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I owe around $ 45000.00 in credit card debt. I always paid off my cards faithfully but with me losing my job and the interest rates rising too fast (even when I always paid on time) I just couldn’t keep up anymore. It’s been almost 16 months since I made my last payment. Now some of the credit card collection agencies have sent me a letter and offered to settle for around 1/3 of the amount. Should I take the settlement offer or is my credit so messed up beyond repair, that I should just consider filing bankruptcy instead? Any advice would be great.

4 Thoughts on Should I file Bankruptcy or should I go with the Credit Card settlement offer?
  1. Reply
    June 13, 2013 at 5:07 am


    1) You have 16 months of bad payment history.
    2) With the offer, you will have “charge-offs” on your credit (bad).
    3) With bankruptcy, you will have a bankruptcy on your credit (worse).

    They are giving you the offer because they think there is a good chance you are going to declare bankruptcy, and they will most likely get nothing.

    If you have the money, I’d take it, the bankruptcy court may require you to use those funds to pay off debts anyway. Just don’t pay it until you have something in writing from them that the debt is discharged completely with that payment.

    But . . . don’t lose sight on importance of debt:

    Worry about a mortgage first, then utilities, then cars, then if you have money left, pay off credit cards. If you have debt more important than the credit cards, you ignored them for 16 months, continue to ignore them until you figure out your financial future.

    EDIT: Any credit can recover over time. Don’t just give up, look at what is best based on your current and projected financial situation.

  2. Reply
    June 13, 2013 at 5:09 am

    I would suggest to forget bankarupcy. you do not owe enough to waist something you can only do every 10 years. credit card companies charge such hi interest rates that its criminal how they charge such hi rates without the congress doung anything to protect you. Stop paying them and change your phone number and wait 5 years and your bad credit will have to be erased off of your credit history. Do not pay any one or the others will see that and come to collect too. Save your bankarupcy right for when you owe over 100,000.

  3. Reply
    June 13, 2013 at 6:02 am

    If you settle for less, the collection agency will state ” SETTLED” and that will remain on your credit reports for 7 years. Any amount over $ 10,000, not $ 100,000 you should call an attorney. Usually the first call is free and the fee is $ 2000, Although it will stay on your credit report for 10 years, after 2/3 years you should be able to rebuild your credit at that time.

  4. Reply
    June 13, 2013 at 6:23 am

    If you can realistically pay what they are offering to settle for, then that is a better option than bankruptcy. Once you get debts discharged in bankruptcy, you can’t do it again for eight years. Sure, you probably intend to be careful from now on, but you never know if you’ll have a medical crisis or something else which leaves you in much worse debt.

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