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Chapter 13 Vs. Settlement -- Questions about this

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    Chapter 13 Vs. Settlement -- Questions about this

    I posted about my situation and things will just get worse if I don't take action. Right now my FICO score is 563 and despite making a decent income for one person (not six figures but well over the median for a household in the state of Massachusetts) I can't even get credit for a wal mart charge card and it took applying to over 25 rental apartments before finding this one that is 'luxury' but only in price literally counting the days till this lease is up. Inquired about a car loan. The best that can be done (and this is only iffy at best) is maybe $4,000 financed at 22% with $12,000 down on a $16,000 car.

    I am over $70,000 in credit card debt and it feels like whatever payments I make just go into a rathole and I may have well burned the money. I am current on a bunch, and in default with AMEX,Chase & GE Money for Amazon so far -- 2 accounts with each creditor.

    Strangely, AMEX is not reporting the late payments or defaults on my credit report. They sold the balances on each card to collection agencies after only 30 days overdue and cancelled both accounts but the collection agencies haven't even called. Chase however has been relentless and my employer may or may not have a direct relationship with JP morgan chase (ironically I work in the same industry).

    The next are with BOA at 20% & 24% totalling about $33,000 plus other retail cards, discover card etc...

    My credit is trashed for 7 years which is something I have to come to terms with. I made alot of BAD decisions in the past few years that led to this.

    So why not just settle the debt if most creditors are offering settlements at 50% of balance?? Do you have to make the payment right away or can you break it into installments??

    One thing is that I have an additional $500 or more each month since I stopped paying. I want to have a decent cash cushion for emergencies that will likely come up. In March when I wasn't working I was hit with a car repair bill over $3,000 for a new torque converter, trans rebuild & full engine tuneup.

    #2
    Hello,

    From my experience, if you go with a debt settlement company and settle it could take 36 moths or so and they won't start negotiating until you have cash built up in an escrow account(your payments to them after their fee)

    After it is all said and done and you are settled, you will be issued 1099's for the amount you did not pay back, it is considered income.

    Either way your credit is messed up however going through Bankruptcy you won't get a 1099.

    Comment


      #3
      One thing to consider is that if you are insolvent, the 1099's are not an issue.
      1/15/10 Filed ch7 2/18/10 314 meeting
      2/22/10 Report of No Distribution
      4/20/10 Discharged 5/20/10 Closed!

      Comment


        #4
        So why not just settle the debt if most creditors are offering settlements at 50% of balance?? Do you have to make the payment right away or can you break it into installments??
        Generally, you need money right away, a lump sum.

        One thing to consider is that if you are insolvent, the 1099's are not an issue.
        Odds are, if the question is between chapter 13 and debt settlement, you are not insolvement.

        Comment


          #5
          Here is the link to my story. I was headed to a ch 13 and found a way to settle using a bonus from work, tax refund, and a 401k loan. You mention you work for a financial company. I do too and one of my cards was with the company. That has not come back to me yet. I am hoping it does not but ch 13 would have meant I would have to notify my boss and HR.

          Comment

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