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I’m thinking about going into debt settlement with 40,726 in…

I’m thinking about going...

I’m thinking about going into debt settlement with 40,726 in debt settlement one is a personal loan for 26,000 and the rest credit card debt. I might go to freedom Debt Relief with a $650.00 a month payment but I’m nervous. I found another company dmb Financial with a 628.00 a month payment just fir the 26000 personal loan to resolve it in 18 months. Not sure if I should do the personal loan first then the credit cards because I’m afraid of a major law suit with all these creditors.

Lawyer's Assistant: What state is this in? And when did the issue begin?

Massachusetts this past year

Lawyer's Assistant: What steps have you taken so far?

Deciding what the best course action is I’m not behind in credit card payments right now.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

I don’t want to do bankruptcy but I’m very nervous about the process and what course action I should take.

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Answered in 2 hours by:
5/12/2018
socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 40,170
Experience: Retired
Verified

Hello,

There is no way that you can settle a $26,000 debt in 18 months for $650 per month. At ZERO percent interest (which is impossible), the payments would only cover $11,700 of the debt. This means that the lender would have to accept a settlement at 45% of the unpaid balance. No institutional lender will accept that deal, because if the lender charges off the $26,000 balance, it can get the same benefit as an expense against taxes. So, there's no good reason to accept your deal, because the tax write off is guaranteed and immediate, whereas your debt relief offer is not -- you could default on the debt at any time. Also, the lender is receiving zero interest on the deal, which mean it's effectively lending you the $11,700 for free -- meaning the lender is losing interest that it could be earning every month.

Also, the amount of the debt that you are not paying will be charged off, and you will owe federal and state income tax on the unpaid balance of $14,300.

So, I would definitely be anxious about the deal.

You may want to reconsider bankruptcy, if you have no nonretirement assets that can be seized and sold to cover your debt. Bankruptcy is guaranteed to relieve you of all of your non-tax related debts, and no one can "game the system."

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf. Note: If you cannot find the rating button on your webpage, please just type in your rating in a response to this note, and customer service will apply the rating for you.

Thanks again for using Justanswer!

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Customer reply replied 3 months ago
Hello I was considering a debt relief company they have a legal team that covers you but I know your credit score drops. I guess they make the settlement after you go into default. But with bankruptcy isn’t it worse? I might be purchasing a car next week would that affect me filing for bankruptcy? How could I get a lawyer if I can only make payments?
Customer reply replied 3 months ago
Do I have to go to court over a bankruptcy or can it be settled without going to court?

Hello I was considering a debt relief company they have a legal team that covers you but I know your credit score drops. I guess they make the settlement after you go into default.

A: No debt relief organization has a "legal team." That would be a violation of the Massachusetts attorney Rules of Professional Conduct, because a debt relief organization is not a law firm and a lawyer cannot split fees with a nonlawyer, such as a debt relief organization. In my experience, this sort of promotional jargon means either: (1) the debt relief organization has some lawyer it can refer you to, but who won't represent you unless you pay customary legal services fees by the hour ($250-$500 per); or (2) the debt relief organization considers some of its personnel to be the legal team, but they're not lawyers and to the extent that they can help, they are probably engaged in the unauthorized practice of law (a criminal offense); or (3) the debt relief organization is simply "blowing smoke" to get you to sign up.

So, you may want to clarify what the debt relief organization means by its "legal team."

But with bankruptcy isn’t it worse?

A: As soon as you default on your payments, your credit score will fall into the 500-ish range, and you won't be able to get a loan from any reputable lender. You'll be paying huge interest. So, unless you have the cash to buy a car, then it won't matter that you're using a debt relief organization, because your credit is seriously damaged either way.

I might be purchasing a car next week would that affect me filing for bankruptcy? How could I get a lawyer if I can only make payments?

A: I would try to get the car before signing up for credit repair, or bankruptcy. This assumes your credit score is okay right now. Otherwise, you'll have to wait about two year after bankruptcy for your credit score to get back to something that a lender will accept.

Most people can "do-it-yourself" a bankruptcy, if their financial situation is straightforward. See the books at the right upper corner of this webpage.

But, even if you decide to hire a lawyer, your fees to the attorney will be far less than what you'll be paying the debt relief organization. You just won't know it, because the fees will be coming out of your payments. Which gets you back to the issue of $650 to settle a $26,000 debt -- that is not gonna happen, in my opinion.

Do I have to go to court over a bankruptcy or can it be settled without going to court?

A: Yes. Court is required for bankruptcy. There's no bankruptcy without bankruptcy court.

Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf. Note: If you cannot find the rating button on your webpage, please just type in your rating in a response to this note, and customer service will apply the rating for you.

Thanks again for using Justanswer!

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Customer reply replied 3 months ago
Can you get into trouble filing bankruptcy? I do have a hardship. I had been paying an attorney for years to get legal custody of my child. I’m also not receiving child support on a regular basis
Customer reply replied 3 months ago
How long does bankruptcy take ?
Customer reply replied 3 months ago
What does the judge look at?

Can you get into trouble filing bankruptcy?

A: You can't get into trouble, unless you lie about (misrepresent) your financial circumstances on your bankruptcy petition.

How long does bankruptcy take?

A: A Chapter 7 bankruptcy takes approximately 4 months.

What does the judge look at?

A: The judge actually doesn't look at much of anything. The bankruptcy trustee examines your petition, and if there's nothing unusual, reports to the judge that you should receive a discharge, and that's the end of the matter.

Most bankruptcy lawyers provide a free first consult. They will have their paralegal input your finances into their computer system and tell you what you can expect without pretty much 99.999% accuracy.

Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf. Note: If you cannot find the rating button on your webpage, please just type in your rating in a response to this note, and customer service will apply the rating for you.

Thanks again for using Justanswer!

socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 40,170
Experience: Retired
Verified
socrateaser and 87 other Legal Specialists are ready to help you
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Customer reply replied 3 months ago
Thank you so much for your help

You're welcome and thanks for using Justanswer!

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DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

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