|
HEllo!
(thanks in advance)
My brother is trying to decide what he should do. After getting fired
in 2002, he was unable to pay bills. All the debt is pre-2002. About
40k original debt(in 2002) in ONLY credit cards.
From 2002 on, he just stopped making any payments. However, there is
no new debt.
Prior to that, from 1997 to 2002 he was NEVER late.
He owns nothing- no car no house. He's 27 and only makes now about 15k
a year. (Maybe 20k last year at the most.)
He went to see a lawyer. He's concerned about the new law. The Lawyer
told him to gather up all the papers. He got his credit report back
and his score was 670( we thought it would be much worse). Most of the
debts say discharged or sold.
What should he do. Any advice? After 7 years do the debts go away?
Is he better off not doing bankruptcy? Paying it off is not an option
at his current wages.
why is his credit score not lower? could it be a mistake?
pleeease pleeease help with some advice :)
THX
Lisa
|
| |
| |
In article <cgftc15bmc54l2mooj274baj7hv86r2fac@4ax.com>,
"Lisa TR" <vefface@yahoo.com> wrote:
What should he do. Any advice? After 7 years do the debts go away?
Debts do not go away. Not unless they are paid, settled via a
contract, or discharged by a bankruptcy court.
Is he better off not doing bankruptcy?
What is likely going to happen is that some of these people
who bought those debts are going to start coming after him.
They will eventually sue him and get a judgement. A judgement
cannot be discharged by bankruptcy (in most cases).
Paying it off is not an option at his current wages.
That is the root cause of the financial problem. He has
to figure out how to earn more. The first thing is to
take a 2nd job. Then he needs to do some fill in work
delivering pizzas, detailing cars, or a paper route (or
three). The work is out there, he just has to go do it.
He is young, so this is the right time to do it. He
will be surprised at how quickly the debts will be paid
off if he takes a 2nd job as a watchman and then delivers
pizzas on the weekend.
The thing is that these creditors will offer settlement
deals. If he has the cash to settle them, he may be able
to get some good deals. But if he cannot settle, then
they will stick it to him when they are forced to go to
court. If they go to court, the will likely win, get
a judgement, and then get an order garnishing his wages.
They will get the money out of him as long as he stays
in the US and works at a job.
Your brother really has to get on the stick here. What
if he was 64 years old and in this situation? What would
he retire on? How would he buy food when he doesn't have
any money? Is he planning to fight with the stray cats
over the garbage can left-overs? Or what about when he
is 74 and can no longer work.
If he doesn't do something today, he will find himself in
these 64 and 74 year old scenarios all too soon, and then
it will be too late to fix it.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
|
| |
| |
In article <cgftc15bmc54l2mooj274baj7hv86r2fac@4ax.com>,
"Lisa TR" <vefface@yahoo.com> wrote:
Debts do not go away. Not unless they are paid, settled via a
contract, or discharged by a bankruptcy court.
What is likely going to happen is that some of these people
who bought those debts are going to start coming after him.
They will eventually sue him and get a judgement. A judgement
cannot be discharged by bankruptcy (in most cases).
A judgment cannot be discharged in bankruptcy? Where did you get that idea?
Judgments are discharged in bankruptcy every day. You may be thinking of
judgment LIENS that remain in place unless the debtor files a petition for
removal under Section 522 of the Bankruptcy Code, but judgments are
discharged unless the creditor files and action under section 523 to object
to the discharges.
Paying it off is not an option at his current wages.
That is the root cause of the financial problem. He has
to figure out how to earn more. The first thing is to
take a 2nd job.
Or he can file for bankruptcy to get a fresh start. Or he can negotiate
with his creditors. Or he can see a credit counseling agency.
|
| |
| |
My brother is trying to decide what he should do. After getting fired
in 2002, he was unable to pay bills. All the debt is pre-2002. About
40k original debt(in 2002) in ONLY credit cards.
no new debt.
Debts normally are dated from the date of the last payment made under
the agreement. These debts are about 3 years old then. More on this
below.
Prior to that, from 1997 to 2002 he was NEVER late.
Makes no difference.
He owns nothing- no car no house. He's 27 and only makes now about 15k
a year. (Maybe 20k last year at the most.)
Depending on the state laws where he resides, he is very likely to be
judgement-proof. This means he has so few assets that suing him is a
waste of time for the creditor.
He went to see a lawyer. He's concerned about the new law. The Lawyer
told him to gather up all the papers. He got his credit report back
and his score was 670( we thought it would be much worse). Most of the
debts say discharged or sold.
This is normal. After a short period of trying to get your brother to
pay, the primary creditors have sold the debts and written them off.
The debts are now owned by collection agencies.
As to why his score isn't lower, 670 is not all that great. ;) If the
collection agencies start aggressively pursuing him and posting
negative information, it will probably drop further.
What should he do. Any advice? After 7 years do the debts go away?
Is he better off not doing bankruptcy? Paying it off is not an option
at his current wages.
First of all, the debts do not disappear. Not now, not ever. After 7
years, the credit reporting agencies are bound by law to remove any
mention of the debt. However, the debt is not invalidated; it just
cannot be used in calculating the credit report.
All states have a statute of limitations that governs how long a debt
can be collected. Once the debt has moved beyond the statute of
limitations for your state, the creditor will be unable to get a
judgement for it. At this point, the debt is uncollectible for all
intents and purposes.
This page offers a summary of the state statute of limitations laws:
http://www.cardreport.com/laws/statute-of-limitations.html
As to your brother's specific situation, he needs to immediately decide
if he will declare bankrupcy. A bankrupcy is an exception to the 7
year rule, and can appear on a credit report for 10 years. However,
bankrupcies are not as big of a stigma as they used to be, and he will
likely find companies willing to lend to him again, albeit at a higher
interest rate. Declaring sooner is usually better than later, because
it means it will be off the report sooner.
The alternative is to deal with the collection agencies and come up
with a payment plan that is mutually acceptable. It is important that
you work with a lawyer or a credit counseling agency for any plan. If
you simply make a payment to a creditor, it may restart the clock on
the statute of limitations. The collectors can be tough to deal with,
which is why I suggest an intermediary. However, it is clear they have
a losing hand here...old, rapidly aging debts owed by someone with no
assets. I would believe they would rather make a settlement for a much
smaller amount (10-20%) than lose it all in a bankrupcy.
|
| |
| |
John A. Weeks III wrote:
That is the root cause of the financial problem. He has
to figure out how to earn more. The first thing is to
take a 2nd job. Then he needs to do some fill in work
delivering pizzas, detailing cars, or a paper route (or
three). The work is out there, he just has to go do it.
He is young, so this is the right time to do it. He
will be surprised at how quickly the debts will be paid
off if he takes a 2nd job as a watchman and then delivers
pizzas on the weekend.
Well, he is working already, enough to make $15k/yr at least.
Earning more money is always a good idea--- but he probably should go
ahead and file for bankruptcy now, based on what his actual debt is
right now vis a vis his actual earnings. If he ran up $40k in bills
and then went 2 or 3 years without paying, then he must have at least
$60k in debt by now. His debt amounts to at least 4 times his annual
earnings. Even if he takes on more McJobs, he's still going to be
bankrupt.
|
| |
| |
In article <c888d1pbllipv9rkl2it29b5lc91rr2o3d@4ax.com>,
"Timothy" <horrigan@aol.com> wrote:
John A. Weeks III wrote:
Well, he is working already, enough to make $15k/yr at least.
Earning more money is always a good idea--- but he probably should go
ahead and file for bankruptcy now, based on what his actual debt is
right now vis a vis his actual earnings. If he ran up $40k in bills
and then went 2 or 3 years without paying, then he must have at least
$60k in debt by now. His debt amounts to at least 4 times his annual
earnings. Even if he takes on more McJobs, he's still going to be
bankrupt.
Earning $15K is hardly enough to afford quarters for a pay
toilet these days. If he files for bankruptcy without fixing
the income problem, he is going to be right back bankrupt
again. He has to get out of this cycle of spending far more
than he earns, and the only way to do it is to start earning
far more. He has 2 options, working harder (ie, more jobs)
or working smarter (ie, education and working better jobs).
Just getting rid of a bunch of old debt isn't going to solve
any problems if he simply cannot afford to live on what he
makes today.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
|
| |
| |
On Tue, 12 Jul 2005 15:59:43 -0400, milieu.zero@gmail.com wrote:
. . . .
As to your brother's specific situation, he needs to immediately decide
if he will declare bankrup[t]cy. . . .
. . . .
_Immediately_ being the key word. Most of the new rules do not go
into effect for another couple of months.
Daniel Reitman
|
| |
| |
In article <5jfad1t4vmdt2v4taki8kc4o0r3pk62co5@4ax.com>,
John A. Weeks III <john@johnweeks.com> wrote:
In article <c888d1pbllipv9rkl2it29b5lc91rr2o3d@4ax.com>,
"Timothy" <horrigan@aol.com> wrote:
Earning $15K is hardly enough to afford quarters for a pay
toilet these days. If he files for bankruptcy without fixing
the income problem, he is going to be right back bankrupt
again. He has to get out of this cycle of spending far more
than he earns, and the only way to do it is to start earning
far more.
Who said he spends more than he earns? Prior to 2002, he earned
enough to keep up his payments. Since he got fired in 2002, he wasn't
able to; but I didn't see anything about his expenses exceeding income
since then.
Seth
|
| |
| |
In article <00mdd15u4faclhib861if2obco2jv7ddnv@4ax.com>,
sethb@panix.com (Seth Breidbart) wrote:
Who said he spends more than he earns? Prior to 2002, he earned
enough to keep up his payments. Since he got fired in 2002, he wasn't
able to; but I didn't see anything about his expenses exceeding income
since then.
Logic. If he is considering bankruptcy, then he has lots
of bills. Bills have payments. If he cannot afford the
payments on his salary, then his bills are larger than
his income. Otherwise, if his bills were smaller than
his income, he would be able to pay them.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
|
| |
| |
"John A. Weeks III" <
| > What should he do. Any advice? After 7 years do the debts go away?
|| Debts do not go away. Not unless they are paid, settled via a
| contract, or discharged by a bankruptcy court.
|Perhaps, perhaps not but they do become unenforceable at which point they
are often sold to 'bottom feeder' collection agencies that stoop to some
'odd' collection practices.
|
| |
| |
In article <aitid1ta0c2fq9kjo0q5ktmia544e47540@4ax.com>,
John A. Weeks III <john@johnweeks.com> wrote:
In article <00mdd15u4faclhib861if2obco2jv7ddnv@4ax.com>,
sethb@panix.com (Seth Breidbart) wrote:
Logic. If he is considering bankruptcy, then he has lots
of bills. Bills have payments. If he cannot afford the
payments on his salary, then his bills are larger than
his income. Otherwise, if his bills were smaller than
his income, he would be able to pay them.
My impression from the original posting was that up through job loss
in 2002, he earned a lot and overspent it (but kept up with his
payments). Subsequent to job loss he stopped spending (and stopped
paying). Now he earns $15K and spends less, but can't cover his old
bills.
Old bills are not current spending.
Seth
|
| |
| |
My impression from the original posting was that up through job loss
in 2002, he earned a lot and overspent it (but kept up with his
payments). Subsequent to job loss he stopped spending (and stopped
paying). Now he earns $15K and spends less, but can't cover his old
bills.
The original post didn't specifically mention the amount of income. The
point of the original post was whether the debtor should just ride things
out (no payments and now no debts since 2002) or file for chapter 7.
Beginning in October, debtors will need to go to credit counseling before
filing for bankruptcy and we don't know if the debtor in this case has any
unique debts that might be impacted in some way by the new bankruptcy laws.
Over time, the debts will become uncollectible due to the expiration of the
statute of limitations unless the creditors take legal action. The might
remain on the credit report for up to 7 years. A chapter 7 would remain for
up to 10 years. Some of my clients simply want closure and a fresh start.
Others work through it. Because of the variables, it is best to consult
with local counsel on issues such as dischrargeability of the debts and
applicable statute of limitations.
|
| |
| |
|
