Can chapter 7 be used as leverage to negotiate with the creditor?

[squeeze]

This relates to a default judgment that has already been awarded. In other words, all the bad s*** that could happen has already happened.

As such, is there any risk of letting the creditor know that I will most certainly file chapter 7 if we cannot work out a settlement?

[MSbklawyer]

This relates to a default judgment that has already been awarded. In other words, all the bad s*** that could happen has already happened.

As such, is there any risk of letting the creditor know that I will most certainly file chapter 7 if we cannot work out a settlement?

There are as many different answers to that question as there are judgment creditors.

[squeeze]

Care to expand on this? What could happen that hasn't already happened?

[HHM]

Leverage to do what?

Everyone threatens BK, it is a pointless threat. They know you could file BK, yet they still went ahead with the lawsuit and got the judgement. Now they have what they want. Your ONLY option to get out from under it is BK (Assuming it is dischargeable debt, and assuming they haven't filed a lien).

[MSbklawyer]

Care to expand on this? What could happen that hasn't already happened?

Well, some creditors just refuse to negotiate the debt downward even though they know they'll get nothing in a chapter 7. Others would rather get 10% than get nothing. There are some, I am convinced, that get some kind of sadistic pleasure in knowing that they've forced someone into bankruptcy.

I can't answer the second part of the question because I don't know what has 'already happened'. But generally, judgment creditors have quite a few remedies at their disposal: wage garnishment, asset attachment, judgment liens, &c.

[dakota112]

The whole thing is a game if you want my opinion. So play the game. They the lawyers and creditors have to play their game to earn their living, you the debtor have better things to do with your life than to waste the energy it takes to move your vocal cords in arguing or negotiating with such scum, so just file and be done with it and mve on. At least it isn't as bad as Dubai wher you are jailed until you can pay your debt which is probably never!! We are heading there however.

[music12]

i was told that the creditor would never believe me until i actually filed, at which point it would of course be too late for them. apparently very many debtors make this threat, and perhaps it often turns out to be an empty threat, which is why many creditors don't believe the debtors.

real question is: do you really want to pay 10% or so of this judgment or not? your other posts seem to imply you don't want to . so why waste your time.

[backtoschool]

No creditor really listens when you say, "I am going to file bankruptcy". Those who are really going to file, don't take the time to tell the creditors, they just file and let the court notify the creditors.

If they have a judgment against you then they have a way of getting money from you until you file. Once a creditor sues, there is less negotiating room, since they can garnish your paycheck and put a levy on your bank account until you file for bankruptcy.

[music12]

also, if you tell them you will file, you are taking the risk that they will hurry up with collecting from you. anything they manage to collect before you file remains with them. they could also hurry up to file liens against you. and since you are thinking of filing only in 6 months probably, they will have lots of time to do this, and that woudl complicate your bk case.

[daytona]

I believe in most cases you can get judgement liens removed after fileing a BK, your attorney just has to take some extra steps...

[squeeze]

real question is: do you really want to pay 10% or so of this judgment or not?

Yes, I definitely want to close this out with a settlement. Contrary to what it may appear, I only want to file as a last resort. But 10% is the upper limit of what I could manage.

Reading through these posts, I think I've worked out a good plan of action. I'll get lined up and ready, then just few days before filing, offer the creditor a chance for a 10% settlement. If they take the settlement offer, I'll avoid chapter 7, and if not I'll file and start to rebuild my finances.

Thanks to everyone for helping me work this out!

[Clouddancer]

Leverage to do what?

Everyone threatens BK, it is a pointless threat. They know you could file BK, yet they still went ahead with the lawsuit and got the judgement. Now they have what they want. Your ONLY option to get out from under it is BK (Assuming it is dischargeable debt, and assuming they haven't filed a lien).

What difference does the lien make during BK other then a little more paperwork to remove it after the BK?

[MSbklawyer]

real question is: do you really want to pay 10% or so of this judgment or not?

Yes, I definitely want to close this out with a settlement. Contrary to what it may appear, I only want to file as a last resort. But 10% is the upper limit of what I could manage.

Reading through these posts, I think I've worked out a good plan of action. I'll get lined up and ready, then just few days before filing, offer the creditor a chance for a 10% settlement. If they take the settlement offer, I'll avoid chapter 7, and if not I'll file and start to rebuild my finances.

Thanks to everyone for helping me work this out!

In cases like yours where there is some reason that the debtor REALLY wants to avoid bankruptcy, I usually go ahead and prepare a bare-bones bankruptcy petition and the matrix of creditors with their names on it and mail it to them with a settlement offer. At that point they know that all that stands between them and a complete write-off on the debt is the push of a button on the software.

But this will only work if you have only one or two creditors. You have to reach a settlement with ALL of them for a settlement to be of any value to you. If you have other creditors out there who don't settle and you file bk, you'll have a preference issue.

[squeeze]

What does this mean "a preference issue"?

Please clarify. Thx

[ForumReader]

What does this mean "a preference issue"?

Please clarify. Thx

A preference issue is when a debtor pays a creditor over another creditor. All creditors listed from the debtor's debt matrix should be treated as equal when filing for bk.