Debt settlement with creditor and collection agency bankruptcy

[icloud987]

Hi, first time here . My So has been consider filing bankruptcy. But recently I came across many news suggest now is a good time to settle debt with collectors and creditors because we are in a pandemic and they are more willing to settle to prevent further loss. It sounds less scary than bankruptcy to me but I don't know anything about it neither. If we can get a small percentage negotiated , we might be able to afford the payment plan because of the extended unemployment benifits .Can someone please share your opinion and experience with both? 
If he can negotiate the debt with creditor and collectors and get the agreement in writing, thats all it needs? What is the better safe way to make the payment? Check? Money order? Are there any other pitfalls?
I also saw some stories online, it is saying even if you settle the debt with collector, people are still being haunted with the same debt years and years later because the debt has been sold multiple times to many different collectors. That is the worst nightmare. If his debt were to sold to many different collectors, how can we decide who is the legit one to make payments to? Does he have to pay more than one collectors？
If the debt is still new and are with the first collector and if he is able to settle, will the likelihood of many collectors demands payments on the same debt reduce? Are there anything else he can do to ensure the paid debts won't haunt him after he settles? 
How can I determine if the debt is owed by a creditor or a collector? If he just calls and asks creditor about this, will they truthfully tell him? I am worried the creditor might accept the settlement to get the money then later tells him, the debt is owned by the collector, so he needs to go pay twice. There is no collection listed on his credit report as of today. Most debts are 150-180 days past due. This whole situation is so depressing and scary, for us who never dealt with this before. 
Is it necessary to hire a lawyer to settle the debt just so the lawyer can make sure the agreement looks right and work as  a legal binding contract ?I am not too worried about settling with the creditor but are worried about shady collectors who may trick him. I don't know how much the debt settlement lawyer would cost .
Please forgive my ignorance. I never owed anything in my life till this point after my SO made many poor mistakes. Any insight is highly appreciated. 

[Jnbmom]

@icloud987 

Before anyone can try to offer a plan or advice we need more info.

How much total debt are we talking about? Who are the creditors and what is owed on each .I see they are not current, are all accounts behind, and again how many accounts are we talking about? What kind of money do you have left over to throw at the debts? Do the orginal creditors still have the debt or did they sell it, are they calling you or are debt collectors?

[icloud987]

It is total of 50000 debt , hope can settle for 30-50 of it  and pay it off in a year or 2 .

I dont know who owns the debt for sure , that is part of my question .How do I find out ? On credit report ,no collection listed yet . I dont answer my phone calls so i dont know who has been calling . i did get 2 letters from 2 collectors , but they didnt specify if they are collecting for creditor or they bought the debt 

There are about 10 accounts invovled , 3 major debt are with NFCU ,nfcu made a offer to me for 50% . But that offer was dated on Feb 9th and I just got the letter now , I am not sure if it is too late , I plan to call them tomorrow , If I ask the creditor do they own the debt , would they be required to tell me truthfully if they own the debt or they sold it to others?

[Jnbmom]

@icloud987 

NFCU usually does their own collecting "in house" so you could settle with them directly, not sure who the other creditors are?

[icloud987]

other creditors are chase ,barclay , usaa , and citi , citi is the first one charged off my debts and the 2 collectors who contacts me are for the citi debts , but they didnt tell me if they owns the debt or citi still owns it . I see many people advise agaisnt debt settlement even with the original creditor , they are saying after settlement , i still will have junk debt buyer follow me for years , do you know much about that ? Is bankruptcy are the only safe option ?

[simplegirl]

That is not true if you settlement you would be settling to satisfy the full debt.

[OmarGB9]

Best thing I can advise right now is to pull your SO's full reports from annualcreditreport.com. This will give you all the info you need, including who currently owns the balances, how much is owed, and when the accounts originally went into default. If you do that, come back here with us and give us a full breakdown in order for us to help you develop a good plan of attack.

Also, if no collections are showing, that's good, but that doesn't necessarily mean the original creditors still own the debt. The way to know that is to look at the charged off accounts and look at the balance owed. If it's zero and/or it includes a comment saying the debt was sold, then they have sold it off to a third-party collection agency (CA). If it still shows an outstanding balance but you have received calls/letters from a collection agency saying you owe X balance, they *should* tell you in their initial communication (and possibly subsequent communication) who originally owned the debt or who they are collecting on behalf of.

Another point, it's best to pay/settle the account with the original creditor whenever possible (if they haven't already sold the debt) in order to completely avoid the possibility of both being sued if within the statute of limitations, and avoid getting a collection reported on your credit. Once you pay in full or settle, regardless of whether it's with the original creditor or the CA if they had already sold the debt, you are free and clear of that particular debt. Junk debt buyers cannot try to collect the rest if you settled for less, and no you wouldn't have to pay twice, either. That'd be illegal. Just be sure to get all settlement offers/plans/payment arrangements for paying in full in writing, and keep all receipts and letters, particularly the final receipt/letter stating your account is paid off/settled and the balance is now zero dollars.

[icloud987]

Thank you so much . These are the answers I really need . It looks like all the charged off accounts on his credit report still shows balance . I guess that means the original creditor still owns the debt ?  I am relieved to hear if we settle with the creditor , and get agreement in writing , thats all we need to do . Many people have always prefered bankruptcy versus debt settlement , it made me feel debt settlement would be a nightmare no matter how it is done . He never answered those collectors calls , I looked at the paperwork the collectors sent , they never specified if they own the debt or not .They have reference for the credit cards and provided us the bank statement when we requested validation of debt , we are thinking about calling the creditor to directly ask them if they still own the debt , would the creditor lie to us by saying they own the debt when they dont own it anymore? 

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@OmarGB9 wrote:

Best thing I can advise right now is to pull your SO's full reports from annualcreditreport.com. This will give you all the info you need, including who currently owns the balances, how much is owed, and when the accounts originally went into default. If you do that, come back here with us and give us a full breakdown in order for us to help you develop a good plan of attack.

Also, if no collections are showing, that's good, but that doesn't necessarily mean the original creditors still own the debt. The way to know that is to look at the charged off accounts and look at the balance owed. If it's zero and/or it includes a comment saying the debt was sold, then they have sold it off to a third-party collection agency (CA). If it still shows an outstanding balance but you have received calls/letters from a collection agency saying you owe X balance, they *should* tell you in their initial communication (and possibly subsequent communication) who originally owned the debt or who they are collecting on behalf of.

Another point, it's best to pay/settle the account with the original creditor whenever possible (if they haven't already sold the debt) in order to completely avoid the possibility of both being sued if within the statute of limitations, and avoid getting a collection reported on your credit. Once you pay in full or settle, regardless of whether it's with the original creditor or the CA if they had already sold the debt, you are free and clear of that particular debt. Junk debt buyers cannot try to collect the rest if you settled for less, and no you wouldn't have to pay twice, either. That'd be illegal. Just be sure to get all settlement offers/plans/payment arrangements for paying in full in writing, and keep all receipts and letters, particularly the final receipt/letter stating your account is paid off/settled and the balance is now zero dollars.

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[OmarGB9]

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@icloud987 wrote:

Thank you so much . These are the answers I really need . It looks like all the charged off accounts on his credit report still shows balance . I guess that means the original creditor still owns the debt ?  I am relieved to hear if we settle with the creditor , and get agreement in writing , thats all we need to do . Many people have always prefered bankruptcy versus debt settlement , it made me feel debt settlement would be a nightmare no matter how it is done . He never answered those collectors calls , I looked at the paperwork the collectors sent , they never specified if they own the debt or not .They have reference for the credit cards and provided us the bank statement when we requested validation of debt , we are thinking about calling the creditor to directly ask them if they still own the debt , would the creditor lie to us by saying they own the debt when they dont own it anymore? 

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@OmarGB9 wrote:

Best thing I can advise right now is to pull your SO's full reports from annualcreditreport.com. This will give you all the info you need, including who currently owns the balances, how much is owed, and when the accounts originally went into default. If you do that, come back here with us and give us a full breakdown in order for us to help you develop a good plan of attack.

Also, if no collections are showing, that's good, but that doesn't necessarily mean the original creditors still own the debt. The way to know that is to look at the charged off accounts and look at the balance owed. If it's zero and/or it includes a comment saying the debt was sold, then they have sold it off to a third-party collection agency (CA). If it still shows an outstanding balance but you have received calls/letters from a collection agency saying you owe X balance, they *should* tell you in their initial communication (and possibly subsequent communication) who originally owned the debt or who they are collecting on behalf of.

Another point, it's best to pay/settle the account with the original creditor whenever possible (if they haven't already sold the debt) in order to completely avoid the possibility of both being sued if within the statute of limitations, and avoid getting a collection reported on your credit. Once you pay in full or settle, regardless of whether it's with the original creditor or the CA if they had already sold the debt, you are free and clear of that particular debt. Junk debt buyers cannot try to collect the rest if you settled for less, and no you wouldn't have to pay twice, either. That'd be illegal. Just be sure to get all settlement offers/plans/payment arrangements for paying in full in writing, and keep all receipts and letters, particularly the final receipt/letter stating your account is paid off/settled and the balance is now zero dollars.

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No, they wouldn't lie. Just call and ask. But if they all still show balances, then it seems they all still own their respective debts, and the CAs you've been contacted by are simply collecting on the OC's behalf.

[icloud987]

Thank you so much.