DMP or Settlement
Date: Thu, 03/20/2008 - 12:49
Well, when I looked at my expenses I realized I did not include a budget amount for clothing. I have 3 kids. It will be impossible to go 4+ years without buying clothes. And a part-time job is almost impossible since my husband already works 55+ hours per week and I work 45 - 50 hours per week. My husband is paid commission and some sort of compensation for working over 40 hours, but it isn't much and I am a salaried employee.
I want to pay my creditors everything I owe. I feel it is my responsibility. However, they have raised my interest rates so much (they say I have too much debt and considered a "high risk") that they have actually made it more difficult for me to pay.
When I signed up with this site a couple of days ago I received information on Settlement. I have heard mixed reviews about dealing with debt in this manner. A question I have is why would creditors be willing to settle? I also understand that BK 13 can make a debtor pay their creditors, so how does that help the debtor? If they cannot afford to pay now, how can they manage with BK 13?
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Settlement
Creditors will settle for less after you are late about 120 days - if you have a true hardship and are overextended. I am currently working on settling my debts and have just settled a $59900 debt for $23,000 - a savings of $36,900. I have four more creditors to go and am waiting until I am eligible (late enough). I am borrowing funds to pay my creditors in a lump sum settlement, that works best, but some creditors will work out payment over a four month period or more.
Keep reading and you will see many stories of debt settlement.
Bk 13
When you file Bk 13 - the judge determines what you will have to pay your creditors (usually only pennies on the dollar of what you owe them if they are credit cards, medical and unsecured debts) - the judge then sets it up for a 3-5 year period of repayment. So they will alleviate your financial burden in many cases. If your income is under the median income you would qualify for Chapter 7 which is a liquidation of all unsecured debt, but you may be required to give up assets. You should talk to a Bk attorney, they offer a free consultation in many cases, check your yellow pages.