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Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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What is the worst that can happen if a person defauts on credit

Resolved Question:

What is the worst that can happen if a person defauts on credit card debt? I have a 30,000 credit card debt with Bank of America. I am straight commission and my income has been reduced by half over the last two years, and I am probably going to default on this loan before I loose my house or car.

Thank you.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.

I am the JustAnswer expert that will be helping you today. I am a lawyer with 25 years experience. Although I am not your attorney, I hope that I can give you helpful legal information.

Can you tell me how far behind on the credit card you are currently
Customer: replied 7 years ago.

I am not behind as of yet because I have been using savings to make the payments; but I have exhausted my savings with this month's payment. I owe a total of 42,000 in credit card debt but this one is by far the largest, 30,000. I could afford paying on the remaining ones if this one were adjusted or eliminated. I know that in most cases until you default they will not negotiate with you. I have tried. They told me go ahead and default or file bankruptcy then they would sue me for what is owed.

My current credit score average between all three credit scorers is 748.

Expert:  Ellen replied 7 years ago.

The first thing to be aware of is that a lender is not going to modify a fully performing loan. You will typically need to be 60-90 days behind before they will discuss modification. They will only modify to mitigate their risk . As long as you are paying, they have no incentive to modify.

If you are not able to modify the credit card debt after you have defaulted, you will want to consider filing for a chapter 7 bankruptcy.
Customer: replied 7 years ago.

What is a chapter 7 bankruptcy?


Expert:  Ellen replied 7 years ago.

J.A. policy requires that you start a new thread for a new question after accepting the current answer. However I will answer.

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13. There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy could discharge (erase) all of your unsecured debt such as credit cards, judgments and personal loans. It would be an opportunity for a fresh financial start. However, you may have to surrender assets, if any, that exceed your exemption.

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that you repay some of your unsecured credit card debt over a 3 -5 year period. However, you may retain assets that exceed your exemption.

Here are the exemptions for Tennessee:

Ellen and 4 other Bankruptcy Law Specialists are ready to help you
Customer: replied 7 years ago.
Thank you very much.
Expert:  Ellen replied 7 years ago.
Thank you very much for the bonus. Best wishes