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Old 06-02-2008, 07:45 PM   #1
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how far can a bank go to collect a credit card debt?

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.
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Old 06-02-2008, 07:51 PM   #2
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Re: how far can a bank go to collect a credit card debt?

Quote:
Is this true? Is the debt settlement agency giving him bad advice?
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.
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Old 06-02-2008, 09:17 PM   #3
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Re: how far can a bank go to collect a credit card debt?

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.
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Old 06-02-2008, 09:33 PM   #4
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Re: how far can a bank go to collect a credit card debt?

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Originally Posted by 27offsuit View Post
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.
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Old 06-02-2008, 09:45 PM   #5
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Re: how far can a bank go to collect a credit card debt?

dude....deep breath
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Old 06-02-2008, 10:00 PM   #6
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Re: how far can a bank go to collect a credit card debt?

man that would suck to be your friend but i hope things work out for your friend
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Old 06-02-2008, 10:09 PM   #7
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Re: how far can a bank go to collect a credit card debt?

your avatar is so much funnier after seeing 'hamburgers and hotdogs'...
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Old 06-02-2008, 10:11 PM   #8
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Re: how far can a bank go to collect a credit card debt?

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Originally Posted by FlyWf View Post
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.
Listen to this.
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Old 06-02-2008, 10:20 PM   #9
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Re: how far can a bank go to collect a credit card debt?

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Originally Posted by dxu05 View Post
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.
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.
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Old 06-03-2008, 01:09 AM   #10
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Re: how far can a bank go to collect a credit card debt?

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.
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Old 06-03-2008, 01:21 AM   #11
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Re: how far can a bank go to collect a credit card debt?

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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.
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.
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Old 06-03-2008, 01:59 AM   #12
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Re: how far can a bank go to collect a credit card debt?

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Originally Posted by Nick-Zack View Post
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.
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.
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Old 06-03-2008, 02:33 AM   #13
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Re: how far can a bank go to collect a credit card debt?

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Originally Posted by dxu05 View Post
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)
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Old 06-03-2008, 02:48 AM   #14
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Re: how far can a bank go to collect a credit card debt?

avoid filing bankruptcy at all costs
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Old 06-03-2008, 02:52 AM   #15
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Re: how far can a bank go to collect a credit card debt?

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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.
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