I am going start with the disclaimer: Yes I realize the mistakes I have made to get to this point.
As a results of a departure from a job and lifestyle I did not enjoy, and things "not going as well as forecasted" in my early 20s it appears I have accumulated a large debt on a credit card of mine. The minimum payments are manageable, however don't really get me anywhere, too large of payments are over extending myself since I do have other financial obligations.These obligations are normal ones are in mostly good standing but don't occasionally get way sided by this larger debt I am desperately trying to pay . It's already had a pretty negative impact on my credit. Basically any financial goal I set - business loans, business credit, getting a house, saving up some good cash and paying off any other bills seems to be hampered by this account.
Now I know settlement is not the same for everyone and credit companies don't offer to everyone, but does anyone have experience or insight on this? Take one big hit so I can stop overextending myself, fulfill my other financial obligations, be free of it, and let my other accounts pull my score back up? What terms should be avoided at all cost? OR just suck it up, tighten the bit a little more for a little longer?
Take it from a guy who used to have large credit card debt, then consolidation debt to get rid of said debt, then parallel credit card and consolidation debt: you'll always be able to find a way to pay off the debt, and settlement might be one of those ways, but what's more important is making behaviour and lifestyle changes to prevent yourself from getting right back into the same situation. The problem is not solved once you pay off the debt; the problem is maintaining behaviours and choices that are drastically different from the ones you have made for the past 10-20 years. Your disclaimer says that you realize the mistakes you've made. I had realized my mistakes, too. But that doesn't mean that you're actually doing anything about preventing the mistakes after your debt goes to zero. It's not passive. It can't be along the lines of "after I pay everything off, I'll stop ____ or I won't _____"; it's more along the lines of "starting now, I will _______".
My recommendation would be to see an independent credit counsellor; not to find out what is the quickest way to get rid of your debt but what is the best, most prudent way to get rid of your debt in a way that also allows you to protect your credit as much as possible while initiating permanent changes in your behaviours and decision-making in order to transition into a sustainable, financially healthy lifestyle.
Everyone on here will have tons of advice but there are so many factors and variables to consider that no single answer is right for everyone. For some it might be settlement, for others it might be consolidation, for others it might be a question of budgeting and getting rid of needless expenses, for others it could be bankruptcy, etc etc etc. Take note of what people suggest but don't take any of it for gold.
PS: Go see an independent credit counsellor or financial advisor. Don't see anyone from your bank or your credit card company or anyone who's tied to a financial institution of some sort. The independent guy works for your fee; everyone else works for incentives from the institutions they're affiliated with so they don't actually have your best interest in mind.
And don't lose hope. I was a total idiot in my 20s but, thanks to the support of my wife and the aforementioned lifestyle changes, I now have zero debt (other than our mortgage, which we are aggressively paying off); our car is paid off, we live in a very nice neighourhood, we frequently travel (etc.) and our only debt it our mortgage. It's an amazing lifestyle change . . . an amazing feeling of freedom and power! And you can get there, too! Just don't invest all of your hope into a quick fix solution; get some professional advice, go for the long game, stick to it and you'll get there too!
Another note about independent financial advice, the long game, etc:
You're probably stressed out. Your emotions are probably clouding your judgement. When I told my buddy, who was studying to become a CFA at the time, that I had saved up several thousand dollars and put it all towards my credit card debt, he explained to me that it probably felt good to do so but that, from a financial perspective, I had actually lost money doing that because I could have taken that money, invested it in RRSPs and not only would I have made interest on them but I would have also gotten a major tax break at the end of the year (that's how it works in Northern Canuckistan) that would have saved me even more money and/or gotten me a return. So, when you looked at it all on paper, you could see that leaving my credit card debt as it was and continuing to make monthly payments while investing those few thousand bucks into RRSPs would have been better than putting a big dent in my debt all in one shot. But, at the time, I was so stressed out that my emotions were getting the best of me. I was so focused on that big number (my debt) that my only objective was to get rid of it. Had I consulted and neutral, objective, knowledgeable third party about it, he could have given me insight and options that made more sense and that would have saved me or made me money. This type of resource is invaluable! Take advantage if you can!
If payment-in-full is an option at all, that's the one you should take. You signed a contract. You spent their money. If you can pay them back by "suck[ing] it up, and tighten[ing] the belt a little more, for a little longer", you should make good on your debt. To do otherwise when you could conceivably pay is theft.
Take your lumps and learn your lesson. Settlement ought to for people who cannot pay, not for those who are surveying their options and trying to find the cheapest way out.
Aren't you a lawyer? If so, I find your response surprising since most lawyers' take on the law is not to get their clients to obey it to the letter but to manage their clients' risks and rewards through it in order to obtain the most beneficial or the least detrimental result. Most professionals I know in banking, finance, accounting, tax (etc.) see money, investments, debt, taxes (etc.) the same way; it's not a question of doing what any rule or institution or piece of paper says; it's a matter of managing risks and rewards in order to obtain the most benefit or the least detriment. It's easy to reduce it to a question of individual commitment and honour but let's face it: that's not how these industries operate.
We both know that, whenever a client is due a big payout from an insurance company, even in very black and white cases that are obviously in the client's favour, the first thing the company does is get the legal team together to figure a way out of having to pay anything at all (usually by steam-rolling the client through the legal system in a way that the client simply cannot afford) or by negotiating a settlement. We both know that the purpose is to limit big payouts not because of any one single incident but because they want to avoid creating precedents which could force them to continue making similar big payouts in similar cases in the future. Everyday shmoes would probably call that theft but most lawyers I know would call that managing risks. So, especially because debt settlements are negotiated (they are not forced onto either party) and the credit card company has the option to accept or reject his settlement offer, it's not a question of extortion or theft or anything along those lines; it's a question of an individual choosing to play by the de facto rules that the industry uses by default. We're not talking about borrowing money from a friend who did this guy a favour; we're talking about risk-managing the legal entity that already risk-managed him before they even knew who he was.
Long story short, IMO negotiating a debt settlement is like tax avoidance rather than tax evasion. One is legal and encouraged; the other is illegal and could land you in jail. (Although the line between the two of them is often very, very fine . . . but that's another story altogether.) The big difference is that most people don't realize that they have the option to negotiate / risk manage with the companies and entities that, by default, negotiate with / risk manage their clients as a default business strategy.
Attorney or not, I don't tend to chart right-and-wrong by gauging what most lawyers would do. Can't think of a dumber way. It was a moral question, not a legal one ... a matter of right vs. wrong, not legal vs. illegal. It is legal to settle a debt. It is wrong to bail on a debt that you can pay simply because you'd rather not.
How these industries operate is entirely irrelevant to questions of how you should operate. Most people would take the cheapest way out, right or wrong. Most people aren't worth listening to.
And, this is most definitely more like debt evasion than debt avoidance. Debt avoidance would be not spending somebody else's money. Debt evasion is spending somebody else's money, then running away when they try to get their money back ... or asking for leniency when you're able to pay-in-full.
If you can pay, you should. If you can't, there's negotiating room. There's no harm in taking charity if you need help. That's what settlements are for. There is harm in screwing somebody out of their money just because you don't feel like paying it.
While the banks laugh all the way to themselves.
Come on. He didn't get screwed, here ... or, if he did, he screwed himself. He knew the game when he signed-up to play. He spent somebody else's money to live a life he couldn't afford. There's always a reckoning.
There is no injustice in being required to pay back money you borrowed. There is no injustice in profiting from lending money to people. Credit cards are a lousy deal for consumers ... but, that doesn't justify spending somebody else's money on stuff, keeping the stuff, and not repaying the money.
"Come on. He didn't get screwed, here ... or, if he did, he screwed himself. He knew the game when he signed-up to play."
Okay. Just like the credit card company knows that settlement is an option they've opened themselves to, just like they know that a certain percentage of people they will lend to will pay late, not be able to pay everything back, not be able to pay back at all, etc. These are the risks and rewards that they calculate and choose to accept as part of the agreement.
If accepting a settlement is getting screwed then the credit card company is screwing itself. It not only knows the rules of the game it plays, it wrote the rules. Furthermore, as previously stated, a settlement doesn't mean that you're not paying them back; it means that you're not paying them back as much as originally anticipated. There's a big difference there. It's like me suddenly repaying the remainder of my mortgage in one lump sum; the lender profits less than anticipated but did I steal from them? Even if I pay the penalty, they still profit less; am I a thief? In most settlements, the credit card company not only recovers the actual credit/loan but they also make a profit. The borrower didn't get something for nothing; the borrower got something for less than originally anticipated and the lender had forecasted the probability of this possible outcome.
Again, the possibility of a lender getting repaid less than originally anticipated (for example, due to settlement) is not only already agreed upon, it's also parallel to a borrower having to repay more than originally anticipated due to changes in fees, rates, penalties (etc.) which is also already agreed upon.
That credit card companies will negotiate does not make morally right balking on a legitimate debt that you can afford to repay.
Credit card companies will accept settlements because they're at risk of getting nothing and there are legal statutes of limitations for collection. They screw themselves to avoid being screwed worse. They're backed into a corner. That also doesn't make it right to take advantage. That they account for bad debtors in their business model does not make becoming a bad debtor by choice morally right.
There's simply no moral or legal sleight-of-hand that makes right spending somebody else's money on stuff, keeping the stuff, and trying to get out of repaying the money and interest when you're able to repay it.
It's not balking, theft or moral sleight of hand. Like I mentioned before, it's negotiating in a context wherein negotiating rarely happens but is nonetheless permitted.
Permissible and right are not the same thing. What about this are you not understanding?