“Dear Steve,

About 6 years ago I ran into very rough times and defaulted on all of my credit cards. They were all charged off and my credit was ruined. I was too afraid to file for bankruptcy and opted to do nothing (foolish me). At any rate, I was sued by one creditor for $17,000 but the judge denied judgment due to lack of proof of the debt. The suit was later dismissed for lack of prosecution. None of the other creditors sued me and the SOL have passed this year (5 years for Florida). Most of the derogatory accounts are scheduled to fall of my report in the next year and a half. In the meantime I am still in debt for about $50,000.

My income is sporadic and I have limited funds to work with. What are typical settlement amounts I could realistically expect get with these old (past SOL) debts? Or should I still seriously consider bankruptcy?

Thanks for any advice you could give.

Scott”

The Answer

Dear Scott,

I see where you are coming from but I think it is a bit of the cart before the horse scenario. Before even considering some settlement offers I’d like to see you have at least $25,000 in cash in a savings account so if you decided to move ahead with settlements, you could.

Not having the money on hand and trying to guess what the creditors want at some point in the future is a bit like trying to herd cats or push string up-hill, it’s pointless.

Do you have cash saved already? Is the $50,000 you mention in debt, new debt?

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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