Too Late To Negotiate?

[copper2]

Has anyone had luck with this? Ran into a friend-of-a-friend last night. He shared his experience with Chapter 7. He successfully negotiated with all his creditors, telling me he was shocked at how little they were willing to accept on what he owed, rather than a bankruptcy with nothing. He said every creditor worked with him, except for AMEX, and so he was forced into Chapter 7 anyway. This is stupid, but maybe worth a try? I mailed my paperwork to the court (two days by Priority Mail) on 10/5. Has anyone tried this at this stage in the process? I have nothing to lose except hanging up the phone and continuing with the process? It's 10 years of my life! Willing to do almost anything!

[Minera]

Oh I tried that route, maybe wasn't aggressive enough but they certainly were not willing to settle with me for little. I was forced into bk because they wouldn't even accept the payments I proposed. This was Amex, Citibank, MBNA, and Capital One. I guess it all depends, doesn't hurt to try.

[copper2]

I failed to get anywhere with Citibank, too, after proposing payments! (What is wrong with them? They remain my only R9). I told this friend-of-friend I had no money to make bargain-pay-off's and he said I didn't need money, just to set up a payment plan with them, and asking them what they were willing to accept in light of a pending BK, either something or nothing, he said. I am a terrible negotiator, so I'm trying not to get my hopes up. On the other hand, I'm sure lots of filing is happening and I have leverage. I'll post what happens.....

[Genenco]

Well, on one hand, it's a write off for the CC companies..And BTW, the banks recently reported they made ( I believe if I am right) 40 BILLION last year and over half...Was FEES!!!

Never feel sorry for the CC companies, they make more in 5 min then you could make in 10 years.

[HHM]

If you already sent off your paperwork for BK, its a little late to negotiate. Once your BK is filed, you can't simply get out of it, unlike a chapter 13, which can be voluntarily dismissed, a chapter 7 dismissal needs consent of the trustee and court order to dismiss. Plus, with the automatic stay in BK, your creditors will not talk to you.

This "friend" simply used the threat of bankruptcy, because you can't negotiate while in bankruptcy.

Settlement is possible, pre bankruptcy, but there are a lot of factors that determine the issue. Also, it may not be the best financial move for you because you have to pay income tax on the balance that gets written off. For example, if you owed $10,000 to Chase, and settle with them for $6,000, you will have to pay income tax on the other $4,000.

Generally, the best, lump sum, settlements are had after an account has gone to a collection agency and has been in default for over a year. It's actually uncommon for creditors to accept both a reduction in balance owed and a payment plan, unless you have a good reason for your financial hardship that can be documented.

[nodinero]

HHM, I'll second that. I used to have a Subchapter S corp with a $30K business debt that I also signed financially for. I used an attorney to help me settle for $15K because they couldn't produced a signed document. In the end I paid the $15K, plus 1.5K in attorney's fees, and a few months ago (almost 3 years after this all happened), a bill from IRS for ~3K in taxes that I personally owed from this transaction!

All be warned, IRS will catch up with you who settle for pennies on the dollar - I am a living, breathing example of that!!!