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Unsecured debt over $75,000

I have unsecured debts from 6 credit cards, 1 credit line, one loan and one consumer credit loan totalling $127,000. As my take home pay is only $2,800 per month, I cannot afford to pay it all back. Would a Division I proposal be an alternative to bankruptcy for me?

I could probably borrow $20,000 from a family member to settle part of the debt and offer to pay another $30,000 in monthly payments of $500 for 5 years. Would this be a reasonable offer in your opinion?

One Response to “Unsecured debt over $75,000”

A licensed trustee said...

Based soley on what you’ve told us, it sounds like a very seasonable offer. Before you borrow any money from your family speak to a trustee – only after the proposal has been accepted by your creditors will you borrow the money.

Here’s a suggestion – don’t tell the trustee you speak to about the family loan. Ask them to calculate how much they think you need to offer in a proposal and then work backwards. If you start by suggesting the offer you outlined then you may be repaying a greater portion than you really need to.

Determining the amount to offer in a proposal the trick – you need to offer more money than your creditors will receive if you filed bankruptcy and you need to offer enough to entice your creditors to agree to your offer.

When selecting a trustee, ask them what percentage of their “files” are proposals. The national average is around 1 out of 5. If they file fewer proposals then perhaps you should speak to a more experienced trustee (for example, in our practice, 1 out of every 3 files is a proposal).

Good luck sorting things out.