Excessive Credit

What happens to a person whojust does'nt pay unsecured credit bills? Have talked with so called companies who are supposed to help eliminate charges, reduce interests etc and the payments are as high as the ones I have now. Also, I dont know if we qualify to file bankruptcy. Our payments on all our obligtions exceed our income by $700-If we just opt not to pay the credit cards and pay all other secured debt and keep a credit card in good standing, what happens?


[Edited by Linda House on 03-23-2001 at 11:45 AM]

Well, I can tell you what happened to me in the exact same situation. First, the credit card companies will call. Some will be nicer than others. They call at home and work. I sent a letter ordering them to cease and desist from any further telephone calls to stop that and it worked. I didn't hear from anyone for a while.

Then, the debt gets charged off and goes to a collection agency. Some of them tried calling and I sent them the cease and desist letter.

Now I get letters from collections agencies all the time with "settlement offers". I throw most of them away, just keeping one from each agency for my file (I keep the one with the lowest settlement offer).

One company hired a local attorney to sue me. This has been VERY stressful. I have had to learn alot about the law, pay a lawyer a small fee for some advice, and lose alot of sleep over what this could mean. It is extremely embarrassing to have the local sheriff show up at your house with a subpoena. However, the good news is that the collections attorney seems like a reasonable, and even likable person. He is trying to get an out of court settlement. I offered 10% as payment in full or $100 per month with no interest or fees on the principal alone. The creditor rejected the offer. The collections attorney is going to keep trying because he knows that if we go to court, and he gets a judgement against me (which he probably will), I will have to file a financial affidavit with the court. Then the court will probably award the creditor about $10 per month.

So, that is my story. And of course, now my credit is absolutely ruined. Makes life difficult in a number of ways.

If I had it to do over, I think I would make a different decision. I could have borrowed the money to pay off the unsecured debt when my credit was good. Assuming I made all those payments on time, (a good bet), I would still have excellent credit and everyone would have been happy. But I didn't want to exchange unsecured debt for secured debt. I am very glad I didn't go to a debt consolidation company. Those folks rip you off as much as the credit card companies do.

Anyway, thats my story thus far. Bankruptcy is not an option for us because we have some non-liquid assets that we don't want to lose. If you don't have many assets, bankruptcy may be just the thing for you. Pursue it soon though because the law is going to change to make it much more difficult for people like you and me. Good luck to you.

[Edited by solange farewelle on 03-24-2001 at 06:34 AM]

There is one more thing people considering "informal bankruptcy" should know: depending on the laws in your state, a creditor that gets a judgement can garnish your wages, put a lien on your home, sieze your personal property and/or attach your bank accounts. Although all of these things seem extreme, they do happen from time to time. If you are judgement proof (don't own a home or don't have equity above the homestead exemption; don't have regular wages that can be garnished; don't have a large bank account; etc) you probably don't need to file bankruptcy because there is nothing a creditor can get at through court.

Also, from what I understand, having a legal judgement against you can be a black mark in terms of employment, buying insurance, get security clearances, etc. Something to think about. I live in a rural area of a small state and I wrongly assumed that the big credit card companies would not pursue legal action against me. If you are considering the 'stop payment' course, you should be aware that you may face court action.