Debt settlement

You mean "unsecured" debts.

ROFL....

 

Why don't you tell us a little more? How many? How much? How delinquent are they?

 

Are those the current balances or the limits on the cards?

How long has this been going on, i.e., are the balances mostly purchases or are there lots of late fees and interest.

I would think that those large balances, like 35k, would be rather willing to settle for something.

Shawn

 

OK... you don't talk much, do you?

What are your assets? Do you have secured debts too?

So you have $90k in unsecured and delinquent debts. How much cash can you raise in the next 30 days to pay towards these debts?

The reason I ask is that any settlements will need to be lump sum settlement. You have a lot of creditors, some of which will settle for less than others.

In general, at this age of the debts, I would expect that you would have to cough up 50 percent ($45k) in the next 30 days to settle all this.

And.... even if you do that, they are going to report the remainder as income for you. So, you well end up owing to government income taxes on the other $45k, all in the same tax year. So after paying $45k to the CC companies, you should still plan on paying another $15-$20k to the IRS come April 2002.

That means about $65k over the next 9 months. Can you swing that?

If not, don't settle with one and let the others sue you. You can some creditors that have a nasty reputation there (First USA, Household).

If I were you (and I am in your situation, believe it not), I would first hire a good BK attorney and pay him to prepare your chapter 7 BK papers. Pay him enough retainer to get you through the whole process. Then stick the papers in your pocket. You can always update them and file them later.

Next, learn all you can about FDCPA and all cival laws concerning the debt collection process.

Next, hire another attorney (a cival lawsuit advocate) to represent you when it comes to dealing with CA's, and the exortion attempt that your creditors will bear on you.

Next, build up a cash reserve for emergancy funds. Your credit is shot to hell for a long time. Give up on the idea of needing or asking for it. Obiously you can't handle it anyways.

I went so far as to quit my job. I am not going to work for some CA's. If there is no job, there are no garnishments. I also have no assets.

If you have a job, maximize your 401k contributions. Contibute $2k/year to your IRA. Your 401K is almost bulletproof when it comes to creditor protection. You IRA is too, but depending on your state, less so than a 401K.

The reason for this is that I don't believe in making two huge mistakes in your life. When you are younger, you can work and recover. Your greatest asset when you are younger is your ability to earn money. When you are older, you loose that asset. In exchange, your largest asset becomes your retirement money. That last think you need is to turn 70 and be dead broke trying to do the "honorable" thing by paying your creditors.

I don't believe that in your situation a CCCS or anyone else is going to help you, or be of any help. It is time you learned how to deal with all this yourself and hired the best legal help you can get.

 

For all it's worth (not much), I was told recently by a credit card company that any cash settlement they made with me was to be paid within 6 months. Just passing that along.

 

6 months to satisfy a cash settlement is very unusual. If you are delinquent to multiple creditors, don't bet on all of them getting aboard this plan.

 

Keep in mind that when you exercise stock options, that you have to pay captial gains tax on the virtual profit between the option price and the market price. You have to pay this even though you may not sell the shares you bought when you exercised your options.

Secondly, you may be restricted from selling your exercised shares within 6 months of buying them. This too would impact your ability to raise cash.

My point is, check with a tax planner to estimate what your options are worth, and when.

If you can raise enough cash via stock options to pay the creditors and the IRS bill that will come with it, it sounds like a good idea. Of course when it is all over, you have nothing.

 

Lets discuss here so everyone can learn too. That is why we are here.

What is your question? Are you referring to my experience in dealing with my delinquent CC debts, or my experience exercising stock options?

 

Well your first problem is going to be getting that many creditors to agree on a comprehensive settlement/payment plan. They are are deeply suspectious of each other and assume that other creditors are getting better terms from you than they are.

If you don't do this, then you will have quit a mess on your hands. Any one of them could turn around and sue you and garnish the money that you were paying other creditors with.

To answer your question:

To date, I have not sucessfully negotiated a settlement. This is only because I have no cash or assets from which I can pay a lump sum settlement. None are interested in the promise of future payments.

If I had cash, then I feel that I could sucessfully negotiate 30 to 40 cents on the dollar.

Because I have no money, I have nothing to negotiate with. I can't negotiate CRA reporting terms, or anything.

 

I hope I answer this right. Your English is not very good, so I am having a hard time understanding what you are trying to say.

When a creditor charges off a debt, it does not mean you are now off the hook. The debt is turned over to an in-house collection department. Then it is given to collection agencies, and then eventually sold to bottom feeding collection agencies. You will be dealing with demands for payment for many, many years; at least 10.

At any point before the statute of limitations expires, the creditor or a CA can sue you for the delinquent amount. I've seen lawsuits filed for amounts as trivial as $100. Once they add on interest and legal fees, it can boost the amout sued for by thousands of dollars.

 

I fail to understand your paragraph about settling or deleting debts from your stock options.

Are you stating the following facts?

(1) Your worth is too great to declare chapter 7 bankruptcy.

(2) You can not exercise your stock options for 6 more months.

(3) When (and if) you exercise your options, you will have no idea of their worth until that time.

(4) You wish to have the negative information purged from your credit report once a debt is settled.

Am I correct?

 

Not to be an a**, but why the heck do you have enough in the stock market to loose $100,000 when you have $90,000 in credit card deck. Just doesn't make sense to me that you would pay that kind of interest and risk all that money in the stock market. Wouldn't you of been better off paying off the $90,000 and put the remaining in the market?

 

Marvin,

He doesn't have $100 of his money tied up in the stock market. What he has is an option to buy a given number of shares at a set price.

Companies offer these to employees as incentives. Dot.com's used them extensively because they did not have the cash to pay bonuses.

If all works as planned, the option price will be below the market price (because your hard work made the company more valuable, and the stock price shows that). Thus, after 5 years of hard work, they let you buy the stock the company at the price that it was at when the option was granted.

If you exercise the option, you get stock at a discount. However, some stock option plans require you to own the exercised shares for a given time period.

What he is saying is that when he exercies his SO (I think he already did), then he has to wait 6 months before he can sell the shares.

The problem is that the shares he is sitting on are volitle and may go bust, or make him very rich, or do nothing. It doesn't matter. The price is what it is when the probation period ends. Once that happens, he is free to sell the shares on the market.