Token Payment Plans - Are they Good?

[chilibill]

What is the name of your state? Florida

Medical expenses and disability have me considering bankruptcy. I haven’t been able to make any payments on several credit card accounts since December. I have been contacted by two of the companies about making token payments of $10 per month for several months so the accounts will remain open to see if there is any change in my disability. This doesn’t seem to make any sense except to keep the accounts open. Are there any advantages or disadvantages to this sort of arrangement?

Also, most of the credit card companies seem to have been able to verify I have no remaining assets and nothing but some disability income to live on. Are they liable to pursue me to the point of bankruptcy?

[Ladynred]

If you haven't paid on these accounts since last december, they've probably been charged off already. Do you know if that's the case ? The token payment plan you speak of, it that coming from the original creditors or a collection agency ?

Token payments will only do one thing.. keep the account open and delay the charge-off date. Meanwhile, you're probably acruing late fees and certainly interest.

They can continue to pursue you because legally you still owe them money, even if you have nothing they can take. They may not bother to sue, but they could, depends on how much you owe them. If the accounts go to collection agencies, they'll hound you too. All this bad info will stay on your credit report for 7 years, which, btw, is another function of keeping the accounts open and paying, they stay 'active' on your CR.

[chilibill]

The accounts have been charged off. The token payments I mentioned are to be made to collection agencies.

If I understand LADYNRED correctly, making the token payments will accomplish nothing, but will keep the account active and extend the date the statute of limitations take effect. Is there anything else I should anticipate?

[bigun]

When the CA gets ready to crack the whip, you will never be able to deny this is your account.

[chilibill]

Bigun, I never intended to claim these were not my accounts. In fact, I intended to pay them until I became disabled and medical bills wiped out my savings. I am just trying to determine how to best protect myself under the circumstances. Is it best to keep listening to the collection agencies, hoping the statute of limitations runs out? Or are they likely to force me to file for bankruptcy? I think by now they should realize I have no assets remaining, but maybe they need to justify their existence, costly as it may be.

[bigun]

Personally, I think if you need to file bk, you should proceed. One day. you'll get a phone call and $10 won't be nearly enough. They'll want $100's. This is the perfect time to file bk. When you're down and out .

In my experience it doesn't make sense to pay the token amount. I was told by Capital One that if I paid anything at all I would be ok, but after a couple of months of $25 a month payments we received a notice from a lawyers office and they said not to pay any more, they would get a judgement against us! And sure enough a month or so later we received a summons. We were assured that as long as we paid some amount, "even a dollar a month" according to the rep I talked with, they could not sue.

So, they are the ones that finally forced us to declare bankruptcy. I feel a lot of relief now, I still don't think bankruptcy is "right" but I finally feel like I have a chance at a normal life now. Counting pennies to buy toilet paper and wearing shoes with holes in them to work was a miserable way to live. I paid everything I could to the credit card companies and they were never happy. I know I owed the money, but things happen and they were not willing to work with me. Being insulted and told to ask other people if we could borrow money was so humiliating. And the phone not ringing every 15 minutes is such a relief!

I don't know how much debt you have, but I wouldn't rule out bankruptcy.