BK is in my future.....

[TupeloHoney]

What is the name of your state? FL
I'm overwhelmed with guilt right now, and I'm confused as to how to handle this mess I find myself in.
I won't dawdle with the details. I am a 48 year old male who, three years ago, had perfect credit and a FICO near 800.
Today, through a series of bad decisions on my part, I am in credit card debt that I can not hope to get out from under. Probably in the amount of around $60,000.
I can't blame the credit card companies. They have been extradorinarily patient even though I haven't made a payment of any kind or amount in about six months. I haven't heard from a one of them except for the occasional phone call.
Then, last week, I was served with papers. I am being sued for past due amounts of approximately $12,000.
Where do I start to dig out from this mess, and how do I protect my family from being affected by my financial ruin?
I see I have twenty days to respond to the summons, but have not done so yet. If I don't, in addition to a judgement being automatically awarded the plaintiff, what other consequences do I possibly face?
Thank you for all assistance.

 

[Ladynred]

Since you're in FL you have a great homestead exemption from judgments and bankruptcy.

If they get the default judgment, the *might* be able to garnish your wages, however, if you file that you are head of household ( takes a letter to the court) that pretty much stops the garnishment.

They can go after any non-exempt assets and levy bank accounts, so a lot depends on how your bank accounts are set up. If they're joint with you as the primary, then there's a risk there.

Judgments hang around for a long time - 7 years and they are renewable, so they can haunt you for a long time.

Filing for BK will most definitely stop the whole thing in its tracks, and it sounds as if it may be something you should seriously consider if you don't have a lot of non-exempt assets to protect.

Here's the FL exemptions:

http://www.thebankruptcysite.com/exemptions/florida.htm

BTW, if you don't mind.. which creditor sued you ?? Was it Discover ?

You do have to answer the summons. If you need info on how, let me know and I'll post a link to a good resource.

 

[TupeloHoney]

Thank you, dear. Some additional info might help.......
I am told, although I have not confirmed, that FL is a non garnishment State. Also, I am self employed and have no steady income.
I have a small checking account in my name only.
My wife and I have a small joint checking account, also. She is the primary on that one.
The only real estate we own is our primary residence. Approximately $70K in equity.
Two vehicles owned F&C: one worth about $3K, the other about $10K.
Info on answering the summons would be very helpful, (Chase Bank, by the way).
Can I ignore the summons now, and after the judgement is issued against me, file bankruptcy at a later date, and thus wiping it out? The only reason I am considering this is financial. I realize BK would get me back on track, but I don't know that I can swing the necessary court and attorney fees presently.
Thank you again!

 

[Ladynred]

FL does allow garnishment, but it can be severely limited or even prevented if you are head-of-household.

Being self-employed can really hurt. We recently had a discussion here on independent contractors - ALL their income can be taken as it is considered as 'receivables' so that can be a real problem for self-employed folks.

Bank account info sounds safe enough

Real estate would be exempt.

Vehicles might be a problem free and clear. Are they joint or separate ?

You really shouldn't ignore the summons. You need to file your Answer to it. If you don't want to go to court and let them have the judgment, then you don't show in court. However, going to court will probably get you an opportunity to settle or avoid garnishment from the get-go.

You can find info on who to answer a lawsuit here:

http://www.nwjustice.org/docs/205.html

Its not for FL, but the general format will help you do yours.

If you let them get the default judgment, bankruptcy later will wipe out the underlying debt. However, it will NOT automatically make the judgment go away. That will take some extra legal and filing fees to file a motion to have the judgment vacated because of your discharge.

 

[TupeloHoney]

The vehicles are both jointly owned. Does that make a difference?
Thanks again for the information.

 

[Ladynred]

Yes, it makes a difference. If jointly owned, then your interest in them is only half and you may be able to get them exempted. The 10k vehicle is the most vulnerable. You need to look up the Kelly Blue Book value and get a really good handle on their value.

 

[TupeloHoney]

Kelley Blue Book values are $2,500 and $8,000 respectively.
So, the Trustee makes a ruling on whether of not I should be required to sell off my vehicles to make restitution?
The same thing with personal assets, such as household furniture and goods?

 

[Ladynred]

If the Trustee feels that there's enough value in property that selling it would yield some money to pay creditors, then the Trustee will take it. Once you get to the point of filing, it would be best to get a free consultation or 2 with bankruptcy atty's to really know what your exposure is.

As for personal property, like home furnishings, YOU value those at GARAGE SALE prices, not replacement value or original cost. Most people can exempt all their household goods that way.

If you have anything with equity beyond the exemptions or other assets NOT on that exemption list, you're likely to lose it. If you've nothing that's not on the list, then you're safe.