Debt Settlement Negotiation - What is a reasonable amount on low income?

If you had hired an attorney in the first place, he/she never would have let you sign an Agreement for Judgment in the full amount that you owed. Unfortunately, you gave them a "win" without even making them earn it or negotiating a better deal.

Although there are some good ones, in my experience debt settlement companies are not helpful to debtors, and are sometimes completely fraudulent schemes that leave debtors in a worse financial situation.

The collection agency (more appropriately, their lawyers) can take you back to court for the next 20 years now that they have a Judgment against you. They can garnish your wages and bring you to court for examination. What's worse, the Judgment continues to accrue interest at a rate of 12% per year.

Your best bet is to save up money in an account and then offer them a larger lump-sum settlement of the entire debt (perhaps 40-60%). You would be well-advised to seek the advice of counsel to make sure that the Judgment is reported with the court as satisfied.

Unfortunately, when dealing with credit card companies or collection agencies the debtor is at their mercy when it comes to repayment amounts required. If a judgment holder refuses to change the payment terms, bankruptcy may be your only remaining option. In a Chapter 7 bankruptcy, the debt would be discharged once and for all and the debtor then gets a fresh start.

Whether or not bankruptcy is a good idea for you can only be determined after a careful consideration of your total debt, assets, etc.
Many bankruptcy attorneys offer free phone consulations and there is a wealth of information on the internet about bankruptcy in general.

Kara O'Donnell, Esq.
Law Office of Kara O'Donnell
Quincy, MA
www.QuincyLegal.com