I Did a Really Stupid Thing With My Credit. – BG


“Dear Steve,

First – let me open by saying that I did a very stupid thing that I will never repeat. I’m looking for the best way out without killing my otherwise good credit rating. Here’s my situation.

I have worked for an employer for 10 years. During the last 3 years he personally hit hard times and could not support the business in any way and had offered to sell it to me. long story – short – I supported the business in an effort to retain clients. I opened up several corporate cards in the business name but also carry my name on the cards in order to keep operating.

Now – I have amassed about 45000 dollars in debt between 4 different CC providers (AMEX, Capital One Visa and MC, Discover). The company I work for (still in old owners possession) will likely fold. I assume I have full liability of the card debt – in other words even if he declares bankruptcy I am not off the hook.. Is there any way of paying off these cards for less than full amount owed? I can probably pull together about 25-30,000 to pull this off.


Dear BG,

There are a couple of issues here. First, did you earn a percentage of the business for your investment? Right to take client list, equipment, or maybe something else?

If you have $30,000 cash to settle $45,000 worth of debts, that is doable. But, pay attention.

Settling debt will result in a tax liability if you are not insolvent after you settle the debt. The debt written off in the settlement will appear as a bad entry on your credit report. In order to get to a reasonable settlement offer you will have to fall behind 90-120 days past due and that will land you in collections and hurt your credit report. If you have to borrow the money or take it from your 401(k) account, don’t.

You’ve learned a big lesson here. No sense wasting a perfectly good mistake.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

2 thoughts on “I Did a Really Stupid Thing With My Credit. – BG”

  1. Steve – thanks – you are a god-send for people like me – I used to think I was a relatively smart guy – now I know that Ignorance is a big liability here. The cards were opened in the company name but against my social security number – even if the company goes bankrupt, I suppose I’m on the hook. So in the end I will have to hurt my credit just to make a settlement. Ouch! In one of your last sentences you said if I have to borrow money from an IRA or savings to pay these off – you said do not do this. Why not – since the alternative will be a credit stain? Again – thank you very much.


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