Settlement Offers

[kwcapt]

We have been reading posts for a couple of months now and most likely will file a BK7 before much longer. We are currently about 180 days late on all of our debt except the mortgages. We have about 140,000 in unsecured debt both personnel and small business (which is guaranteed in my name). BOA called and is trying to settle at 85% less than what we owe on a couple of cards. Total on the two cards is almost 43,000 and they will take about $7,000. We would have 90 days and four payments to settle this. Should we ask for this offer in writing? Is it safe to give them bank info over the phone? We obviously would have to scrape to get money together to settle anyway. We could most likely settle all of the debt if we could just get the commercial building we own sold but with the market the way it is, its not looking very hopeful. If only the building would sale.

[jribe]

First: if you you settle with BOA for the $40k you owe- what about the other 100k you owe?
If you still need to file BK then you won't want to settle.

If you are considering settling: get everything in writing. DO NOT give out your bank account info. Send certified checks/money orders. Once they have your routing and account number they can take out payments.

Also- remember that any "forgiven" debt is taxed at the end of the tax year. So if they are forgiving 30k, you'll be treated at tax time like you made an additional 30k on top of your regular earnings. Is that affordable to you?

If you can't get all your creditors to settle- it's usually not worth doing at all.

I had thought about trying to settle with my creditors- but i had some hold outs. So i didn't bother.

Also, the amount not repayed can still be sold to other collection agencies. So unless you have something in writing say the debt will not be re-sold- dont' settle. You'll just end up having other companies coming after you for the balance.

We have been reading posts for a couple of months now and most likely will file a BK7 before much longer. We are currently about 180 days late on all of our debt except the mortgages. We have about 140,000 in unsecured debt both personnel and small business (which is guaranteed in my name). BOA called and is trying to settle at 85% less than what we owe on a couple of cards. Total on the two cards is almost 43,000 and they will take about $7,000. We would have 90 days and four payments to settle this. Should we ask for this offer in writing? Is it safe to give them bank info over the phone? We obviously would have to scrape to get money together to settle anyway. We could most likely settle all of the debt if we could just get the commercial building we own sold but with the market the way it is, its not looking very hopeful. If only the building would sale.

[AngelinaCatHub]

I just got through with answering a like problem. For one thing, GIVE NO ONE your account numbers. How you gonna know that help desk person does not have a side job???

Next, if you are intent on bk, the settlement would be a "preferential" payment a ruin the bk for your. The tax situation was previously mentioned.

Have a better New Year. 'Hub

[SleepWellNow]

I would consult a BK attorney before agreeing to settle anything. Even if all $140,000 could be settled for 15%, that's $21,000. You also mention your commericial building that hasn't sold. There has been a lot of talk that commercial buildings will be the next wave of foreclosures. For commerical loans that recast at 5 years (purchased at the 2005 peak), due to lower values and tight lending, many will not be able to make the payments or refinance. That means a glut of commercial REO's and prices falling. I would discuss with your attorney if you qualify for a Chapter 7. You may may end up an asset case (due to the equity in your commerical building), but selling the building will be the Trustee's problem, not yours. You may be able to wipe out your debt and get rid of the building at the same time. This is just a thought. I hope everything works out for you.