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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 17515
Experience:  B.A.; M.B.A.; J.D.
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If one is being sued for credit card debit and unable to pay,

Customer Question

If one is being sued for credit card debit and unable to pay, but owns a home. Is it possible or advisable to negotiate a lean on property (being the home) as a settlement?

For example: Say a credit card debit is 20K, instead of a creditor being awarded the full lean amount plus applicable attorney fees, etc. Could one just give them permission to put a property lean on an agreed settlement amount, say 10K?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Phillips Esq. replied 5 years ago.

Thank you for giving me the opportunity to assist you. I encourage you to ask me for clarification, if you are not clear with my Answer.

 

Question: If one is being sued for credit card debit and unable to pay, but owns a home. Is it possible or advisable to negotiate a lean on property (being the home) as a settlement?

 

Response: No, it is not. It is not prudent to negotiate for a lien to be put on your property because of an unsecured credit card debt. In any event, the collector or Creditor would put a lien on your property once they win judgment against you. Why make it easier for them to do? The lien remains on your property until it is paid off.

Customer: replied 5 years ago.
Thanks for your reply. It's the amount of the lien I am wondering about. If the debt is 20k, could one agree to negotiate a lean of say only 10k? Your basically giving them permission and this way it doesn't have to go through the courts, etc..If you owe the money and cant pay what real options does one have?
Customer: replied 5 years ago.
Relist: Answer quality.
Expert:  Phillips Esq. replied 5 years ago.

 

Thanks for your reply. It's the amount of the lien I am wondering about. If the debt is 20k, could one agree to negotiate a lean of say only 10k? Your basically giving them permission and this way it doesn't have to go through the courts, etc..If you owe the money and cant pay what real options does one have?

 

 

Response: Yes, you can. However, any reduction in the amount of your debt would be considered debt forgiveness and you would be required to report the income in your tax return using IRS Form 982. You need to add to the negotiation that reduction of the debt must not be considered debt forgiveness but rather a modification of your debt and thus no 1099-c would be issued. Get this in writing. Otherwise, the creditor would report the debt reduction as debt forgiveness and issue you a 1099-C. In this case, you would be forced to report $10,000.00 as income on IRS Form 982.

Phillips Esq. and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.

Thanks for your response.

Would it be advisable to go the above route if one is unable to pay the debt? The creditors are basically wanting some sort of settlement. A settlement cannot provided as there are no funds available. The said party involved is on disability and has no additional income for a settlement.

Are there any other options to consider prior to going this route?

Expert:  Phillips Esq. replied 5 years ago.

Thanks for your response.

Would it be advisable to go the above route if one is unable to pay the debt? The creditors are basically wanting some sort of settlement. A settlement cannot provided as there are no funds available. The said party involved is on disability and has no additional income for a settlement.

 

Response 1: No, it would not be prudent as I stated in my initial response and especially since the debtor is on fixed income and cannot pay for the debt.

 

Are there any other options to consider prior to going this route?

 

Response 2: Yes. You should consider filing for Chapter 7 bankruptcy to wipe out the debt.

 

 

You may be eligible to file for chapter 7 bankruptcy protection, if you meet the means test--the income test. If your income is equal to or less than the current income guidelines for your household size in your state, you would be eligible to file for a Chapter 7 bankruptcy all things being equal. In Chapter 7, if the Court grants you a discharge your debts will be wiped out. You would get a clean state, a fresh start.

 

 

These are the current income guidelines for the State of Arizona:

Household of one person $$42,603.00
Household of two persons $$55,404.00
Household of three persons $$59,659.00
Household of four persons $$67,113.00
Add $7,500.00 for additional individual

 

 

The filling fee is $299.00. You may able to waive this filing fee if your income is 150% below the current poverty guidelines. Click here for current poverty guidelines:

 

http://www.uscourts.gov/bankruptcycourts/resources.html

 

 

You must receive budget and credit counseling from an approved credit counseling agency and obtain a Certificate of Credit Counselling to be filed with your bankruptcy case. The agency will review possible options available to you in credit counseling and assist you in reviewing your budget. Different agencies provide the counseling in-person, by telephone, or over the Internet.

 

It is usually a good idea for you to meet with an attorney before you receive the required credit counseling. Unlike a credit counselor, who cannot give legal advice, an attorney can provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions. The attorney can also provide you with a list of approved credit counseling agencies, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm

 

 

After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm

 

You may also be able to waive the credit counseling fees based on your income. The credit counseling agency that you would choose would make this determination.

 

Consult a local bankruptcy attorney for further explanations of your rights and responsibilities.

 

The sites below are good resources for finding bankruptcy attorneys in your area:

 

http://www.nacba.org/

 

http://www.naca.net/

 

http://www.justia.com/

 

http://www.lawyers.com/

 

http://www.avvo.com/

 

 

If you cannot afford an attorney, then the next best alternative will be to use bankruptcy petition preparer. Bankruptcy petition preparers prepare bankruptcy forms but they cannot give you legal advice because they are not attorneys. Click on the links below for some of the bankruptcy petition preparers. You can do some searches on Google or Yahoo if you do not like the ones on the links below.

http://bridgeportbankruptcy.com/bridgeport/index.asp


http://usabankruptcyassociates.com/usabk/moreinfo.asp#wedo