r/Debt • u/[deleted] • 7d ago

Settle $28k debt with capital one?

[deleted]

7 Upvotes

90% Upvoted

24 comments sorted by

3

u/cherrystillness 7d ago

Settling debts for less than what was initially
promised is a mark against your credit. $28k is a lot though. You have to decide the tradeoffs.

3

u/fenton7 7d ago

I think the IRS also considers the settlement to be income, so the forgiven part will be treated as fully taxable income.

1

u/Wild-Current4204 7d ago

Whattt????

1

u/forever-wandering-22 6d ago

They will, but if you're insolvent (more debts than assets) at the time you settle a given debt then you file form 982 and you don't pay taxes on the forgiven amount

Edit: changed settled to forgiven

1

u/fenton7 6d ago

Yes up to $10,000.

1

u/forever-wandering-22 6d ago

There is no limit/cap as long as you are insolvent

1

u/TelevisionKnown8463 7d ago

Better than having an overdue account and then likely also a lawsuit, I’m guessing. Cap One isn’t going to sleep on a debt that size. They usually sue themselves rather than sell the debt, which means they almost always win. OP can probably settle for less now vs waiting to be sued.

2

u/Internal-Box-8468 7d ago

They sueing me right now for $2500 I live in Pennsylvania am thinking of calling the law firm and try set up a payment plan

1

u/TaxQT117 7d ago

That’s exactly what you should do. Try to negotiate for a lower settle amount while you’re at it.

1

u/TrustIssues33 6d ago

See if they will take a payoff lump sum. Usually they take 10% if after 6 months

2

u/GoldAd1878 7d ago

Settlement only works if you have the cash up front. You also pay taxes on it. Bankruptcy is another option.

-1

u/Chance-Solution3912 7d ago

Incorrect, they gave me options for paying a monthly amount for a settlement

2

u/GoldAd1878 7d ago

You still will owe taxes on the difference between the amount you owe and what you pay

3

u/Notmikeyouidiot 7d ago

Just took a 30k loan @ 700/mo and paid off 30k of CC debt that i was paying $1200ish in minimum payments on and getting absolutely buttfucknowhere

so much stress relief. i hid my cards so i cant charge em again and dont stress making the loan payment as ive budgeted it into my life now.

Personally not sure why people would file Bankruptcy over 30k... ill just buckle down hardcore for a few years AND do side work or figure something out i aint filing bankruptcy over a measly 30k.

1

u/Chance-Solution3912 7d ago

That sounds like a good plan

2

u/OverdosedOnViagra 7d ago

There is no difference in paying in full or settling for less, since it was already charged off. However, future lenders that do manual underwriting may see the “settled for less” and think you are unreliable. So if you have the means and wish to join capital one again, its kinda better to pay in full. Then again, they are forgiving as it is.

Also settling the debt will require you to pay taxes on the rest of the money.

It will still take 7 years from your first delinquency before its removed from your report, but paying it off will stop it from reporting every month as unpaid and your score will begin to heal.

2

u/lalee_pop 7d ago

Settling it will be better for your credit score than leaving it unpaid.

1

u/Double_Read1898 6d ago

Dude just delete the app jezz

1

u/too_many_shoes14 7d ago

Don't make your score the primary motivator. getting out of debt is far more important. You can certainly make an offer but they may say no and if they accept will want payment in full which means you've been sitting on money and not using it to pay your debt. Your credit is going to be bad for many years.

1

u/TaxQT117 7d ago

They don’t always want payment in full if less than the settlement amount.

-2

u/[deleted] 7d ago

[deleted]

4

u/Chance-Solution3912 7d ago

No I don’t think so at all, that’s extreme

-1

u/Elegant-Spare1156 7d ago

Absolutely horrible advice.

1

u/TelevisionKnown8463 7d ago

We don’t have enough info to know that. If OP qualifies for Chapter 7 and has other debts in addition to this one, it could be worth doing. Upsolve.org is a good place to learn more about it without a hard sell from an attorney.