Need more info.

[Run]

My wife and I have about $15,000 in credit card debt from school and starting up an unsuccesful business and miscallany. I have student loans that are deffered ($15,000). I am currently unemployed and became so a year ago semi-voluntarily. We have been writing and do not want to go away to work ever again just to play the extortion game where a working man is worth paying enough to keep him coming back and no more (this statement is very old and is taught in philosophy classes everywhere via John Locke etc...). We have three children and we home school the oldest. We want to move out to the boonies here in Alaska and be self-sufficient. We aren't ever going to change our minds and want to be rabid consumers again.

I have a motorcycle in another state with a loan/lien and they can have it (question #1 should I just call them and tell them where they can pick it up?) We have a truck that isn't worth much but works and we like it and I am a mechanic enough. We don't have any assets of value and are highly unlikely to acquire any soon. If one of my books did get published the first thing I'd do after tithing would be to pay off everything I could and therefore any windfall would fall under the same prospect.

My question is what happens in our situation if we do nothing? They already call 24/7 so we just turn the ringer off on the phone. The largest balance is $4000, will they likely seek a judgement and if so how does that work? We obviously couldn't pay it so short of some debtors prison or claiming that our debt was fraudulent what could they do?

We stopped using the cards as soon as it was hopeless. We paid them as long as we could and never intended on stopping until we no longer could. There has never been any fraud on our part. Only that I fear they would interpret our stupid descisions as such since in their minds I'll never publish a book etc...

I am not worried about credit. I want bad credit, I don't want to ever incur any debt again, ever. What should I be worried about?

Land here can be had in remote areas for dirt cheap and I want to build a cabin on it. Would I ever be able to raise any money to buy land or would they simply confiscate it to pay my debts as soon as it went over a few thousand dollars?

I know they will confiscate most of my Permant Fund Dividend, can they also take my childrens?

I am sorry for all of the questions but as you well know, this is a disconcerting experience to say the least.

[HHM]

First, what is the "Permant Fund", (never mind, I answered my own question, its something specific to Alaska). Whether they can touch this fund will depend on your State's collection exemptions, my guess is, the fund will be exempt, but you need to look that one up. I doubt they could touch the kids funds.

To answer most of your questions will depend on your states collection exemptions. All states and the federal govt. have laws that allow you to exempt certain assets from being collected, garnished or seized, to pay debts. For example, all states provide for a home equity exemption, i.e. if you own a home and lets say you owe $150,000 on the home (a mortgage), but the home is worth $200,000...you have $50,000 in home equity...if your state's home equity exemption is $100,000, then unsecured creditors (i.e. credit cards) cannot force a sale of your home (even with a judgment) to collect because your equity is under the state's equity cap.

Home equity exemption only applies to your primary place of residence, so if you were to buy land, it probably would not fall under any exemption until you actually started to live on the land full time.

Anyway, let me spell out the worse case scenario...the credit cards sue you and get a judgment (a judgment probably will happen, eventually, if you do nothing), the judgment will include attorney's fees and continue to accrue interest. Right now you are basically "judgment proof" (sidenote, its a bad name for it as it implies they can't get a judgment against you), what that means is there is nothing for the creditors to collect, no wages to garnish, no non-exempt assets of any value to repo and sell...so the judgment just sits there, accruing interest. If someone is on the ball a few years down the road, they may discover you have bought land...and perhaps they may find out you don't actually live on it yet...if it has any value, they could use the judgment to seize the land and sell it. Also, you said you were hoping to publish a book...if you do and receive payment and royalties, the creditors could use the judgment to seize the payment and royalties. Moreover, if this happens several years from now, what is a $15K debt today, could be a $30K debt in a few years, and it would all be legal.

I will not pass judgment on your choice of lifestyle but I think you should stop and consider your priorities, you wont be able to totally drop off the grid, and your kids may ultimately have other priorities that come before, or should come before, your individual desire.

[HHM]

As for what to do...think of it this way,

Do you really always want to be looking over shoulder regarding any financial move you may make because of some judgment lingering out there on you.

If you want to move out to the boonies, etc...get things cleared up now so your past does not come back and bite your future.

[lrprn]

As for what to do...think of it this way,

Do you really always want to be looking over shoulder regarding any financial move you may make because of some judgment lingering out there on you.

If you want to move out to the boonies, etc...get things cleared up now so your past does not come back and bite your future.

As HHM says, it's best to get things cleared up now before the CC companies end up in court getting judgments that can follow you around for decades.

If you are asset-free and have no desire in the future for credit, why haven't you filed for Ch 7 bankruptcy to wipe out the credit card debts (can't wipe out your student loans though), avoid court-ordered garnishments and seizures related to the cc debt, and be done with it?

[Run]

The reason that I haven't yet filed is that for one I was hoping to be able to just pay it off. It has only been I think two months that we have not been able to make payments. The do nothing approach is easy in the short go as we can't really do anything anyways except bankruptcy which is not a very exciting option. I would love to file and have it done with but I am on an island with a small population and worry that I would have to travel to a lawyer and/or court. I cannot afford an attourney nor to travel. Additionally I worry that they would deny the claim because I do not want to take some lousy job to pay the settlement or whatever.

I obviously do not know what is required of money and time nor what obligations would be forced upon us in order to file and have it go through. I don't know that I am up to all of the ridicule of the decisions that we have made.

Perhaps a good option would be to apply the Permanant Fund money every year to the debt and eventually get it paid off that way. They garnish 80% of what will be between $700 and $1200 per person Ie. this year about $5000+.

Would I be better off trying the settlement option and using the PFD next year (we did not get it this year). I know we would have bad credit but...at least it would get paid off in a year or two and not continue to haunt us.

How long before the companies seek a judgement against me?

[lrprn]

The reason that I haven't yet filed is that for one I was hoping to be able to just pay it off. It has only been I think two months that we have not been able to make payments.

How long before the companies seek a judgement against me?

The typical time frame that credit card companies and other non-secured creditors who intend to go the court judgment route start down that road is about 6-9 months after payments stop. Most cc companies will decide to write off the debt and/or move it to a collections agency who then harass you for another six months or so before they may decide to go down the court route.

Most bankruptcy lawyers provide free half-hour to hour consultations - that is likely the case in Alaska as well. Knowing that travel can be so onerous and expensive where you are, you could arrange to meet with two or three over the phone or even exchange information via email. At least that way you will be operating with sound knowledge when making these long-reaching financial decisions for your family. And if you do decide to file, bk lawyers understand the 'no money' thing very well - arrangements for payment or even barter could be made. But you won't know if you don't take the first step to find out what you are actually up against. Facts are always better than guesses.

Keep in mind that deciding what's best to do in your situation needs to be a cold, hard financial decision using facts that can be verified by a knowledgeable bankruptcy lawyer who knows the ins and outs of the bankruptcy decisions and culture in your area of the state. Don't allow your emotions (shame, fear about filing, etc.) cloud making sound decisions about what is best for your family in the long run.

[HHM]

Additionally I worry that they would deny the claim because I do not want to take some lousy job to pay the settlement or whatever.

You don't have to worry about that.

I don't know that I am up to all of the ridicule of the decisions that we have made.

Nor should you worry about that, they really don't go over your history with a fine-tooth comb.

As for settlement, why pay them something when you can file Bankruptcy and pay them nothing. You would probably qualify for a chapter 7 which would completely eliminate your debt and you are only out of pocket your attorney's fee. With settlement, to settle $15K, you would still need to come up with at least $7,500 (maybe more), even if you waited a year.

I am sure attorneys in Alaska are prepared to deal with people that cannot travel (given the large size of the state), so I am sure phone consultations are not out of the ordinary. However, you would probably have to make one trip to visit the Bankruptcy Trustee for what is known as the 341 meeting.

[Run]

Thank you for the replies. I think I will contact an attorney and see what the process looks like here.

[Run]

Okay, so we had no money to file and have not taken any action. We now have the money to at least start the process, but have some questions.

We are both unemployed and have no assets to go after.

Question #1- Judgment. We have told them on the phone that we have nothing and intend on filing. If they decide to go after a judgment what is next a summons? Can I ignore it?

Question #2- If they do get a judgment will I just include it on the bankruptcy filing just like every other debt owed?

We intend on filing pro se.

So the biggest question is what should we do first? File before a judgment comes? Any suggestions?

[juststupid]

1st - If you get a summons, you can ignore, but I would suggest you don't.

2nd - If they do get a judgement than you can include it on the bankruptcy, we sure included a judgement in ours.

[somnolence]

I know they will confiscate most of my Permant Fund Dividend, can they also take my childrens?

This one I know! They can't garnish your children's PFD. I live in AK too and they garnish all of my PFD, but they don't take my daughters and I'm pretty sure they can't.

[somnolence]

Oh, here is the website for Alaska Legal Services. I was planning to file pro se too, but I should qualify for this and so should you http://www.alsc-law.org/ (I have put my application in and am waiting to hear back from them right now.)

[Run]

Many thanks!