Second Thoughts

[PinkTinker78]

Has anybody decided to not file Chapter 13 at the last minute and been successful dealing with the creditors on your own.

I am thinking real hard about not filing and trying to battle my creditors one by one. I figure if they start to get judgements on me it would be no worse than a second BK showing on my credit report. At least I know I can only be garnished up to 15% of my pay here in IL. The biggest reason for filing was catching up on my car payment and my credit union said they will work with me on my delinquent amount. I'm thinking with the money I would have been given to the trustee every month I can just use it to settle with creditors. I have about 5 or 6 that all have balances less than $300 some even $200.
I'm just so confused and don't know what to do. *SIGH*

[LimpDisc]

What's your total unsecured debt? Your post states that you have 5 or 6 CC's with the total balance owed being $1500 - $2000?

[andy158]

I'm sorry we didn't file sooner. For the last two years we have been back and forth with cc companies and medical collections. Used up what back up savings and retirement savings we had just to keep up with minium payments on everything. And for what? BofA and Chase would not work with us and as soon as they realized we were having trouble they hit us with 30% interest and doubled payments because we were now a high risk. Other card companies followed suit just because they could. We were never late or missed payment on any of our cc's. However, wages were going to be garnished for medical bills past due. If you think you are having trouble, you probably do and there is nothing bad about saving some of your assets through bk protection. That is what it is there for. I denied our financial trouble too long and wasted a lot of time and money getting to the end of our rope. We are not a dead beat family that just didn't want to repay our debts. This whole economy with hours cut and raises and bonuses froze put us into a downward spiral that literally was sucking the life out of us. We gave up on the live now/pay later lifestyle and filed bk 13. Chapter 13 forces you to make sacrafices that you can live with while paying a percentage of your debt back.

[klandsb]

Andy... ??.. So when did u start making pmts ?? I noticed your confirmation isnt until DEC 2009 but u state that you are 3 mths into it so I am assuming u have made 3 pmts already ??????

[andy158]

Made first full payment August 6 as a money order. Payroll deductions started August 13 bi weekly. Four deductions plus inital full payment is three total payments. Maybe a head start, but I am glad to be on my way to payoff. Hope no adjustments are made at confirmation.

[PinkTinker78]

LimpDisc - I was referring to the few balances that I do have under those amounts, that I would probably be able to payoff one by one once a month.

My actual debt not including my car and student loans is around $13,500 and that includes credit cards, medical bills, collection accounts (ie; cell phone, utilities, etc.), payday loans and a couple of small installment loans.

My car balance is around $14,500 but it's only worth $6,000 or less. I haven't had the loan with the credit union that long so it's nowhere near the 910 day for being able to pay only what it's worth in BK. My student loan debt is around $40,000 which I know won't be included in BK anyway.

Andy158 - I know exactly what you mean. I has doing pretty good bringing in money and keeping up on my bills, then everything just hit me at once. We lost hours at my full-time job, we didn't get our bonuses or raises, I lost my second job which was bringing in an extra $200 a week. On top of that other things were popping up like, car expenses and medical expenses.

[bailoutUSA]

Has anybody decided to not file Chapter 13 at the last minute and been successful dealing with the creditors on your own.

Yes. I did.

Chapter 7 is a beautiful thing, but Chapter 13 seems like a prison sentence. In most cases you should be able to negotiate an equivalent arrangement to Chapter 13, but with the flexibility to renegotiate if things go south and without being punished should your income improve.

Unless you are way behind on your mortgage on a home you'd like to keep, I think 13 is almost always a bad idea. And in this real estate market, keeping a home you're way behind on (and likely underwater in) is probable a mistake.

I was able to work out low and no interest payment plans with my creditors at around 120 to 150 days of not paying them. Had I not be able to afford even those payments, I think I could have went the 12 to 24 months cash settlement with the JDBs.

I'd like to see the BK forum create a separate debt settlement forum. There are a lot of posts about it scattered through out the other topics and I think it warrants it's own area.

[woeisme]

I think because most debt settlement attempts are disastrous financially, the moderators would probably not want to set up a separate place for it, as it might be seen as advocating it. At least my personal experience with it was that it was $ down the rabbit hole and only prolonged and made my situation worse. There are a few success stories, as with anything, but the vast majority of the debt settlement firms are bottom-dwelling scumbags and few people on the BK forum have the resources to offer settlements the credit card companies are willing to accept. CH 13 might seem like a prison, but for me it was an escape from the debt treadmill that the credit cards had me on, with fees and interest eating up all payments on so nothing was ever applied to principle, I could have kept paying for the rest of my life and never made a dent in it, paying the same company 20X over and never getting out of debt.

[jadams]

The difficulty is it only takes one creditor to screw it up.

If someone decides not to play along and gets a judgement with years of interest and fees, that can haunt you for a long time. (In my state 10 years, renewable for another 10)

If it pushes you to need to file BK later, you've in a sense "wasted" the money you used to settle up to that point.

At least with the CH 13 the *have* to accept the arrangement.

But depending on your situation, it's definitely an option to consider...

[klandsb]

Ditto to woeisme... I did the debt settlement route & I am a financial disaster now. Maybe it different if you join a debt settlement company like I did or go it on your own which is what it sounds like bailoutUSA did. I am in the hole $3000 (which the debt settlement company did nothing for ) and creditors havent been paid in close to a year..
Try digging yourself out of this mess and your alternatives are limited to say the least. NO huge savings to make settlements and now with added interest & late fees I am a sinking ship.....

[klandsb]

Also I dont understand this statement by bailoutUSA :

Unless you are way behind on your mortgage on a home you'd like to keep, I think 13 is almost always a bad idea.

If you current on your mortgage /car
You have a mthly income to accomodate your low interest ,reasonable mortgage pmt
but your credit card balances are way out there and things have happaned and I would rather pay my house pmt and car pmt before any credit card what would u suggest someone to do.

As long as there is a certain amount of disposable income you have no choice but to do a chapter 13....
Maybe I am missing something or maybe I should have went to 50 lawyers until I found one that would try to do a Chapter 7....

[bailoutUSA]

I guess I should have been clearer. I meant do it yourself debt settlement.

I think because most debt settlement attempts are disastrous financially, the moderators would probably not want to set up a separate place for it, as it might be seen as advocating it. At least my personal experience with it was that it was $ down the rabbit hole and only prolonged and made my situation worse. There are a few success stories, as with anything, but the vast majority of the debt settlement firms are bottom-dwelling scumbags and few people on the BK forum have the resources to offer settlements the credit card companies are willing to accept. CH 13 might seem like a prison, but for me it was an escape from the debt treadmill that the credit cards had me on, with fees and interest eating up all payments on so nothing was ever applied to principle, I could have kept paying for the rest of my life and never made a dent in it, paying the same company 20X over and never getting out of debt.

[bailoutUSA]

I don't understand what's not clear. If you're behind on your mortgage you may need a 13 to force the mortgage company to accept your back payments over 3 to 5 years.

Unsecured creditors have very little leverage in most cases and can be outlasted until they agree to something you can afford. I certainly did not suggest someone pay their credit cards before the house or car payment. A chapter 13 decision presupposes there is at least some disposable income after paying secured creditors, otherwise you'd be in a chapter 7.

A sixty month principal only payoff requires a monthly payment of less than the interest alone on an unsecured debt charging over 20%. Most credit card companies can be brought to something close to that as you near charge off. That's a real get out of debt program for someone with some disposable income (before unsecured debts) but are being exploited by the credit card companies and their usurious rates.

Also I dont understand this statement by bailoutUSA :

Unless you are way behind on your mortgage on a home you'd like to keep, I think 13 is almost always a bad idea.

If you current on your mortgage /car
You have a mthly income to accomodate your low interest ,reasonable mortgage pmt
but your credit card balances are way out there and things have happaned and I would rather pay my house pmt and car pmt before any credit card what would u suggest someone to do.

As long as there is a certain amount of disposable income you have no choice but to do a chapter 13....
Maybe I am missing something or maybe I should have went to 50 lawyers until I found one that would try to do a Chapter 7....