Your experience with settlement offers

[InOverHead]

Got the call late yesterday that my Attoreny had finally filed!! Yippee!! 341 set for Aug 30th. Now i have a month and a half to sweat that out...he said the delay was computer related.

When i got home there was a FEDEX package, interesting coincidence that on the day i file i receive the first settlement offer. Offer was settle for 60% of the debt. PNC Bank - balance was about 12,500+ and it clearly stated pay 7716 and the rest will be forgiven.

I am assuming they meant i would need to come up with the entire amount by the deadline of July 29th.

What surprised me is that i have missed two payments and have not communicated with them. I thought the offers came around 5-6 months. 60% at 60 days late seems like if i waited there was more room to negotiate.

What has your experience been like with the offers?

[frogger]

Debt "settlement" is one of the biggest scams out there. The best debt "settlement" plan is done according to the bankruptcy laws where everything is binding on all parties involved.

[sunshinepa]

I got offers after I missed my first payment, never even considered them. And yes, they got better as time passed but I ignored them all.

The 341 will be here before you know it and will be over so quick you won't believe it. Best of luck and keep us posted!

[InOverHead]

Debt "settlement" is one of the biggest scams out there. The best debt "settlement" plan is done according to the bankruptcy laws where everything is binding on all parties involved.

I understand the debt settlement companies are scam artists, but how is a letter from the bank i owe the money to offerring to settle for 60% a scam?

Thought out potentially waiting it out and trying to settle all the debts prior to making the decision to file, my fear was 1099's and some creditors not wanting to "play ball."

[InOverHead]

I got offers after I missed my first payment, never even considered them. And yes, they got better as time passed but I ignored them all.

The 341 will be here before you know it and will be over so quick you won't believe it. Best of luck and keep us posted!

Thank you Sunshine! I sure hope time flys...

So what was the best settlemnt offer you received?

[sunshinepa]

Thank you Sunshine! I sure hope time flys...

So what was the best settlemnt offer you received?

I actually got a 20% offer about 3 weeks before I filed....but then it was quite a balance after late fees and interest. I have seen others here post about the same on some, less on others.

[frogger]

I understand the debt settlement companies are scam artists, but how is a letter from the bank i owe the money to offerring to settle for 60% a scam?

Thought out potentially waiting it out and trying to settle all the debts prior to making the decision to file, my fear was 1099's and some creditors not wanting to "play ball."

That one particular letter may not be a scam, however unless all of your other creditors are offering to settle at a greatly reduced rate that you can afford, then you are scamming yourself by paying only the one.

Also... make sure you read the fine print about any 1099C forms, and make sure that the debt is listed as paid/settled in full. The scam starts many times after the original deal is over.

[fileda13]

One of the main reasons I went the C13 way instead of trying debt settlement was tax related. I've been fighting for years, and with $90k+ in CC debt I couldn't keep up. If I settled for .50 on the dollar, the $45k saved would be taxable income to me that I'd pay fed & state taxes on. In C13 none of the payoofs less than 100% are taxable.

[jetsfan2010]

I thought I was the only one that had this happen recently. I received three certified letters from my former bank on 2 credit card and 1 loan I had with them. They were offering lump sum settlement of 35 percent of what I owe. I would do it IF I was still in a 100 percent ch 13 lol.

[JackBondLove]

I tried to settle for 10%, but none of my creditors would take it, so I did a Chapter 7, and they got 3% instead. (And because I would have had a tax bill, I probably wouldn't have even settled at all.)

[keepsmiling]

I had an offer of 15% the other day - about 10 or 11 months since my last payment
Had a coupla 20 to 25's, and the rest around 40-50.
No can do regardless. Had fantasized about trying but the tax consequences are a deal breaker.

[InOverHead]

Everyone talks about the tax consequences; I thought it was a crapshoot if they 1099'd or not. Either way, this is all after the fact as the decision has been made and petition filed - just trying to educate myself.

[keepsmiling]

I think you have to assume you WILL get a 1099. For many people this might mean nothing in taxes. I owe around 100K and assuming best case scenario, might have settled at average 20%... hence 80K "income" even at lowest bracket is just way too much... would have to dig in to retirement and pay taxes on that "income" as well... yeesh

It all depends on your insolvency quotient. Luckily, I still have my 401K, which I would have liquidated had I not found this board (THANK YOU, BKFORUM!!) PLUS with my ds starting college, if I had to include that as income (?) his financial aid package might have been in the toilet.... actually kinda curious about that, if anyone cares to chime in ...

[jetsfan2010]

Everyone talks about the tax consequences; I thought it was a crapshoot if they 1099'd or not. Either way, this is all after the fact as the decision has been made and petition filed - just trying to educate myself.

Anyone who is contemplating settling must ask this question and get in writing whether or not that original creditor will send a 1099 and count as income for them. That short term debt relief can turn into a long term IRS nightmare.

[drowning123]

You don't want to settle since you have to pay tax on the difference. Just wait out for your discharge.