experience with NOT filing bankruptcy

[philnk]

I am in dept with 9 creditors. What will happen if I just let one of them file for binding arbitration? What will the others do?

[aa06a47]

I wouldn't allow it to go to arbitration. Why would you even consider this?

[GoingDown]

I am in dept with 9 creditors. What will happen if I just let one of them file for binding arbitration? What will the others do?

Once one of them files, the others are likely to file as well, but the answer depends on a lot of different factors. It depends upon how much you owe each creditor and who your creditors are and whether or not you are "judgment proof". One of my friends has a Capital One credit card that she stopped paying over 2 years ago, and they never went to binding arbitration, nor did they ever file a lawsuit against her. But, she only owed a principal balance of $300 on it. It has since ballooned up to $1,700 with interest and fees. According to Arizona Law, that debt is now unenforceable because the statute of limitations has expired on it, so they can't sue her and win at this point. But, I think that only happens if you owe a tiny amount like that. If you owe over a certain amount, probably anything over $1000, they will probably go to binding arbitration or file a lawsuit against you. Once they do that, your credit report will show a judgment against you, which looks very bad to prospective lenders and prospective employers. At that point, depending upon which state you live in, if you have verifiable wages and don't get paid under the table, then you will have your wages garnished, which would be likely to upset your employer, and may get you fired because it is a lot of added paperwork for your employer to deal with. And if you have any money in a checking account or savings account, they can seize it, so you'll have to start using cash and money orders to pay for everything. If you own real estate, they can put a lien on your house.

On the other hand, if you're judgment proof-- you don't own any real estate, you use cash instead of checking accounts, you live in a state that doesn't allow wage garnishment (Texas and a few others) or you get paid under the table or you are self-employed-- then their judgments against you won't do much to you except ruin your credit for 7 years. If Texas wasn't such an awful place to live, I would consider moving there, because then I could get a regular job and not have to worry about getting my wages garnished.

[LostOne0069]

Note here that the judgement ruins your credit for the FULL 7 years... your credit won't start rebuilding until after it drops off... unlike bk where your credit starts improving immediately upon discharge.

[Rover]

While your credit card agreement might have an "arbitration" clause, I believe that in order to collect if you stop paying, the creditor would have to file a lawsuit. Arbitration would not be involved.

Whether a creditor would actually file a lawsuit would depend greatly on how much you owed. If the amounts owed were small, it just wouldn't be practical to file a lawsuit. No lawsuit - no judgment.

If a lawsuit is filed, get a copy of a book on how to represent yourself if you have the ability to do so. When you are served a summons, file a Motion to Dismiss, don't file an Answer immediately. That will buy you several months. If the attorney files an amended complaint, file another Motion to Dismiss. You can probably buy many months of time before you even have to file an "Answer" to the complaint. Then, after you do file an "Answer", you can stretch things out many more months, and so on. There's a chance the attorney will decide that it's just not worth the hassle to continue pursuing you.

If you are sued, the worst thing you can do is to do nothing. If you just take some time to learn how the lawsuit game is played, you can ride the court system for a very long time.

Bankruptcy is not always the best thing for everyone. There may be situations where just not paying and fencing with the lawsuits, if any, would be a better strategy. Particularly, if your credit is already ruined and you don't really care. If your credit is already bad and you are judgment proof, a judgment is not very meaningful.

[debtisbad]

Just curious--why is Texas an awful place to live. My mom said Suze Orman said on her show that Texas is the next hot spot. Florida is over priced and Texas has great weather. Just curious? Thanks.

[Rover]

I thought I should expand on my previous answer.

Since one has to wait 8 years to file Ch 7 again, one should use their Ch 7 opportunity judiciously.

For example, if there were a significant chance that you might incur additional substantial debt in the not too distant future (perhaps, medical expenses), it might be a better strategy to postpone bankruptcy as long as possible so that you could include future debt as well.

The trade-off is dealing with harrassing calls from collectors (which is no big deal IMHO), lawsuits and subsequent judgments. But protecting your opportunity to file bankruptcy might just be worth it in some cases.

[Minnymouth]

Filing bankruptcy is not for everyone!! It should really be considered a last resort to solving the financial problem as it stays on your credit report for 7 years. And it does affect every aspect of your life afterwards - getting new credit, buying a home/auto, even getting a job....
If your debt is not very high, and you can pay it off working a temp parttime job.... then I would suggest that!

But large financial problems of job loss, medical bills, etc are not going to "go away" and usually only get worse as time passes. It works on you financially, mentally, physically, and emotionally as well trying to deal with it. That is when the time comes that you need to file bankruptcy and get a "fresh start" in life.

Sometimes carefull planning, a parttime job, consolidation will help solve the problem.... but often it all comes down to having to file bankruptcy.

Yes, a lot of thought should be given to filing....

[philnk]

I owe MBNA $42,000 and the total owed all credit cards is about 75 grand. Looks like the credit card companies have given up on calling me. Maybe they are getting ready for lawsuits.

[edwards2]

philnk -we had 2 MBNA accounts that totalled $20K. This was sometime ago so I dont know how they do business now but they were extremely - shall we say diligent - in making sure payments were made and on time. They were also constantly raising our limit - not their fault - we could have resisted but we didnt. Anyway when the account reached the $20k mark we got a home equity loan and paid it off. I have a friend who also had one and they went after she and her husband with a vengeance. I cant imagine they will let that kind of balance go. As Minny said BK is a very tough decision. The laws have changed since ours was discharged last year but regardless the process is still basically the same. It is embarrassing and emotional and the fallout is not pleasant but it is an opportunity for a new beginning and we desperately needed that. Unless you win the lottery owing that kind of debt will take a lifetime to repay. Rest assured the cc companies are not going to sit back and do nothing - that is fairly obvious. I am not advocating you file just pointing out the obvious. I would consult an attorney and see what your options are. Good luck...

[philnk]

Is there a point in the binding arbitration process, where filing Chapter 7 bankruptcy petition can't stop it?

[2LiveSimple]

Couple Questions

1) I am in a debt consolidation program..I owe on numerous credit cards..they negotiated a lower interest rate ..etc..you guys know the routine. My question is how will a trustee see that? Would they be more apt to want me to file chapter 13 as opposed to 7?

2) What is binding arbitration and how will I know if a credit card company decides to use this?

Let me just say on a side note..overall I think this site is a great place..and so far I have only been informed and encouraged.

[JeepMom]

1) I am in a debt consolidation program..I owe on numerous credit cards..they negotiated a lower interest rate ..etc..you guys know the routine. My question is how will a trustee see that? Would they be more apt to want me to file chapter 13 as opposed to 7?

2) What is binding arbitration and how will I know if a credit card company decides to use this?

Let me just say on a side note..overall I think this site is a great place..and so far I have only been informed and encouraged.

1) Our trustee looked at it as a good thing. It showed we were making an effort but we just couldn't do it. There's not much difference IMO between Chap 13 and Debt consolidation. We filed 7 with no problems.

2)I belive that is when they sue you. If you are in consolidation making payments they can not come after you. They come after you if you just ignore them and don't send any money.

[keepmine]

A bk filing will halt arbitration proceedings-just let your lawyer know since the arbitration forum will need to be notified of the filing.