Unpaid bills

I am not, repeat not, looking for legal advice. It would be nice to hear from anyone who is going through this or has gone through it.

Let’s say credit card 1 is due on the 5th, credit card 2 is due on the 10th and condo homeowner’s association dues is due on the 25th. If someone has no income and cannot pay any bills, what will happen if the bills are not paid? I can’t wrap my mind around a scenario of bill collectors and phone calls, too easy to avoid. Do the police come to your house and drag you away? Obviously, credit scores are affected (who cares). Can you literally walk away from your home with the few belongings that mean anything to you? I already hear people saying “talk to a lawyer”. What happens when you can’t afford even 1/2 hour of a lawyer’s time?

I’m quite serious here. I’ve been mocked on SDMB before, I hope it doesn’t happen this time. I am an intelligent person in a very unfortunate situation, looking for facts. Thank you.

Some bankruptcy attorneys may give a free consult. Bankruptcy can wipe out some debts or make them more affordable. Check it out.

Otherwise, generally speaking, credit scores get hit, utilities get shut off, credit lines get reduced and/or closed, and some creditors (or debt buyers) will file collection law suits in an effort to get a judgment for the unpaid balance.

Secured creditors go after the security and take whatever money they can get out of it. Maybe they try to get a deficiency judgment for the amount left over after the collateral is auctioned off.

Homes get foreclosed upon and the laws are complicated and vary from state to state as to what actions a creditor can take with respect to real property.

People don’t go to prison in the US for unpaid debts. However, some people go to prison for failing to follow court orders regarding collection law suits.

Judgments are enforced by real property liens, wage garnishments, bank levies, property seizures, etc. etc.

It all varies based upon what kind of debts are involved so it’s hard to give a generalized answer. That’s the gist of it, though.

Anecdotal, but I’ve heard that it’s much worse to just walk away from a home than to work with the bank.

My own home in Atlanta I sold via a short sale. While I was up to date on my payments they refused to work with me, so I had to stop payments. 3 months behind was their threshhold… after that they worked with me and I got the house sold. It didn’t even hit my credit that hard.

Since the OP is obviously a real life situation, let’s move from General Questions to IMHO.

In IMHO, you can receive not only opinions but facts, real life advice, and legal opinions.

samclem, Moderator

No. You cannot be jailed for failure to pay most civil debts. There are exceptions for things like court ordered support payments, but otherwise the creditor is limited to civil remedies.

The burden of enforcing a judgment against a debtor is generally placed on the creditor. The creditor tries to locate the debtor’s income and assets. Then the creditor tries to use legal mechanisms to get the local law enforcement to take the debtor’s income and assets and hand them over to the creditor.

A debtor with no income or assets available to satisfy a judgment is generally considered “judgment proof.” In this situation, a judgment issued in favor of a creditor is pretty much worthless and the creditor is just out of luck when it comes to actually trying to collect.

Unsecured debts are often sold to debt collection agencies.

Let’s say your credit card balance is $1000. The card company “sells” the debt to a collector. The collector pays the card company $500. The collector will then come after you for the full $1000. If he gets the $1000, he gets to keep $500 profit.

If the collector is unsuccessful, he can sell the debt to ANOTHER collector.

All collectors typically employ a “boiler room” of phone people. These guys are simply given your name, your phone number, and the amount of money you owe. They legally can only call you between the hours of 8 AM and 9 PM, I believe. If you tell them not to call you at work, they must abide by your request.

There are unscrupulous phone collectors who don’t follow the rules. They call any hour of the day or night, call you at work, call your employer, they’d probably call your mother if they could get that information. They threaten all kinds of mayhem, to bully you into paying. I’ve heard of them telling the debtor that the cops have been dispatched, they are enroute to come bust your ass and throw you in jail.

While that is complete bullshit, there are people who believe it, and leave their homes in the middle of the night to escape this supposed incarceration.

(quite frankly, if someone threatened ME with that scenario, I’d laugh in their face, because in SCal, you can’t even get the police to respond to a ROBBERY IN PROGRESS)

If you have ANY income, you might be interested in debt consolidation. There are a lot of scammers trying to get people to sign up with their service, so check out the business thoroughly before you go with this choice. A legitimate debt consolidation service is nonprofit, and your customized plan with them will pay off the debts in full. The service negotiates with the credit card companies to get a lower (MUCH!) interest rate, and gets an agreement with the company to accept the negotiated payment. The service takes all your expenses and income into consideration, and while austere, the budget is livable. Your credit score will ultimately benefit. A scammer consolidation company does NOT work with the credit cards. Instead, your payments go into a savings account the company manages, and after accumulating a percentage of what you owe, will negotiate with the credit cards into accepting a reduced amount to cancel the debt. This hits your credit score HARD.

I used a debt consolidation service, and I cannot recommend them highly enough. With the legitimate service, all calls STOP. The accounts CANNOT be turned over to collection. And in the end, your butt is safe.
~VOW

If you have any income at all, take VOW’s advice about consulting with a nonprofit consumer counseling agency. Many credit unions have them. Like he said, they’re free. If you have no income and don’t anticipate any, look for a bankruptcy lawyer. Many offer free initial consultations.

Do you have a mortgage that can be refinanced or are you renting? Second vehicle to sell?

If you haven’t already called the credit card companies, have a couple beers and call them. I’ve heard they’re willing to work with their customers these days, even offering lower interest rates.

On the news the other night, I heard an economics guy say it takes an average of 27 months to finalize a foreclosure. So don’t walk away from your home.

First you need to get drunk. Go to the liquor store and pay for the booze with the credit card before it gets canceled.

Second, you need to make a long term plan. Do you anticipate income any time soon? You need to budget with what little you have and then prioritize. First you need food, shelter, utilities, etc.

Credit cards? Fuck 'em. There is no reason for you to pay a 30% penalty interest rate for basically nothing when you can’t afford the basics.

Without knowing the overall details of your situation, these are only the basics, but it is a general rule to be followed. Bankruptcy definitely sounds like an option for you if you have ZERO income.

Keep in mind that you should wait 90 days before filing for bankruptcy if you take cash advances on your credit card or make a greater than $600 purchase. Not that you would go to an ATM tonight and make a large cash withdrawal, but if you did and waited 90 days before filing bankruptcy, you could still discharge it.

Do you own any nice things like a boat, expensive jewelry, a lot of equity in the house, or a second car? You might want to sell those or look into options for protecting them. The state that you live in is important for determining these questions.

As others have said, Dickens era debtors prisons are a thing of the past. The worst thing you can do is nothing, though, because your stress level will continue to build. Calling the credit card companies may or may not be part of this plan. Develop a plan to come out on the other side and do what it takes to protect you in this situation. Good luck.

Sorry to hear about your home, but you have highlighted a major problem and the reason I feel no pity for the banks. You have to fall behind 3 months before they will even talk to you. Instead of trying to work something out with people to avoid a forclosure or short sale, they prefer to play it by the book. That may have been well and good when the economic situation of the country as a whole was better, but doesn’t it make sense that the banks work with people prior to them getting to a point of no return?

I’ve heard stories about things like unpaid homeowner’s association dues turning into a lien on the property in an attempt to collect - is that something the OP needs to worry about? Are those rumors full of crap?

This is precisely how someone close to me lost their house.

Read the fine print in the credit conditions for your credit cards and homeowner’s association dues. It’s possible that if you fail to pay just one of them on time, that could trigger universal default, meaning the interest rates on all accounts jump immediately. However, the 2009 CARD Act supposedly stopped this practice, but credit card companies have their own ways of gouging you.

Homeowner’s association dues can get real scary if you default.

While you may not care about your credit scores, potential employers may use your credit worthiness to judge you if you are worthy enough to be hired, even though the nexus appears not to exist.

Yes, you can walk away from your mortgage obligations, aka, a strategic default. However, depending upon your specific financial circumstances, your lender’s (ruthless) desires, and your state’s anti-deficiency laws, your lender may sue you for the difference between what you owe and what your short sale or foreclosure proceeds were.

Yes the one percenters will take their pound of flesh, and more, from the 99 percenters, even if you are down in the gutter, just because they can.