I Was going to file BK but.........

[ramstang]

I was all ready to file for Ch7 on march 1st, I was laid off for 6 months, and had stopped paying my CC's. Now I am getting relocated and Along with a paycheck every week, im getting a significant moving bonus. Now This moving bonus is to aid in the sale of my current home as well as my moving expense obviously. But since Im only moving about 300 miles away I will have alot of extra to pay to these CC's. I'm gonna say I stopped paying in November. And the Creditors are Citi $4700, sears $1400, and 3 wells fargo, $6000, $3000, and $3500.

My question is, Should I pay all the late and back months and get my accounts current again, or should I negotiate a settlement figure with each card that will let me? I know wells fargo is offering to knock a few thousand off my balance, not sure what others creditors will say.


Now if you say I should try to negotiate, I have another question. When I send them the money, and they report it, will it show "paid as agreed"? And whats the chance of me ever getting them to lighten up the baddies within a year so I can attempt to buy a home where Im going?



Thanks so much for your input!

[Trixie007]

It's really hard to form any kind of opinion without more details. I can see you have $18,600 in cc's - any other debts? What percentage of your income is this? How much will be left after expenses (and don't forget taxes) from your relocation bonus?

Your numbers look low to me (cuz mine are so high ) - if they were mine, I would negotiate them! However, it really depends on what the rest of your situation is. There's a ton of info on this site about negotiating debts, what to look for/expect, tax ramifications, etc.

As for them removing derogatories a year out, no, they won't. However, the negative impact lessens on it's own as time goes by. And when you do go to buy a new house down the road, the lender will likely look for 2-3 active tradelines with a positive pay history for anywhere from 1-3 years.

[StartingOver08]

Many of the cc's are settling for 20% or even less ...so given the little bit you have posted about your debt, it seems to be a better solution for you to negotiate settlements (make sure you take into consideration the tax amounts when you are figuring your budget). You don't have a lot of debt (if what you posted is all of it) - so why waste a BK on a small amount of debt?

[ramstang]

Well, when i was getting ready for BK, it would have also included an RV, and an already negotiated CC that i still owe $10k on. plus about 3 other small balance store cards I still am able to pay on time. I was looking at wiping about $45K of debt out with the chapter7. Now my income will be much to high for a ch7.

Now with my moving bonus I will have some extra to hand out to creditors, and if the settle for less, I know I will have some tax ramifications. If I bring my accounts current, I pay about $800 month on the minimums. And Ive got so much more going out now because of apartment rent in the new city while trying to sell my house. If I can re-age the accounts, might that make it easier for me to send out some goodwill letters for deletion of them bad months?

[optimistic1]

I doubt that they would just delete stuff off your credit file.

If your contemplating a Ch.7 and settlement, why not just do it?

Instead of being dragged into the hole you created.

I would just let them go delinquent, save your money, and settle them for pennies on the dollar.

And then you can live with piece of mind, not owing some credit card companies money.

But do what is in your best interest.

[HHM]

Debt settlement and a good looking credit report DO NOT go together. The credit report entry is something along the lines of "settled" and no, they will not remove "true" negatiave entries.

Many people immediately think debt settlement, but then when the rubber hits the road on how to actually come up with the money to pay the settlement, that program becomes a little more questionable. Keep in mind BK (i.e Chap. 7) is ALWAYS more cost effective than debt settlement (and frankly, better for you in the long term).

Keep in mind the 20 cents on the dollar is still a "rare" settlement, the average is still in the 40-60% range. Also, keep in mind, if you need to take time to gather the money, that 20% will be 20% of what you owe at THAT time, not what you owe now.

Generally speaking, if your unsecured debt is more than 40% of your gross annual income, BK is probably the better option.

[treehugger1]

I agree. Any settlement that reduces your overall principle should be looked at carefully. In addition, if you declare BK in the future, you are probably still liable for any taxes owed the IRS on forgiven debt unless you can show insolvency.

I've had offers of 30 cents on the dollar paid off over 6 - 9 months. In these cases, the creditors would not send out a 1099 until I had completed the reduced payoff.

What still bothers me is that I called all my creditors originally and explained my situation. It didn't matter though. Once I defaulted by just a day, my interest rates went through the roof. Then, 6 months later (right before charge-off) they were coming up with all sorts of ideas and offers. By then, my credit had tanked. Without knowing the future, it seemed better to not reset the 7-year reporting period. I still have a couple of open lines of credit, and I use these frugally. I do need a CC in order to avoid the steep holds rental car places put against a debit card.