Is Chapter 13 and Settlements for credit cards the same thing?
Chapter 13 is a type of bankruptcy. Settlement is not a bankruptcy; it is a settlement. The former is governed by law; the latter is a negotiated. Though, in some bankruptcies, settlement negotiations can ensue policed by a judiciary.
Reyaj said:
Cause I was thinking that's my other option... to settle the debt... there's a lot of companies that seem to do this.
I would encourage you to stay away from companies that settle debt. Most operate outside of the law. Most cannot represent you if you are served with a Complaint, as these companies have no in-house counsel, and if they do, often counsel is out-of-state unable to represent you in your state.
You are a W2 employee with garnishable wages. Essentially, you are "fresh meat," ripe for the picking.
Accordingly, if you elect to proceed with settlements, exercise due diligence and do it yourself, or hire a local attorney not to exceed $5,000 in fees for full service of your debt including negotiating, settling, answering complaints, discovery, serving and opposing motions, and trial. If you have less than five creditors, quite a few debt-settlement attorneys would be willing to engage under such terms.
Reyaj said:
I know debt settlement hurts your credit too, but not as bad as bankruptcy?
Both hurt your credit. Bankruptcy lowers your credit score more in most instances:
If you have creditors that you don't settle and continue to pay on time such as auto, real-estate, student loans, and you are behind only in credit cards, debt settlement will not impact your credit anywhere near a bankruptcy.
Alternatively, if your credit comprises only credit cards and you fall delinquent on all cards, then debt settlement will likely impact your credit score similarly to a bankruptcy.
Reyaj said:
Wouldn't stop paying my cards be a bad idea as the interest will accumulate even more?
Interest rates will increase to the top percentage allowed by law as well as other fees. Nonetheless, you will settle anywhere between 20-50% on the original principal balance.
Reyaj said:
What happens though as i'm sure 99% of cases prove you owe the money... Like do I put myself in deeper doo doo trying to go to court and say I don't owe it?
In 95% of cases if you are trying to settle, you will settle before trial. Debt buyers who sue will likely order the contract or billing statements from the original creditor before trial. Notwithstanding whether they have evidence or not, debt buyers will still settle with you, as (1) They buy debt for 2-5% on the dollar; (2) They don't know if you have other judgments that will be or have been entered before theirs (they have to stand in line until other judgments have been paid in full before garnishing your wages); (3) They don't know if you are employed (some do); (4) They have no guarantee on continued employment for wage garnishment; (5) They don't know if you will file a bankruptcy post-judgment.