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CalAttorney2
CalAttorney2, Attorney
Category: Legal
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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I am looking advice about debt & bankruptcy to see

Customer Question

I am looking for legal advice about debt & bankruptcy to see what I should do and to get some clear answers please
Submitted: 10 months ago.
Category: Legal
Expert:  CalAttorney2 replied 10 months ago.
Dear Customer,Thank you for using our forum. My name is ***** ***** I look forward to assisting you today.
Customer: replied 10 months ago.
Hi Bill,So I have several accounts in collections now for I believe 4 years so I would like to know if it is better for me to wait out for the SOL which is 7 years 180s or file for bankruptcy? Also, what happens to your credit report after the SOL is up?
Customer: replied 10 months ago.
could we talk on the phone vs sending messages back and forth?
Expert:  CalAttorney2 replied 10 months ago.
Dear Customer, I do not participate in the phone call program for the site, however, if you wish to have a phone call with an attorney, you can post a request for "additional services" and your request will post to other experts that do offer this service. When another attorney accepts your request you will get additional instructions. (If you have questions about these additional services, you can contact our customer service at: http://ww2.justanswer.com/help)
Customer: replied 10 months ago.
no problem, this is suffice
Expert:  CalAttorney2 replied 10 months ago.
What state are you located in (I can confirm the statute of limitations for you).RE: the distinction between waiting the SOL vs. Bankruptcy, if the creditors are not pushing you for collection, you may be better off simply waiting it out (if you can get to the end of the statute, the creditor will be precluded from enforcing their claim, your credit will only take the one hit (it remains on for 7 years from the date of default), and you can file bankruptcy in the future if necessary).However, if you have a lot of debts, or if creditors are pushing you for collection, bankruptcy is much more certain, it deals with all of your debts at once. Your "credit worthiness" (how willing creditors are to lend to you) is much better because there are no other debts outstanding, even though your credit score will be lower.
Customer: replied 10 months ago.
NY
Customer: replied 10 months ago.
So is the 7 years on your report after the SOL or it off your report once it goes into collections and is on your report for 7 years? I am little bewildered with your response
Expert:  CalAttorney2 replied 10 months ago.
Statute of limitations on collections is 6 years from the date of default in NY.The credit bureaus can report a bad debt (so one that has been defaulted) for a period of 7 years after default. Even though the creditor can no longer enforce the debt (after 6 years), the debt is still "valid" they just cannot do anything about it.
Customer: replied 10 months ago.
Ok, after SOL, will my score start to increase and will it affect any loans in the future? I am just concerned with the care I lease which I always pay on time and don't want to run into a problem when it's due up again b/c I would like to continue staying with them but I would also like to get cc's for my business so can you please advise? Additionally, if I were to pay the debt off, it is still on my report from what I read so how is that beneficial? I am just trying to figure out what I should do so it doesn't affect me in the future...
Customer: replied 10 months ago.
Also, when you said creditors can contact you up to 7 years from the time of the default, after that, will the company file a judgement or lawsuit? And with that being said, I do have a judgement from AMEX but it was under my personal name but my business name as well so what happens from that ?
Expert:  CalAttorney2 replied 10 months ago.
As far as future creditworthiness you are dealing with 2 separate (but related) issues.On one side, creditors do not like lending to debtors that do not pay their debts (so history of non payment, either defaulting on loans or bankruptcy, or both), makes the applicant less credit worthy.On the other side, creditors prefer to give loans to debtors that have less loans outstanding rather than more (so if you have less creditors that can enforce their debts - either because you have passed the statute of limitation, or declared bankruptcy), this increases your credit worthiness.(Please note, I am referring to "credit worthiness" - not your "credit score" (the numbers reported by the credit reporting bureaus).
Expert:  CalAttorney2 replied 10 months ago.
Getting your current indebtedness under control (either by declaring bankruptcy (the most comprehensive option), settling with your creditors (paying off your loans, hopefully for a reduced amount), or waiting out the statute of limitations (usually biggest hit on your credit, and will usually be the longest delay for you to recover your credit worthiness).
Customer: replied 10 months ago.
what if I were to settle say now even after SOL? Would that be more beneficial that filing bankruptcy?
Expert:  CalAttorney2 replied 10 months ago.
The loans or debt that you have incurred remains a "valid" debt until you either (1) pay it; (2) declare bankruptcy; or, (3) the creditor forgives it.Loans do not go away with time, however, time does make it so that (1) the loan is no longer judicially enforceable (statute of limitations is 6 years); and (2) it is no longer reported to the credit buereas, so it does not affect your credit worthiness/credit rating (7 years from default).
Customer: replied 10 months ago.
Ok, if you were in my shoes, what would you do?
Expert:  CalAttorney2 replied 10 months ago.
If you are trying to get your credit in shape so that you can take out more loans in the future (business loans, which are largely unsecured, in particular), you have 2 options:Trying to negotiate settlements on your loan (depends on how much you owe, and how much money you have to settle with.When trying to settle a debt, creditors generally prefer lump sums over payment plans. They are often willing to accept an amount less than the full debt (the trade off is that they get a quick payment and don't have to worry about ongoing collection costs or administration). If you do not have the ability to offer a lump sum for something the creditor will accept (some will accept a small portion, while others want close to the full amount), you can try a payment plan, these are less satisfactory to the creditor (especially if they have a lien on your property already), but if you are willing to offer something with a reasonable chance to get the creditor a large amount of their debt back, you are likely to get them to accept it.Whenever working with a creditor, make sure that you keep your communications in writing (if you speak to someone by phone, promptly send a confirmation letter to summarize your conversation), as this will help to ensure that there is no confusion later on, and you will be able to enforce your settlement against any future collection efforts.But if your debts far exceed your current liabilities, and you are looking at trying to expand your loan portfolio in the near future, I would recommend making an appointment with a bankruptcy attorney. Bankruptcy can help you get a new start, and as you are wiping out all of your current debts, you are more "credit worthy" after your bankruptcy than before (since your income has remained the same, but your debts are gone).
Customer: replied 10 months ago.
Ok, what if I pay the amount in full - is that better to do than filing bankruptcy to be more 'credit worthy'?
Expert:  CalAttorney2 replied 10 months ago.
If you pay all of your debts off, they will be recorded as "Paid" - this MAY (I emphasize "may" because the credit reporting bureaus utilize proprietary formulas to create their credit reporting scores - a system which has many negatives, primarily being its lack of transparency) help increase your credit score over the other remedies.However, you are also dealing with many unknowns - such as who are the other creditors that you hope to be borrowing from, what are their concerns (not all creditors look at reports the same way), and how much time between your settlement/bankruptcy/payoff and your loan application. What other factors do you have going into your loan applications (are you earning a lot of money and living a frugal lifestyle or are you making minimum wage and paying 60% of your income in rent).If you are planning on borrowing for a business, I would recommend speaking to actual loan officers and get their input into how best to clean up your credit for their lender's purposes. Try local credit unions or small banks.You can also find information with the SBA although I caution people with these loans (the interest rates are reasonable, but they come with added leverage for creditors, meaning the downside/risk for borrowers in the event of default is greater).
Customer: replied 10 months ago.
Ok so basically paying them off may or may not do any good?
Expert:  CalAttorney2 replied 10 months ago.
If you have the cash to do so, you can pay them off, it is the one form of resolving this that is entirely within your control, and has only upside (if money were no object, I would recommend paying the debts, you will repair your credit immediately and you will not have a bankruptcy reported on your credit history for the next 10 years).But, if money is tight and you really don't have the ability to pay off your debts, that is where it is more of a debatable/problematic question.
Customer: replied 10 months ago.
Ok that is good to know
Customer: replied 10 months ago.
One of the accounts into collections was under my business however my name so what isn't that under my business and under my name affecting me personally and not the business?
Customer: replied 10 months ago.
why* (typo)
Expert:  CalAttorney2 replied 10 months ago.
If you were a sole proprietor, or if you signed as a "personal guarantor" for the debt, you would be listed for the debt personally as well as your business.
Customer: replied 10 months ago.
Ok, last question(hopefully) - When paying off the debt, are the creditors legally allowed to remove from your credit report or can they leave it on there? I read something saying that they can but I spoke with some accounts and they said they can't -what are the laws behind that?
Expert:  CalAttorney2 replied 10 months ago.
These are not laws - the credit reporting bureaus are private entities that collect information for consumers (such as outstanding loans, and their payment status).Creditors can (most will not) change credit entries with these credit bureaus. It is possible to try to negotiate a payoff conditioned on removing negative information from credit reports, but there is no guarantee.
Customer: replied 10 months ago.
You may have answered this before but I want to ascertain I understand this correctly. If I pay off the debt, that is better than having the 'bankruptcy' over my head, correct?
Expert:  CalAttorney2 replied 10 months ago.
Paying off the debt would be preferable going forward.A bankruptcy generally isn't a big deal as far as prospective lending goes, but you are going to have it raised as an issue with every credit application you make, and it will undoubtedly keep you from getting the best interest rates (even if they are only using this as a flimsy excuse).Also, declaring bankruptcy can have an impact on certain jobs (security clearances, etc. will look for bankruptcy filings) - so while filing bankruptcy is not supposed to create any negative effects for the debtor, there are some repercussions to doing so.The downside to paying off the debt of course, is that you are out of pocket the money that you perhaps could have saved by stiffing your creditors (either by waiting out the statute or declaring bankruptcy).

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