Credit Card Payment-Legal Question

Factual Questions
1

About two years ago I lost my job and had to stop making payments on my credit cards.
I received a few letters and phone calls, but not much happened until a year ago I started receiving letters from attorneys soliciting business due to a lawsuit filed in a local court.
One attorney I talked to advised me to just wait until I received a summons, and then go from there.
I never have received a summons.
I now have a new job, but my salary is about half what it used to be. I can afford my mortgage, but not much else.
I never did file for bankruptcy, what should I expect to happen?
Should I go ahead and file for bankruptcy? I have basically done nothing, and am not sure as to what to do.

Thanks

2

Expect for your creditors to eventually catch up with you.

It’s possible the lawsuit could catch up with you, too. If they are hard-nose about it (meaning you owe that creditor a substantial amount), the possiblities range from having your wages garnished, a lien placed on your property, to a bench warrant being issued for your arrest to who knows what else.

If you lose your job because you are in jail or some other factor, failing to pay the mortagage may mean you lose your home as well.

I am deliberately painting a worst case set of scenarios. Just because you haven’t heard from your creditors does not mean they have given up on you. Any one of your creditors may very well have filed a bad credit report against your name - when you want to trade in your current vehicle, for example, you may be denied credit. You could also find yourself in a personal crisis and need a load - oops, sorry, bad credit rating.

Worse yet, you could suffer identity theft. Then you could really be up that creek without a paddle. :slight_smile:

Your most important assets are your name and your reputation. Ingnoring your financial responsibilities now may mean you could tarnish one or both. And in this day and age, even the best intentions and tarnish cleaners do no good after the fact when it was in your power to face your responsibilities, contact your creditors and set up some sort of repayment schedule.

3

While I can’t advise you legally, I can give you a bit of ethical advice.

You spent the money, pay your bills. Even if you have to take another part time job to begin making payments again. It probably isn’t going to anything to improve your credit rating any time soon, but it’ll do a world of good for your soul.

4

Sheesh…what is this?..the Straight Dope Morals Board?

The man said that he has no ability to pay. I take him on his word.

Now…for some usable advice:

You’ve been sued. You don’t have to even appear. The court will find that you do in fact owe the debt and issue what is known as a “judgement”. What this does is clears the way for the creditor to garnish your wages or go after your property.

They may or may not take that next step. It costs them money. If they do proceed…file bankruptcy and stop them in their tracks.

Chances are that they’ll use the judgement to harass you into paying them so that they don’t have to spend more money on garnishments and such.

If you want…toss the ball into their court…when they make their next post-judgement move, be prepared to beat tracks to an attorney and file bankruptcy…It’ll cost about $800.

IANAL…but have had the experience of being totally financially destroyed.

Oh…and the morals thing? Heck…I believe that you would have paid had you had the ability. You don’t. So don’t beat yourself up. Bankruptcy laws exist to give people like yourself a fresh start.

5

Oh…and BTW:

Cite?
Nothin’ like good ole scare tactics. AFAIK, debtors prison does not exist in the USA. I suppose that if you failed to pay the “government” you could be jailed (eg. IRS)…but we are talking specifically about credit card debt in the OP. And unless the credit was obtained fraudulently, then I can’t believe that poor Homer would stand any chance of arrest by law enforcement agents.

6

IAAL - This OPINION is not legal advice. DO NOT RELY ON ANYTHING SAID HERE AS A STATEMENT OF YOUR RELEVANT LAW. This OPINION is in no way an offer or acceptance of legal representation. Consult a specialist attorney as soon as possible.

No, I don’t believe you can be arrested for not showing up to court, at least as a defendant in a civil court. The worst that will happen is a default judgment, which you will probably have to pay one way or another, unless you have a GOOD reason why you didn’t answer the summons.

But I’m getting ahead of myself.

Obviously, rules in different jurisdictions vary, but generally, if a complaint has not been filed, and it’s somewhere between 3 and 5 years, it’s too late to sue you (SEE AN ATTORNEY IN YOUR JURISDICTION!). Also, the plaintiff (the credit agency here) has a finite amount of time to serve you, or forfeit their case. Bets are, they have done what it takes, and there is a judgment against you, waiting to be exercised, thus garnishing your wages, attaching your bank account, etc. In any case, none of the above means a credit agency cannot Royally mess you up for this as far as your credit rating is concerned.

As far as filing for bankruptcy is concerned, I wouldn’t recommend thinking it’s a magical cure-all to make your debts go away. Placing yourself in bankruptcy (there are many kinds, etc. Once again, CONSULT A SPECIALIST ATTORNEY BEFORE TAKING ANY ACTION) is in many respects placing every financial decision you want to make in the hands of a court-appointed parent for the next several years. You think you got nothing now? Try living off half of nothing. Your creditors may have to accept a fraction of your debt to them, but every spare dime you have can be used to pay that fraction.

Your best bet? Contact an attorney. Often times, for a small fee they can negotiate a settlement between you and your creditors that you can live with with some financial counselling. And take it from me, ignoring a problem with the court (civil or criminal) rarely makes things better.

To Krispy Original -

When did this become the Striaght Dope Morals Board? When someone came to it asking to be advised how to avoid the consequences of his actions, consequences that I and others on this board will probably wind up paying in the end. I mean no undeserved disrespect to you, simple homer, but you had the choice to spend what you did, for what you did. I applaud your OP, in which you genuinely seem interested in doing the right thing. My response is in that spirit only.

But Krispy Original, your response is, well, not merely bad advice, it is counselling another to shirk a legally and properly incurred debt. That advice is irresponsible, and whether you find it moral or not, it could land homer in more trouble than he bargained for. The reason credit card interest rates are in the neighborhood of 20% is that that is the only way they can remain in business, given the high rate of credit card default. Every person who holds a credit card pays for your advice.

I note in this thread, you suggest that morals do not belong in General Questions. I disagree, to a very real extent. This question asked for the board’s advice. Our advice seems pretty collectively to be, “own up to your debt.” homer is free to accept this advice, ignore it, or choose which parts of it he will heed. But to merely lay out all the ways that a person can avoid debt, effectively passing said onto his fellow man without consequence is irresponsible. Were we as a group to treat such questions as if they existed without any moral context, we would be complicit in any of the consequences which would result from a person using that advice to the harm of another. I do not subscribe to your “give what they ask for or butt out” philosophy toward this board. I am certain that those who read these posts will judge for themselves how they feel on the issue.

That said, I know you are not an attorney (because if you were, you would have just opened yourself up to one whopper of a malpractice suit, and possible disbarment). I would hope that you have more consideration for your fellow man than to recommend that homer try to hand the bag to the next guy, but were just caught up in the moment, figuring it’s just the big, bad credit company that gets screwed. I can assure you that the credit company has absolutely every responsibility to its customers to pass that cost on to those same customers.

-Redhawke

7

Red

  1. Homer asked a legal question…not a moral one. Moral questions do not always have black and white answers and hence, are more suited to forums like GD, and IMHO. There is a factual answer to Homer’s questions…and I supplied it.

  1. What? First of all…with a Chapter 7, no “Court appointed parent” will be making ANY future decisions for you. Secondly, Homer says (effectively) that he has no spare dimes.

  2. My advice was not “irresponsible”. My advice was but another alternative to the morality sermons. My advice was not in any way unlawful, nor factually incorrect.

  3. Bankruptcy is not (necessarily) a measure of moral character or irresponsibility. Many good individuals and corporations have endured bankruptcy and gained a “fresh start” and have gone on to avoid future debt problems.

8

From personal experience, ignoring a problem doesn’t make it go away especially when it comes to your credit. With the massive numbers of bankruptcy in the USA, creditors have learned that being reasonable will net them better than being stalwart jerks. Chances are your local United Way chapter may be able to suggest services to help you negotiate with your creditors.

However in your OP, you state that when it comes to available income there is nothing left. If you aren’t able to pay your creditors anything (even $15-$25 a month), then you are definitely in a bankrupt situation.

10 years ago I was faced with huge medical bills and no health insurance. My part time job was enough to keep me off poverty levels, so I wasn’t even able to get help from the US government. Each doctor and hospital was demanding minimum payments of $50 and wouldn’t accept anything less. They were all jerks and sent back my payments of $25 (which I could afford) because it didn’t meet their minimum requirements. They filed lawsuits, and basically I was forced into declaring bankruptcy.

I believe that it was the best decision because even at $50 a month, I would still be paying on that medical debt into 2020! Now, after time has passed, creditors are now in a position to begin trusting me again, and now I am flooded with credit card and loan offers (with acceptable interest rates).

Personally I don’t understand why a person (except those that believe in a moral obligation) would declare anything other than “straight bankruptcy”. Both forms equally stain you credit report. The only disadvantage is that you can only declare “straight bankruptcy” once every seven years. Chances are with you credit rating being stained, you shouldn’t have to worry about going into bankruptcy again too soon.

9

Well, yeah, actually, whatever chapter gets filed there will be a trustee appointed by the bankruptcy court who will have enormous discretion in deciding how the debtor’s assets are distributed. When one files for bankruptcy, what pretty much happens is that everything you own except exempted property is taken away from you and is transferred to a bankruptcy estate, which the aforementioned trustee is charged with administering.

IANAL but FWIW I didn’t find Krispy’s advice to be either legally or morally reprehensible given the content of the OP. If the debtor has incurred debt, the debtor should pay it. If the debtor can’t pay it, the debtor is free to file bankruptcy if the debtor is eligible to do so. It hardly acquits members of the bar to be making moral calls; I certainly hope your practice doesn’t involve a lot of bankruptcy work…for the sake of your clients, who would undoubtledly suffer as much from being bankrupt as they would from having to endure your lectures.