Which Would Be Better, Debt Settlement or Chapter 13 Bankruptcy? – Julia

“Dear Lewis,

My husband and I make $4088 per month (Soc Sec + PT Job); we owe approximately $57,000 in credit card debt. Our house is worth about 175,000 with a balance of about 95,000. We own 2 vehicles outright (2002 Buick Le Sabre, and a 1995 Dodge conversion van). Our home is a converted old church building; it has been converted to 1/2 house and 1/2 commercial. We run a business out of the commercial part … in the red for now. We live in Missouri. We just started getting behind in our CC payments.

Would it be better if we did a debt settlement for a Chapter 13?

Thanks for your help.


Dear Julia,

This question can only be answered by a Missouri bankruptcy attorney. Unfortunately, I only handle Florida bankruptcies. From what I can see, Missouri has a very low homestead exemption. So that would be the main reason you are pushed into chapter 13.

It looks like your home equity alone would force you into a 100% chapter 13 – meaning paying your full credit card debt over 60 months. That payment would be roughly $1000/month.

I am not sure if you have already spoken with a debt settlement company. Are you talking about lump sum settlements with each credit card, or the monthly payment plan to settle cards?

I am sure you have scoured Steve’s sight to know that many of the debt settlement companies are scam artists. They take your money each month and hardly ever settle anything, while retaining ridiculous amounts for “fees”.

I would go to a consumer attorney who specializes in bankruptcy in your area to determine whether bankruptcy is a good option for you or not. A good place to look for a qualified attorney is www.nacba.org.

Good luck!

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

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