At charge-off point:Ch 13 or Work it out?

[confusedguy]

6 months ago, I resolved to file for bankruptcy and stopped paying my creditors. I saw one attorney and found her unable to answer my questions satisfactorily. I then saw another attorney who was much better with the advice. I last saw him at the end of November and he told me he would be in touch with me around mid-December and we would go ahead and file. Mid-December came and went without me hearing from him. I chalked this up to the holidays and being busy at the end of the year. I called him earlier this month (January) and left a message for him and he has not returned my call. I have not been more aggressive about seeing him because I am extremely busy at work the past few weeks, and haven't found the opportunity to leave the office and go visit with him (the whole world runs 9AM to 5PM, of course).


Also, I've been having second thoughts. I've attained some part time work in the interim and, because I haven't been paying my debts, have accumulated a bit of padding in my checking account. I've contacted my creditors to see what repayment options they would offer and I've been considering them.

I have coverage for legal services through my place of employment, so the only thing I am charged for my bankruptcy is the filing fee, so long as I see an approved attorney.

Here's the thing, one of my creditors is going to be charging off my account tomorrow.

Which will be worse for my credit history and personal history: contacting my creditors and working out repayment after 6 months of not paying, or simply filing for Chapter 13 bankruptcy?

Also, I know that both Chapter 13 and my six months of non-payment will drop off my credit report after 7 years. That's fine, but if I go apply for a job, let's say, 20 years from now, won't the bankruptcy be a part of my permanent record, while the non-payment will only be relevant to my credit report for 7 years?

There are many other factors influencing my decision, but this is the essential question I would like help with. Thank you.

[krielly]

From the sounds of things, your credit is already shot. A bankruptcy is not going to do more damage to your credit than the 6 mos of no payment has already done. In fact, sometimes filing can actually raise your credit score.

I would definitely consult with an attorney or two. You are very fortunate to have the legal benefits which will allow you to file for filing fee only.

I'm not sure where you got the idea that a bankruptcy will stay on your record permanently. That is simply not true. Chapt 13 will remain on your credit report for 7 years typically.

Please see an attorney and get back on track to a better future and freedom from your debt. You'll feel so much better once you have a plan in place.

Let us know how you make out!!!!!!!!!!

K

[filingin08]

I could be wrong, but I believe if you negotiate a lesser amount with your creditors, the amount they write off becomes taxable to you. In a BK though, anything not paid to the creditors just goes away. Something else to consider.

[Flamingo]

I could be wrong, but I believe if you negotiate a lesser amount with your creditors, the amount they write off becomes taxable to you. In a BK though, anything not paid to the creditors just goes away. Something else to consider.

You are correct. If the creditor "forgives" a portion of your debt, that debt becomes taxable income to you in the year forgiven and you will receive a form 1099 from the creditor for the forgiven amount to list on your taxes. Be careful as to debt negotiation. When the debt is included in bankruptcy that does not occur and the slate is wiped clean with a Chapter 7 or with payback during a 13.