Settling prior to charge off: Is it worth it?
Date: Wed, 11/17/2010 - 17:08
I am trying to get the creditors to state in their settlement letter "settled in full". If I were successful in that verbiage, is it worth the $15,000?
Some info: I am permanently and totally disabled for more than 10 years so I am almost "judgment proof," I meet the definition of insolvent so the 1099-C won't have an impact, and I pass the means test for Chapter 7 bankruptcy.
With this additional information, does anyone have any thoughts?
I think it is better to settle your debt before it is assigned/s
I think it is better to settle your debt before it is assigned/sold off to a collection agency. Charge-offs hurt your credit core big time and remains on your credit report for around 7 years. It is always better to request your creditors to update your account status as "Paid in Full". This may help to increase your credit score.
Zeb, Why the reluctance to file BK if you qualify for chapter 7
Zeb,
Why the reluctance to file BK if you qualify for chapter 7?
The settlement will cost 15k. The BK will be less than 2k.
If there are reasons for you to avoid filing bankruptcy, I respect that, but from a pure cost benefit perspective the BK wins.
It is true that settling prior to charge off and where a charge off is not reported will lend to your credit recovering quicker. I would not put too much emphasis on the "settled in full" vs. "settled for less". The impact to your credit is from the 30, 60, 90, 120, day late pays. Whether settled in full or settled for less is noted, you paid it off late, but now have a zero balance owed.
I don't entirely understand your question above: "I am trying to get the creditors to state in their settlement letter "settled in full". If I were successful in that verbiage, is it worth the $15,000?"
The value, or worth, of the 15k is putting the debts to bed for far less than the balance, eliminating any risk of being sued on the accounts you settled, beginning to heal financially.
Best of success in your efforts!
Mileage may vary
Greetings "[URL="http://www.debtconsolidationcare.com/forums/mem
Greetings "[URL="http://www.debtconsolidationcare.com/forums/member.php?u=237996"]Zeb[/URL] ",
Welcome to the forums.
Just a couple of thoughts here from my journey.
1. I settled all of mine before charge off.
2. I did it to keep them out of the collection angency's grip.
3. I negotiated tough with the original creditor and got great settlements.
Now just an opinion.
I would make certain that I if could file Chptr 7.
(Spend a few $ with the folks that have a law license hanging on the wall to find out for certain)
And if it was confirmed, then you are way ahead of the plastic masters at this point.
Then you escape the fed tax on the forgiveness.
And one last question.
Do you have the $15k?
Please keep us posted.
King "Kash" Jabba Labba
