I have about $45k in debt. I have the "ability" to save maybe $100 a month. I am thinking about stopping payments to credit card companies. I just recently went through a divorce and have roughly a 500 credit score because of it. My car will be paid off in 9 months, but I still need to start getting health insurance, which will be most of that payment (I have a new long term girlfriend that I'd possibly like to have kids with one day, lol). I literally do not see myself coming out of this before the 7year SOL would be up. We live paycheck to paycheck (she will most likely never make more than she does now, which is barely enough to pay for her car and gas). We barely go out, and I try to be as frugal as I can in grocery stores and telling her that I have no money, so we can't go out. Sometimes I just have no choice, but even then it's minimal amounts of money compared to the grand scheme of things. I have read that since we are in North Carolina, that my wages can't be garnished at all. I'm thinking that if I let this stuff sit unpaid for a while, I could at least come up with some money to settle in a year when they finally come after me, if they even do. Even if they could garnish me, I am basically paying the 25% max income that they could garnish anyway. My creditors are BofA, Citi, and mainly HSBC store cards. Any thoughts on this? I am starting to fall behind and have zero money in the bank to make payments, so I am starting to juggle the whole "bounced check" thing. I have a new job (I am not making any more money than I was before, however, just more stable and a happier place) that I don't plan on leaving anytime soon, and I really could care less about my credit score. I'm not in a huge rush to buy another house, which means, I can wait 7 years if need be. I guess my main question is, can they really come after me for so little money? The SOL in this state is supposedly 3 years. Would they even get to me that soon with all the other people in this similar situation? Thanks in advance... emrys
$45K in credit card debt and you want to know whether they will come after you or not? Do wild bears raid honey trees? Yep! Sure do and you can count on the fact that they will come after you. Sounds to me like you think you got it all figured out and that you are basically bullet proof. Do you really believe that since they can't garnish wages in your state they are powerless to collect? If you believe that then think again. They can garnish money out of your bank account if you have any. They can go after personal property and other things. Don't think you are safe because you are not. They will take you to court and if you don't know how to fight back they will get judgments and garnishments and show up at your doorstep one fine day with a court order to snatch just about everything you own. Best you stop thinking about how bullet proof you might be and start thinking about how vulnerable you are. Study your state laws and see what they can or cannot do. Lawdog.com is an excellent place to start learning about that.
If you're thinking about stopping payments, you should probably also be thinking about filing bankruptcy. The sooner you do that, the sooner you can start getting back on your feet.
Missing a few car payments is also a great way to get back on your feet, now isn't it? The results in either case are about equally desireable.
billbauer, thanks for putting words into my mouth. I never said I would stop paying my car payment. I'd appreciate it if you just left this thread alone if you are gonna be hostile. ccbob, yeah, I've been thinking about bankruptcy as well. I'm gonna start looking into that today after work.
You simply don't understand. Here is the analogy. There is an old saying seen on signs at many car lots that says that missing car payments is a great way to get back on your feet. That is obviously true because if you miss making your car payments you will soon be back on your feet walking instead of having a car to drive. Of course, that is not a good thing. Filing bankrkuptcy is about as bad or worse than missing your car payments. After all, if you file bankruptcy your credit will be shot for at least the next couple of years and maybe longer. The fact of your having filed bankruptcy can remain on your credit reports for the next 7 to 10 years and it will remain on your public record forever. Far from being hostile, I'm just telling you that filing bankruptcy can be one of the worst decisions anybody could ever make.
To each their own. With BK, you go to court once and deal with everything all at the same time. Sure you'll have a BK on your credit report for 10 years, but after a couple of years, you'll have a better credit score than someone with a handful of collection accounts and a slew of R9 overdue accounts. Sure those will fall off after 7 years and the BK will linger around for 3 more years. But by putting all that behind you you'll have something you haven't seen for a long time: cash! Now if you stop payments and do the unofficial bankruptcy, you'll be looking over your shoulder and going to court every once in a while for the next seven years. You won't have a BK on your record, that's true, and in 7 years but those 7 years will be a lot longer. It all depends on what you're comfortable with.
Exactly! If you are lucky, that is. If not you just might end up reporting to the referee or the judge every month for the next 5 years while you pay off all your debts or at least a hefty portion thereof. You make it sound like a sweet process with no downside. You also make it sound like it isn't going to cost you anything. Not so. It is extremely expensive. That's true. But that assumes that persons who have a handful of collection accounts and a slew of R9 overdue accounts all do nothing at all about them. Another false assumption in many cases. And where is that supposed to come from? The tooth fairy? A job? Not likely with a BK on your record. Not likely in today's economy either. Now then, by using other methods ccbob and others obviously disapprove of you can get rid of all those debts, make a nice bundle of cash and get rid of all your problems in a couple of years or so and leave absolutely no adverse record whatever and do it without paying any bankruptcy lawyers to wreck your credit and your future for you. These days some employers check the credit of their employees and if they get into financial trouble its curtains for them. Then just try to find a new job with or without a BK on your record. Lots of luck. Employers now have the idea that employees with credit or bankruptcy problems are more prone to missing work days and more prone to steal from the company one way or another. They don't want to take chances so they just pass them by in favor of employees who don't have such problems. Both military and government at all levels are that way any more. Get yourself in debt and you better get out in a hurry or you will lose your position and don't file BK in the process of getting yourself out of trouble. Smooth it over, sugar coat it any way you like, BK is nasty and bad for you. Most people who file BK soon wish they never heard of it. [/quote]Now if you stop payments and do the unofficial bankruptcy, you'll be looking over your shoulder and going to court every once in a while for the next seven years. You won't have a BK on your record, that's true, and in 7 years but those 7 years will be a lot longer.[/quote]Seven years has nothing to do with it one way or another. Looking over your shoulder? For what? Who is going to come and get you? The illuminati? The thought police? The FBI? Maybe the Council of State Governments? (LOL) Yep. Personally at a bare minimum of $1,000 a pop for each violation of my rights they can commit I'm very comfortable with it. In the case I'm working with right now, I have about 60 or 70 violations times 5 lawyers and their lawfirm having committed them I should come out pretty well. I'll make that come out to at least $10K or more with no problem. That would make me pretty comfortable for a little while. Everything has it's ups and downs. There are drawbacks to everything even having lots and lots of money. We can easily find good or evil in just about everything.
Emrys - I side with ccbob on this one. $45K is a lot of credit card debt, and your creditors can certainly come after you if you choose to stop making payments. Remember, the effects of a BK are not forever. Long before a BK even falls off your credit reports, you could be qualifying for loans with good rates and terms again.
I have a new job that I don't plan on leaving ever (it's one of the best employers in the country and the area), so I'm not going to be looking for a job anytime soon, of my own accord anyway. I have never had a credit check done in my field. They do background checks, but not credit checks. I'm not dismissing the possibility, it's just that I've had a bunch of contract jobs in the past couple of years, and in my field, that's what I'm observing. I'm gonna start looking at bankruptcy, right now actually, and see what that is all about. I'd love to pay off all this debt, believe me I would, and I have been. I haven't been using cards at all really in the past year, and I'm still nowhere with the debt. I'm not making excuses either; I screwed up for various reasons, and I need to deal with it. I'm just weighing my options. I'm not delinquent on anything (except for the house we had to get rid of during the divorce, which is finally gone), so I'll probably just keep it going for a bit longer until I weigh the options more. Like I said, as well, my car payment will be going away next June, so, by that time I'll have a couple of the smaller cards gone (one is like $200 and the other is like $100), and will be able to put more down into other cards. I have zero assets other than this car. I own nothing but debt at this point I just don't like living without a safety net, and I've been doing that for far too long. No medical insurance, no savings account, no retirement, nothing. My ex-wife and I really made a mess of our lives financially, and I've learned my lesson, believe me. Thanks for the advice... I'll probably be hitting this thread up some more soon with more questions, lol
$45K is peanuts but they will come after you for mere crumbs so don't think they won't be likely to come after you. I've had students who had only a few hundred and they sued them for even a small amount. One lady in Washington state go sued for 18 cents. (LOL) The judge wasn't too happy about that and hit the debt collector with an $1800 sanction. An article circulated about that case for a while a couple of years ago. Of course that's pretty unusual that a debt collector would stoop that low. (LOL) but it does show what they are capable of. Beating debt collectors on cases of as much as $1,000,000 or more is not all that rare. I know of a doctor who owes millions and has property worth millions as well. He has been successfully keeping ahead of his creditors for years now. There is no such thing as an amount that is either too large or too small for debt collectors to come after. Best advice is pay those cards off if you possibly can and save yourself a lot of problems and bad credit later.
I contacted a bankruptcy lawyer, and they tell me I will only qualify for a Chapter 13 bankruptcy. I just did the Nolo means test, and they seem to confirm that. How does one determine how much "disposable" cash you have that the payment plan would require to be paid. I mean, I guess if the debt goes away in 5 years and I keep making the same payments, essentially, that is a good thing. Ultimately I was looking to be able to start saving money though. I'm thinking I should just keep paying on the CC's for a while longer, and see what I can do when my car payment goes away. What a crappy thing to have to deal with, lol...
The good news is that failing the "means" test suggests you have a high enough income to cover all your major expenses and still have some disposable cash in your pockets to start paying down unsecured debts. I always like to suggest that if you can actually stay current on all your payments while keeping a roof over your head and food on the table, then do so. Pay off that car as fast as possible and begin looking for every way possible to reduce your monthly expenses and/or make a little extra money on the side too. Look for a second part-time job, things of value around the house you don't really need that you can sell on e-bay, etc. You know, look for anything that will help you generate some extra disposable cash and then put it all towards paying down your debts. It will take time and persistence, but I've known people that have dug themselves out of even worse holes without filing BK.
True--one of them is me. I did work several jobs for a while, but it can be done. I now have a fairly good sum of money in the bank for emergencies as well. If you have cable, cancel it. You'll be surprised at how much more time you'll have (maybe for a part-time job, even). Take lunch. Don't buy newspapers or magazines--read them online or at the library. Just put every penny you can toward your debts. I'll differ with Joshua on one point. Don't pay the car off early. It's probably some of the lowest-interest debt you have. Pay minimums on everything except the account with the highest interest rate. Put EVERY PENNY you can scrounge on that highest interest rate account. When it's paid off, take what you were paying on that and add it to the amount you're paying on the next highest interest rate. Keep a spreadsheet. Every month put in the interest rate and balance on each account. Sort by interest rate, pay minimums on everything but the highest rate. It gets all the extra money. The reason you do this and sort every month is that interest rates can change, and you always want to pay off the highest rate first. Make sure you have a total of the balances at the bottom. You'll see that total number go down every month as you make progress. At first it will be slow, but soon you will start to see progress.
