settlement timeline

Hi Kristin,

With 3k a month discretionary, your chapter 13 will likely have you paying back the total 140k over 5 years. Based on a 2% of balance pymt, you can make payments on the debt right now, albeit minimums. If you were aggressive in a debt roll up strategy (finding additional funds beyond the 3k a month) you could pay this all off yourself, within 5 years, and not have a BK filing to potentially complicate your future.

The chances of being sued on unpaid debt are very real. How high the risk will depend on several factors; state of residence, who you owe, what firms will find when they skip trace etc...

Settlement is a very real option. My experience with people that have 6 figure debt and the ability to set aside the amount you referenced each month, is that they often have other assets that can be liquidated that will shorten the length of time it will take to be clear of the debt.

With a little creativity, you may find you can be through this in under 12 months. This will drastically reduce the chance of litigation. Again, just a guess on the additional asset thing. Lawsuit(s), were they to occur, may or may not be a show stopper when using a settlement approach (also dependent on several factors).

Your question about creditors waiting long:
Creditors do not wait. They follow internal policy for handling non perfoming accounts. The similarities between the many national creditors are strikingly close for the first 90 days and then they start to diverge. The predictability of events upto 6 months delinquent with each individual creditor are very solid too. After 6 months, a myriad of things will happen, also predictable for the most part.

Settlement works. It is one of the only options for dealing with debt that provides necessary flexibility. Life is, after all, one big fluid event. The 2 primary reasons the process works; you continually set aside money (aggressively whenever possible), and the predictability of events. If life changes occur (loss of income, medical event) you can visit BK at that time.

Mileage may vary

Thanks so much for that information! I just looked at our budget again. It was wishful thinking to put aside 3K a month. It's more like $2500. But with tax refunds, we could hopefully still be done in 28 months.

But will AMEX wait that long?

If I am understanding what you mean by "wait", no, they will not wait. AMEX, just like your other creditors, will do what they do. Whatever SOP is for each, thats what they will follow.

Why is it important for AMEX to wait vs, other creditors you have? Is AMEX the largest balance? Is most of your debt with AMEX?

Depending on your creditor profile, you could do some creative things that would be the epitomy of amex waiting.
You could enroll in their temporary hardship plans while managing your other accounts.

The math would have to make sense and it will prolong closure.


Mileage may vary.

Yes, they are the biggest creditors we have. I just redid the numbers. If I leave out AMEX completely and keep paying them as planned, I could possibly have the other five cards settled in 18 months.

Something to think about....