I hаνе become disabled аnd owe a lot οf money οn credit cards. I hаνе gone tο consumer counseling аnd thеrе іѕ nο way I сουld pay οff thе debt using thеm ѕіnсе mу creditors аrе demanding $670 per month wіth a reduced interest rate. I spoke tο a bankruptcy paralegal аnd ѕіnсе I hаνе absolutely nο assets such аѕ car οr home аnd nο bank account hе suggested thаt I јυѕt default οn thе Credit Card debt аnd thаt I wаѕ judgement proof bесаυѕе thеу саn’t attach mу Social Security Disability Insurance check аnd thе lіkеlу hood fοr mе tο return tο work іѕ very slim. Dοеѕ anyone hаνе аnу experience wіth thіѕ type οf situation аnd whаt саn I dο? Shουld I јυѕt file bankruptcy chapter 7 tο avoid thе hassle οf court actions bу mу creditors?
I would do what the bankruptcy attorneys suggest and don’t get any more credit card or other debt.
Only the government can take government money away (SSDI)
So. . . that means credtiors cannot touch that income
Just don’t keep too much in the checking. It becomes “free” money after a few days
Surprised credit counseling did NOT tell you this. Dissapointed.
Don’t bother with banrkuptcy – what benefit will it bring?
Again, even if the creditors sue you – they can’t take money out of you
Just take the phone off the hook during the day
Bankruptcy will cost you at least $1,500 upfront – don’t waste your money
You don’t have to go to court – let them get their default judgements
Keep your extra cash in your mattress
The key words are “judgment proof” so why are you trying to do something when you don’t have to since you are judgment proof? Your paralegal told you that, didn’t you understand what he said?
If you owe on taxes then the federal government can put an offset on your SSDI check so be sure to pay those taxes. Anything federal is not dischargeable in a bankruptcy.
If you owe only on credit cards and it’s under $65,000 then forget about filing for bankruptcy. If a collector calls then tell them you are judgmentproof and they will understand. If you’re still able to use your credit cards then don’t use them. In addition, don’t go bankrupt unless you owe more than $65,000 and a huge pile of medical bills. Last I heard you can only go bankrupt every 7 years and you don’t want to do that too many times or it’s considered fraud. So save that “out” until you’re really bad off (as far as money is concerned).
Just get it done and over with and file for chapter 7. This way the debt is gone and they can not come after you. Just because they can’t garnish your SSDI payments does not mean the phone won’t wring 24/7 and they won’t harrass you constantly.
Yes, you are judgement proof. . . but you need to make sure that you do not mingle one single dollar from another form of income other than SSDI in your bank account or else a creditor can sue you, get a judgment and garnish your bank accounts.
What is worse. . . is the fact that banks are just plain “stupid”. You will have to remind them constantly that your checking account is judgment proof because otherwise you will find that they conveniently “forgot” and the money is gone out of your account until you deal with your bank and force them to reverse the charges. Only the account that receives your SSDI payment is safe. . . any savings accounts you have that date from before the disability will not be judgment proof so I suggest you don’t put yourself into this situation and just file bankruptcy so that the debt is written off completely.
Bankruptcy is only for when you have collateralized loans such as auto loan, mortgage. You default by non-payment.
For the first 6 months, the primary lender will call every other day or every few days although legally they can call daily. Give them your name, address, phone # and tell them that you are unable to make a payment right now, then hang up. Don’t elaborate or tell your life story, you are talking to a customer service representative and they don’t get paid enough to care, plus they take notes. You want it to seem like you don’t have any funds (important, so the less said the better). They can call you once a day as long as you answer your phone. This process is boring, name, address, phone number, I’m unable to make a payment right now, then hang up. Be polite, share nothing more.
After 6 months, they will Charge Off your account & sell your information (called Evidence of Debt) to a third party collection agency. This means that the primary lender has settled your account for pennies on the dollar. For example, you owe $80,000, the third party collection agency will pay $800 for your info. So don’t fall for the 40% off what you owe letter that they will send you on the fifth month of default. If you pay it, the amount that the primary lender has to write off is sent to the IRS & you will owe taxes on it.
Collections: The third party collection agency may call you on a Mon or Tues. Give them your name, address, phone # & ask if they have sent you their standard letter (give no other info whatsoever). If they ask for your SSN, don’t give it to them, you don’t know these people. Tell them you can give your address & phone #, you always want them to be able to find you. According to the FDCPA, they have 5 days to mail to you the standard letter from the time they call you. You will get it on Friday. Often times, they don’t call you, they will send the letter first, but they can call you daily until you send them the validation letter in response. Then the calls stop. Unlike the primary lender, most third party collection agencies don’t work Sat & Sun, so your weekends are quiet.
Once you get their standard letter, you will send them a validation letter asking them to validate the debt. See video below, link for sample validation letter included. They must provide a copy of the original credit card form you filled out and signed when opening the account. They won’t be able to, they only bought your info, the primary lender won’t give them this form. Copies of your previous credit card statements & print screens count for nothing. These big bulky envelopes are annoying & meaningless. You will send the validation letter by Signed Return Receipt once they get it, they will almost immediately sell your information to another third party collection agency & the process repeats. I defaulted on four credit cards ($22K) due to unemployment, I sent out 2 to 3 validation letters a month for 7 or 8 months until they ran out of third party collection agencies to sell my info to. It’s been real quiet for the last 6 months, but they have 5 years to try & collect the debt in my state, after that it’s too old. There is a Statute of Limitations which is different for each state. Just google “Statute of Limitations in (your state) for Debt” to find out.
If by some miracle, you get a petition, the laws still favor the debtor, not the lender. The Ebook from Your Legal Leg Up spells out the Whole process, but don’t get too excited. If you show the slightest hint that you intend to fight this in court, they will file a motion to dismiss, long before you ever get close to selecting a jury. They aren’t going to collect enough money from you to cover their legal fees & with so many more easier victims and foreclosures, they aren’t going to waste time on you if you show & look like you know what you are doing. Plus by sending the validation letter every time, you’ll never see a petition.
You can’t afford bankruptcy, your lawyer will need to be paid. Check your state for how long creditors have to sue you then make sure they don’t overstep.
Keep only SSDI deposits in your bank, not another penny. Get a small fireproof safe in your home for other cash.
Change your phone number. Move on.
A debt management plan may help, but do your research and consider all your options first. If your finances take a turn for the worse and you find yourself drowning in debt, a debt management program may help you keep your head above water.
Debt management programs (sometimes called debt management plans) may be able to help you negotiate lower interest rates, get late fees waived, work out a payment schedule that’s acceptable to you and to your creditors, and consolidate your monthly payments into one.
Check with the Department of Justice. Beginning October 17, 2005, all bankruptcy debtors have to go through approved credit counseling. Credit counseling agencies must be approved and are monitored by the Justice Department.
Nearly all consumer bankruptcy attorneys offer free consultations. Take advantage of this to meet with one and get advice based on all of the details of your particular situation. You can find a referral at NACBA. org (National Association of Consumer Bankruptcy Attorneys).