Expert: Michael Brotherton - 4/14/2009

Question
QUESTION: I had a chapter 7 bankruptcy in 1996. I thought that would include my student loan, but it didn't. It did get me out of debts that I had tried to get myself out of since my divorce in 1992. I have been a single parent supporting 2 children and working in a low wage job. I mistakenly opened a few high interest credit card offers after my bankruptcy, and quickly fell behind. The credit limits were $500 on one and $1000 on the other but with late fees/over the limit charges monthly that total quickly grew. They sued me in the end of 2008 and I now have 2 credit card judgements against me totalling a little less than $7000. Mt student loans, totalling $8000 were in forebearance for years then in a graduated repayment plan but I couldn't even keep up with that and now are in default. I only make 17,800 a year. I live in Florida. I own a home, but it has a mortgage. There is a lien on it from the County -- I borrowed from the County for a home repair. It was a loan program for low income residents to do needed repair. It doesn't have to be repaid until you sell or earn more money. They placed a lien on my property and assume the loan will be repaid if I sell. After the judgement I was sent a Fact Information Sheet by the lawyers office representing the credit card company and the judgement against me. I didn't understand the papers and I didn't answer their phone calls. Two weeks ago I received, through the mail, another Fact Information Sheet to fill out and attached to it are court papers - that say Motion to Compel and Motion for Sanctions. I was scared. I filled the Fact Sheet out and I sent the copy of my tax return and copies of other papers they asked for. I know they got it because I sent it certified and someone signed for it. Yesterday I get another Fact Information Sheet to fill out -- the same thing as before. With another court paper attached about Motion to Compel. I am a wreck here. I can't sleep. I'm so scared. Even though I filed bankruptcy once before, can I file again? The debt isn't huge, but it is beyond my means. I can barely pay the electric bill, homeowners ins., etc. Is bankruptcy better than having the judgements sit on your record for 20 years? I heard that in some instances student loans can be discharged if they would cause the debtor undue financial hardship to repay. Do you know anything about that? What can the judgement do to me? I read that in Florida the judgements stay on your record for 20+ years. I read that they can't garnish my wages but they can take my checking account. Is this true? Not that there's much in there, but how will we live if they do? Any advice you can offer would be appreciated. I have called the Legal Aid office in my county, but a lawyer there can not speak with me for a week. I am sick over this.

ANSWER: First, this is a civil matter. They cannot put you in jail or do anything to you physically so relax. Second, your research is accurate. The only thing they can do at this point is attach a judgment lien on your home and sit  on it until you sell the property.They could attach your checking account but there is no public record for your bank account and unless you disclosed the location of the account they may have a hard time finding it. If you have disclosed this you may want to close the account and open one elsewhere at some obscure bank or credit union.

Even the student loan may have a hard time collecting their money without attaching your tax refunds but they can do that.

Bankruptcy may be an option but nothing is immanent at this time so there would be no rush.

My suggestion is concentrate on improving your financial situation then make an attempt to work out a payment plan. You are safe for now so take a deep breath and go about your business. When you are able to pay it do so. Until then I wish you well.

---------- FOLLOW-UP ----------

QUESTION: Thank you for your first answer. I apologize for asking another, but I am so scared and feel sick over all this. I looked up my civil court record online and it shows that the attorney filed a Motion to Compel and Motion for Sanctions on April 1st but it doesn't say it is being served on there. Do those get served or mailed?

It said defendent (me) had 20 days to fill out the Fact Information Sheet. The last entry says case reclosed April 8th. I did fill out that Fact Information Sheet, mailed it out certifed and they signed for it on April 3rd. They sent a second copy of the Fact Info Sheet and the court copy of Motion to Compel to me a couple of days ago -- after they had received the first one I sent. This made me think I did something wrong with the first one I sent.

One thing I didn't do --I didn't get it notorized -- so today I went and got it notorized and resent all the information certified mail. My question is this: what happens next? I called the attorney representing Capital One and they weren't in. What happens after the Fact Information Sheet is received? I am a single parent making below the federal poverty level. I own one home and it is mortgaged. One 1998 car worth less than $1000. Will I have to go to court again? Should I fax in copies of what I sent in the mail tomorrow -- because they won't get the mailed one for a few days.

I wish I had done this right away because I've only compounded my problems by letting it go.

Thank you.

Answer
Sorry for the delay. The fact information sheet is just to determine your income and assets that may be levied. If you dont have wages they cant get anything. Just as we discussed earlier they can place a lien against your home but they woulnt foreclose. The attorney will have to make a determination what steps to take next. I dont expect anything much to come from it. If you dont have anything they cannot get anything. Relax. Whatever step they take, if it is serious, you still have time to deal with it or seek legal counsel. If necessary you can file bankruptcy but I dont see it is necessary at this time. Play it by ear for now. One step at a time.