While I try to find a decent lawyer, I thought I''d ask if anyone here knows anything about this.%0D\
Can a person go bankrupt,(absolve credit card debt) and still keep their home? We purchased the house under a trust with our last names as title (ie: Jones and Smith Trust), but we each unsecured credit debt that are so high because we have both lost our jobs.%0D\
OR - WHAT HAPPENS IF A PERSON JUST STOPS PAYING THIER CREDIT CARDS? Simply igonore them. Can they sue you? %0D\
They are all unsecured. Can the credit card companies lean on the house? %0D\
I don''t want to go this route, but we are getting desperate - looking for real work, while working three part-time jobs. Thank you
In a bind
YEs, a friend of mine who is about to declare bankruptcy (chapter 7) due to mounting medical and cc debt was served with papers last week. She hadn''t paid her cards in about six months. They can garnish a portion of your paycheck (25% is the limit), take funds from your bank account with a court order and add on all the fees. Since she is declaring bankruptcy, all the charges and garnishments, etc., will go away, but she''ll be giving them some money in the interim unless she does something quickly on her bankruptcy
A couple of things I left out:\
she was served on one card (she has 4 or so).\
she has 20 days to respond to the lawsuit, which she is doing to put it off until later so that she can get her affairs in order. \
this was done in civil county court. \
Her house in her husband''s name, or else they could put a lien on it. (She married last year when the medical problems and bills had already started, so she decided to keep her name off the property).
I assume laws vary from state to state. I had a friend who declared chapter 7 (and then wished he had died). In california, I don''t think they can do anything to your house. But there was something to do with his car. They could take the car, and give you a 3 grand allowance for a replacement.\
Anyone? Am I imagining this?
[quote]OR - WHAT HAPPENS IF A PERSON JUST STOPS PAYING THIER CREDIT CARDS? Simply igonore them. Can they sue you?\
Depends upon which state you live in. That is why OJ moved to Florida.
"but she''ll be giving them some money in the interim unless she does something quickly on her bankruptcy"%0D\
If your friend is planning to do a bankruptcy, she shouldn''t pay anything to her collection agencies in the meantime. She should just declare bankruptcy now and it will stop all collections. Let the court decide who gets paid what.%0D\
If not, she should respond to the lawsuit denying everything. That will tie it up for months.%0D\
But again, if she is thinking about bankruptcy, she should do it now.
She is only thinking about the funds that are taken before teh bankruptcy starts. \
For some reason, she cannot do it right now. She has some tax debt (from her ex-husband''s company; she was on the papers but knew nothing about hte underpaid taxes) that will discharge in 2011. Because he filed the papers wrong, it isn''t dischargeable under normal Chapter 7; her tax attorney says beginning in 2012, the debt will be old enough to be discharged.\
the problem is that she''s afraid that if the judgment comes against her, she will wind up having her wages garnished for a few months. BUT still weighing it, the tax debt is much higher, so anything she has to pay will ultimately be worth it. I know this from a 30-minute conversation, so I can''t provide you with any more details or even argue with you if you say she''s wrong, misinformed, etc. I just don''t know the ins-and-outs.
R1 & R2
They can lean on the house, yes. Just keep the doors and windows locked, and unless your house is made of sticks or paper, they won''t be able to get in.
Bankruptcy laws are federal laws. I don''t think they vary from state to state. There are, however, different chapters of bankruptcy, each having a different effect on how your debts are handled.
Certain aspects of the bankruptcy laws let the states make rules, including the value of the home you are allowed to keep.
But r9, what if they huff and they puff?
Kind of on-topic:\
If the only debt you have is student loans which you KNOW you''ll never be able to pay off, is there a benefit to declaring bankruptcy?\
No other debt (no credit cards, even), no house, no car payment (own an old car), nothing.\
It would be just a way to reset the debt.\
Or is it only worth it if you owe a LOT of money to the student loans? i.e. Go get all your degrees, use student loans to pay for them, and then declare bankruptcy.
Student loans are no dischargeable by bankruptcy. You''re stuck with them.
R13, as already said, you can''t discharge student loans via bankruptcy, only through being declared disabled (thus, unable to work) or by dying.\
If your loans are Federal loans, they have a few payments plans that may help: Income Contingent Repayment, which bases your monthly payment off 20% of your monthly discretionary income (basically, your AGI minus the Federal poverty level divided by 12) or, if you can''t afford that payment, there is Income Based Repayment, which is around 10% of your monthly income (I think). Under one of these plans (IBR, I think), your loans may be discharged after 25 years.
You can keep your house and you can also keep what''s in your retirement accounts if you file bankruptcy. Laws do vary by state as to how much equity in your house can be exempted. There are some places like Florida where millionaires like Donald Trump like to go bankrupt because they can keep the house no matter what. Other states allow you to keep the place if you have under a certain amount of equity.\
I filed last year and kept my house only because the value had dropped a fair amount since buying it and I didn''t have much equity.
Never been good with money
Thanks for the info.\
*sigh* The more I read / learn about the student loan situation (not just my own), the more fucked up it all seems to be...
Talk to a lawyer immediately! Not just any lawyer, one who specializes in bankruptcy. And don''t wait -- bankruptcy should be carefully planned to preserve as many assets as possible & discharge as many debts as possible.
With private student loans, at what point do they just write off the debt? I stopped paying a couple of years ago, and it showed up on my mom''s credit report (she co-signed). I recently started getting calls about the loan. If the debt has been sold, and is not "owned" by the bank anymore, is that dischargable since it was converted to a general "debt" and I never made a contract with whatever entity bought the debt?
Wow, most posters here get on my ass for being "one of those damn idiot Ron Paul libertarians", the first thing you need to do is get a lawyer AND an accountant, and research the lender that holds your title. The banks (fucking bastards) have fucked up 500 years of property rights law via MERS (the Mortgage Electronic Registration System) and if it holds your note, then quit paying immediately. Even if not, there are dozens of "robo-signing" cases working through the courts that might allow you to walk away scot-free.\
If you own your house outright, and you live in a "non-recourse" state, then they are shitoutofluck with unsecured debt, and bankruptcy is easy. A lawyer will have to guide you, but you should be good.\
Hope this helps.
The libertarian that wants to end the wars and stop the banks from killing us!!!
Yes. If you can keep one clean credit card, that would be good. The banks have always screwed us...now it''s their turn to get screwed. I think all credit card holders should charge them up and take bankruptcy. How else are we ever going to get even with banks or corporate thieves? Our government let them turn into loan sharks. It is a lawless world. Corporations do everything and anything...from spoil our environment to fire all loyal workers and hire minimum wage. Who will make them pay? Not our government, that''s for sure.
Consumer bankruptcy attorney here.\
For the love of God go see a bankruptcy attorney. The amount of misinformation on this thread is appalling. Bankruptcy is a Federal court process. Your principle issue appears to be what assets can you protect from creditors. This can vary from state to state. As to protecting assets, Congress has let the states decide whether persons in bankruptcy must use only the state exemptions available to all debtors in non-bankruptcy situations (opt-out)or may also use the Federal bankruptcy exemptions. In Louisiana you must use the state exemptions which are absolutely horrible. In Washington you can chose the state exemptions or the Federal exemptions. Which one to use generally depends on the amount of equity in your house.
If you don''t pay your credit cards the bank will probably sue you, obtain a judgment against you, and garnish your paycheck. Where I practice the creditor gets 25% of your net pay in a garnishment. A judgment may also act as a lien on your property. Really, go talk to a lawyer. Most consumer bankruptcy attorneys, at least where I work, will offer you a free consultation.
They''re not going after you R19, they''re going after the co-signer, the only one qualified to take this loan. That is why it required a CO-signer, whom you carelessly fucked. Oh, by the way, that person is also your mother. They will garnish her wages, add fees,, ruin her credit, and lien her personal property. But don''t worry, because won''t go after you.
Thanks [R3] for the correction/admonishment. %0D\
You''re in a good place and I wish you health, all things good and never any troubles. The same for [R5],("Seriously"). I only asked as I understood CC''s to be UNSECURED debt. I''d heard CC loans are sold off and you often pay just a portion of a settled debt amount. I wish you well too. It''s fun to knock someone who is down JUST to make one''s self feel better about their own life. SO MANY UNHAPPY, UNKIND PEOPLE HERE.%0D\
But peace to those who did honestly try to help. Thank you sincerely. %0D\
The Original Poster
You can always bargain with credit card companies - they often take a smaller amount because they have made a fortune on you already by the time you are this deep in trouble. You know all those fees you've been paying. A lot of the amount you owe is interest anyway.%0D
Many years ago I was in a terrible financial mess and had lots of credit cards. For me at the time it was a lot of money to owe - maybe $30k spread among the cards. I was self- employed so I used the money to keep me going. But I struggled to make payments and always talked to my creditors. I was always hopeful and friendly with them. I never signed anything though. %0D
Well, when I thought I was finally in a position to make payments on all cards (albeit not catch up completely) I researched how to approach my creditors and stumbled upon a web site that gave advice on how to do this and make agreements to pay cards off at reduced amounts. %0D
I read and read and realized that my problems had been going on for so long that I was near the statute of limitations (SOL) for law suits against me. I am in a 3 year SOL jurisdiction and it is also a "cause of action" jurisdiction.%0D
What that means is that the SOL starts to run the month after the 1st day I am late on a payment because that is the date the creditor has a cause of action against me to sue. The SOL continues to run until I catch up completely with the card. In my jurisdiction even if I make payments throughout this time if I do not catch up with back payments and become current so that I can once again use my card the SOL continues to run. So all those partial payments I was making just served to buy me time. %0D
I waited out the 3 years and only one creditor tried to sue me. They never served me though and the first I heard about the suit was when I got a postcard from court telling me the suit had been dismissed for failure to produce proof they properly served me. I had read this was a trick used - some creditor law firms would deliberately serve the wrong address or an old address or just not serve you - so you'd miss a court date and they'd get a default judgment. That doesn't work in my jurisdiction. It is very consumer friendly. %0D
I always wondered why no one else came after me - maybe cause at the time I really was pretty much judgment proof or it looked that way from public records. I'm not recommending this for anyone - I really lucked out somehow.%0D
But in my research I realized that people should be more willing to declare bankruptcy and just start anew. It really does give you a fresh start. Businesses do it all the time. They aren't made to feel ashamed. It's the corporate world that has tried to lay a guilt trip on individuals for doing so. But it's just business - nothing personal. Everyone should treat it as such. %0D
PS If a creditor forgives part of a debt then they have to file an IRS form listing the forgiven amount. That can be considered income to you. You may or may not be taxed on that. It is almost assuredly an inflated amount and if you end up taxed on it you should definitely challenge the amount. %0D
Also be ware that when creditors claim to be giving you a disounted settlement agreement that they can sell the remaining debt to another creditor and you start the fight again. You need in writing an agreement that they will not sell or assign the remainder of the debt to anyone else.
Txs for those who did not rip me a new one with their "witty" putdowns. Of course I had to file, but it was pride. I have always paid my own way AND ON TIME. My salary went from $88k to less than $50k - THANK GOD for private disabilty insurance. (I was DX'd w/ a neurolical disease).
I signed bankruptcy docs in December. Paid the lawyer his 2 grand, but delayed filing until last month. In that time, I rec'd many calls from the credit cards companies - but not one nasty message?
Since my house was $710k at purchase in 2006 and it's now worth $460k, (I have $280k equity in it) - that w/ the $100k in non-secured debt, (mainly doctor bill that my insurance company denied) - the math, including having just an old car, made it a "wash". I'm allowed to reclaim the house - at the 4 month anniversary of my filing.
I have also filed,(360 pages to the bank already), for a mortgage modification/reduction. I'm still waiting for an answer from them. I can afford the house and my insurances, but living expenses, doc bills and property taxes, etc. are what weigh me down.
Not having to move, keeping my house and my $280k that I've put into it is a grace. I have to just tighten my other budgets.
Thanks to all who didn't treat me like shit. I was running to doctors, sick and scared to step forward on this - like a child, I wanted it and being sick to go away on their own.
I appreciate everyone's feedback and will never understand the peeps who sit in front of their PC all day at the ready on D.L. JUST to bring someone down further. Does it make you feel beter about your own lives?
I "get" the bitchiness & gossip about celebs but trying to feel superior to others who post within a message board is pain sad.
[quote]Can the credit card companies lean on the house?
Smaller balance credit cards (under 5k) will take you to small claims court. The larger ones won't bother taking you to court because it is a very expensive process. I was unemployed a few years ago, and stopped paying my credit cards for over a year. I eventually settled with the companies for about 20 percent of the balance.
I'm glad bankruptcy helped you, OP. As another poster said, it really can be the "fresh start" it's claimed to be -- sounds like that's been your experience.
Poor Man's Bankruptcy= Stop paying cards and wait out the SOL. In 7 years your credit report will be clean. You can send written requests for collection agencies to stop calling you. They will, unless they want to pay you for breaking the law. Some sue, some don't. Some wait 6 months, some 2-3 years. You won't get a LIEN unless you are sued and lose a judgment first. This can be a long process. Their goal is to get a default judgment. Just by answering any lawsuit, you will buy some time. You can usually settle for 20-30%, sometimes it takes 50-70%. Do not pay debt settlement companies- they don't do any real negotiation at all. They just charge for what you could easily do yourself.
I did just that, R31. I was just served with a 7K judgement. I really thought that this college problem would just sort of... disappear. I've been smacked in the head by my employer to the tune of $600 a month to pay it off.
Be sure that credit problems aren't going to affect your employment. Government or financial jobs or anything that involves some level of trust usually require a background check. For government work, you can have as much debt as you want, but discharged or bad debt will disqualify you. I've seen people in get promotions that involved a reinvestigation, and they ended up losing their current job as well as the promotion.
[quote] I stopped paying a couple of years ago, and it showed up on my mom's credit report (she co-signed).
Your mom must be so proud of you!
Student loans are forever. My sister still has her tax refunds seized by lenders of student loans from 40 years ago.
It probably varies from state to state regarding garnishments, but in my state (Wisconsin) you are exempt from having wages garnished if your earnings are at some type of poverty level. Obviously, ask a lawyer about this.
[quote] $100k in non-secured debt, (mainly doctor bill that my insurance company denied)
This is really scary. I can't believe this is legal. Can a person fight their insurance company on denial of payment?
Isn't there some new law in 2013 that lets the credit card companies come after you forever????
Want to get really angry? Until the late 1970's you COULD discharge student loan debt in bankruptcy proceedings.
But now they changed the law so that they always get their money. But there are tricks you can play if you don't mind completely trashing your credit. Refuse to answer all letters and phone calls from the student loan lender. What will happen is eventually they'll default the debt, which means a scumbag collector can purchase it.
At that point, file your bankruptcy. The scumbags can't claim protection.
[quote]WHAT HAPPENS IF A PERSON JUST STOPS PAYING THIER CREDIT CARDS? Simply igonore them. Can they sue you?
Why do you think you're so special that you don't need to follow the agreement you entered into when you got the credit card to begin with?
There are bits and pieces of truth all over the place. Let's start with the truth.
There are two types of bankruptcy for consumers. Chapter 7 (liquidation) and Chapter 13 (reorganization). The Federal Government sets an income limit bases on the amount of money you earn. This is attached to a level. So if you live in a state like Hawaii with a high cost of living you can earn a lot more, than say Mississippi, where the cost is lower.
In Illinois for example it's about 45K a year, roughly. So if you make more than that, you have no choice but to do Chapter 13.
If you stop paying your credit cards, it's unsecured debt. If it's under $5,000 (the individual account) they will probably not sue. They'll simply sell it to a collection agency. Over $10,000 they'll definitely sue.
The time a primary debtor has to collect varies from three years to 20 years, depending on the state.
After they sue, they get a judgement. The judgement are good for three years to 20 years, depending on the state and in some states can be renewed indefinitely or a limited number of times.
In four states, SC, PA, TX and NC you can attach wages, except for things like child support, alimony and taxes. How much they can take is maxed at 25% but may be less depending on your income, but you have to be very low income to get less.
You cannot be fired for one wage attachment but if you have more than one, your employer can legally fire you.
Once your judgment is sold to a collection agency you're unlikely to get the house taken from you, but they'll put a lien on it which will effectively prevent you from selling it, till you get that satisfied.
[quote]My salary went from $88k to less than $50k ... Since my house was $710k at purchase in 2006
You haven't yet explained why on EARTH you thought you could afford a $700,000 house on a salary of a mere $88K/year. Even with a reduced principal, you STILL can't afford it, so why do you continue with this albatross on your back?
I thought that was what bankruptcy was for- to prevent you from ending up starving in the street?
If not, what is the point of having it exist?
[quote]"I stopped paying a couple of years ago, and it showed up on my mom's credit report (she co-signed)." --R19
You sound like true a gem, R19. No one cares what you did to your own credit rating, but fucking up your mother's credit rating is quite another matter.
Whoever said that filing for bankruptcy was a good idea is wrong. It's a very bad idea unless of course, you owe over a hundred grand and have future opportunities to live well.
It will screw up your ability to rent an apartment, buy a home, car, and get some jobs. It is better to have some bad debt than file for bankruptcy.
Try to negotiate a lower payment plan--this is usually acceptable for hospitals and most medical care. They will generally work with you.
When famous or well-off people file for bankruptcy it is because they have hidden assets and will not struggle to find a home or car in the future.
Bush implemented many new bankruptcy laws in 2008 which makes it harder to run from your debts. The very wealthy will of course, but not you and me.
And paying off student loans is great for your credit rating so arrange for a lower payment plan.
p.s. it is very easy for employers and private detectives, as well as some journalists, to find a bankruptcy in your past. This information can always be used against you in a court of law or used to defame and smear your character.