Settle for 1/2? - creditor calls

[Iamnowbroke]

Hello all, I am new here and have retained attorney about 2 weeks ago. Here is the current situation.

I pass the means test by -1000. Even including the money my boyfriend contributes to household. (I actually over estimated his contribution to be sure). So I definatly qualify for Chapt. 7.

Last week I notified all my creditors of my situation and the calls have stopped (Thank god).

This week every single one of them contacted me and offered to settle for 1/2 of what I owe. It would amount to about $25,000 - If I really really try, maybe I could do it.

so, you think it would be better for my credit to try to pay this off? Or file Chapt 7.

opinions appreciated.

Christine

[HHM]

Without more information, its hard to say.

But realize this...BK is obviously the MOST cost effective solution...why pay $25K to get out of debt when you can pay an attorney $2K. Second, there is absolutely NO benefit to you to settle. Your credit is already trashed, you create an income tax liability on the forgiven amount. Ask yourself this, is 20 points on your credit report really worth $25K?....(because that's about the only difference you "might" conceivably see between DS and BK).

I say this over and over again....
The ONLY time it makes sense to "settle" debts vs. filing BK is if you have non-exempt assets that must be protected or you otherwise cannot file a BK (and by can't file, meaning you could not legally receive a discharge).

Also, if you actually qualify for a chapter 7, it begs the question as to where you will get the $25K

[catleg]

How late are you on these accounts? I am 60-90 days late (haven't paid since Sept-Oct on most of them) and I'm getting settlement offers in the 60-75% range.

HHM is right. You're probably better getting a clean slate. The only real downside is you can't file again for 8 years. Usually that is not a problem if you really wipe the slate clean.

[Iamnowbroke]

Well, I am only about 30 days late on all cards. Total debt is about $50,000. I DO NOT have any assets. I own a car worth about $12,000 - still owe $15,000 on it.

No house, no jewlrey, no property - nothing except my clothing and my furnature, which is VERY WELL used.

I have about $1,100 in the bank today - rent is due in two days (1,475) so I will again have to ask my boyfriend for extra money to pay rent.

I guess you are right, I don't have a freaking dime, how in the world will I come up with $25K?

Yes, my credit is trashed....I still have about 3 months before I can file because I owe attorney $1500.

HMMMM - guess it is a no brainer -

I Will have a clean slate - I will NOT use CC and get into this mess again....my life WILL get better

[broken64]

I agree with others go with the bk and get a fresh start. These companies are a joke, they make up their own rules as they go along, they make arangements with you and then bam take them away on a whim. I wouldn't take any chances Iamnowbroke, get your fresh start, Good luck to you with your decision.

[Iamnowbroke]

Ask yourself this, is 20 points on your credit report really worth $25K?....(because that's about the only difference you "might" conceivably see between DS and BK).

ONLY 20 POINTS!!?? Wow, that is aweful. The creditors make it sound like I would be OK after settlement. BUT, I guess since I have gotten myself in this mess for a reason, then I should not have credit cards.

UGH - How life throw things at you - this sucks

[Trixie007]

ONLY 20 POINTS!!?? The creditors make it sound like I would be OK after settlement.

Oh, they'll tell you anything that they think will cause you to cough up some money! They are not your friends, they do not have your best interest at heart! I already knew this before, but when every one of my creditors called on the day of my surgery (which they knew about) multiple times, I finally really figured out that they do not care about us!

[DYLAN150]

Question: when you settle with a company do they want a lump sum or can you make payments over a fairly long term? I am wondering if a person is on the eve of filing a bankruptcy where would get the money to pay off these companies?

[jeb]

The creditors make it sound like I would be OK after settlement. - iamnowbroke

As Trixie stated, they will tell you anything.

USAA is willing to work with me on my car - but ONLY after the loan is brought up to date.

In other works, if I pay them 2 months back payments - some $800.00 - THEN they will tell me what they will do for me. If what they offer is not something I can accept I am out the 8 hundred. - jb

[catleg]

It would require selling or borrowing against an exempt asset, such as 401k plan, life insurance policy, borrow from parents, etc.

It's a form of poker. They can't really tell if you're bluffing until they get papers from the BK court, and then it's too late.

They also know they can sell a fresh charge off for about 15 cents on the dollar. So you are in competition with junk debt buyers for your own debts!

I had a collector today telling me to pawn my TV...this on a $25k credit card debt. Thank you, US Bank.

[fltoo]

BK is the best action for a clean slate without the added headaches and expense of settling.

Settling the accounts can be personally time consuming and lots of cash is needed since the creditors want the money ASAP. I would never use a settlement company since it can be done totally on your own, without the expense of paying the settlement company.

Unless there is a good reason for not wanting a BK on your record such as the protecton of considerable assets or being denied a great job or promotion, BK is the best route to take.

Hope you find your way. Good luck.

[liz417]

I agree with the others, go the BK route. Also remember that you will be TAXED on the debt that is forgiven Also, 50% is a starting point, they will settle for less as time goes on. I currently behind over 8 months and they are calling my attorney with offers left and right, no thanks...I'll file BK. They didn't want to "help me" when I called them last year in trouble...now that are all "willing to work with me"...not thanks

Good Luck!