Stick with Debt Settlement or File Bankruptcy?
Date: Tue, 01/30/2007 - 18:52
We have roughly 52,000 in unsecured debt. Last April we signed a contract with a debt settlement Company to handle our accounts. We have already paid them about $5,000 of the $8,000 we will be paying them. We stopped paying all of our debt last April/May and instead have been putting our monthly payment an Escrow Account, which currently holds about $1200 (the rest has gone to their fees). There were three of our accounts that we were able to send Power of Attorney Letters to and they have pretty much left us alone (until recently). However, three of our debts we had to handle differently than the rest of the accounts. I have logs and logs of calls that we have received over the past 7 months.
On January 15, 2007 I received a fed-ex package from one of our credit accounts for an Arbitration Hearing. I called our debt settlement company to inquire about this and they sent me paperwork and guidelines to follow, however, they basically told me I’m on my own. This account was suppose to be an "easy" settlement account; however, now it has turned into Arbitration which could end up with a judgement that would not be included in the program.
I guess, basically, I fear going through this settlement program and ending up with judgement that they "don’t handle". I am tired of the endless harassment and tired of always struggling and being behind in our bills.
We have a house with no/little equity to speak of and two cars that we have a balance on which is pretty equal to the amount of the blue book value. My husband and I have decent incomes; however, our debts exceed what we bring home every month so we are always behind on something. We are going to catch up this February with our tax refund but will probably again fall behind towards the end of the year.
What do you think our best avenue is? To stick out the debt settlement or to file bankruptcy? We've consulted a bankruptcy attorney - she advised that we file bankruptcy. She can guarantee results. Although we make "too much" to file Chapter 7 we would have to file Chapter 13 and I have no idea what the monthly payment would be.
Thank you for your time.
Rach- I always advise bankruptcy as the last option, but sometim
Rach- I always advise bankruptcy as the last option, but sometimes it is necessary, when you have so much debt. I would find out everything about the bankruptcy, cost, it's not cheap, extra fees, etc., before you make your decision. What kind of "guarantee" can the bankruptcy offer, what results? Be sure to check every angle, including the attorneyt out..Good Luck..KAren
Be aware that it will stay on your credit report for I believe 1
Be aware that it will stay on your credit report for I believe 10 years . . . . But it may be a viable option for you. You didn't mention how much your income is, so it's hard to tell what the best avenue is. With chapter 13 you will still be paying the debts back, just a reduced amount and through a trustee from the BK court instead of directly to the creditors. It will stop the calls and harrassment though.
If your debt is higher than your income BK might be the best option for you. I would be vary of any attorney that guarantees results. They can guarantee that the paperwork will be accepted by the court, but they can't guarantee a discharge . . . .
Another route you could go is maybe getting a second job . . . . Then put all the income from the second job directly towards your debt. But that may be unrealistic.
It's also not that much harder to file for BK now . . . .Really it's just more paperwork for your lawyer to handle and a class you have to take that you can usually take online in an hour or so. Creditors want people to think it's harder, but aside from the class it isn't much different for the debtor. The way things are calculated is in my opinion the biggest change. Instead of looking at your actual expenses, they look to the census bureau for your area's median numbers. So even if you pay $2000 a month for your mortgage, if the median is $1200 that is what they go with.
