Has anyone ever tried this...negotiation w/ credit card for lower balance??

[lalap123]

Okay, I'm beginning to re-think my bankruptcy filing. I think we can scrape together about half of what I owe to my cards. What if I called all of my creditors (all credit cards...all about 60 days behind) and told them honestly that I am about ready to file Ch 7 but if they will reduce my balances by half I can pay them in full and will close the accounts? Is this going to be just as bad for my credit as BK would be? The reason I am balking with filing to be honest is that I am terrified the trustee will either take our house or force us to pay the equity to him, which in the end would probably be almost as much as paying the cards off (if they will go for this). The money that we could use to scrape together the payoffs would almost all be non-exempt money that the trustee will take anyway if I file ch. 7.

Anyone tried this? What do you all think?

[nervousss]

There is a post somewhere on this board about a woman that did that. She called them every day, offering x amount of dollars, saying that's all she had. If they tried to get more out of her, she said that she didn't have more. She hounded each creditor multiple times every day, until eventually they all caved. She didn't even offer them half. I'll look for it, and if I find it, I'll post a link.


EDIT:

I didn't find the thread I was looking for, but there were lots on the subject, including this interesting one:

http://www.bkforum.com/showthread.php?t=34581&highlight=settling

It sounds like if you wait a couple of months, it will be pretty easy to get them down to 20 percent or so.

[jessegirl]

I was un the impression that whatever they had to write off you would get a 1099 at the end of the year and would have to claim that. Now i might be wrong. I hope someone else chimes in?

How much equity do you have that you are so worried about the trustee taking it?

Also, depending on what state you live in you may be able to exempt it and if you and your spose (if you are married) are filing together, those amounts will be doubled.

[broken64]

2 words....Good Luck, I tried "negotiating" mine down, signed paperwork on some, didn't matter, they say what they want and do what they want. I know every situation is different but if you only have so much money to work with and they renig on their end then where do you stand? No money for a lawyer and still out of control debt? I think jessegirl is correct with the 1099 also, I seem to remember reading that also in other threads. Hope everything works out for you.

[Tromploi]

Same here, tried negotiating over and over, got nowhere. So now they get nothing. Bet they wished they would have worked with me!

And anything they write off is considered income, you will get a 1099 for it.

[browneyes]

I am here because we just don't have the resources to do settlement. I did find two or three reputable companies that basically told me if you can't come up with the funds to do it within a year to 18 months, then it's probably not a good idea and bankruptcy is your next move.

As far as the 1099 goes, yes you will get one, but if you are insolvent at the time you don't have to pay tax on it. I am no accountant so please check with an accountant on that. I think it's IRS form 982. Good luck with your decision.