Day Spa Debt
I had my own business a beautiful day spa since 2004 but have had to close it down due to the economy in Feb 2009. I owe about $60K in business credit card debt to American Express ($12K); BofA ($24K); Capital One ($5K); Chase ($18K) and the IRS about $12K.
I have tried to settle with each one of them other than IRS since the closing of the spa and before any delinquencies. Now they are about 108 days late and still none have reported on my credit report and they are not willing to settle.
I used to get calls every day from Chase and Amex and now only American Express calls, sometimes 3 times a day. I am logging every call. They want me to send in the delinquent amount and then set up a payment plan but I told them I don’t have income and am negative $2000 a month but can borrow $5000 from my mom to settle.
What should I do? keep sending them settlement letters? Can you help me? What is their next step? I really don’t want to be sued.
Day Spa Debt”
Dear Day Spa Debt,
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Settling this debt is going to be a bad idea if you approach this on a piecemeal basis. The best way to do this is to make sure all will settle first before you send anyone any money. If you have four creditors and only three settle, you’re still screwed.
And if you are trying to settle $59,000 of credit card debt with $5,000, I seriously doubt that is going to work.
Without any income or assets to direct to this situation, the logical and probably most appropriate solution is going to be bankruptcy. If you file bankruptcy it will leave you with the IRS debt but that really needs your focus and attention more than the others. The IRS has massive powers to take action against you.
Find a local bankruptcy attorney that seems nice. Go in and talk to them about your situation. You don’t have to go with the intention of filing bankruptcy. Go to educate yourself about how bankruptcy might be a solution worth considering.
If you do decide to go bankrupt it will end the debt and eliminate any potential lawsuit against you.
Use this link and you can find a local bankruptcy attorney online.