Expert: Regan Shinski - 1/18/2011

Question
Hi,
My husband and I have been having a hard time financially and when it began I tried to keep up with my credit card payments.  My husband took a new job making considerably less money and there just wasn't anything left over for my credit cards so I quit making payments.  One of them is currently with a collection lawyer and they are threatening to use my property to get the money.  I was wondering what they can actually do (I live in Indiana) and also wondering if bankruptcy is something I should consider for 2 credit cards totaling about $5000.
Thank you for your help.

Answer
Hi Chrissie:

I know times are tough and the situation is all relative, but that is not really a lot of money in the scheme of things to file bankruptcy.  When you consider the attorney and court fees needed, that is a decent portion of the actual debt, you know what I mean?

However, I guess it is an option if you qualify for chapter 7.

They can't actually "take" your property.  What happens is that they sue you and get a court-ordered judgement against you.  They credit holder then uses this judgement to collect on it.  One of the collection options is to place a lien on the property.  When you go to sell or refinance the property, that lien has to be paid before clean title is transferred.  This includes probate and estate issues if it goes on for that long.  Other collection techniques can include wage garnishment, attacking bank accounts, and even confiscating personal property for sale at auction.  There are limitations and exemptions in all these cases, but it is possible.

I am assuming you have verified this debt is beyond the statute of limitations (SOL)?  Credit cards in Indiana typically have a SOL of six years.  If it is beyond that, they cannot legally collect the debt if you exercise a SOL defense.

If it is within the SOL, your options are limited.  They include bankruptcy, settling, paying, or entering into a new agreement to pay.  An additional option is more complicated but many people - myself included - have had success with it.  That is using credit repair to offset the debt.  You basically get the collection agency on violations of the Fair Debt Collection Practices Act (FDCPA).  This statute carries significant penalties.  You use these penalties to offset the debt, delete the account, and even collect money yourself in some cases.  Go to www.ficofighter.com and sign up for credit repair if you want to attempt this route.  You would still have the other options described above if it doesn't work or if you run out of time.

Good luck.  I hope this helps.  I wish I had better options for you.

Regan

REMOVE COLLECTION ACCOUNTS FROM YOUR CREDIT -- www.ficofighter.com