Do I need to close ALL bank accounts after defaulting? Do PayPal accounts get frozen?

[DSIG]

BB, So when a 3rd party collector, such as a law firm, sends a collection letter threatening legal action but has no intention to follow through, and has in fact violated the FDCPA because lets say - for example - that none of their attorneys are even licensed to practice in my state, I can't begin to liquidate my assets?

[treehugger1]

Just because some CA or collection attorney has dunned you, this does not constitute "reason to believe" a suit is in the works. In many states, the consumer is always the "least sophisticated." In my opinion, you are free to do with your "cash" as you please. The issue is whether or not you gave "cash" or "assets" away. The other issue is related to "intent." I'm not going to attempt any general discussion of the various state laws. I wll say this. If you know you might be sued or have reason to believe a lawsuit is forthcoming, then protect your assets and bury them under your mattress or ina hole in the backyard. Don't give or transfer any assets to your spouse, parents, children, etc. This is especially true on the eve of a bankruptcy. Use some common sense.

BB's point of his example seems clear to me. However, if there was no record of where the woman's assets went, then the judgment cannot attach to assets beyond that of the debtor.

In my opinion, you can liquidate any assets that you please. Just don't give assets away. If you are heading to BK, then you should be concerned about where your assets went. In terms of non-BK law (at least in my state,) if there is no record of where potential cash assets went, then so what? If there is a claer record, as in BB's example, then you should be concerned. Other than that, any additional collection/attorney fees become part of the judgment awarded by the court.

It is no tnecessarily true that a dunning letter from a CA or attorney constitutes a knowledge of pending litigation. If that were the case, then every debtor would have hundreds or thousands of dollars on deposit anticipating a fraudulent transfer. BB is correct in that pending litigation or possible litigation can suggest a transfer of assets as fruadulent. On the other hand, if there is no "transfer" and you simply have no idea where your bank account or wages went (compulsive gambler, eat out every night at $30 per meal, etc.) who gives a rip?

To answer the last post, I doubt that a dunning letter serves as any notice that you are about to be sued. This is especially true if you have records of many dunning letters and noone has ever bothered to file suit. In my state there has to be a clear "intent to defraud creditors."

I'm not diagreeing with BB. I am only stating the obvious. If you have cash asets, use some foresight to prtect them. Hind sight could cost you far more in terms of a judgment dollar amount. Base your new personal banking/finamcial methods on the assumtion that you could be sued.

[Rog]

I defaulted on a BOA credit card over 5 years ago. The amount was just over $9000. I had and still have a checking account with them. They never attempted to take money from the account, nor have they sued me (and the SOL has past).

With that said, I keep a minimal amount of money in the account. At the end of the month I make a large deposit and pay my online bills immediately. My guess is that the account would be closed if were sued by them or if I filed for BK.

[DSIG]

I agree that you cannot easily dupe the creditors and CAs if you have real property. A simple credit check can show you own real property if there is a mortgage or HELOC loan on the report. That's enough evidence that you have real property. If you made a transfer as part of a short term strategy, you cant hide the mortgage on your credit report; it will stay there for 7 years.

By way of example, I have an Amex account with a hefty balance of $80k or so. Its still with Amex, just got charged off, but has been through at least 3 CAs since Feb. One collector wasted half an hour of my time explaining that he usually finds some solution for the accounts he handles. His solutions consisted of making use of existing HELOC loans, making the debtor take out a HELOC loan, or finding other cards with available credit to do a balance transfer. He said that I dont have any of those options available to me. I have no mortgage and my unsecured cards were either maxed out or closed when he pulled my credit report. I thanked him for wasting 30 of my cell phone minutes and never heard from him again. This CA, when asked to validate, sent me ALL my Amex statements from the time I opened my Amex account. Now, that's ballsy and at a glance looks intimidating if you are the debtor. But, one look at my lack of real property and they did not bother moving forward with a lawsuit, despite the fact that they threatened legal action.

My own example demonstrates that even high balance accounts are not lawsuit material, especially if you have no real property. Now, there is no telling what Amex will do between now and tomorrow when my attorney hits the send button with my bk filing.