If you make a payment arrangement w/creditor, can you still file BK?

[Lindsay]

I was considering sending letters to my creditors asking for a lower monthly payment temporarily and some sort of payment arrangement. I guess I just want to see if it is possible to get out of this without bankruptcy, but most likely its a longshot. Misplaced optimism is what caused this situation to get so bad in the first place, but I guess I'd feel better if I tried.

If I ended up agreeing to payment arrangements and I ended up filing BK anyway, would this cause problems and objections from the creditor?

Also, the preferential payment has me confused. Is it $600 a month or $600 in the last 90 days. The largest minimum payment I have is $410 and I paid that last month to the creditor. One creditor hasn't been paid in 60 days. Will we be in trouble because we paid one unsecured creditor over another? I'm really confused about that part. We have 8 total creditors (unsecured). Three of the accounts are current, three of the accounts are late but less than 30 days, one of the accounts is 30 days late, and the other is going to be 60 days late in a few days.

Thanks so much; this is such a wonderful board. I do feel better since I've been reading it.

[havetodecide]

I am curious to know as well. I negotiated with one creditor and sent a payment but then decided to file. Also negotiated with others, told them i would think about the plan they offered.

I keep wondering if they may think i may be able to pay but opted for bankruptcy and if they may show up at 341 meeting alleging that.

[HHM]

You can still file BK even if you make a deal with creditors.

BUT....

TRUST ME.....you are going to end up filing BK anyway, so why throw good money after bad. You already have late payments, universal default interest is going to start kicking in on all your credit cards (i.e. 28%+), the hole you are in is already too deep for you to dig out of. Face the reality of the situation head-on, and deal with it objectively.

[emoney]

It is impossible to offer any good advice without knowing more about your situation. Some information that would be helpful is your total debt. Is any of it pledged? How old is the debt?Your income, age and education would be helpful.
Rembember BK will affect future earning because many companies will not consider you for promotion because of BK. It is illigal but it happens just the same.
Do not think for one minute BK is painless.
regards,
emoney

[reallynervous]

We tried to work with our creditors, but it still didn't work out for us. They weren't willing to work with us at all until we had missed paying for 2 months. (Why should they, we were continuing to pay them at 29.99% interest?)

Once we were able to negotiate payment plans with the first ones we attempted (Chase, where our interest on 3 accts was high), we thought we might be able pull it off. Then our other accts raised our interest rates because we had been late paying Chase. It was a vicious cycle, a lot of heartache (I had to share our situation over and over again with person after person), and wasted time and money as we ended up having to file anyway. So from that perspective I get what HHM is saying and it is good advise.

That said, I think it was a necessary step for us. I think we (especially my dh) were deep in denial and living on hope. The process showed us that we were definitely in too deep and that BK truly is our only and best option. I think it helped us to accept it a little easier so I guess I am not totally regretful that we tried.

We have a lot of debt compared to our income so your case may be very different. Maybe you share a little more specifics with your numbers and the experts here can give you their advice.

One thing is for sure, if paying your cards means that you have to put anything at all on a credit card, then it won't work out. You have to be able to use cash for everything that may come up and then pay your cards with any extra money.

Good luck!
reallynervous

[BurgerKingVII]

I had a client whom I defended in multiple debt collection lawsuits, and I negotiated some partial payment settlements. However, before my client could pay all the money due under the agreements, his finances got even worse, and I had to refer him to a BK attorney so he could file Chapter 7. The fact that he defaulted on the settlements I'd worked out was a total non-issue in his BK. (It's not even clear to me how it would have given them grounds to object.)

HHM has a good point, though -- if you wind up filing BK, you've thrown away whatever money you paid to your creditors. It could also complicate your BK if the payments are preferential transfers ($600+ to any one creditor within 90 days before filing), because the trustee can recover that money for distribution among your creditors.