BofA offered to settle debt for 30.1% settle or BK CH 7 ?

[aish]

I had posted two other posts already about my situation...
pregnant due in may, unemployed, hubby employed but income varies from $600-2600 p/month.

owe 88,650 on 1st mortgage (guild mortgage) behind. House valued $89k-$95k
49,000 on second mortgage (BofA) current
$9,200 CC (BofA) behind for 7 months. offered us to settle for $2770
$4,000 CC (amex) current.
$1000 (sears) current

We wanted to file CH 7, due to unemployment, lawyer recommended ch13 to keep house if the house value was less then 1st mortgage we could strip 2nd, (not the case) so we decided to file ch 7..

Last Friday BofA called about the CC account telling us they will be sending it to CA or maybe we could get sued if not contacting back that day.. so we called back... I told them we've been trough really hard times...

they offered to settle for 4600 at first but went all the way down to 2770, have to be paid by June 26,
really good deal i think if we didn't have any other debt... we are still to get current on house, and pay amex and sears... and we have nothing for baby to come.

we don't even have the 2770, the cheaper, easier,faster is pay lawyer and file ch7, we are afraid of borrowing money to pay that card and having to file bk after....

what do you recommend??

what would you do?

[pandacb]

I have been reading everything I can find about the same issues you are facing. Some very respectable websites (like the national bankruptcy attorneys' website) are warning that debt settlement might not be final. They warn that years down the road we may hear from a "debt buyer" that we still owe the deficiency...even if we have it all in writing. I'm not sure how that can be, but if true, it would be like a nightmare coming back and a chance we have decided not to take. Just my opinion, but the economy is bad and not seeming to get any better which is more incentive for these "junk debt buyers" to pounce on anythng.

From my research, a debt settlement puts a black mark on your credit very similar to a charge off which is similar to a bankruptcy.

[ready2puke]

If you decide to settle, you will have a 1099 and will have to pay IRS income tax on the forgiven amount..
Also if you stopped paying BoA and are even thinking about filing why are you paying the rest of your cards.. You need to save for you baby and if you file an attorney..
You need to really take the time and read this forum, I mean really read it and see what others have gone thru and then make your decision.
Good luck..and congrats on your baby

[dakota112]

When that 1099 form comes, now you will have to deal with the IRS and they will want their money now. You can't win. That is why filing is the best way out of this mess. You get rid of all the debt and there are no tax consequences which can be immediate and horrific. These poor folks who make these deals with the credit card companies and don't think this through don't realize the troble they are in.

[Dst1]

I have been reading everything I can find about the same issues you are facing. Some very respectable websites (like the national bankruptcy attorneys' website) are warning that debt settlement might not be final. They warn that years down the road we may hear from a "debt buyer" that we still owe the deficiency...even if we have it all in writing. I'm not sure how that can be, but if true, it would be like a nightmare coming back and a chance we have decided not to take. Just my opinion, but the economy is bad and not seeming to get any better which is more incentive for these "junk debt buyers" to pounce on anythng.

From my research, a debt settlement puts a black mark on your credit very similar to a charge off which is similar to a bankruptcy.

What you need top understand is that this is a free country and people can sue you for anything and threaten to sue you for anything and call you all they want. Settling the debt doesn't stop people from being free humans. Does debt sometimes get sold after it's settled. Yes. There are crooks in every business. Could they pester you for the rest of you life? Possibly.

I think the best answer is to do what's in your own best interest. There are no guarantees in this life about anything. Once you accept that fact it's a much more manageable reality.

[aish]

debt settlement might not be final. They warn that years down the road we may hear from a "debt buyer" that we still owe the deficiency...even if we have it all in writing.

From my research, a debt settlement puts a black mark on your credit very similar to a charge off which is similar to a bankruptcy.

That would be awful! do you imagine... coming up with 2770 from nowhere to pay this and settle... also pay taxes on it and after all that finding out it was not enough!

yes I've heard the same about debt settlement and bk any of them is better then the other...
thanks for you input!

[aish]

If you decide to settle, you will have a 1099 and will have to pay IRS income tax on the forgiven amount..
Also if you stopped paying BoA and are even thinking about filing why are you paying the rest of your cards.. You need to save for you baby and if you file an attorney..
You need to really take the time and read this forum, I mean really read it and see what others have gone thru and then make your decision.
Good luck..and congrats on your baby

yes we will have to pay irs and irs is not forgiven in bk, so it's worst then bk. I cant imagine 6000 taxes... last time we got a 1099 (interest) for 200, we had to pay 100 in taxes for it... so I expect at least 3000 tax plus 2770.... plus if sold to some company.... ugh!
we better do bk then debt settlement.

[aish]

When that 1099 form comes, now you will have to deal with the IRS and they will want their money now. You can't win. That is why filing is the best way out of this mess. You get rid of all the debt and there are no tax consequences which can be immediate and horrific. These poor folks who make these deals with the credit card companies and don't think this through don't realize the troble they are in.

yes, you are completely right!