Some debts are hard to settle. There are even some that can’t be settled at all. Take inventory of your debts to see which ones fall into the categories of difficult and impossible to settle. A few of these debts will have to be paid in full, while others may need more time to become delinquent before you can settle them.
Credit cards you just opened. A creditor won’t be too willing to settle the balance on a credit card you only recently opened. They’re more likely to assume you committed fraud by charging a balance you know you couldn’t repay. If you know you’re going to settle your debts, don’t apply for any new credit cards. But, if it’s just a coincidence that you opened a new card then fell on hard times, consider keeping that card out of the settlement program by making your regular minimum payments. Or, consider settling it after you’ve already settled other accounts.
Credit cards that aren’t delinquent. It will be nearly impossible to convince a creditor to settle on an account that’s current on all the payments. That’s because these accounts are potential moneymakers for the credit card issuer. Don’t think you can save your credit and settle your accounts. You’ll typically have to be a minimum of 90 days past due before you can settle any accounts.
Credit cards with recent charges or balance transfers. For a similar reason that makes settling a new account difficult, you’ll find it hard to settle an account that you’ve recently used to make a new purchase or transfer a balance. The credit card issuer will likely want to know why you made a purchase or transferred the balance if you knew you couldn’t afford to repay the balance. They may even sue you for the balance if they believe you can really pay it back.
Secured debts like mortgages. Because secured debts are backed by a piece of property, you typically won’t be able to settle these debts at all as long as you still have the asset that’s tied to the debt. For example, you probably can’t settle your car loan and continue driving the car. If you want to settle a secured debt, you’ll likely have to give up the asset, wait for the lender to auction or sell it, and then try to settle any deficiency judgment that remains.
Child support, alimony or related fines. These are all debts that can’t be discharged in bankruptcy and debts that you’ll have to pay in full because the court has ordered you to pay these accounts. If you’re behind on your payments, you may be able to come up with a plan to pay back your arrears while continuing with your current monthly payment. Or, if your income has decreased (or your spouse’s income has increased), you may go back to court to try to have your monthly payment decreased.
When you can’t settle debts, other options are to consolidate them, go through bankruptcy, or to pay them off. Remember that certain debts can’t be discharged in bankruptcy, but you could try to have your payments for such debts restructured.
Other articles you may like
