use a good debt settlement company or file chapter 13?

[dsm]

hi, i have mortage debt totaling 1750 per month and no other secured debt but owe 84,000 on cc's should i do debt settlement or chapter 13? i am only behind on my credit cards by about 1 month. anyone?

[MSbklawyer]

There's no such thing as a good debt settlement company. "Debt settlement" is a scam. On the whole, the debt settlers are every bit as slimy as the debt collectors and are cut from the same cloth, so to speak; opposite sides of the same coin. Contrary to their advertisements, there's no big pool of "Obama Money" out there that the federal government has set aside to help people with their credit card debts. There are no "special super secret programs" that the "credit card companies don't want you to know about". Pay your debt, settle it yourself, or file bankruptcy. Stay away from settlement companies.

[AngelinaCat]

Thank you MSbklawyer!!!

When I saw the title of thread, I thought: "THERE'S an oxymoron. There is no way the words 'good' and 'debt settlement company' can even co-exist in the same sentence, unless the phraseology is similar to: "good riddance to the debt settlement company".....

[jl37]

debt settlement

Speaking as someone who did go the debt settlement route for about a year and a half, I would definitely not recommend it with the amount of unsecured you have. I was in one of the highly advertised debt settlement programs with about 45K of unsecured and a similar mortgage payment. While they did technically settle about 5 of my accounts, some of the others grew tired of waiting for the money to accrue and filed lawsuits. At that point I wound up filing the chapter 13 anyway. Top it off with at least 2 of the 5 have now filed claims for pieces of what was owed even though supposedly settled. To further top it off all the accounts which weren't settled are now substancially higher balances due to late fees etc. Don't waste your time or money on those kinds of companies. They suck you in with the low payments per month but if you don't put much more then the minimum into the account each month it does not accrue or amount to much after the settlement companies fees etc.

Just my 2 cents.

[cspa522]

I agree with jl37 and the others. We did debt settlement for 18 months before we opted out of the program. In that time they settled four of our cards, but it was still impossible to make ends meet with a mortgage, 2nd mortgage, regular bills, and a massive payment to them each month. I wish we had never done it and just filed. We'd be 18 months into it by now and out a lot less money.

[HHM]

When it comes to debt settlement; do you have the money, or can you get the money in 12 months or less (you want to budget about 40%-45% of the balance owed). If the answer is no, then chapter 13.

[blockhead]

When it comes to debt settlement; do you have the money, or can you get the money in 12 months or less (you want to budget about 40%-45% of the balance owed). If the answer is no, then chapter 13.

I'd agree with that more or less although I'd say you need 50% cash within 2-3 months just based on my own experience, although I had some pretty high balances - 30K, 40K most of them.

[Dougie011]

IMO its better to try to settle with them on your own. I got screwed by a debt settlement company because it made matters worse. I would have had better luck doing it myself.

[gman]

Settling only works if you have enough saved up to offer one time, lump sum payoffs.

The good news in the current market is that settlements seem to range from 10-40%.

The bad news is you really need to have all of your accounts go to collection agencies to get these "deals". You will not find the credit card companies willing to settle until you are (1) 90 days late and (2) typically they only give you 20-35% off.

The other bad news is that in many cases, the amount you "save" in debt settlement gets counted as "income" and is taxed! Talk to an accountant about your situation.

Now - with all of that being said - I WOULD NEVER DEAL WITH A DEBT SETTLEMENT COMPANY WHEN YOU CAN DO THIS YOURSELF AND NOT RISK SENDING YOUR PRECIOUS CASH INTO SOME 3RD PARTY.

A good do it yourself website is this one: www.zipdebt.com

I am not a customer nor do I have any dog in the hunt with them. He appears to be very reputable and inexpensive in teaching you how to do it yourself.

Good luck!

[2xedged]

I have a situation that is almost 100% in-line with the OP in regard to amounts. I was going to file a Ch13 (make too much to qualify for a Ch7) but I have been offered by family an "advance" on inheritance monies that could pay off half of my unsecured debt immediately. It seems like doing debt settlement in this case would be better than a Ch13 since I can obtain the funds immediately.

Advice?

[lillymarlene]

I agree with the others, that there is really no such thing as a "good debt settlement company." About six months ago I did try a legitimate non-profit debt counseling firm, and luckily I guess, I was so far gone:-) that they recommended I see a bankruptcy lawyer right away. I ended up filing chapter 13, and though I am new to it, I believe is the best way for me to go. I have also heard that with settlement you are forced to use a 1099, and that the unpaid portion of the debt may be considered taxable income.