BK 13 and Charge-offs

[treehugger1]

A colleague of mine filed a BK13 a few years ago. By the time they decided to file, CC's had charged-off several thousand dollars and sent a few accounts to collections. They listed everyone on their creditor matrix that they knew had some connection to an account. He said over half of the creditors that had charged off (including some of the collection companies that were attempting to collect the debt) never filed a proof of claim. At the end of 60 months and their discharge, it turned out they had paid off about 55% of what they felt they truely owed. Yet, they paid back 100% of those who actually filed claims. Does anyone here who had CC and unsecured debt companies charge off accounts have any similar experience? Why would a company not attempt to take a few minutes to get at least some of their money? Why would a 2nd or 3rd party collection agency not take a few minutes and file a claim? It is interesting to note that in my state (Oregon) a collection agency must be licensed with the state. Could it be that there are so many unlicensed collection agencies in some states, that they don't dare submit a claim for fear of drawing attention to themselves?

[lrprn]

He said over half of the creditors that had charged off (including some of the collection companies that were attempting to collect the debt) never filed a proof of claim. At the end of 60 months and their discharge, it turned out they had paid off about 55% of what they felt they truely owed. Yet, they paid back 100% of those who actually filed claims. Does anyone here who had CC and unsecured debt companies charge off accounts have any similar experience?

We are having the same experience in our Ch 13. About half our creditors and the collection agencies our original creditors sold our accounts to decided to file a claim, the rest chose to write us off. Paying back only the ones that did file claims at 100% at our current monthly payment amount, our trustee shows us finishing our Ch 13 plan before 60 months are up. The trustee can't keep taking our payments if everyone who filed a claim and our lawyer have been paid in full.

Why would a company not attempt to take a few minutes to get at least some of their money? Why would a 2nd or 3rd party collection agency not take a few minutes and file a claim?

Since the creditor/collection agency is not allowed by law to ask for payments or communicate with a Ch 13 debtor the typical way they do everyone else, it requires the company to set up a completely separate internal system to deal with bankruptcy accounts to ensure no bill is ever sent or illegal contact made with the debtor that would violate the automatic stay. The overhead to support this plus the separate bookkeeping and personnel required to account for all the trustee payments they receive for hundreds/thousands of bankruptcy accounts plus provide accounting at the end of every 3-5 year plan to multiple trustees to settle every single Ch 13 account is considerable. A lot of companies just don't see enough return for the extra effort, so they write off the account and include the loss on their taxes. They probably get as much back (if not more) than if they pursued every single individual account through Ch 13 where they may get as little as 10% back on the dollar anyway.

[treehugger1]

lrprn: How long did you not pay everyone before they sent you to outside or internal collectors. I'm still trying to get a bearing as to whether or not I can hold off for another 6 months. I can deal with a few irritations and even a judgment or two. Some of my unsecured have made agreements with me. Some will probably begin calling in a month or two. I used my tax refund to catch up with everyone per agreement, so that bought me a few more months. Do you suppose I can hold out 5 - 6 months?