Just stop paying all unsecured creditors - ramifications?

what is your point?i hope there was one besides DO NOT PAY YOUR BILLS.because i will lock this so fast it's not funny.

I am not making any points. I am trying to understand what would happen if I stopped paying my cc bills. I am certainly not advocating that anyone "NOT PAY THEIR BILLS".

I have found that having all the information available to me, (even the very worst case scenario) is helpful in making logical decisions.

Certainly, if you thought about it carefully, you could come up with some scenario where a man's best and most moral course of action would be to no longer make payments on his credit cards. (At least for a time, isn't that how some debt settlement companies operate?) If I had more time, I would love to discuss just what those situations are. But for now, all I am looking for is information.

well if your looking at options.my man mobile or nascar should be able to point you in the right direction.you do have options.re-reading your post it seemed like you thought you were out of options.your not.if you wish you can still get the consultation this website offers.

For the most part, you are correct in all your assumptions. I'm not familiar with TX laws, but I have heard creditors cannot garnish wages there.

However...
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This portion of Texas law came from a document provided by someone on this site, I think (See below). It sure looks like the lien can be removed from the homestead by a simple declaration of the property owner.

Does anyone know if Texas judges will throw you in jail for contempt of court simply for not being able to pay a judgment? I assume this is not supposed to be able to happen, but I have seen things happen in Illinois courts that made a mockery of our imagined system of justice, so I am curious if disregard of the law is a common practice for Texas judges as well.

PS - Wow, do you know I just googled "Texas Code Section 52.0012" and this thread came up #6 on the list.

Well, I just read section 52.0012, which does create that affidavit. It doesn't quite make sense to me, because section 52.0012 almost contradicts 41.001, which states.



In any case, 52.0012 does have a provision which seemingly invalidates an affidivat "after the judgment creditor files a contradicting affidavit in the real property records of the county in which the real property is located asserting that ... another reason exists as to why the judgment lien attaches to the judgment debtor's property."

So then my question becomes, what constitutes "another reason" ?


If this is true, that it is that easy, all you have to do is type up an affidavit and your lien is erased... why do lenders do business in Texas, if there is essentially no way to enforce a judgment?

that is weird,but nascar and goldenbast have said being from TX .that they are the most debtor friendly state.i guess this proves it.

Have you considered bankruptcy?

I mean $85,000 in CC just seems like an incredibly large amount to me, and if you just stop paying them they they will go to the defaulted interest rate (I'm not sure what it is now, but when I worked in banking it was like 32%) making these cards nearly impossible to pay down if you are able to start making payments on them again.

I have no ideas about bankruptcy laws in TX; however, it might be worth it to consult a BK attorney and discuss what your options are. I believe most BK attorney's give a free inital consultation?

Once you do, sleep on it before you make any decision as it will be with you for a long time.

Everything you generally said is correct. I understand your wanting to know exactly what your options are, so keeping any moral arguments out of it:

Texas has a huge, long list of things that can't be touched, I am not certain, but your home (the one you live in) is one of them, so is your car and just about everything else under the sun including your tractor (not joking).

Texas also have a 4 year SOL, so they only have 4 years to take you to court.

Once they got the judgments the only thing they could really do is clean out your bank accounts.

The judge will not throw you in jail for not paying, even if you ignored it completely and let it go to a default judgment. They would just do an asset search and try to find any bank accounts you have.

Your credit report would be a ruinous mess for seven years and a bum on the street would have a better shot at getting credit then you would.

Whatever your situation is that you find yourself where you can no longer pay those cards (and there are very legitimate ones) with that kind of debt you should try bankruptcy and perhaps credit counseling so you never get in this type of situation again.

It would also likely mean some drastic lifestyle changes as well.

You shouldn't worry about your fico score anyway as it's obvious you don't need to be extended credit. Dave Ramsey says the fico score is the "i love debt" score & he's absolutely right. You should buy his book " The Total Money Makeover" & learn why debt is a four letter word. Now that you've had your debt lecture this is what I think.

The debt never goes away, though the power to do anything about the debt is limited in Texas. The cc company has 4 years to sue you in Texas and get a judgment. If they try to sue you after the 4 year limit, you can file a letter of denial with the court stating statute of limitations for time & ask the court to throw out the suit. For the amount of money you owe they may sue you. I defaulted on a cc card with $14000 in debt. I consulted several attorneys, all who refused to take my case. They said I wasn't in serious enough financial trouble to bother with bankruptcy! It felt pretty damn serious to me, especially with my phone ringing off the hook. I learned several things.

1. Get a tracfone & use this number on your bank accounts. This is how debt collectors get your home phone number & drive you crazy.
2. If you've already defaulted on the debt, start saving as much as you can in a cash stash.
3. Most cc companies don't sue before the 4 year statute. Keep your savings safe.
4. After the 4 year limit, I went for 7 years, when you get some 10th level debt collector sending you letters to settle the debt, call them & offer them 25% of the original balance minus fees.Most will take it. Tell them you will only pay them with a cashiers check. DO NOT GIVE THEM YOUR BANK ACCOUNT NUMBER or let them auto debit it. Tell them you want the agreement in writing that they are settling for the 25% as complete payment of the debt (before you send the cashiers check get it in writing!). Get the cashiers check from a bank with the account number on your letter typed by the bank on the check. Pay the debt & send a copy of the cashiers check & the letter you got from them to all three credit bureaus & keep these documents forever. You have proof you have settled with them for example $23,000 instead of $85,000.
5. Learn from your mistakes. Learn to avoid debt & pay cash for everything. This is what I learned from my credit card experience. It's got a different feel to it & takes discipline to get a handle on it, but once you learn to save & pay cash, you'll never want to borrow a penny again. Since learning this, my home & car are paid for. We'll be paying off my husbands truck in June & will be totally debt free. We save & designate all money now & live on a budget. It's getting nice to see thousands of dollars piling up to be put to proper use later. It's the only way to go. Take a deep breath, face your fears & your problems, and avoid debt. You can do this. Be sure to buy the book.

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Pay nothing...bankrupcy is just a scam by the bankrupcy industry parasites...your loan is un-secured...and that means they can do NOTHING aside from threatening you over the phone...tell them to fu*k off dont pay a dime....

I'm no expert by any means, but I work for a title company and I has seen many times, if a seller had a judgement on them and the property they are selling is homestead, then the judgement creditor will partial release that property without payment. Now, if the property is not homestead then the judgement has to be paid, which usually is done with proceeds from sale.

So, I have a similar issue. I took my EX wife back to court for custody of my kids. I lost the court case and the jury awarded my EX Attorney fees. So, her attorney decided to place an abstract judgment on my house. I did find the section 52.0012 on how to release it with the affidavit. So, my question is after I notify her, what can she do to counter me?

What you state is correct, Mikeincog. You are safe. But, it might be better to file for bankrruptcy.

Her lawyer can take out the money owed from any bank account you have.

Send them a certified letter stating;
If you wish the debt collector to stop contacting you, you must send the collection agency a written notice instructing them to stop. Once the collection agency receives that letter, they may contact you only one additional time to notify you that the collection agency or creditor intends to take a specific action in relation to the debt.

Sending this type of notice does not resove the debt. For example, the creditor may file a lawsuit against you in order to collect the debt, even if you prohibit further contact by the collection agency.

Sample Letter
Your Name
Your Address

Date

Collection Agency's Name
Collection Agency's Address

Subject: Debt Collection Against [Your Name]
Creditor Name: [Creditor]
Account No. [Number]


Dear Account Representative,

I am writing pursuant to the Fair Debt Collection Practices Act, 15 USC 1692c(c), to request to request that you cease all communication to me about my account [number ________] with [creditor].

[If you wish, explain your circumstances. For example, "I was recently laid off from my job, and I do not presently have any resources with which to pay off this debt. Once I have again secured employment, I intend to resume payment on the debt."]

[If there have been any violations of the FDCPA, you may wish to describe them. For example, "Please note that in violation of the Fair Debt Collection Practices Act, one of your agents contacted me last night at 9:30 PM. Should your agency contact me at any time in the future, please be sure that your contact is made in full compliance with the FDCPA."]

Sincerely,

[Your Name]

For the first three months after non-payment, your creditors will call you. As another poster said, keep track of dates and times of calls. Some creditors will call so many times it's abuse, and you may be able to counterclaim if that creditor sues you. I have had some success for my clients that way. After three months the debt collectors will start to call. Keep track of dates and times of calls, name of company, name of card they are collecting for and balance, and take notes of any comments they make about your debt. Don't spend any time telling them your hardship, just get this info and politely end the call. If you are considering bankruptcy, the National Association of Consumer Bankruptcy Attorneys (NACBA, a non-profit) has a website where you can find an attorney in your area. And if you are harassed by a debt collector, go to the website for the National Association of Consumer Advocates (NACA.net), also a non-profit, and look for an attorney in your area. Good luck.

I also am iin a similar situation and am currently being sued. My ex-husband was to split his stock account with me 50% upon our divorce. He allegedly spent it all and told me too bad. I sued him and was awarded a judgment. I filed it with the county and then went back and filed it again on his property. Now his new wife is sueing me for emtional anguish. From what I understand there was already a cloud created from the judgment? Anyone have any advice? This was all done in Texas, by the way.

to the origional post, do you have intentions of settling or just not ever paying again?

link deleted. see if this helps.

mod note it won't.soliciting business forother sites is not allowed.

I opened my own business two years ago, and like a dream, it was well on its way to getting in the black well before our expected day. Then a series of unfortunate events, and my business dropped 75%.

I find myself in so much debt and the business was not holding its own. I have finally had a target month. The first in over 12 months, which gives me hope. What I am finding is that now, the debt load is so large... even hitting the original numbers isn't enough. I work two additional jobs and simply pay against the debt. I am blessed that my family has given me a place to live and my car is paid off.

I want to approach the banks with some sort of debt resolution, but every thing I have read and seen says to stop paying before they will reduce anything. Is there another way? It seems they don't have an incentive to renegotiate with me while I am making the payments, but I am robbing Peter to pay Paul. And not paying doesn't sit well with me morally.

I am not wanting to default, but it seems ridiculous that banks can change the rules but I can't request any mercy when my circumstance has changed. They raised interest rates based on the debt to income ratio, yet extended the credit in the first place under very low rates. And I want to be honest, I want to cry out. "Cut me some slack and maybe the business survives, I survive and I can pay!" But it seems like I am going to have to destroy my credit for this to happen.

Viable suggestions?

Okay I live in Texas and have been there. Was a time in 04/05 that ex stopped paying child support and 16 year old daughter had major accident with fatalities and needed attorney. I had debts that ex was supposed to be paying me so I could pay them well he didn't and couldn't pay target credit card. Tried for a year with minimum and balance was the same when I started. They filed a judgement. Never heard from them again after that. Other credit card companies called, collection agencies called but now it's been 8 to 9 years and every now and then someone will call about an old debt. I only have cell phone and if they call at work I tell them very politely they can't call me there and give them cell phone but i don't answer. I need to take care of the judgement now that I can but credit score is going back up I have a new house. I even had to let house go back but I had equity so i think they made out. I am not proud of any of this but I did what I did to keep 16 year old safe. After 25 thousand in attorney fees charges were dismissed because she overcorrected and lost control. Not complaining she lived and her friend did not. You are pretty much protected in a community property state. One that still irks me is T Mobile when 13 year old ran up bill to over 700 and I called them and asked to backdate a plan change to cover it said they would if I signed 2 year contract then a week later said we can't do that. Now 9 years later they will settle for 100 but no way am I paying that.

Stop paying them all for 6-9 months, let them go to collections, save up what you would pay on your minimum payments to settle, then offer all of them 25-50% of the balance to settle once they are with 3rd party collection agencies. Fax that offer in once a month for as long as it takes. Prepare for any possible suit, though it usually goes through at least one if not more collection agencies before being forwarded to a same state collection atty. And they will be open to negotiating usually as well, often down to 50%. Other option, take the judgment, make small payments or do whatever necessary to avoid execution (my director always said Texas was the best state as far as consumer laws to settle in), and then settle it 6 months down the road for 30-50%. What I would do if it was me.

Just re-read your post and after you do all that, research and sign up with a reputable credit repair program. They will send sets of letters to experian, transunion, and equifax and dispute over several months with several sets of letters, all the negative inquiries on your report. This will substantially help your credit score. But since one of the biggest factors of credit is your ability to absorb more debt, you can often re-esablish credit lines (maybe with a different bank or lender who specializes in credit repair lines of credit).

There is a way out, it involves recognizing the bank for what it has become. Your adversary. And you must take appropriate measures. If what I advocated is too aggressive for you, you can always try the hardship departments at the credit card companies to lower your payments and interest, while staying with the creditor.

The KEY to that is not speaking with someone in collections who just wants your money and next pay date, The automated systems, and people, on the companies phone lines make it difficult to reach the hardship department, because that department helps customers pay LESS money. It's not as aggressive or money saving as settlement, but granted there is less risk. I have phone numbers for several major credit card hardship departments I got for a neighbor, let me know if you need them.

....please PM me for more details. Here in a nutshell is the situation as Ive found it....

You are correct that for this kind of debt you cannot be garnished in S.C with a few VERY specific exceptions. Unless you got sued while living in a state that allows garnishment, lawsuit was completed and garnishment was in place and THEN you moved then S.C will allow that garnishment to continue. Thats the only exception Ive found besides the usual ones (child support, taxes, alimony) that exist everywhere.

There are some fairly decent exemptions to seizure in bankruptcy and levy/attachment situations (they are the same set of exemptions).

I'm not sure where the above poster got the info that they cant put a lien on real property as my research indicates they can. You have a 50K homestead equity exemption here so most of the time they just sit back and wait and watch from what I can see and hope your situation improves so they can swoop in.

But watch your bank account. Prime target. There is 'supposed" to be a 5k cash or liquid assetts exemption for those not claiming a homestead exemption here (like me) so in that case "supposedly" you could have up to 5k in the bank and it couldnt be touched. Dont count on that though as ive found very few people who even know about that and your bank would be tickled pink to clean you out if they receive an order to levy and charge you a fee for doing so.

No one, repeat NO one is going to look out for you in this situation. Period. Do your own research (Id be glad to share mine as well) and treat it like an absolute war. Which it is once you default, strategically or otherwise.

It is definitely an absolute war, I love that analogy.

Great advice... You will have a chance to settle with collections agency's most likely, before any type of legal action comes down. Although Citi, HSBC, Discover, and Chase are being very combative towards debt settlement and clients defaulting now. But most of the time it will go to collections where get a 25-50% lump sum settlement is possible. Your accounts will go to collections approximately 180 days after your last payment, unless they put them through faster to try and speed up the process of eventually getting to a same state attorney. Not paying them is okay, if you have a strategy like rown said. A strategy to settle for each account, and backup for dealing with the legal process is what I would be ready with.

Rules of business can be applied to a degree if you view yourself as a business. Do you still have revenue coming to you (like a job?). How many credit cards do you have? What is the balance on each? Are you able to save money and not spend it? 85000 unless you win the lottery you will never be able to pay off, ever. it is not financially viable. being in texas you have great protections. you are correct in what the potential problems could be be but If you are able to save. then you can solve this problem over time.
Steps
1) first recommendation is go online an get a free voice mail phone number (j2.com is free)
2) change your account information with the new phone number
3) if any of your cards are with the bank you bank with, move all accounts (checking, savings, money market etc) out of that bank into a bank that you have no credit cards with. if you leave the money in the account the bank will take it
4) list up the cards with the balances on each (low to high)
5) calculate 30% of each balance owed as a target number for savings
6) stop paying all of the cards
7) start saving $x/month towards your balance, should be less than your minimums
8) monitor online what settlement rates are, companies like BoA may settle for 15% of what is owed while others like Discover may only accept 60%
9) key points figure out what balances you could pay off at the reduced amount within 120 days
10) if you talk to collections "sorry don't have the money now when i do i will contact you, goodbye" hang up nothing to talk about with them.
11) 120 days is when the bank will have to get money from you or they have to sell the debt to another collections company. the bank will sell it at 5 or 10% of what is owed so if you offer 15% everyone is happy. banks have played games where they sell it to another division or another bank and rotate back and forth to bypass the 120 rule.
12) when you save enough money, contact them and ask for the settlement department to settle the debt.
13) have your hardship story prepared (written) and that you have $x to pay off the debt.
14) ask for a settlement letter stating that they will accept the reduced amount as paid in full, send by fax (they can send it to the j2.com number you have now)
15) don't talk to them prior and only contact them when you have money in hand
16) you have to pay something to pay the debt off. don't think you can walk a way from it.
17) some of your cards will have been sold 3 or 4 times before you ever pay it off, each time for less and less money, you don't owe the full balance anymore.
18) you may end up in court, GO TO COURT. tell the court your hardships and that you are working to save enough to settle. you live in texas there is not much that can be done to you, but go to court.
This is no different that what a business does. when you use the cards, did you know things were going to get difficult at the time? things happen. people that don't understand money have been brainwashed into thinking they have to pay off all of their debt. people with money understand they do not (look at the texas rangers). it happens, at least you can clear yourself, you will take a short term hit, but it will go away and you have paid your debt.
we advise our business clients who are in over their heads now to negotiate. its unsecure debt. they can't take things from you. it is either adapt or perish for many businesses. it is the same for people too.
request a settlement in full letter from them before you make payment.

You are right, any lien against your homestead may be valid but unenforcable. They can cloud the title however UNLESS you simply ask them to remove it. If they do not, or don't respond they are guilty of "Slander of Title" and that would be the basis of a lawsuit. Otherwise, you can file an affidavit in the real property records in the county where the homestead is located and have the judment lien released as to the homestead. (See Tex. Prop. Code Sec. 52.0012) It won't even show up in the Title Company's report.

As an alternative, you can go to Consumer Credit Counseling, threaten bankruptcy, and lower your payments substantially. I believe an evaluation costs $35 and they are a good outfit.

Beyond that, you can just talk to a bankruptcy attorney to review alternatives. (i.e. Chapter 13, Chapter 7) The idea is to get the facts, then make a decision.

Good luck.


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I live in Pa and have about 6 payday loans which I can't pay. the interest rate is so high and it actually ended with my bank closing my account and now I owe about 650 dollars in overdrawn fees, which I don't know where I gonna get the money from. just receive my final notice from the bank. they won't take partial payments. I have half now and willing to pay half in two weeks. what can I do...

Please do not post duplicate information in threads. Your question was answered in your original post.

The next time a creditor asks me when I am going to pay and how much I feel like asking them:

1. When will the value of the equity in my house come back?
2. When will my 401k return to previous levels?
3. When will business pick up so that I can make the same amount I did three years ago!

I feel as if Creditors were the root of the entire economic collapse because they made and immediately sold high risk products and got into a never ending game of hot potato. When the entire thing came crashing down they got a bailout, the people who were high risk immediately went back to where they started from, the rich didn???t need them in the first place, but it was people like us, responsible middle class people who pay on time and who make too much for bankruptcy or even a genuine hardship program that paid for the bailout! In order for them recoup their losses, the credit card companies have created a system that penalizes us for everything, calls us irresponsible, and forces us to do things that aren???t correct.

Where is my bailout? How about, Where is a fair and just hardship program that would suspend interest and penalties for let???s say 18 months until we become liquid again? It is clear to me now that the credit card companies are true criminal mafias, and in fact I think that they are purposely creating this situation to keep people in the position of paying minimums and not helping at all so that they can recover as quickly as they can. They want to maintain the status quo.

Also, somehow, somebody alerted our creditors about something about to be negative on our credit report or possibly directly to our creditors. We have been good clients with most for over ten years and have very seldom been late and we never missed any payment. NOW, as soon as we are a few days overdue (again, just recently ??? and entirely by accident) and our creditors are calling us insisting that we pay, they want specific dates and the amount we will pay and they want us to pay it immediately.

One company reduced my limit to $100 more than my balance. (I could care less, but it seems like a blatant attempt to get me to exceed the balance and then they can ???legally ???apply the minimum default interest rates of 32% and tack on exorbitant late fees.

Well, I am going to give them what they asked for:

1. We truly don???t believe that we can afford a debt management plan, and even the thought of it makes me resent them even more.
2. Why in the world should they dictate to us how much of our disposable income we need to give to them?
3. Why should we suffer extreme hardship so that they can get what they want?
4. Is our motive to maintain Good Credit? Really? Credit is already shot! (before we even defaulted or were late paying)
5. Is our motive no lawsuits or judgments? I don???t care anymore, let them WORK for their money.

I will keep any money that I could have paid them, that they desperately want me to pay through a Debt Management Plan or even Chapter 13 Bankruptcy, and when they inform me that lawsuit is imminent I will offer them the same percentage that I am able to offer any of the other creditors who remain. Best case scenario: they take 60 cents on the dollar because it would cost them 65 cents on the dollar to sue. Worst case scenario: they sue and we have to pay them so we send them the 65 cents on the dollar and pay off the rest in short order.

They want to create the impression that if you can???t or don???t pay them then you are a deadbeat irresponsible member of society. They want to distract you from the reality that:

1. THEY STOLE OUR MONEY when THEY were irresponsibly making high risk loans and selling them over and over again.
2. THEY stole our money when the economy crashed because of their irresponsibility and the value of my home decreased by $50,000 and my 401k lost $30,000.
3. THEY stole our money when they didn???t have any money left to lend to legitimate business people causing the economy to crash and forcing millions out of work eliminating all of my overtime and reducing my salary $25,000 over the last three years.

How about everyone in debt gets together and calculates these things and DEDUCTS these amounts from what we owe THEM. In this scenario THEY would owe US far more than we owe them!

Then, just for fun and sense of satisfaction we get their phone numbers and call them three times a day asking when we could expect the next payment and how much they would be sending!!!!

I work with a lot if real estate investors and I can tell you personally that I have threaten unsecured lien creditors who have abstracted their liens with Texas Property Code 52.0012 to "partially remove" a lien with great success. Yes, the lien can be removed against the property but it will follow the debtor for at least 10 years unless the creditor renews it every 10 years.

With regards to the non-paying debtor, if you already own your home and will pay cash for the forseeable future, it seems the only hope creditors have in Texas is for creditor reform. That is why few folks lose their homesteads in Texas.:p