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It's not a bad offer, but its still extortion as far as I'm concerned. Most bankruptcy cases you'd be lucky to get 10-15% of what's owing. Litigation for only $7k is not really worth it so place those variables on the table and it may be worth it to you. But I'd sure as hell be certain to process as few transactions as possible with them in future.
WG
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I play with Google.
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