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just did a short sale in July. I'm now receiving a bill in the amount of $55,000 from the second lender. On my credit report it shows that it was charged off. Is it better for me to claim bankruptcy, Chapter 7? I'm a single mother with three kids and would never be able to pay that off.

smithsussane · Posted: Tue Oct 28, 2008 8:15 pm Post subject:

Hi Jessica Pineda!

Welcome to forums!

Charged off means that the original lender is not bothered to collect the loan from you and has sold it off to a collection agency who will be collecting it from you. Filing chapter 7 will have a severe impact on your credit report. You may speak to the collection agency and see if they offer you an alternative payment plan which is affordable for you.

If you do not find it affordable, you may file Chapter 13 which helps in re-organizing debts. The lender will give you a modified loan payment structure by which you will be easily able to pay off the debts between 3-5 years. I think this will be a better option for you.

Feel free to ask if you have further queries.

Sussane

Samantha · Posted: Wed Oct 29, 2008 5:19 am Post subject: RE: repay charged off debt

Hi Jessica,

I don't think filing bankruptcy chapter 7 would be a good idea. It's going to ruin your credit even more than a charge-off. Is there any way you can negotiate and pay off at least a part of the second mortgage debt? If it's possible, then I suggest that you file Chapter 13 and follow a repayment plan as advised by the bankruptcy trustee.

Alternatively, you can negotiate with the collection agency for a repayment plan and settle the charged-off debt for a comparatively low amount. I understand that you won't be able to pay enough. But the fact remains that it's better to repay charged-off debt. Otherwise in future when you apply for mortgage, it'll get a bit difficult to qualify.

Hope this helps...

May god bless you.

Samantha

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