Question Before filing, how long can you go without making payments on things?

[Aidencent55]

I met with a bankruptcy attorney for a free consultation and one of the things they said was don't make any payments on your debts for at least 90 days before filing. I then asked well how long do some people go not paying before they file and the lawyer said well I can't tell you exactly but many of my clients haven't paid any credit card or loan bills for at least 6 months by the time they come to me. Looking online I have seen that EVENTUALLY most of these companies will sue you or take you to court but it's really unclear what that time frame is from what I can see and even the lawyer didn't give me any clear examples.

So my basic question is this - does anyone know, or have experience, with how long you can go without making payments before credit card companies or personal loan companies like Lending Club and Upstart begin trying to take you to court?

[shipo]

I stopped making payments during the summer of 2013 when I took a 47% pay cut; I contacted my attorney later that year and we started getting into the meat of the matter in 2014. Given how complex my filing was and given other considerations of how I was paid, she guided me to file in January of 2015, nearly 18 months after I quit paying. During that entire time, only one creditor served me with a summons (which I immediately turned over to my attorney).

[justbroke]

So my basic question is this - does anyone know, or have experience, with how long you can go without making payments before credit card companies or personal loan companies like Lending Club and Upstart begin trying to take you to court?

There isn't a way to tell how a company will behave for individual debtors. There are many things which go into deciding to sue a customer. Typically, you need to go at least 90 days late before stronger collection activity beings. It's usually 120-180 days before an account is charged off, so I would suspect that lawsuits happen after day 181. That's the typical creditor.

But what happens on day 181 can be different based on different customers. Most of the attorneys to which they assign these cases will likely run a LexisNexis Risk Report to see what type of assets you may have as well employment information and other details. But for larger creditors, or creditors that hire the "big" collection agencies such as Bass & Associates, they file these lawsuits electronically and in bulk. The "cost" for them to file is not a big deal because they handle so many of these. The big collection agencies are very good at getting a judgment.

So your attorney is correct. It's typically after charge-off (180 days), and based on other factors that are too specific (specific to the customer/debtor). When the debt is over $2,000 (I'm just using that number) the creditors are typically more aggressive at collection.

So, expect to be sued. At what rate lawsuits come in will be determined by the creditor. Have your strategy in place. If you are going to file for bankruptcy then you could use the issuance of a summons as your trigger to file.

[Aidencent55]

There isn't a way to tell how a company will behave for individual debtors. There are many things which go into deciding to sue a customer. Typically, you need to go at least 90 days late before stronger collection activity beings. It's usually 120-180 days before an account is charged off, so I would suspect that lawsuits happen after day 181. That's the typical creditor.

But what happens on day 181 can be different based on different customers. Most of the attorneys to which they assign these cases will likely run a LexisNexis Risk Report to see what type of assets you may have as well employment information and other details. But for larger creditors, or creditors that higher the "big" collection agencies such as Bass & Associates, they file these lawsuits electronically and in bulk. The "cost" for them to file is not a big deal because they handle so many of these. The big collection agencies are very good at getting a judgment.

So your attorney is correct. It's typically after charge-off (180 days), and based on other factors that are too specific (specific to the customer/debtor). When the debt is over $2,000 (I'm just using that number) the creditors are typically more aggressive at collection.

So, expect to be sued. At what rate lawsuits come in will be determined by the creditor. Have your strategy in place. If you are going to file for bankruptcy then you could use the issuance of a summons as your trigger to file.

So basically 6 months is the guaranteed minimum, then from there it all is in question if I understand you correctly. If you do get served a summons for legal action, just getting set up with the bankruptcy lawyer is enough to get that stopped or is the action of actually filing? I was confused when I talked to the lawyer on this as there seemed to be some things they said happen once you file and other things happen (like the stopping of credit calls) just from securing a bankruptcy lawyer itself. But I could pay the lawyer and obtain their services and still technically not file for a little while so that's where the confusion lies of which action (filing or just securing the lawyer) stops the court action/summons.

[Aidencent55]

I stopped making payments during the summer of 2013 when I took a 47% pay cut; I contacted my attorney later that year and we started getting into the meat of the matter in 2014. Given how complex my filing was and given other considerations of how I was paid, she guided me to file in January of 2015, nearly 18 months after I quit paying. During that entire time, only one creditor served me with a summons (which I immediately turned over to my attorney).

Were your debts large or no? I have 2 personal loans, one 18k and another 50k and like 6 credit cards with balances ranging from 3,000 all the way up to 30k.

[flashoflight]

Aidencent55 Assume all of the questions I ask can be answered by Lexis-Nexis or EWS without your permission. Do you have a home? Do you have a job? How many cars and other valuable personal assets do you have? Do your bank accounts show a lot of money coming and going? If you answer in the affirmative for most of this, its virtually certain you will be sued. In California, I would say 18 months from last minimum payment for the first summons and many more will come afterwards. You can delay things for a year pre-covid in California by properly responding to the summons and interrogatories to set the case for trial. After judgment + 1 month, maybe you have another 60 days left before your money is taken involuntarily.

It costs next to nothing in terms of money, time, and effort to sue people. Judgment enforcement actions are super duper cheap. E-filing has made it particularly easy and quick to sue on a massive scale while cutting costs.

Most people wait too long to file bankruptcy so I would expect the typical period of nonpayment typically be 6 months to forever. Many also need the former minimum payments for a few months to pay for the lawyer and court fees to file BK.

[shipo]

Were your debts large or no? I have 2 personal loans, one 18k and another 50k and like 6 credit cards with balances ranging from 3,000 all the way up to 30k.

Let's just say well into the six figure range none of which was secured.

[Carmella]

It took a good year before we were summoned to court for credit card missed payments. The debt went through various collection agencies. I do not recommend waiting it out that long. I regret doing it. We were never sued since we filed, but we did make a few court appearances. Our attorney directed us what to say at court. Lawyers from the creditors tried to settle with us and we had other trial dates, some by phone.

[bcohen]

I stopped paying all my debts in February-March of 2009. At the time, the debts ranged from about $600 to $10k. Although the two largest accounts--a Citibank MasterCard with a balance of about $10k at the time, and a Discover card with a balance of about $3k at the time--were passed around to several collection agencies and law firms over the years, no lawsuits were filed for many years. Ultimately, it was Discover who filed a lawsuit, in September of 2012, for the debt which had by then ballooned to about $5800.

And of course, once sued, you can respond to the lawsuit, file your own discovery requests, etc. in order to drag it out and buy time. That is exactly what I did, and I managed to delay the judgment until late January of 2013 during which time I spent down my non-exempt funds and filled out the paperwork to declare bankruptcy. The collections attorney then sent a copy of the judgment and a letter asking for me to work out payment arrangements for this debt, which together with attorney fees and other charges now totaled about $8800.

About two months later, they attempted to levy my checking account, which had less than $150 in it. At the time, the first $165 was exempt from judgment enforcement, so they did not receive a dime. A few weeks later, I finally went to the bankruptcy courthouse and filed my Chapter 7 bankruptcy. Sending that attorney a letter informing them of my bankruptcy, and reminding them about the automatic stay was one of the happiest moments in my life!

[lookingforward]

We got about three months of peace by asking for a payment deferment due to being affected by the covid outbreak. We had not a single phone call from creditors and waited three full months, then filed in the fourth month. We did have to call and renew the deferment every month.

[Drewby]

We selected an attorney in October 2019. Stopped paying everything in November 2019. American Express sued us for $14k in January 2021. Penfed shortly followed for $23k with a court date in Feb 2021. Everything was current and had never been late through October 2019. I never spoke to anyone about any debt.

[shipo]

Drewby, after being sued twice, what was your next step and what has been the outcome?

[Drewby]

shipo American Express received a default judgment on 1/19/21. PenFed court date isn't until 2/16. We file our case on Monday 2/1. Our attorney advised us to put it off as long as possible to allow my wife's income to fall off our lookback period and to wait for some changes in the Virginia Homestead exemption and increases in the median income level. We just kept pushing it off. But our attorney was correct, with the increased Homestead exemption, increased median income for Virginia, and my wife's income not impacting our 6 month income, we were able to just barely (within a few hundred dollars) qualify for chapter 7 and have the equity in our home completely covered.

[shipo]

And once again we find out a good attorney is worth pretty much whatever the cost.