[INJUNTOM]

Seeking info on the credit card debt scenario where from what I understand, you stop paying them and pay into an escrow account until a certain percentage is in there and an entity negotiates on your behalf to settle for a lesser amount.

Back Story: I am in the process of closing down my auto repair business. I took a 2nd against my house 11 years ago to buy the business and since then after the economy went down and put us down 35%, people changed the way they do things with the advent of youtube videos, facebook and craigslist mechanics, my state buying up and crushing all the older cars, etc, compounded by me finding out recently that I got screwed on the loan I took out in 2007, I decided to throw in the towel at the shop and refinance our first and 2nd into just my wife's name. All good with that, but I have about 90k in credit card debt starting when the economy first went down to keep the business running, juggling 0% cards and hoping to someday pull out of it. It's not pulling out, and I'm current with the payments, but the business just barely covered all that and now I won't have the business.

Recently talked to a bankruptcy attorney and he was all for it, but from what I can see, since I own too many Classic cars and other asset, all they are going to do is seize everything and sell it all off at auction for me....well I can do that myself and get more out of it. If I sell a couple of my Pontiacs, my dead buddy's '68 Camaro and some guns equipment, and other stuff I can probably get there, but would rather not if there's a way to negotiate with the card companies.

Anybody done that? I obviously don't want to risk anything with my house either, so not sure whether to buck up and get 'er done or fight it out. Asking here because there really isn't a better place to ask that I know of since Pontiac people are the smartest out there and asking these companies themselves is just like asking the bankruptcy attorney who has everything to gain by you filing.

BTW, I am in CA.

[Fullsize455]

I'm no lawyer, and I think you should seek more professional advice than on a forum, but my understanding is this: You don't have to worry about your assets/house until and unless it goes to court and they get a judgement against you. Do whatever you need to do to make sure it never gets to that point.

I'm just spitballing here, but I'm thinking the right course of action is to hire an attorney to negotiate with the credit companies on your behalf. Work out a payment schedule that you can really, legitimately commit to without fail, and pay them off over time. If it's realistic and reasonable, odds are they're going to agree to it. In the end it costs them less than actively pursuing you through the court, auctioning your assets, etc.. I'm guessing an attorney will tell you the same thing, but the only way to know for sure is to hire one and ask.

[poncho-mike]

I agree with seeing the lawyer.

It's been a number of years ago, but I had a friend who got in debt over medical expenses for his daughter. She had isses and ended up in a mental hospital. Somehow the doctor she was seeing was not recognized or authorized by the insurance company, and they refused to pay his bills, which ran up close to $100K for a couple of stays. Anyway, he already had a second mortagage on his house so there was little equity in his home. He owned a couple of collector cars and I think inherited some real estate. He went through bankruptcy, and I think he failed to disclose all his assets. He kept his house because he had such little equity, and I believe his two daily driver's also had little equity. He went bankrupt, but somehow debt collectors found out about his cars.
He ended up in more legal trouble for trying to hide his assets. In his case, I believe the doctor who he owned money to hired a private investigator to look for hidden assets.

I think credit card companies will negotiate rather than fight through bankruptcy. You should hire a good attorney that specializes in dealing with debt and credit card companies.

Mike

[CaptainSluggo]

Originally Posted by INJUNTOM

Seeking info on the credit card debt scenario where from what I understand, you stop paying them and pay into an escrow account until a certain percentage is in there and an entity negotiates on your behalf to settle for a lesser amount.

Back Story: I am in the process of closing down my auto repair business. I took a 2nd against my house 11 years ago to buy the business and since then after the economy went down and put us down 35%, people changed the way they do things with the advent of youtube videos, facebook and craigslist mechanics, my state buying up and crushing all the older cars, etc, compounded by me finding out recently that I got screwed on the loan I took out in 2007, I decided to throw in the towel at the shop and refinance our first and 2nd into just my wife's name. All good with that, but I have about 90k in credit card debt starting when the economy first went down to keep the business running, juggling 0% cards and hoping to someday pull out of it. It's not pulling out, and I'm current with the payments, but the business just barely covered all that and now I won't have the business.

Recently talked to a bankruptcy attorney and he was all for it, but from what I can see, since I own too many Classic cars and other asset, all they are going to do is seize everything and sell it all off at auction for me....well I can do that myself and get more out of it. If I sell a couple of my Pontiacs, my dead buddy's '68 Camaro and some guns equipment, and other stuff I can probably get there, but would rather not if there's a way to negotiate with the card companies.

Anybody done that? I obviously don't want to risk anything with my house either, so not sure whether to buck up and get 'er done or fight it out. Asking here because there really isn't a better place to ask that I know of since Pontiac people are the smartest out there and asking these companies themselves is just like asking the bankruptcy attorney who has everything to gain by you filing.

BTW, I am in CA.

Dear California,
My Opinion: Why not do what is right and sell off YOUR assets and pay off YOUR debt. YOU created the debt.
Then you can start over with a clean slate and a clear conscience.

You are correct, the first thing that will happen is the court will make you sell everything to pay your debts.
Even if you sell or transfer your assets before you file for bankruptcy, there is still a record of those assets and the court will want proof of where the money went once you sold or transferred those assets.
If you transfer the car titles, house deed, etc. to someone else, you better make sure it is someone you can trust and is of no relations to you. BECAUSE, Some "friend" may hold them for ransom or sell them and then move away.
"Nothing makes a man more dishonest then money".

The bankruptcy courts have seen every trick in the book.
Either pay off your debts or live with the stipulations that are imposed on you by the court after the bankruptcy.

Good Luck,

[Chris65LeMans]

I wouldn’t hire a lawyer. I know that’s the first thing everyone says on the forums, but you’re better off using the $30,000 you’ll pay him to pay off debts. There could be a way to settle with the credit card companies. I think there are companies that help with this - buy watch who you give your info to. A lot of shady characters in that field.

Probably some Google research will be beneficial. You may be able to arm yourself with some knowledge and call the card companies yourself.

[INJUNTOM]

I did just talk to the attorney who I talked to last week (He had told me then that he transfers the office phone to his cel and often picks up on weekends), and let him know I wasn't going the bankruptcy route, but asked about debt settlement since it's mentioned on his website, but he talked for a while and said that he no longer does that because it's not worth his time and that a lawyer isn't needed in that case because you can negotiate that yourself, and that if you quit paying, they will start sending offers to settle. But you do have to be ready to do it within a certain amount of time, in other words, right away. I kinda figured that with the research I have already done.

[Half-Inch Stud]

Sell Biz to next highest mechanic?

[goatmanmitch]

My ex went through this after we divorced- she stopped paying on the credit cards and after they went to collection, she called each collection agency and negotiated a settlement. Most were about 50% of what she owed, some were 40ish and one or two were around 60% less than owed. But she had a big surprise next time she filed a tax return as she had to pay taxes on the amounts that were written off by the collection agencies.

She did NOT need a settlement company or a lawyer for this, but she was in the unique position of having a divorce settlement from me at the time.

[tom s]

That's true,the forgiven amount becomes ordinary income.So now you owe the IRS.Tom

[INJUNTOM]

Originally Posted by CaptainSluggo

Dear California,
My Opinion: Why not do what is right and sell off YOUR assets and pay off YOUR debt. YOU created the debt.
Then you can start over with a clean slate and a clear conscience.

You are correct, the first thing that will happen is the court will make you sell everything to pay your debts.
Even if you sell or transfer your assets before you file for bankruptcy, there is still a record of those assets and the court will want proof of where the money went once you sold or transferred those assets.
If you transfer the car titles, house deed, etc. to someone else, you better make sure it is someone you can trust and is of no relations to you. BECAUSE, Some "friend" may hold them for ransom or sell them and then move away.
"Nothing makes a man more dishonest then money".

The bankruptcy courts have seen every trick in the book.
Either pay off your debts or live with the stipulations that are imposed on you by the court after the bankruptcy.

Good Luck,

I hear you on that, and prepared to do it. I've never been one to stick people, but in this scenario, I was stuck by crooked bankers, and my industry has died out and over ran by crooks competing against me and not reporting it, leaving me with no way to pay the debt. Much different than someone who lived the high life on credit cards then left someone else holding the bag. I also figure the credit card companies have gotten at least 20% from me in transaction fees, etc. since there is a 3% transaction fee, and some of the cards have been 1.99 and 2.99% rather than 0% over the years. They have also tried to stick me because while you have the card close to maxed, they will send convenience checks trying to get you to use them and stick you with the full percentage, but what I have always done was pay off the last loan with the revolving balance in my business account, and put it back in with the convenience checks. Quit paying myself years ago hoping it would slowly go away, but business sales have been steadily the worst year I've had every year since the economy went down. If they will settle for less then why should I be the only person in the world to turn it down? I don't take it lightly, and I've personally known/heard about dozens of people who have filed bankrupt multiple times, which is pretty lame. Also going bankrupt because you blew a lot of cash on stuff you don't need is lame as well.

[INJUNTOM]

Originally Posted by tom s

That's true,the forgiven amount becomes ordinary income.So now you owe the IRS.Tom

Yes, I'm aware of this too. Another thing I'm keeping in mind. The Attorney says that isn't the case with bankruptcy, but I really don't want to go there. Showing 40 - 50k income may not be quite as bad if I'm not showing an income anyways, but would require selling more stuff to pay that, so really what do I save? is the question.

[bird72]

Yes it has been 5 years now, but I paid 54K in debt in 4 years thru a non profit credit repayment organization. There are a couple, and "non profit" is MANDATORY part of what I said. They can negotiate rates you can not. They will not negotiate reduced debt. But the rates can be almost nothing so you can get out. You will surrender (freeze) all credit accounts. You will live frugally. You pay them and they disburse. Miss one payment you are done. You will repay your debt and in the end look better than a bankruptcy. PM and I can maybe help further with info. DO NOT go to one of the late night TV ad debt outfits. They will trash your credit and make money off you in the process.

[marxjunk]

any settlement on any debt shows up on your credit report as a settlement...

i agree with above..sell some stuff pay off the debt you acquired and start fresh..im sure any attorney's first piece of advice was to pay it off...if you have the means..then its over and done..

bankruptcy isnt pick and choose..its a last attempt to start over when there are no other choices..

my buddy has drug out a similar scenario for years...and you can see it in his face etc..its really taken a toll on his life..if he would have just surrendered to it all and moved on, in 6 months he would have been able to get past it

[INJUNTOM]

Originally Posted by Half-Inch Stud

Sell Biz to next highest mechanic?

Nobody wants it. Honestly, that's part of the problem in my area...people are working out of their garages, little warehouses everywhere for cash and only doing the easy stuff. Last several times I tried to hire techs I get no reply. I had one guy I wanted that was referred by a buddy, and he wanted to come to work, but was 3 months backed up in his garage. He now rents half a warehouse with lifts, office set up, and everything for $600 a month, works 25 hours a week and is making a killing. There are guys like that all over this area. I see ads all the time on craigslist and facebook advertising this kind of work. Autozone and O'reillys checks people's codes for free, youtube tells them how to fix their car for free, so you get all the crap nobody wants to do or can't figure out. On top of that, even buying the best quality parts you can get still produces about a 20% warranty rate, sometimes the crap don't even make it out of the shop before you have to warranty it. Guys working out of their garage don't warranty anything because they make the customer buy the part.

[marxjunk]

Originally Posted by INJUNTOM

I was stuck by crooked bankers, and my industry has died out and over ran by crooks competing against me and not reporting it, leaving me with no way to pay the debt.

because they are crooks, doesnt mean you have to be less than honorable, you will feel better in the long run..and material things come and go...peace of mind is everything...

[Fullsize455]

Originally Posted by INJUNTOM

Nobody wants it. Honestly, that's part of the problem in my area...people are working out of their garages, little warehouses everywhere for cash and only doing the easy stuff. Last several times I tried to hire techs I get no reply. I had one guy I wanted that was referred by a buddy, and he wanted to come to work, but was 3 months backed up in his garage. He now rents half a warehouse with lifts, office set up, and everything for $600 a month, works 25 hours a week and is making a killing. There are guys like that all over this area. I see ads all the time on craigslist and facebook advertising this kind of work. Autozone and O'reillys checks people's codes for free, youtube tells them how to fix their car for free, so you get all the crap nobody wants to do or can't figure out. On top of that, even buying the best quality parts you can get still produces about a 20% warranty rate, sometimes the crap don't even make it out of the shop before you have to warranty it. Guys working out of their garage don't warranty anything because they make the customer buy the part.

What part of California are you in? I spent most of my life in the bay area, having left a year and a half ago, and that was not my experience AT ALL. Yes, there are plenty of guys like you describe running shade tree under the radar garages, but there were also tons of above the board, established repair businesses of all types that continued to do very well. I am still friends a few shop owners out there who all echo the same sentiment, they simply cannot keep up with the demand. Many people are justifiably afraid of going to a shade tree type, so the legit businesses still get PLENTY of work, especially if they've been around a while.

I'm not trying to disparage you or speak on your experience when I know zero about you, your business or location, but my distinct impression is that a halfway decent shop in a halfway populated area should have no trouble whatsoever making ends meet and then some. The guys I know who are still running shops there are making good, even great money. Unless you're out deep in the sticks or on major ghetto/druggie land, I can't see a properly run shop having any trouble keeping the bills paid.

[INJUNTOM]

Originally Posted by Fullsize455

What part of California are you in? I spent most of my life in the bay area, having left a year and a half ago, and that was not my experience AT ALL. Yes, there are plenty of guys like you describe running shade tree under the radar garages, but there were also tons of above the board, established repair businesses of all types that continued to do very well. I am still friends a few shop owners out there who all echo the same sentiment, they simply cannot keep up with the demand. Many people are justifiably afraid of going to a shade tree type, so the legit businesses still get PLENTY of work, especially if they've been around a while.

I'm not trying to disparage you or speak on your experience when I know zero about you, your business or location, but my distinct impression is that a halfway decent shop in a halfway populated area should have no trouble whatsoever making ends meet and then some. The guys I know who are still running shops there are making good, even great money. Unless you're out deep in the sticks or on major ghetto/druggie land, I can't see a properly run shop having any trouble keeping the bills paid.

Bay area is a whole different story. Most people over there simply aren't allowed to work on their own cars, have the space or even the knowledge. I'm over the hill from the bay area in Modesto where there is plenty of space, residential neighborhoods with large garages, rural areas, and about the only place you can't work on cars is a lot of the apartment complexes. I have a few customers that know how to work on their cars and would if they could, but live in apartment complexes. There's shops on every corner out here, and the tough part is having a higher end shop with a good safe location, good insurance, good equipment and excellent customer service is crazy overhead. About 25 - 30k a month. Don't get me wrong, we have a great customer base and I have about 400 regulars I have to feel bad about now, but bottom line is that when I once had 3 - 4 techs out in the shop, I've only had 2 for a lot of years now and half the time only have enough work for one. other times we get enough work for 3 or 4, which is another issue...you lose customers because they get pissed that you can't get them out in a timely manner and start going elsewhere.

Also, we have been "making ends meet", and most likely could pull out of it in time, but back to my original problem - We just found out we got screwed on the 2nd we took out against our house to buy the business in 2007 and it's a balloon loan due in 2022. No way to deal with that. They say that you normally redo the loan if you can't pay in full, but that won't happen either with the credit card debt. It's all not sustainable, so why not cut our losses now?

[64speed]

Honestly like everyone else said you can just stop paying the credit cards and they will chomp at the bit to receive whatever settlement they can get. When I went thru my divorce years ago I lost a job and a wife and income went from a combined ove 80 grand to 30 by myself. I called all my credit card companies and they gave me a very hard line......until they stopped getting paid then they were all for whatever I would send them interest free yada yada yada. I don’t know how it is in California but in S.C. NOBODY is gonna get a lien against you for unsecured credit card debt. When I was a deputy in the RARE case that someone had secured debt such as snap on tool account or rent to own stuff they would send us out to retrieve it and either the owner dodged us completely had sold it to pay other debt or claimed to have lost it or had it stolen. The rep would look at me and I would just throw my hands up. Can’t get blood from a stone. Just keep your house free and clear

[Heybuck]

I'm not in the USA but I can feel your pain. Credit just all too easy for most people. Banks are always busting themselves to give you an umbrella when times are good and first in line to take it off you when it starts raining.

If I can make any suggestion to you, it is to buy this book: https://www.ebay.com.au/itm/THE-BARE...wAAOSwbkVaHlDV

DOES NOT MATTER that this is an Aussie book. It has the best financial advice ever written. It won't be free post to the US but its worth finding out how much it will be plus shipping.

You will NOT REGRET IT. I promise you

Good luck with your problem.

Ian

[Sirrotica]

In 2001 I went through a divorce with a bunch of credit card debt, roughly $40,000 on 2 different cards. When the C/card companies figured they weren't going to get anymore money they quickly changed their tune on what they would settle for. It was about 50 cents on a dollar, give or take, I paid them off with the equity in the house sale. They quit bothering me, however my credit was so badly damaged I couldn't get a bank to even give me a debit card. Slowly I overcame the credit rating and finally got a debit card again and re- established my credit.

Just be prepared to be able to deal with absolutely no credit on anything for 5-7 years. BTW, I did it without attorneys, not sure if a attorney would have been any help or not. It sucks to have to pay for everything with cash because you can't get a bank to give you a debit card, even with a checking/savings account.

It's not going to be a fun experience no matter what you decide to do, good luck.