I understand your sentiment when you say you feel like the one being squeezed. Where is our bailout?
Anyway, to your question.
Your best move here is to try communicating with the creditors. Right now, a bird in the hand is worth two in the bush and they will likely be willing to work with you. Your not as delinquent as a lot of people and can probably negotiate a resolution involving electronic and automatic monthly payments at a reduced interest rate. If you can come up with a first payment of a couple hundred dollars on each cards and propose a monthly payment of $100 or more, then I'm willing to bet that you will be able to negotiate a resolution.
Your worst case scenario is that the creditor rejects settlement, sues, gets a judgment and attemps to garnish your wages and accounts. If you make efforts to settle now and are rejected, that would be something the court would want to know and that may help, should litigation happen.
I don't see your worst-case scenario materializing, though. Making an effort to communicate with the creditor and offering a resolution will go a long way. I handle commercial collections for a manufacturer and would welcome such a scenario so I could focus on the accounts that are still non-responsive.
Best of luck to you.
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Whether the bank can right off bad-debt does not affect your claim. Whether they did may, perhaps, be a defense, but you would have to prove it. Even if they did, if they were able to recover from you, they would simply pay taxes on the revenue. It really has no relevance to your situation.
While I am not in a position to research the matter of whether lending, generally, breaks the law, I am skeptical of such a claim. And, again, these would only be defenses and wouldn't prevent the bank from suing you anyway.
You asked what you should do and I responded with a course of action that could resolve the matter. If you are not in a position, then you could be looking at the worst case scenario, which is judgment (plus the additional fees/interest), then lien and garnishment.
I guess you could hope to slip through the cracks and have the bank forget about you until it is too late, then sell the account to a scavenger credit company which tries to sue you, but fails to properly plead the case (e.g. can't attach the original account agreement which is required in some states to prosecute the claim), and get the case dismissed. I've been able to get this outcome for a couple of my clients, but they are the exception rather than the rule.
Those are the likely scenarios, given our legal system as it now exists.
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