Settlement Payments

[airahcaz]

After entering a settlement agreement with a creditor, which currently states "Defendant agrees to pay sum of X, which sum Plaintiff agrees to accept in full Settlement of its claim herein, inclusive of interest, counsel fees, ans court costs"

Should the settlement offer that is signed have verbiage of stating it as SETTLED, PAID, or CLOSED when paid off?

Can I pay via Amex?

Should I pay via a check via my checking account so it is properly tracked, or via Money Order?

Via either method, what exactly must go on it so that it is properly documented, the original account number, the account number at the creditor, the court docket number?

[HHM]

The language seems fine, not too many different ways to interpret "full settlement of claim herein"

Pay by check...put all reference numbers on it and send with cover letter.

[airahcaz]

If one files CH7 or CH13, will that eliminate a settlement as well? how does that work?

[shark66]

If one files CH7 or CH13, will that eliminate a settlement as well? how does that work?

When one is *discharged* from any BK chapter, all the debt is discharged unless re-affirmed (only a secured debt can be re-affirmed) in the BK proceedings, the only exception being student loans which are non-dischargable in most cases.

With the underlying debt getting discharged, any settlement becomes obsolete...

In other words, if you're planning to file anytime soon - do not settle.

My $0.02 only...

Good luck.

[AngelinaCatHub]

When one is *discharged* from any BK chapter, all the debt is discharged unless re-affirmed (only a secured debt can be re-affirmed) in the BK proceedings, the only exception being student loans which are non-dischargable in most cases.

With the underlying debt getting discharged, any settlement becomes obsolete...

In other words, if you're planning to file anytime soon - do not settle.

My $0.02 only...

Good luck.

Hey Sharkey, how be you? I still love your avatar and your sig. It suits you. LOL.

Now, if he has made a settlement agreement, and has signed it, would this be a legal contract? Could he cross the creditor and get out of a signed contract, or has he in essence reaffirmed a non secured debt? It is a good post and when one never sees this as normally 'run of the mill questions' it teaches even us "old dogs". Give me your take on the reason it is not a contract. 'Hub

[AngelinaCat]

airahcaz, have you already filed BK or not? That is the question.

I hope you have not, because if you have, and you have just entered into this as a 'side agreement' outside the BK, you risk having your case dismissed.

[airahcaz]

airahcaz, have you already filed BK or not? That is the question.

I hope you have not, because if you have, and you have just entered into this as a 'side agreement' outside the BK, you risk having your case dismissed.

which case, a bk case dismissed cause of this? I have not filed BK as yet.

Also, so one files, then a court date is set to review what can be paid?

[airahcaz]

When one is *discharged* from any BK chapter, all the debt is discharged unless re-affirmed (only a secured debt can be re-affirmed) in the BK proceedings, the only exception being student loans which are non-dischargable in most cases.

With the underlying debt getting discharged, any settlement becomes obsolete...

In other words, if you're planning to file anytime soon - do not settle.

My $0.02 only...

Good luck.

I suppose the follow up question I'd then ask is if CH13 discharges the debt, then I suppose the courts decide how much this particular creditor then gets, and the previous settlement amount is inconsequential?

[shark66]

While it might be a contract, the fact that the underlying debt gets discharged makes the contract impossible to enforce...

We all had "contracts"...mortgages, credit cards, auto loans and what not...and all of them got wiped out in the BK. Now, a secured creditor can re-possess, but an unsecured can't do anything since they'd be violating the discharge order...

Stay well, 'Hub, your posts usually bring a ton of joy to these ailing eyes...

Good luck to us all.

[AngelinaCatHub]

While it might be a contract, the fact that the underlying debt gets discharged makes the contract impossible to enforce...

We all had "contracts"...mortgages, credit cards, auto loans and what not...and all of them got wiped out in the BK. Now, a secured creditor can re-possess, but an unsecured can't do anything since they'd be violating the discharge order...

Stay well, 'Hub, your posts usually bring a ton of joy to these ailing eyes...

Good luck to us all.

I hate it when someone just pops up a reasonable answer. LOL. 'Hub

[AngelinaCat]

which case, a bk case dismissed cause of this? I have not filed BK as yet.

Also, so one files, then a court date is set to review what can be paid?

You and I have both misunderstood each other. I was concerned that you had ALREADY filed, and then were entering into this agreement. That is not the case, so that issue is moot.

HOWEVER! If you are planning to file within the near future, say 6 months or so--or even longer, you enter into this agreement to pay this one creditor, and you have OTHER creditors out there that you are NOT paying, then it becomes a PREFERENTIAL payment. If this creditor is a friend or family member, then it becomes an INSIDER PREFERENTIAL payment..

In either of those two cases, you may have to wait up to at least two years before you are able to file, otherwise those preferential/insider payments can and will bite you in the behind.

[AngelinaCatHub]

which case, a bk case dismissed cause of this? I have not filed BK as yet.

Also, so one files, then a court date is set to review what can be paid?

NO, not exactly. It is good you have not filed. It is a consensuses here that a Clean slate C7 is better than a C13. What you are referring to, is called a 341 out of bk code sections.

It proofs under oath you are a citizen and that your forms have not changed and that since the forms are under oath when you file, you are under oath to agree that all is correct. At that time, any of your creditors may make an argument as to why their particular loan should be upheld. Generally most do not show and is is kind of a moot point as even if they object they may only get a hearing date later on. From that point, any creditor can object within a 60 day waiting period. They then also can get a hearing but few do. Most who have an objection big time would sue in an "Adverse Procedure". It is a trial within the bankruptcy but separate yet linked to ONLY their case. You still can be discharged and the suit may survive a discharge and if they lose, you're free, if you lose, only that account will not be discharged. They are relatively rare. Shark66 is right after thinking about it awhile and his undeniable explanation. It is up to you but once you file, DO NOT PAY ANYONE as that is called a "preferential" payment and it could be reversed and taken by the Trustee, then you become an asset case which goes on much longer and a little more complicated. I hope this helps. 'Hub

[airahcaz]

NO, not exactly. It is good you have not filed. It is a consensuses here that a Clean slate C7 is better than a C13. What you are referring to, is called a 341 out of bk code sections.

It proofs under oath you are a citizen and that your forms have not changed and that since the forms are under oath when you file, you are under oath to agree that all is correct. At that time, any of your creditors may make an argument as to why their particular loan should be upheld. Generally most do not show and is is kind of a moot point as even if they object they may only get a hearing date later on. From that point, any creditor can object within a 60 day waiting period. They then also can get a hearing but few do. Most who have an objection big time would sue in an "Adverse Procedure". It is a trial within the bankruptcy but separate yet linked to ONLY their case. You still can be discharged and the suit may survive a discharge and if they lose, you're free, if you lose, only that account will not be discharged. They are relatively rare. Shark66 is right after thinking about it awhile and his undeniable explanation. It is up to you but once you file, DO NOT PAY ANYONE as that is called a "preferential" payment and it could be reversed and taken by the Trustee, then you become an asset case which goes on much longer and a little more complicated. I hope this helps. 'Hub

all these replies most definitely helps - thanks to everyone

I don't think I qualify for a CH7 cause of income, so I expect some creditors to be paid, but now that I think about it, I also have 3 six figure HELOC's with no equity, so there very well be no $ left over!

[airahcaz]

The language seems fine, not too many different ways to interpret "full settlement of claim herein"

Pay by check...put all reference numbers on it and send with cover letter.

I was going to star a new thread, but might as well ask here first, I am reading that it is not advisable to pay by check since they'll have my account and routing number? However, many make a point about having it probably tracked being cashed from your account. Confused...

[DYLAN150]

What about a cashiers check? Money order?