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JoeLawyer
JoeLawyer, Attorney
Category: Bankruptcy Law
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Experience:  Attorney in the practice of Bankruptcy Law since 1996
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What is the recourse if I stop paying my credit cards vs ...

Resolved Question:

What is the recourse if I stop paying my credit cards vs filing bankruptcy?
Submitted: 9 years ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 9 years ago.

HiCustomer

If you stop paying your credit cards, eventually they can sue you. If they sue you, they may be able to garnish wages or attach a lien to property you own. However, if you file bankruptcy, the credit cards are generally discharged and they cannot try to collect from you.

I know this is a somewhat simplistic answer, if you let me know if you need more detail I will be happy to tell you what I can.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above (c) by Joseph Ross, all rights reserved.

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Customer: replied 9 years ago.
Reply to Joseph Ross's Post: They would actually have to sue me before they could take any wages, correct? Do you think in the economy we're in that creditors will be sueing everyone that cannot make payments after losing jobs, etc.? I am also losing my house, so they would not have any recouse there.
Can you give me any more information that might help me move in the right direction?
Thanks
Expert:  JoeLawyer replied 9 years ago.

Correct, they generally cannot take wages without a court order, and the only way to get a court order is after obtaining a judgment.

I have seen many creditors that used to pursue collections aggressively not be as aggressive lately, probably because of the economy, but that has been more in the area of collecting deficiency balances after foreclosure sales rather than credit card collection actions.

I cannot tell you what to do since I cannot give advice online, but bankruptcy may be a decent alternative, especially if you are losing your home too. Some people don't file bankruptcy because of the credit score hit, but not filing allows the credit cards to hit your credit with late payments for 7 years, which may be just as damaging, all the while having them hassle and potentially sue you. Sometimes a bankruptcy provides a fresh start that is worth more than some credit points saved.

If you opt not to file bankruptcy, then credit cards become uncollectable after the statute of limitations expires, which varies from state to state, but is usually around 6 years. This doesn't mean they won't continue to try to collect after the statute expires, but if they do sue you after that and you tell the court the statute expired, their case may get dismissed. Each time a charge is made or a payment is made though, the statute starts tolling all over again.

Two other options some people try are credit counseling and debt settlement. Credit counseling is where you contact a credit counseling agency, then they contact all unsecured creditors (they won't deal with secured creditors) and they set it all up in one payment with low interest. Debt settlement is where you settle the credit cards for substantially less than the amount owed, but you generally have to do this in a one-time lump sum payment, so this doesn't work unless you have some cash on hand to work with (which most people don't nowadays).

I'm not sure what type of information you are looking for, so let me know if this didn't help!

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Fees I receive for answering questions are paid for information, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. Joseph Ross does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above (c) by Joseph Ross, all rights reserved.

 

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