Debt Settlement-Dear God, what have I done?

Question

Last year I signed up with a debt settlement agency. I had very little money and used credit cards to live off of while I was in school, thinking I could catch up. It was that or starve, basically. I had to work part time for the last 5 months of school to complete an externship, which is basically working for free.Working full time would have prevented me from completing my education. I thought debt settlement was my only option other than bankruptcy, based on the reduced amount of income I was generating. Hindsight is always 20/20, and ignorance is expensive.

Anyway, I learned too late and I realize now that I should have really researched it a lot better. For example, I didn't know that the IRS can tax you on amounts over a certain dollar value that you saved by settling the account. The DS agency never mentioned it. Why would they, right? I didn't realize a lot of things, like how my credit is pretty much going to be destroyed after this. The debt settlement agency has told me that my credit should be better after this, but I am not optimistic that they are being truthful at this point. Suze Orman said to stay away from debt settlement agenices, but she never gave advice on what to do if you already took the fatal step into credit suicide. I have a good job now, and make decent money. Has anyone out there gone through debt settlement, and if so, how did you clean up your credit after? Also, has anyone left debt settlement in order to try to clean up the rest of their debts themselves? If so, what happened? I still have 2 accounts left to settle. Should I break up with my debt settlement agency and try to clean the rest of it up myself? Any helpful non-admonishing advice would be appreciated.

Answer 1

My advice would be to settle with the remaining 2 agencies yourself. I know people who have used debt settlement agencies and weren't happy with the results. These companies neglect to mention that if your accounts are current, you often have to let them go into delinquent status before the debt "settlement" agency can help you.

Call the remaining 2 companies and work something out on your own. You have 2 accounts left. You're on your way. It will all soon be paid. Good luck to you.

Answer 2

You can call up your two creditors and explain your situation and deal with them directly.

You seem to be a smart and articulate person who just made a mistake, you should be able to talk to them and explain the situation and proceed with settling your debts without the intervention of a third party. Getting out of debt settlement will not impact you as long as you talk to your debtors and set up a parallel deal. If you do not talk to them and take the step yourself, there maybe some deals that they might be getting you which could be pulled out.

All the best!

Answer 3

It sounds like you are nearly ready for credit repair.  I would break it off with the settlement company if you only have 2 accounts left.  There are things you can do to improve your credit again quickly.  I would recommend 2 things: 1) a very low cost (possibly free) credit repair program to try to have the negative items removed. 2) I would add a tradeline program to boost your score quickly (60 days or quite possibly less). A friend in California used this and got a 120 point bump from 560 to 680. There has been a lot of disinformation by Experian saying these authorized user programs do not work. Check out the source news link for an article from July 30th that has them admitting it still exists. My friend in California went through www.totaldebtsolutionsllc.com and filled out their free evaluation form to get the ball rolling. Good luck.

Answer 4

Your DS agency was wrong to not inform you that you could be taxed on the amount you saved as that is standard.  I worked with a DS agency and they were great  they kept me informed of everything alays filled out all paperwork I needed and let me know the next step after each settlement.

I entered the program with 5 accounts for a total of $20,000 in debt (before fees and interest).  I found it better than bankruptcy because there were less legal fees, I could keep one credit card (I travel for work so I pay for hotels and such upfront and get reimbrused later).  originally the DS agency told me it would take three years......however

lost my job was unemployed for a year and then had to take a job that paid much less .......so they had to rework my payment amounts and  ti took me five years.

While I was going through it my credit was awful and continued to get worse but as soon as I made each settlement it cleared the bad stuff from my credit history. Hubby and I were able to buy a home within three months of last settlement.  

Answer 5

before you let them go... call the origional companies where the debts left to settle are.  in alot of cases they can give you a way better deal than the debt services ever could have.. you just need to ask.  Sure debt consolodation can reduce fees and stop intrest but can they cut the bill in half??  lots of origional companies can because they lose if you pay the cccs but win if you pay "something" to them and always the sooner the better!

if they are willing to work it out then junk the ds and do it yourself.. as far as your credit.. this can be on there for a long time but the sooner you start rebuilding the better..  when you go for loans just tell your story and they will see y the ds was needed and not pass judgment thinking you were just to lazy to pay... Good luck!!

Answer 6

I can't believe you got a college degree and still don't know how to use paragraphs...Sorry I couldn't read all of it, it hurt my eyes.