If you're in default with HSBC...

[nickifan]

I know some people in this forum are/were looking to see what kind of settlement offers they can get from creditors if they really are trying to avoid BK.

I'm in Texas (in Houston area) and got a letter yesterday from the law offices of an attorney acting for his client HSBC Bank. (Don't know if I'm allowed to say the name?)
I owe over $6320 (a few hundred of that is the stupid %!!@##* fees that have accrued since I stopped paying them last December) and they "have agreed to accept $2847.89 (I just love the cents) as settlement in full for monies owing on my account." They want payment within 10 days from date of letter -- which although being in the same city is already 7 days later. (OR they deliberately type an earlier date than it was actually sent to make it seem much more pressing to ACT?) If I don't contact him he will "recommend that my client proceed with all lawful action necessary to effect prompt recovery of their financial loss."

Anyway...I have no intention of paying it as I'm still planning to do a BK...but I thought I'd let people know what the bank is willing to accept. Maybe it's not a big whoopee -- I'm not a math whiz, I think it's 45%? I do recall at least a few folks here were playing the how-low-will-they-go settlement waiting game. Just thought I'd mention.

[catleg]

This wouldn't be a vietnamese name would it? There is a well known but poorly skilled collections attorney of that nationality in Houston.

[lovemybugs10]

Thanks for that info! I am finding that they are willing to settle for 40% and take payments for it.

[Exployer1234]

I had received some settlement offers before my BK. It was about 40%. Since I did not accept the offer the company started adding more fees on my balance.

[Brazzy]

Quick psychology/sales lesson. Always use cents. That will give the impression that the figure you are giving has some sort of reasoning behind it and will give the debtor/buyer/whatever the impression that the number is non negotiable.

Always look at what percent the offer is in respect to the value. If its not a rounded % (ie 30% or something like that) then its totally made up and you can probably weasel a little more out of them.

[scsurfer]

I settled with HSBC for 50% with 3 payments. (if you're interested search my older posts where I post about the process)

[jacko]

Actually, the settlement is not 50% when you factor in the tax liability on the other half.

I settled with HSBC for 50% with 3 payments. (if you're interested search my older posts where I post about the process)

[scsurfer]

Actually, the settlement is not 50% when you factor in the tax liability on the other half.

there won't be any tax liability, it's a wash, in fact I made money on the whole situation.

[lrprn]

there won't be any tax liability...

Can you prove to the IRS that you were indigent when the 50% was forgiven? That's the only way you'll get out of paying taxes to the IRS on the 50% that was forgiven by your lender.

Proving you are indigent to the IRS is more complicated than "I was having trouble paying all my bills." You have to complete IRS form 982 and file it with your taxes. It includes a listing of all your income and debts to prove insolvency. See http://www.ehow.com/how_4780039_file...vency-irs.html for the details.

Here's an example of how this works (copy/pasted from this site):
"If the total value of your assets is $80,000 and your total debt it $100,000, you are insolvent by $20,000 and only that amount of canceled debt can be excused from being taxed. So if you receive a 1099-C reflecting a debt cancellation of $25,000, $5,000 will be taxable."

So are you saying that even paying taxes on the 50% forgiven, you'll end up owing less than the original debt so that's how you are "making money"?

[catleg]

there won't be any tax liability, it's a wash, in fact I made money on the whole situation.

So in another thread you mentioned this 3k debt to HSBC and it being handled by the 120-day desk. That tells me that you're four payments past due, which means 10% (30% default apr times 4 months out of 12) interest accrued to the balance plus lates and probably over the limits (let's charitably say $30 for each, though I think those rats at HSBC charge $39). So now we've got $300 in interest and $240 in late fees added on. So did you settle for 50% of the total debt of $3540, or $1770, and get 1099'd for the difference between that and the original debt of $3000?

This small debt (low-$) and average settlement (%-wise) doesn't prove too much. Most people here have five and six figure credit card debts (yes that's $100,000+) so I would hesitate to pass myself off as an expert yet. Just sayin.

I still don't understand why someone with $1770 to spend on a settlement wouldn't just keep making minimum payments on a $3k credit card, which is what about $60 a month??

[scsurfer]

Here's my deal, I'll get my 1099c and apply it to my taxes, and some of it will wash since I usually have about 15-20k in write offs each year. So it will cut into a little bit of my refund. The unsecured debt was a Sam Ash card which I used to buy deeply discounted DJ equipment for my DJ work. I've since quit DJ'ng for hire and sold all that equipment for about 2.5 times what I paid for it. I used that money to pay off the 50% settlement and pocketed the rest. I didn't need to settle with HSBC but given this unique situation I would rather get a 1099c for 50% than 100% in case it ever got written off.

[catleg]

That certainly is a unique situation. Well done.

Now where do I buy this DJ equipment? I feel like scratchin' myself.

Are you DJ Pauly D from Jersey Shore?

[scsurfer]

That certainly is a unique situation. Well done.

Now where do I buy this DJ equipment? I feel like scratchin' myself.

Are you DJ Pauly D from Jersey Shore?

Lol no not even close.

I know my situation is unique compared to most here. I just try to post on my experiences with creditors in case it can be of any help to anyone. I'm by no means an expert, just trying to make the best decisions for my life.

[BobMango]

Here's my deal, I'll get my 1099c and apply it to my taxes, and some of it will wash since I usually have about 15-20k in write offs each year. So it will cut into a little bit of my refund. The unsecured debt was a Sam Ash card which I used to buy deeply discounted DJ equipment for my DJ work. I've since quit DJ'ng for hire and sold all that equipment for about 2.5 times what I paid for it. I used that money to pay off the 50% settlement and pocketed the rest. I didn't need to settle with HSBC but given this unique situation I would rather get a 1099c for 50% than 100% in case it ever got written off.

This is quite different from saying "no tax liability". You in fact did have a tax liability, but in your case it was basically a wash so didn't take money out of your pocket to do it.

Not everyone that gets a settlement will be able to do the same. This is a great example of why folks should be careful of the advice they get here, or any public forum.