Should DW declare BK

[Sean28]

Long story short,

I have very good credit, however my DW is 40K in debt and about a year ago (before I discovered these forums) she opted to pay a lawyer to settle a debt with her creditors for a fee of course. She currently pays $525.00 a month to this law firm over 5 years. This firm is supposed to be negotiaing settlements of up to 30% with her creditors and has done a lousy job of keeping up with their part of her agreement. 1 year later, she has been sued by Target and had to go to court, the firtm did settle some smaller debt with maybe a 5% settlement rate and we still get harassing calls on a daily basis. I'm sure her credit is shot with derogs all over it but havent pulled her report to find out, been too scared!!!!. My advice to her is to declare BK and cut her losses and start over but I wanted to ask all the wonderful people on here if that is a smart decision. We own a home (in her name) but our looking to upgrade in the next 3 years and wasn't sure how great of an impact the BK will sway the mortgage lenders.

Any advice is much appreciated.

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[Jazzzy]

I would advise that the first thing you need to do is pull all 3 of her reports. You can't make an informed decision until you know what is there.

Also, does she have a written contract with the legal office that is "handling" her debt? I'd be looking into that and having a sit down with them.

As for the future mortgage, do you need her income in order to qualify? Will they have to see her reports?

[Anonymous]

BK doesn't cut losses.  If she is able to make $525 payments on the debt, then most likely she will be required to go BK 13 and have to make payments for at least 3 years and possibly 5 years...

But, these debt settlement companies are often scams that take your money and do little in return.  If they are indeed a law firm (check with the bar) you might want to file a formal complaint with the bar association and BBB.

These companies cannot negotiate anything that you cannot do for yourself.  They feed on peoples fear of facing creditors and on their initial ignorance of the laws.  Just use this site to educate yourselves, make your own deals and save the fees plus get better results.  Part of cleaining up credit is settling old debts.  Often this can be done for a percentage of the original debt.

Turning your life over to someone else who only is interested in your money usually returns disappointing results.

IMO

[Sean28]

TXJohn, I hear you, I hate the idea that someone is making money off this. I didn't realize that even if you file BK, you still have to pay for 3 or 5 years. I guess I'll pull her credit reports to get a gist of what her creditors are reporting.

Thanks

[Anonymous]

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@Sean28 wrote:

she opted to pay a lawyer to settle a debt with her creditors for a fee of course.

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By chance is it Lexington Law?