just settled for 11%

[jb4lcm]

Just an FYI for anyone in collections AFTER charge-off, I just settled on an unsecured C/C debt - 48K - for 11% one time payment.

Fire away.

JB

[GoingDown]

I'm not surprised. They're probably glad to get anything from such a large debt. Most of those end up going down to nothing in a chapter 7 bankruptcy.

Be prepared for one heck of a tax bill next year.

[justbroke]

So, you'll get a 1099-C for about $42,000. What's your tax expectations or can you prove insolvency? How does the settlement agreement read? Are they issuing a 1099-C or selling the balance to some other junk debt buyer (JDB)?

[jacko]

The only entity I would settle with is with the IRS and state taxing authority. All others can pound salt.

I'm not surprised. They're probably glad to get anything from such a large debt. Most of those end up going down to nothing in a chapter 7 bankruptcy.

Be prepared for one heck of a tax bill next year.

[frogger]

Debt settlement. The gift that keeps giving.

[mountanddo]

Be prepared for one heck of a tax bill next year.

Do you pay taxes on the remaining debt like it was income. I assume that is what a 1099-C is. That is a lot of taxes to pay. From reading here it sounds like it may have been cheaper and better on your credit to file BK. Unless possibly that was the ONLY debt that you had.

[justbroke]

Do you pay taxes on the remaining debt like it was income. I assume that is what a 1099-C is. That is a lot of taxes to pay. From reading here it sounds like it may have been cheaper and better on your credit to file BK. Unless possibly that was the ONLY debt that you had.

It's treated as "ordinary income" which is regular income. Would have been nice if it was treated as a Long Term Gain / Loss.

[salsa]

That's a great settlement. I wish I could have gotten even close to that.

[HHM]

That is the irony, the larger the balance owed, generally the lower percentage settlement you can get. 11% is very good, generally an aberration. But I would be very concerned, as was pointed out, about the resale of the remaining balance.

[keepsmiling]

Are there any steps to take to prevent such a resale?

[catleg]

I think you would have a defense of estoppel if a subsequent buyer of the debt sued you, but you would still be out the cost of the defense.

[df04527]

Yup agree with Catleg on the defense - not that that usually stops any of them though.

[bcohen]

I wish I could settle my debts for 11%--that would be approximately what it would cost to file for bankruptcy, with the added benefit that I wouldn't have to wait 8 years to file again if something happened. Unfortunately, I don't have that much money, and the JDB's who bought my debts have only offered settlements in the 80% to 90% range, and that's after adding on tons of interest and fees from the date of original default! The tax consequences of settling would not be a problem, as I am legally and actually insolvent.

[keepmine]

Are there any steps to take to prevent such a resale?

I'd insist the settlement agreement contain language to the affect that the unsettled portion can't be sold, transfered or assigned to any other party.

[justbroke]

I'd insist the settlement agreement contain language to the affect that the unsettled portion can't be sold, transfered or assigned to any other party.

Exactly! The agreement should read that the balance is forgiven and a IRS Form 1099-C for the balance issued.