“Dear Steve,
Hi Steve, first let me tell you what agreat comfort you are to many people. Honest advice is hard to find. I have written you before and value your opinion.
If there is a way to settle debt with the creditor for a decent amount, is it not better to do that than go bankrubt? I will have to take a loan from my 401k but all the debts will be settled. However, I understand tht the IRS will come knocking from the 1099’s.Is this always the case? If this is true I will be back in debt again. Is there a way around this,Is it the best route to take? 65,000 in debt with offers to settle for half
Lynn”
Dear Lynn,
Thank you very much for the compliment. I do try very hard to give impartial and honest advice.
Your scenario is one of the prime examples of debt repayment that I’d hate to see happen. Your 401(k) might feel like a savings account you can rob, but it’s not. In fact the 401(k) is protected from your creditors in case you did go bankrupt. Why? Because that’s the money you are saving to retire on. If you drain that account then it will be impossible to get back into the same position again to have as much money to grow and compound. Taping that account will cost you dearly.
Which would you rather be, someone that had once gone bankrupt or someone that is now 70 years old, ill, and does not have enough money to retire on after social security went broke.
Not to be too extreme but the bet comes down to which you’d rather deal with, some intermediate pain from bankruptcy or living in a crappy place and eating dog food when you are elderly. Ultimately the choice is yours but you can see why I always look at the 401(k) as being untouchable.
The thing that makes bankruptcy the most unpalatable to you is not the reality of it, but your fear and assumptions about it. If you settle the debt you’ll have bad credit reported about you for seven years. If you go bankrupt you’ll have the bankruptcy reported about you for seven to ten years.
So Lynn, just based on those cold hard facts, which option looks better for your future safety and protection?
Please update me on your progress by
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Hi steve, First let me tell you that your (The Second Attribute to Getting Out of Debt – Gratitude) Letter really hits home. I plan on sharing it. So I went to another attorney, much better than the last by far, but he is expensive. I set up one more appointment with another attorney, who is about 500.00 less. I will see how it goes. I know you get what you pay for, but sometimes the bigger the place the more they charge. I don’t know if that applies for attorneys also. We dicussed the workers compensation award of 7000.00 that I will recieve next year, and he said I would have to turn it over. I hated the thought of that because of all the surgery and pain I went through with this injury, but it is what it is. I just thought I would share it with you. Maybe its because its New York state… that want everything. Any thoughts on choosing which attorney? How did you decide. It is pretty scary,like picking out the wrong used car. It could cost you dearly. Thanks
Hi steve, First let me tell you that your (The Second Attribute to Getting Out of Debt – Gratitude) Letter really hits home. I plan on sharing it. So I went to another attorney, much better than the last by far, but he is expensive. I set up one more appointment with another attorney, who is about 500.00 less. I will see how it goes. I know you get what you pay for, but sometimes the bigger the place the more they charge. I don’t know if that applies for attorneys also. We dicussed the workers compensation award of 7000.00 that I will recieve next year, and he said I would have to turn it over. I hated the thought of that because of all the surgery and pain I went through with this injury, but it is what it is. I just thought I would share it with you. Maybe its because its New York state… that want everything. Any thoughts on choosing which attorney? How did you decide. It is pretty scary,like picking out the wrong used car. It could cost you dearly. Thanks
Thanks Steve,I will check out the site and try someone else.I know he may have just been an ass,but it was tough. It just made me more upset with myself for getting here in the first place. I will keep trying. While I have you here,maybe you know the answer to this question. I hurt myself at work and the comp case will be settled in about a year,probably around 7,000.00 including lost wages. A friend of mine says the courts will automatically take that.Do you know if its true. Thanks again
Lynn,
I doubt that to be true since it is an compensation award for an injury rather than a windfall.
No need to beat yourself up over this. Bad stuff happens to good people everyday. The key here is like something I saw on the back of a pickup truck yesterday. The sticker said “Cowgirl Up”. Just realize the situation today is what it is and deal with this head-on. You’ll be stronger and wiser for it.
Steve
Hi Steve, I took your advice and called a bankruptcy lawyer. The meeting was awful,he was rude and very inpersonal. He made me feel terrible about this whole process. I know..or hope not all of the attorneys are like this. I will try someone else, but I am scared now. I didn’t expect him to kiss my behind, but I did expect just plain politeness. He was very mean and now I am gun shy. I don’t know who to ask for a referral.
Lynn,
I am so sorry to hear about your experience. Since I always try to give advice from the heart let me me perfectly honest with what I’m thinking about this.
In every profession there are assholes. In my medical days I knew the most loving and compassionate doctors that were like gems, a bunch that were great and a group that were, you guessed it, assholes.
It’s the same in every profession, bankruptcy lawyers are no different.
In helping people I’ve dealt with lawyers of all types and I had many lawyers as personal clients when I was helping people one on one. I’ve held lawyers crying from their debt and hugged them as they sobbed. Lawyers are just people wrapped in a special knowledge. And sadly, some are just assholes that went to a lot of school.
Let’s see what you can take away from that experience. I think the best thing to learn is that you are not a victim here. I think you need to take charge of your solution and instead of allowing someone to treat you rudely you need to say, “Excuse me, but I don’t think we are a good match”, then get up politely and leave.
You are not going to seek absolution, but help to navigate the choppy waters of the bankruptcy law.
Let’s take a second swipe at this. Maybe try the National Association of Consumer Bankruptcy Attorneys finder at http://www.nacba.org/attorneyfinder/ and see if you can find someone local and different. And when you do I bet if you click with them and latter mention your experience with the first lawyer they say something like, “I’m so sorry. That’s not the first time I’ve heard that”, and they’ll be thinking that attorney truly is an asshole.
And you know what, if anything, that first attorney unfortunately did you a favor, he made you mad and from that can come strength and determination. These are good commodities to foster when you are down.
Now get back on that horse and go kick some ass, politely
Steve