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Good morning. Most credit card companies these days are willing to do one of two things...i) settle for a percentage of the original debt; or ii) agree to a payment plan over a period of time while cutting your interest rate to a very low rate or none at all. Only if one of those alternatives do not work do the companies take other action. Typically, they will not file suit themselves; rather they sell the debt to debt collectors, who begin to hound you daily. You can stop this hounding by demanding they cease to do so; once you demand this in writing, they are in violation of the Fair Debt Collection Practices Act if they continue and you can report each violation to the Federal Trade Commission. At that point, the only time they can contact you is if they decide to file suit. Which they can do. Once they sue you and get a judgment, they can then move to collect that judgment by attaching your assets and/or garnishing your wages. If you have basically no assets, you can then seek bankruptcy protection to get this judgment discharged.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
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If I decide to declare Bankruptcy, is my house mortgage/home equity loan in jeopardy? It is covered by the Homestead Act. My Equity Loan contract says that, if the bank thinks that my financial status has changed significantly in a negative direction, the bank can accelerate the equity loan balance to become payable in full immediately.
Along the same line, my wife and I have credit cards with the bank that holds our mortgage. Would it be too risky to try to settle these credit card balances? I do not want to do anything that will scare the bank into accelerating my equity loan.
If you declare bankruptcy, you do not have to include your home...you can continue to pay on your home loans and exclude the house and the accompanying debt from your bankruptcy filing.
Your acceleration provision is a pretty common provision, but banks are hesitant to accelerate home loans when they are performing. In a ironic twist, your settlement of these credit cards actually makes your home loans more secure because it frees up more money for you. I doubt the bank will call these loans given they are secured by your homestead...if they were loans for anything other than your home they would be more likely to accelerate them.
I managed to arrange settlements on two of my credit card debts. Hiwever, one bank BOA) refised to accept any of my offers to settle one of my wife's creditcards. She recieved a summons on 4/1/2011 to which she must respond. The following is a draft of our response. Cpuld you please review it and advise as to whether or not it is appropriate.
April 4, 2011
Shechtman Halperin Savage, LLP cc: Clerk of Pittsfield District Court
Pawtucket, RI 02860
Re: Your File Number: 10-04776 and District Court Civil Action No. 1127W0141 dated 3/30/2011
Subject: Settlement Offer for BOA Account #4888 9340 1151 4907 (aka FIA CARD SERVICES)
References: 1) Letter from Bank of America to undersigned dated January 12, 2010
2) Letter from undersigned to Bank of America dated January 19, 2010
3) Letter from FIA Card Services to undersigned dated February 10, 2010
4) Letter from Bank of America to undersigned dated February 10, 2010
5) Letter from undersigned to FIA Card Services dated February 12, 2010
6) Letter from Collectcorp to undersigned dated March 3, 2010
7) Telecon between Mr. Dean Khalid* and the undersigned on March 8, 2010
8) Letter from undersigned to Collectcorp dated March 11, 2010
9) Telecon between Mr. Dean Khalid* and the undersigned on March 12, 2010
10) Telecon between Mark* and the undersigned on April 4, 2010
11) Telecon between Caroline* and the undersigned on May 20, 2010
12) Telecon between Marie* and the undersigned on May 24, 2010
13) Letter from undersigned to Collectcorp dated June 3, 2010
14) Letter from undersigned to Collectcorp dated July 18, 2010
15) Letter from Weltman, Weinberg & Reis to undersigned dated August 19,2010
16) Letter from undersigned to Weltman, Weinberg & Reis dated August 24, 2010
17) Letter from Shechtman, Halperin & Savage to undersigned dated February 8,2011
18) Letter from undersigned to Shechtman, Halperin & Savage not dated
19) Letter from undersigned to Shechtman, Halperin & Savage dated February 24 2010
20) District Court Civil Action No. 1127W0141 dated 3/30/2011
Dear XXXXX L. Maynard:
The following is my offer to settle the reference #20 action/claim.
I will agree to settle the claim for a reduced amount equal to $1852.72 (15% of the claim amount of $12,351.44) payable at the rate of $5.00 weekly. This is the best offer that I can make at this point in time. I have made several settlement offers to the BOA on this account, which you can see from the letters and telephone conversation notes referenced and attached. The BOA declined all of these offers. The funds that we had available at that time have been provided to other credit card debt holders who accepted our settlement offers.
I believe that this is a fair offer because the BOA has, in the past year, accepted a settlement of my husband's credit card account for 25% of the original amount. He made that settlement offer when we had income from our book publishing business. My husband writes and sells engineering textbooks. We have absolutely no disposable funds available at this time.
Sales have since dropped to almost nothing on our web site. No one is buying technical books in this economy. They are spending any disposable income on their mortgage, car payment, health insurance, food, etc. My husband has recently had to remove the shopping cart for book sales from our web site because we don't even have the funds available to pay the monthly fees for the shopping cart and the Internet gateway/bank.
My only income is from a small social security check ($660.00 per month).
Please advise if this offer is acceptable to you and your client.
Kathleen N. Lyon
163 Balance Rock Road
Pittsfield, MA 01201
Hi there. I think your letter is fine. I might add two things...i) let them know that counsel has advised you that creditors cannot touch your social security income; and ii) add at the end that as you have shown you are making every effort to resolve your bills by paying as much as you can, but that if BofA refuses to comply and takes any action that you have nothing for them to get and you may have no choice to file for bankruptcy protection in which case the amount owed would be discharged in its entirety.
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