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Roger
Roger, Attorney
Category: Bankruptcy Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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I am trying to avoid bankruptcy. I just sold a piece of property

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I am trying to avoid bankruptcy. I just sold a piece of property and I have a 30K profit. I owe one credit card company 35K and the other one 16K. I have no income other than unemployment and rental income all of which goes to living expenses, primary home mortgage and credit cards. I have not paid other mortgages. I own 3 other properties plus my primary home. One of the properties due to close in 45 days with a profit of $2,000 (two thousand) and past due mortgage of about $2000. One is on the market and at risk of foreclosure, with a past due mortgage of $6000 and one is a trailer worth about $1,000 and carries no mortgage.

I am able, fortunately to keep up with mortgage payments on my primary home. My thought was to use the 30k profit from the property just sold and contact both credit card companies and try to deal with them. I want to ask them if they would accept a certain lump payment and forgive the rest. The only choice if they do not accept that is for me to file bankruptcy and they get probably much less than I would give them. I will work with the bank for the one home near foreclosure to go short sale as market value is close to payoff.

1. Is the plan I just described workable and legal?
2. If I just go ahead and pay each credit card company 50% of the 30k, what can they do to me about the rest of the money I owe them?
3. How long can they come after me for the balance and can they garnish wages?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Roger replied 1 year ago.

Hi - thanks for looking me up again.

 

1. Is the plan I just described workable and legal?

Yes, what you've described is legal and it is do-able IF the creditors will cooperate with you. USUALLY, unsecured creditors (like credit card companies) will negotiate and settle because they know that if bankruptcy is filed, nothing will be recovered.


2. If I just go ahead and pay each credit card company 50% of the 30k, what can they do to me about the rest of the money I owe them?

UNLESS you have a settlement agreement with each creditor, even if you pay 1/2 of the amount due to each, they can still sue you for the remaining balance. Thus, you should try to reach a settlement and have an agreement in place before paying them (if the payment is less than the full amount due).


3. How long can they come after me for the balance and can they garnish wages?

The statute of limitations for an open account (credit card account) is 4 years from the date of the last charge or last payment, whichever is latest. Once the 4 years pass by, the debt would be uncollectible. BUT, it's likely that they would sue before that point.

As for wage garnishment, yes the creditor can do this AFTER it obtains a judgment against you. Here's a good link about this: http://www.nolo.com/legal-encyclopedia/michigan-wage-garnishment-law.html

Customer: replied 1 year ago.


Do you have any info or links on wage garnishment in Florida since that is where I live, although all my property is in MI.


 


How could I prove to the credit card companies that I indeed would be forced into Chapter 7 if they did not negotiate. Why would they take my word for it?

Expert:  Roger replied 1 year ago.

Florida's wage garnishment laws are basically the same as Michigan. 25% of your wages can be garnished, etc. Here's a link: http://www.nolo.com/legal-encyclopedia/florida-wage-garnishment-law.html

As for convincing the creditors to settle, it's really just a negotiation, and you do have to try and convince them that you're on the verge of bankruptcy and unless they settle, they'll likely get nothing.

Also, if your creditor pulls a credit report on you and sees several accounts in arrears, it should be fairly evident that you're in a difficult situation - - which would validate your claims to the creditors.

Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26333
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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