Settling Credit Cards Instead of BK?

[Dancer]

It looks like it won't be in our best interest for my DH to file BK because it appears that the bank is going to forgive the deficiency after the short sale.

I've read online about settling credit card debt. Is it something people can really do? I understand the negative ramifications to DH's credit report but the short sale has already messed up his credit report. I also know there is a tax implication to settling but I'd rather pay the taxes on the forgiven amount than the total amount, KWIM?

DH's credit card balance is about $16K total.

If people really do this, do you do it you itself or hire someone to do it?

[keepsmiling]

First you will have to stop paying them. None of them will settle while you are still current.
Within a few months you most likely will start getting offers to settle. You can also play lots of drag it out games and sometimes they give up and go away. There used to be some discussions here about the "electing arbitration" clause but we haven't seen those in a while. I'd be interested in revisiting that topic. You might want to look that up. It may very well be a way to make a lot of that 16K go away. Depends how old some of those cc's are.

The usual number thrown out here for settlement is 40%. I've gotten offers for less but there are no guarantees, also no guarantees that all of the cc's will settle.
Again, if you are insolvent, you don't have to worry about tax consequences.

[Dancer]

Thanks. I'll have to do more reading about the insolvency piece. We file taxes jointly and I don't know if technically we can say as a couple that we are insolvent because I've got savings in my name only.

Most of the charges are a few years old but DH has incurred some small charges in the last year.

The attorney is running the numbers for the BK filing. I suspect they will come back saying DH has to be in a 13. A 13 doesn't make any sense for us if there is a way to settle his credit card debts and avoid BK.

[keepsmiling]

If the debt is your husband's only, your savings shouldn't count.
Think long and hard over filing for 16k.

[keepsmiling]

http://www.creditinfocenter.com/legal/credit-card-arbitration.shtml

keep us posted!