Debt reduction

[dosumi]

What is the name of your state? CA

Maybe this is a better forum than the bankruptcy.
We are about to file chapter 13. If it goes through the way the Lawyer says, the total amount we will pay in 3 years including the lawyer’s fees and Trustee fee will be less than 10% of what we owe.
The Lawyers office has someone who does debt reduction. The cost would be $750.00 + 15% of whatever amount they have reduced. So if they save us $100,000 their fee would be $15,000. She said that they start at 20% so the best it could be is 35% if all agreed to 20%, most likely not.

Is this about standard fee for negotiating debt reduction?

We would try our selves but not sure either of us would be very good at it. And yes I know there may be taxes due on the amount written off.

If we make a deal to payoff a certain amount to certain creditors or collection agencies, and we can’t get enough of them to agree, would that affect our filing chapter 13?

We would have to borrow the money from a relative and make loan payments (they would take out a loan and we would make the payments)

Do these companies really make deals at 20 to 30% of the amount owed?

Thanks

 

[Debt Guy]

I'm really confused.

If you are filing bankruptcy, why would you want to negotiate settlements on these debts? Why don't you just include them in the BK?

What am I missing?

 

[dosumi]

I don't really want to file BK. And all of our debts are in the chapter 13 plan. We have not filed the paperwork yet. Mostly due to the lawyer has been very busy the last few weeks.
If we could settle for about 30% even though it is much more than the BK amount, I would rather do that and not file BK.

Thanks

 

[Wiser Now]

I understand your situation. I had a business fail and ended up with a crushing ton ( over $300,000 ) of credit card debt -- I had unwisely financed the business with credit cards when I ran out of cash and bank loans.

Yes, you can secure settlements as low as 30%. It is not easy and from what you describe, I think you are on the right track to seek help from a settlement professional if you decide to go that way.

I am guessing that you are considering a Chapter 13 instead of a Chapter 7 for very specific reasons that make 13 more palatable. I had the same problem.

I went throught this same search as you are on. I spend a lot of time talking with my attorney friends and, like you, considered bankruptcy. I looked at a lot of alternatives and concluded that trying to settle the accounts was the choice that fit me best.

I spoke with a number of settlement companies. Lots of them are flakes and, I think, verge on frauds . I was quoted fees of a high of 15% of the total debt from a California company (15% of the total debt is a lot more than 15% of the savings) to 15% of the savings like you have been quoted.

One of my lawyer friends recommeded to me a settlement company. He knew the owners and considered them to be honest and ethical. They quoted me a fee of 10% of the savings. I don't think they give that fee to everyone but did for a good client relationship. I am about half way through their program and I have been entirely satisfied . I checked their references beforehand and spoke with several of their clients that were in my situation and everyone said they were satisfied and happy with both service and results.

I is not appropriate on this board for me to recommend them or to post their name. I am only offering this comment to let you know that what you are trying to do is possible and you are asking all the right questions. Feel free to send me a private message or an email if you have any more questions.

Best of luck.