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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34851
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Consolidated our debts 10 yrs ago on Discover card. For first 9+ years we paid above the

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Consolidated our debts 10 yrs ago on Discover card. For first 9+ years we paid above the minimum, never defaulting. Husband lost job early this yr. Continued to pay Discover in full until a few months into unemployment. Mailed a certified letter to Discover explaining our situation & that we would still be paying monthly but it would be less. We continued to do this, never ceasing payments. After a few more months, Discover was demanding the balance in full (about $32,000). Then they offered us a 40% settlement offer. I counter-offered via certified mail with the remaining amount in my 401K ($10K)- all we had left. Still no response from Discover. I continued to pay as much as we could monthly. They have now referred me to an attorneys office to collect and I am hearing from them. They are asking for all of my personal financials (mortgage pmt and whom holds it, all other info from amount owed to who we pay it to. I am finding this invasive and dont know how to respond.
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 3 years ago.
You have no obligation to provide anyone with any financial information unless you are actually sued and served notice of a "discovery request" for "production of documents."

If you have never really considered bankruptcy -- now is the time. If you remove money from your 401(k) to pay the debt, you will convert assets that cannot be reached by your creditors under any circumstances, including bankruptcy, into assets that can be reached.

So, the smarter move may be to simply file for bankruptcy and just get it over with. Once you do, the collection attorney will just go away, because he/she won't have any ability to collect anything from you.

If you want to try to leverage the negotiation with the attorney, you can make a flat offer of $X, in exchange for an unconditional written release from all further liability for the outstanding debt -- tell the attorney that it's "take it or leave it," and that if he/she chooses to leave it, that you will simply file for bankruptcy and he/she and his/her client will get nothing.

For a bankruptcy attorney referral, see this link.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

Customer: replied 3 years ago.
Thank you for your advice. However, if I may further explain, we are not interested in filing for bankruptcy. The cards original debt was $55K we transferred for debt consolidation. We only charged on the card twice in 9 years. We were serious about getting it paid off. When my husband lost his job we continued to pay, but then gradually our payments had to go below the minimum in order to feed our family, pay our mortgage, etc. I always paid something every month to show our commitment and always kept in touch with them and apprised of our situation. Hubby is back to work and I run a small business part time, and take care of my young children. We are still just trying to get back on our feet. We understand and accept responsibility for this debt. We just want to work something out to pay them, but they are not being accepting of payments any longer and asking for the full balance.
Knowing the above, how do I respond to them in a letter? I dont want to tick them off, I just want to work something out without them invading my personal financial info. Can any of this debt be considered secured debt? I dont want this to get to the point of garnishing wages, lien on house, etc. What is the best way to respond? THANK YOU.
Expert:  socrateaser replied 3 years ago.
Knowing the above, how do I respond to them in a letter?

A: If you are not prepared to file for bankruptcy, then you have no legal leverage. Your only response would be to offer the creditor a lump-sum payment, and if the creditor rejects your offer, then you're done negotiating, because there is nowhere else to go.

The fact that you are unwilling to disclose your financials, and you are not threatening bankruptcy, would cause any savvy collections attorney to believe (perhaps incorrectly) that you are cornered, and that you cannot file bankruptcy for some reason. This will cause the attorney to file suit for a money judgment, and then start garnishing your wages and executing on your assets.

I dont want to tick them off, I just want to work something out without them invading my personal financial info. Can any of this debt be considered secured debt?

A: Until the creditor sues, and obtains a judgment, and records that judgment in your county for at least 90 days, there is no secured debt. Afterwards, it's secured, and you can't get rid of the debt, even if you do file for bankruptcy.

I dont want this to get to the point of garnishing wages, lien on house, etc. What is the best way to respond?

A: By your foreclosing the possibility of bankruptcy, you have also foreclosed the best way to respond -- which is to threaten bankruptcy while offering a settlement amount that you believe the creditor may accept. You will have to decide whether or not you are prepared to suffer a lawsuit which will include additional collection costs of attorney's fees, and which will result in a wage garnishment.

I'm not trying to dismiss your ethical nature -- it's just how the law works. If I were trying to collect against you, I would ask you to pay. If you offered less, I would want to see your financials to determine what you could reasonably pay. Once I had that info, I would make the determination, and then demand that amount. If you refused, I would sue -- based upon my reading of your financials and the potential for your filing bankruptcy. Because once I have those financials, I will know your entire "hand," to use poker nomenclature. And, I will know if you can get away by filing bankruptcy.

If you do not want to file bankruptcy, and you don't want to disclose your financials, then the attorney has nothing to go on except his/her gut. He will have to decide whether or not to call your bluff. If you have a $50,000+ debt, then the attorney will probably take the risk and sue.

After that, you will be once again faced with the choice of filing bankruptcy, or accepting that you will lose in court and be stuck with a very large judgment that will never go away.

The botXXXXX XXXXXne is that it doesn't really matter how you respond, because the collection attorney will simply react based upon the knowledge available. In the end, your circumstance will either end in bankruptcy or your being stuck with a very large debt.

Note: It may be of some interest to you to know that, among others, Donald Trump, Henry Ford, Walt Disney,. Comic book pioneer Stan Lee, the founder of Hershey’s Chocolate, Milton Snavely Hershey and the founder of Heinz Ketchup, H.J. Heinz -- all filed for bankruptcy at one time during their lives.

Food for thought.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34851
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you

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Attorney and Real Estate Broker -- Retired (mostly)