Chapter 13 vs. Judgement?

[inspiring]

I have about $3,000 worth of debt. If I filed chapter 13 I have about $600 extra monies every month and will probably get tagged for about $400 payments for about 8 months (Do they do payments for that little time under chapter 13?) Or do I just not file and let a collection agency sue me (I mean why try to pay it all back if only 1 or two of them end up sueing me and I end up only having to pay back 1/3 of it or less?) Isn't a judgement where a judge says..this is how much you owe, this is how much you pay a month for x amount of months? (Basically a payment plan, which a few of my creditors wouldn't accept when I asked them in the first place?) Shouldn't they have just accepted the payment plan in the first place instead of maybe taking me to court? Or do they just like to add the extra money with court fees? If you break down all my debt, the highest one is around $850 (and that's with interest and fees)..does anyone even think that a collection agency would sue over that amount? (Not a credit card or bank.) I originally wrote to everyone of my debtors and told them that I only have social security and one car that has a $6,000 balance on it.

Thanks
Mary

[FloridaGirl]

Mary, Mary, I'm quite contrary to your filing BK! LOL! That was my attempt at being funny. Seriously, why do you want to file a BK on 3 grand worth of debt? If you have pretty good credit, it seems like there would be another way for you to deal with this other than ruining your credit with a BK. Three thousand dollars just isn't worth filing BK over. Let's say you did file a 13. You said you would have about $600 dollars in available income to pay into the plan, right? Well why couldn't you apply that $600 to your debts every month without filing BK? If you did this, it would only take you five months to pay your debts. I can't see any credit card company turning down a hearty payment each month. You say your highest debt is $850. You could send them $600 this month, and $250 next month and be done with it. You could do this with each of your creditors and be done with all of them in no time at all. I'm just confused as to why you'd want to put yourself through BK when it doesn't seem necessary at all.

You said some of your creditors won't accept a payment plan, but I have to wonder what type of payments you offered to them. If you called the creditor you owe $850 to and told them you'd send $600 this month and $250next, I can almost guarantee you they would gladly accept. Why would they want to risk having their debt discharged in a BK when you are willing to pay the debt off in two months? And you could easily do this same thing with each of your creditors until you've paid the 3 grand off. If you have $600 extra each month, then how about you just pretend you are in a ch.13 plan. Pretend you have got no choice but to turn that money over to your creditors each month and get them puppies paid! Just send them the money even if they said no to a payment plan. If they have a check in their hands, they will cash it.

Something just doesn't add up here. Are you sure you are telling the whole story? It just doesn't seem right that you'd want to file a BK over 3 thousand dollars when you say you have 600 extra each month. Did you mean 30 thousand? I'm confused.

[inspiring]

No, not 30,000

I get that joke alot. I haven't actually added up the exact amount of my debt. I also realize that the $600 disposable is no longer true. I might have about $250 extra a month. On a $850 debt I would have to pay it over 4 months at least and it would leave nothing extra for emergencies and such. I pulled my credit reports earlier this year..and all the new creditors are not listed (Around 13 of them.) I didn't get my actual credit score though. I am sure it is under 500 by now. I guess I really need to sit down and ad up all the debt huh?

Mary

[StaciMM]

Regarding filing ch. 13 on a low amount of debt. Keep in mind that not only would you be paying your creditors at 100%, but you'd also be paying an attorney and a fee to the trustee. The going attorney fee in a ch. 13 is $1500-2500 I believe, and 13 is not as simple as ch. 7 so you really do need an attorney.

The collections companies, etc. may not WANT to take the payments you proposed-but they have no choice but to apply a payment to your balance. OR, if you accounts are already charged off (not paid in 6-9 months) then you could save up for a couple months, and offer a settlement. Such as the $850 account, offer them something really low, like 20-30% and they'll likely counter with 50-70%. Just get it in writing before you send payment! If your balances are all somewhat small, you won't have to worry about getting 1099's on the forgiven debt-that is generally only an issue if the amount 'forgiven' is over $600. (Even if you paid 15%, though, on a settlement where you saved $1000, that's like paying $150 to get rid of $1000.)