Wait to be sued for old CC debt? Set up payment plan? Ignore it?

[pdxgrrrl]

Back in January, I received a letter from a lawyer who wanted to sue me for an old Bank of America credit card I defaulted on. They said I owed $6200 when the final balance before charge-off was $3100. I did the debt verification and validation thing and just received another letter from the lawyer. This time he's asking me to contact his office to "discuss the sum of $3100 plus interest at the rate of 27.7% per annum." He wants to hear from me within 10 days -- the letter is dated March 19 and I received it on Monday.

What do I do now? I owe the debt -- one of the documents I received during the validation process was an old statement with the amount of $3100. I have no money to settle the debt and am broke until Friday. I could possibly manage to pay off the debt at $50-$100 per month, but there's no way in hell I can afford the full amount upfront. How do I set up a payment plan? Can I do it in a letter? I really don't want to talk to this person on the phone.

This is just one of the many debts I have. I've thought about bankruptcy and have visited two lawyers, but lack the funds to hire a lawyer or file for BK right now. (Both lawyers wanted at least $1000 to retain them. Ha ha, like I can afford that.) I'm thinking about possibly filing later in the year after my financial situation improves. (I'm paying too much for rent and am looking to move to a cheaper place when my lease is up in June. That would free up $200-300 per month for me.)

I'm not sure what to do. If anyone has any advice, I'd appreciate it.

Thanks.

[EricaCallaha]

Are you serious about filing bankruptcy? Because if you are....don't bother responding. They will keep sending letters and calling you. Save as much as you can as fast as you can and retain a lawyer. And, stop using your cards. Stop paying your cards. Use that money to live on and save for attorney and filing fees.

Check out the website www.legalconsumer.com. It has a means test for you to plug some numbers into to find out what kind of bankruptcy you qualify for. It will give you a rough estimate of the kind of payment you could be looking at in a Chapter 13 or if you qualify for Chapter 7.

Good luck. It's a mess we are all in or have been in. You are in the right place.

[pdxgrrrl]

Thanks for the reply.

Unfortunately, not making CC payments to save up for BK isn't an option for me. All of my debt is old -- I started defaulting on CCs and medical debt after I was hospitalized and lost my job a few years ago. All of the CCs were charged off and I've been dodging letters and calls from CAs and lawyers since 2004, and living with bad credit. (I can't get approved for anything now.) I also have some nasty tax debt that needs to be taken care of at some point.

I'm not sure how serious I am about filing BK and coming up with the money will be a major strain for me. (I live alone and only have one income. I live paycheck to paycheck.) I do know that I don't want this lawyer to sue me and to have my wages garnished, that's for sure.

[StartingOver08]

Well, two things: you might consider a Ch 13 where the attorney fees are included in the plan and your tax debt is also included in the plan. IF you make less than the median income for your household size and state, you may even only have to have a 36 month plan. There are plans were zero is paid to the unsecured creditors.

You need an experienced attorney to guide you. The initial consulations are free. Also, checkout this site to get acquainted with the process so it is not so overwhelming.

A Ch 7 does not take care of the taxes - but you certainly can take care of them in a Ch 13.

Also, depending upon your income you may have access to free legal help. I can't remember the organization right now (my brain is tired!-) but someone else will answer soon with the name.

[pdxgrrrl]

I've already seen two attorneys. Both of them wanted at least $1000 upfront. One of them thought I should do a Ch. 13 (to take care of the CC debt and taxes) and he wanted $1000 upfront and then $2500+ rolled into the payment plan. He was the first lawyer I saw and I wasn't too impressed. The other recommended doing a Ch. 7 and dealing with the IRS on my own. He wanted a $200 retainer, plus another $800 before filing, and then I'd have to pay the BK filing fee, of course. Neither one of these guys is even remotely affordable at the moment, unfortunately.

I also saw a guy who basically wanted to counter-sue the lawyer threatening me. He wanted a $750 retainer and charged $225 per hour after that. (He also charged me for the consultation.) Needless to say, I didn't retain him.

[2Bshinyandnew]

I've already seen two attorneys. Both of them wanted at least $1000 upfront. One of them thought I should do a Ch. 13 (to take care of the CC debt and taxes) and he wanted $1000 upfront and then $2500+ rolled into the payment plan. He was the first lawyer I saw and I wasn't too impressed. The other recommended doing a Ch. 7 and dealing with the IRS on my own. He wanted a $200 retainer, plus another $800 before filing, and then I'd have to pay the BK filing fee, of course. Neither one of these guys is even remotely affordable at the moment, unfortunately.

I also saw a guy who basically wanted to counter-sue the lawyer threatening me. He wanted a $750 retainer and charged $225 per hour after that. (He also charged me for the consultation.) Needless to say, I didn't retain him.

Many folks retain an attorney for $200-$300 and give monthly payments, until the entire balance is paid and then file. It could take a year but in the end you will have the ability to take some positive steps in solving your financial problems. The good thing is that once that initial retainer is given, many BK attorney's will allow you to send all your creditors calls and letters to them, so you can get on with the job of living (and preparing for your bankruptcy)

Once you find a cheaper place to rent in june, that $$$ you free up could go towards paying your BK attorney. If you have many debts, the $1800-$2500 you will pay is small price to pay. If you liked any of the attorney's you have already seen, perhaps ask if a payment plan is an option.

Also, how old is the BOA debt you are dealing with right now? Do you know the statute of limitations of the state you are in?

[EricaCallaha]

You need to go interview more lawyers. Go see the ones who give free consultations and take all of your numbers with you. A Chapter 13 may be a really good option for you to take care of the tax debt and erase the credit card and medical debt. Keep hunting for an attorney. We paid only $50 to retain our attorney and had the rest rolled into our Chapter 13 plan. I know that you can't do that with a Chapter 7 because you can't bankrupt your attorney and you have to have the filing fees. But a 13 is cheaper to file than a 7 and many attorneys are more than happy to be paid within your plan.

Good luck. I hope it works out.

[dingdong]

The SOL in Oregon is 6 years. IS their any way you can wait it out until the SOL expires?

If you make a payment on the debt, the SOL will start over.

If the creditor hasn't sued yet, there is a chance that they won't.

You stated that the debt was from 2004. Do you know that dates that you stopped paying the debt?

If you do happen to be sued for the debt after the 6 years has expired, then you can raise an affirmative defense stating the debt is time barred for collection and the creditor is S outta luck.

That doesn't mean that they cant keep contacting you, but it does mean they have no legal standing to sue as the SOL will have expired after 6 years from the last activity (payment) on the debt.

As an example, say you last made a payment in Jan 2004, the creditor has until Jan 2010 to sue you. It will take a couple of months for them to most likely get their ducks in a row to sue you, so IF they do sue you , then get a garnishment, by the time that all happens you may only have a few months where you are at risk of garnishment.

If you are able to save for an attorney to file BK in those few months ( given that they sue, they may not since they haven't yet) the judgement would be wiped out n BK.

I personally would wait it out, your debt being so old it was probably purchased by a Junk Debt buyer and they are probably just trying to use strong arm tactics to get you to pay. If you do pay, then the SOL starts all over again.

See if you can wait and try and save some money for an attorney in the mean time, you may just beat the SOL and have nothing to worry about.

[dingdong]

Also, post the name of the lawyer threatening to sue you. It may be a junk debt buyer who uses a junk debt lawyer to scare debtors. Hunt Henriques is one of them. They are basically junk debt buyers that contract with slimey law firms which I believe is more of an intimidation tactic.


There are quite a few of these types of junk lawyers, who are really just debt collectors.

How much is the debt? Also check your state's garnishment laws, most of your income may not be subject to garnishment.


You also might try calling the IRS and work out a payment plan for your back taxes so you don't get hit with a tax levy or wage garnishment from the IRS.

If the JDB starts threatening garnishment, tell them you have a lot of back taxes and are expecting a garnishment, tax garnishments have priority, so even if the JDB was able to get a garsnihment, they may not sue knowing they may have to wait a long time for their garnishment to take effect. Most states allow for only one garnishment at a time.

Here are the garnishment laws for ORegon.

Wage Garnishment and Bankruptcy Exemptions -- Oregon
WAGE GARNISHMENT EXEMPTION: 75% of disposable earnings or 40 times the federal minimum hourly wage, whichever is greater


MAXIMUM INTEREST RATE: Judgment: 9% or contract rate


STATUTE OF LIMITATIONS ON ENFORCEMENT:


Open Account (credit cards): 6 years
Written Contract: 6 years
Domestic Judgment: 10 years (renewable)
Foreign Judgment: 10 years

Calculate what 25% of your disposable ( after taxes, basically) earnings are, that is what may be subject to garnshment.

For every 1000.00 of after tax income, 250.00 may be garnished.

If the amount you are thinking about paying is more than that, it makes sense to wait out the SOL and see if they sue you.

Even if they do serve you, and you are worried about garnishment, you could possibly negotiate prior to the court date for a payment stipulation on the debt.

[pdxgrrrl]

The name of the lawyer contacting me is C. Thomas Davis, an attorney based in Beaverton, Oregon. The SOL in Oregon is 6 years and I know the debt is still collectible under the SOL. I last made a payment on this CC back in either December 2004 or January 2005, after losing my job due to an illness. I had about five CC's at the time and couldn't keep up with them all. All of them were charged off.

Anyway, C. Thomas Davis is acting on behalf for JPRD Investments which, according to the paperwork Davis sent me, bought the old CC debt from Cach, LLC in September 2008. I don't recall receiving any mail or calls from Cach, but the account was bounced around from CA to CA since 2005 and I still have some of those letters. I Googled JPRD Investments and couldn't find much info about them, although according to various newspapers in the northwest, they routinely get judgments against people for debts with CapitalOne, B of A, etc.

Crap. I don't know what to do.

[treehugger1]

This has happened to me on several occasions. So far, I have no suit against me from one of these CA/attorney firms. I suspect they will eventually come to my county and file a suit. It is unlikely they will proceed unless they feel there is a good chance of recovery (they probably need to recover money to be paid.)

I did notice that one firm over in the Willamette Valley recently had a suit on the docket in the county where I live (middle-of-nowehere, Oregon.) So, occasionally these firms will sue. Since the case was on the court docket, I have to assume the defendant filed an answer (about $190 in Oregon.) It is unlikely they will go for small claims as attorneys cannot represent clients in small claims here. As a result, you should have time before the summons arrives and 20-30 days to respond.

You "could" contact them via mail and state that you are neither denying or admitting to the debt, but you consider the debt a nuisance, and would they take 36 - 60 payments at $## per month? Just be careful to not admit to anything. Just my opinion.

Keep in mind that it does not take long from default judgment to writ of wage garnishment in Oregon. They can essentially have the judgment one day, and file the writ and have it served in a couple of days. The writs in Oregon are only good for 90 days. If the debt is not satisfied through wage garnishment within 90 days, then they have to file and issue a new writ. Since the debt is somewhat large, they might work with you. The truth is that if you are prepared to file a BK 13, then it will be as long as five years before they get their money (or some percentage.) In these times, I would think the attorney's office would like to have some type of settlement without going to court. No way to know for sure.

Their next step will require a suit to be filed and service to you. Once you are served, then you will truly need to make a decision.

[All Cash]

A Ch 7 does not take care of the taxes

Wrong. Federal taxes are dischargable provided you filed your return 3 years from your bankruptcy filing.

[BigJohn]

The name of the lawyer contacting me is C. Thomas Davis, an attorney based in Beaverton, Oregon. The SOL in Oregon is 6 years and I know the debt is still collectible under the SOL. I last made a payment on this CC back in either December 2004 or January 2005, after losing my job due to an illness. I had about five CC's at the time and couldn't keep up with them all. All of them were charged off.

Anyway, C. Thomas Davis is acting on behalf for JPRD Investments which, according to the paperwork Davis sent me, bought the old CC debt from Cach, LLC in September 2008. I don't recall receiving any mail or calls from Cach, but the account was bounced around from CA to CA since 2005 and I still have some of those letters. I Googled JPRD Investments and couldn't find much info about them, although according to various newspapers in the northwest, they routinely get judgments against people for debts with CapitalOne, B of A, etc.

Crap. I don't know what to do.

If you want to do something, send a lawyer demand proof of the debt. He represents a JDB (Junk Debt Buyer) and there probably is a 99.9% chance they do not have real documents to support their position.

[BigJohn]

If you do send off a letter, make sure it is done by certified mail.

[StartingOver08]

Wrong. Federal taxes are dischargable provided you filed your return 3 years from your bankruptcy filing.

No you have to file your taxes on time. IF there are amounts that are due to the IRS that are more than 3 yrs past due those are the only ones that are dischargeable, but you are responsible to pay the taxes within the past three years.

There is a thread posted by HHM on this very subject with the deadlines. Don't mislead the OP.