Ever used a debt settlement company? (pay, taxes, rate, collector)

[ioneoskay]

Express Debt settlement LLC? has anyone used them? They sound good to me, anyone have any ideas?

[FLPL75]

I have one opinion of Debt settlement companies
Stay away !!!
How most of them work is you send them a certain amount of money each month when it reaches a set amount they then call the credit card company and offer them a settlement or anywhere form 25% to 50%

Heres what they don't tell you
They can not promise that the companies will accept the settlement
Also they have you stop making payments to the creditors so this will result in affecting your credit
So you risk that the account could be charged off which could result in a chance that the creditor can send the account for litigation
You also have to pay them a hefty fee for these services
Also any settled amount over $599 the companies can send you a 1099 and you have to report this as income which could result in higher taxes

When I worked for the credit card company I saw the problems these companies can cause

[texdav]

I had a friend that girlfriend did this when she got a divorce. She agreed to pay 400 a month for 20 years to settle her part. Frankly she would have been better off going bankrupt which was easier then..

[pushkinswife]

If you use them keep the original settlement offer letter, a statement letter of 0 balance and a receipt for your payment of the settled amount. You might need it in the future--I have settled a debt (cell phone) and 3 yrs later another collection agency was asking me for the original balance. Good luck

~Push~

[deezine]

I would never use a debt settlement agency. You can negotiate yourself. I have done this for numerous accts. Even got some removed from my credit report upon payment. There are a lot of tools that you can use and get better results than going thru a debt settlement agency.

[Mircea]

Originally Posted by ioneoskay

Express Debt settlement LLC? has anyone used them? They sound good to me, anyone have any ideas?

Don't do it. You're better off filing for bankruptcy.

You'll get a notation on your credit report that you're using a debt settlement company and you'll be damaged goods.

All debt settlement companies operate the same way. For example, you owe $7,000 on a credit card, the debt settlement company will harass and browbeat your creditor into accepting a settlement of $3,500 but, the debt settlement company won't tell you that. They'll tell you they settled for $5,000, then you'll pay $5,000, your creditor will get $3,500 and the debt settlement company will collect $1,500.

Any portion of an unpaid debt, even if settled, is subject to collection, so don't be surprised if debt collectors or junk debt buyers start calling you and slam your credit report, too.

The only time the unsettled balance is not collectible is when your creditor writes off the debt and issues you an IRS Form 1099-M in the amount of the unsettled debt. That is imputed income and you must claim it on your taxes.

I highly recommend that you study the tax tables very carefully, because if you're settling a large amount of credit debt, the imputed income from the unpaid balance could kick you up into the Alternative Minimum Tax (AMT) range, and you'll owe more in taxes than you normally would.

[benefic]

Please do not use a settlement company. It does more harm than good. If your accounts are in collections, you have options.

[Briolat21]

I guess I'm the only person with a decent opinion of them??

I used one of these companies - because while you're right, you can negotiate on your own - what's your leverage?

"Hi, this is X - I'd like you to lower my rate from 28% to 8% or I'll cancel my account...
Oh, okay, you're going to keep my rate at 28% and close my account.. great."

If I had not been maxed out on cards and not been on the verge of being unable to afford monthly payments I could have legitimately said "I'll transfer your balance over here to a lower rate and pay it off" .. but that wasn't an option.

The company I dealt with (consumer credit management company) charged a small fee ($25/month) - sent my payment to the creditors EVERY month, and all my cards were paid off in 5 years.

Had I been paying on my own without the interest rate deductions, etc.. it would have taken 20 years at least!

Now - they did make $25/month for 5 years ... so that's $1500. But it was worth it to me.

Oh, and 2 years after paying off my cards, my credit rating was over 700 and plenty of offers coming in the mail every day.

Obviously it doesn't hurt your rating that much!!!!

I think you need to look into them very carefully, and choose one that is not a scam..

But I don't think they're all bad, if you do not think you will be able to negotiate a better rate for yourself, or you are not organized enough to successfully do this on your own, they do provide a service!

[Wendell Phillips]

It would seem to me that you have paid a lot of money to get a big tax liability, and with all these charge-offs on your credit report. Frankly, I don't think that your credit report is all that important - I think that how your potential lenders view your credit report is more important.

[FLPL75]

Briolat21
you used a debt management company and it sounds like one that is a division of Consumer Credit Counseling which is part of United Way, these are non-profit and the fee is on a sliding scale
Congratulations on getting your debt under control

they are a great option they can really help get your interest lower and possibly even lower payments
since they do not lower the balances or negotiate settlements you pay what you owe and don;t have to worry about 1099's and owing taxes on the amount that was written off


the op is talking about debt settlement companies there the ones to stay away from
they are pure "for profit" companies