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     | Friday, October 06, 2000 - 08:59 am  At the present time I am behind on my credit card bills about 6 months. A few months ago I hired a lawyer to settle my debts for me. I am now second guessing this decision, and thinking about going with a credit counceling agency. The lawyer tells me that after I settle a debt that they will try and get the negative statement of the charge-off or settlement off of my credit report. The lawyer cant guarentee this, but says that it is pretty normal. Waht can I expect as far as getting negative statements removed form my credit report? My dilema is this. I can settle all of my debts over the next year for roughly 40% of the face amount (the face amount is roughly 24k,and the lawyer sais she can settle for around 10k) and risk my credit being trashed. However, doing this, after I finish settlement, I can put the money I was putting towards that into savings, and come out way ahead. Or I can work with a credit counceling agency, who can reage all of my accounts, and help get my credit report straight. Doing this will take 4-5 years, and at the end of that time I will have no money saved at all. My main goal is to be able to buy a house in around 5 years, sooner if possible. From this standpoint, in 5 years, which option will put me in the best spot to buy a house? Thanks
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| | Friday, October 06, 2000 - 09:43 am Do neither. File bankruptcy. Not only will you save money but it will be far kinder on your credit.
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| | Friday, October 06, 2000 - 11:22 am How could you suggest bankruptcy? It sounds to me as if the original poster's lawyer had an excellent plan. Getting rid of $24K in debts for only $10K sounds mighty fine. Even if the items can't be deleted from the credit report, they'll still show up as paid - which seems a whole lot better than a bankruptcy. And then the original poster will have money to save each month. Bankruptcy would *not* be a solution here.
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| | Friday, October 06, 2000 - 11:30 am I think bankruptcy *might* be an option. What I would probably do in this situation is deal with the creditors myself. Tell them how serious your debt is. I would probably exagerate and tell each creditor I owe over 50K altogether and that you are seriously considering bankruptcy. If you negotiate hard I would think you might be able to settle them all off for under $5K. Your credit will be bad for a few years but it will with a bankruptcy too.
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| | Friday, October 06, 2000 - 12:20 pm I agree with Shylock. Definitely look into bankruptcy. I hope you didn't pay that lawyer. I'm curious HOW the lawyer gets paid, I'd appreciate your posting how this works. If you take the time to search this forum for "settlement, settle" and read those pages, you will see that you HAVE to negotiate for removal of the account as part of the settlement. The creditors will do NOTHING for you after they got your cash. If your lawyer has different experiences, please have her post here. Maybe she knows something we don't, I'd sure like to know how she's going to get those accounts off your credit AFTER the settlements.
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| | Friday, October 06, 2000 - 02:22 pm From what I read it sounded like the lawyer was just saying she could settle the debt but the credit would remain bad. That is true. The credit counseling people were suggesting that they would negotiate for Chris to pay off the entire debt and then Chris would come out with clean credit. This is possible but likely false. You would be putting an awful lot of trust in that credit counseling agency and many of them don't care as much about your credit as you might think.
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| | Friday, October 06, 2000 - 04:53 pm P.Rosa -- why would someone pay $10k to settle debts that could most likely be discharged for perhaps $750 worth of bankruptcy forms. Statistics indicate that 15 percent of people would benefit from filing bankruptcy. With an estimated 270M people in the United States that means 40M people would benefit from bankruptcy. Despite that only about a million people file a year. Simple planning such as cashing out your savings accounts and using it to pay down a mortgage improves the odds of bankruptcy helping your financial picture to 20 percent. Running up extra debt on credit cards before filing ups the odds of a favorable result to 33 percent. Bankruptcy is likely to be the simplest and most favorable action in terms of both his credit and financial situation. (All statistics courtesy of Michelle J. White a professor of economics at the University of Michigan.)
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| | Friday, October 06, 2000 - 05:39 pm P.Rosa -- why would someone pay $10k to settle debts that could most likely be discharged for perhaps $750 worth of bankruptcy forms. Adverse credit consequences of bankruptcy will be far worse. Remember that the original poster wants to buy a house within five years. Yes, that might be possible with a bankruptcy on his record, but it'll be a lot easier if he gets these bills paid in full. Of course, this is assuming that his lawyer really can get the creditors to agree to the $10K settlement. Statistics indicate that 15 percent of people would benefit from filing bankruptcy. With an estimated 270M people in the United States that means 40M people would benefit from bankruptcy. Despite that only about a million people file a year. Bankruptcy is a vital tool, but it's a tool of last resort. 40 million bankruptcy filings would absolutely wreak havoc with the nation's credit system and indeed its whole economy. Credit cards would be far more difficult to obtain, consumer spending would plummet, and the nation would be lucky if it got off with a severe recession rather than a full-blown depression. Also remember that Congress has been trying for three years now to make bankruptcy far more restrictive. One million filings a year has been enough to get the anti-bankruptcy movement started. If the number of filings exploded, such as would lead to a total 40 million filings, you can be sure that Congress would act with dizzying speed.
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| | Friday, October 06, 2000 - 07:58 pm And what are P. Rosa's credentials? "Adverse credit consequences of bankruptcy will be far worse." I'd like P. Rosa to substantiate this ridiculous statement. Sounds like P. Rosa works for the CCCS. Well, I'm always ready to learn something new, so let's hear it. Facts please!
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| | Friday, October 06, 2000 - 10:15 pm Erik, here is Chris's exact quote: "The lawyer tells me that after I settle a debt that they will try and get the negative statement of the charge-off or settlement off of my credit report. The lawyer cant guarantee this, but says that it is pretty normal." I'm picking on this because people (like myself) get suckered into deep doodoo with these "we'll try" and "it is normal" phrases. There is NOTHING normal about trying to get accounts rerated AFTER a settlement, and there must be literally hundreds of postings on that subject at BayHouse. What's the lawyer going to do? First negotiate the settlement, THEN dispute it as "incorrect?" Sounds absurd to me. I also hope everybody read P. Rosa's other posting, which is the BEST testimonial FOR bankruptcy I've seen in a while. P. Rosa may be as innocent and well meaning as any Jehova's Witness who goes from door to door preaching that the world will end next year. It's their believe, and they're entitled to it. However, the ONLY purpose of the BayHouse site is to spread the truth as I know it, based on my 13 years of living and practicing real estate and mortgage lending, as well as contributions by professionals and "experienced" consumers. Don't take that personal, P., but you got a lot to learn about credit. You shouldn't advise other people whether or not to file for bankruptcy and how it will effect their credit 5 years later. You simply don't know. Just like the friends and relatives who advised "Kathy" and caused her to lose everything.
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| | Saturday, October 07, 2000 - 04:26 am P. Rosa: It is routine practice to get a Fannie Mae conforming mortgage two years after bankruptcy and three years after a foreclosure. Filing bankruptcy wouldn't interfere with his ability to get a mortgage five years from now.
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| | Monday, October 09, 2000 - 12:46 pm P.Rosa. You conclude that if people in your situation file bankruptcy then, in the aggregate, it could possibly wreak havok with the nation's whole economy. We would be lucky if we got off with a severe recession. You conclude that would likely be the result of 40 million bankrupts. The last time that I read the stats, there are 1.5 million new chapter 7s filed each year. I'll ignore the chapter 13s which only pay pennies of the dollar. Even if one makes the silly assumption that the identical people are filing bankruptcy each year, without any new people having financial problems, then that means we have 9 million chapter 7 bankrupts. That is because one can only get a ch 7 discharge every 6 years. 6 x 1.5 = 9. To get that low a number I must disregard all chapter 13s and make other ridiculous assumptions. You may not realize how close we are to that 40 million number (if we have not exceeded it). A lot of people have filed bnk. They just don't walk around with scarlet Bs on their chests. You over-estimate and dramaticize the effects of your filing bnk. And it might be a better idea to worry about what is best for you, instead of worrying that filing bnk will melt the polar icecaps.
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| | Wednesday, October 25, 2000 - 06:06 pm Dump your attorney. I don't think any of us need them for anything. You can even file chap 7 on your own for about $300.00. And, like you see above, you will no doubt be able to get a home loan in 2 years. Call a legal self help place and file chap 7. P. Rosa evidently has no sense where this is concerned.
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| | Wednesday, October 25, 2000 - 07:18 pm June, Mitch is a Florida bankruptcy attorney, and the only good one I've ever met. He actually cares to read and post here so he can give his clients better advice with respect to credit. He even notifies the CRAs of the discharged accounts for his clients. June, maybe you should meet Mitch, since you're both in Florida. (see the Dating section) Maybe he can convince you that not all attorneys suck.  And you can call me stupid, but except for the FCRA I just don't understand codes. Sometimes I read a paragraph 10 times and I never get it. Sure, some people have the time and education to be able to read and UNDERSTAND the selfhelp books, written for us normals to comprehend. But I've also seen people (myself) helping themselves into a huge mess. There is nothing more dangerous than thinking that you know what's going on when you don't. Even the worst attorney usually knows about his State's exemptions, knows how to prepare a budget, knows how to present the case to the trustee. Why try to save a few hundred dollars and risk losing thousands? I'm all for reading the selfhelp books in COMBINATION with professional advice.
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| | Thursday, October 26, 2000 - 05:50 am Christine is right. I assumed Chris didn't have property and only unsecured debt so that his would be a clean BK. And I would love to meet an attorney that doesn't suck. Maybe I'll need one in the future. I just hate to see people in this situation paying attorneys money they don't have. Read the selfhelp books and get professional consultation.
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