I just got a notice of civil action regarding some $2800 in unsecured credit card debt. I think it dates back to '99-'00 or maybe '01.

There has never been money to pay this debt or about 4 others totaling >$10k because of illness, unemployment, and student status. I thought about filing bankruptcy, but never did because of lack of funds, changes in the law, and poor records.

Anyway, I just got a job that, in time, will let me get rid of my 13 year old car and maybe even get out of my small apartment. The re are sizeable student loan repayments and ongoing medical costs, so it will take a while.

Today, I got this notice. How likely is it that a judgement would be entered a against me? What happens if I can pay the judgement (at least not right away)? Can they attach my paycheck? I need to pay rent and pay for prescriptions. And pay the student loans.

Is bankruptcy still an option? I mean, I am getting a paycheck now and hope to clear essentials by at least a few hundred. But I sure could use that money to get re-established. I'm almost 50 and spent all my retirement accounts to go back to school.

Do I need to speak to a lawyer?

Thanks

This sounds like a collection agency scam. The first thing I would do is go to WWW.FTC.GOV and read the debt collection laws. Next there is a free cease communication letter at WWW.budhibbs.com this stops debt collectors in their tracks. Finally 10k in debt doesn't make you bankrupt, and you can't default on a student loan. The best thing to do is pay the debts off as soon as possible.
Thanks

Hi Zeke -

I did wonder about the "collection scam" aspect, because there were letters included from the collection agency with instructions on how to contact them. But it was registered mail from the judges office.

As for the 10k and bankruptcy, well it would be 13k if this one was included - and that is just the closed accounts form 6-9 years ago when I first got sick, changed jobs, and moved. While getting a new educational credential and getting my present job I did incur about $5k in more recent credit card debt. In fact, the bulk of it was just in April and May when I knew I was starting work in June. Things were getting pretty desperate and I charged food, medicine, and some vet care for my cats.

At any rate, I see no problem paying off the current credit accounts, servicing my student loans, and slowly getting a savings account again. Like I said, there will be a few hundred a month beyond essentials.

However, if this matter resulted in some sort of wage garnishment, and the other 4 defaulted accounts followed suit, there is absolutely no question that I would need to file bankruptcy. The only way I can pay my rent, service my student loans, and make my prescription co-pays is if my paycheck is intact. If 25% or upwards were garnished, I would have to choose between eviction or missing the student loan payments - and some of the current credit accounts might go into trouble. There are no assets. Period. A high-mileage 13yr old car, no savings, no retirement, no home ownership, no nice furniture, no late-model electronics - nothing.

If it meant keeping this collector at bay, I could manage some sort of payment (maybe $50 or $75) a month. But I have read here about a woman who was making some monthly payments and got a civil-action for the full amount anyway. It is hard to know what is best to do.

I disagree that this is a collection scam. Especially now that you mention this came from a judges office. It sounds like the collection agency picked up that you now have a job and is going after you.

Since the debt is valid, they almost certainly will obtain a judgement against you that could result in garnishment of wages. Your best bet is to contact the agency, explain your circumstance and offer to start paying a monthly amount that you can afford.

I am going to talk with a lawyer the day after next, and I will ask about this strategy.

Ideally, I would like to get some sort of consolidated monthly payment for all of the closed accounts, and not just this one.

I will follow-up as things develop.

Not a bad idea. Typically a consolidation loan requires you to put up property to obtain the loan. Then you use the loan amount to pay off your creditors. If you have enough equity to obtain a consolidation loan then you may be able to pull yourself out of your situation without having to consider bankruptcy. Best of luck. Let us know how it goes.

Well the only thing I have worth more than a few hundred would be my kidney.

I was hoping to get some non-profit agency that would negotiate for a reduction and payment structure on all the closed accounts and then I could somehow make one payment that got dispursed. At one time or another each of these accounts or their assignees have offered a 50% settelment.

If this does not exist, then dealing with all the creditors will not be a possibility. Just plain ain't got any property.

I generally intended to pay these debts once I got on my feet again. It is just coming at me a little fast. Things are still fragile and I am really afraid that the loss of 20% or more to one creditor would mess up my current obligations cause enough additional troubles that I can't get on my feet.

You may want to look up the statute of limitation in your state. Generally a creditor only has a specific time for default to collect. If that time has elapsed you may be able to have the judgement vacated.

Great point. It looks like the other closed accounts are beyone the limitation. In fact it looks like it is the impending limitation on this account that is prompting this action rather than that they've noticed Im on my 3rd paycheck.

Still, like I said, I generally figured I would pay all of the acounts at some point, limitation or not.

OK, I spoke with the lawyer. He may be a little quick to recommend Chapter 13, so I am still thinking about that option, BUT

* in this state (PA) my paycheck cannot be garnished even if they get a judgement. It will simply stop the limitation clock.

* as long as I continue to have no property and little savings, the judgement will not have a lot of practical consequences.

* the lawyer recommends I tell the court I intend to defend the suite, so that a future hearing date will be set, and I get the extra time to talk to the creditor or decide to file Ch13 or whatever.

* I have been asked to visit a credit counselor (because it is good in general) but because it would be prerequsite for Ch13

* I am going to get a credit report and nail down the exact amounts in the closed accounts, and document the current expenses, including the medications and student loan payments.

One thing that kind of bothers me about the Ch13 is that some current debt that I planned to pay off over the next year will now be pretty much given to the lawyer. For example, I can discharge (or do whatever ch13 does) $3k to $5k of current curedit card obligations, but will now give the lawyer $3500 to do the ch13. I know paying both these accounts and the lawyer is an option, but if I really had the money to do both, I would not be in this mess.

He said I could pay off a curent account I want to keep, but that any large balance paid off right before I file might get taken back by the court on the grounds that it preferences one creditor over annother. I am not sure this would happen for just a few thousand.

You State laws do provide you with a degree of protection. That said, bankruptcy even a chpt. 13 doesn't sit right with me. I would recommend looking into a settlement program. Be sure to do your research though so as not to be taken advantage of. Remember, even attornies are at heart salesman selling a product. The product in this case is a chpt. 13 when one may not be needed.

A settlement company may be able to help, but you would have to take care of that in a timely manner to avoid the lawsuit which could lead to a judgement which could lead to wage garnishment.

www.superiordebtrelief.com

Superior is correct for most States. PA. law does not permit wage garnishment for unsecured debt. They can still pursue a judgment to protect their right to collect but they can not garnish.