debt settlement instead bankruptcy

May 17th, 2009 by Questions

Is it possible to use debt settlement instead of filing for bankruptcy when my total credit debt is $400K. My husband and I both have 2 jobs and we have steady income. It is just the credit cards interest rate are too high for us to keep up. What are the credit card institution procedure when they said that they will take legal actions.

Posted from: Ontario

Questions

One Response to “debt settlement instead bankruptcy”



, A licensed trustee said:

I applaud your intent, but debt settlement programs are limited to 60 months. In order to repay $400K in debt you’re monthly payment would be $7,000… if you can afford that type of payment then you’d be better served by having a lawyer negotiate individual repayment terms as opposed to relying on a not for profit credit counselor.

The normal process for initiating legal action is as follows:
1) in the first couple of months when ther has been default, the creditors use their “in house” collections poeple to try and recover the debt (they’ll call and send letters);
2) Sometime after month 3 the debt will be assigned to either an external collection agency or a law firm. They usually start with phone calls and more aggressively worded letters (threats to take legal action);
3) At some point the creditor will issue instructions to sue – this happens in perhaps 1 in 3 cases. There does not seem to be a clear pattern of how this decision is made, but certainly income comes into play…
4) Depending on the size of the debt the lawsuit will either be advanced in Small Claims (under $25,000 in Ontario) or Superior Court (over $25,000). Once you are served you have 3 weeks to respond or the creditor will receive a default judgment against you.
5) When/if you are served you need to decide whether or ot to defend against the suit – you miught want to consult with a lawyer at this point for more specific details…

Please post a follow up comment below:

(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)