Questions about settling debts or doing bankruptcy
Date: Sat, 12/03/2011 - 06:00
Submitted by everythingelseinhere
on
Sat, 12/03/2011 - 06:00
Total Replies: 1
Hello everyone. I just found this website yesterday and I'm hoping that it can help me with some decisions that I have to make. My story can be very long but I'll try to condense it.
I lost my job in April of 2010. I was only able to find part time and lower paying jobs that had me in the negative each month. I had to use my credit cards for basics like paying utilities, car, groceries...etc. In a year I managed to rack up 17k in credit card balances. Eventually I couldn't keep up and I'm now 4 months behind on the credit cards. I am getting calls from Citifinancial, Bank of America (FIA card services), and Barclays.
I went to see a bankruptcy lawyer and because of my finances I qualify for a chapter 7 and don't have to worry about any assets because I really don't have anything that isn't exempt. The attorney said the bankruptcy would take 4-6 months to be discharged and all the unsecured debt would be discharged. I could start over. As far as credit goes...I don't have any plans to get in trouble again, but he said an FHA mortgage would be okay after 24 months and that credit would be available almost immediately although with high interest rates at first. So this is option A
Option B is settling my debts. Although money is tight, I have family willing to help me out to settle and close accounts, but not to just keep making minimum payments. FIA card services is handling 2 Bank of America Visa cards totaling about $6500. Yesterday they called me and I explained my situation to them. They offered to settle these 2 accounts or $1900 and said that I can pay that over the course of 93 days. I believe that I can do that. If the other companies would be willing to do similar settlements I may be able to settle my 17k in credit cards for about 6k. Bankruptcy would cost me $1800 anyway.
I am going to do one or the other and want to weigh the pros and cons. The attorney told me that it made no sense paying 6k to have accounts on my credit report that said "Settled for less than full balance" when a bankruptcy would cost me less, and he said that my credit rating would come back quicker than settling.
So my questions is, which of the two options is less detrimental? I'm thinking of things like future job applications, apartment leases, if I every have to apply for a car loan...etc. I would sell off whatever I have left to pay the settlements if that's what will have a more positive outcome.
Another quick question I have is about giving FIA my checking account and routing number. They said that they had to have that to enter into the settlement agreement. They also said that they couldn't give me a copy of the agreement to read over until after I had committed to the settlement. I found that odd. If I paid them in a lump sum would they let me read the agreement?
Sorry for all the questions. Thank you everyone in advance!
I lost my job in April of 2010. I was only able to find part time and lower paying jobs that had me in the negative each month. I had to use my credit cards for basics like paying utilities, car, groceries...etc. In a year I managed to rack up 17k in credit card balances. Eventually I couldn't keep up and I'm now 4 months behind on the credit cards. I am getting calls from Citifinancial, Bank of America (FIA card services), and Barclays.
I went to see a bankruptcy lawyer and because of my finances I qualify for a chapter 7 and don't have to worry about any assets because I really don't have anything that isn't exempt. The attorney said the bankruptcy would take 4-6 months to be discharged and all the unsecured debt would be discharged. I could start over. As far as credit goes...I don't have any plans to get in trouble again, but he said an FHA mortgage would be okay after 24 months and that credit would be available almost immediately although with high interest rates at first. So this is option A
Option B is settling my debts. Although money is tight, I have family willing to help me out to settle and close accounts, but not to just keep making minimum payments. FIA card services is handling 2 Bank of America Visa cards totaling about $6500. Yesterday they called me and I explained my situation to them. They offered to settle these 2 accounts or $1900 and said that I can pay that over the course of 93 days. I believe that I can do that. If the other companies would be willing to do similar settlements I may be able to settle my 17k in credit cards for about 6k. Bankruptcy would cost me $1800 anyway.
I am going to do one or the other and want to weigh the pros and cons. The attorney told me that it made no sense paying 6k to have accounts on my credit report that said "Settled for less than full balance" when a bankruptcy would cost me less, and he said that my credit rating would come back quicker than settling.
So my questions is, which of the two options is less detrimental? I'm thinking of things like future job applications, apartment leases, if I every have to apply for a car loan...etc. I would sell off whatever I have left to pay the settlements if that's what will have a more positive outcome.
Another quick question I have is about giving FIA my checking account and routing number. They said that they had to have that to enter into the settlement agreement. They also said that they couldn't give me a copy of the agreement to read over until after I had committed to the settlement. I found that odd. If I paid them in a lump sum would they let me read the agreement?
Sorry for all the questions. Thank you everyone in advance!
I agree with your attorney. Settled is no more positive than ba
I agree with your attorney. Settled is no more positive than bankrutpcy...plus you will still owe the money but now to family.
My opinion is to just do the bankruptcy...get a fresh start.
