BK 13 or make a deal

[dosumi]

What is the name of your state? CA

We are filing chapter 13, if our lawyer ever gets going. I think ever since the new BK law passed they have been inundated, and put us on the back burner because we have to file Bk 13. Hopefully by the time law is signed we will have filed by then (end of this week).

Anyway before the BK is finalized, I have still been considering trying to make a deal with our creditors, Two have offered to take 30% as payment in full and we haven’t talked to them, they just sent a letter offering the 30% deal. Some of the others have stated that they would be willing to make a deal if we call and talk to them.

If we call and try to make a deal could this have any affect on our BK. Should we tell our lawyer if we try to make deals?

Are there any specific items we need to have in writing other than the payoff amount.
Are there any statements we need to avoid saying to the creditors?

Could we make a deal on the original amount or have to calculate on the current amount.
Original was $123,000.00, I only have current amounts from ½ the creditors but it has ballooned to $138,000.00 in about 7 months.
30% of the new amount will go out of range of what a relative would be willing to take a loan out for.

Also would it be better to use a professional to do the negotiating, how much do they usually charge for their services. We only have two with the 30% offer and would need all the others to fall within that range.

Will some of these companies just not make a deal, even if we go to BK 13 and they will get substantially less.

Thanks for any help

[bigun]

even if we go to BK 13 and they will get substantially less.


I'd proceed with the 13 if the payback to unsecured creditors will be less than 30%. One big kicker is if you settle the account you'll get a 1099C on the difference and may well create a tax liability. An account settled through bk won't have that liability.

[dosumi]

Yes I know about the possible tax liabilities, unless you are considered insolvent.

thanks

[dc417]

First off, you need to understand your rights under the Fair Credit Reporting Act, the new FACT Act and The Fair Debt Collections Practice Act(FDCPA).
Once your creditors receive the notice of filing regarding your BK, they must cease and desist ALL COMMUNICATION with you regarding any allege accounts. They must contact your attorney. You have a right to request that all alleged debts be validated. depending on the age of the accounts, the statue of limitations for collecting these accounts may have already expired. So legally, they can't collect. You may want to check CA laws regarding collections. Since you are filing bk anyway, all of your creditors stand to probably get less than 30% anyway. Right now, you are in control. If you do speak with any debt collectors and I wouldn't since you have a paid attorney to do so for you, immediately object to your conversation being recorded, this could hurt you. Get every agreement in writing. Also, if your going to pay some of your creditors off, the agreement should include, "account paid in full or paid as agreed. no negative info should be reported to credit bureaus in all agreements; just get it in writing. Your attorney should be able to assist you with this. Just remember, he is expensive. I could go in to great detail about this credit and collection issues, but it would take a lot of time. I hope this small bit of info helps.(Also,
In a BK 13, your creditors must show up at the hearing regarding the alleged debts. To my knowledge, all those who don't show up, the debts are discharged and at the end of the 3-5 year payment plan, all remaining debt is discharged anyway.)

[dosumi]

That's interesting.
Do some credit card companies actually not show up, if the amount they will receive in the BK 13 is very small.
Less than 10%. Or does that just sound good and they all always have someone there.

And how exactly would that work? If say 6 creditors don't show up, their debts are discharged at that time and they receive nothing from the BK 13 payments, the remaining debtors now divide up what is paid in.

Do you receive a discharge notice in a few months for the debtors who don't show up, or isn't it officially discharged until after the 3 to 5 year plan is done?

[dosumi]

Will the new law have a big affect on chapter 13.

And will any parts that affect chapter 13 go into affect when it is signed or 180 days later.

Does anyone have an idea of when the Busher will sign the new BK law.

[bigun]

I would not be surprised to see it signed this week.

[dosumi]

Do the parts of the new law that went in to affect after Bush signed it yesterday change any parts of a chapter 13 and if so what part?