Negotiating Down Debt V Bankruptcy
I've got an S corp which is now in dire straits - been hanging on for two years and my long term debt is out of control. I'm in the process of closing the corp down now. Effectively the debt flows back to me, so I was considering a personal Chapter 7 and went to see an lawyer. When I liquidate the assets of the corp there will be a small amount left - she suggested she negotiate with the lenders for a percentage lump sum against the debt, while threatening chapter 7 if they don't accept in which case they get nothing. This seems a fair solution; they get something, I don't have a BK on my record (although it will trash my credit for a while). Has anyone been down this path and are there any pitfalls? Thanks in advance for any input and my thoughts are with anyone who has similar problems (and there are a lot of us out there, believe me!).
The real question is how much you'll have available to pay the creditor. Typically, you get an average deduction of about 1/4 to 1/3 for lump sum settlements.
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