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Worst case scenario in PA


Firstsettlement
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Hello,

This is my first post. I look forward to recieving help and in short time being able to reciprocate and help others. Thank you in advance for any help you may be able to offer.

After much reading I still would really like to find some clarification on something. I am very cautiously trying to decide between bankruptcy or trying to settle debts. One thing that I really need to be clear on is what the worst case scenerio could be in trying to settle. I am in PA

What I know so far:

I could be sued.

-liens on property

-forced to pay the entire debt (would that be lump sum or payments?)

-garnishment of bank accounts (not wages in PA)

I would greatly appreciate it if anyone could help me to gain a full picture of what the worst that could happen would be. I just need to know if it is worth the risk or if I should jut go forward with bankruptcy.

Keep in mind:

I have a family to protect.

I have ability to and am willing to pay a settlement assuming it would be significantly less than the full amount outstanding.

Thank you very much. Can't tell you how much some answers here would help.

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Roughly 40K in unsecured. (20K is all to one creditor. The rest is split between 8 others) All about 90 days late as lawyer told me to stop paying as he was recommending bankruptcy for my situation. We are at the point of being ready to file. Should be next week. I am now having doubts that it is the best course.

House and car is current and no issues.

Yes I am working. Income is average.

Edited by Firstsettlement
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BK 7 or 13? If you qualify for a BK 7, and you get to keep your house, that would be my first choice.

If its a BK 13, that's still better than "settlement". In effect, the BK trustee decides how much each creditor gets...and, makes them play nice.

Debt settlement on your own is a crap shoot...

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I could be sued.

-liens on property

-forced to pay the entire debt (would that be lump sum or payments?)

-garnishment of bank accounts (not wages in PA)

You already know the down side of trying to settle. 20k to one creditor will be difficult to settle for less. Almost all settlements are lump sum. if they are willing to take payments, they'd probably want a "stipulated judgement"...in effect, miss a payment and they get an automatic judgement.

Plus...you get all the fun of the nasty pphone calls from collectors until you do reach a settlement...and then there's the tax consequences of the "found income".

BK puts a stop to it all.

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Like Willing said, it would be a crap shoot to try and settle. You would have some of the following to face if you do.

Fighting them to get a percentage of the total paid.

1099-C issued for any balance due, then fight with the IRS over that.

If you try for a PFD, you may or may not get it.

You could restart the SOL if you have one.

If you do luck out and they accept partial payment in full, doesn't mean that some other JDB wont come after you for the balance.

There are probably other things that you might face to

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Thank you.

As far as making good on settlements. That is honestly the big worry for me. I have the means.

My biggest concern is judgments against me and what may come with them that could potentially compound the situation.

As long as I am making effort to settle and pay them money would it be unlikely that they would try to get a judgment on me in the meantime?

On the thought of someone coming after me even after a settlement is paid I feel like that is unlikely as long as the negotiation covers that the agreed upon amount fully settles the account. IF it did happen you just suck it up and ride it out. They will go away.

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Like I said...if they settle 20k for say 8k, they willl want a "settlement agreement" saying if you miss a payment, they get a judgement. In fact, they get the judgement anyway.

If you do settle with an OC, and you get all the details in writing before you send money, they will probably...probably...abide by the agreement. If there is a collection agency in the middle, you cannot trust anything they say.

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It's a 7

Thank you but I still need to look for the answer to my original question.

I need to weight options very carefully. The bankruptcy option comes with personal drawbacks that I would like to avoid.

The relaxation is split between 8 others) About 3 months late as lawyer explained to prevent having to pay because he was suggesting personal bankruptcy for my situation. We're at the purpose of being prepared to file. Ought to be in a few days. I'm now getting doubts that it's the best course.

House and vehicle is current with no issues.

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