Reg: Credit Cards

[mesa777]

Has anyone here looked into any of the debt relief compaines out there? For example if I have $40,000 in credit card bills would this be a better way to go rather than to file BK??? I am just looking at my options still however will probably end up in BK due to my house situation, I just do not know how long I would have to "hang" on to my home before I am ever able to sell it.. AZ has a horrible real estate market now for the sellers anyway...

[stljohn]

Not enough info for anyone to come up with really useful response. For that you probably need to talk to a lawyer, but for what its worth I chose BK route.

Bk stops all collection, sets firm time frame on clean start. Its on your record for 7/10 yr but IMO less damaging then the lates and chargeoffs.

The other way is uncertain, not all creditors will work with you. Agreements will likely be breached, there will still be pressure, time frame and end is not certain.

[BKTango]

A search of "debt settlement" or "debt negotiation" companies within the site will bring up a TON of posts on the subject to help you in your decision.

Or...you could just look at my old posts to get my first hand experience with a company such as those. Several members of the forum have gone down that route before bk and ended up farther in debt due to fees, interest, money lost and lawsuits. Of course we ended up in bk anyway. If there is one thing I always have regretted it's not just filing in the first place instead of wasting time and money I didn't have doing the debt relief crap. But we must each make the decision for ourselves.

[HHM]

Generally, if BK is a viable option right now...you are beyond the help of a debt management company.

[Lindsay]

For us, we did try to work out arrangements with creditors. Some were willing to work with us, others weren't. HSBC told us that they won't work with debtors or make arrangements, that they'd just sue. Chase sued us after less than 4 months. Some of the creditors like Bank of America offered to take 50% off the balance, payable in 6 monthly installments. We didn't have enough money to settle with the ones that offered and it wouldn't have worked unless we got all of them to agree. I think the debt settlement would work if you had a few creditors who were willing to work with you, but if you have 6 or more creditors, its going to be hard to get them all to agree on a plan that will work for you.

My advice to you is to be patient. I'm not sure if you are already behind on your bills or not. We are finally retaining our lawyer on Tuesday. We have waited out the endless barrage of collection calls for more than 6 months. Its been 7 months since I've used a credit card and that was just for gas and food, no luxuries. The reason I waited because I was afraid of an objection. I just want a simple bankruptcy with no complications. If I were you and considering settlement or credit counseling, I'd try to get the minimum payments lowered or go on a hardship program for a while. You can always file BK six months or a year from now when you won't have to worry about objections as much. Also, maybe you should get a few other opinions from other lawyers. Maybe this lawyer was a fatalist or doesn't want to take a chance that he'll have to defend you in court.

[CindyLou]

Remember, you get taxed via a 1099 on any debt forgiven as the result of a settlement. For example if the company negotiates to pay a ccc 5K on a 10K debt, then you will get a 1099 for 5K. You then end up owing another 1500 +/- or so in taxes (depending on your tax bracket.)

So on a 10,000 debt you still pay 6500 + the fees you pay the agency.

IMO, there are very few people that this type of thing works for. I have an example. A girl at work had some credit issues in the recent past resulting in approx. 10,000 of deliquent debt. She is now caught up on all of her secureds, is making enough money to pay all her bills and BK is not an option because she has disposable income to pay towards the old debts. She did not want to deal with the creditors on her own, and all theee of her creditors are major companies that work with these agencies. She chose to do this and it is working out very well for her...she's almost done, actually.

But, Mesa, given the information you have posted on your situation, its just my opinion that this consideration would just be grabbing at straws. You will have to get help for the gambling problem FIRST then do your bk and give yourself the fresh start you deserve.

Again, just my opinion.

Best wishes,
Cindy

[rrockinggramma]

And many debt collection agencies even though it isn't a BK triggers the creditors to list you as a "wage earner plan" on your credit report. Well that to the world is a chapter 13. (happened to me with CCCS ) and I couldn' believe it when creditors would ask about my BK long before I ever filed one.