In my last post I alluded to how the banks are used to us sub-par credit rating consumers and how we can now get access to credit products; like the “Holiday Loans” offering.  Let’s talk now about getting out from under delinquent debt without paying someone to do it for you.  This is for those who are already delinquent and unable to pay the monthly payments or the balance.  I do not promote intentionally not paying your debts.

Believe if or not, banks are very used to taking less than the balance owed, “settlements”, on debts.  Think $.20 on the dollar, or said another way “you owe $4,000 and they accept $800 “.  And NO, please do not pay someone to do this for you like a credit counseling service or attorney or anyone else that wants to charge you.  It is absolutely, 100% free to do this yourself.

If your accounts are already delinquent and you are unable to pay them going forward give the bank a call and discuss your situation letting them know you are unable to pay.  Depending on how delinquent the payments are, the bank may offer you a settlement if you can pay a portion of the balance within a few days.  Usually before the end of the calendar month as that is when accounts age to the next month of delinquency.  Typically, the first offer they make you is not their best offer so never, never, never, and I do mean NEVER take the first offer from the bank.  I don’t care if it takes a lengthy phone call of back and forth or what they tell you; they can ALWAYS go lower.  Keep that in mind as you begin the negotiating.

If the account has been sent out to a collection agency on behalf of the bank, the same rules apply.  They will typically offer you a settlement right off the bat in a collection letter.  Again, never take the first offer.  You are already in collections and your credit score is being affected, so the least you should try to do is make the credit score ding worth something.

There are certain tax implications of settling your accounts.  You will be required to pay unearned income taxes on any amount over $600 that was written off on that year’s taxes so keep that in mind as well.

I have helped and guided many people through this process so if you are interested in learning more please send me an email, I will be happy to help in any way I can.

This post does not take the place of paid financial advice, and it is intended only as a personal experience.

 

Thanks for reading,

Connie