Good friend is having financial probs. Lost job approx 8 mos ago, unemployment barely covered his mortgage and car payments. Used up all of his savings to pay for food, utilities, etc. (has 1 child, a toddler). Has borrowed from friends and family but they are all tapped out as far as being able to help. He joined a debt settlement group to try to get help, and got a call from his credit card company today. He was told that his account would charge off, go legal at the end of this month.

The debt settlement company advised him to let that happen, that they could settle it down the line for less with a collection agency. The bank told him that because its a high balance (over 5k) and he has a home, it will most likely go legal. He told them he refinanced and there is no equity in his home right now (true, he did this before the market dropped) and they said they could take other actions, such as attaching his wages when he gets a job, etc. Is this true? Is the debt settlement agency giving him bad advice?

If anyone knows anything about this please reply, the collector told him that if it leaves the bank they will add legal fees, which could be thousands. He is panicking, doesn't know what to do. Advice please.

It is true in that it's possible they'll garnish him, but it's pretty unlikely. For a regular person credit card debt that **** almost never happens, garnishment is mostly for child support, tax liens, and other things like that. However, if they sue and get a judgment the bank won't settle for nearly as little as they will prior to the suit, so the debt settlement company needs to settle prior to that.

Your friend's debt settlement company blows, by the way, the debt settlement company I worked for would cut off any collector->client contact immediately. That bill collector's job is to scare your friend into paying, of course he's going to say they'll garnish his wages.

Credit card companies can not garnish wages. The government can, though.
I don't think he has to sweat the credit card.


In all seriousness, forward this to your friend. It explains a lot and mind give him another way to look at things.

It's also a great read in general. Hits on a lot of hot topics...


Also, tell him to drop the debt-settlement scam and call a bankruptcy lawyer STAT.

PLEASE DO NOT READ THIS INSANE LIBERAL JARGON. MUCH OF THE BULL SAID THROUGHOUT IS NOT TRUE.

The parts about buying time by sending mail late and other gimmicks may or may not be true, I'm not sure. I am however sure that their views on bankruptcy are absolutely ridiculous. They brush it off as something that isn't a big deal and who gives a **** about credit anyways. Let me put it this way, debt is one of the things that can accelerate your progress on a consumption/production basis. It is something you definitely want available to you. Your life will be slowed down for 7 years+ post bankruptcy due to defaulting on all this debt. 7 years from now the amount you owe today is going to be insignificant compared to the pain in the ass when you ever try to buy a house again.

As for the rest of it, you know the site goes AWOL the second it's like "dems in the white house" solve all the problems. It's a silly ****ing site. It tells you that after you go bankrupt and sell your house, you can live comfortably renting and owning 1 or 2 credit cards. No one is going to ever give you a credit card, and the only places you're going to rent you will need to understand jive and carry a 9.

dude....deep breath

man that would suck to be your friend but i hope things work out for your friend

your avatar is so much funnier after seeing 'hamburgers and hotdogs'...

Listen to this.

You are way wrong here. Almost everyone will start getting credit card offers (albeit pretty high interest) within a couple month of the BK being finalized. You will have a hard time renting from a large company but will have no problem at all renting from an individual. You may have to put up a couple months rent up front but other than that they will be happy to have you.

Depends on a lot of factors. Whomever said they can't garnish your wages is wrong. In some states if you have a judgment against someone you can garnish their wages for recovery. A judgment is achieved through a lawsuit. So if they sued your friend, got a default judgment and he lived in a state that allowed garnishment then they could take money out of his bank accounts.

This is not very common though. What you really want to do if you have no intent of honoring the debt is to lay low, appear judgment proof and wait for the statute of limitations to expire. What you don't want them to do is sue you and get a judgment. Judgments follow you on your credit for essentially ever, unless you pay them off. They last for 10 years but then can be renewed for every 10 years for 10 more years. So if someone wanted to, they could make sure you had a major black mark on your credit for ever.

To be extra clear, there's a difference between garnishment(taking a portion of each paycheck) and a lien on a bank account(seizing funds in a bank account). I'm not a lawyer and your state may vary, but I've never heard of a private party getting a lien on another private party's bank account. Only the IRS/child support.

Garnishments are rarer, but they can occur. The most common bad result from a judgment for a private debt is a lien on any real property you might own. Most judgments, though, just sit out there as uncollected debts.

Also, yeah, your friend should probably declare bankruptcy. It'll be way cheaper than the current plan, and you can have decent(functional) credit in a few years.

Uh not credit cards you want to use. You're officially part of the "sub-prime" category post firing for bankruptcy so if you feel comfortable paying half of your balance in interest, go right ahead. You will not be able to buy a house for seven years, anything regarding a loan will be highly scrutinized such as a car. The ability to turn purchases into negative cash flows at reasonable costs (AKA LOANS) is so incredibly important to most people's financial health. If you believe you'll become a millionaire and will have cash on hand for everything in the future, sure go bankrupt. Otherwise, you will get abusive credit card offers, opportunistic loans, and generally be the whipping boy for interest bearing deals.

As for rentals, any high demand rentals you might apply for are going to have a serious issue with people who have filed for bankruptcy. I don't care if it's an individual, individuals with high value holdings always get a credit check before renting. When the word bankruptcy comes up, you have a problem.

Again, you are going to sacrifice a lot of opportunities to generate cash and cash savings through going bankrupt and this site highlights none of them. You need to be realistic in that if it's unavoidable and you have no choice then it's a reasonable alternative. You should still however put up every effort to avoid bankruptcy and ideas like not paying your creditors out of speculation is terrible. It will be a short term reprieve that you'll pay every penny for. This isn't a free lunch.

not true, if I remember correctly from my days as a mortgage broker, it is 24 months since the discharge date, and that is for a conventional mortgage (or at least this was true pre mortgage crisis)

avoid filing bankruptcy at all costs

Unless of course those costs outweigh the costs of the bankruptcy. A lawyer in your area should be able to provide insight. The assorted topics forum of a poker site will not.

YGOS?

You're correct on this; bankruptcies do however stay on your credit for 7 years. And after the 24 months, you still will not be receiving beneficial loan rates.

The key to this situation is to have no significant assets. Then it isn't worth the credit card company's time to sue you, because you have nothing for them to take. Obviously this is not your friend's situation if he owns a house.

But I have a friend who maxed out & defaulted on several cards, but she has no money and no house. They tried to collect but have backed off since they realize they aren't getting anything. She is walking around free as a bird, has been for years since this happened.

Again: Have your friend talk to a bankruptcy lawyer. It will be worth it.

That is not saying 'file for bankruptcy', it is saying 'talk to a bankruptcy lawyer'.

Fact is, if his debt is larger than his yearly income, it's bankruptcy time. Deal.

creditboards forum, they are deadbeats too.

<--- Collector for State tax debts

You are dead wrong on the laws and terms. Terms vary from state to state, in the Midwest a levy is used to mean garnishment (and can hit wages, non-employee compensation and bank accounts), and a lien only effects property. Other states use garnishment instead of levy, or even lien, and call what the midwest calls liens Judgements.

Depending on the state (and in the case of a credit card company they can use almost any state where they have an employee) if they sue you and get a judgement (which they will) then they can, and will, seize your bank account, or levy your wages. Just ignoring it will not help. Talk to the CC company and negotiate a lower payment/interest rate, this is the same thing a credit counselor will do.

FYI the guys who say they will settle your tax debts for pennies on the dollar are so full of crap they squeak when they walk. The IRS may settle (but not often) but most state revenue depts will not settle unless you are almost dead, and have no future earning power, if you can make money in the future we will keep the debt valid by filing liens or obtaining judgements and then garnishing your wages. Pay your taxes.

We called them liens when I worked for a bank. And no CC ever got into one of our client's bank accounts when I worked for a debt settlement company.

Also he's not talking about tax debt. Credit card companies settle all the time. Debt settlement companies are still scams, but it's completely reasonable to get well under a 50% settlement on unsecured debt. OP's friend probably needs to declare bankruptcy. He definitely needs to consult a banco lawyer.

Not true(you're thinking of where you can sue the credit card company, sort of), but irrelevant, since you aren't going to be able to win the lawsuit if you contest it anyway.

If his credit is in the ****ter now, do you think he cares about loan rates 3 or 4 years from now?

I know 3 people who have filed for BR. All 3 said it was the best thing they ever did.

hahaha so awesome, gonna sign this dude up for so much ****

Dont talk to collectors, deal with them in writing.

A lot of debt settlement companies are fly by night operations set up in Arizona airplane hangers that are just going to take your money.