What’s the worse that can happen if I just stop paying?

[alaska708]

I live in Texas, just took a huge pay cut by having to change jobs. Have around $35,000 in unsecured debt here in Texas. What is the worse that can happen if I just stop paying?

I filed a chapter 7 a little over 4 years ago, just cannot keep up with this cost of living,

[justbroke]

I think you can file a Chapter 13 if you so choose.

I can't really answer how your individual creditors would respond. Larger banks, such as Discover Bank, may be aggressive in collections and be the "first to the courthouse steps" to secure a judgment. American Express is no slouch either. Smaller creditors may take 6 months or more to get to that point, but there really is no way to tell what would happen. If the "small" creditor is one of those local "loan shark" places, like CitiFinancial, then expect to be sued immediately (that's why they are local... so they can pounce quickly).

I don't know the garnishment rules for Texas, or if they can garnish (brief glance says no garnishment except for "trust fund" sorts of things like child support, taxes, etc). The problem is if a creditor is able to get an order to levy and get to your bank account, or take other actions on other property. I just can't say.

[alaska708]

No assets, own no house. Thinking about financing a new vehicle while credit is decent, letting the lender on my older vehicle take it back as it needs lots of repairs.

if I file chapter 13 and wait 4 years after my filing of the chapter 7 case I should be ok but really don’t want a ridiculous 5 year payment plan. Will just have my paycheck deposited into my spouses single bank account so am basically untouchable.

[justbroke]

Will just have my paycheck deposited into my spouses single bank account so am basically untouchable.

It may not be so simple. If a creditor gets a judgment, you may have to disclose if you're employed and where you bank. I don't know how a levy action works in Texas, but that is the way they get to your money. It's also likely, that you'll need to be named on the spouse's account to have any money deposited via ACH (Direct Deposit) as most banks check the "beneficiary name" on these types of electronic transfers. (Not all, but many check this.)

[flashoflight]

Will just have my paycheck deposited into my spouses single bank account so am basically untouchable.

You can't use direct deposit. You have to be on the account and they check for that before starting the direct deposit. If you have a paper check, you can go to a check cashing place or deposit through your spouse. If you deposit through your spouse, have your spouse take every last cent out of the paycheck in cash at the in-person teller every payday and you will need to be there to show ID as well. I would never, ever have any of your money land in her account. She cannot use an ATM to deposit your paycheck because no bank will allow a 3rd party check to be deposited at the ATM.

[womanonfire]

I went through a similar situation and what I did was I called all of my creditors and asked for assistance. Several of my creditors initially put me into very affordable payment plans that stopped interest from accruing however my line of credit was cut off. Many of them told me that after paying off the balance, I would be able to easily establish accounts again. You might contact each one ahead of time to see what they have to offer you before you just stop paying all together. When that stopped working and I quit paying, also while trying to avoid bankruptcy, I attempted to settle my debts and was successful with quite a few with targets of 50% of the balance owed or less. This maybe a viable alternative to bankruptcy and should have less impact on your credit score. It also puts you in control over the situation, somewhat that is.

[alaska708]

Thanks for the feedback, just have myself in a bad financial condition right now but not going to let this effect my overall health or stress levels. I can only do what I can do but since I’m in Texas I might just try to ride this out as long as possible and if I need too I will file for a chapter 13 about 4 years and 1 month after my chapter 7 bankruptcy case was filed here in Texas.

Have a car loan for $12,000 that I did to refi cash out, planning on letting this back to the creditor. Car in horrible shape and will buy a new car 3-4 months before filing ch 13 and let them take the car back.

only other creditors are unsecured loans for $17,000 from a credit union. 3-5 credit cards that total $8,500. Probably not worth the court costs for these creditors to take me to court. If they do I own absolutely nothing and I feel depressed about this but I can only do the best that I can. I’ll never be able to afford a home on my wages and current economy, lots more people like me out there but not going to settle and get hit with taxes at the end of the year! Not doing it.

[BKTexBCS]

I have no problem with your plan, especially with the protections TX offers, however things just won't go away. Things will get tricky, you'll need a third party to cash all your checks and pay your bills. If you are going to go this way stop and do not respond to any creditors as it will restart the statute of limitations to collect on the debt.

I think most creditors will either take you to court or sell the debt (took about a year in my case, Brazos County by the way). You will be served papers by the court on behalf of these companies to appear in front of the local Magistrate. Id advice you to show up to hearings to avoid an immediate default judgement. Then they will come for your bank accounts (after the court decision). I'd stop direct deposit and make sure there are no funds in any bank account with your name attached to it.

Our situations were slightly different, all the stress of of the unknowns resulted in me filing 7 to stop everything. Sounds like you have a good understanding of your situation however I'd be leaning more towards chapter 13. 4 years is a long time to wait to have this resolved.

[BKKimOK]

I’m in a very similar situation to you. I don’t own a house, have no assets and 80% of my debt is credit cards and loans that are so high in interest that for over a year now, I’ve been re-financing one, to pay others. I’ve been very financially irresponsible and I take responsibility for that. I filed a 7 4.5 years ago and had really no knowledge of a 13, but when I called my lawyer he said I was eligible, so I went for it just for relief.

Im a little nervous because I just had my initial meeting with the trustee and he sounds like he really hates me and is an ass, but I’m hopeful this is just what he does and doesn’t make my life a living hell for the next 5 years. I guess we shall see, there is no turning back now.

As someone else said, 4 years is a long time to try and escape these creditors. Maybe you should talk with a lawyer and weigh your options.

Best of luck!