Motion for Default Judgement - Citigroup

[toby]

Hello everyone. I am currently college student, no income, no asset. 2 months ago, Citigroup has filed a lawsuit against me about my credit card debts. Before I owned them $1200. After adding up interest and fee, I now own them $1700. Then they filed the lawsuit against me. During that time, I wrote them a letter to negotiate a settlement and Citigroup agree to let me pay $1500 and settle down the debt. But I have failed to make that lum sump payment. and Now I receive this letter Motion for Default Judgement. The court asked me to appear at 06/03/08. What is the best option should I do?
- Should I filed for Bankruptcy (I currently owned about $15000 credit card debts)
- Should I pay Citigroup?
- If I dont show up for court apprearance, could they go after my checking account. I currently have $1600 in there.
- What would happen if I decide to show up to court? What could happen to me?
Thank you so much

[toby]

CitiBank sent me like a post card that have Case Number, Date and Time for Hearing of Motion for Default Judgement. Does it mean that I have to show up in order to defense myself and buy some time for myself. Or do I already have the default judgement against me. I did receive some letter a summons and complaint from Citi Bank that require me to answer to the court. But those letter didn't tell me what time and date is the hearing though. This is the first letter that I got stating that time and date of the hearing.
When I settled down the debt with CitiBank, they sent me a letter to require me to make a lump sum payment. But I didnt make any payment to them at all. I think that's why they continue to pursue the case and file Motion for Default Judgement.

[FreshLikeADaisy]

Toby, BigBoy asked you some really good questions... I agree you need to settle these first to get to a good plan of action.

But in the meantime, if they DO get a judgement, you don't want to have that cash in the bank. If they get a judgement, then you may be facing imminent garnishment and/or levy of your bank accounts.

The way to minimize the effect of a levy on your bank acct is to simply have very little in there -- maybe $10 to keep the acct open -- and start paying your bills with money orders until you can decide on a more permanent course of action. You may also wish to look up how garnishment works in your state, and see if you can file a Claim of Exemption, which can reduce and even eliminate how much they are able to garnish. Do this BEFORE they get a judgement!

I wish you well. Good luck!!!

[toby]

Thank you so much for your promptly reply. Im sorry that I wasn't clearly explain my situation. There is a law firm that represent CitiGroup in this case.And I make the deal with the law firm and they sent me letter stating that they accept settlement if I pay $1500 in lump sum. Right now I have checking account with $1900 in there. If I didn't show up for the court, I would have default judgement against me. Can they freeze or take money from my checking account. I have defaulted on CitiBank credit for over a year. I live in Ohio. I just don't know what is my best option. Should I pay for them, or let them take money from my checking account due to default judgement. Because I really don't want to file for Bankruptcy for only $15000 credit card debt. I can still work and pay for it later on. But right now, I am really tight on money.

[toby]

Currently I have no asset and no income. Basically, I am judgement proof. Because I am college student, I'm afraid that BK will affect on my future career outlook. So I am thinking of taking student loans to pay off those credit card debts first. And then work and make some money to pay off student loans later on.
Well, if I can negotiate those $15K debt to $5K. I would definitely pay for it. But I seems like its very hard to negotiate with those creditors. Usually, they only give me $0.75 on the dollar.
I will try to send the law firm that represent Citigroup another settlement letter and see what they said. Hopefully they accept my settlement.
Wish me luck guy. If you by any chance have some kind of sample of settlement letters. Could you post on the forum for everyones to take a look at. Or maybe I could post my letter to Citigroup and you guys tell me what do you think

[treehugger1]

If you already have a court date (summons) then I would have to think the suit will go forward.

There are many law firms that operate a bit like a factory in that they schedule several hearings at a single time. You should have (or should, if not too late) respond with an answer. There are other sites on the web that have more information as to how to do this. You might google debtor forums, boards, etc and see what you can find.

[toby]

Hello everyone. Thank you very much for all of your help earlier. Last week I sent a letter to the collection agency to settle down for my debt that recently scheduled for Motion for Default Judgement. And all they sent me was the letter stating the time and date for court appearing. Do you think should I show up for that court hearing? With my apprearance, could I at least delayed judgement against me?
Currently I have one checking and saving account, but I never used this checking acct to pay for Citibank credit card. Do you think can they find out this checking acct and garnished the fund? Also I have another joint checking account with my wife? The credit cards that I owned solely on my name. Do you think the creditor can garnish from my joint checking acct with my wife?
Thank you so much.

[WhatMoney]

You could show up for your hearing and see if they will settle with you for $1500 or less, and then dismiss your case. They would probably want a bank cashiers check given your past payment record.

Otherwise, they will get a default judgment, and you will owe the full amount including interest and their court costs. And yes to execute their judgment they will find and levy your checking accounts, including the joint account with your wife. If you close your own checking account before the judgement and also close your joint account and have your wife reopen it only in her name, you might escape a bank levy. You would need to keep your funds in cash. But if they wanted to play nasty and ask for a debtor's exam after the judgment, you would have to reveal your past accounts, closed or open. What happens then is unpredictable.

[WhatMoney]

Another thought - withdraw your checking account funds and open an IRA account with your funds. Your IRA money is exempt from judgment.

If you leave your account's open, but with a small balance, they may still seize that, and you will have to pay the bank a legal fee as well, typically $75 - $150. Basically they can go after any of your non-exempt assets forever once they have the judgement, unless you file for bankruptcy. And when you get a job, they can take 25% wage garnishment until the debt is paid.

[WhatMoney]

Nooo, you can not convert none exempt assets into exempt assets once you have been notified of pending legal action. And a summons and complaint is the top of the scale for being notified of pending legal action against you. The judge would merely reverse and undo any conversions or transfers that occurred after the day you were served.

Well, that's assuming you appear and volunteer your financial past transactions. Otherwise they are only going to find out what you did through a post-judgment assets exam or interrogatory. And depending on who has the judgment, that's not always a given.

If you wait until after the judgment to move your funds out of your bank accounts, what are they going to do? You have every right to protect your checking account from a bank levy/major funds seizure, by removing the funds. You don't just sit their like a duck waiting to get shot. Did you withdraw your funds only to lose them all at a nearby casino playing the $1 slots? Oh well, you've accounted for the withdrawn funds.

Now a conversion to an IRA leaves a paper trail, so that may be a problem if done soon after the judgment. On the other hand you are never too young to start your retirement planning. Keeping the cash under your mattress is always an option.

Given the OP has a long working career ahead of him, he will need to pay this bill eventually (assuming no BK discharge of all his debts). It's a matter of avoiding paying the judgment now (by protecting his limited cash), and paying off later through wage garnishment or asset seizure or a later settlement, vs an upfront settlement now. His choice.

[WhatMoney]

BTW, an unpaid money judgment on your credit reports is probably just as bad as a bankruptcy. So either could affect your future job prospects, mortgages, and other credit. If I was still in college and could afford it (as it appears you can) I would try to settle before judgment as BB4U has suggested. You might also try for a PFD (pay for delete) from your credit reports if you want to clean up your credit.

It all depends on how confident you are that you will not get back into debt trouble with your $15K outstanding CC debt and student loans. A high paying professional job after college should bale you out. If that doesn't work out, then BK is your eventual choice.

[toby]

I'm really appreciate for your promptly reply. After reading all of your reponses, I would definitely go to court and try to make a deal with them. Law firm that represents Citi group is West something. So what would you recommend that I should to bring to court? My tax papers?

[toby]

I have found out the law firm office that sued me is near my apartment. Should I come to their office and try to settle the debt that I owned to citibank? Im thinking to bring with me a $900 in money order (to settle the debt out of $1200) and persuade them to accept my lump sum offer. Should I tell them that I am thinking about filing bankruptcy. They can get this $900 or nothing. Because my hearing for default judgement is nextweek. If the law firm successfully have the judgement against me, the judgement will stay on my credit report for 7 years FROM the date I pay the debt off. What do you guy think? Lemme know

[toby]

I recently got in contact with their representative from that Law firm through email. And they said my offer $900 is too low. They only accept $1500 as a lump sum payment. I original owned Citibank $1200. But I think due to interest charges and late payment fee, the debt added up to $1700. And CitiBank sold that debt to this law firm. So do you think $900 is reasonable amount, or should I go for $1500 from their offer? I have reply their email and stating that $900 is all I got and I am thinking about filing for bankruptcy.
Assuming that they will get a judgement on June 6, 2008. Could I take all of the money out of my current checking account before June 6 and move it to a joint checking acct with my friend in different bank. Do you think this will delay the law firm levy my new joint checking acct with my friend. Thankx

[Carmen830]

From what I understand, once you ACCEPT a settlement offer from the bank, you are required to pay them in the form the settlement was offered. If you accept the settlement offer and DO NOT pay them, they can sue you for the FULL amount of the debt and the settlement will no longer be accepted by them. If you have been sent a notice with a court date, you need to make it your business to go and see what can be arranged. By you NOT showing up at the court, you are making things a lot uglier for yourself.