Need some advice

My wife and I are in the process of filing Chpt 13, a couple more payments and our lawyer will start the paper work..BTW I was a Chpt 7, discharged in June 2004 so that's one of the reasons why it had to be a Chpt 13.The other reason is that we want to keep our home..Just an fyi my wife has never filed BK..

Well we are thinking of not filing now we are going to try to work with our creditors and negotiate some of our debt and just try paying them off with hard work..Chpt 13 just doesn't seem like a fresh start to me if feels like you're being handcuffed (Does anyone else have that feeling)..I plan on working another job during the day to pay some of the debt.I really hope I'm doing the right thing it seems like I've been making some bad decisions lately.I have about 40-45k in debt and she has about 50-60k, credit cards are not joint accts, so I think she has an out if she decided to file bk on her own..

Now my question is would we still be able to file in the near future if we cancelled the Chpt 13 process now? (We've paid about 1400, is this refundable ) Would it look suspicious lets say if we both decided to file for Chpt 7 in 3 years, since that's when I would be eligible to file again? We really are going to try to pay some of this debt off and see where we are at in 3 years but if things get harry would it look suspicious..Plus our ARM goes up in 2011 so I figured that if we do decide to file in the near future we can add the house, hopefully this doesn't happen but who knows (Crossing Fingers wishing Real Estate will bounce back then). Would they look back in 2008 and ask questions why I didn't go thru with the Chpt 13?

Now as far as summons go, I received 2 from Mann Bracken. Is it too late to settle once it's gone this far? Should I call Mann Bracken directly and ask to settle and set payment arrangements?


Last question. Has anyone ever used a debt management company like Consumer Credit Counseling Services? Will they still work with you if your late or defaulted on your credit cards? Ok I'm done. Thanks for your help.

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Now as far as summons go, I received 2 from Mann Bracken. Is it too late to settle once it's gone this far? Should I call Mann Bracken directly and ask to settle and set payment arrangements?


Last question. Has anyone ever used a debt management company like Consumer Credit Counseling Services? Will they still work with you if your late or defaulted on your credit cards? Ok I'm done. Thanks for your help.


First, if you use Consumer Credit Counseling Services your credit will take the same or similar hit as if you filed BK. It is a good idea to get debt counseling - just from someone that actually can help you from a budgeting point of view- rather than a service that is dedicated to just BK type filing, JMO.

Most of the debt you can negotiate better payments yourself than a counselor can - the counselors have arrangements with the cc companies and they can only work with those companies - you can work with all of the cc's.

Mann Bracken is a bottom feeder type CA. They may or may not have the right to collect from you. You can get specific informtion by going to www.creditinfocenter.com For the most part, Mann Bracken will say whatever they want to say (lie to you) to get you to part with money. If you have been served you will want to respond if you are not filing BK. Check out the other site for specific threads on that topic.

As to stopping the BK process.. your attorney did not file the paperwork yet, right? He has only collected the fees? In that case you can stop the process. As to getting your funds back, probably not - but ask anyway.

So what happens if I didn't show up to the court date? Can I still settle or is it too late?

JunJun, I think you are making a mistake. I think you need to go back and carefully read your thread

You are cancelling a 13 where you get to dictate to all your creditors how much they will get paid based on how much "you can afford" in order to try to pay them in a manner that provides no guarantee, and there will be tax consequences if you do settle. Trust me, settling with your creditors is far from a fresh start and is almost always more expensive than a chapter 13. Moreover, you might have already been sued.

IMHO, based on the facts as you have presented them, you are making a mistake if you cancel your 13.

JunJun, I think you are making a mistake. I think you need to go back and carefully read your thread

You are cancelling a 13 where you get to dictate to all your creditors how much they will get paid based on how much "you can afford" in order to try to pay them in a manner that provides no guarantee, and there will be tax consequences if you do settle. Trust me, settling with your creditors is far from a fresh start and is almost always more expensive than a chapter 13. Moreover, you might have already been sued.

IMHO, based on the facts as you have presented them, you are making a mistake if you cancel your 13.

I didn't know about the tax consequences..Can you please give me an example? If creditors are willing to cut it in half isn't that something I should take advantage of..I know in a 13 it would be what I can afford but what happens if I get laid off. What then..That's what scares me..And how I have to report any increase or overtime to the trustee, so it will never be a set amount...What really stinks is that I worked about 50 hrs this month and the lawyer got all salty, told me that I shouldn't have done that..I told her I need to pay my property tax and mortgage, what was I suppose to do..Plus, there was a time in 2006 that I maxed out credit cards and didn't pay a cent..I'm really scared they would see that as fradulent so I kind of figure I take care of it now, just in case in the near future we do file..

I just wanted to add that we did CCCS about 7yrs ago and was done about 3yrs ago. We bought a house with a great interest rate only 2mos out of the program AND both our credit scores were over 700. So it doesn't affect everyone negatively for some reason.

JunJun, I think you are making a mistake. I think you need to go back and carefully read your thread

You are cancelling a 13 where you get to dictate to all your creditors how much they will get paid based on how much "you can afford" in order to try to pay them in a manner that provides no guarantee, and there will be tax consequences if you do settle. Trust me, settling with your creditors is far from a fresh start and is almost always more expensive than a chapter 13. Moreover, you might have already been sued.

IMHO, based on the facts as you have presented them, you are making a mistake if you cancel your 13.


How much can I get taxed? Lets say I owe GE Money 10K and settled it at 5k and they are willing to take monthly payments..That's my biggest debt..How much will I get taxed? All the other debt is between 7k-500.00. I'm paying a lot of the cc's monthly installments..I just got a letter today from Mann Bracken and they are willing to work with me before any judgement takes place..Is there anything I should be worried about? Will I need something from them proving that they will drop the judgement once I make a full payment..My wife is not settling with any of her cc's basically she's closing them and making monthly payments..Her debt hasn't yet gone to collection agencys..

I wish i knew about this forum when we were deciding about filing bk in August..She had perfect credit and all..I just panicked when the summons was sent..Now I'm scared about the tax consequences..Sheesh it never ends..I thought for a minute I was doing a smart thing..

I didn't know about the tax consequences..Can you please give me an example? If creditors are willing to cut it in half isn't that something I should take advantage of

It sounds like a great deal until they send you a 1099 at the end of the year and you get to pay taxes on any amount they write off. Not only that, your credit report will take a hit. It will show "settled for less than what was owed." So you get screwed twice..... What a deal! This happened to my ex husband and I when we were going through a divorce. We thought we were doing the right thing by taking the profit from the sale of our house and paying off all our debt by getting the creditors to settle for less than what was owed. Looking back now, I wish we would have just filed Chapter 7.

I just panicked when the summons was sent

Junjun....this is exactly why I just filed Chapter 13. I received a summons on a car loan from 3 years ago. I had 20 days to figure out what I was going to do. Rather than get a judgement on me, worry about waking one morning and seeing my bank account drained, watch my wages get garnished, I filed Chapter 13. I can't afford to be in Chapter 13 but I also didnt want to worry daily about 25% of my paycheck being garnished and my bank account wiped out which is exactly what can happen with a judgement.

It sounds like a great deal until they send you a 1099 at the end of the year and you get to pay taxes on any amount they write off. Not only that, your credit report will take a hit. It will show "settled for less than what was owed." So you get screwed twice..... What a deal! This happened to my ex husband and I when we were going through a divorce. We thought we were doing the right thing by taking the profit from the sale of our house and paying off all our debt by getting the creditors to settle for less than what was owed. Looking back now, I wish we would have just filed Chapter 7.

How much can you get taxed..The only creditor I settled with the amount was 10k settled for 5k and they are willing to take monthly payments..Of course this was over the phone..I know I'll need them to write something up for me.. I'd like to know how much will I get taxed if I settled for 5k on a 10k account..

How much can you get taxed..The only creditor I settled with the amount was 10k settled for 5k and they are willing to take monthly payments..Of course this was over the phone..I know I'll need them to write something up for me.. I'd like to know how much will I get taxed if I settled for 5k on a 10k account..


You are going to be taxed on the $5000 they wrote off. You need to figure out your tax bracket to know the dollar amount you will owe. Also, call the company and ask if they will send you a 1099-C for this. Most companies don't offer the info freely.

You are going to be taxed on the $5000 they wrote off. You need to figure out your tax bracket to know the dollar amount you will owe. Also, call the company and ask if they will send you a 1099-C for this. Most companies don't offer the info freely.

I ask this once I pay the settlement in full right? I'll be making monthly installments so I don't get taxed until it's all paid off right? Thanks..

You are going to be taxed on the $5000 they wrote off. You need to figure out your tax bracket to know the dollar amount you will owe. Also, call the company and ask if they will send you a 1099-C for this. Most companies don't offer the info freely.


Combined we only make between 100-120k..

if you have already filed and now want to withdraw (dismiss) it will still show up on your credit report as a "dismissed" bk which is worse than a discharged one. Since you have the credit hit already by filing, I would just stick it out.

if you have already filed and now want to withdraw (dismiss) it will still show up on your credit report as a "dismissed" bk which is worse than a discharged one. Since you have the credit hit already by filing, I would just stick it out.

No we haven't filed..We were still in the payment process..

then make a list of the pro's and con's. Because you filed in 04, I think that some of the trustee's are "tougher" on refiler's but I have no proof of that. Just an observation of posts at this website and others.

In a chapter 13, not all creditors will file a claim (usually) but it is true that your life will be budgeted for several years. However I have found that learning to budget has been a good thing for me.

You need to analyze your situation completely. Will settling those accounts for less really put you in a better financial position? Can you afford your current lifestyle plus those payments?

Many will try all avenues before filing. For me, it was just such a relief to not have the phone ringing off the hook and knowing that no creditors could send me to collections and ding my credit report more than "included in bk" notation.

So weigh all your options carefully and do what you think is best. GL

If I was in your situation (what am I talking about....i am!), I would file Chapter 13 now and convert to a Chapter 7 in 3 years. Either way, you are going to be "handcuffed" by filing Chapter 13 or by working more hours to pay off the debt you already have. You said the company that is sueing you is "willing to work with you" but you don't know how much they are willing to work. In my state they can garnish 25% of your paycheck. My guess is the company is going to want at least that much each month because they know they can get it with a garnishment. If you think Chapter 13 is being "handcuffed", imagine a garnishment.

If I was in your situation (what am I talking about....i am!), I would file Chapter 13 now and convert to a Chapter 7 in 3 years. Either way, you are going to be "handcuffed" by filing Chapter 13 or by working more hours to pay off the debt you already have. You said the company that is sueing you is "willing to work with you" but you don't know how much they are willing to work. In my state they can garnish 25% of your paycheck. My guess is the company is going to want at least that much each month because they know they can get it with a garnishment. If you think Chapter 13 is being "handcuffed", imagine a garnishment.

You can convert to a Chapter 7 once you're in a Chapter 13?

RockingG makes some good points, let me try to bottom line this thread here.

There are pros and cons and tradeoffs for each possible solution, Bankruptcy and Debt Settlement.

A few things you need to know
1. Generally, when your account gets in the hands of these junk debt buyers, getting BOTH a reduction in principal and a payment plan are out the window. These players are looking for quick money. Thus, generally, you must be prepared to make a lump sum payment or a several large payments over no more than 6 months. So, your plan to try to negotiate to reduce the balance owed and pay it off over a long period is essentially a non-starter
2. If any entity forgives a portion of debt of $600 or more, they are required to issue a 1099-C and the taxpayer (you) is required to declare that portion (the forgiven debt) as income for tax purposes, there are some exceptions to paying the income tax (see IRS Form 982).
3. RockingG makes a good point, will settlement solve your underlying financial problems with any degree of certainty. Do you really have the resources to settle (i.e. lump sums).

As for chapter 13, yes its a payment plan, it is a 5 year payment plan (sometimes 3), BUT, it puts YOU in control. Also, you always have options in a 13 if things change. If your income goes down, guess what, you can amend your plan and reduce your payment, if your income goes down enough, you can covert you case to a chapter 7 (note, in your particular circumstances, you could only convert 8 years after the date of your previous chapter 7 discharge).

Bottom line, if your plan to settle with these guys was to try to get into some extended payment plan, the ONLY option you have is a chapter 13.