Getting Rid of Credit Card Debts but Keeping Home and Cars With Bankruptcy
I have 4 credit cards in my name only, that my husband and I can no longer afford to pay. We are only 30 days behind in payments, so only phone call attempts made, so far. 2 cards are Capitol One, 1 BOA card and 1 Discover bill, totalling about $25,000.00. I have not been employed for several years, I am a stay at home Mom and my husband is a permanently disabled American Veteran on disability.
After a screw up by the VA, which cost us several months of his disability pay, we are over our heads in credit card debt. We've kept our home in good standing (the home mortgage is in my name alone, purchased before we were married.)
Thanks to help from my Mother, we were able to stay current on our mortgage. We only own two cars (both in my name and paid in full), 1 a 1951 Chevy and the other a 1959 Rambler, neither are in excellent condition, but the 51 is my daily driver. We just can't handle the over 700.00 minimum credit card payments anymore.
We have no money right now to pay an attorney and not sure if bankruptcy is the right choice. I guess, I'm just trying to find out what is going to happen to us.
I don't really care about my credit rating at this point, I have a home, a car that's drivable, so no need to apply for credit anytime soon.
Can they put a lien against my home or take our cars?
I've heard people say that they can force the sale of our home to pay our debts--Is this true? I don't have any wages for them to garnish, so I'm afraid they will come after my assets (which aren't much, I've only owned my home for 7 years and also have a HELOC, so not much equity.). We've always been current on all of our payments, until now. So, I have no idea what to expect.
Can the credit card companies sue me and get a judgement, then force the sale of my home? Is bankruptcy a good idea for us and can we keep our home and cars if we file? What can I expect to happen over the next several months?
—M.D.
You have a considerable amount of time before there is any risk to you being sued for the credit card debts you are not paying. Creditors like Discover and Capital One will not place accounts with an attorney debt collectors (who they authorize to sue), until roughly 6 months of missed payments. Sometimes accounts are never placed with attorney debt collectors. Filing bankruptcy will stop any lawsuit from progressing to a level where you have to be concerned with aggressive collection action like threatening your home or possessions.
I know you are stressed about the situation, but you have time to gather up the information you need about bankruptcy. You even have time to save up to hire a bankruptcy attorney.
Your next step should be to connect with a bankruptcy attorney for a free consultation. During the consult with the attorney, you can ask about keeping more than one car and staying in your home. The answers to these two questions are specific to your state. The less equity you have in your home, the more likely you will be able to keep it through a chapter 7 bankruptcy.
The chapter 7 will discharge your credit card bills and other unsecured debts.
Use this means test calculator to determine how you can qualify for chapter 7 in your state. If you then want to connect with an attorney for a free consult, click through the additional screens in the tool and complete them in order to connect with an attorney in your general area.
If you learn something about bankruptcy from the attorney that gives you pause about following through with it, post additional questions or concerns in the comment section below and lets take it from there.
Readers with similar concerns are welcome to post below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi my husband is being sued by Midland credit(original creditor Chase) for $5600. We responded to the summons with a verify/validation letter which we just received the response to this week which surprisingly all seems to check out. We stopped paying this card a little over a year ago so they are within the SOL. My husbad was recently unemployed and I currently work on the side for my family so there is no proof of income. Midland spoke to us today and told us we can pay 100$ monthly and drop the lawsuit but said if we missed a payment would be automatic judgement. This is one of 9 debts totaling $26000 which Midland has bought most of. We feel like this is prob the first of many suits to follow so we now feel like bankruptsy may be our best option. Problem is we dont have the upfront money to hire a bankruptsy lawyer until we receive our expected tax return in Feb/March. My question is would it be better to settle this out of court and pay the 100$(lent to us by family)monthly until we can file bankruptsy or go to court and let a judgement be put against my husband. Is it possible for them to take our income tax refund? We have no money in a bank account in his name we do own a home and have 2 vehicles financed one of them being for sale. We live in Texas and I know they have some pretty good exemption laws. Any advice would be greatly appreciated.
Thanks,
Lindsay
Lindsay – I would recommend pursuing bankruptcy as a fresh start given the information you provided. If I were in your shoes, I would see if the family member, who would have loaned you 100 a month for payments, instead front you the down payment a bankruptcy attorney will often take to start working your case. The attorney will probably not file the chapter 7 petition with the court until you fully pay, but they will be retained. This could mean that you can refer any collection calls and letter to the attorney. The attorney, once retained, will contact all creditors, including Midland and the attorney they hired to sue you. That would pretty much put them on notice any lawsuits are a waste of time and money. All communications from Midland Funding, and other collectors would be routed to your attorney.
In other words, you can get a head start on your fresh start using bankruptcy for debt relief.
Texas does have some of the best exemption laws of any state. If you are forced to wait until you get your tax return to file the bankruptcy petition, and you end up with a judgment before that, the only real risk I see, from what you shared, is the bank account he has (with no money in it).
No, Midland Funding cannot intercept your tax refund as a result of the judgment.