Negotiate prior to filing?

[Keebler]

I'm a month or more away from filing and I'm just now passing 30 days late on many of my credit cards. The calls are starting and I'm wondering how to minimize future trouble.

A couple cards have offered special payment programs and I'm tempted to apply for them. I'd like to minimize the post-BK damage to my credit and I'm willing to buy some silence until I file. If it keeps me tied to in-house collections, it seems like it's not too bad of an idea compared to having the debt sold.

Other than the potential waste of money, is there any reason to avoid negotiating a special payment plan with them as long as I've read the terms and conditions and I agree? Is there any potential down-side if I do this and file later?

[lrprn]

The one potential downside I see is how the creditor is going to interpret you agreeing to a payment plan, then filing 1-2 months later. It's going to be harder to claim that you entered the payment plan in good faith intending to pay back the money when it's that close to filing. This is where a good bankruptcy lawyer or two can give you sound advice about how this may be treated in your district.

Even if some creditors do agree to a payment plan, all of them won't agree so you'll still be getting calls from the non-participating creditors non-stop.

Frankly it's a whole lot easier to get caller ID and an answering machine to screen the creditor calls, then turn off the ringer or send a registered, return-receipt letter to each creditor that is hounding you stating you will speak to them only at one number. You can also get a PO box at the post office and direct them to only contact you in writing there - treehugger has had great success with letters like this stopping his calls.

Why make this harder than it has to be plus potentially open a charge for filing in bad faith for only a few months of partial quiet?

[CindyLou]

You may also get 1099's for any forgiven debts outside of your bk and have to pay taxes on them! Beware. There is no opportunity to "save" your credit at this point. A BK is a BK is a BK. Period. So go into this with an attitud of a fresh start. Once you committ to a Bk do with an all or none attitude. If you can't committ fully then it isn't going to give you the fresh start you need and you aren't going to get the full effect from the automatic stay and the use of the fund you would normally be using to pay your creditors to redirect to pay your attorney and sustain a healthly lifestyle through a rough time. Please spend some time and read through previous post on this site. If you have decided to file then make some appts to have some free consultations with at least 3 attorneys in your area. Once you've decided to file at the advice of an attorney, do not pay another unsecured creditor another dime! There is no benefit to to doing this. Your credit score should be the VERY last thing on your mind right now. That will come back in time and with some work and strategy later one, but now is not the time to think about that!! Good luck.

[HHM]

Short and simple answer....Don't bother, why throw good money after bad, just ignore the calls.

[CityGirl]

Why is everyone saying to see at least 3 attorneys?
I've only spoken to one and his rates are low..accepts payments and he definitely sounds like he knows his stuff.

[CindyLou]

We always say 3 because the consulations are free and it gives you a few very different views on your specific situation. You may see one attorney and think its a perfect fit, but then when you see another you may feel differently or you may very well go with the first one you saw. Its just kind of a rule of thumb in the in the legal world whether to do with BK, divorce, dui, or criminal, etc....see three and then make your decision.....

[CATCHMEIFYOUCAN]

It's always good to keep your options open, get a feel for what kind of relationship you might have with your attorney. Kind of like job hunting, you want to get the best deal !
Is this attorney out for your interest or does it seem he just wants to make money off you! Feel the vibes !

Best of Luck, Catchmeifyoucan

[CityGirl]

His rates are very low and he seems to know what he is doing. He already set my mind at ease. I see him in person tomorrow. If at that point, I don't feel comfortable, I'll see another one. The thing is, since I'm very in the public eye with my job, the least I see the better chance of someone I know not finding out about this.

[treehugger1]

keebler, cease communication letters will generally only work with debt collection agencies, not original creditors. While I don't know how agreeing to a payment plan would effect your BK in the immediate future, I have several payment plans set up as I'm still under no pressure to file and I'm still trying to determine my best course of action for my financial future. You also need to understand that I have a very solid job and make way above the median income in my state. The credit card companies will report any payment plan agreements to the credit bureaus. In addition, many will still continue to show "lates" on your credit reports, because technically you are late. A string of 30, 60, 90+ days late will be almost as bad as a few collection accounts down the road. My rule is don't negotiate to "save your credit." I only negotiate because I can't afford to make the full payments any longer. If you are absolutely sure you will file, take HHH and others' advice and don't throw your money away on debt you can't repay.

[SinkingFast]

Other than the potential waste of money, is there any reason to avoid negotiating a special payment plan with them as long as I've read the terms and conditions and I agree? Is there any potential down-side if I do this and file later?

The Permanent Injunction of BK.

If you negotiate a payment plan, you're stuck with that Creditor. If you default, the terms of the agreement could be such that the Creditor can come back after you for the full $$$ amount of the account. Plus all added lates, penalties, fees, and interest that would have accrued while you've been paying.

When a debt is Discharged in BK, a Permanent Injunction comes into place barring all subsequent owners of your debt from contacting you or attempting to collect.

[HHM]

Other than the potential waste of money, is there any reason to avoid negotiating a special payment plan with them as long as I've read the terms and conditions and I agree? Is there any potential down-side if I do this and file later?

It's not just a matter of "downside", you also need to ask yourself if there is any benefit, or "upside". Plus, WASTING MONEY is a HUGE downside.

If you are GOING to file BK, there is absolutely NO BENEFIT to you for entering any type of agreement with your unsecured creditors, you don't get bonus points for trying, your credit is still going to be trashed, etc. And the main downside is, you are throwing good money after bad.

So to sum up, there is no upside for you in negotiating with creditors, and you will be wasting money by paying them, I just don't see how that would be a good thing for you, or for anybody.