I have been lurking for a couple of weeks and reading and reading and reading........and reading. There is a lot of great information here and I appreciate all of the people who have shared their collective knowledge. Now to my situation. I am in Texas and recently divorced. The divorce used all of my cash and 401k for legal bills. Fortunately, I prevailed in a very long and costly custody battle. However, I had to agree to $0 child support. We had some debts but the divorce made the problem worse( i also had to keep these debts in the settlement). I am still paying my attorneys every month to pay the remaining $17,000 off (total was over $120,000). I currently have $70,000 in CC debt that I cannot pay for anymore and keep paying my bills and attorneys. I am just now "past due" on CC's. I have gotten some voicemails from the original creditors and I want to plan ahead for what I am in store for. Therefore, I have several questions and would like your thoughts on how I should proceed. 1. Should I let the OC know I will not be able to pay them until some time in the future? 2. One of the CC's is with the bank I have my checking account with. Can they just seize my checking account to help pay them? Stated another way, should I change banks in anticipation of this possibility? 3. Should I wait until this debt is charged-off and deal with the CA's? 4. Should I keep watching my credit report so I know when they are closing in on me? I certainly didn't plan this speed bump in my life but I am responsible for two beautiful kids and want to protect us from real damage at this point. Thank you for reading this and responding as I have never had to deal with anything like this before.
1. You can, not sure what good it would do, they only want the money not a sob story. 2. They have to take you to court and obtain judgment and garnish the account. 3. The interest rate will goto a defualt rate and will continue on the account until you pay it off. 4. Charge-off is generally 180 days after last payment. Are the accounts in your name only, created while you were married? Texas is a community property state, regardless of a divorce decree. If you are both signors on the account both could be held liable for the balance.
Yes, the accounts are in my name only as my spouse kept their accounts in the settlement. I get those calls, too. Spouse hasn't paid the bills in many months even during divorce proceedings which was a violation of the temporary orders. So, I can keep my checking account whre it is with no worries (unless they procure a judgement). I gathered from the info on this site that after 180 days I will be dealing with CA's and not the OC's. This is going to kill my credit report. How should I handle written correspondence from my OC's as they start sending me notices of the past due debt?
If you can't refinance things, then, at least from the cheap seats, it looks like a good time to consider bankruptcy.
I make too much money (over $100,000) and should make more in the future. I just won't be able to keep current on the CC debt while I am getting back on my feet. From what I have read here on creditnet, I should avoid BK by any means necessary. That is a permanent black eye on my credit ( I know it would officially come off my CR after 7 years). My plan at this point would be to let it go to collections and settle for reduced amounts when I have the cash to settle. I just want to keep them honest as I go through the process. Thanks for your responses.
So you have no credit cards that have both of your names on them? Yes you can keep your checking account with no worries. You'll be contacted numerous times from internal collections, then usually it will be assigned to a contingency agency a few times then sold to a collection agency. The late fees, overlimit fees, interest, will continue on the account until charge-off and the interest will remain until satisfied. The impact on your credit score will be significant and last for quiet a long time unless you work something out with the OC's now for a minimal payment or something.
I would not say that your checking account would be in the clear. If you have other obligations at the bank that you are delinquent on, they may be able to deduct that from your checking account....I believe that it's called right of offset. I would consider changing the checking account.
The credit card company would simply just have to pull his credit report sometime in the near future after he closed his account, find an inquiry from a bank attempt to garnish, very easy process, plus there are numerous companies out there that can locate bank accounts on anyone. I've used them and they work everytime.
I will probably change my checking account just to be safe. My question is whether I should send a validation letter to the OC. I am not sure if this process is intended for OC's or not. I will continue to read. Yes, my score will plummet, however, I should not need to use my credit in the next couple of years. Hopefully, I can straighten most of it out and obtain some deletions. From what I have read here, the OC's don't really want to "settle" with me as I have made all of my payments up to now. By the time they are delinquent for 180 days they will just charge-off won't they? I am trying to plan for the other end of this tunnel. How can I maximize my outcome after I settle with the CA's in the end?
RE BK: You might talk to a lawyer (and not your divorce lawyer since they'll be on the short end of the BK) before you rule it out. I didn't think I could qualify because of income, but after running the numbers, it turns out that I could (not that I will, but it was an interesting exercise). Plan "A:" be late: Your credit will be in the dumper for 2-4 years depending on how you handle things and if you can get the "lates" or the entire trade line removed down the road. Either way, you could be "sub-prime" for a couple of years or more. Plan "B:" BK7. Your credit will be in the dumper for a couple of years AND you'll have a BK7 for the next 10 years, but you'll have CASH and in a couple of years, you can have a credit rating that is as good or better than if you were late for 3-6 months and ended up in collections, etc. Bottom line, it may not be as bad as you think. For me, it grates on my nerves when I see people who are 2 years out of Ch7 and have better credit scores than me (who has high balances and some late payments). That sort of thing makes me wonder if I made the right decision a couple of years ago when I skipped a couple of payments.
Also, I have seen ads for debt settlement companies but do not see where they add value to my situation. They seem to want a big fee (15% of total debt) and want me to pay them for three years and then they attempt to settle with the creditors. Any thoughts on these companies?
Thank you ccbob. This is the kind of honest experience that makes this forum so informative. I will probably go through the exercise as you did to look at all the options. Will that cost me a few bucks with a qualified BK attorney or can I get an opinion before paying?
To clarify, I know that not making the payments on time wasn't the right thing to do but I was in a temporary tight spot and didn't have the resources. So rather than writing them all off in bankruptcy, I did the "honorable" thing and got caught back up. For this I was "rewarded" with the "default" interest rate of 30%, a credit score in the near-bankruptcy area, AND the original debt obligation. That was three years ago. I'm working on getting that turned around and I did manage to get the interest rates brought back down to a reasonable level, but thanks to the "default" rate, it cost me a lot of money that would have been in my pocket had I declared bankruptcy.
I think you can find all this out on the web (don't have the URL off the top of my head) but that's where I found the worksheets and reference tables they use to determine the details. I'd do a "back-of-the-envelope" estimate from the web to get an idea and then consult an attorney if it looks like it's worth going that way. Either way, good luck getting things back on track.
True, true. But you would always have to answer yes to that "have you ever filed bankruptcy" question. I do have my divorce as my "excuse" but I want to use all the information available to plan my exit strategy from this mess.
However you proceed, keep good records of everything, including both statements on accounts whether current or late, and statements and checks on paid obligations. Since charge-offs pass your accounts off to CAs instead of only the OC having your account information, paying of obligations thru the CA may stop that CA from harassing you, but the account information might still be sold off to some other CA, either on an alleged remaining balance when you had an agreement to settle, or even when you paid off the full balance. The CA might not pass the payment on to the OC, or the OC might not correctly credit it to your account, or either the OC or CA might pass it on despite payment. If 4 or 5 years hence some new CA starts asking for payment all over again, and you had made a "phone check" to pay it in full, even though you should have no remaining obligation, you may still find yourself wasting time and legal expenses, and possibly even paying it again. The collection industry is error prone, and some of it is corrupt. CYA.
