Debt Settlement Program vs. Chapter 13---which to do?

Well, I would have to say go with the bankruptcy, however many might disagree with me. The reason I suggest that is the fact that you are concerned about getting sued or garnished wages. We looked into settlement also, but we didn't have the "****S" for that:), we we afraid of being sued also!! Its really a personal decision, as to what would work best for your situation. Just my 2 cents. Good Luck Reny

Hi Mike,

Good question. I'm new to this site, but no stranger to this question. I've helped many people figure this out, so let's see if this helps you too...

If you ask an attorney, they will usually tell you to file bankruptcy.

If you ask a debt settlement salesperson, they're quite likely to tell you debt settlement is the way to go.

But what's really best for you?

Let's look at some facts I can share with you...

Chapter 13 Bankruptcy is a court ordered payment. As long as you pay it, you are under bankruptcy protection. If you stop paying, creditors can go after you. This payment is based on a means test, so if you have much of an income, you may have to pay back a significant amount of your debt. If you have a very low income or no income at all, then you may not have to pay back much at all.

Many of my debt settlement clients were quoted much higher repayment amounts, and higher monthly payments, than their debt settlement program offered.

If bankruptcy is a consideration, I offer clients a free consultation with a bankruptcy attorney in their state because I am not an attorney and do not offer legal advice, only education and information. You should not have to pay a retainer just to find out if you qualify and what the time frame and monthly payments would be in your situation.

These payment plans are usually 60 months.

During these five years, the bankruptcy is listed on your credit. Each account included in the bankruptcy filing is listed on your credit report as something like "THIS ACCOUNT INCLUDED IN CHAPTER 13 BANKRUPTCY".

This is worse than a Chapter 7 Bankruptcy (which stays on your credit report for 10 years) because you still owe the debt. If you cannot make the payments, you still owe the debt.

Plus, the bankruptcy will stay on your credit report for seven years AFTER the bankruptcy is discharged. So you're likely to have the seriously negative impact of bankruptcy on your credit report FOR TWELVE YEARS TOTAL.

Still, you may qualify for a quicker, cheaper payment plan than debt settlement. If you do, then it's up to you if you want the extra long term credit damage.

Bankruptcy filing is also public record for 20 years.

It may affect renting, buying a home, getting a job, etc.

If you have military security clearance, a bankruptcy filing could jeopardize your status. Union leaders have reported the same.

Most of my clients have chosen debt settlement over Chapter 13 Bankruptcy.

As you probably know, with debt settlement you'll get out of debt in about 2-3 years for about half of what you owe, paying another 15% or so in fees. So your total cost is about 2/3's of what you owe.

There is no reporting of a debt settlement program on your credit report.

You do get late payments and charge offs, but if you're considering bankruptcy then this is probably already happened or going to happen, as you're considering taking even more severe credit damage from a bankruptcy.

It seems your greatest fear is getting sued. Here are the stats I know about first hand from one of the largest and most reputable debt settlement companies I have seen in this industry during seven years of full time work:

Out of approximately 50,000 clients and over $1.2 Billion of debt under management for over six years, only 1% have gone to a legal status, and only 3.3% have gone to any kind of pre-legal status.

So the odds of you actually getting sued, getting a judgment against you and the creditor going to court to get an order from the judge to enforce the judgment by garnishing your wages is possible, but it's very unlikely.

Lawsuits do happen.

You can always attempt bankruptcy in the future if necessary.

The best thing you can do if you decide to go through debt settlement is *make*getting*out*of*debt*a*priority*.

STOP paying interest and START earning interest ASAP.

...I like to call it "the big idea".

Get it?

If you get committed to this idea, and take action, action, action, then you'll come out on top.

The people I've seen turn things around, going from deep in debt through debt settlement (or bankruptcy, or credit counseling, or an accelerated payoff plan, or who cam einto money and just paid it off and didn;t go deeper...) to become debt free, grow a savings and start investing all got committed.

They saw they needed to turn the tables and made it a priority.

Make it a priority and you will succeed whatever you do.

Here's how to get started:

Open a high yield money market account. This past year they have paid 3-6%. You can find these accounts online and with large local banks. Look for an account with a low or no minimum balance and a high interest rate.

Here's a list: bankrate.com/brm/rate/mmmf_highratehome.asp?params=US,416&product=33

Then make it a priority to stash as much money as you possibly can into this account. This is your emergency savings fund and the beginning of a good habit: earning interest 24/7.

Use a budget, do a dance, sing a song... whatever you have to do, do whatever it takes to cut and save and make more money and stash as much as you can away. Make it a fun game!

IF you get into a sticky situation during your debt settlement program, this can be your "war chest" where you can take advantage of settlement opportunities (often disguised as legal threats), and ultimately are better prepared to avoid legal action by having the funds to settle available.

If you're like most people in good debt settlement program, you will not need this money and will have created the habit of saving and investing, and EARNING interest. Plus you'll have a nice emergency savings fund in place you can grow into long term savings and investments.

It helps to know the probabilities and consequences of your possible options when making this kind of decision.

Other than this information, it's really about you, where you're at and where you want to go. Think about this info in light of your situation and your goals, and chose the option that will work best for you and what's important to you.

If you have any other question, please write them here. I'll return again soon to give you my best information.

Thanks and best wishes!

Cheers to financial education, literacy and intelligence - great website!

Unifund, the company that bought my credit card debt, will only settle with my debt settlement company for 80% of the balance after fees and interest. So what used to be an $11,000 credit card debt has become a $30,000 debt to Unifund. I have been approved for an unsecured loan from my local credit union for $16,000 and the rest I have saved in trust at the settlement company to pay Unifund this week. My question is would I save more money if I tried settling the debt with Unifund directly (with a payment plan) than to pay the interest on the bank loan at 11.57%? How would each option effect my credit? Would the bank loan look like a "good" debt while the payment plan to Unifund look like a "bad" debt?

Mel - you might want to start your own thread on this question. It will get more responses and not get lost in this thread.

To the guest who posted the big posting about bankruptcy vs. debt negotiation, do you have any contact information?

I am in a debt settlement program, and while funds were currently tied up settling two major accounts, I did receive a summons from another creditor. HOWEVER, they offered a great settlement as an alternative, and the summons was made invalid. This summons was not the fault of the settlement company I am working with, it was simply the result of an impatient creditor who did not want to wait until funds were available within the program (so I settled on my own). This can happen when you are settling on your own, without a settlement company, as well. BUT, even if you are sued, you would probably be offered an alternative settlement. Still not as bad as a bankruptcy, IMO. Your credit report would be marked "paid as agreed", sometimes with an "although for a lesser amount than originally owed" but still, once the accounts are settled you can begin to repair your credit to an acceptable level much quicker than with a bankruptcy.

As the above posts this is a personal decision. I myself went through settlement. And if you do decide to do this, this is my advice to you.

Debt settlement is not easy, but its the fastest and better for the long term effect on your credit. for however long you need to take for this settlement program, you must make it your number 1 issue. every dollar counts. and every dollar needs to go to settlement to get it done as fast as you can so that the odds of getting judgement are lower, the more time goes on the more likely you are to get sued. Usually even if you recieve a summons it can be settled before the date and the court date will be canceled.

Also, I made myself miserable during this time. Why? because i was so worked up about the debt that i went without absolutely everything and sometimes necessities. No fun, no makeup, no take out, No nothing. But im super glad i did and this is why. If you make it so miserable on yourself you will never do it again. I promise. Reward yourself after the settlements are over for a job well done. Settlement is something that needs to be taken very seriously know the facts about settlement and how it works.
good luck!

"Out of approximately 50,000 clients and over $1.2 Billion of debt under management for over six years, only 1% have gone to a legal status, and only 3.3% have gone to any kind of pre-legal status"

This is an interesting stat. Is there any more info as to what percentage of that 3.3% that go to pre-legal status, is made up of high balance debts? I'd imagine most of it?

I must be unlucky! I stopped paying in May '08. I was sued by Citibank on $7,900 balance right after charge off. Sued by Target National Bank on $2,400 balance in Jan of this year. 3 other accounts went to local collection law offices after being with regular CA's so I expect I would have been sued on those as well if I hadn't worked out a settlement.

Wow, an $11,000 credit card balance went up to $30,000 after fees and interest? Is that normal?

I am thinking about trying to settle my CC's but if all my balances triple after fees and interest there is no way I can settle them!!

Is that how high they usually go once you stop paying?!?

Thanks,
Angela

Ultimately, there is one man and his three sons that are responsible for inflicting finical pain and suffering on over one million families in America: Bernard D. Zises (Ben) and Sons Jay, Selig and Seymour. Ben and his sons ran Integrated Resources, a real estate investment trust. Small-time investors put their life savings into a scheme that let the investor use a tax depreciation on commercial real estate, and at the same time, get capital gains when the investment matured and was sold. The company was privately held by the Zises family.
But, they got wind of pending changes to the tax laws that would put them out of business. So, what???s a nice Jewish family to do? How about go public and sell the business to a couple of thousand suckers! Yeah, they can get their good friend Michael Milken to sell securities in Integrated Resources, just before the company becomes completely worthless. Bernard Zises and his three sons became filthy rich, and investors were out $995 million dollars.
Ben, what would your Mother Fanny, Father Samuel, and older brother Louis say to you if they could see you today? Would brothers and sisters Sidney, Rose, Ida, Peppie and David be ashamed to meet you again? You are about to meet them all again, and for eternity. Will you have to explain yourself and the suffering you have caused? Did your wife Ruth have to explain for you already when she met her maker? Ben, have you been a good human being? Did you leave the world a better place than when you entered it? What will the ghostly members of the basketball team from Thomas Jefferson High School, or your spirited alum of Long Island University have to say:??????.guilty, of crimes against humanity????
But, you sons have done so much better than you at inflicting finical pain and suffering. They have a very good teacher, Dad. Your son Seymour runs Forest Hill Capital a.k.a. Family Management Corp. where he has lost millions of investor???s money by investing with Bernie Madoff. I???ll bet Seymour figured out an angle to end up with the money as a result of this suffering too.
Better yet, all three sons are the founding principles of Unifund CCR partners, a vicious collection agency. This year, Unifund will sue 160,000 families for credit card debt. Many families will be sued for cards they never owned. Even more will be sued, and never know about it until their wages are garnished, their bank account is cleaned out or the Sheriff sells the family home. This is an exceptionally profitable business. A face value account of say $8000 can be bought for less than $400, and yield a default judgment in excess of $20,000. And, since the tax laws treat purchased debit proceeds the same as loss recovery mitigation, the profits are mostly not reportable and tax free! Woopie!!!!
The industry is full of illegal activity all the way up to the corporate management level. Unifund has a contract with Asta Funding a.k.a. Palisades Collections that rewards Unifund CCR Partners with a premium commission for collecting ??????outside the relative statute of limitations???.
I am sure the Zises Brothers have multiple offshore accounts in the Cayman Islands, Jersey, Isle of Man, Isle of White and various South China Sea banks. They must be using their accounts with the Israeli Discount Bank on 5th avenue, which has a branch in the Cayman Islands, as a vehicle to get the unreported Unifund proceeds out of the country.
Ben, I think there are a lot of people that want their money back. The first thing they should do is to send you a demand letter:

Bernard D. Zises
72 Estates Ter N.
Manhasset, NY 11030
(516) 484-0887
Or
Bernard D. Zises
2201 Christy Ln
Oldsmar, FL 34677
(727) 789-4211.

If you cannot find him there, try the house of his son Seymour:

Seymour W. Zises
1016 5th Ave.
New York, NY 10028
(212) 535-7734
Or
Seymour W. Zises
71 Jefferson Blvd
Atlantic Beach, NY 11509
(516) 239-3576

If you cannot find him there, try the house of his son Jay:

Jay H. Zises
965 5th Ave., #10B
New York, NY
(212) 879-0212
Or
Jay H. Zises
639 Ocean Rd
Bridgehampton, NY 11932
(631) 537-5628
Or
Jay H. Zises
106 Old Orchard Rd
Palm Beach, FL 33480
(561) 588-9700

If you cannot find him there, try the house of his son Selig:

Selig A. Zises
988 5th Ave., #9
New York, NY
(212) 772-6460
(212) 593-6700
Or
Selig A. Zises
760 Sagg Main St
Sagaponack, NY 11962
(631) 537-0537
Or
Selig A. Zises
3035 Countryside Blvd #35B
Clearwater, FL 34621
(813)796-8922

Such a nice family.

Correction:
Jay Zises
106 Old Orchard Rd
Chestnut Hill, MA 02467
(561) 588-9700

Correction:
Jay Zises
106 Old Orchard Rd
Chestnut Hill, MA 02467
(561) 588-9700

Correction:
Jay Zises
106 Old Orchard Rd
Chestnut Hill, MA 02467
(561) 588-9700

Dbt sttlement is alot better than Chpt 13, Chpt 13 stays on your credit report for ten years, you're also locked in by the court on the payments, and you're living expenses. Be sure to do your homework and go with a settlement group that is approved by the BBB, federal credit act, there are alot of scams out there. I started filing for chapter 13 and my lawyer did not give me all of the pro's and con's of each. After I did some research debt settlement was a way better option, also chapter 13 settlement was about 60% payback, debt settlement was 45%. The creditors would still rather get a portion of their debt then spend money on legal action. If the creditors take you to civil court, A good debt settlement company will assist you with the legal action, and your defense is that you enrolled into debt stttlement to make a good faith attempt to repay. My lawyer already took a good portion of my money and was not looking after my best interests. You will have to do alot of the research yourself, it helped make the right decision

Ive read all of the post here and im not gonna lie, I work for a Deblt Settlement company so if anyone would like some more info on the programs and the process or just has a question they want answered plesase feel free to email me at [email]M.fruits.stf101@gmail.com[/email]

im not gonna sit here and tell you settlement is your best bet, so please dont think that

what i will do is tell what it does for you, your credit report and score

other than that good luck to everyone seeking help

Guest at 9:15 AM.

Can you please direct us to the information you found stating BK 13 stays on your report for 10 years?
Can you please direct us to the "federal credit act" and further information as to how one can be approved under said act?
Can you provide any detail that will support having enrolled in a debt settlement program is in any way a defense in a law suit?

well its not a defense in a law suit but it definately helps. for example i got sued by citibank and the judge was pretty angry that i was attempting to come to a agreement and trying to do something to clear the matter up and they were unwilling to cooperate. he said they waisted the courts time. when i was attempting. had i stopped paying and tried nothing that would have been different.

Give me a little time, im a little busy at work but i will have all the answers for you

Off the top of my head if you research and artical on bankruptcy especially bankruptcyaction.com will tell you that your credit will be affected for 7 - 10 years
during that time making it impossible to barrow $

Like i said give me a little time and ill get the answers
email me if you have a personal questions related to your situation as well

Matt
[email]M.Fruits.stf101@gmail.com[/email]

If the creditor has passed judgement on your accout before you enter into a Debt Settlement program there is nothing the debt settlement co. can do to help but if your in a program before the judgement is passed the law firm representing the Debt settlement company will protect the client.

hope this helps

that is if you join a company that has attorneys at their firm. Alot of settlement companies do not, they are not gonna send a attorney to your hearing or anything. your kinda on your own unless you are using a attorney that specificly deals with debt settlement. most companies state in the fine print that they cannot represent you in court.

our company offers 60 hours of attourny representation, all of my replys are based on what my company does. We are the only company that offers legal representation

arb, citibanks the worst. my origional debt was 600-700 went to 1300.00 and that is exactly what they sued me in court for. i even agreed to pay the origional debt it was a no go they wouldnt negotiate at all and they got the full 1300.00 they are the worst

yeah they are the worst i had a client just like you and she refusses to pay them they raised her interest rate from 7% to 24% for no reason ( all credit card co. are premitted to raise your interest rate until dec. 09) and if she paid it all of at once its a 39.00$ fee so she said the heck with them

I cant blame her

Why shouldn't citibank get their 1300.00. Why are they the worst because they want you to pay what you owe

what you don't understand is he's paying 2x what he owes because of the interest rate, and im sure citibank recently jacked up his rate by a minimum of 10 points.

he ows about 600 and was asked to pay 1300 not to mention all of the fees involved
this is just one of the many things these creditors are doing to take more money out of our pockets
NOT TO MENTION ALL THE BAILOUT MONEY $$$$$$$ CITIBANK GOT FROM THE GOVERMENT, THE GOV. GOT IT FROM THE TAX PAYERS ....US .. ME AND YOU

how does that make you feel ?

Im sorry i have to side with "love my things"

Hi Mike ,
What was the name of the Debt Settlement company that has been around for many years that you've had quite a few clients go through? I'm lost and don't know what to do.Quote:

Anonyomous

Very informative post. You seem to be well informed. Hope you stick around and help others in this forum. My greatest fear is being sued but your statistics put me at ease.

There is a long thread regarding "Can credit cards sue you?". You should post that statistic there for all to see.

Thanks:cool:

Debt Settlement is the way to go if you could afford the monthly payments. Bankruptcy seems like an easy way out but with it comes many financial consequences.
I work for Rapid Debt Settlement and would be happy to answer any questions you may have.