Served today for $9600 debt to creditor

[flashoflight]

Your creditors probably know more about you than anyone else except yourself. They can order reports from Lexis Nexis and EWS to figure out what assets you have (cars, houses, boats, businesses, etc.) and how you are doing income-wise and with bill payment. So they got a good idea if judgment enforcement will be easy or not. So yeah, they will probably find out and react accordingly. You also would not settle for a dime if you knew you were going to file BK and the creditors know that. Your credit is already trashed anyway so there is little reason not to file bankruptcy. Why don't you want to file bankruptcy? Why struggle with creditors who are very willing to use judicial process to make your financial life miserable? You should not hesitate to do the same via judicial means by filing bankruptcy.

[bcohen]

It is extremely difficult to predict how creditors will behave with regard to defaulted/charged-off debt. Some are quick to file lawsuits, some wait several years to allow the balance to grow, and the debtor's circumstances to improve before filing a lawsuit, others just sell their defaulted accounts to junk debt buyers (who may or may not file a lawsuit themselves). Of course, there are criteria which creditors and collections attorneys use to decide which accounts are worth suing on, but those criteria are a guarded secret. It goes without saying that creditors are more likely to sue a debtor if they have long-term verifiable employment, if they own real estate or investment accounts, or if the credit report shows that the debtor is continuing to pay other creditors.

One thing which is easy to predict is the fact that for most people--especially those who have reached the point of being sued by creditors, bankruptcy will offer a much better "settlement" than anything your creditors would voluntarily agree to. This is especially true for people who are considering Chapter 7 bankruptcy. Since you mention Chapter 13 bankruptcy, I assume you either have non-exempt assets to protect, or your income exceeds the median for your state. Chapter 13 bankruptcy can often reduce the total amount paid to creditors, because the interest which can be charged is limited by law, and because some creditors may fail to enter a claim, which means that their debt will end up being discharged. Another important advantage of bankruptcy (whether Chapter 7 or Chapter 13) is that any debts which are discharged or reduced will not result in tax accrual. If you negotiate your debts outside of bankruptcy, any amount discounted or forgiven is considered "income" for tax purposes, and you may find yourself issued a 1099C and expected to pay taxes on this amount.

[zizzled]

Hi everyone... today, I was served and am being sued by a collection agency for $9600. I am contemplating whether to attempt to contact them to pay this debt. My question is... if I would pay this in full, would other debtors that I owe then come after me more aggressively, thus warranting my possible need to file a Chapter 13? I really don't want to file bankruptcy, but I have about $25k outstanding debt that I am in arrears on... and that includes this 9600. Thanks in advance for any help!