how long will it take to recover from det settlment/negotiat

[ronn]

I have been reading some posts and they were very informative. I was wondering others think about my situation.

I have 175k in credit card debt spread over 7 accounts. I have approx 100k in equity in my house. Right now my credit is good. So I feel that settlment may be a viable alternative to BK for me.

I was wondering if anyone that been through debt settlement on their own can tell how long the process took anf how long it took for them to repair their credit afterwards.

Thank you

[DocDon]

How "good" is your credit? $175K is a lot of revolving credit to have ($25K on each of the 7 cards), which means your score is taking a hit because you're maxed out... ?

CC companies are not going to simply "settle" because you don't want to pay the amount you owe them when the accounts are active. It usually involves letting the account default and then getting a reduced settlement, which, on top the negative history, now says "settled for lesser amount".

Did you call your issuers and asked for reduced APR's? What are your APR's?

Did you consider using the equity to pay these down? I know people like Suze Orman are adamently against putting your home up as collateral for your spending habits, but when you're looking at mutliple cards with high APR's as opposed to the APR for an ELOC, her opinion loses its punch.

[ronn]

My scores is like 705 a month ago. even if I sell the house or get a HEL/HELOC I will be left with 75k in cc debt and the new loan to pay. I can only pay $1000 a month. I will never be able to pay it off in 5 yrs. So I was considering BK, but will be forced to ch 13 where only 50k in the home equity is protected. The idea of settlement is temtpting since I sacrifice my credit rating for a substantial savings if I default for 6 months or so.

[DocDon]

With only $1k available, your question makes more sense now...

Also keep in mind that the OC is under no obligation to settle with you at all - even after default. So you may be jumping into a snake pit. If they sue you, you can't hide $100k in equity.

PM sifxpert and have him look at this post.

[ronn]

Thank for the input! much appreciated.

[jeffr]

I agree with DocDon. Just because you want a debt settlement doesn't mean the CC will immediately give it to you. You need to be in default, and, the longer your in default on repayment, the better.

I definetly would NOT take an equity loan , however. If you do though, cancel those cards immediately. You definetly don't want to run them back up again.

Just remember, though, that in debt settlement you will be liable for any 1099's reported to the IRS. So there will be tax complications.

[ronn]

If you setlle all your accounts, how long will it take to rebuild your credit. i am asking since If I settle for 50% or better I can use all my home equity and be debt free with bad credit or i can go BK 13 protect the house equity and have no and repayment for 5 yrs at a much lower amount and no credit at all.

If it takes forever to to rebuild credit I will just do BK 13, if its like a 1-2 yrs i will settle.

[Gettinout]

ronn

Your question is a very tough one to answer. I wrestled with the same question and wasn't able to get any confident answers.

The time to repair your credit may hinge upon how long a history of good accounts you have. In a few years it seems that a long standing good history should outweight the damage done by settlement.

I beleive that with a good credit history, that in my case my credit will rebound fairly quickly, much faster than a BK. I chose to settle for various reasons. Especially since the accounts were only in my name and not my wifes. Her credit isn't affected by the settlements.

With 175K of debt your BK13 payments will be quite large. On the flip side you'll have to come up with most or all of your home equity to settle the accounts. (If the CCs are willing to settle to settle without a fight)

Do be very careful about using equity. You must be confident that you'll be able to afford the payments. Bk may not help you much if you file after you've attached the debts to your home.

Have you contacted Sifxpert about your situation?

Good Luck

Gettinout

[ronn]

Thank for the imput gettingout. I contacted sifxpert, he recommends settling. I just wanted to see if anyone else had some additional input.

[willingtocope]

Just out of curosity, how will sixfert charge to settle $175k worth of debt...and what does he think it will settle for?

[ronn]

based on the 7 cc I owe money to and given the balance of each he says he can settle all for approx 80k + 10% of savings to him. he also mentioned he can help repair credit after settlement are done.

With his assistance it would be like 50%, claims he calculated interest for next 6 months inside settlment figure. Since I am only behind 1 month I have few months to decide.

Paying is not realistic, only option is refi house and settle and have no credit or BK13 and pay monthly payments for 5yrs and save home equity and rebuild later. Even if I pay BK trustee $800/month thats only 48k.

[willingtocope]

Okay, so $80k plus 10% of $95k = $89.5k. Then you get to pay what 25% income tax on the $95k...so that takes the totals to around $120k.

The IRS you can make payments on, but do you have to come up with the $89.5 in one lump?

[ronn]

yes 89.5k lump. But 80k is not guaranteed, just his opinion. what if it is 95k? I will be left with no debt and no assets, at least in BK 13 I make 5yrs payments, but keep what I have in house.

IRA/401k protected in BK 13, not sure if they are protected if cc's sue me.

[willingtocope]

Not an easy decision. I assume you're thinking you get a $100k second mortgage on your house, then put that in the bank (you don't have to give it to sfixpert up front, do you?), then stop paying on the CCs until they're willing to negotiate. You've got to get the mortgage first, because you're credit reports will be trash once you stop paying. In fact, with that much CC debt, you might not get the loan anyway. And then you're still stuck with the tax bill.

Wow...I don't have an answer for you. You might want to talk with a BK lawyer or two before you do anything. Most will give you a free consultation.

[ronn]

Based on info I retreived from web and family and BK consultation, I feel

BK is the safest option. It protects the house and IRA/401k and I just make payments for 5 yrs. The more riskier option is refinance with cashout and settle in 5 months. With settlement option there are the tax consequences, sifxpert fees and no guarantee that all 6 creditors will settle at below 50% and that all will settle at all. I am concerned that only 4 wil settle and 2 will be a pain and not settle. Either way I will have no credit, but I realize that, and I'm OK with it.

I am single and have no wife/kids to worry about, my initial feeling is that BK13 is safer, because no taxes on savings/no lawsuits and protect what little I have in house and retirement funds and in 5 yrs I am completely free and can rebuild with my home equity. Settlement is temting, however there are so many unkowns.

[Gettinout]

ronn,

Have you spoken with a BK Attorney and gone over the terms of the BK13?

In my case, due to assets I would qualify but have to repay all debts owed over 5 years. Does the protected equity you have reduce the amount you'll have to repay? How much do you have to repay under BK13?

Gettinout

[ronn]

BK attorney said that I have 100k equity, 50k is protected since I am single. so i need to pay 48k over 5 yrs because my mortgage is 102k.

Gettinout did go with BK13 after all? I have some concerns like how long after can I sell my house, what if I become unemployed or get raise/bonus will my payment plan chnage accordingly.

[Gettinout]

I chose not to go BK 13. I am nearing the end of the settlement process.

I am not very educated on how BK details work. Be sure to post those questions in the BK forum.

Gettinout