PR and Debt Settlement


#1

I will have a TS PR next summer and I am currently considering Debt Settlement. I have, what I consider, a significant amount of unsecured debt right now. I am 100% on time and I believe that debt settlement requires me to be delinquent in order for the program to work so I would need to voluntarily stop making payments to become delinquent. The likelihood of having to indicate that I have been and am currently 90 days delinquent on the SF86 (should I choose debt settlement) has be concerned. I consulted with a bankruptcy attorney a couple years ago and was told that Chapter 7 was not an option for me and I could only set up a repayment plan under Chapter 13 and I would most likely be paying close to if not 100% of what is owed due to my income level (although I am living pay check to pay check right now). It looks like Debt Management might be a better option but that forces the closure of all credit accounts and I would have nothing for emergencies. Debt Settlement does not close accounts (at least not all and at the same time).

Another factor/question would be...are KMPs held to a higher standard during adjudication?


#2

There are no differences in adjudicative standards for KMPs, it is the correlation of the issues to the duties of the position that are factored in. What you have outlined is a legal remedy to take care of the debt. It will be looked at as a possible concern that may be questioned, but if you have documentation showing that there is a plan to resolve the debts and follow through with it, then it may be mitigated. One thing to consider however, is this: what was the cause of incurring the large amount of unsecured debt? Circumstances and any evidence of irresponsibility will also be a factor.


#3

@marko.hakamaa as far as security clearances are concerned, is there a difference between a debt settlement where you do pay off all the debt versus a settlement where some portion of the debt is simply 'written off' and not paid back?


#4

Thanks Marko. I probably won't go that route because there are other issues with debt settlement that they did not share with me that are making me lean away from it.


#5

A debt settlement with a creditor for less than the full amount of the debt is a legal means to resolve it, instead of just walking away and getting it charged off, which would be worse. Other factors like why you incurred the debt why you didn't weren't able to pay in full, previous history all play into the equation,.