Settlement or Chapter 13: Overdue Rent

[wtaylors2010]

I recently moved out of my apartment and have not been paying rent for close to a year. The amount I owe is about 34K. My debt is not with a collection agent who I have ignored, but feel like I will be sued. I would prefer to settle this without filing, but at a reduced amount of what I owe. I dont have the 34K but could probably come up with half. Is it better to file 13 and then withdraw as a negotiating tactic if I come to a settlement or should I start negotiating now before I file. Either way, I would retain an attorney and let him handle the negotiations. I would appreciate any advice on this.

[jetsfan2010]

how did you stay somewhere for a year without paying rent?

[lrprn]

I recently moved out of my apartment and have not been paying rent for close to a year. The amount I owe is about 34K. My debt is not with a collection agent who I have ignored, but feel like I will be sued. I would prefer to settle this without filing, but at a reduced amount of what I owe. I dont have the 34K but could probably come up with half. Is it better to file 13 and then withdraw as a negotiating tactic if I come to a settlement or should I start negotiating now before I file. Either way, I would retain an attorney and let him handle the negotiations. I would appreciate any advice on this.

You didn't mention if you also have considerable non-secured debts or other secured debts as well - do you?

I'm assuming you are posting in the Ch 13 forum because your income is higher than the median income for your family size in New York - true? (See here for NY's median income by family size - http://www.justice.gov/ust/eo/bapcpa...come_table.htm ) Keep in mind that even though your income may be higher than the median, it is still possible under certain financial circumstances to file Ch 7.

The best option for you right now is to set up 3-4 free initial consultations with experienced bankruptcy lawyers in your area. Take in all your financial information and find out what's going to be possible in your situation. This is not the time to be guessing or making on of the most important financial decisions of your life on the word of well-meaning, knowledgeable, but complete strangers who are not bk lawyers (well, the vast majority of us are not) in an internet forum

Last but not least, here in the BKForum many of us have tried debt settlement first. In almost all cases, it didn't work and we ended up filing bk anyway after months of futile payments trying to pay down our debt. During your free consultations, ask the bk lawyers if debt settlement makes sense rather than filing. The good ones will tell you the truth and can justify what they tell you.

Also keep in mind that in debt settlement, Uncle Sam considers whatever $$ you don't pay back of the $34K as income for your income taxes that year. Be prepared if you go that direction to pay taxes you will owe on the forgiven amount.

As you can see, debt settlement is often not the best way to deal with your debt. Nothing in debt settlement forces the creditor (in this case, your landlord) to agree to the settlement you want. They can't be forced into *any* settlement. In bankruptcy, the creditor has no choice but to take the terms of your bk. That's one of the biggest advantages of filing bk over debt settlement.

[wtaylors2010]

Irprn, Thank you very much for your reply. All the debts I have are non secure, but my income is too high for Chapter 7. I am meeting with an attorney this week and will keep you updated on my situation.

[wtaylors2010]

I just wanted to let everyone know that I Avoided bankruptcy by settling with most of my creditors. I actually hired a great bankruptcy lawyer who called my major creditors and notified of them of my intent to file bankruptcy unless they settled. It helped having money on hand to make lump sum payments and I Settled with the largest creditor for about 40% of what I owed. I settled with the other creditors for about 20-25% owed. Good luck to everyone on here!

[forgotten]

congrats on getting things taken care of!! Just make sure you keep some extra money on hand when uncle sam comes knocking next year.

[jetsfan2010]

glad it worked out for you. I hope you did verify you wont be sent 1099's for that 60 to 80 percent the creditors "forgave" you.

[forgotten]

glad it worked out for you. I hope you did verify you wont be sent 1099's for that 60 to 80 percent the creditors "forgave" you.

A 1099C is actually required by law if they forgive more than $600. I'm not saying they always get sent out, but, you aren't going to be able to hold them to a promise to break the law.

[frogger]

I just wanted to let everyone know that I Avoided bankruptcy by settling with most of my creditors. I actually hired a great bankruptcy lawyer who called my major creditors and notified of them of my intent to file bankruptcy unless they settled. It helped having money on hand to make lump sum payments and I Settled with the largest creditor for about 40% of what I owed. I settled with the other creditors for about 20-25% owed. Good luck to everyone on here!

Yes indeed. You settled with them, and they most likely sold the balance of your debt to someone else. The gift that keeps giving...