Can/Should we tell creditors that call that we are filing ch7 soon?

[murphsmom]

We have decided to move forward with filing around May 23rd. Can we or should we tell creditors that call that we will be filing in the next couple of weeks? Are there any dangers of telling them? The attorney seemed to think that if we told the bank that is threatening to sue us for the car, that they would hold off on filing any judgement because it would be a waste of time. What about CC cards though?

Thanks

[Dorsey]

The attorney seemed to think that if we told the bank that is threatening to sue us for the car, that they would hold off on filing any judgement because it would be a waste of time.

My question as his client would be "how can he not know the answer to such a basic question?"

Does the car have a lien on it? Does the bank you reference own a loan on the car?

As for credit cards, there is no advantage to telling them. One, they will not stop collection efforts until they have a case number in hand. Most large credit card companies receive automatic alerts from the Bankruptcy Court PACER system and the calls will stop within 48 hours or so in most cases. Two, any judgement the card company(ies) may be seeking will be placed on hold upon filing and any monies they get in the months before the filing will have to be returned to the Trustee.

[murphsmom]

I should rephrase. The attorney said "don't worry about the car judgement, it hasn't even been filed yet and once they know you are planning on filing they most likely won't go through with it". This was a car that we voluntarily returned back in January, they auctioned it and are threatening to sue us for the difference, $1800. We have not yet told the bank that we are filing, but I'm wondering if we should, so they don't file the judgement now?

[Dorsey]

That's more like it! I think I saw a related post from you in another thread related to this $1,800. Okay...I suppose the only value in alerting them and preempting the filing of a suit is that you wouldn't have to disclose the suit in your filing. For instance, if the suit is filed you would likely want to include the banks attorney's fees as either a secured or unsecured lender (the amount of the attorney fees would be set out in the pleadings the bank files in local court), you would have to disclose the suit on Form 7, and you would have to separately notify the local court of your bankruptcy filing. So, if the bank did NOT file a suit, it would make your petition filing a little easier (but not much). And if your attorney is doing your paperwork, then why sweat it.

If it were me, I suppose I'd make a phone call and let them know what I intended to do. But before I make such a call, I'd want to be sure that the bank couldn't somehow accelerate a claim and take $1,800 through a garnishment or off-set. For instance, if the bank seeking the $1,800 also handles your checking account, etc. they may simply deduct money from your account. The Trustee would likely seek this money as part of the bankruptcy, but it locks up the money and couldn't be accessed by you right away. So I would move all of my money, if this were me, out of that bank ... and then make a phone call. But, again, I'm not sure if they bank would get a benefit from rushing to the courthouse and filing right away when they might have otherwise just dawdled and missed your May 23rd filing. Again...it seems your attorney should know the answer to this.

[AngelinaCat]

I should rephrase. The attorney said "don't worry about the car judgement, it hasn't even been filed yet and once they know you are planning on filing they most likely won't go through with it". This was a car that we voluntarily returned back in January, they auctioned it and are threatening to sue us for the difference, $1800. We have not yet told the bank that we are filing, but I'm wondering if we should, so they don't file the judgement now?

We had this happen with us with a vehicle that 'Hub foolishly co-signed the loan for an acquaintance. When Acquaintance defaulted on his payments, and we started getting the calls and notices, 'Hub had Acquaintance surrender the vehicle. It was sold at auction and then lawsuits for the difference of 13K were started. They were a couple of months into the process, and we were just before going into 'Mediation'--we also never admitted or denied this debt, as it really was not ours, but we were on the hook for it--when we filed. LESSON LEARNED: Never, ever, co-sign a loan for anyone--no matter who it is.

Once we filed, and the court got the notice, the suit against us was dropped. The suit against Acquaintance proceeded, as he never took any action to file for himself, and he now has a judgment for the 13K.

Also the court just doesn't automatically file a judgment against you. The loan holder has to file a lawsuit, you have to be notified, all of which takes time. Because you will have usually 20 days to respond, etc. You have at least a couple of months.

Now, if you do get a summons to appear in court, appear, or have your attorney file an answer. Whatever you do, do NOT ignore the summons. If you do, then you WILL get a default judgment.

[frogger]

Can we or should we tell creditors that call that we will be filing in the next couple of weeks?

Thanks

You can tell them, however until you have a case # in hand, no one cares. The collectors hear this all of the time from people and understand that in 99% of the cases, it's just a delay tactic. Tell them nothing until you have that case #.