I used to feel the same way as the OP but then I got to thinking, companies do this ALL the time. I used to work for one hotel that did it regularly, it was part of an overall business plan.
If GM, Tribune, and the airlines as well as a host of other big companies can file, why not the individual?
Fair is fair, and if it’s good enough for GM it’s good enough for the nation 
But going bankrupt is a serious business, is it not? Could you not write to them and offer them a modest sum in lieu of the entire debt saying you are filing for bankruptcy and if that goes ahead they’ll get nothing?
Absolutely. But as I explained in the OP, I have no assets, no valuable possessions, and my credit’s already in the shitter. I have absolutely nothing to lose.
Sure I could. If I had a few thousand dollars I was sitting on, which I don’t, I could offer it to them and hope they settle for it, but there’s no guarantee they would, or they could take it and still not close out my account forcing me to take them to court, or they could reject my offer outright and immediately sue me for it (even though my filing Chapter 7 would prevent them from collecting, it would still be an extra headache to deal with).
The quickest, cheapest, and most efficient way to help myself is to do exactly what I’m doing.
Could you not lose your house? That’s the reason we haven’t tried for a Chapter 7.
No house. No car. No anything, really. I’m a simple man living a simple life. If I ever want to have any of those things, this would be the first step towards it.
If you have no assets, why bother filing bankruptcy? Unsecured debt like credit cards falls off your credit report in seven years, but a bankruptcy stays on for ten years. What do you gain by filing bankruptcy? Just send your creditors a cease and desist letter, and they can no longer call you on the phone. Shitcan any mail they send you. The poor man’s bankruptcy.
Because they can still sic their lawyers on me and garnish my wages. If I had assets to protect I would have different options.
Just because it’s possible that I can make them stop calling me and it may or may not “fall off” my credit report eventually the fact is I’ll still legally owe the money and there are all kinds of dirty lawyer tricks they can pull to keep me in debt to them forever. Fuck that. I’ll spend a modest amount of money once now and just be done with it. After this they have no legal recourse whatsoever and I can move on with my life.
They have to take you to court and win a judgement before they can garnish your wages. In my experience, you are judgement proof if your only asset is a modest income. Most states exempt up to 75% percent of your weekly take home income from garnishment, so they can’t get enough of it to make the court action worthwhile.
There is no “may or may not fall off”; the FCRAmandates that the credit reporting agencies must remove references to uncollected debts after seven years, or be held liable for punitive damages and reasonable attorney’s fees and costs for willful noncompliance.
All states have a statute of limitations on debt collection that ranges from six to ten years, after which the debt is considered out of statute, and there is no legal remedy for collection, though they can continue to send you letters.
I walked away from $16,000 worth of credit card debt in 1994 without declaring bankruptcy, and none of my credit card companies took me to court. YMMV
My credit score is now in the low 800’s.
Look man, I know. I’ve done all the research, I know all the laws, but I don’t have time for that shit. I guarantee you my mileage very much varies.
I’ve already had a collection agency serve me papers and that’s who I’ve been making payments to but it’s not about the laws, it’s about time. I’m happy that waiting it out worked for you but I don’t have time to pretend it’s not there and wait for it to go away on its own. I got a life that I’ve gotta live now. I have to eliminate my debt and make the American Dream happen ASAP for reasons I can’t explain to you and only a handful of people in the world would understand.
Suit yourself. But that bankruptcy will be on your credit report a lot longer than uncollected debt.
I don’t think it works like Fear Itself is saying, either - I think that seven year clock for bad debts resets every time there is an action on any of the accounts. Getting them closed and cleared off is the better route, in my (very unexpert) opinion.
The clock starts when the debt goes deliquent. The only thing that resets the clock is when you make a payment. And bankruptcy does not wipe bad debts off your credit history, it only provides protection from legal action. Bad debts remain on your credit history for seven years, bankruptcy or no.
One thing everyone should research carefully in settling with your creditors vs. bankruptcy. Your first instinct is that settling will be better. BUT be careful. It could be more costly in the long run because of the way it affects your income tax.
If, for example, you have $30,000 in debt and you negotiate down to $10,000. You will be surprised to discover that you will have to claim that $20,000 that you didn’t have to pay as INCOME on your Federal Income Tax Return and you will have to pay tax on it as if it were earned income. Are you ready for that to happened in what is probably already the worst financial year of your life? Bankruptcy could be better than owing the Federal government, in my opinion.
Oh yeah, I’m not a professional tax preparer or attorney, etc. So check it out yourself.
My lawyer gave me bunch of paperwork to fill out a few weeks ago. I filled it out and today I handed it over to her along with my filing fees. The ball is now officially in motion…
Good on you for doing what needs to be done. I filed bankruptcy about a year ago and it was discharged in Jan or Feb of this year. It was a huge weight lifted off my chest and a good lesson learned for the future (although I still have a vast amount of undischargeable student loans–sigh). I am too scared to try to reapply for credit cards yet since it dings credit every time you try. The only thing I own is a car, which I was allowed to exempt since it’s the only property I own and you’re allowed to exempt a certain dollar amount of property–and I believe one home. Losing your home isn’t a worry, at least in my jurisdiction, but you could have additional property taken away if you owned more than one house. I’m still making payments on the car (never stopped), and paying my phone bill every month, so I hope I’m building credit little by little.
When I filed BK, my lawyer told me to stop paying my creditors immediately and save up that money for attorney’s fees instead. I’m not advising you to do this, since IANAL, but ask your lawyer if you should. You said you’ve already been served with lawsuit papers, yes? So be careful about that collections company in particular. I was never served with any. I also stopped answering my phone after my first encounter with a collections agency, so I never had to talk to them again. But my wages were never actually garnished either.