Credit Card Settlement?

[doclm]

Hello All,

I've had a Discover card which has been over the limit for the past six years. My original limit was $1000, however after lots of interest and bad credit habits in undergrad, it is now up to $3400. Would it seriously hurt my credit to make a settlement with Discover, say I pay the whole account off with....$2000? or somewhere less than the actual balance. My interest rate on this credit card is about 20% , and I want to get this whole thing wiped out before I start school this fall.

Although I could make enough just to pay this whole thing off in a month, I am saving as much $$$ for my first years rent. Should I pay this whole amount if most of this is interest and fee's? Or should I settle it so I can wipe out this entire debt?

Again, thanks for your input.

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[texmex2]

Hello All,

I've had a Discover card which has been over the limit for the past six years. My original limit was $1000, however after lots of interest and bad credit habits in undergrad, it is now up to $3400. Would it seriously hurt my credit to make a settlement with Discover, say I pay the whole account off with....$2000? or somewhere less than the actual balance. My interest rate on this credit card is about 20% , and I want to get this whole thing wiped out before I start school this fall.

Although I could make enough just to pay this whole thing off in a month, I am saving as much $$$ for my first years rent. Should I pay this whole amount if most of this is interest and fee's? Or should I settle it so I can wipe out this entire debt?

Again, thanks for your input.

Personally, and ethically, it makes me sad to see these these types of posts. But putting my personal preferences aside, you should visit creditboards.com.

 

[glp]

Hello All,

I've had a Discover card which has been over the limit for the past six years. My original limit was $1000, however after lots of interest and bad credit habits in undergrad, it is now up to $3400. Would it seriously hurt my credit to make a settlement with Discover, say I pay the whole account off with....$2000? or somewhere less than the actual balance. My interest rate on this credit card is about 20% , and I want to get this whole thing wiped out before I start school this fall.

Although I could make enough just to pay this whole thing off in a month, I am saving as much $$$ for my first years rent. Should I pay this whole amount if most of this is interest and fee's? Or should I settle it so I can wipe out this entire debt?

Again, thanks for your input.

call one of the credit agencies or a local bank you trust and ask them. we have no idea how this effects your credit. all things being equal, settle for a reduced amount and move on.

 

[doclm]

Personally, and ethically, it makes me sad to see these these types of posts. But putting my personal preferences aside, you should visit creditboards.com.

What exactly makes you so sad to "see these types of posts"? All I asked was for some really simple advice. Nothing that should move you emotionally.

 

[Sol Rosenberg]

Your credit will be pretty much equally screwed either way. If you pay it off, you MIGHT be able to dispute it some time later, and the companies MIGHT NOT dispute the dispute. This was my situation after I screwed up my credit by paying late while I was in college. I eventually paid everything off, my credit was ruined, but after a few years, CC companies didn't care when I disputed the bad information, and I cleaned up my credit that way.

You DO know that if you settle with the CC companies, you will most likely be 1099'd by them, so you will owe taxes on the amount that you don't pay. Pick your poison, but I'd recommend paying what you owe.

 

[texmex2]

What exactly makes you so sad to "see these types of posts"? All I asked was for some really simple advice. Nothing that should move you emotionally.

And your inability to understand why someone would find this wrong just trumped my earlier sadness, and even made a tear roll down my cheek... Please excuse me while a get a tissue.

 

[heech]

I've heard that negotiating a charge-off with the credit card company is a great idea. At this point, they'll probably be content with getting their loan amount back... and they'll give up on the late-fees, etc.

So, give them a call and ask. *BUT*, keep in mind that you MUST make them document (in paper) that with your payment, they will remove the delinquency from your credit report entirely. Otherwise, apparently any payment you make into the account will actually "revive it"... you're only 1 year away from the delinquency scrolling off and disappearing, but if you pay it without getting their agreement, then all of a sudden you'll have another 7 years to wait before it scrolls off.

 

[bubbleyum]

And your inability to understand why someone would find this wrong just trumped my earlier sadness, and even made a tear roll down my cheek... Please excuse me while a get a tissue.

well actually, to be fair to the OP, that $3400 is not all stuff that he spent money on. 20% interest rate is HUGE, plus he is over the limit. so i bet his statement every month looked something like, $38.00 over the limit fee, plus his interest on the $1010.00(maybe 10 over the limit) he spent, charging him close to a $100.00 for $0 new expenses. and this probably snowballed to the point where he is eventually being charged $2400.00 extra on top off about $1000.00 that he spent when he was in college. credit card companies know that this is outrageous (but this is how they make their money!) so that's why they are so willing to "settle." (actually they are probably profiting even more, because the OP probably paid off his $1000.00 a long time ago and at this point is just paying off the crazy fees that they keep piling on.)

to the OP: i think you should settle, because if you don't, you will get charged every month on that $3400.00 you owe right now, which will continue to snowball even more. this bad record will stay on your credit record longer, so pay it off now. also when you pay off (settle) debt, it improves your credit.

 

[doclm]

well actually, to be fair to the OP, that $3400 is not all stuff that he spent money on. 20% interest rate is HUGE, plus he is over the limit. so i bet his statement every month looked something like, $38.00 over the limit fee, plus his interest on the $1010.00(maybe 10 over the limit) he spent, charging him close to a $100.00 for $0 new expenses. and this probably snowballed to the point where he is eventually being charged $2400.00 extra on top off about $1000.00 that he spent when he was in college. credit card companies know that this is outrageous (but this is how they make their money!) so that's why they are so willing to "settle." (actually they are probably profiting even more, because the OP probably paid off his $1000.00 a long time ago and at this point is just paying off the crazy fees that they keep piling on.)

to the OP: i think you should settle, because if you don't, you will get charged every month on that $3400.00 you owe right now, which will continue to snowball even more. this bad record will stay on your credit record longer, so pay it off now. also when you pay off (settle) debt, it improves your credit.

Thanks Bubbleyum,

You are exactly correct about the situation. For the others, I am not sure if they really read my original post correctly. I charged $1000, and the rest ($2400) is actually overlimit fee's and interest. I contacted Discover today and they told me that they cannot do a settlement with me because I have been making regular monthly payments to them for the last two years and have built my status back up with them. On the other hand, they claimed they could take at least $200 off of my fee's if I would set up an arrangement to pay so much $$ down so I am not over the limit. When I asked one of the managers they asked me: "tell me how much $$ are you willing to arrange to pay off your entire balance?" She told me that if I said something like 2k, that would not be enough, however they are willing to work with me because they can take these overlimit fee's off my balance, and still be considered in "good status" for paying my credit card balance in full.

Thanks for understanding

 

[doclm]

. . . because you used the card to purchase things. . . and now you don't want to pay for them.

Sorry that I didn't make it clear that my limit was $1000, so all I charged was $1000 to begin with and I know that I have given them at least that much within the past six years.

Credit cards screw people over all the time because of fee's and misc charges that I know for a fact can be taken off their balances if certain arrangements are made.

 

[doclm]

And your inability to understand why someone would find this wrong just trumped my earlier sadness, and even made a tear roll down my cheek... Please excuse me while a get a tissue.

Are you for real?

I will reassure you that there is nothing here that should make any credit worthy person, besides the CEO's of major credit cards, sad about realizing what a person can actually do if they are hit with as many fee's as I have been. I have talked with many people in the past that rightfully have been able to get the fee's taken off their balance by payment arrangement or have settled. However, the only response that I was looking for from my original question was settlements hurting my credit more than being over the limit. Currently I make enough money to pay $3000 from my next two week paycheck, however I am really tight with my $$ because I am saving up for the next years rent and utilities. I do not want to be taken for a fool by the "big credit card companies" as I was seeking to save myself a little $$ by asking around.

 

[LINYKid]

how is your credit score? and are you anticipating making any major purchases i.e house, car or even a lease [apt or car] where a credit check is done

Hello All,

I've had a Discover card which has been over the limit for the past six years. My original limit was $1000, however after lots of interest and bad credit habits in undergrad, it is now up to $3400. Would it seriously hurt my credit to make a settlement with Discover, say I pay the whole account off with....$2000? or somewhere less than the actual balance. My interest rate on this credit card is about 20% , and I want to get this whole thing wiped out before I start school this fall.

Although I could make enough just to pay this whole thing off in a month, I am saving as much $$$ for my first years rent. Should I pay this whole amount if most of this is interest and fee's? Or should I settle it so I can wipe out this entire debt?

Again, thanks for your input.

 

[doclm]

how is your credit score? and are you anticipating making any major purchases i.e house, car or even a lease [apt or car] where a credit check is done

Over a year ago, it was 550, but I think it is higher now because I get credit card offers every week now. I was able to purchase a new car from my credit union, but at a higher interest rate. However, I am not planning on any major purchases for at least another 4 years. When it comes to apartments, although my score in the past is not stellar, they see how much $$$ I make and have no problem having me as a tenant.

 

[kate_g]

I charged $1000, and the rest ($2400) is actually overlimit fee's and interest.

But it's the fact that you let it get to this point... Six years??? You kind of offhandedly mentioned "bad credit habits in undergrad" as the cause, but that's exactly the problem... The fact that nobody ever taught you *good* credit habits. You reached the age of legal ability to sign a credit application without anyone ever teaching you not to spend more money than you've got. (If you were charged interest and overlimit fees, then at some point you must have had a bill bigger than you could pay.) And then there's the fact that you think you've been "hit with" these fees and believe you should "rightfully" get out of paying them, rather than acknowledging you've earned them fair and square over the past six years. You can blame your parents for not sitting you down and explaining credit, or your high school for not making home economics a mandatory class, or credit card companies for happily taking advantage of inadequately prepared college students... But in the end *you* signed the application.

I'm sorry, I'm not trying to preach or be overly mean... It's just that I know a number of people who got stuck in similar situations - at exactly the same point in their lives - and then said "but I didn't know!" and assumed they could just avoid the consequences of their ignorance. I just think if you're willing to sign your name to a contract, you should be ready to be held accountable for it.

 

[almost_there]

But it's the fact that you let it get to this point... Six years??? You kind of offhandedly mentioned "bad credit habits in undergrad" as the cause, but that's exactly the problem... The fact that nobody ever taught you *good* credit habits. You reached the age of legal ability to sign a credit application without anyone ever teaching you not to spend more money than you've got. (If you were charged interest and overlimit fees, then at some point you must have had a bill bigger than you could pay.) And then there's the fact that you think you've been "hit with" these fees and believe you should "rightfully" get out of paying them, rather than acknowledging you've earned them fair and square over the past six years. You can blame your parents for not sitting you down and explaining credit, or your high school for not making home economics a mandatory class, or credit card companies for happily taking advantage of inadequately prepared college students... But in the end *you* signed the application.

I'm sorry, I'm not trying to preach or be overly mean... It's just that I know a number of people who got stuck in similar situations - at exactly the same point in their lives - and then said "but I didn't know!" and assumed they could just avoid the consequences of their ignorance. I just think if you're willing to sign your name to a contract, you should be ready to be held accountable for it.

Sure, but doesn't mean that a formerly ignorant person can't or shouldn't try to negotiate a better deal.

 

[doclm]

But it's the fact that you let it get to this point... Six years??? You kind of offhandedly mentioned "bad credit habits in undergrad" as the cause, but that's exactly the problem... The fact that nobody ever taught you *good* credit habits. You reached the age of legal ability to sign a credit application without anyone ever teaching you not to spend more money than you've got. (If you were charged interest and overlimit fees, then at some point you must have had a bill bigger than you could pay.) And then there's the fact that you think you've been "hit with" these fees and believe you should "rightfully" get out of paying them, rather than acknowledging you've earned them fair and square over the past six years. You can blame your parents for not sitting you down and explaining credit, or your high school for not making home economics a mandatory class, or credit card companies for happily taking advantage of inadequately prepared college students... But in the end *you* signed the application.

I'm sorry, I'm not trying to preach or be overly mean... It's just that I know a number of people who got stuck in similar situations - at exactly the same point in their lives - and then said "but I didn't know!" and assumed they could just avoid the consequences of their ignorance. I just think if you're willing to sign your name to a contract, you should be ready to be held accountable for it.

Well.........................

I am sure glad that your super parents taught you at a young age to ASS/U/ME and openly voice opinions about people that you have no clue about.

 

[Barts]

So does Discover still hold the account or has it been charged off and sent to a collection agency? If Discover still holds it you might look into a settlement if you can get them to settle for an amount you are comfortable with. If it has been six years since you have made a payment and it's with a collection agency it is probably past (or very close to) the SOL (depending on the state you resided in when you got the card). Anyway, as someone else suggested I would probably check out that website...creditboards.com.

Everyone makes mistakes, I wouldn't worry about the 'better than you' attitude some of the other posters seem to have!

Good luck with it.

 

[Barts]

You DO know that if you settle with the CC companies, you will most likely be 1099'd by them, so you will owe taxes on the amount that you don't pay. Pick your poison, but I'd recommend paying what you owe.

Very good point! For the amount he owes and could possibly settle for I'm sure he would get a 1099.

 

[kate_g]

Well.........................

I am sure glad that your super parents taught you at a young age to ASS/U/ME and openly voice opinions about people that you have no clue about.

You asked what was making people sad, and that's what I find sad about the situation. It's not really about you as an individual, so I'm sorry I worded the post that way - I didn't necessarily mean it as a direct attack. The part that's most sad is that it happens so often, and that there's such a general lack of desire to take responsibility (or such a strong desire to get out of the consequences, anyway). At least in this case I can't say it's driving up my taxes or insurance premiums or anything, which is my usual complaint about irresponsible behavior. It probably does drive up credit card interest rates, but at least it's possible to avoid paying those...

 

[doclm]

You asked what was making people sad, and that's what I find sad about the situation. It's not really about you as an individual, so I'm sorry I worded the post that way - I didn't necessarily mean it as a direct attack. The part that's most sad is that it happens so often, and that there's such a general lack of desire to take responsibility (or such a strong desire to get out of the consequences, anyway). At least in this case I can't say it's driving up my taxes or insurance premiums or anything, which is my usual complaint about irresponsible behavior. It probably does drive up credit card interest rates, but at least it's possible to avoid paying those...

Taxes are something I can agree with you on. Last year I grossed 51k, however payed 12K in taxes where I got $300 back this spring. Now that I have been working at least 20 hours overtime per week, I payed $1200 in taxes out of my last two week paycheck.

 

[kate_g]

Taxes are something I can agree with you on. Last year I grossed 51k, however payed 12K in taxes where I got $300 back this spring.

Exactly... AND, if you have no deductions to speak of (mortgage interest or dependents or anything), it all goes straight to the government. So people who scam government programs...

 

[blkprl]

Hello All,

I've had a Discover card which has been over the limit for the past six years. My original limit was $1000, however after lots of interest and bad credit habits in undergrad, it is now up to $3400. Would it seriously hurt my credit to make a settlement with Discover, say I pay the whole account off with....$2000? or somewhere less than the actual balance. My interest rate on this credit card is about 20% , and I want to get this whole thing wiped out before I start school this fall.

Although I could make enough just to pay this whole thing off in a month, I am saving as much $$$ for my first years rent. Should I pay this whole amount if most of this is interest and fee's? Or should I settle it so I can wipe out this entire debt?

Again, thanks for your input.

I would pay it off if it is still accruing interest...

most credit card companies will report settlements to credit bureaus. some times they send a 1099 at the end of the year reporting the difference as income to the irs. I would ask all these questions before I taking the settlement.

Also, depending on long it's been on your credit it may not make much of a difference if you paid it off since that bad debt has already affected your credit score.

Several years ago, I paid off a couple of charge off accounts; they stayed on my credit until the 7 sevens came and went before they fell off......

 

[faviola]

Hello All,

I've had a Discover card which has been over the limit for the past six years. My original limit was $1000, however after lots of interest and bad credit habits in undergrad, it is now up to $3400. Would it seriously hurt my credit to make a settlement with Discover, say I pay the whole account off with....$2000? or somewhere less than the actual balance. My interest rate on this credit card is about 20% , and I want to get this whole thing wiped out before I start school this fall.

Although I could make enough just to pay this whole thing off in a month, I am saving as much $$$ for my first years rent. Should I pay this whole amount if most of this is interest and fee's? Or should I settle it so I can wipe out this entire debt?

Again, thanks for your input.

JUst settle you will be better off..trust me!

 

[mshheaddoc]

I hope you settled your card. You won't need to pay all those fees/interest.