Paying Off All Debt At Once, Any Secrets?
I will be closing on a house in the next week and will be able to pay off all my unsecured debt. I have 7 credit cards that will be in full. I have not been late on any of the accounts and they are all in good standing. My question is - Just send in a check for the full amount or call these companies and try to negotiate. I wouldn't want it to reflect on my credit report, the negotiate part.
Any ideas?
Hi,
It seems to me that you will be flush with cash in a couple of days. Good for you. Hope you put that money back to work for you.
Anyway as far as your cc debt call the bank up and ask them what the payoff for your account is. You can't negoiate with them unless you are about to file bankruptcy or something very detrimental along those lines.
If you are in good standing with the company they will expect you to fulfill your end of an unsecured loan and pay them back in full.
The credit card companies have no reason to negotiate if you are not behind. I would recommend paying everything off in full to preserve your good credit.
GOOD LUCK
Hello,
It depends if you will use your credit cards in the future to leverage, for more properties. If your rates are high but credit score good, call your card Co and ask for a better rate. If they wont give you one transfer balances to cards that will. Then pay down cards at a high rate maybe 5-10 times current payment once been doing that for couple months call and ask for higher credit limit.
You can have credit deposited into your checking account to use on future home purchases, without paying cash advance fees.
If you use credit for leverage...
or if you can get really good or zero interest rate. it's cheap or free loan. :-D
I guess I'll just pay them off.
Consider going to "myfico.com" this is the people who created the "credit score" that all creditors use as a benchmark. On the site it overs a free "what if" model
regarding if you payoff in full or over time, it will show your "new" score based on your actions. Also, if you
pull your report for this site it doesn't afffect your score.
Again the site is "myfico.com"
Give it a look! Mark
:-D
Paying off all credit cards at once can be detrimental to your FICO scores. Paying off over at least three months will help avoid taking a FICO hit for something you would think would help you.
gmoney69
Learn the art of "OPM". Other Peoples Money.
I will disagree with most in the settlement of credit card debt. You can negotiate a payoff settlement as I have done it my self.
I simply ask them for a payoff and when I get the numbers I let them know I am going to pay it off and in most cases they offer to reduce the interest. I simply tell them if they know off a percentage of the balance I will use the card again and the discounts come.
When I get funds from a large purchase/profit property I take the funds and place them in a CD and turn around and borrow 75% of the CD at 2% above the CD rate, so I get a 2% loan. Now I pay off what needs to be paid after I have negotiated a discount of course and invest the rest on the next deal.
Look at it this way, what is the worst they can do say no take away your birthday.
How easy it is for us to ask property owners to sell at a discount, but we don't dare to ask lenders to discount our bill!
Some will disagree with me on this and that's ok, but than again why give more than you have to.
[addsig]
Am I missing something? If I owe $10k on a credit card and have the cash to pay it off and I have not been late even once, I can call the credit card company and try to negoitiate a payoff of, let's say, $8k?!?!
If this is true, can they report a negative on your credit report?
Very interesting....
[addsig]
Shirley
A credit provider can not report a discount as a negative see the fair credit reporting act.
This type of transaction occurs all the time; it's as simple as asking.
In every thing that I do in business I ask for discounts, It's just like posting at TCI ask and you will get an answer don't ask and you get nothing.
I have had mortgages, invoices, bids, credit cards, credit lines, secured and unsecured loans, motel rooms, airline flights, car rentals, dinner, lunch and the list goes on discounted by just asking.
[addsig]
As a mortgage professional, I see dozens of credit reports every month.
I see many credit reports with entries such as "paid less than agreed" all the time, and as such scores ARE lower. However is it correct to state that a credit card company simply will not negotiate if you have excellent history and are not in default. Simply put, they know that you want to maintain your high credit scores.
Regarding the suggestion to NOT pay off your credit cards or your scores will drop: that is simply not true. If anything, you will see an immediate RISE in your scores.
HOWEVER there is a caveat: if you dont have activity on those paid-off accounts for several months then your scores will begin to fall.
Scores from all 3 bureaus are derived from payment history (negative and positive) from the most recent 24 months trailing the date that the credit scores are generated. Dont be confused this with the fact that the information stays on your credit report for up to 10 years. Scored are also computed based on balance-to-limit ratios. Keeping balances below 40% of the limit will keep scores high. The 24 month rule doesnt apply to major derogatory items like bankruptcys and tax leins, etc.
Hence... if you pay off ALL your debt and have NO activity for 24 months, your scores will be really bad because of a LACK of credit history.
The lesson here is that you are very wise to pay off your debt... but maintain SOME activity every month on 1-2 cards. I suggest paying for groceries, etc and then paying it off at the end of the month.[ Edited by jrothstein on Date 12/31/2004 ]
Thank you for that last post. I am a mortgage broker as well and reps for credit repair say all different types of things. I will pay them all off and keep 1-2 cards active each month.
I have never been a fan of using unsecured credit for real estate unless it is for the short term.
Also keep in mind that if you settle with any creditor for "less than the agreed amount" you could expect a 1099 from that creditor as income that you will need to report on your taxes. After 9/11 I suffered some severe financial hardships. Still trying to recover at this time. Lost full time job after 18 years (AT&T) lost a retail business, lost my home.....you get the picture. Anyway, I tried to negotiate with some of my creditors. A lot did negotiate and those that agreed to less that what I owed or "forgave the debt", I wound up paying as income on my taxes. It blew my mind! 8-)
Quote:
On 2005-02-09 21:46, mfwalton wrote:
Also keep in mind that if you settle with any creditor for "less than the agreed amount" you could expect a 1099 from that creditor as income that you will need to report on your taxes. After 9/11 I suffered some severe financial hardships. Still trying to recover at this time. Lost full time job after 18 years (AT&T) lost a retail business, lost my home.....you get the picture. Anyway, I tried to negotiate with some of my creditors. A lot did negotiate and those that agreed to less that what I owed or "forgave the debt", I wound up paying as income on my taxes. It blew my mind! 8-)
You have to take those 1099s into income only if you were solvent. If you were insolvent when you got the forgiveness of debt (discounts), you attach an extra form to your 1040 and that lets you off the hook. You may want to go back and file 1040Xs for the years those things happened to you.
I simply issue a int. promisory note to pay all the debts off.
then I get it off the cr. report and I will perfect keeping it off
in case it was repeating. I probably am in the advanced
class right?
First step try this article - http://kutv.com/gephardt/local_story_336170054.html
I would get a loan on that rehab house, or sell it/lease option it/rent it , but you need to evaluate your options. How did you get that first house? Use the same technique and try to get another one, you probably will need to use hard money. You CANNOT ever be in a position of wondering how you got so much debt, you have to control and track your expenses.
[addsig]
Good news!! We have someone who is going to lease the house. They are willing to us the deposit and first months rent today after we do reference and credit checks. So at least that burden will be off of us. Now, we just have to pay down our debt and worry about getting a HELOC on the house.