Your advice is appreciated

Please know that I am just beginning my debt settlement process so I am hesitating to even respond. With that said, we looked into bankruptcy and you need to be careful of that. Especially if I am understanding your right with a house and cars that are paid off??? In Chpt. 13 you still have to pay something every month that will go to the courts that in turn pays to your debtors for so many years. So sometimes it can be a good option but sometimes not. I would think assets that are paid off would be in jeopardy in BK. Now as far as your cc..so you have not paid them at all for over a year? Have you just been avoiding their calls? I am 10 days late and they call every day..I would think you could start to settle with them if you have the cash. Most would rather settle (I believe) than do the hassle of taking you to court.

READ READ everything you can. Education is power.

Thanks for the reply, luckin10. I've read and learned a ton here and other forums.

I've not made a payment on all 3 cards for over a year now. I got the calls to stop with a CD letter. Since these are unsecured debts, I learned that my house won't get affected should I decide to go the bankruptcy route.

I'm looking for advice on how much people have been able to negotiate down. Someone also advised me to be very careful because in many cases, the creditors may say that they will settle for 20%, but then fine print it so that the remaining 80% get sold to another creditor.

That's a hard call with the law suit. Usually, if it has gotten to that point, law firms aren't in the habit of settling - they make their money from litigating. Most often, they won't budge. Some may go down to .80ctd but they know if they sue and can garnish, why settle now? You maybe able to work out a settlement for the full amount, with monthly payments spread out over a period of years - you can then start saving on the side until you build up some funds so you can make them a "settlement offer to pay it off and be done with it all at once" - They may accept that instead of the ongoing payments for several years. But really, you have to look at a couple of things - 1. does your state allow for a wage garnishment? 2. is there any equity in your home? 3. do you have any real standing to fight the law suit? 4. Who are the creditors?

Once you sent the CD letter, you gave the creditor very little option. In the future, you should keep an open line of communication. Explain that you don't have any income right now and it's a struggle just to survive - maybe in another 30 days it would clear up and we can talk again then. That's hind sight - i know.

With 80k in cc debt and no assets if you were to file for bk (if you qualified for a chpt 7) - then that maybe your best bet - file and be done with it. You can start rebuilding. A chpt 13 may require you to make a % of payments to the creditors and would stop any action or garnishment.

You could try and call the creditor and offer them .30 or .50ctd prior to the hearing and say that you can borrow from a relative and avoid bk - they may go for that....

Thanks for the input and advice, nole. The creditors are FIA Card Services from BOA.

Well, if you feel ok about borrowing the money - start with them and try to settle - explain your financial problems to them and that you could borrow money from a relative - but seriously 80k is a big hole and without knowing more about your overall situation - I wouldn't begin to be able to suggest some solid solutions that maybe right for you....you can send me a private email and we could talk - it wouldn't cost you anything.

Just my 2 cents, if you qualify for chap 7 bk, I think would be your best bet, 80k it a big chuck to even try and settle and then borrow from relatives to try and pay the settlements and then worry how your going to pay them back. You would probably be suprised at how quickly you can bounce back for bk. With the economy being the way it has been i'm sure a lot of employers have seen people with worse credit, its probably going to be the norm for near future a lot of people are in the same boat, watching it sink and doing whatever it takes to survive. I filed bk before the law changed in 2005, it was the best thing I ever did, it lifts the weight of the world off your shoulders.

I think bk should also be explored. 80k - you would need about 30k to settle (the national average is around .32-.37 ctd) - If you borrowed that money, that's a big commitment from family. If you had to save it, even at 2k per month - that would take some time. If you qualified for a chpt 7 - then I would seriously think about it. BK isn't as bad as it seems and I agree with "sinking ship" - you can recover from them fairly quickly. There will be millions of filings over the next couple of years and the banks will always figure out a way to make money. Here's some history about credit and bk over the past several years that may "soften" your thoughts....

Again, if all of your other options are exhausted or if you won???t receive any real benefit, Bankruptcy may make sense. Remember, people that tell you Bankruptcy is the worst possible thing you could ever do or that you won???t be able to get a job or you will never be able to purchase a house or a car, usually have some vested interest in saying it. You can always rebuild. Starting fresh is what it was designed for. Sure, creditors may charge you more interest in the short term, but you can reestablish yourself fairly quickly. Credit card companies and banks will always find a way to make money off of us. Always.

Let???s look at some trends over the past 25 years and you will begin to see that these are all economic cycles and people are people. If someone can figure out a way to make a buck, they will.

About 25 years ago, if you were to file for a Chapter 7 Bankruptcy (The worst kind, because a person walked away from the debts they owed without paying anything back - most often credit card debts. They may have been able to keep their home or their car, etc. in the process) it was pretty much a given that you wore a ???Scarlet??? Bankruptcy letter. Once branded on your report, no creditor would give you a loan. You would have had to start rebuilding your credit over a long period of time.

Flash back 20 years ago and in the early 90???s, we went through a recession. Bankruptcy filings skyrocketed. What used to be a small time specialty for most attorneys, boomed. Suddenly, most law firms saw that there was money to be made in Bankruptcy filings and wanted in on the action. If you looked in the phone book prior to the early 1990???s - you would have come across maybe a handful of attorneys that practiced bankruptcy. After that, pages upon pages.

A strange thing also happened in the credit industry. They realized that with all of these people filing for bankruptcy, they were losing potential revenue. After all, if everyone went bankrupt, who would be their customers. If they lost 10% of their market - that represented millions if not billions of dollars in potential revenue out the door.

The banks realized that;

1. If a person went bankrupt, they had no more debts and so, they had a good chance of getting back the money the loanded.
There was a rule in place that prevented a person from walking away from their debts again by filing for another bankruptcy (chpt 7) in the future - so they knew that they had a better chance of collecting if the person didn???t pay them back during that time frame. Currently a person can only file and receive a discharge under Chpt 7 every 8 years. The 8 years is calculated from the time the first case was filed.

Even though looking at 1 and 2 above, it would seem that the risk of lending the money would actually be less if someone had already filed for bankruptcy vs. someone that carried a good amount of debt and didn???t yet. They used the Bankruptcy as an excuse to charge the consumer more money to get the loan or line of credit - even though they had some serious protections and lower lending risk. Now getting a house back then right after going through a Chapter 7 bankruptcy was unheard of. It would hardly ever happen, unless the person had a good amount of money as a down payment and paid a higher interest rate. Normally, you would have to wait about 2 years and still have to put down a large down payment and pay a higher interest rate.
THE BANKS saw an opportunity and went for it. They didn???t close their doors to these people, they figured out a way to make more money off of them.

Now, Flash Back to about 10 years ago, just as the markets began to move again. People were still filing for bankruptcy and we were also starting to see good growth in the housing markets. Did the banks just continue to keep people who filed in the penalty box for 2 years? Nope. During the high of the housing market, if a person filed for a Chapter 7 bankruptcy, there were lenders out there that would lend money to buy a home, the day after a case was discharged. Not 2 years, 1 day.

Someone could even be behind on their home payments and file for Chapter 13. Because housing prices were also rising, lenders would reach out to people while they were currently in their bankruptcy. If you made your payments for 6 months and the equity in your house was sufficient, the lenders would buy you out of your bankruptcy case. They would actually give you another mortgage to pay the old one off or refinance you.

Credit card companies did the same thing. Anyone that files for a Chapter 7, will begin to receive new credit card offers in the mail. Same for auto lenders. You just have to understand how these cycles work. Again, banks and credit card companies are in business to make money. They make money by lending it to people. No people, no loans, no money. Of course they won???t come out and tell you - it???s ok if you file for Bankruptcy or Settle your Debts, we will work with you again. But history tells us other wise.

Wow. Thanks so much for your inputs sinking ship and Nole! That's a lot of really good info.

Right now, I'm lost as to which direction I should go. If I try the settlement route, I was wondering realistically what figure I may negotiate down to from 80k. I already have a $60k offer from 2 of the creditors and haven't talked to the 3rd one yet. You said the that on the average, settlements may be somewhere around 35%. with FIA Card Services, would my chances of settling lower be any better?

I've thought about the bankruptcy route as well. I'm planning on meeting with a lawyer in the next few days, but thought I'd reach out and do what I can do without having to spend any more money than I really need to. I know legal counsel may be my best choice for now, any I've had several people suggest doing this first, but wanted to learn as much as I could too.

Again, thank you all so much for the information you've provided. Any more inputs are certainly welcome!

Well, you have to be patient and continue to work the offers - you should be able to get below .50 ctd - it's just a matter of what you say and how its presented to the creditor. Going to see a BK atty to see if you qualify for a Chpt 7 bk shouldn't cost you anything for the consultation. At least you will know if that is a viable option for you and if it is, you can use that as leverage in the negotiation process. If you do end up filing for chpt 7, the attorneys fees would be far less than what you would pay the creditors through settlement and at least you can get the fresh start and begin to rebuild.