try to settle before chapter 7 .. thoughts?

[danohio2831]

i have a very bad bipolar disorder and it has caused excessive spending sprees for a 10 year period. i have a second mortgage from a spending spree from 5 years ago of 56,000. i know am sitting at 115,000 on credit cards, from a 1.5 year period. and to make matters worse, i just got laid off. i have medical documentation for the past 7 years i have been on medication for proof. ( like it really helped....lmfao...have to have a little humor)

this is what i want to try to accomplish to try to avoid chapter 7

i have totaled up all my assets, and added up my 401k

if i sell all my assets (wich would be taken in chapter 7) and withdraw my 401k, i could pay back each creditor 40 % of what i owe them.

i have recently stoped every credit card payment, and am currently behind by 2 months.

how should i make offers, just sent a letter about my medical condition, being laid off, and i want to settle.
i will also send coppies of
1. bipolar depression from doctor
2. proof of being laid off
3. that i have completed credit counceling (for bankruptcy)
4. and i will have no other choice to file chapter 7 if i am sued, or a settlement of 40% cannot be reached.

also a thought, if i start selling things now, and have to file for bankruptcy in 1 year, will the be ok with the fact i sold everything to try to settle my debt?

also, what is a time frame from when u stop making a payment ( but i will still talk with them and stay in contact) before they file a lawsuit
for the record, i know i did wrong, and i do not know what happened. i was just trying to be happy and i just kept buying and buying. i also had a change in my medication. i do not know, all i know is i was wrong and want to try to correct it with some creditors before i file. it is like christmas every day in my house now that i am laid off. i clean and find 5-10 things i forgot i bought.

ps
thanks for any advice and listening to me
dan

[keepmine]

Dan,

Get yourself to a lawyer and get all of your options explained. Please, DO NOT TOUCH the 401K. That is exempt from creditor seizure.
No job and selling everything you own to pay $115K worth cc dets that are in default is just not reasonable thinking.
Slow way down. Chapter 7 may wll be the best option. For darn sure, you keep any ERISA qualified retirement accounts. And, your state may well exempt many of your assets.

[SinkingFast]

Whoa, Nelly! Take a breathe, slow down, step back, and think about this a bit.

First,......... The most important thing here is your mental health. You need to make that your number one priority. Getting control of your condition so you are able to make rational financial decisions about your future. That's A #1, Numero Uno Important.

I don't know if you'll make it a year without being sued or not. As little as a year ago, probably, but the New Law changed things. There have been posts on the Forum by one person being sued by CC's after as little as 5 months of missed payments.

More than a few of us here are getting offers from CC's to settle our debts. The best offer I've personally had was to reduce the debt from $13K to $8K on one CC. So that's no where near the 40% you hope to achieve in a settlement offer made direct with them.

If you file BK, AND you're current on your home, you may not loose your house, provided you can get another job to make the payments. Depends on the amount of equity you have and your Homestead exemption limit.

If you file BK, your 401K is protected under the New Law. Nobody, not even the Court, can take that away from you. It's totally untouchable by BK and will be there for you when you retire.

Don't just jump the gun and run out and start selling stuff. The look back period for major property transfers is 1 year. You've got to declare things you've sold. Cars, jewelry, houses, boats. High dollar things like that you'll have to declare.

When you file BK you're allowed to keep a certain amount of property and equity in your home. Every State has Exemptions rules. Some States allow you to choose the State or Federal Exemptions. So you really need to see where you stand on your property versus your exemptions.

You need to do some research, make some appointments for Consults with attorneys, AND work on getting control of your condition.

[danohio2831]

i live in ohio

one of the lowest exemt states there is from what i am reading.

i agree, that is what gets me going, a thought and i cannot function until it goes through my mind 10000 times.

i need to slow down

[Minnymouth]

STOP -- BREATH DEEPLY ----- DON'T SELL ANYTHING ----- READ THIS FORUM ---- SEE AN ATTORNEY FOR OPTIONS AVAIABLE TOO YOU ------

DO NOT RUIN A CHANCE TO FILE A CHAPTER 7 IF AVAILABLE TO YOU!!!!

Your intentions of paying your cc debts is NOBLE - but not necessary.....

Your prority should be the roof over your head, your auto, and utilities. The rest is not necessary and mostly wrote off in bankrtupcy.

Feel Guilty if you MUST, then brush that feeling aside and do what you have to do......

DO NOTHING till you consult an attorney and find out what options are available to you.....

AND DO NOT TOUCH YOUR 401K............. bankruptcy will not touch it...................

Keep us posted,

Minny