The debt settlement chapter of my life is finally over. I have managed to bring all my debts current and settled a massive amount of credit card debt. Now my credit will start to rebound and maybe after a year or two, I will be considered credit worthy again. I've seen this with my clients so I know that it does rebound; much better than filing a bankruptcy that stays on your credit for 10 years and would have ruined my career. I settled the following debts:

BOA - Settled at 38%
Chase - Settled at 45%
Citi - Settled at 38%
Discover - Settled at 50%
Sears - Paid down $1350 and am making 0% interest on the remaining $6,100 in credit card debt.

My total savings was $78918.93. It's not over yet; I will get 1099's from each credit card company and I have to count that as income; so I had a very good year and I wish I had made that much at my job.

Fortunately the IRS has an insolvent provision (publication 908, form 982; cancellation of debt) so you take your financial position at each point of debt settlement (the day you paid) and if your liabilities exceed your assets, you are insolvent. According to my calculations; I'm insolvent to the tune of the first $45,000, that means I have to pay tax on $33,918.93 at possibly 28%, which would be approximately $9,500. I generally get $5,000 back in a tax refund so I will need about $4,500 when I file taxes next April. I am definately going to need a tax professional to help me deal with this; the last thing I want is a tax audit.

My saving grace will be if I can sell the house and make about $15,000; that will solve the tax problem and the rest of the funds would go toward the $26,000 401k loan I have remaining; I had to take out a 401k loan to settle this mess. I'm fortunate that that is all I owe, I was able to save money, sell possessions and had some money given to me by my DH. If I do not sell the house, I could make installments to the IRS until next filing,in 2010, when I would get enough back to pay them in full. I've talked to them at length and they have a 5 year, 8% interest installment plan (I don't need another payment, but if I can't save enough between now and then, I will have to do it; I don't want a tax lien on my house or a freeze on my bank account).

So I should feel a great relief right now, but I have a tendency to worry about unfinished business. I guess I consider this unfinished until the IRS is done with me. I have considered consulting with a tax professional in the next few months just to be sure I'm understanding everything properly. I have filed my own taxes for several years, but I've never had this situation before and the tax instructions and definitions of assets and liabilities are vague.

So technically, I went from $135,000 in credit card debt to $26,000 in the form of a 401k loan, $6,100 I still owe Sears and $9,500 in tax implications; a total debt still owed of $41,600. So in the last six months I have reduced my debt by $93,400. That is truly amazing when you look at it in dollars and cents. My goal is to pay off that debt by the end of next year. I have several plans on how I will do that, including selling the current house I live in; this housing market has to turn around soon.

Don't get me wrong here; I'm very grateful and thankful that I've been able to clean up and reorganize this situation I'm in. I feel truly blessed and feel there was some devine intervention here.

This has been a journey and for the last six months,it has been a living hell. I had never had a credit issue in over 20 years and then the housing market crashes and like thousands of people; we have found ourselves in a personal finance dilemna. What to do and how to handle it?

There are several things that people do, some file bankruptcy, some go through debt management programs, some settle their debts with their creditors for less and some just take the approach of "do nothing and it will go away". Throughout this process I called "debt settlement companies" and did consider using a few of them. Then one of them told me to go ahead, try to settle myself and I would be "sued". I saw that as a fear tactic and felt that if they could do it, I could do it. I consulted with a bankruptcy attorney and he advised me that creditors don't want to hear from anyone but their customer and you could actually increase your risk of being sued by hiring a third party. So I sat down, added up my debt, took an amount of about 45% and decided that is what I would need. I also knew in order to be successful I would need to settle everything within 180 days before they were charged off. So I borrowed, received money from family and sold personal possessions and saved and budgeted every dime I could.

Now here I am, down to my last creditor and I only have about 60 days left on that account to settle it. I don't have enough money so I have cleaned out my shed, cleaned out my basement and am advertising a few items in the local paper. I'm selling some office equipment I had stored away and a rototiller. That should give me about $1,000 and will help with the process. My car is still broken, but right now this is priority. I have another used car to get me around until I can afford to fix my primary car; although that is in the garage right now with a warranty item that was replaced last year. I have two cars, one is a summer car and it's 9 years old and my primary car is 8 years old.

With all the creditors I dealt with, my hardest creditor to deal with has been Discover. They called frequently, sometimes 4 times a day. I would talk to them in the morning and they would call three more times before the day was out. They were difficult to deal with; they would always ask the same questions even though I knew they had notes. Then when you were done and I had told them I did not have a normal wage and couldn't make monthly payments, they would ask if they could charge my account for the amount due (like they didn't hear a word I said); they would then ask if they could speak to another family member and etc. Then they would say they were going to get someone to help stop the calls and they would transfer me to another collection person and put me through the whole thing again. I knew the routine so I would hang up when they tried to transfer me. I was very intimidated by them, I lost sleep and was a nervous wreck after talking to them. This is what they do, in the beginning when you are late they will agree to settle at 85%, then after about 90 days they start talking 60% and then one person told me Discover never settles for less than 60%, well about 10 days before chargeoff (charge off usually occurs at 180 days) they dropped to 50% of the total balance. I was able to settle my account at 50% just before charge off and that was a big tool they used to settle, "if you settle now you won't be reported as charged off, it will be an R-9 "settled" which is better than a charge off. So I made sure I settled before charge off. However, I pull my credit 10 days later and it is reported as a charge off by Discover. I called them and they said it is my problem and I have to dispute it with the credit bureau. So just one more nasty and one last insult.

What I have learned here is that if you are having a "true hardship" most creditors are sympathetic and will work with you. Citi called me and told me they were sorry I was in such financial distress and they offered me a settlement at 38%. I believe it is an industry secret rarely discussed, but debt settlement is real and available to people who cannot pay their debts and are in financial crisis.

My hope in blogging about this experience is that it will help others who are overextended and need to bring their lives back into control and financial stability versus filing bankruptcy.

What are the affects on my credit after this? My credit score is 630 and I think that after 12 good months, I will probably be back up, at least over 660. I have 11 negatives on my report and 32 positives, because this is the first time in my life I have had a problem, I will probably recover faster than some people will.

I was hoping to have this all done by the end of June, but that won't happen. I'm short about $1,500 to settle with my last creditor, my car is broke down, my son is graduating from high school, my daughter is getting married and I have some additional expenses I did not expect, i.e. some travel expense and dental expense. So it will be difficult but I will find a way.

I will be broke, but I will be credit card free.

I just settled another credit card and tomorrow I'm suppose to finish the next one. These cards are both with the same company and have been very hard to deal with. After I have them both "settled" I will share this experience. I did settle with them on one card before chargeoff, but they did not share their end of the bargain, which shouldn't surprise me after all I have been through with this company. I will give further information on this and how I intend to deal with it after they are done with me and I am done with them.

I have been trying very hard to save more money to finish this up, I also had a yard sale. However, my car broke down and it's eight years old, the muffler broke which was going to be very expensive but my mechanic figured out a way to fix it for less, would have been $1,800 but instead cost me $850, but now my clutch is going and after a long winter, the paint is starting to peel off my front fenders, so it needs to be touched up. I really need to trade the car with the cost of a clutch at $1,000, paint at $1,000 and if I have to have a maintenance kit it will be another $1,500 and the motor in my automatic window on the driver side is going too and sometimes the window won't roll up. The car is only worth about $4,700 and I owe $5,200 - what would you do? I don't have the money to trade nor do I have the money to fix it? My DH says he will trade it for me if we need to, but I don't want any more debt.

My house is on the market and we thought we had an interested party, but he changed his mind for now. He will come here mid July and look at the house again. I hope to have a contract on it before then. If I get a contract on it I am hoping to make enough money to pay my IRS tax implications from debt settlement. Also, our rental property needs a new window and a wood stove before winter. We are not paying the predicted $5.00 a gallon for oil this year and are getting a "wood pellet" stove. It should pay for itself the first year and it is eco-friendly.

So much going on right now, my daughter is getting married and there is major expense with my dress, DH's suit and my sons Tux (he's in the wedding). It is not a good time for me to be having these problems; this is my only daughter and her father is deceased, so I'm it.

My son had his senior prom so I had the tux expense, tickets and his dinner. His father didn't offer to help and he has a lot more money than I do. This is the way it has been for years, through my kids college and etc., I'm always it, their father doesn't feel the need to contribute much at all and won't help with any of the kids car expense, entertainment and etc.

We have graduation as well, but this shouldn't be too bad. I can just have a BBQ here after the ceremony. When it rains it pours.

I want so badly to end this debt settlement but with all these extra expenses I'm really going to have to get creative. I have put together some personal possessions that I could try to sell; a ring, office equipment, rototiller - I'm working on it.

I haven't said much lately about my credit card situation and thought that maybe you'd like to know what has been happening. First of all, my phone has been ringing daily, I still have four creditors with 7 credit cards that are calling. I have my answering machine set up so I don't hear the constant ringing, but I can see from caller ID, they are calling.

I have been sick since last Sunday with that horrid flu and today I'm not much better still. I did talk to my creditors the week before I got sick just to let them know I was here and waiting to settle with them.

What I have learned from this experience is that there are policies within each credit card company and you have to wait until you are at least 120 days past due before they will negotiate a settlement. I'm not 120 days past due yet, I'm only a little over 90 days and less on some cards.

This whole thing seems like it has been an eternity, probably because I saw my falling last October and have been worrying relentlessly ever since. I've made offers to two of my large accounts; one wrote to me that they were unable to settle at this point and thanked me for my good faith effort to settle this account and the other told me I was not eligible yet. So I asked the collection person what they meant by "I'm not eligible yet, did it have to be a number of days?" She said, "you've got it" and then I said, "how many days, 120 days?" and she said, "you said it", I guess we are talking in code because this is a company secret. So two weeks into April I will be 120 days on one of my accounts and I am going to make the offer and see if I am now "Eligble". I will be so glad when this is over so I can move on with my life.

I was offered a new job a few weeks ago, but had to decline because my credit is a mess and in my business, "Credit is Character"; they would not have hired me if they had seen my credit. Even after I have cleaned this mess up, I am going to have to wait until my credit score goes up before I can apply elsewhere and it will be embarrassing to explain that I was overextended and had to take this approach. With the housing market not budging, I may have to take a different job and it would probably be in sales, because I could never work in an office again and be stuck to a desk, I've been on my own for years and it's a scarey thought that I would be confined in an office cubicle.

So the saga continues and hopefully, by June, this whole thing will come to a closure. In the meantime, I hope the housing market opens up. I was unable to pay my mortgages this month and am having to use money from my debt settlement account to pay them; that is not good, I need that money to settle this mess.

I have a car I'm planning on selling and hope to take that out of storage this week and get it to a garage so he can get it repaired and put on his lot to sell for me; there has been so much snow I haven't been able to do that yet. This would be a huge boost to my situation if I sold that car. The current vehicle I am driving is 8 years old and needs work so if I sell the other car I can fix my current vehicle to run for the next few years until my credit comes back; but even when my credit comes back, I hope to save enough money to pay cash for a good used vehicle and hope not to borrow any money - I never buy new!

After this situation the best thing I can do for myself or anyone can do for themselves, is put their own money in the bank and borrow against it to start building a new credit history. I do have a couple of mortgages I am paying on that also will help, but I do hope to sell a house this year.

I'm still saving for my Debt Settlement and the creditors are still calling. I borrowed $28,000 from my 401k plan and I'm getting back a tax refund of $6,500 plus $900 from the stimulus package. I still have a car to sell and hope to get at least $6,000. My car is going into the garage to be repaired and the owner of the garage is also a car dealer and he said he would sell the car for me and charge a $500 commission. The car is a 99 BMW Convertible and I had a new roof put on it last year, they didn't put a new rubber on the roof and it leaked and rotted my passenger leather seat. So I need a new seat cover and need a new rubber in the new roof before I can sell it. Otherwise, the car is fully restored with new paint and etc., should be a good buy for someone and hopefully it will sell.

So if the car sells the total savings would be $41,400. If I do not sell the car I will only have $35,400. I had hoped I could save additional funds, but so far I have not had any luck putting extra money away because my income is still too low.

The total credit card debts I have left are about $75,000 with the interest and late charges. Even if I could settle at 50% ($37,500), I'm short without selling the car. I'm still hopeful I can do this. The creditors are telling me that I am not eligible yet, which leads me to believe I have to wait possibly to 120 to 180 days before they will settle. Most of the creditors have been very nice and understanding; everyone but Discover who calls six times a day and they are so rude when I talk to them. They are now acting differently though, the other day the guy was very short with me and I just told him my only option would be to settle and I'm waiting until I'm eligible. He said, "okay, good bye". Made me think that they do have a time frame and I'm not there yet.

Regarding the housing market, the month of February was the worst month I have had in the last 8 months. The interest rates went up and housing sales are down. I sure hope this turns around soon; as it is, it looks like I may have to pay my mortgage payments out of my debt settlement money because I didn't earn enough money this month to make the mortgages.

Overall, I have some positive days and then I have the bad days. I think that once I settle with another creditor, maybe I will feel that their is a light at the end of this tunnel. Until then I'm reading every positive book I can find and I'm not saying "I think I can", I'm saying, "I know I can".

My largest debt is with Bank of America, it is at $59,900 right now with the interest and late fees. I had a dream on Tuesday night that they were suing me for the balance. I woke up at 2:00 am and couldn't go back to sleep.

For those who been following me, you know I have that "Privacy Corp" ID machine that let's my calls go to the machine and I don't hear it ring. I thought I had all the collectors so far, programmed in. So my mother is traveling and I was concerned about her and the phone rang and I assumed it was her, well it was BOA. I had not planned to talk to them again until March because I'm not yet 90 days.

So I told them my situation, which has not changed and told them I'm looking to settle my debt. The nice gentleman I spoke with offered me a settlement of $21,000, I asked for $18,000, so he told me he would go see his manager and call me back. He called me back with bad news, they wanted $27,000, which I don't have available to me right now and it would throw off my settlement plan making me short to settle all my debts. So he hooked me up with the Manager, she thought I was threatenig her with a bankruptcy which I told her I was not, but .... that didn't go well. She then told me that if I did not settle, she was sending me to arbitration, that means legal and they make the decision to sue me or not to sue and she told me they would sue me and garnish my wages and put a lien against my house. So then she and I compromised and we finally settled at $23,000. A little more than I have right now, but she let me spread it over 4 months so my tax refund will be here and I'll have enough. That is a 38% settlement and I'll take it with the threat of being sued over me. My account was large and it is usually the large ones that get sued.

I didn't realize how much this has been bothering me, I knew it was upsetting and I thought I was dealing with it okay, but after I hung up I literally cried for an hour and then I broke down a few more times during the day. I was mentally wiped out and couldn't do much the rest of the day. I am still in shock that they settled with me and I'm so relieved that it has finally started and I was able to take care of my biggest account.

The bad news is I have $74,500 still in credit card debt to settle with four more creditors. I owe Discover $25,000 and they are they are about 70 days deliquent now and will probably be willing to talk to me in another month.
I checked out my 401k plan and I can now borrow more money than they told me I could, because I've lost so much money lately, I decided to put in a loan request so I can start planning how to finish this up.

There is a God and I may survive this (knock on wood).

For those of you following my story, I'm $133,000 in credit card debt and growing with interest, late charges and over limit fees and I have lost most of my income (commission based and tied to the real estate market) have $280,000 in mortgages and another $20,000 in vehicle loans. I've become unable to make payments on the credit cards which use to be $2,500 a month and have now shot over $4,000 with the new 29.99% interest rates I've inherited because of delinquent credit. My goal is to settle this debt and I'm saving and waiting since you need to be about 90 days delinquent before they will even talk about settlement and more like 120 days before they will give you a decent settlement. The waiting seems to be the worst part of this for me, I just want it over. Good thing they have Ambien CR or I wouldn't sleep at all.

So last week the refinances have started trickling in. Alot of people still need to refinance those high rates. In my area I'm considered one of the best in the business, I often get calls asking me to come work for a new company. Last week I got calls from Citi Mortgage and Wells Fargo. I declined interviews for both jobs for a couple of reasons. One is I won't make any more money than I'm making now by changing companies and it is not a good time with these economic conditions to be moving jobs. Two is if I try to change employers they will pull my credit and see the mess I am in and won't hire me anyways.

It really hit home when I realized that because of this mess, I have given up any possibility of changing employers and even if I wait a few years to do so, it will be extremely embarrassing when I have to explain my credit report. That is why I have to at least settle this debt and can't have a bankruptcy, I couldn't take 10 years of explaining and not getting the job because I had that public record. I've worked so hard to get where I am and now credit can ruin my career ...

I am in enormous debt as you can read from my prior post. The Feds are lowering the rates and I'm starting to see some slow activity in my business. However, it is confusing, one day the 30 year rate drops to 5.75% and then the next it is back to 6.125%, customers don't want to lock in because they think the rates are going down and I fear it's going to excite the market and make the rates go up. One customer accused me of not giving them my best rate after the rate jumped ... this gets very stressful and I just wish they would lock when they see what we have at application ... it's a gamble and if I knew what was going to happen, I'd be rich!

Even though I'm seeing some activity and maybe my income will increase, I'm overextended, behind on all my credit cards and have rates up to 29.99% with about $80 a month in extra fees on each card and there are 8 of them, with five creditors involved. There is no way I can recover from this without settling my accounts, my credit card payments were $2,500 a month when this started and now they are at $4,000, the debt is climbing. I don't even bring home that amount after tax and I still have two houses to deal with and two car loans, my cars are almost paid and we need both cars for work. So I will continue my plan to settle and clean up what I can. I'm figuring by April I may be able to take care of the first creditor.

In the meantime, my phone rings about 12 times a day from three of the creditors, not all of them are calling yet, I still have two more that will be calling soon. So I decide to talk to one about 10 days ago, we go over my situation for about the fourth time since this all started, I hang up the phone and they call four more times that night. Do they think a miracle occurred and I instantly found wealth? The fact is this is legal harassment, they try to wear you down with the calls. What they don't know is I purchased a machine that makes the calls go right to the answering machine and they don't ring in my house, so I can pick up the calls when I choose. I will not talk to anyone for another month, it is too depressing and it ruins the rest of my day. I don't feel it is necessary to talk weekly, things like this don't change quickly. I also have the option of sending them a cease and desist to not call my home, however, sometimes that will accelerate the sitution right to a lawyer, so the machine is on and I stopped looking at the ID to see who has been calling, the creditors are programmed so family and friends can ring through. The caller ID machine is called "Privacy Corp" and it was the best thing I could do for my sanity through this.

In over 20 years I never missed a payment, this is all a learning experience for me. I have my fingers crossed that I will have settled all my credit card debt by August and I have been saving everything I can. I've looked at hardship ideas and debt consolidation and etc., but that would be a bandaid for this serious situation that is bleeding all over the place. I've consulted with a Bankruptcy Attorney who has encouraged me to file, but I just want this over and I'll give what I can and what the creditors feel is acceptable. They will get more money from me this way then through bankruptcy.

I had some good news today, I was reviewing my tax information and have found that I'm getting back $5,000 in my income tax refund; I'm still waiting for some tax forms for mortgage interest and etc., but I looked them up on line to rough out my taxes. So now I can look at possible funds available to settle debt:

$22,000 Family Loan
5,000 Income Tax Refund
2,000 Loan Repayment
3,300 Hardship W/D
7,000 Sale of Used Car
5,000 Projected Savings
& Misc. Items Sold
$44,300

Finally, my Ace in the Hole is my loan against my retirement, if I have to settle in June I will have $18,000 available bringing the total to $62,300.
Assuming the debt creaps up to $150,000 and I can settle all his at 40% ($60,000), I would have enough for now, then later I'll need money for the IRS. I'm still not getting a clear answer from the''m on 1099C reporting. I've had two different answers so far and it basically comes down to the IRS and what they think.

When reading the guidelines it says that if a creditor forgives a debt, they must report it that year. However, the IRS says that if they do not write it off that year they don't have to file the 1099. Further, she told me that if I get the 1099C two years from now, that would be the point of settlement and I look at my insolvent position at that time. Otherwise, after I get everything resolved, then I get a 1099C and I'm no longer insolvent, I would pay tax because the credit card company didn't write it off yet. I believe that if I get a settlement in writing and I write a check, that is the point of settlement (the effective date the transaction occurred). I would fight this with tax lawyer. I don't think any of what she said made sense. So further would not give me a direct answer on "fair market value" on a home at time of settlement, says town has a value, I have a value and an appraiser has a value and the IRS would look at any documentation I had and decide. So the whole town was just assessed by a professional company and they came into my home, I would consider that an accurate figure? Oh she didn't know, only an audit would tell for sure.

I asked her if I could report 1099C cancelled debt withou a 1099C? Definately not, you have to wait for the issuing creditor. Even that doesn't sound right, I have read that if you do not get a 1099C you are still obligated to report it as income. So no real answers just more confusion.

I had an interesting call from Bank of America yesterday, I know I said I wasn't going to talk to them, but after they threatened to send me to collection, I figured I'd see what that meant. Well she just went over my scenario then she said she would let everyone know nothing had changed and I was still working to get together some money. Within an hour of her call, they called three more times last night. I didn't answer the phone because I had programmed it not to ring and it was on my caller ID and they left no message. This is not going to be good. Numerous calls a day from all these creditors jamming up my phone.

So good news, not so good news and confusion. Tomorrow is another day!

On a credit report, when you settle debt for less, it has a very similar affect as Bankruptcy 13, except it doesn't follow you around as a public record for seven years.

I am choosing to do Debt Settlement because I ethicially feel it's the right thing to do under my circumstances. Yes, it would be much easier to just file the Bankruptcy 13 and I wouldn't have the added tax implications of "cancelled debt", but I would be in a five year plan;five years of my life on hold making payments to a trustee and answering to the same. Also, everyone in town would know my situation as well, bankruptcies are published in our local paper, there wouldn't be a bank in town that would hire me. I think it will be much easier for me to just settle up this mess and move on and maybe no one will find out.

I have spoken with an attorney about what I am doing. He of course wants me to file bankruptcy and has asked me not to settle with anyone until I speak to him first. He advises that the credit card companies will only get pennies on the dollar if I file and etc., etc. If I fail at settlement and end up being sued, I will probably be forced into bankruptcy for protection and I'm praying that doesn't happen.

I'm finding it very difficult to deal with anything else in my life with all this debt hanging over my head. There is not a day that goes by that I don't think about it or talk about it. This has been going on since last October, when I realized my work was not going to change, the housing market was not going to rebound and my sinking ship was going down. The more you make the more you spend and your debt is higher as well. I never planned on this economic disaster. It is true that "it is not the hard times that will get you, it is the good times", living beyond your means and living the good life will destroy you financially when the bad times come. I certainly earned this and should have known better and planned better. I guess I needed to learn another one of those lessons of life.

In my community I am a highly respected professional, no one would have any idea the mess I am in. When I'm out and about and I see another business person and they start talking to me about how everything is going and how is my business doing; I usually just tell them everything is great, but inside myself I just think about the horror of my situation and pray they never find out, that no one finds out that a professional like myself, got herself in such a mess.

In my business head hunters are always calling and making offers for me to go work for them. There is one in particular that has been after me for three years. I haven't heard from her in about 9 months and I know it is due to the declining housing market, but I know that when things pick up she will start calling me again and will make an offer for me to go work for her; sign on bonus, commission tiers and etc. If I accept, the first criteria is for them to pull my credit; that is considered character in my business. I am so screwed I can't even change jobs, I'm stuck where I am and if my employer finds out about all this, I risk losing my job with them. Although we have very little work right now and I am only paid on performance (you can't work if there are no customers), I could still be let go because of my credit. My once 700 plus credit score has crashed to below 500 I bet, I don't really know because I don't dare to look. Legally they would not come right out and tell me why I was being let go, they would just eliminate my position or something, I know how this works. Several years ago a very nice lady in a bank I worked in, filed joint bankruptcy because her husband's business failed, the powers that be kindly took her aside and her job was eliminated. A small community where everyone knows everything and bankruptcy is published in the local paper.

I've been struggling not to fall into depression here, but with the long winters here, the lack of work and my obsession with my debt, it's very hard not to. I never sleep through a full night anymore, I don't do much outside of the house and I really don't have a lot of energy right now. All classical symptoms of depression. Well now I can tell the credit card companies that not only have I lost my income, I'm now mentally ill; maybe that will help my case.

Guess I'm just having a bad day here and anyone who is in my position or has been, will understand. Sometimes you just need to ramble on. I think I will go cook something ... I love to cook.

I've been debating with myself as to whether or not I want to blog about my debt. There is embarrassment and shame associated with having $133,000 in credit card debt, but I'm hoping that maybe writing about this situation and trying to resolve it will make me somehow feel better and that it may help others in this situation.

How I got to this point comes from at least nine years of being a single parent, making a good income and thinking that I could just keep spending. I put two kids through college, bailed out a failing business and have helped numerous friends and family members through some financial problems. I've been more than generous with my children and have charged on my credit cards like there is no tomorrow, thinking there would be no problem paying it back. Then the inevitable, the housing market slowed to a crawl and my income is commission and it is connected to the housing market and real estate. This year alone my income dropped about 45%, when you have two houses with mortgages to the tune of $280,000 and $133,000 in credit card debt, something has to give.

I have charged my credit cards to the max in 2007. I've been unable to keep up with my expenses without borrowing from my cards. Both of my cars broke down with repairs of $6,000, and one was involved in an accident, another $4,000, my house needed some serious repairs to the septic system and I needed to paint it to get it ready for sale, and my income declined. So here I am, I've maxed out my credit cards, I don't have enough money coming in from my job to pay all my monthly bills and I have to find an alternative to bankruptcy, before I cash in all my assets just to make monthly payments. I don't know when this market will turn around and my income will be more stable, but is commission ever stable?

I've researched it all and I've decided that debt settlement will be the best option for me. I've talked to three debt settlement companies and with their fees, it will take me longer to get out of debt. Also, I really think creditors want to talk to their consumers and I can do anything a debt negotiator can do. However, they do have more experience and they settle large amounts at once, which probably makes them more of an expert, but I need to do this myself because, as it is, I don't have all the money I need to be swift and successful with this and with a debt negotiator it would take me longer to settle and the longer it takes, the more chance I have of being sued. Although I want to avoid being sued, there are worse things in life, but publically it would be very embarrassing.

I have consulted with a bankruptcy attorney and I could file Chapter 13, but that process would take five years and I really want this over in one year and I don't want to live with that on my public record for the next 10 years. It could affect my future employment opportunites because I believe that if you have had a bankruptcy you can never get bonded?

How do I plan on taking care of this in one year? Right now I'm thinking I will have to borrow against my 401k - I think I will have about $19,000 available by June in a loan and a $3,300 hardship withdrawal. I've been able to borrow $22,000 and I am going to try to sell my second car and some personal belongings for about $7,000 in the spring. I'm thinking I will get a tax refund of about $3,000. That still isn't enough money, I'm figuring I'll need about $65,000. I'll have to try to save an additional $5,000 by June. I tried to get a home equity but was denied because of a low appraisal. I figure waiting and negotiating will take a total of six to eight months so I have some time to do the things I need to do and hopefully the car will sell and etc. It's pretty much up in the air right now. My goal is to have this credit card debt behind me by the end of 2008.

Regarding the houses, I've been able to rent one house and that pretty much covers the mortgage payment, taxes and insurance. The house I'm currently living in is going up for sale after June. If the housing market doesn't turn around, I will not be able to sell it and I will have to live here another year. My mortgage is an adjustable rate mortgage, interest only and that scares me. I took out a five year ARM about a year ago thinking I was selling the property and needed some breathing room until it sold, but with the housing market falling, I can't get what I need to get right now, if worse comes to worse I may have to "take my bath while the water is warm" and sell for what I owe on it, we'll see.

So who are my creditors with the credit card debt; BOA, Chase, Citi, Discover and Sears, five creditors with eight credit cards. I figure by the time I am ready to settle these cards they will be at $150,000 to $160,000 with overlimit fees and late fees and their famous 30% interest. They really try to help you out once you go delinquent! By the way, I haven't had a late payment on anything in over 20 years; I'm really nervous about this whole thing.

I hope I am able to get through this without getting sued or ending up in bankruptcy. If I end up in bankruptcy the creditors will get a lot less. There are some concerns regarding my tax implications. I'm currently about $70,000 insolvent so my first $70,000 in debt cancellation will be tax exempt. I still have research to do on if fees can be deducted from the cancelled debt; a good question I intend to ask the IRS and will update later.

Am I proud of my situation? I am not, but hopefully others will learn from my experience and have the courage to take care of their own debt without the expense of a debt settlement company. However, if this doesn't work well for me, they may decide to hire a debt settlement company. Time will tell.