Chapter 7 or Settle ?

[bbnet]

OK. I have window where could qualify for Chapter 7, or
may have generous family member and part IRA fund settlement if can do 10% Average overall ($40k)

Debts 2 old helocs and a few credit cards
Heloc Regional Bank - now non -secured from short sold spec home $ 200k sued and judgment done
Heloc Small Bank ditto ditto $ 100k sued and judgment done
Chase credit card haven't paid for over 12 months $ 40k
Amex ditto $ 13k
FIA Visa ditto $ 32k
Chase ditto $ 3k

File and move on?
or settle without court risk and better long term credit outlook?

Thanks BB

[IOAlot]

I would have gone the chap 7 route if I could of. By settling you will get a 10% penalty plus taxes on the IRA which is protected in bk. You will also get a tax bill for the 1099C's. And 10%, although possible, is probable not going to happen.

Keep that generous family member close by if you need something in the future, or you can send them my way. :-)

[bbnet]

thanks for reply ioalot!

10&#37 ? (sorry dummy here if this code for something)

It's just the emotional impact(self realization) of chapter 7 that is keeping me prolonging to last minute...
I do have $700k forwarded captial gains losses but those would be better put to work for future income vs 1099 c's eating a portion...

and some say credit could rebound faster ? although stigma of BK on record may offset? thx!

[Angels]

i agree with IOAlot. your credit will get better sooner with a BK than to drag this out for years. with a BK 7 you will be done within a year easly.

[Angels]

BK is very common these days. very common. and the emotion will be tough while going through the process but will be over sooner than if you let the debt collectors ride this out for you. talk to an attorny about your situation so that you are well informed before making a decision.

[Evan Bedard]

Yes I have to agree with Angels and IOAlot. It is very rare for a credit card to settle for anywhere close to 10% of the balance, and with 88k in cc debt, BK seems to be a sound option..

[IOAlot]

thanks for reply ioalot!

10&#37 ? (sorry dummy here if this code for something)

It's just the emotional impact(self realization) of chapter 7 that is keeping me prolonging to last minute...
I do have $700k forwarded captial gains losses but those would be better put to work for future income vs 1099 c's eating a portion...

and some say credit could rebound faster ? although stigma of BK on record may offset? thx!

The 10&#37.... the percent sign doesnt show sometimes, imeant 10 percent.

It's that same emotional impact that drained almost 200k for me, I continued paying my debts until I had no money left, since I cant do a bk, i'm struggling to settle. Ill take the stigma of being debt free anyday. Good luck with your decision.

[RyanJP]

I agree... With that amount of credit card debt, BK7 is the way to go, in my humble opinion.

Yes, you will have to acknowledge that you've filed for BK on future credit applications, however, 6-12 months of timely payments after the discharge, you will be on the verge of qualifying for reasonable car loan rates. Three months after my discharge, I was able to open up a new credit card account for the sole purpose of making small payments to build my credit.

From discharge in July to today, my credit score is close to 100 points higher than it was when I filed.

[Evan Bedard]

From discharge in July to today, my credit score is close to 100 points higher than it was when I filed.

Wow! You have done an excellent great job rebuilding your score and gaining so many points in such a short amount of time:-)

[RyanJP]

Wow! You have done an excellent great job rebuilding your score and gaining so many points in such a short amount of time:-)

Honestly, I think the BK7 instantly raised my score, as I had spent the year prior struggling to pay/settle accounts and fighting collections... I instantly got a boost just on the fact that I wasn't overextended anymore!

I just got three judgements officially satisfied after finally sending in the right paperwork to the court, so that should see another boost in my score.

Its amazing how many vultures are out there, though. After my discharge, I was inundated with offers for "special auto financing" that was "the best way to being rebuilding my credit." I had no intention of going through with any of the offers, but I checked into a few, and they wanted 23% interest on these loans! Talk about predatory lending!

I know somebody who works for a car dealership, and she told me that with a good payment history from the time of the discharge, I should be able to get 10-15% after 8-12 months. If I wait 18-24 months, with a good history since discharge, I should qualify for whatever the good credit risk rates are at the time. That's a BIG monthly savings!