If I don’t want to file bankruptcy shouldI chance it and attempt settlements?
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If I don’t want to file bankruptcy shouldI chance it and attempt settlements?
I have over $180,000 in debt do to family business and helping out. I really don’t want to file nor does my wife. We have a chance to borrow $25,000 from a relative and try do do 10-13% settlements. Some cards have already said that they will accept this. Most of the 14 cards have charged off; one is possibly suing. Sould I settle with the ones that will and just keep dealing with the ones that won’t and hope that they possibly will settle somewhere down the road? I’ve been dealing with this for over a year. What would suggest? Also, Iwill receive an inheritance from an uncle (87)when he passes.
Asked on February 7, 2011 under Bankruptcy Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
While you should absolutely consult with a bankrupty attorney who can evaluate all the specifics of your unique situation and give you the best advice, in general terms, the situation you describe is appropriate for bankruptcy:
1) 10-13% is a fairly low settlement; it's therefore likely that not all the creditors will accept this. Therefore, depending on how many do, you could end up still owing, say, 1/3 to 2/3 of the money to creditors, or $60k - $120k+...in addition to the money you'd owe the relative for the payments. That means that even if you can settle some debt, you may be forced into bankruptcy anyway; if that's goiing to happen, you're better to roll all the debt into it and discharge as much as possible, since filing bankruptcy on $70k is the same to your credit as filing it on $180k+.
2) Inheritances are the prototype "don't count your chickes 'til the eggs hatch." You don't know when the uncle will pass (e.g. I have a 97 year old uncle still going strong); you don't know if health, nursing, etc. costs will eat up his inheritance; he has the right to change his will at any time that he's still mentally competent; he could have debts that will first have to be satisfied from his estate before distribution; etc. Whatever you get is a windfall, but you can't base plans, one way or another, on it.
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