Cautionary tale on not talking to creditors

[keptdigging]

(moderators: please PM me if I'm creating too many threads...)

I have read some posters here who were adamant about not talking to creditors because they'll just use the info against you.

I wish I had talked to them.

In my case I initially figured after I stopped paying that I'd soon be filing. And I didn't want to tell them that, and I didn't want to lie. And frankly, with about 12 of them it was easier to just unplug the phone.

What happened is that I discovered this forum and realized my quick filing plans (say on the 91st day after the last charge) were unrealistic when there were balance transfers and advances involved. All in all I went through 2 major shifts in strategy all the while not talking to lawyers until I had "learned all I can." (Yes I'm that kind of idiot.)

Anyway before you know it it's 90, 100, 105 days and Chase it threatening to sue (in writing) and I'm thinking maybe I SHOULD talk to them but first I go online and find that Amex has already sued.

I really think that a (true) story about no current income and a house that's underwater and trying to find income and an (embellished) story about hoping to avoid bankruptcy certainly would have yielded better results than getting sued just over 90 days after the first non-payment.

Having a judgment out there is either going to mess up the timing of my filing or make it very hard to plan and eat and retain an attorney as suddenly I won't be able to use the banking system.

It would have, in fact, been worth it to squeeze out some meager payments to them and keep the timing of everything under my control.

A lesson learned for the next one... good luck.

[WhatMoney]

I would not beat yourself up over this.

The fact is the larger banks such as Chase, and the notorious aggressive credit card companies such as Discover, have decided that a lawsuit is the most efficient way to extract any assets you may have in recovering your debt. This is somewhat recent development. However, you are being sued because on paper you appear to have assets and the ability to pay. This has always been the case. Some of us appear to be completely destitute on paper - no job, no payments for years, no home, no property, no new credit report activity for years, etc. We are never sued unless the creditor is a complete idiot. You appear to be low hanging fruit - and you are being harvested.

It's just a business decision based on the data they have retrieved about you.

You could have talked to them until you are blue in the face. If would make no difference unless you could indeed prove you had nothing left to lose.

[catleg]

I agree -- don't beat yourself up. You have no way of knowing that they wouldn't have sued you anyway even if you had talked to them. In my opinion these decisions are made by a computer model and it's unlikely that the impressions of front line collections reps carry much weight.

If I were running a bank and writing such a model I'd be looking for stuff like this to decide to sue:

-- appears to be working (important: wage garnishment is their best tool for collecting)
-- appears to have equity in property (getting a lien on real estate used to be an effective tool, not so much anymore)
-- appears to be paying others (settling other cards, paying utilities, paying mortgage, implies money is coming from somewhere)

Again I suspect for purposes of the "model" these inputs are harvested from databases and not typed in based on the opinion of a phone rep, though that might be given a small value.

[frogger]

Things are now changing in the collections world. There is quite a bit of new software coming out that does automated property searches, asset searches, pulls credit reports, and comes up with targets that are a good candidate for a lawsuit.

While in the past, all of this was gathered and looked at by a person, the computer program now does it and generates a list of who should be sued.

Times are changing. Fast.

[bobbyquefour]

Yes, and I think they will only change faster and faster. I only stopped answering the calls when I was sure I was filing BK within the next 3 months......AMEX and others seem to be suing faster and faster now. I believe what catleg says to be true: it is computers doing most of it now. There is no way companies have the resources to assign a human being to every case--probably only the really huge ones with huge balances and huge assets they can easily discover. But I believe the days of people being able to not pay for a year and not get sued are quickly approaching ending. So in my opinion the best thing to do is to make payments up until you absolutely cannot anymore. Even if you have to get in a payment plan with them (which they will normally not do until you are 60-120 days overdue).....but to just pay nothing and hope you can hold out for extended periods...banks are going to speed up the process...they want to sue before you file BK.....Just my opinion, of course, and I am no expert.

[bobbyquefour]

I only stopped answering calls when I knew I was about 90 days from filing. Until then I tried to make payments, even when they were smaller than what was due and I kind of knew I was throwing away my money: I figured something was better than nothing and I was showing some good faith.

I agree with others that the days of people not paying a dime for many months and not answering the phone (believe me, we have ALL felt like that) are over as far as how fast lawsuits are going to be coming. Creditors want to sue faster and faster now BEFORE you file........

There will always be the lucky few who can claim "I have paid nothing in 14 months and haven't been sued yet" but they are a smaller and smaller percentage nowadays, and I have to ask myself why they are waiting so long to file and face the inevitable...though filing is a very hard personal choice to do, like admitting you have a problem with drinking and actually doing something about it. Denial is just a river in Africa, and I get that.

But my advice to folks, and I'm no attorney, is to stop answering those calls only when you know you are going to file SOON. Otherwise you might just get sued quicker if they can't reach you AND you've made no payments.

Sorry for the double post, folks. For some reason, something is up and sometimes it looks like it doesn't accept your post on here and then you see it pop up 5 minutes later.....sorry.

[albacore44]

I think this is a new development, probably brought on because so many people are defaulting and qualifying for Ch-7 when the banks thought the overhaul of the BK Laws would yeild better results. I filed in January 2010when I knew several of my cards were close to Lawsuit. I had 25 cards with various banks, stopped paying in Jan-Feb 2009. I spoke to 1 collector and never answered a single other call. Today, I am 30 days away from Discharge. yes, i have property, and a job, and assets, but all exempted.

I think the banks are moving faster out of fruastration.

[jacko]

So they sue. Maybe a wage garnishment is cheaper than paying the min on each creditor before the eventual filing.

I have been sued by Crap One and they got a judgment. Took pro active steps to protect my cash like closing my local checking account. They raised the white flag when they could not seize anything. Maybe if they read my credit report like my other creditors did, would of saved them hundreds in court costs.

I would not make any payments. Would park my dough in a WalMart money card and pay pal.

Yes, and I think they will only change faster and faster. I only stopped answering the calls when I was sure I was filing BK within the next 3 months......AMEX and others seem to be suing faster and faster now. I believe what catleg says to be true: it is computers doing most of it now. There is no way companies have the resources to assign a human being to every case--probably only the really huge ones with huge balances and huge assets they can easily discover. But I believe the days of people being able to not pay for a year and not get sued are quickly approaching ending. So in my opinion the best thing to do is to make payments up until you absolutely cannot anymore. Even if you have to get in a payment plan with them (which they will normally not do until you are 60-120 days overdue).....but to just pay nothing and hope you can hold out for extended periods...banks are going to speed up the process...they want to sue before you file BK.....Just my opinion, of course, and I am no expert.

[catleg]

Some good points here.

As case filing becomes more automated that will make it easier for creditors to file suit.

On the other hand, as states raise filing fees to cover their budget deficits it's going to cost more to file.

I've read a quarterly earning call transcript with the CEO of Portfolio Recovery, those junk debt buying weasels. And the issue for them is not whether they can get a recovery, it's whether the time and money they invest is justified by the return on investment.

Good point on the garnishment issue too. At some point it simply becomes cheaper to allow wage garnishment than to file BK. (cue treehugger1)

[jacko]

If all your cards have been discharged, why even bother settling. It won't make your credit report look better. Take pro active steps that treehugger and goingdown have used to protect yourself.

It amazes me that folks are so worried about their debt(credit)score and will go overboard in trying to protect it. My last use of a credit card occurred 18 months ago. I have learned to budget and say no if there are no funds to purchase which makes you think if you really need it.

[jacko]

Also, if I am reading this right in regards to IRS garnishment guidelines. The first $1004 of monthly income for a single resident is exempt from garnishment, more if you have additional family members. So a garnishment for some maybe the way to go which could be cheaper than being a slave in paying the min on each creditor.

Be proactive and check your state exemptions.

[keptdigging]

No wages to garnish... own home but no equity. Likely result is that they'll just have accelerated my filing. If they do actually snatch something (say I leave some cash in the bank,) they'll just make a TT very happy cuz he'll get to claw it back and take his cut. But BK gives me California System 2 exemptions as an option (it is only available for bk, not judgments in general) so worst case I'll probably file sooner and just roll the dice on being able to settle any APs.

Fortunately I'm having a little more success at getting a hold of attorneys.

[GoingDown]

So they sue. Maybe a wage garnishment is cheaper than paying the min on each creditor before the eventual filing.

I have been sued by Crap One and they got a judgment. Took pro active steps to protect my cash like closing my local checking account. They raised the white flag when they could not seize anything. Maybe if they read my credit report like my other creditors did, would of saved them hundreds in court costs.

I would not make any payments. Would park my dough in a WalMart money card and pay pal.

CrapOne sued me over a lousy $300 credit card (in the wrong state!), and I was quite judgment proof at the time (and still am), so they obviously don't seem to take much time or effort deciding who they will or will not sue. But they have not yet received a penny from that judgment.

As for the original poster, unless you can afford to make the payments in the payment arrangements they set up for you, they would have sued you anyways. Just talking to them wouldn't stop them from suing you. And if you could afford to make those payments, then you wouldn't be in this mess right now.

I have heard many people say how they agreed to make payment arrangements with the creditors, then after a certain number of months of making payments on time, the creditor suddenly demands a higher payment, or simply demands to be paid in full, and when the debtor is unable to do that, then they sue them anyways.

Out of all the many charged off credit card debts I had, only one ever sued me. The rest discovered I was judgment proof and didn't bother suing me. And I did not talk to them on the phone. They all got cease and desist letters and judgment proof letters in the mail from me.

[junquemayle]

I just stopped paying on my cards after depleting my savings. I have a meeting with an attorney this afternoon, but I definitely can't file before July (due to 6-month look back on wages).

I have already started to receive calls from Chase every morning (payment was due 2 weeks ago). I have been ignoring the calls and letting them go to voicemail. So far, it has only been automated calls.

Does anyone know what the process is for the cards? Do they try to collect for 30 days, then send to collections for a while before they file suit? Do they always send demands in writing first? I have equity in the house and an above-median income, so I am looking at a 13, and I probably would appear to be a prime candidate for the "model" that catleg outlined earlier....

[flyinbroke]

Keep your head on a swivel; Chase is one who sues quickly and often.