A brief introduction and some questions

Hello, everyone. I chanced upon this forum while searching Google for information on dealing with creditors once your unsecured debts have lapsed into collection status. I'm one of "those people" who lost a very well paying job and got behind as a result of greatly diminished income. I did eventually become re-employed, but I'm not making nearly as much as I used to.

Was I irresponsible with my credit? Perhaps. Was I a victim of a failing economy? Absolutely. As it stands, I've certainly learned my lesson and am paying the price for my lack of foresight by being unable to finance a home or a vehicle under even remotely favorable terms, and would probably be laughed out of any bank I ever applied for credit at. A far cry from a previous 750-ish Fair Issac score, no? Who is ultimately to blame? I've already found the answer and come to terms with it rather than be bitter and blame it on everyone and everything else.

I was forced to make a difficult decision. Support my family or suffer along with them for the sake of my creditors. I decided that my obligations to those I love and care about come first.

I've gotten the phone calls and the dunning letters. I've mailed the terse yet professional responses requesting validation. For the most part, my creditors and the CA's they're dealing with have been playing fair. All except for one... Capital One is pursuing things a bit more tenaciously than the other creditors.

Capital One sends me not one but two "pre-legal" dunning letters threatening to sue. I request validation from their CA, and Capital One sends me "validation" in the form of three recent account statements and a copy of the customer service agreement. So far, I'm on the second CA and as of this writing have yet to receive a response to my validation request, but I have a feeling this game of "hot potato" is going to continue a bit into the forseeable future.

So... My question is: What is the likelihood that Capital One is going to pursue this to the bitter end? I'm not naive enough to think that validation letters are going to be an aegis against an inevitable judgment suit, but I am curious if they are the stereotypical "bully" who eventually backs down when you show them you're not an easy target. The alleged debt being alluded to is under $3,000 at present but I'm no dummy. I know it will continue to accrue interest and penalties in the interim. Saying "prove it" only goes so far until the risk/reward ratio starts to skew in favor of filing Chapter 7. And yes, I know some of you will say: "Don't do that! That's a permanent solution to a temporary problem!" I've weighed all my options, done my homework, and I know what Chapter 7 is and isn't, so if I do decide to file I would be doing it without any illusions about what the long term reprocussions would be. I've learned my lesson, and if moving on means I need to take a wrecking ball to my credit so be it. I'm prepared to pay that price and do what is necessary to pick up the pieces afterward and try to rebuild my life and my credit.

I suppose another question would be that since I am, after all, inexperienced with sparring with creditors, just how much of a fight am I in for in the long run? Am I eventually going to be spending a major point of my income on sending things by certified mail with return receipt requested? The total amount of all the debts combined is less than $20,000 but to me that's a not-so insignifigant amount. It can't be ignored. Of the many things I pondered, I'm wondering if spending the $350 for Chapter 7 and the mandatory counseling, despite the aftermath, has a better cost/benefit ratio than fending off CA's with letter after letter requesting proof of the alleged debts and therefore keeping them honest.

Even if I fight the good fight, I'd be a fool to think that I'm judgment proof. I'm worried about having my bank accounts frozen and MAYBE an additional encumberance being placed on an already encumbered vehicle. Is it worth fighting this out to the very end if I decide I can't deal with the inconvenience of cashing my checks at the grocery store (and hoping to God they have the cash on hand when I do) and paying in money orders? What about the vehicle? How does that work exactly? Does the vehicle get seized by the CA the day I satisfy the existing loan taken out on it with my bank? Thankfully, at least in the state of Pennsylvania, wages CANNOT be garnished for consumer debts, so I s'pose those are at least safe.

Anyhow, I think I've said enough. I do welcome anyone who would like to talk to me about my situation and give me advice, and I would like to thank everyone who has taken the time to read my long winded post.

I look forward to your replies. Best, ST.

Edited to add: In hindsight, I've realized that calling the introduction "brief" was a little tongue-in-cheek.

 

Hello, Hedwig. I want to thank you for your reply, but I unfortunately failed to mention in my original post that repaying all of these debts isn't remotely feasible under my set of circumstances. To keep things short, my expenses (justifiable expenses like a vehicle loan, utilities, groceries, fuel, clothing, etc.) take up enough of my income that I'm left with little float to work with. Not long ago, a credit counselor from a non profit agency went over our family budget with me and told me very frankly that restructuring the debt is not viable with our current income and expenses and that bankruptcy may be the only final option. She also suggested that if I file I should find an attorney who will handle my case pro bono since pulling $1,850 ($1,500 retainer plus the $300 filing fee and $50 for mandatory credit counseling) out of thin air isn't going to happen any time soon. This is pretty sobering considering these agencies have every incentive to keep people out of bankruptcy.

To sum it up, I am not in an admirable financial position and negotiating repayment plans with creditors is off the table.