Settlements...Final and Future

[BKINAZ]

It would be helpful (I am guessing to new people) if we had an idea what kind of settlements are out there? I was just told by one person that their house, taxes, two cars etc gave them a settlement of like $5,000 per month. Whereas their house was close to $5,000 by itself.

Pennies on the dollar, dimes...quarters for you all?

Also...if you make $20k more the next year...how does your settlement go up? (I assume)

[Trixie007]

Huh. Maybe it's just me, but I have no clue what you are asking! Are you talking about what your Ch 13 payments are and what would make them increase?

[BKINAZ]

Correct. I realize everyone will be different. But what would be helpful is what you were able to "settle" on the dollar.

For instance if my debt is costing us $2,000 a month, and to file BK13 costs us $1,500 per month...is it worth it?

Again I realize there is a formula, every one will be different...but it would be helpful to think my payments might be $300-$700 per month vs $1,500 to $1,800 per month.

Speaking for everyone filling, (not that they want me too) that's the great unknown.

[Tbornetun]

Your payments have nothing to do with your debt amount, they are based on your DMI (disposable monthly income) from the means test. The creditors will only get the portion they are entitled to based on your DMI. If your DMI is the same as or greater than your current payments to the creditors then it wouldn't make sense. But if your DMI is less than those payments, Ch. 13 would help you.

[liz417]

Correct. I realize everyone will be different. But what would be helpful is what you were able to "settle" on the dollar.

For instance if my debt is costing us $2,000 a month, and to file BK13 costs us $1,500 per month...is it worth it?

Again I realize there is a formula, every one will be different...but it would be helpful to think my payments might be $300-$700 per month vs $1,500 to $1,800 per month.

Speaking for everyone filling, (not that they want me too) that's the great unknown.

If you are paying $1,500 in a ch 13 plan and you WERE paying $2,000 to creditors on your own...I would say get a better attorney.

[Trixie007]

I agree with the above posters. I think your confusion is... you are not "settling" your debts in a Ch13. It is a "reorganization" of your debt, you make monthly payments according to your DMI - there isn't usually any negotiating, unless there's an objection to your proposed plan and the Trustee/creditor tries to say that you should be paying more monthly into the plan.

[justbroke]

Correct. I realize everyone will be different. But what would be helpful is what you were able to "settle" on the dollar.

For instance if my debt is costing us $2,000 a month, and to file BK13 costs us $1,500 per month...is it worth it?

Again I realize there is a formula, every one will be different...but it would be helpful to think my payments might be $300-$700 per month vs $1,500 to $1,800 per month.

Speaking for everyone filling, (not that they want me too) that's the great unknown.

A Chapter 13 plan is totally based on your particular circumstances and income. I can't gues what your payment would be, based on your data. Regardless of whether people say to get a better attorney, it's all based on the given data, and generally not what your attorney can do. (I will say that having a good attorney will allow you to get more of your money pocketed instead of being classified as disposable income.)

There are many folks in 100% plans, but they are using them so that they can save property. Remember, a Chapter 13 isn't used just to discharge debt. It's a tool used to "reorganize".

[BKINAZ]

Thanks. You know what threw me off was that I thought there was one "means" test that determined if you could do 7 or not. I didn't realize the means test was valid for 13 as well.

According to my first look I am in the negative. (taking away the debt I am getting rid of in chapter 13)

With that said what doesn't count when figuring "living expenses". Haircuts? Dog food?, Direct TV (btw a deduction for me for my business), my office rent ($1,200 per), Home owners association? Those are my most quesiontable ones.

Here is a web story that helps to explain the means test...seems pretty good.

http://www.buzzle.com/editorials/1-10-2006-85999.asp

Thanks everyone!

[Trixie007]

This is off-post, but do you mean HELOC/2nd in your signature? Or am I missing something?

[BKINAZ]

yeah I thought the H was there...didn't notice. thanks.

[fltoo]

Strictly speaking settlements with creditors, I will tell you what friend of mine was able to do, as her credit was shot, but, she absolutely cannot have a BK on her credit report. Her scores are in the 690's already and she just finished settling 3 months ago. As other posters stated, this is not a chap 13.

She had 120,000 in cc debt and 3 rentals upside down with first and second liens plus her own house with an interest only loan.

She settled Citi, Chase, Discover, BOA, Cap1, Wamu for 20 cents on the dollar. AmX took 25 cents on the dollar. She short saled two rentals and negotiated with the lender not to have deficiencies. Kept one rental negotiating the second lien at 20 cents on the dollar with the lender removing the lien completely. Lender was GMAC. She found Countrywide the hardest to work with, btw.

On primary residence, negotiated with lender to change interest only loan to fixed rate. Tried to get them to lower the mortgage balance, but they would not budge. Can't remember who lender was. Possibly Countrywide.

I must tell you, it takes a lot of cash and perseverence to go this route.
This woman was on a mission for 6 months and was proactive. She never waited for the lenders to call. She called them every other day and offered them settlements until they agreed to her terms.

She was insolvent at the time of the discharge of debt so acct submitted the IRS form of assets and liabilities with her 2008 return. She was nervous about getting audited, but acct (business CPA) said he hasn't seen being insolvent throwing up any red flags moreso than anything else.

Time will tell.

[BnkrptcyLwyr]

Your payments have nothing to do with your debt amount, they are based on your DMI (disposable monthly income) from the means test. The creditors will only get the portion they are entitled to based on your DMI. If your DMI is the same as or greater than your current payments to the creditors then it wouldn't make sense. But if your DMI is less than those payments, Ch. 13 would help you.

And let me clarify as well ... it even makes sense to go into a Chapter 13 even if you end up paying 100% to unsecured creditors. The major reason is that you can pay those pesky credit cards 0% interest - which in and of itself says thousands upon thousands of dollars if your talking 30-50k in credit card debt. Furthermore, one payment to the Trustee ... no calls ... etc.

There can be very good reasons to file bankruptcy and still pay all creditors back.

[BKINAZ]

Bnk...you're right that makes a lot of sense.

FLTOO...great post...thank you! Gives me hope these idiots (I just don't get it) may want to settle before they get a lot less than I am offering. I think I will be a little more pro active and go after them.

Are you sure about her 20 cents? Was she like 6 months behind?

[fltoo]

She stopped paying cc's and mortgages 3 months before she started calling them herself.

All settled for 20 cents except AmX played hardball for a long time and stuck to 55% settlement. They finally agreed to 25 cents on the dollar.

She didn't actually offer the 20 cents on the dollar. She would call a creditor and say, check my credit report, I am behind on x amount of accounts. She would tell them she had exactly 5000. (say on a 25,000 debt) and you can have it and if you don't take it, I am going to call my next creditor and offer it to them. They folded one by one. She opened a separate checking account and used it just for the creditors to pull the money out. Every time one settled, she would put exactly that amount in the account.

She gave AmX the same story but they kept asking her if she could borrow money from a relative. So, she waited a day, called them and told them she had the 5000. and borrowed 1250. from a relative (which she didn't) and said that was the best she could do.

They finally took it. She called these creditors incessantly for days on end just like the creditors call us. LOL It was like a part time job, she was on a mission and would not take no for an answer.

Every time she settled one she would call me squealing that one settled. She knows I am doing a chap 7. I told her she should go into the settlement of cc business!

[BKINAZ]

That is a special kind of awesome ! That is why a forum like this is important to be able to look at all ways to get back ontrack.

I am curious...any idea if she had them sign and send her an agreement (I assume yes)...but did it give her the recommended way to discharge it that would hurt her less on her credit report? "Account settled satisfactorily" or something like that as to not hurt her credit "that bad"?