Could a debt settlement plan work for me

[Broke1234]

I owe 58k on 7 credit cards.... Pretty much all of the debt was due to gambling

I have maybe 5k in savings along with 23k in trust fund which I inherited but have never touched. It's invested and of course doesn't make much of anything with mutual funds performing crappy this year.

I've never filed for bankruptcy and think a settlement option could work here.

Also consider that as of now I am not delinquent at all on the minimum payments.

The amount I owe is overwhelming considering I only make 37k annually at work.

[Flamingo]

You owe $58,000 on 7 credit cards and have a yearly income of $37,000, and did not list the cost of your housing/rent, utilities, transportation, food and other life necessities. I don't know how you could stay afloat on that salary with that debt and having other basic bills, unless you are living for free with relatives/parents. I would investigate filing bankruptcy first by having some initial consultations with a few lawyers (most consultations are free) to find out exactly where you stand in the state you reside. You will also need to curtail your gambling or once you get this all straightened out, it will be only a matter of time before you are there again. Since you know what is causing the debt, that is a marvelous sign and I wish you all the luck in the world in betting beyond your situation and starting over.

[Broke1234]

Flamingo I appreciate your time.

I don't have many bills at all, I live with my folks still... I don't gamble at all any longer

Anymore suggestions about debt settlement rather than bankrupcy

[JRScott]

Most Debt Management Plans do not work and generally folks that try them generally file for bankruptcy within a year.

Debt Settlement might could work if you have the money. However keep in mind that the forgiven debt you'd receive a 1099 on next year and would be responsible for filing that with your 2008 taxes. It would be treated just like income.

So say you settled for half 29000, you'd then get a 1099 for 29k and would owe taxes on that as though it were income.

If you are looking for alternatives, and really want to find an alternative you might check out Dave Ramsey's Financial Peace University. Given that you live at home it might be possible to work your way out, but it will mean hard work and a difficult couple years but it might still be possible.

[Mark80]

Personally I don't like Debt settlement plans, mostly because the industry is so shady and decieving. Plus if they do help you talk down your creditors there is nothing to back anything up. During the payback if your creditors decide they don't like your payments, or whatever they can just demand more from you.

I went down that road before deciding on BK and got scared out of the idea. I just didn't like to hand over all that money each month and just hope the debt consolidation company actually pays everyone, on time, etc.

With Bankruptcy at least you have the courts on your side, and once filed your creditors have to go along with it or else.

Just make sure to run a ton of checks on a company if you really want use one.

[Broke1234]

bump

[Flamingo]

Flamingo I appreciate your time.

I don't have many bills at all, I live with my folks still... I don't gamble at all any longer

Anymore suggestions about debt settlement rather than bankrupcy

"Investigating" filing bankruptcy (as I suggested) does not mean filing. Investigating would have given you an idea as to exactly where you stand and what you can and cannot do, and that also means looking into debt management. The attorney would advise you if he/she thought you could do one or the other (ours did). Then you would be clear as to what you could do as to either.

[HHM]

My bet is, no, a debt management plan would not work for you. Plane and simple, your debt to income ratio is too high.

If you think doing debt settlement is going to save your credit, think again. Before credit cards will even entertain debt settlement (an actual reduction in the pincipal balances), you typically must go in default.

[Mark80]

My bet is, no, a debt management plan would not work for you. Plane and simple, your debt to income ratio is too high.

If you think doing debt settlement is going to save your credit, think again. Before credit cards will even entertain debt settlement (an actual reduction in the pincipal balances), you typically must go in default.

I was told a few years ago "before" the mortgage crisis by a mortgage broker (that I have used many times) that a bankruptcy mark on your credit hurts you less then debt management. (in regards to getting a mortgage) He said it showed you took control of your financial problems, instead of allowing a third party company to try and manage your debt for you.

Now obviously you went out and had an attorney in most cases set things up, but he said a debt management mark on your credit scares lenders more.

And also, when I spoke to a debt management company they couldn't guarantee me that my payments would be made on time. In many cases they warned it would be made a few days late especially at the start.