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I have a client who has about 80,000 in back debt on credit…

I have a client who...
I have a client who has about 80,000 in back debt on credit cards that was incurred in 2017 by his wife. He is 70 years old and sold all his assets in 2016 and 17. His debt is from CA but he moved to Texas.
If he paid all his money he could pay off the debt and be broke. He gets about 1500 per month in Social security and his wife gets $600 per month.Can he stop paying his credit cards? Will the credit card company come after him out of state? He may move to Nevada in the future. What are his cnances if he simply ceases to pay on cards. I understand the Statute of Limitations on Credit Card debt is 4 years in CA. Can he just wait it out?
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Answered in 6 minutes by:
2/10/2018
Loren
Loren, Attorney
Category: Legal
Satisfied Customers: 36,372
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If he and his wife haveno assets then they may be judgment proof. If the only money is social security then there is no non exempt income or assets to garnish or attach even if the credit card companies got a judgment.
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Customer reply replied 12 days ago
It turns out he does have some assets in stock and bank account. Probably enough to pay off cards. One attorney advised him to not pay the cards and to pay him 18% of his savings from settling the cards. In other words, after a period of not paying, he simply negotiates a lower payment. This might work. I also understand CA has a 4 year Statute of Limiations on Credit card debt. He has moved out of state. What will companies do when he is out of state and he owes them. Will they find him and subpoena him and take him to court for a credit card debt? He also was looking at forming a company or corporation so he could make some money. It is actually possible, with his expertise, even at his age, to make some decent money. Can he take some of the cash he has left, form a corporation, and start a business? If he invested his money in his corporation, for the legit purpose of getting a viable business going, would the credit card companies be able to come after the corporation. I am not looking for a total guarantee and there is no possible way. But suppose he put his final assets in a corporation he formed and started operating. Would the credit card companies realistically be able to come after the corporation? He also has been wanting to make a donation to his Church. Would there be anything illegal about this is he had credit card debt he was not paying off? I know this may sound unusual. Maybe he wants to "buy his way into heaven". And maybe he wants to start a small business in an area he has expertise in. He would certainly like to not to pay off his credit card debt. He has had significant losses since he incurred the debt, and has a lot less money than he expected to. This is not some planned out scam to rip off credit card companies. He does not want to pay all the money he has left to credit cards and live with his wife on $2100 per month. What are his options? I would appreciate a practical answer here, e.g. "The credit card companies may have trouble sueing him out of state. And if the money is given to charity or invested in a corporation, they are going to have trouble getting and collecting on a judgement." or " They will finkd him and sue him and if the money is in a corporation they will liquidate the corporation bank accounts." or "If he donated to his church, they will sue the Church." I realize there is not 100% certainly, and am curious as to your response. I gave these scenarios as extreme examples, as I am hopeful you can tell me what is most likely, and what probable risks are to him.
long as he moves or donates the money prior to there being a judgment against him, there would not be a problem with donations or corporation forming. There is no law preventing a church donation if he owes money on credit cards. They would not have any right to claw back a gift or donation.
If he formed a corporation or LLC then it would not be liable for any personal obligations of his. On a general level, hos personal creditors would have no right to corporate assets. The corporation is a separate entity.
The other possibility is to wait for the credit card companies to contact him seeking payment and see if the will settle at a discounted amount.
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Customer reply replied 10 days ago
Sorry I took so long to reply. So he could make the Church donation if he wants to, invest in his corporation, and start his business. He would probably not be making much in business first. If the credit card companies did not settle on a discount, could he just file bankruptcy? His main assets would be in corporation/LLC.where he might have a bank account. But would they be able to get to it? Is it likely they would? It seems forming a corp might give him a lot more leverage and protection. If he did this, is there anything illegal or riskyl?
Customer reply replied 10 days ago
p.s. You will get a 5 star rating and tip.

If there is no judgment currently entered against him then there is nothing particularly risky in forming an LLC or corp.

If he forms a corporation then the assets in the corporation would generally be out of reach of creditors, but the shares are an asset of his which could be attached. So, while the creditors would not be able to seize the corporate bank account, they could attach his shares.

If (and only if) you are completely satisfied that your question is answered professionally and accurately, even if not the answer you were hoping to get, please remember to leave a favorable rating (click 5 stars in the rating section on this page). It is the only way that I am credited by JustAnswer for answering your question.

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Loren
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