Should we contact credit card companies to try and settle debt prior to filing chapte

[flash12]

I owe about 80-100 k in unsecured credit card and medical debt after already signing over home in Lieu of foreclosure and selling business for a big loss. Recieved 1099c and have filed tax return for the business corp and personal taxes. Looks like I may get back about 19000 on a tenative 1045 . Should I attempt to settle with the credit card companies prior to filing chapter 7. For lets say 10 cents on a dollar owed. I also have about 8500 in an IRA that I could get to try and settle. My income and assets now are not making me a able to pay these debts. Any advice would be appreciated

[AngelinaCatHub]

I owe about 80-100 k in unsecured credit card and medical debt after already signing over home in Lieu of foreclosure and selling business for a big loss. Recieved 1099c and have filed tax return for the business corp and personal taxes. Looks like I may get back about 19000 on a tenative 1045 . Should I attempt to settle with the credit card companies prior to filing chapter 7. For lets say 10 cents on a dollar owed. I also have about 8500 in an IRA that I could get to try and settle. My income and assets now are not making me a able to pay these debts. Any advice would be appreciated

Well your question is a personal decision that only you can make. Let's say one will not settle and all others will. Then you have failed and that becomes a preferential payment in bk. If you cannot successfully settle with all of them or that it would clean you out, and you file anyway, then you have thrown good money after bad. As far as your credit rating is, it will not be worse in bk than it probably is now. Going to gut your retirement is not wise at all as that is safe money and exempt. If you have extra money after your tax return put it into exempt items or accounts. Do this 90 days before you file so as not to look as though you are hiding assets. BTW, don't hide any assets but the money can be used for your lawyer up front.

There are many issues and only you can decide what to do. 'Hub

[flash12]

Thanks for replying ,what type of exempt accounts are you refering to? Are you suggesting IRA contributions? Thanks again

[calgirl67]

Why settle anything if you are going to file and get it discharged anyway? Keep what cash you have for your fresh start.

[blockhead]

Lump sum needed for settlement

If you have 50-55% of the total owed on cards and they're 3 or more months behind you might, stress might, be able to settle them but they will want lump sums or maybe 3 payments over 2 mths - at least that's what it came down to with me and I had 3 deals worked out - but then couldn't settle the rest so inevitably had to file.

[catleg]

Taxes are the main issue when you have a big debt load.
It's really a lot easier to just do a chapter7 case if you can.
Any free cash needs to be protected by an exemption or paying down a non dischargeable obligation like student loans.

[shark66]

Don't forget that IRS will come after you for the amount that you "earned" by settling with credit card companies to tax is as income...

No such thing once you're done with Ch. 7

Good luck.

[daglo]

Don't forget that IRS will come after you for the amount that you "earned" by settling with credit card companies to tax is as income...

No such thing once you're done with Ch. 7

Good luck.

They won't if you can prove you are insolvent, which we did. We settled with B of A and we didn't have to pay taxes on the settlement because total of liabilities are more than assets.

[shark66]

OK...how about this:

If you can prove that you're insolvent, you should have no issues sailing smoothly through Ch. 7, which is where OP is headed anyway...

That being the case, it's just wasted money spent on settling anything prior to filing.

My $0.02 only...

[GWBcasualty]

I am briefly entertaining the same thought as I have a couple of months to kill before filing and my IRA value doubled in the past 9 months (AAPL stock...).

I only called one creditor so far (the toughest to deal with I've been told...) and they were very happy to hear from me... they were also very quick to offer 40% which is a no-deal.

Some of my lines charged off almost one year ago and the phone is pretty quiet. A couple of my cards already offered near 20% months ago.

The way I see it, if I can settle for 10% and get some negative marks from my credit report removed, maybe one or two tradeline deletions it would be worth it.... if not I will file.

I will not pay anyone unless I have an agreeable offer in writing from everyone. So, I think it's safe to day that it will not happen, but if nothing else will keep me busy