I am new to the site, and have spent 4 hrs reading posts. My husband and I own a business; many of the credit cards we use for business are in our personal name. We have had 2 tough yrs, and had to live off ccards for one of them -- enters a $48,000 debt. Now we cannot afford to continue taking money from the business to pay the ccard pmts, but we can take enough to meet basics. We owe 12 creditors, and the most we owe one is $22,000. All others are $5000 or less each, with some as low as $2000 or so. We met w/ attny re: BK, but our bus is still viable, and if we do personal BK, it will affect our bus. So I am looking into settlement, but I am concerned w/ the one large debt owed and what MBNA might do. We are in NC and wages cannot be garnished. But, we do have some assets. Would it be in my best interest to try to settle w/ them 1st? I just stopped making pmts., so we are only 30 days late right now. Should I age the debts and then begin validation/dispute procedures? Of course, all are currently w/ the OC's. I am not concerned w/ CRA's right now, just reaching some resolution w/ these creditors re: payment of the debt. Later, we will do credit repair. Or, should I consider all of this simultaneously? Thanks for helping! Kdixon
Well if you "break up" with MBNA, you'll get to meet Wolpoff and Abrahmson. (search the board for them) Then they force you into arbitration and get and easy win THEN bring it to your local courthouse to enforce the judgement. Are you going deeper and deeper in the hole ? Are things not going the other way anytime soon where you'll be able to pay some of this debt down? I'd hate for you to have to deal with these guys above. Ask anyone...
So, now what? I do have a lump sum of money that I could use to offer these creditors for debt settlement (it would make up approx. 20% of total outstanding debt).
Get a second a opinion from another attorney. I don't know much about settlments, but I would hate to see you lose that chunk of money, then turn around and have to file Bk anyway. Hardship porograms with CC's last only 3 to 6 months, then they raise your interest, and it negs your credit anyway. I do not recommend use of any of the Credit Counseling centers, check mannequins post about Ameridebt being sued in Mo. and laying off workers in Az, any many other nightmare stories. WE filed bk 7, although no business involved, but job loss, lengthy unemployment etc., and our dollar amount Bk7 was major, not a decision made lightly, but no other choice, the good news is the repair and rebuilding, it is not the end of the world and you can se that by the results on this board and others like creditboards.com. Keep reading, but I would def. consult another attorney, can't hurt, could be a big help........
I should have added, we had some friends in CA who owned a clothing store, ended up filing BK, and it did not affect them personally. They opened a jewerly store and still have their custom built home, travel, etc. I would not think your business bk would have anything to do with your personal life, however, LOL , I am not an attorney, but a second opinion would be good.......
First, take a breath and relax. If you have enough to make the minimum payments, that's what I would do to start. Bring all accounts current. Then, ask yourself if the business your family runs can operate with one less employee (you or your spouse). Chances are that if you take a full time job or at least a second job (whichever pays more), you can chip away at the debt and get results without filing BK or having to duck creditors. If you have Microsoft Money, plug in all your accounts. Trust me, this really works. Use the debt reduction planner. I live by this program (see my debt free date below - this is the date of my last mortgage payment if I stick to the plan - I purchased the home December 31st of 2002). Chances are good that you could satisfy a 48k credit card debt in 1-3 years or less depending on how much you're willing to pay. The number may seem large, but consider these options: pay the highest rate cards first, ask for lower rates, balance transfer higher rate balances to lower rate cards with consideration for fees and interest to avoid going over your limit, consolidate balances to fewer cards to reduce the number of payments you have to make each month and/or consider HOLEC, HEL or a small business loan. You will be amazed at what you and your husband can accomplish if you don't panic. Good luck.
I second that ... Besides, it's too early to think about offering a settlement. You have to be few months late. Then the bank will sell your debt to a CA which will buy your $20,000 debt for not more than $2,000. Then you can offer the CA some money as a settlement - anything above the $2,000 they paid will be their profit ... JMO
I agree with CardKid. That sounds like a good process to follow. See if one of you can get a job outside your business, and dedicate that income to paying off bills.
How is your business structured? C-corp, not incorp?? If most of your charges are for business related items, filing personal BK may not help. I'd talk to an attorney that handles business BK for a second opinion. As others have pointed out, it is way too soon to even think about a settlement. For the amounts you told us about, MBNA will not settle. Can one of you run the business alone and the other take a "job", not that your business is a job, just to make more money? While it is true in NC you cannot garnish "wages", but as a business owner you are not paid a wage. Look at the definations very closely. Even if you list yourself as an employee of the company, assuming you are incorp., a creditor can still claim you are not paid a wage but paid a portion of the company profits. It can be a real mess.
We are an S Corp. Sounds like a good idea, to try to work this out. It is so easy to panic when you feel behind the 8 ball. I think I can bring the accounts current this month, but I will need some help w/ int. rates and fees if I am going to get anywhere with these balances. On Tues (3 days ago) I called each creditor and explained our circumstances. All are willing to work w/ us. Some have "hardship programs" which reduce rates for 6-12 mos, but require postdated checks for auto drafts. Others (like MBNA) want us to work through the Consumer Credit Council. If we work w/ the CCC, they told us that Am Exp (we use Am Exp Gold, in our personal names, for all business txns) will cancel our account, even if it is paid up. We pay this off every month. So, the CCC is not an option, b/c we cannot get new bus. credit right now to replace Am Exp. Can I "strongly request" that each creditor ease up on terms individually w/o going through the CCC?
One other thing...I thought it important to mention that our personal credit is already in "not good" shape. We had to let a large piece of equipment go back last year, which was personally guaranteed. Because at this point we are not too concerned about our credit, but more concerned w/ keeping $ in the business, we were leaning more towards trying to settle our personal debts. Thanks for the input!
Call your creditors, explain the situation, try to get an interest rate adjustment, so you can lower your payments (wherever you're still making them). Some creditors can put your account "on hold" for month or so. In general, they will try to help you, because that's the way to get their money back. They all know that you can file for BK and they can lose everything. Check the CreditNet Yellow Pages - there are some good numbers there. Whatever happens - don't lose faith! There are people around who've been in worse situations, they are still alive and kicking ...
