How to avoid Bankruptcy thru Debt Settlement

[Fred_BK]

Student loan and SOL

Hi Ladynred,

What about Federal Student Loans (from the Dept. of Education)? Do you think the SOL also applies to them?

I agree. 6 years is a long time. I am considering paying 2 of my credit cards off while totally ignoring others (including federal student loans) for 6 years. If I pay some and leave others untouched, then will this ruin the SOL?

Thank you again

 

[Who's Liable?]

Federal Student Loans are NOT dischargeable... You cannot let those go into default! If you do, you might as well move to the moon and apply for credit there...

 

[Ladynred]

Yeah.. SOL is NEVER for student loans, they'll basically follow you to your grave.

 

[anabanana]

HA! Student loans are more inescapable than the IRS. You can't escape those even in bankruptcy. THEY NEVER EVER GO AWAY. There is no SOL on that debt.

And without knowing one single thing about your circumstances, let's just say every misleading creepy enticement was offered you to get you in over your head and you're the total credit victim. Let's just set that premise.

But what's the rationale and justification for not paying back your student loans? All debts are not equal. What you got out of school, they can't ever take back, but if you and others like you default on student loans, it makes it harder and harder for my kids to ever get it. You see? Consider where the pain is gonna go. To hell with the CC companies, let them run (not that it's going to be a slam dunk. They can sell the debt and restart that clock in some very sneaky ways).

One more thing -- and this is coming from someone who has been wrangling with this system as a creditor for a good long painful time -- you might want to consider bankruptcy anyway. It makes you bulletproof. BULLETPROOF, pal. Whereas the SOL isn't as iron clad as it seems. Do not assume that ANYTHING "falls off" your credit report. As long as your creditor, or whomever inherits your delinquent accounts, continues to report the accounts, you are going to have a living hell getting the bureaus to clean them off. Be prepared for a fight. Doing nothing isn't the passive solution it sounds like.

But by all means, avoid those credit repair miscreants. Bunch o' miserable cretins.

 

[Fred_BK]

401K penalty

"..but if you and others like you default on student loans, it makes it harder and harder for my kids to ever get it."

I definitely do not want to default on Student Loans. I just do not want to be ignorant. This forum is so free I could say MANY things and feel comfortable!!

I mentioned the Statue of Limitation but deep inside I feel something is wrong if I don't show any attempt to pay.

My concern is only Credit Card companies keep hitting me with high late fees ($30 or $35 each). Together with the interest that is becoming higher and higher, I just DON"T know what to do. The interest in the Student Loan is LOW and I can afford paying minimum on it. So please let me know if a legitimate CCCS is OK rather than having this out of my control!!

I am thinking of taking my 401k money rather than dealing with a non-for-profit CCCS company. I just feel bad that ALL CCCS are bad (they cost me more than I would do myself). Is there a way to avoid the early withdrawal penalty from my 401K plan?

Thank you ALL

 

[olgethorpe]

Back to your question about paying some CC and not others...no, that doesn't reset the SOL on the ones you don't pay. Each debt has its own DOLA and therefore SOL.

And...no...taking 401k money to pay CC debt is NOT a good idea. Think about it...you'll pay income tax on whatever you withdraw PLUS a 10% penalty. Translates to interest as high as 30-30%.

 

[cmorris]

AND the only way a creditor or CA can make the debt stay on your credit reports longer is if they ILLEGALLY reage the debt (selling the debt does not restart the reporting period). As long as you have proof of when you defaulted, you can fix that and maybe even make a few extra of off the scumbag companies that try it.

 

[Fred_BK]

Pay some, default on others. Compare to BK.

“Back to your question about paying some CC and not others...no, that doesn't reset the SOL on the ones you don't pay. Each debt has its own DOLA and therefore SOL”

It’s critical to know that resetting the time counter (for the 6 years SOL for NY) will not take place. Thanks. But lets say I pay some credit cards off and the others I default on. Is this better than Bankruptcy? At least I could pay some completely and close them.

“AND the only way a creditor or CA can make the debt stay on your credit reports longer is if they ILLEGALLY reage the debt (selling the debt does not restart the reporting period)”
Thanks. Since you are saying it’s illegal to re-age the debts, then is this something to worry about. Can they re-age the debt easily while I am away.

 

[olgethorpe]

When you stop paying on a CC, after some period of time that depends on the credit card company, they'll "charge off" your account. That puts a pretty big ding on your credit record, which is accually a little worse than BK. This is particularly true when they check your credit report and see that you obviously have some money because you're paying others. In those circumstances, the CC's you're not paying will continue to try to collect AND retain their records on you. Therefore, the CO will stay on your records for the full 7+ years...assuming they don't take you to court and get a judgement which can stay for 20 years.

On the other hand, if you do a BK, everything stops right then. And, yes, technically, a BK will stay on your credit report for 7+ years, but, it is possible through the "debt validation" process, to get it to fall off sooner.

Also, mortgage lenders will lend you money after a BK...but if you have a CO on your report, they'll ask you to pay it off before they'll give you a loan.

In many ways, the system is set up to force you into BK. You can learn more about this whole subject over at www.creditinfocenter.com.

AND, yes, reaging is something you need to watch for. Some CC companies and many collection agencies use that tactic to keep your credit report screwed up longer than it should be...

 

[Fred_BK]

The ding is more influential in the USA is what u mean I think

That puts a pretty big ding on your credit record, which is actually a little worse than BK.

But this ding on my credit cards is not as visible like BK in foreign countries, right?

BK is very standard and could be shared with Canadian money market easily because it's more standard procedure and a public record. On the other hand, if you pay 5 credit cards off while you have a bad reputation on just 2 credit cards, then I will have less damage, right? This damage must be less based on the pure laws of probability. Look at the events involved:

1) The Canadian credit card company must be willing to check my credit rating in the USA
2) The Canadian company must properly retrieve my credit rating in the USA
3) The Canadian company must be convinced that without BK in the USA I could still have bad credit. But most of them assume if they could not find a BK record on me, then they just approve my credit card application (even for a small amount). This is because it's their policy not to check further or it's too costly to check all my history.

Picking any of the 2 and multiplying them to find the probability of the Canadian Credit Card company finding out that I have bad credit is just too little. Besides, it’s only bad credit to foreign countries and the ding that you are mentioning above has much more influence in the USA than in Canada.

Anyway, this is compared to the standard bankruptcy routine that most counties understand well what it means. So retrieving such standardized thing (BK) and understanding it is so easy because it could be easily shared (i.e., put in a shared database on a computer). Right?

 

[olgethorpe]

Well...this forum is about US law only...so we really can't comment with any certainty on Canadian operations...


But...the border between the two countries is really just a line on the map...many US CC companies have operations / call centers in Canada and vice versa. I don't think I would count on there being much difference, regardless of what the laws say.

 

[Fred_BK]

Thank you

Thank you. I think I might do what you mentioned.

I know that Canada/Mexico is the worst-case scenario. I might choose a non-neighboring country since I am salesperson and travel often and have residence already established far away. But the idea of trying my best to pay some credit card companies and keep them in excellent standing while leaving others in default status is just a better situation than bankruptcy for cases like mine.

I do not recommend people leaving overseas to ignore their obligations to pay the CC companies. I am just evaluating BK versus paying some CC companies while ignoring others (if they are in my situation). For me (and may be others), I think it is good to know the rules or standard procedures rather than stay ignorant about credit ratings. Then after this is done, it boils down to ones honesty and value system to choose the best course of action.

But I have not yet totally rules out bankruptcy and Credit Settlement through a CCCS. I still feel extremely bad that everybody is against CCCS. But I am thankful to all who contributed to show that CCCS are always a BAD CHOICE.