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J.Hazelbaker, Attorney
Category: Legal
Satisfied Customers: 4385
Experience:  Attorney and small business owner with 10 years experience in the general practice of law.
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CC Debt

Resolved Question:

I have roughly 30k in delinquent cc debt through multiple accounts. Due to a significant income loss, I am behind 6-7 months and most, if not all of these accounts has went to collection. In an effort to save myself the grief, embarrassment and possible strong arm tactics, I've avoided all collection calls like the plague as my irrational thoughts were.....What am I going to tell these guys - "Yes I'm delinquent, No I don't have any money for payment & No I don't know when I'll be able to". At this stage of the game, what can I possibly expect; worst case scenario to most likely scenario as well as perhaps some direction to reverse this monster. I'm an honest guy, sometimes to honest, but I gotta tell you that after becoming informed and educated to how the banking system really works, I was appalled and felt like I was the victim who was being squeezed here.
Submitted: 8 years ago.
Category: Legal
Expert:  J.Hazelbaker replied 8 years ago.


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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Customer: replied 8 years ago.
Thank you for your thoughts, and I can appreciate what your saying - I really can. However there are some unsettling aspects to my circumstances that perhaps you could enlighten me on.

First of all, please correct me if I'm wrong in my understanding but unless laws have recently changed, aren't
banks allowed to write-off a bad loan after 180 days and then receive a tax deduction/credit. Secondly, after writing it off, aren't they now back to their original assets they had before I was approved for the account. Thirdly, they did not lose one penny during of this entire ordeal. Result: (1) the bank received money from me while I paid the interest (not to mention any additional fees that can occur) on the "debt" thus receiving interest on money they just created out of thin air through monetizing my signature (2) the bank also received a tax deduction; (3) the bank did not lose any money because they never had any of their own money at risk. Whatsmore, believing that they can write this off as bad debt and recieve credit for no monies of their own that they ever actually extended, they now sell this bad debt to a collection company for pennies on the dollar.

Contract law states: Two Parties Must Be At Risk; My creditor entered into a contract with me and didn't take on any risk because they didn't lend me depositor' money, they created it out of thin air. I am the only one at risk here. This violates contract law. They charged me interest on an alleged loan which is against Usury laws. They didn't provide Full Disclosure in their contract explaining how they created a promissory note using my signature.

So is it not true that everytime a Bank lends credit, they are in violation of their charter and break at least 10 federal laws as stated in the US Codes Title 15, Section 1666 and 1692, Truth in Lending Laws, Usury Law, the FTC’s Fair Credit Billing and Reporting Acts?

If all of this is true, calling this predatory lending may be a light hearted expression. Is there not consumer protection laws against such practices?

Now that I've vented my rage, I'm not necessarily in a position financially to follow your suggestive guidance. I do not have any discretionary monies to use as "earnest" payment. I had roughly
$900 in monthly payments going out to 7 different accounts; each with varying payments from $300/month to $30/month. The best I could do right now would be $300/month amongst them all. Something tells me that if I were to attempt to take this $300 and make a valiant effort to restitute this matter, I have a pretty good feeling my higher payment creditors would not play well.

I appologize for the length of this reply, but if it is true that after 180 days a bad debt can be wrote off and then receive a subsidized credit.....why or how can a creditor pursue a cival lawsuit? Perhaps they are the ones that should realize that a "bird in the hand is worth two in the bush".

I am looking forward to your reply

Expert:  J.Hazelbaker replied 8 years ago.

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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