Debt settlement 101 Pl point to some useful info
Date: Mon, 11/16/2009 - 22:37
I am a debt settlement newbie seriously considering an attempt to stop payments and get the banks settle my credit card debt. I am getting ready to start my battle by stopping payment and 6 months or so of negotiations but have questions. Some could be really basic. Pl don't flame me and point to a sticky or any topic that addresses this.
background: Ran into debt due to medical bills for mom. Had to take care of expenses and her insurance refused reimbursement.(long story why it had to be reimbursed so keeping it short)
Debt situation: About 50K each for both me and spouse who is not working now. Just got home loan modification on 1st loan done. Have heloc close to 100k. No equity in home. Value less than what we owe on 1st. Somehow paying cc bills so far. Lot of int rates are going up. No room left in HELOC to borrow anything further. This has been going on for more than a year now. We need a break.
Questions:
1. Is it possible that cc company/CA can get a court order that makes me pay and it is binding(i.e. assuming the worst case if settlement is not done) and can it directly access my paycheck or have some arrangement of that sort to take it from there? If I had to go to court, do I need to open up all my financial info?
2. Do the cc companies have any way of knowing how much each my paycheck is? i.e. can I hide my income from cc companies? Do you have to disclose it? I am afraid of being in a situation and repaying for years and paying interest etc. Do they really have any means to verify if you are about to file BK or it is an empty threat....
3 If I change my account options as far as work and home contact numbers etc. will the cc company still call me using what they had in old records or applicaiton info?
4. Can the cc companies find out if I start sending my paycheck to a different bank where I do not owe anything in cc debt?
5. Lot of threads talk about settlement offers and payments. Where do you keep those funds? Is it possible for the cc/ca to get some info about your account and/or balances where you might keep some funds to settle any offer that you like? Worst case: Can they freeze any of my other accounts?
6. While negotiating and getting an offer in writing, what are the things to verify in terms of debt settlement in full as well as credit card reporting on your report? Is there a standard that the cc companies/CA follow here?
7. Are there any good threads for these basic questions?
8. Is it a bad idea to borrow some money from cc just before you stop making payments? We have ccs from citi, bofa(most balance), wells fargo, cap one, national city, discover, chase and couple more issuers. Is there any guidelines on which ones to choose and not to mess up with? I believe if this needs to be done, it is prehaps best to go all out..
9. Spouse may restart working next year. How bad does it become for job search with a credit in the middle of this crisis? Same for me.. if anything goes wrong with my current job...
Pl point to any useful info.
Thanks for reading! I appreciate your time and any suggestions.
Yes, the creditors can sue you and if they win a judgment agains
Yes, the creditors can sue you and if they win a judgment against you then again 'yes' they can garnish your wage or put levy against an asset to satisfy the judgment. However, it would depend upon your state laws.
I don't think it would be a good idea to change the contact info if you really are interested in negotiating a settlement with the creditors. If the creditor can't reach to you, it may then leave them with no option but to sue you. IMO it's better to stay in contact with the creditors to keep pleading your case. It'd better your chances of getting a settlement offer.
agreed upon the above post mentioned and to add these few things
agreed upon the above post mentioned and to add these few things:
1. usually when going through settlement you will want to have a savings or new checking from a different bank for this. and no they cannot access it unless its court ordered for them to have a levy on it and then they will find it, but if not its safe.
2. your paychecks are safe from them knowing how much you make unless of course they have attached your wages (per court order and judgement) so if you live in a debtor friendly state like i do, they cant do it so check your local laws on this.
3.BAD BAD idea to take out another debt to pay the ones your trying to settle.
5 you can try to negotiate whats on your credit report but its not likely that they will cooperate.
6. and finally six is that you need to keep in constant contact as the above post mentioned or you will end up in court for sure. the way that settlement works the best is to try to avoid court by making the best deal possible in the fastest time possible.
My advice by not paying you should be able to start saving all of that, that you normally pay find new ways for extra income, cleaning babysitting mow grass whatever. sell what you dont need yard sales, and ebay, liquidate everything that is not a necessity. Depending on your state and garnish laws, this will keep you out of court and keep you safe.
good luck!
Thanks for the response, some more questions though!
Thanks for both the responses. I really appreciate it.
Now a couple of clarifications on my questions, I think I didn't convey everything properly earlier.
1. On Changing contact numbers: I am just thinking of taking out home and work phone numbers out of accounts and then leaving only one number my cell phone or the best number to avoid getting disturbed at home and at work. So the question really was, if I take out a number or two from profile, do the cc companies still try to call me everywhere? I do plan to talk to them once a week or so to let them know that I intend to find a solution.
2. On taking additional debt: Some of my cards have a few hundred bucks left in credit lines. Some have a bit more available. Since I am going to stop making payments and it will add up some interest and penalty fees would it make sense to go all out and max credit lines before I stop making payments? The idea being setteling 20% of 8k against say 20% of 9K or 10K balance without counting the fees etc. So that way net savings will be more meaningful. The real question was does it make any difference if you debt was acquired a while ago and you tried to make payments for many months before giving up as against borrowing and stopping payments right after that? Do cc companies decide their strategy based on how the debt was acquired? Do they get pissed if you borrow more just before quitting on payments?
3. Where do I find information about what states laws are and about friendly states etc.?
Thanks for reading!
If I were you I would not touch the line of credit before I stop
If I were you I would not touch the line of credit before I stop making payments. That is considered Fraud and they can most likely sue you.....and you will also have a hard time at a later date while trying to settle....they are smart and will take a note of that. My advice is to stay clear and not use anything. If you try to count the savings down to the penny you will end up either not taking the offer at the right time or not focusing on what you need to do.
Good luck,
Ok, thanks. So where do you draw the line? How many payments bef
Ok, thanks. So where do you draw the line? How many payments before being able to claim hardship? 3 months or 6 months perhaps? Any guidelines here?
the above post is correct, they will not settle or will make it
the above post is correct, they will not settle or will make it so hard to settle scince you charged on it at the last minute knowing that you were in trouble and they do consider it fraud.
Now with that being said usually around 3 months things will start to get rolling. good luck