| whether or not i should pay off my debt |
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ektorp
First Time Poster
Cash: $ 0.25
Posts: 1
Joined: 29 Jul 2010
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| whether or not i should pay off my debt |
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so here's my situation. until recently i have always been a financially responsible person with no late payments or account defaults in over 10 years. i had a credit score in the low to mid 700's. however, due to the real estate collapse, i was behind several mortgage payments and recently sold my property in a short sale and my credit score dropped to the low 600's. i have about $25,000 in credit card and about $25,000 in savings. i was initially thinking about taking my savings and paying off my debt in full and be debt free. i am now being advised to settle my debt for about 20% of what i owe. this would cause my credit score to drop but it is already low because of my short sale. does it make sense to pay off $25,000 in debt and still have a low credit score or settle the debt, have a lower credit score but have about $20,000 in savings? any advice would be greatly appreciated.
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Thu Jul 29, 2010 2:46 am |
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coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
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I don't think you have enough information in your decision matrix. For example, what your score would drop to, how long it would stay there, whether or not you need to borrow any money in the future while it's down, what is your cash flow, how long it would take to pay off the debt, what the effect on your credit score if you paid the debt in full, pay it off over time versus pay it off now, etc etc etc.
Another is who is giving you the advice to settle the debt and if and what they're getting from the deal.
~Tim~
Eye Candy : Why Whimsy
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Fri Jul 30, 2010 2:57 pm |
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CaliChristian
Full Member
Cash: $ 8.50
Posts: 56
Joined: 29 Jul 2010
Location: California
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I would NOT settle my debt ever. There are far better options. Depending on your interest rates on your cards I would look into debt management. You pay off the full balances, but at significantly lower interest rates. This is far superior to the other options. Look for a good non profit company, they are scrutinized very closely and are legitimate.
Non-Profit credit counseling. Over 20 years experience, we have helped over 200,000 families and individuals become debt free.
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Fri Jul 30, 2010 6:56 pm |
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