I have not yet filed, but was wondering if a creditor disputes your discharge, how much of a repayment will they usually want? 50%, 30%? ? I owe $15,000 on a cc and I am trying to prepare myself to pay some of it back if Visa objects to this discharge. Thx.
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hidden costs in settling with cc companies
Be forewarned that if you settle with a cc company, rather than have a debt discharged in BK court, then you will be liable for income taxes on the amount of money that the cc company "forgives." Typically the cc company will send a 1099 to the IRS alerting them to the "income" they provided.
Taxes on this income, like almost all other taxes, are not dischargeable in BK. So, for example, for my family, living in NYC, for every $1000 a cc company might "forgive", we would owe around $400 in federal, state and city taxes. This would not be a fresh start, or anything like it, for us.
Beware of this hidden cost of settling with cc companies. -
what should I do then if this happens? Should I spend thousands of dollars fighting this? Or just give them half? I am sorry for being so ignorant, but I have no idea what you are talking about (thanks for informing me)Comment
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I re-read your original question and I think I misunderstood your question. It sounds as though you are planning on filing Ch. 7. I thought you were talking about settling with them prior to Ch. 7 proceeding.
I'm not sure why you think they would be entitled to dispute your debt and require a repayment. From what others have written here, it seems that they seldom even show up at the 341 meeting, so you may be ahead of yourself.
Do you have a lawyer? If you are seriously worried that they may have grounds to dispute your debt, you might want to consult with one. Almost all BK lawyers offer one free consultation. I suggest you talk to one or two and find out what they think about your concern. That ought to help!Comment
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Thank you mothersvox! I am going to be filing chapter 7 and I AM getting way ahead of myself! After I file, I heard stories that cc will threaten to take you to court to dispute a discharge. I do not have the $ to go to court and then somehow lose. It just seems to me that it is the luck of the draw. I mean if the trustee is laid back, things go smooth. If the trustee is strict, there may be problems. I have taken several cash advances out about 3 months ago. I am waiting until Aug to file (just to put some time btwn the cc advances and bk) I guess I am just trying to prepare myself. Although I didn't use the cc fraudulently, I am just scared. This is a very scary time in my life (as I am sure it is in everyone's here) So does anyone know if cc companies expect at least 50% of the balance or less? Thanks again for a quick response mothersvox.Comment
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and yes I do have a lawyer.
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Assuming they have grounds to object to discharge, most credit card companies will accept a reaffirmation agreement of %50 of the objectionable amount rather than start an adversarial proceeding.Comment
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thank you HHM! You have been very helpful.
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