Owe $1100 a month on two credit cards, should I pay less than the minimum payment?

[SadPanda]

I can't seem to find the edit button to edit my last post (I'm sure the edit button was there a couple of days ago), but I just wanted to add that if you want, you could try to call the companies and find out if they'll work out a plan with you - but I'm pretty sure that even if they will do that, they probably won't until after you haven't paid for a couple of months. After you stop paying for a couple months, you'll probably get letters in the mail from them, saying they "understand times are hard" and they can help, or something like that. I can't remember if I ever called those numbers, but I remember the letters. So if you want, you could give it a try, but I don't know what they'll offer or if they'll still be adding interest or other fees every month. If they do offer some type of plan, you could then decide if filing bankruptcy is the better option or not.

[LadyInTheRed]

I can't seem to find the edit button to edit my last post (I'm sure the edit button was there a couple of days ago)

The edit button disappears because you can only edit your post for a limited time after posting. It is better that way. People who are subscribed to this thread will get a notice of your new post. If you just edited your old post, people who have already read that part of this thread, including the OP, would probably never notice.

[ksgirl38]

I can't seem to find the edit button to edit my last post (I'm sure the edit button was there a couple of days ago), but I just wanted to add that if you want, you could try to call the companies and find out if they'll work out a plan with you - but I'm pretty sure that even if they will do that, they probably won't until after you haven't paid for a couple of months. After you stop paying for a couple months, you'll probably get letters in the mail from them, saying they "understand times are hard" and they can help, or something like that. I can't remember if I ever called those numbers, but I remember the letters. So if you want, you could give it a try, but I don't know what they'll offer or if they'll still be adding interest or other fees every month. If they do offer some type of plan, you could then decide if filing bankruptcy is the better option or not.

I tried sending my credit card companies debt settlement offers, but it didn't work. One of the reps even told me they won't work with you until you stop paying. Makes a lot of sense, right?

[SadPanda]

LadyInTheRed - Thanks, I didn't realize that. I've been on forums where they don't like you to make two posts in a row and they prefer you edit your post instead of posting twice in a row, but I agree that making a new post is better than editing, since edits will probably go overlooked.

ksgirl - I know, it makes as much sense as the settlement offers that only give you the option of paying in one lump sum, even though you can't afford the minimum payments, which are much lower than the total of the lump sum. To get them to work with you, it's as if you have to prove you're serious about not paying them the amount they expect (because you literally can't pay it, but it seems like they don't believe you until you stop paying). I tried to do what I could to keep the accounts current, spending money on the credit card payments (using money that I really needed for other things), mostly because I was so concerned about my credit score.

I remember how belittled I felt when I spoke to them about my financial state - I felt like they were talking down to me. They wanted to know why I was in that financial situation and I think they even suggested I borrow money from others to pay my credit card bills. When I couldn't pay on time, they added late fees and over-the-limit fees (some of them had lowered my limits to just above my balance) and it was impossible to keep up. I probably could've kept up with them longer if they hadn't added all those fees, but it wouldn't have mattered in the end anyway.

[bcohen]

I tried sending my credit card companies debt settlement offers, but it didn't work. One of the reps even told me they won't work with you until you stop paying. Makes a lot of sense, right?

Actually, it does make sense. Banks don't want to work with you, until you have taken the "hit" to your credit of one or more 30/60/90-day late pays. Then suddenly, they know you're serious (and that they might not get anything from you), so they'll offer various hardship payment plans, interest reduction/forgiveness, and so on.

I know that once I quit paying all my credit cards, 2 weeks after the first missed payments were due, suddenly I got letters in the mail asking that I call to discuss my options. After 2 months of no payments, all of my credit cards were ready to settle, and Citibank was willing to offer a hardship payment plan of $200 a month with zero interest, and they were even willing to forgive the interest, late fees, and overlimit fees that I was charged during the 2 months of nonpayment. I was "tapped out" financially, and struggling to make ends meet, so I didn't bother trying to pay anything toward any of my credit cards, etc.

[lillymarlene]

I tried sending my credit card companies debt settlement offers, but it didn't work. One of the reps even told me they won't work with you until you stop paying. Makes a lot of sense, right?

A few years ago I didn't have any idea and I kept hearing ads about people "settling their debt for pennies on the dollar." So I called Bank of America, where I had 5 credit cards, all with balances, and asked them about settling my debt for 25%. The person I spoke to informed me that settlement was only for people who weren't paying their bills, that I certainly wouldn't want to do that, since my credit with BOA was absolutely beautiful. LOL

[josephga]

since I haven't paid in 3 years I'm hoping they will take my offer of 25% I was diagnosed with MS in late 09 and hoping to avoid using my bankruptcy card in case i need it down the road

[SadPanda]

If you do some Google searches for things like, how to make debt settlement offers, negotiating with credit card companies, make offer to credit card company, etc., you will find information on how to go about making settlement offers to your creditors.

One thing to keep in mind is that if you do negotiate a settlement with your creditors and you settle your debts for less than you owe, you may get a Form 1099-C ("Cancellation of Debt") from the creditors for the forgiven debt. The IRS considers the forgiven/canceled debt as income, and you may have to pay taxes on it.

However, when you file bankruptcy, you don't pay taxes on the amount you're discharging - although some creditors may still send a 1099-C and I'm pretty sure if you receive those, you have to fill out Form 982 when filing your taxes (to prove the amount of the debt is excluded from income).

The following article also says you don't have to pay taxes on settled debt if you're "insolvent" http://www.creditcards.com/credit-ca...e-tax-3513.php: "The exclusions include debts discharged during bankruptcy and debts of consumers who are insolvent (meaning their liabilities exceed their assets) prior to the cancellation of debt."