Credit Card Debt - Help!!!

Lounge By CakeForte Updated 26 Mar 2010 , 8:49pm by tirby

CakeForte Posted 10 Feb 2009 , 8:29pm
post #1 of 22

Ugh...I hate putting this out there, but I'm having issues this year!

So I have a credit card from back in college. It's a long complicated story that has been a major source of tension for me and my family...but the debt is not mine...but it is in my name. So "technically" it's mine and messing up my credit.

It hasn't been paid and it has been hindering me from doing a lot of things. Mainly a lot of things w/ getting my business off of the ground. However it is almost at that 7 year mark where it is off of my credit report....in 2010 I believe.

Well i had to check my credit report b/c of a possible identity theft scare a couple of months ago...since then credit card company has been calling me. They have offered a %50 percent settlement on that account. Basically they took off all of the interest and fees. The card is almost at 8k....settlement would be $4k.

I've been researching this and I don't know what to do. If I pay the $4k to settle....from what I have read it still stays on my report for another 7 years (since I'll be paying it in 2009) and have on my report "settled". but a $0 balance. I want to buy a home withing three years....so I'm afraid that settling this credit card will still "haunt" me until 2016. That doesn't sound like a good option.

Then I read somewhere on a debt website to not even bother settling the account because it will almost be at the 7 year mark and will not be on my report anymore. However won't this still hurt me when trying to buy a home?? My overall score is not bad but it would be perfect without this credit card.

Lastly...I (finally) have enough to pay the entire debt...fees and all, all at one time...but it will wipe me out for a couple of months. I mean I will be starting from $0. The plus side is that it will be "paid in full" on my account. I only have two bills...my building rent and insurance....but it would be super tight.

What is my best option? My ultimate goal is to be able to buy a condo....my biz is second.

thanks

21 replies
michellenj Posted 10 Feb 2009 , 9:18pm
post #2 of 22

my husband had something similar happen. When he was in college he got a credit card, but he lived in a house that had been chopped up into apartments, and everyone kinda went through the mail and took out their own. DH thinks that a neighbor stole it and was using it, racked up a bunch of charges, and dh, being young and naive about these things, just let it go since he didn't make the charges. A couple of years later, it was in collections and they tracked him down. I can't remember what the amount was that he settled for, but it was less than $2000 and his debt was more than yours.

I would try to negotiate. Tell them you'll write them a check for $1500 today, and they may take it, they may counter with more.

Just MAKE SURE that they send you a letter saying that the issue is settled, and hang onto it. When we bought a house a few yrs later, we found out that the co. had never reported it paid or whatever, and we had to show the letter to the mortgage people.

indydebi Posted 10 Feb 2009 , 9:25pm
post #3 of 22

Per Dave Ramsey, if they offer to settle for 50 cents on the dollar, then do it .... but get it in writing FIRST, before you send them one red cent, that they are accepting the 50% settlement as payment in full. Then and only then, do you send them the agreed upon amount.

As far as buying a house, when you place your application, explain to the loan officer what went on. "When you run the credit report, you're going to find ..... and here's what happened." They don't mind issues that have been resolved. They do mind being surprised.

But it's always better to get rid of credit card debt.

Check out www.daveramsey.com for the best credit advice in the world. The man is a GOD!!!!!!!!!!!!!!!!

Deb_ Posted 10 Feb 2009 , 10:25pm
post #4 of 22

My DH is a VP at Bank of America. They're not giving mortgage applications or business loan applications a second look if there is a blemish like that on the person's report. The banks cannot afford the risk right now with the way the economy is and all the bad mortgages. You have to have better than "good" credit to qualify with them right now.

You may be able to get it taken off of your credit report after 7 yrs, however it doesn't disappear into thin air. This is one big misconception about credit reports. It never disappears completely, it's bad debt, especially if it wasn't paid.

My SIL has had bad debt that had been charged off over 20 yrs ago. She can't even get car insurance, because they pull old reports and she is a bad risk. She's 48 yrs. old and these charges go back as far as college, it's ruined her entire life and she doesn't have the means to pay it. It's a very sad situation.

I know my DH would advise you to try and make arrangements with this company and pay it. It will definitely show you as a more responsible borrower in the future.

P.S. Don't go through those debt consolidation companies. Call the bank that the CC is issued on and make arrangements with them only.

Good Luck and hey, don't sweat it, we were all young and naive once in our lives. Been there done that, ya know! The important thing is you're willing to make restitution, and that's great.

tjrobin31 Posted 11 Feb 2009 , 4:10am
post #5 of 22

definantely attempt to pay it, if not it will haunt you forever...
it sucks to have to do that especially since it's not really your debt,
unfurtunately it's you and your good name that get smeared if it's not
taken care of ...

CakeForte Posted 11 Feb 2009 , 5:04am
post #6 of 22

Thanks for the replies so far. If I had known then what I know now...I would have filed a police report against a family member....but now I don't have any supporting evidence to prove otherwise so here I am.

I guess I should have rephrased my question. Which sounds like the best, most realistic option in order to be able to purchase a home in 2-3 years? A or C.

A)If I pay the $4k to settle....from what I have read it still stays on my report for another 7 years (since I'll be paying it in 2009) and have on my report "settled". but a $0 balance. I want to buy a home withing three years....so I'm afraid that settling this credit card will still "haunt" me until 2016. If I settle for $5k, would they change the terminology...to "paid"?

C)Lastly...I (finally) have enough to pay the entire debt...fees and all, all at one time...but it will wipe me out for a couple of months. I mean I will be starting from $0. The plus side is that it will be "paid in full" on my account. I only have two bills...my building rent and insurance....but it would be SUPER tight.

The middle one...I was just saying that I read that, but that is not an option...that is why I am in this position in the first place. The person who made this mess "promised" to take care of it and never did.

Either way...this is my number one priority for the spring...so it is getting paid....I just want to make sure I can take care of it and still not be such a negative situation anymore.

chutzpah Posted 11 Feb 2009 , 5:37am
post #7 of 22
Quote:
Originally Posted by CakeForte

The person who made this mess "promised" to take care of it and never did.




I would haunt this person until the end of their days.

sweetness_221 Posted 11 Feb 2009 , 6:00am
post #8 of 22

I went through this a few years ago. Long story short I was left with a bunch of debt and no money to pay it from an ex. I already know it was stupid on my part to put it in my name. About 5 years ago I settled with my creditors and thought it was all taken care of. 2 of the creditors showed that I made a payment but would not consider it settled even though they they said over the phone that they would. I fought with these people like crazy and one of them had the nerve to turn me over to an attorney for collection even though it was supposed to be settled. The only reason I was able to get out of it was because of the statute of limitations where I live is 3 years. They cannot legally collect on that debt after that time period. There are some states where the statute of limitations on collecting debt is 15 years so you would have to check. So for my advice...let if fall off of your credit report. I used to work for a mortgage company and pulled people's credit. They do not pull old credit reports. They want up to date information when deciding to give someone credit. Since it will be a few years before you plan on purchasing a home you should be just fine. If for some reason the debt does not fall off of your report when you want to buy, then yes, you will have to pay it off before they will approve you for anything. So I would just wait and see what happens with your credit within the next year or 2. HTH.

mixinvixen Posted 11 Feb 2009 , 6:00am
post #9 of 22

right there with ya, chutzpah!!

does this family member ACTUALLY KNOW that you can't prove it? could you bluff your way through, threatening small claims court or worse?

Deb_ Posted 11 Feb 2009 , 12:28pm
post #10 of 22
Quote:
Originally Posted by sweetness_221

So for my advice...let if fall off of your credit report. I used to work for a mortgage company and pulled people's credit. They do not pull old credit reports. They want up to date information when deciding to give someone credit. Since it will be a few years before you plan on purchasing a home you should be just fine. If for some reason the debt does not fall off of your report when you want to buy, then yes, you will have to pay it off before they will approve you for anything. So I would just wait and see what happens with your credit within the next year or 2. HTH.




Where do you think it will fall?.....The big black hole where all our single socks are?

Absolutely, a bank TODAY in these times will and are pulling reports, especially if the prospective borrower has no other record of revolving credit on their report. In three years when she's ready to buy, this will still show up.

Please don't advise anybody to just "let if fall off" because "you should be just fine", that is irresponsible credit counseling. This is not the 80's or 90's, this is 2009 and the banks DO look at your past history, especially for first time home owners.

My SIL settled with some company for 1/2 owed and this was years ago. It still shows up on her report.

If you have the money to pay it in full, than that's what you should do. That's what lenders want to see. Your credit is the single most important bit of information about you and your character. I wouldn't advise you or anyone to full around with that. It will follow you good or bad for the rest of your life.

Mike1394 Posted 11 Feb 2009 , 3:28pm
post #11 of 22

The seven yr thing. All the creditor has to do is put it back up there again. The seven yr thing really doesn't exsist. Since thier in contact with you I'm sure they would put it back on there.

Mike

sweetness_221 Posted 11 Feb 2009 , 8:10pm
post #12 of 22
Quote:
Originally Posted by dkelly27

Quote:
Originally Posted by sweetness_221

So for my advice...let if fall off of your credit report. I used to work for a mortgage company and pulled people's credit. They do not pull old credit reports. They want up to date information when deciding to give someone credit. Since it will be a few years before you plan on purchasing a home you should be just fine. If for some reason the debt does not fall off of your report when you want to buy, then yes, you will have to pay it off before they will approve you for anything. So I would just wait and see what happens with your credit within the next year or 2. HTH.



Where do you think it will fall?.....The big black hole where all our single socks are?

Absolutely, a bank TODAY in these times will and are pulling reports, especially if the prospective borrower has no other record of revolving credit on their report. In three years when she's ready to buy, this will still show up.

Please don't advise anybody to just "let if fall off" because "you should be just fine", that is irresponsible credit counseling. This is not the 80's or 90's, this is 2009 and the banks DO look at your past history, especially for first time home owners.

My SIL settled with some company for 1/2 owed and this was years ago. It still shows up on her report.

If you have the money to pay it in full, than that's what you should do. That's what lenders want to see. Your credit is the single most important bit of information about you and your character. I wouldn't advise you or anyone to full around with that. It will follow you good or bad for the rest of your life.





There's no need to get defensive. She asked for advice I gave her mine. That's it. No one said she/you had to agree.

Deb_ Posted 11 Feb 2009 , 10:06pm
post #13 of 22

Sorry, you thought I was getting defensive. I simply stated that advising someone to ignore a bill and wait for it to fall off their credit report is irresponsible credit advice.

My DH has been in banking since 1986, he works for one of the largest banks. I hear first hand stories daily from him about the changes in the banking industry. The #1 most important advice that he gives to our college age children and their friends is to pay their bills on time and check their credit report every few months.

It is one thing that lenders, colleges, and even potential employers use in making a decision to lend, allow admission, or offer a job.

He has NOT hired people because they have poor credit. Your credit report tells a lot more than just how you pay your bills. It shows a lot about a person's character. Someone that may ignore or not pay a credit card or loan, is looked upon as a negative candidate for a job.

Ignoring bills will not make them disappear. Just look at the people that are losing their homes. Personal debt is the highest it has ever been in the US. Banks and mortgage companies are closing because people can't pay their debt. It's a trickle down effect and it's crippling our economy and our country. It's very very sad.

indydebi Posted 11 Feb 2009 , 10:22pm
post #14 of 22
Quote:
Originally Posted by dkelly27

He has NOT hired people because they have poor credit. Your credit report tells a lot more than just how you pay your bills. It shows a lot about a person's character. Someone that may ignore or not pay a credit card or loan, is looked upon as a negative candidate for a job.




How lucky I was that when I got divorced and my ex filed bankruptcy and left me with more bills than I could pay ... which resulted in many of them getting paid late, because I was raising two kids with no child support and ALL of the marital bills .... how lucky I was that employers didn't think I would be bad at answering a phone and processing their paper because MY EX HUSBAND had no character.

What a shame that circumstances surrounding these inpersonal Numbers On A Report seem to be the ONLY measuring stick anymore.

What. A. Shame. that people are so black and white and can't look at the person instead of the personal data (says the wife of a guy who spent 25 years in the banking industry).

cakesbycathy Posted 11 Feb 2009 , 11:22pm
post #15 of 22

I don't have any advice on how you should handle paying the cc debt off (other than take meticulous notes whenever you talk to someone and get anything in writing before you proceed. Oh and hunt down the person that screwed you icon_rolleyes.gif )

I wanted to comment on the buying a house thing. You can still buy a house with less than great credit. You just have to be willing to go a non-traditional route.

My Dh is a real estate investor. He lease-options houses. 99% of his clients cannot get a house thru traditional financing because they have a divorce, previous forclosure, family death, or some other real life situation that causes them not to qualify for a traditional bank loan. They have the income to make a rent/mortgage payment, but because of their history, a bank will not help them.

The simplified version of how it works: the client will pick out the house they'd like to live in (whose payments are within their budget). Dh purchases the house and they make the mortgage payment (along with property tax and insurance) to DH. He makes the mortgage payment to the bank. The client still has to give a down payment to Dh. His lease options usually run for 18-24 months. The client is able to rebuild their credit by making their monthly payment to Dh on time, and then later on they can qualify for traditional financing.

On the occasion that the client falls behind or stops making their payment, Dh can evict. It only takes 2-3 months to get them out, as opposed to the year or more when a house is in forclosure.

Anyway, just to let you know that there are always different options out there.
Good luck with whatever you decide to do!

Deb_ Posted 12 Feb 2009 , 12:12am
post #16 of 22
Quote:
Originally Posted by indydebi


What a shame that circumstances surrounding these inpersonal Numbers On A Report seem to be the ONLY measuring stick anymore.




I guess in a way it is a shame, but there are so many people looking for jobs that employers can be choosy.

My SIL that I spoke of earlier is a perfect example. Her credit is atrocious, and so is her personal life. She has a Masters in Social Work, well educated, so she's not stupid, yet she cannot hold a job because she just doesn't show up, or she goes in late and leaves early.
So when you look at her and than see her credit report, you understand just what kind of person she is. She forged my younger BIL's name on a car loan application as a co-signer, had a friend notorize the application and she got the loan, which she later defaulted on.

My BIL didn't know any of this until he went to get his mortgage last year and was turned down because of this defaulted loan. Can you imagine doing that to your baby brother? Fortunately, he was able to prove that it was not his signature on the original car loan. So she's screwed again, for forging his signature, and he probably will never forgive her for putting him through all that he had to go through to get it fixed.

Yes, good people can get screwed by their families and exes and unfortunately they have to suffer the consequences of a bad credit report. But, there are ways to fix it, making timely payments and creating a good solid payment pattern will raise the score considerably.

Walking away from the debt, is not the right thing to do.

janelwaters Posted 12 Feb 2009 , 1:17am
post #17 of 22

In my pre-disability days I was a commercial real estate and residential real estate lender for 10+ years - I can say this about the 7 year thing - it will "fall off" your credit report after 7 years if the company writes the debt off. As long as they report it will be on there. As long as they consider it "open" it will stay on there.

any job I have ever had they checked credit - having good or bad credit does imply your accountability and responsibility as an employee. Plus, those that have credit problem are more likely to steal money from the company to pay their debt or have creditors call for collections during work hours and interrupting the work day.

Unfortunately, there are people like Indy who get royally screwed by ex-hubands, friends, family etc. Most of those instances can be explained with divorce papers and bankruptsy papers.

Big banks and Community banks lend differently as well - if you have blips on your credit you would do better at a community bank.

Take the 50% offer and have them put it in writing and no matter what, NEVER lose that original piece of paper - the CC companies are notorious for settling a debt and then NOT reporting it to the credit bureaus causing you to have to "prove it" when you go get a mortgage.

Good luck!!

indydebi Posted 12 Feb 2009 , 1:19am
post #18 of 22
Quote:
Originally Posted by janelwaters

Take the 50% offer and have them put it in writing and no matter what, NEVER lose that original piece of paper - the CC companies are notorious for settling a debt and then NOT reporting it to the credit bureaus causing you to have to "prove it" when you go get a mortgage.

Good luck!!




I hear stories like this all the time when I listen to Dave Ramsey, which is why he always tells people to get it in writing FIRST. And as advised above ... save that paper forever!!

janelwaters Posted 12 Feb 2009 , 1:25am
post #19 of 22

I cannot tell you how many times I had to ask for paperwork like that to get a loan through or help people to settle debt and told them the same thing - If your house is on fire and you can save one thing (besides a human!) - save that piece of paper - keep it in a safe deposit box - keep it in a fire box - treat it like gold - because basically it's worth however much you settled the debt for! so if you do settle you would be holding a piece of paper worth $4,000!

CakeForte Posted 13 Feb 2009 , 5:26am
post #20 of 22

This has been a busy week so I'm just now reading everything. Thanks for the additional posts....it has helped a lot. I think I'm just going to pay it all of...fees and all since now I actually have the funds. I'm going to try and negotiate a payment instead of all onechunk. This is the only bad mark on my report...and I don't want it to haunt me even it it says "Settled" because from the stories I have read so far...that still does not sound ideal. That's the plus...I don't have any other debts (besides student loans)

In regards to the family member...ugh I don't know...it's been at least 6 years of trying to get this taken care of. The original debt wasn't even that much...about 2k...so I don't know why they didn't just handle it then. I was still in school and "trusted" that it was being resolved. =( If I took it to court, I think I could win, but I still wouldn't have my money. I'm just putting this in the category of "something God (and/or karma) will take care of" because sadly, this is not the only money issue this person has caused in the family. I've only just learned this recently though.

sillyjodes Posted 13 Feb 2009 , 5:52am
post #21 of 22

I'm going to second Indydebi and recommend dave ramsey. Check his website out and you'll understand.

tirby Posted 26 Mar 2010 , 8:49pm
post #22 of 22
Quote:
Originally Posted by sillyjodes

I'm going to second Indydebi and recommend dave ramsey. Check his website out and you'll understand.



I will third it! and the book The Total Money Makeover. Go to the library and check it out. It truly changed our lives.

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