Expert: Regan Shinski - 12/16/2009

Question
I have around 15,000 in unsecured credit card debt, i have been sommoned to file an awancer to one of the collectors lawfirms & im pulling my hair out on what to do (because i only have 20 days) i even filed an extension cuz i dont know what i should do cuz i cant afford to pay the 10,680 dollars there asking for, even cut in half i couldent afford it, i work but due to my childsupport & insurance i pay on my son its really hard to come up with extra money, my girlfriend that lives with me helps me pay bills & i know thats gonna affect my chances at bankruptcy because we also share a bank account. All of my debt has made it to collections & alot of the collectors have stoped calling which is really scareing me, i went thew a credit consolidation place & havent been able to pay any amount the collectors are offering. At this point i dont care about my credit & i dont own any big items, even my car is not worth much. So what would you suggest doing? Please help me, my heads about to explode.


Answer
Hi Rick:

I'm sorry you are in this position, you are not alone.  If you can't increase your income or make additional payments to the debt, you really only have two options:  bankruptcy or nothing.

If you do nothing, it is likely some of the creditors will just drop it.  It will still stay on the credit, but they may not pursue it and just write it off as a loss.  However, it is also likely that some creditor(s) will pursue more vigorously.  What you would worry about is if they sue you.  If they sue, you likely will get a judgement.  There are options to aggressively fight and delay but I'm just going to a worst case situation.  If you get a judgement against you, they can garnish wages, attack bank accounts, place liens on property, and even have the sheriff collect personal property to sell at auction.  Now, all these options are not available to them in every state and there are exemptions that can protect some basic items and money, but these are possibilities if you get a judgement against you and your state allows it.  What you do if you are going to ignore the creditors is just deal with each one as they come up.  You can send letters to stop calls from collection agencies.  If they sue, you delay or try and settle.  Basically, you don't do anything until you HAVE to.

The other option is bankruptcy.  It sounds like you have completed some research on this.  It also destroys your credit and stays on for ten years.  You may not be eligible for certain jobs or promotions.  It is public record available to anyone that is looking for it.  You likely have to pay an attorney something up front.  You have to qualify for chapter 7, which discharges the debts.  However, it immediately stops any calls and pretty much wipes out the debt if you qualify.  If you don't qualify for chapter 7, chapter 13 is basically an interest free consolidation payment plan.

I can't make the decision for you.  It really is a personal choice.  However, I hope this helps answer some questions you may have had.

Good luck,
Regan
mbscompany@aim.com