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Bankruptcy or Debt Settlement Program??? Please Help

LTrain823
New Contributor

Bankruptcy or Debt Settlement Program??? Please Help

Hello everyone, I have been reading through these forums for quite some time and I am amazed with the openess of everyones comments. I feel very fortunate to have a collective wealth of knowledge look over this and was hoping to get any insights on my current situation.

 

To make a long story short, I have managed to bury myself with almost $70,000 in credit card debt. A very unfortunate event occured when I purchased my new home and it has been killing me every since. I did not want to file bankruptcy because I am only 25 and I am planning on getting married within the next few years. I have been able to pay around $1,500 a month towards credit cards consistently which usually cover a little more than the minimum payment. I was doing the math and even with getting interest lower this is going to take me anywhere around 8-10 years to pay this off especially with the planning of a wedding, etc.

 

So I decided to join a debt settlement program that allows me to pay $1075 a month for 36 months and it will get me out of debt by settlement. I have never been late on anything before but this month I have been advised by the company I decided to work with to stop paying the creditors. Does anyone know if the debt settlement companies send pfd's or are they just trying to settle and get their share? What are somethings that I should expect to happen to my credit in the next 3-5 years? Does anyone have any success stories about settling their debt? I am just trying to sleep good at night knowing that this could work and hopefully make me realize all the "what not to do's" once this is paid in full.

 

Also, are there any additional steps that I should take in my own hands even if the debt settlement company has negotiated a settlement?

 

Any help is much appreciated...my first debt settlement payment is going out tomorrow so wish me luck on this next chapter in my life...

Message 1 of 60
59 REPLIES 59
Boscoe
Established Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

I am wishing you much luck, as most people don't make it through these "settlements".   I would, just to have all the angles covered, meet with a bk attorney just to see what they think, based on your $70k debt and any other issues you have.
 
Being only 25, your bk would be over by the time you are 30 (or sooner), the $70k would be discharged and the bk public record on your credit report would be gone by the time you are 35.....
 
I just filed last year at age 42, not fun to be sure, but I am in a much much better place and much faster by filing a chapter 7 rather than go for any settlement or debt mgmt program.
 
Others will weigh in here, and I bet that most of them tell you the same - good luck but most do not meet much success.
Message 2 of 60
LTrain823
New Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

I am going back and forth trying to decide whether i should file bankruptcy or dmp. I'm trying to seek any info on a dmp if they can give me a rough guestimate on what a dmp payment would be on 70k.
 
i have read through many threads on bankruptcy on here and chapter 7 sounds like the way i should go since all of my debt is only credit cards but my annual salary is 75k. will i be able to apply for chapter 7?
 
if i cant and they make me file chapter 13 and i have always been current on my mortgage can they take it from me? I dont want to lose my house.
 
If i go chapter 13 what kind of monthly payments do you think i would be seeing on 70k?
 
Im sorry to be asking so many questions, im just really worried here and my friends and family dont seem to be very supportive in trying to help me make a decision.
 
As always, everyones thoughts and insights on the forums is greatly appreciated.
Message 3 of 60
danikasmom
Regular Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

I read through all of your threads and replies yesterday and thought you had come to the conclusion of DMP.  I don't even pretend to understand your situation, but if I remember correctly, you had pretty decent scores.  What kind of equity do you have in your home?  Can you refi to pay that off?  I am not a fan of that anymore but I am also less of a fan of BK.  My concern for you as far as BK goes, is what are you going to learn from it?  Are you going to go back to credit card dependence?  I know people who have filed BK and just go right back to the same habits because they didn't have to work to get out of their situation.  Lesson not learned.  Same with the refi, me being a perfect example.  Not anymore.  I think that if you get yourself out of the situation yourself you will learn from this and not fall into the same habits.  I wish you luck but you have received more replies to your emails than I have seen for myself and you still don't have enough info in your eyes.  I do know you are frustrated but it is time to listen to your inner self and pay attention. 
Message 4 of 60
LTrain823
New Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

Thank you Danikasmom, yesterday i was trying to make decision whether or not i should go to a debt settlement company and after getting many posts from the wonderful people who took the time to post, i have decided to not go that route.
 
I just purchased my new home in June and I have already refinanced since then because for some reason the company who did my original mortgage totalle screwed me over and didnt add taxes and insurance and the next month i got hit with a $6,400 summer tax bill (Yes!!! i was livid!!!). My debt did not come from poor management skills, it came from a tragedy that happened right after I bought my house.
 
The DMP program is what i would prefer to use but i am already currently playing 12k-15k a month and that barely gets me over min monthyl payment and thats also leaves me with very little room for the rest of my expenses. I would assume the DMP is going to be a 5 year plan and if they are expecting anywhere around this same amount of a payment then I know eventually i will just get buried after a year or two and then I would have been kicking myself for not going another route. But doean anyone know what a dmp payment may be for just under 70k? If it is much less than what i am paying monthly to the creditors now that i would go that route.
 
Thanks again for the words of wisdom danikasmom.
 
 
Message 5 of 60
granny031350
Established Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

IMO, you should check with a BK attorney as well.  they all give free advice for 1st visit.  You would probably end up in chapter 13 based on your 75K but if you have family living with you that you support, then that also figures into the equation.  There are many factors.  I went chapter 13, as posted previously.  A chaper 13 is a BK, will be on your credit for 7 years from filing (less than the 10 for chapter 7) and you will make payments to the trustee.  The beauty of chapter 13 is that not all your creditors will file a claim (maybe your BOA account) and at the end of your plan (if you finish it completely) that debt is discharged and gone.  No creditor contacts while in the plan and no surprises of CA's going after unpaid balances while in a DMP. (not saying that will happen but it could)  If you want to make an informed decision, you owe it to yourself to not discount the BK option as well.  You should be able to keep your home as long as the lein against it was perfected, your cars, etc Only your unsecured debt would go bye bye. 


Message Edited by granny031350 on 02-16-2008 12:58 PM
Message 6 of 60
LTrain823
New Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

Granny...thanks so much for being so open with me. I have a few questions if you dont mind answering. I did some research that a chaper 13 still ends up paying the creditors in full? Is that true? Do you mind telling me what your debt was when you filed and what it is you are paying monthly? I guess it would sound hopeful to file ch. 7 if possible. Also, if I have never been late on my mortgage is there a chance that they can take my condo in either 7 or 13?
Message 7 of 60
whoisjohngalt7
New Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

i started typing out a long reply, but i didn't want to sound off.

research BK online and look for free consultation to see which you qualify for. there is a means test your lawyer has to determine. Chapter 7 which will give you a fresh start before your wedding. mind you, it will stay on your record for 10 years.

it really also has to do with how much you own and make.

don't be afraid to ask around , go to more than 2 lawyers if need be, look out for yourself since everybody else is, especially lawyers. as easy as the process may seem sometime, on some instances, like in your case, it may not be. legal counsel is recommended, doing it by yourself is not.

get yourself a thick skin, look back at what you did wrong, look ahead at what can happen, and move on.

the mandatory classes for BK are very helpful. Give yourself a couple of weeks, if you have that time, to sit back and research what you need to do. gather up your finances, living expenses, assets, and disclose this to your lawyer and he'll determine whether you have the means or not to file.
Message 8 of 60
LTrain823
New Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

Thanks so much whois...that is very valuable info. I just recently posted this if it helps...this is my total current situation:
 
So i have spent the last 3 days contemplating on what decision I have to make. BK is def in the air but I keep hearing that the that the judge has to agree whether or not i go ch. 7 or 13. Here is my current income and expenses.
 
75k a year is what i make which turns to $3900 a month take home after taxes, ins, and ira.
 
Mortgage : $2000
Car : $260 (lease)
Condo Association : $140
Car/Home Insurance : $200
Utilities : approx $400
Gas : approx $200
Phone/Internet/Cable : $0 (I work in this industry so its paid for by company)
Food/Entertainment: Approx $400
 
So this is a total of approx $3600 in monthly expenses that is not including some other misc expenses that probably add up to $100 a month.
 
I am currently single and I'm planning on getting married in the next 3-4 years. I just bought my new home in June of 07. I am currently taking care of my family as I have two sisters who live with me and my mother and father. I am 25 and my sisters are 22 and 17. My father cannot work and my mother has a part time job because she has to spend time taking care of my father if needed. Luckily, my family lives with me because I am able to pass on some expenses to them. Currently, my 22 yr old sister pays the assocation fee, my mother pays me $600 towards the mortgage and all utilities. The problem here is that my family is planning on moving away in about a year so I cant count on them for long. I dont see the need to try to sell the house especially in this terrible housing market that is currently going on. I have a brand new condo and the builder is still building 70 more condos in my sub so I dont see why someone would want to purchase my home when the builder is selling brand new condos for right around the price I purchased mine.
 
So anyway...I currently have close to $1000 to put towards my credit cards and I am just under 70k in credit card debt. I only have credit card debt and nothing else. I am current on all of them...I have never been late on a payment with any creditor and I have never been late on my mortgage. At this rate, I am never going to be able to pay off the creditors, it will probably take me well over 10 years with interest and thats not including what could happen after my family leaves. I know i can probably find a roommate but i wont count on that for now.
 
I also want to know what happens if I file BK now and get married after a few years. What happens to my spouses income? Will that be reported as disposable income? If so, I wont even bother getting married until I get through this...that would be the last thing I would ever want to do to my wife.
 
Do i seem like a BK candidate? If you genuinely feel with my current situation that there is please let me know. I am thinking about a DMP too but that all depends on what the monthly payment to them would be.
 
So I hope this clarifies as much as i can in my current situation. If there is anything else you would like to know please dont hesitate to ask. Thank you for all of those who has responded to my most recent posts the last few days.
Message 9 of 60
whoisjohngalt7
New Contributor

Re: Bankruptcy or Debt Settlement Program??? Please Help

this is your bk case, if you do file, not your future wife. once discharged, that is it. no one else is affected unless you are part of the credit application.

some of you expenses are conservative even for me, and i make way less than you, lol.

the fact that your mother and sister gives you money to help out increases your take home money.

when you file for BK, not saying you should, but if u are, only your current conditions apply, meaning the fact that your family lives with you is good..that means more hardship for you that is on paper. after the discharge, it doesn't matter what happens to you, you could be a billionaire for all we care, lol.

you need to include food bills and other expenses for your family members who are not contributing. even if it's only to disclose that they are sorta your dependents. thsi will help your case.

from what i can see, if there are members who are sort of depending on you, then the food bills alone should be much higher and separate for entertainment.

don't forget about medical insurance, medicine, expenses for grooming such as haircut, grooming supplies, car maintenance like oil change and repairs, gardening if any, all sorts of insurance, any other taxes you pay, like property taxes averaged out to a monthly figure. you would be surprise how much these things add up and how much you are actually spending a month.....I WAS!

Once you have sat down and knit pick on everything and gathered up everything you spend on, go see yourself a lawyer and he will give you your best option, be it a BK or debt consolidation, which he will also probably set up for you! BE HONEST AND DISCLOSE EVERYTHING TO HIM/HER. If you want a fresh start, you have to be honest with him/her, as well as yourself.

one last thing, filing also means the possibility of losing/liquidating your assets, chapter 13, this might not be the case. go see a lawyer, he'll know more than i do.

be prepared for this option.

Message Edited by whoisjohngalt7 on 02-17-2008 01:38 PM

Message Edited by whoisjohngalt7 on 02-17-2008 01:39 PM
Message 10 of 60
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