Settlement offer: 15% of 75,000 with B of A?

[jwmc1]

OK, I have gotten it in writing everytime...

[tyfoon]

That's part of the key in a settlement issue. You better get it in writing before you ever send them a cashier's check. There are plenty of examples out in the world where a debtor thought they had a settled an account with a CA. Then, a few years later the remaining balance shows up with another CA or JDB. It sounds as if tyfoon has been quite careful and covered all the issues that could come up in the future.

Yes, I did get everything in writing before payments were made. My Bank of America accounts are all listed with the credit bureau as settlement accepted.

BTW my Equifax credit scores are starting to inch up. Went from 720 a year ago to 450 when I did not pay anyone for a few months. Now at 540.

[twocents]

So, after my 1st forecloses, the BA Heloc $250K isn't worth settling? If they settle for 50%, then they can sell the rest of the unpaid loan to someone else? What happens if I file for BK13?

[forgotten]

So, after my 1st forecloses, the BA Heloc $250K isn't worth settling? If they settle for 50%, then they can sell the rest of the unpaid loan to someone else? What happens if I file for BK13?

Would you have $125k to settle with the first!? Don't forget the deficency balance on the first, they will want that money too.

If you file CH13 then you pay your disposible income in to the plan for 5 years and are done.

[tyfoon]

So, after my 1st forecloses, the BA Heloc $250K isn't worth settling? If they settle for 50%, then they can sell the rest of the unpaid loan to someone else? What happens if I file for BK13?

If you have that kind of money ($125,000) you should pay a attorney (and maybe a tax accountant) to tell you what your options are. Sounds like you want to get out of the first mortgage and home equity loan without selling the house or paying any more on it? Is the home worth a lot less then what you owe on the first mortgage and line of credit? If so, is a short sale a option (sell house for what it is worth if mortgage holders agree to it). No matter what you may have to pay income tax on the amount written off.

[MarieT]

Thanks for your comments. I am going to look into the 1099c tax issue. I know that one has to fill out form 982 to claim insolvency and pay little or no tax on the settlement. Maybe i will redo my 2008 tax return assuming that i took the settlement and see if i would have owed anything on it.

Regarding BofA selling forgiven debt. That sounds crazy. In my case I have a signed settlement offer in my hands. I have no idea how they could get away with selling the remaining debt. I might ask them if that is even a remote possibility or to indicate that they would not do so in the written offer. Have to do more research on that.

I know that it will be real tough to get the rest of the creditors to settle. A couple of days ago I asked Chase ($4k balance) for a 15% settlement and they said absolutely not and pretty much hung up on me. Have had little or no contact with Sears and GM card collectors. They must be too busy working on other customers accounts to care about my "small" $12-$13k balances.

Most likely will eventually end up filing ch13. But, like everyone else, I am looking for the option that makes sense to me. At this stage I really do not want my employer to find out about my financial condition. Bankruptcy would require part of my salary to go to the courts which obviously requires our payroll/personnel staff to be informed.

I realize that this is an old thread but I am researching everything I can prior to actually filing BK. I have three credit card accounts, two written off and one writing off soon. Is there something where if you file BK they notify your employer as noted above in last paragraph?? This puts a whole new wrinkle in this!!

We have already negotiated one cc $20,000 balance down to $4,000 that was turned over to a JDB and I think they will really accept $2-2,500. We have a BofA debt for $37,000 that has been turned over to someone who is identifying himself as an attorney when he calls...don't know if he is with a collection company but does not identify himself as being with BofA. Part of our quandary is if we end up getting a 1099c for what could ultimately be $50,000 of forgiven debt, that could be a $15,000 IRS bill and that cannot be written off in BK so really have to know what we're doing here. On the other hand if we are made to pay all the creditors through Ch 13 we could end up paying more plus have the BK on our record.

[MarieT]

I am also not sure what abbreviations were not understood.. I was new to the forum when i posted this topic and understood the answers..

BTW, ended up settling the accounts. Settlement on the GM account took longer then the rest. Had to wait until it was turned over to an outside collection agency before they agreed to 30% but by then balance had increased due to interest and late fees.

Tyfoon...I realize you may not be on the forum anymore but I am very interested in trying to settle our debts instead of doing the BK if at all possible. I have been told with our income that Ch7 not likely even though we do pass the online means test to qualify for Ch7. The idea of a trustee overseeing our lives in a Ch13 for the next five years makes me crazy!! Obviously if we have no other choice, we will go that route. I am like you in taht I want to be as informed as possible and not kicking myself later and wishing I would have done debt settlement instead of BK. I have just gone through a year of getting my home loan modified and I am just sick to death of having every paycheck and bank account scrutinized.

I am still reading and learning about BK and really appreciate any advice.

So with that said, did you find out anything about the 1099c? We have a regular income but a negative net worth right now.

[tyfoon]

Tyfoon...I realize you may not be on the forum anymore but I am very interested in trying to settle our debts instead of doing the BK if at all possible. I have been told with our income that Ch7 not likely even though we do pass the online means test to qualify for Ch7. The idea of a trustee overseeing our lives in a Ch13 for the next five years makes me crazy!! Obviously if we have no other choice, we will go that route. I am like you in taht I want to be as informed as possible and not kicking myself later and wishing I would have done debt settlement instead of BK. I have just gone through a year of getting my home loan modified and I am just sick to death of having every paycheck and bank account scrutinized.

I am still reading and learning about BK and really appreciate any advice.

So with that said, did you find out anything about the 1099c? We have a regular income but a negative net worth right now.

I also did not want a court telling me exactly what I can do as well as did not want my employer to find out which has to happen since trustee will garnish wages from you in a ch13 case.

My 2009 1099c's totaled $67000 (did not receive 1099's from every creditor) Since I was insolvent at the time I settled (my liabilities exceeded assets by over $80000) I will owe no tax on the settlements. Big reason for that was my home value took a nose dive and i owed $130000 on a house that was worth maybe $90000. It is actually worth even less now. FYI I did not talk to a tax professional and only filled out the insolvency worksheet as per IRS publication 4681.

However, I have no credit and probably will not for years. Most likely would rebound much quicker if I went ch13. If I went ch13 would have had to pay creditors about $700 a month and was told I would have to discontinue paying back my 401k loan.

[MarieT]

So this is the first I have heard that the trustee will garnish your wages to pay the Ch13! Is that what happens in all Ch 13s? I sure missed that little detail. Not good!! That would so not bode well with my husband's employer! I am already really concerned because my husband must use a company credit card that he filled out a credit application for when he started there....of course he had perfect credit then. His company pays the cc bill (I think it's AmEx) but obviously they looked at his credit when issuing the card to him.

So you can be insolvent even if you have a job as long as your debts are more than your assets? We are underwater on the house by more than $100,000, owe about $110,000 in unsecured cc and loc debt, $27,000 to IRS, owe about $27,000 total on 1 motorbike and 2 cars and total worth is right at $29,000 so guess that is almost a wash. So you would be considered insolvent for the purpose of not having to pay income tax on the forgiven money as long as you owe more than you have in assets? We do not have anything is assets except regular household stuff, the house, and two cars and one motorbike.

Why are you thinking that your credit would rebound better with Ch13? Is that because you would have ultimately paid the creditors 100%? It seems your credit would still come back faster since you would not have a Ch13 on your report for 7 years. We have never been late on any of our secured accounts except the house which I just got a loan modification on.

[tyfoon]

So this is the first I have heard that the trustee will garnish your wages to pay the Ch13! Is that what happens in all Ch 13s? I sure missed that little detail. Not good!! That would so not bode well with my husband's employer! I am already really concerned because my husband must use a company credit card that he filled out a credit application for when he started there....of course he had perfect credit then. His company pays the cc bill (I think it's AmEx) but obviously they looked at his credit when issuing the card to him.

So you can be insolvent even if you have a job as long as your debts are more than your assets? We are underwater on the house by more than $100,000, owe about $110,000 in unsecured cc and loc debt, $27,000 to IRS, owe about $27,000 total on 1 motorbike and 2 cars and total worth is right at $29,000 so guess that is almost a wash. So you would be considered insolvent for the purpose of not having to pay income tax on the forgiven money as long as you owe more than you have in assets? We do not have anything is assets except regular household stuff, the house, and two cars and one motorbike.

Why are you thinking that your credit would rebound better with Ch13? Is that because you would have ultimately paid the creditors 100%? It seems your credit would still come back faster since you would not have a Ch13 on your report for 7 years. We have never been late on any of our secured accounts except the house which I just got a loan modification on.

I believe that in all cases the funds used by the ch13 trustee to pay your creditors off will be deducted from your payroll. Sometimes they want to pay your car payments to (you pay the trustee and your attorney from your funds, they are not doing anything for free. i think that the trustee gets a percent of what he pays out to your creditors so the more he pays the more money he makes.). Therefore your employer will always be notified. You should check with a bankruptcy attorney to find out for sure.

Sounds like your financially insolvent to me. I would get the IRS publication and fill out the insolvency form to make sure.

Regarding quicker rebound of credit if file ch13, I am not completely sure if that is true but have read it somewhere. Most times you will not pay back 100% to creditors under a ch13 arrangement unless u can afford it and the trustee has to approve any new credit (or new car loan) before you can do it. However, since ch13 is a legal action, it may be forgiven quicker by creditors then settling the accounts. Right now, it is very very difficult just for the average person to get credit anyway. I imagine if I had to get a car, I would have zero chance to get a loan but if I was in bankruptcy I may be able to (but the interest rate may be high).

[flyinbroke]

Credit as we knew it is no more. People with high scores are seeing CLDs, ratejacks, closure of accounts and denials regardless of payment history. The advantage of BK to settling is legal...you do not have any law on your side if you settle (along with needing $$$ upfront, IRS liability and less than honest dealings with the CCCs.)

As for 13s, while all BKs can show for 10 years after filing, many times a 13 drops off after 7. You have paid something towards creditors. And most people who filed BK already can attest that offers for loans started rolling in as soon as they popped up in PACER.

[MarieT]

As far as credit, it seems if you get the creditors to agree to report it as "paid" or whatever you can do to make it look better on your credit report (still researching that!)before you pay them, that settling could be better than Ch 13 for your credit.

I do understand totally not having protection by settling, I am just trying to weigh all the advantages and disadvantages.

[tyfoon]

As far as credit, it seems if you get the creditors to agree to report it as "paid" or whatever you can do to make it look better on your credit report (still researching that!)before you pay them, that settling could be better than Ch 13 for your credit.

I do understand totally not having protection by settling, I am just trying to weigh all the advantages and disadvantages.

Bank of America reported mine as settled. They told me exactly what they were going to do (1099c and how they reported my account). Sears and GM reported they they wrote off my account since they sold them to a third party. I disputed that since I settled with the third party but GM and Sears both said they would not change the status. One of the third parties listed the debt and indicated I settled. As a point of reference I was scoring about 720 or so before I stopped paying the credit cards. Score dropped to 450 before I settled. After I settled my score has been increasing but it is only 540 now.

[MarieT]

tyfoon...how long did it take your credit score to get to 540? It would be really interesting to know what it would hav ebeen if you would have done a Ch 13 instead. Ours is weird because we have so many debts that we have never had a late pay on, then the three credit cards that are now charged off. The house had missed payments but not all at once. I am meeting with an attorney who does settlement as well as BK so owe will see.

[HHM]

The score would be higher in BK 13