Settlement with Creditors before 341 meeting

[logmaster]

Hi,

This is the first post on this forum. So far, I have been a silent participant on this amazing forum.

My situation is as follows - I have around 100K in Credit Card Debt (Bank of America - ~60, Chase ~40) and my business has unsecured debt of around 140K (Was taken two years ago, I have already paid around 40K in interest).
The business loan lender is someone whom I know and feel really bad to include him in the filing. Even after the BK process will get completed, I intend to reach a settlement with this company paying them around $850 per month for the next 3 years.

I have filed for chapter 7 bankruptcy on 1/31/2010.
After getting the letter, this creditor has asked to meet me and I have agreed.I have explained my situation and how things got to this point. I have mentioned that I am not committing to anything but I will do my best to pay some of the debt after the discharge.

The trustee will have around 4-5K from me (Car) after the process is over, those funds will be spread between the creditors.

Since the creditor mentioned above agrees to take this amount and release me from the reminder of the debt, I was wondering if Bank of America and Chase will be willing to settle at this point.

I have not abused my credit cards and as a matter of fact, I have been on their hardship programs for more than a year paying on time, up to 3.5 months before filing. I am not sure if it is realistic but I will be able to borrow money and pay around .10-15 cents on the dollar for those debts. Do you think that I have a chance with those guys?

I know that they usually don't go so low but since I am already in the process and they have all the information on my assets and they know they are not going to get anything with the bk

Has this even happened before? Does it even make sense to try avoiding the BK? Do I put myself at any risks?

As for taxes, will I have to pay taxes for the debt erased? Is there anyway to minimize it or avoid it?

Will my credit file show the bk if it's canceled?

I am sorry for asking so many questions, any help will be greatly appreciated!!!

THANKS!!!

[DebtEnder]

You have already filed Bk7, there is no way to stop it now at least not from your end.

If the debts are discharged you have no issues with taxs. You may get a 1099-c but that is for the creditors internal bookeeping. Your credit report will show ch7 filed for the next 10 years from the date of filing. It will have a noticable inpact for the next 2-3 years, much less after this assuming you do well with your future credit.

There is no point in offering to pay back old creditors unless you feel the need for your personal peace of mind. The big banks won't care one way or another. The ones that hate people that BK will never deal with you again, the ones that don't care so much will be sending you offers 1-6 months after your discharge.

Making deals and paying any creditor before your BK is discharged could cause you issues. If you feel the need to pay the one guy back go for it. But you will be in no way legally bound to do so.

Also are you with a lawyer, if so did this bussiness lender go through him 1st, or just contact you directly. You need to be aware of your rights and not allow anyone to pressure you to make deals to repay discharged loans if you don't truly want to do so.

[logmaster]

Thanks for your reply. I have an attorney even tough he is not being really helpful.

I feel obligated to reach an agreement with this specific creditor. I wish I would have had a way to settle with him prior to bankruptcy however at this point, he is willing to settle for whatever he can get. I will pay him the same settlement amount with or without the bankruprcy.

[ForumReader]

Thanks for your reply. I have an attorney even tough he is not being really helpful.

I feel obligated to reach an agreement with this specific creditor. I wish I would have had a way to settle with him prior to bankruptcy however at this point, he is willing to settle for whatever he can get. I will pay him the same settlement amount with or without the bankruprcy.

You might want to talk to your attorney about this matter to avoid the risk of preferential payments especially if you pay at least $600 (and if settled at $600 or more) to a creditor before your 341 meeting. There is a common question most trustees tend to ask is if you have paid to any creditor $600 or more in the last 90 days. Sounds like your situation is personal/unique so again consult with your lawyer and sorry he is not being helpful. He ought to be. Good luck.

[AngelinaCat]

I will tell you what our BK attorney told us:

"Once you have filed, if you enter into a side agreement with any ONE of your creditors, you WILL blow your BK. You will most likely be dismissed and not allowed to file BK on the creditors listed this time ever."

That is a paraphrase. But she was emphatic.

Not only that, but the trustee can go after this creditor and get back the money you paid him since that would be a 'preferential payment'. So you would be accomplishing nothing except causing you and possibly this creditor a world of trouble.

You can do what you want to, but in my opinion, you need to tell this creditor that you will talk with them AFTER you are discharged. You may not be aware of this, but once you receive your discharge Order, you can repay anyone you want to--even a debt that has been discharged.

[Dst1]

I understand your desire to pay someone back but I would NOT enter into an agreement to do so. You can't file BK again for eight years and who knows what can happen.

In other words, not matter how you feel, it's stupid to take a discharged debt and then make it a legal debt again. Just stupid.

[DebtStinks]

You can do what you want to, but in my opinion, you need to tell this creditor that you will talk with them AFTER you are discharged. You may not be aware of this, but once you receive your discharge Order, you can repay anyone you want to--even a debt that has been discharged.

That's your answer right there... dont' do a damn thing while your BK is active. If you really want to pay someone back then the time for that is AFTER you're discharged and closed out.

I would also agree with Dst1, don't sign anything that obligates you to a discharged debt. Make good faith payments to get that debt paid off if that's what you want. But if something happens don't bind yourself to old debt with some contract. Keep your options open.

[logmaster]

Wow, I wasn't aware of the consequences and potential risks.

I am not going to do anything until the case will get discharged.

THANKS AGAIN!!!