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I am currently in credit card debt and have no income or assets, due to a failed business. Extending family members are attempting to help me to the best of their ability. Im trying to make payment arrangements with one creditor, it has gone to a collection attorney. The attorney is saying that the need a signed affidavit by my parents stating my financial hardships, that i am living with them rent free, etc.. basically that the are supporting me, which they are. Is this common? or it is a trap?
Response: This is a trap and should not fall for it. The collector does not care if you are homeless so long as he can get money out of you. If you do not have any income and assets and are depending on the kindness of your family to survive, I do not understand, why you are making payment arrangements with debt collectors in the first place. You need to consider filing for Chapter 7 bankruptcy protection at this time to wipe out your debts.
You would 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 family size in your state, you would be eligible to file for a Chapter 7 bankruptcy all things being equal. The income used in calculating the Means test is the income for the 6 months before the filing of the bankruptcy petition. This means that if you are filing for bankruptcy protection this month, July 2013, the income that would be used is your income from January 2013 to June 2013. If you are filing next month, August 2013, the income that would be used in the Means Test calculation would be the income from February 2013 to July 2013, etc. In Chapter 7, if the Court grants you a Discharge your debts will be wiped out with some exceptions such as some taxes, child support, alimony, which are not dischargeable. You would get a clean state, a fresh start.
Click on the link below to see the current income guidelines for your state:
Because you are unemployed, you would meet the Means Test.
The filling fee for Chapter 7 is $306.00. You may able to waive this filing fee if your income is 150% below the current poverty guidelines. Click here for current poverty guidelines:
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
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:
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.
i am making payment arrangements because my family is offering to help pay what they can. How is this a trap? how would it benefit them to have this statement or letter? that i am unclear of Response: The collector is trying to find out what your financial situation and your parents' situation is. With this information, the collector would attempt to get more payments from you. This is a slippery slope. The collector is never going to be satisfied with the hardship letter. Next, the collector would want your bank information and how you are paying for your day to day expenses. That’s why I deem this as a trap.
i understand what you are saying, but would a simple signed letter from my parents stating that i live at home rent free be damaging? the alternative is to allow them to sue me and get a judgement. in which they will still receive nothing
Response: No, it would not be damaging. Your parents can do the simple letter. However, it would not do you any good. The collector would still want you to pay something. Regrettably, the collector may still file lawsuit against you. However, if you are Judgment Proof, if you have no income and assets, there is really nothing the collector can do to you.
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