Chapter 13 vs. just settling the debt

[NorthFLgal]

Has anyone ever settled any unsecured debt vs. filing for a Bankruptcy? Me and my husband went today for a consultation with a BK lawyer and we would have to file a chapter 13 at a 100% payback. They did suggest that if we did not want to go that route that we should just try to settle the debt for less. Anyone else done this? TIA for any advice.

 

[pumpkinmomma]

I cant speak to what a chapter 13 is like, but if you decide to settle, you will still take a major hit on your credit report plus you have to pay taxes on the debt that was forgiven. So you should factor that in when you are trying to decide what to do.

 

[happily single]

I don't do bankrupcty work personally but a close friend in my office does. a few things to consider. I'm not 100% postive, but I am 98% postive of the following"

1. In a Chp 13 you paycheck will be garnished weekly. This means your employer will find out about your situation (in case you were trying to not disclose this to your employer)

2. You will need to turn over your income tax return every year that your bankruptcy stays open

3. It will take a long time to re-establish credit once you have been discharged. Discharge happens once you have repaid all your debts.

Now considering working with the creditors, a problem you may have doing it personally:

1. Not all creditors may agree to reduce your debt. If they do BE SURE to get it in writing before you make any payment

2. This will also affect your credit becuase the debts most likely will show on your credit as "paid for less than account balance", which is a negative mark

Good luck. Its not easy either way

 

[torinsmom]

I would look at Consumer Credit Counseling. They can consolidate your debts and get your interest rates lowered without bankruptcy. I have done a Ch. 13 before when I was young and stupid and married to someone else young and stupid. It became clear early on that not only could we not pay the payments, but our credit was much worse than the lawyer had told us it would be. We ended up converting to a Ch. 7. If I'd known then what I know now, we would have done debt consolidation through CCCS instead. I ran up credit cards again after our divorce and that's the route I went that time. The payment was lower and some of my creditors went to a 0% interest rate. The one payment was about 25% cheaper than paying them separately. CCCS will also do a whole budget run-down with you and suggest ways to save you money.

You have to be careful what organization you go through.Some are not non-profit. My bank uses CCCS of San Francisco. There was no charge since I am a credit union member.

https://www.cccssf.org/

 

[jaminmd]

Where's that ShellyLynn3630 when you need her?