negotiating with unsecured creditors

[gina2000]

Hello all - I've been pouring through this great forum for the last three weeks and have consulted with an attorney. I'm still current on all payments (all unsecured - credit cards and medical providers) but have only been able to do that by pulling money out of my IRA. I am well under the median income for CA and clearly insolvent, so a chapter 7 should be doable. My question: if I had a source of money (from a friend), does it make any sense to attempt negotiating on my own with these creditors for 10-15% of what is owed? Or is that almost an impossibility because they each have different expectations? I would prefer doing that rather than going through the bk stress but really don't know what I might be getting into.

[LadyInTheRed]

You are very unlikely to get all creditors to settle for 10-15%. Even if you did, you'd be in debt to your friend. If you are well under median, you should have an easy Chap 7. Probably less stressful than trying to settle with several creditors.

ETA: Take some time to consult with several attorneys until you find one you feel good about working with. A good attorney is the key to having a stress free BK.

[keepsmiling]

Do NOT take any more out of your IRA!!!
Regardless of which decision you make... you've already made one. Stop throwing good money after bad. It's just as if you are flushing it down the toilet.
Even if you decide to negotiate (generally not in your best interest but there are exceptions)... they will NOT work with you if you are current.

[df04527]

Amen on IRA OR borrowing the money.

[Floridagail]

Please stop borrowing from your future. The bankruptcy law is there for a reason. Use it.

[gina2000]

Thank you for the responses. Yes, I've made the decision to stop throwing good money after bad and realize that the next phase is to get behind with these creditors. Which leads to another question.... as long as there are able to keep in contact with me, is there any possibility they would also call family, friends or neighbors? Like just to be nasty?

[TRfromillino]

If they can, they will call everyone they can get a phone number for. I had them calling me, calling at work (til they put an end to it!) and even my daughter-in-law once! *Awkward* And they called until they charged it off and then the collectors started calling. It stopped after I threatened them with harrassment. I literally had my phone on silent for 6 months, the length of time it took me to save money to hire an attorney and file bankruptcy.

[df04527]

Yes agreed they will call anyone they can. Folks on here recommend Google voice religiously. Then go online to all your accounts and update to that number. BEFORE you file.

[gina2000]

Eeek. Why would they call anyone else if I'm willing to talk with them?? Isn't that harrassment and isn't it illegal? I can understand them calling family and friends if they CAN'T locate me... but why would they call anyone else once they're able to reach me?

In all the threads I read about GV it sounds like you use it primarily to funnel the calls to a number that doesn't ring in your home. If anything, I would think that would make creditors more likely to call friends and family. Which is what I don't want.

[syd74]

They just do it to be jerks, frankly. It's ridiculous. Probably the worst things about my experience were: they found my brother-in-law's work number and called him several times, and they called my parents (about a debt that was only in my husband's name!). It seems like they just try to embarrass you. I don't even have my BIL's cell number, let alone his work number! I have no idea how they managed to get it. Bizarre. He lives in a different state, even. They told both people that they couldn't get a hold of us. Yet never once did I or my husband personally get a phone message from those two creditors.

I found the greatest relief when we had paid a down payment to our lawyer and were able to call each creditor and say we had retained an attorney for bk and they must contact that attorney from now on.

But in spite of the embarrassment of those two call issues and a few other hiccups, BK is totally worth it. What a huge load off!

[mknolan]

Your story is the carbon copy of my situation. I too, was taking money from my IRA. I consulted with an attorney while my accounts were still current. His first advise was to stop paying. I did just that, took all of the paperwork he provided to complete, saved the money I was paying on my accounts to pay his fee and the filing fee. I started the process in the beginning of January (my initial consultation), filed on February 25th. During this time I was only one month past due so the calls weren't bad at all...I was worried too!! I only received calls for about 2 weeks, once my Chapter 7 was filed the calls stopped abruptly!! I would assume that the creditors get more aggressive after 3 or so months of non payment. I will have my 341 this week Wednesday. I thank God every day that I found this forum...the information I have been able to gather has really helped and eased my "guilt" about not paying my creditors!! Hoping that my 341 goes well and I will be officially on my way to a fresh start! Good Luck!!

[TRfromillino]

lol I felt guilty for about the first 2 days after I quit paying the CC, because I realized that for the first time in ages, I was going to be able to pay my mortgage and regular bills without worrying who or what was going to only get a partial payment because I had that CC debt! I'm only mad at myself for the debt rule me for so long, hope it never gets its grip on me again! I'll be thinking of you on Wednesday, mine is the 10th!

[mknolan]

TR I wish you all the best as well!! Oh and negotiating with creditors...impossible!! I tried negotiating a lower interest rate with Citi...I had that card since the early 80's, never missed a payment and they refused to budge. Did the same with Chase, they were the worst...wouldn't budge!! BTW...over the guilt and love not having to juggle bills and money!! Happy weekend and Happy Easter!

[DaisysMom]

Three years ago I was on the same hamster wheel you are. When I did a search about BK I found this site. After reading, researching and absorbing all of the info I could, I flat out quit making all my CC and revolving loan payments. I was then able to buy groceries and gas without juggling my finances so my payments would not be late. It was the best decision I ever made.

As for the calls, I just told them I was on hard times and would make a payment when I was able...PERIOD. Didn't talk money or problems...just short and sweet. Then when I saw an attorney several months later and paid my retainer, I just gave them my attorneys name and #. Then when I filed, if they called I just gave them my Case #. It all worked perfectly....they never called any of my family members or neighbors. I was never rude.....just made the calls very short with no promises or extra information (which is a big thing...they want to ask you all kinds of questions.) Don't give any personal info.

I am now 1 year post BK. I get tons of new car offers at decent interest rates. I had an offer for a 1K credit card with a really good interest rate, which I refused. I may reconsider eventually, because it's easier to travel when you can use CC for tickets, rental cars etc. But I'm in control now...it will be ONE CC with a low limit. The point of this is that I am financially fine now. BK was a temporary situation. Live and learn and get on with your life in a wiser way.
WOOT!! Life is good again!!

DM

[gina2000]

Congrats to you mk and DaisysMom on getting this behind you. I'm relieved to hear that creditors don't always call family and friends. One attorney I consulted said that as soon as I paid her retainer I could tell the callers what I was doing and give them her name and number. That better do the trick, as I would be absolutely humiliated to have friends or family find out about this. Only one other person knows my situation - the friend who would give (not loan) me money if it would help. Thanks everyone for the helpful posts.