Credit Card Debt...advise...

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debtor's picture
debtor
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Posts: 3
Credit Card Debt...advise...

Hi CM folks, 

I've had rosy colored glasses on and gotten into significant credit card debt. 

I own my home and owe $100K with 1st and 2nd mortgage  
on a house with ~ $200K value.(1998).  Mortgage payments
are current and up to date. 

AND I have ~100K in unsecured credit card debt...
and stopped paying the cards when my income plunged in early 2009 (~2yrs)

Today a sherriff served court papers at my home that I need to
respond to for one card sold to a collection agency for  $23K.

A year ago, I considered bankruptcy but found it too expensive
to complete... $1500 for attorney and $400 filing fees... so I just
avoided all debt collector calls and paperwork from credit card
companies many of whom are charging me an
astounding 29.99% interest rate.
(Talk about a number that compounds quickly...and has "turned
the hockey stick corner).   I'm working and am getting by on
60% of my previous income... Self employed and right
now things look good for work projects but no guarantees here.
Have reduced alot... drive old car,  still have child support payments.

I have been using debit cards only. (for the past 2 years.)
 
I would be happy to pay the credit cards at the same low
4.5% as my morgages... and could afford that... and not
"go bankrupt"....  

I'm looking for advise that I might not get from an attorney...

I may not be getting best advise from attorney who
specializes in bankruptsy.  

Anyone with similar experiences here? recommendations?
Then there's the possibility of SHTF....soon?

Considering paying 10% penalty and cashing in
retirement money.... If so, I might just want that
in gold or silver or cash under the mattress...
...then hope for inflation to pay off debt...Or not... 

-Daniel Debtor

 

 

 

 

 

 

 

Jager06's picture
Jager06
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Joined: Dec 2 2009
Posts: 395
Debt ...

I have not come across anyone who has the amounts or diversity of options that you do. I would recommend that you get in contact with someone who might be able to give some free, and ethical advice, CLark Howard.

http://www.clarkhoward.com/

 

Good luck!

Jager06

signalfire's picture
signalfire
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Posts: 34
If they are truly 'court

If they are truly 'court papers' and have a filing date and case number on them, it would be a good idea to consult a lawyer now.  You need to show up in court to protect yourself or you'll be handed a judgment arbitrarily.  I got something like that from Discovery Card, it was a fake court paper, looked the same but was mail delivered; no case number, which means it was never filed with the court and was meant to scare me.  I owe them about 8K.   I sent them a letter detailing that I was not working, had utterly no assets, was underwater on my house, and since I had been notified that they had tried to find out what kind of car I drove (!) that if they wanted that, I owed more on that than it was worth and if they tried to seize it, I would sell it to my daughter first. 

Never heard back from the scum again.  These people who 'buy debts' and try to get you to give them money (you don't owe THEM a penny!) are evil bloodsucking criminals. 

A good lawyer will help you deal with this, without much money needed.  A few hundred oughta do it, and once you have a lawyer, they cannot call you at home or work and all communication will be thru the lawyer.

Max Keiser's recent video is spot on.  The banks have engaged in criminal behavior and giving them money is helping to kill people on the other side of the planet. Take all your business away from them and open up a credit union account if you must.  Do all your business person to person, not with the vampire squids!

 

 

docmims's picture
docmims
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Posts: 644
The repurchasers of credit

The repurchasers of credit are criminals -- plain and simple.  Unsecured creditors cannot forclose on or take your property all they can do is put a lien on it.  That being said,  ALWAYS SHOW UP IN COURT!  The judge is not your friend.  He is not some sympathetic wise old man who wants to hear everybodies side of the story.  He is a beaurocrat who want the case off his desk.  That being said, he just wants to see the paperwork is in order.

Just claim you don't owe it and ask them to provide the paperwork.  They don't have it, I can almost guarantee.  They are good at the bluff.  Just call it.  Don't sign a paper to pay them 10percent.  They will collect any money you give them and then claim the full amount again after you pay them.  They are criminals.  Don't forget it.  For 25k it would be good to show up with a lawyer, because you will be befuddled with the local court terminology and procedures.

rhare's picture
rhare
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Okay, I'm going to play the

Okay, I'm going to play the other side...

debtor wrote:

so I just avoided all debt collector calls and paperwork from credit card companies many of whom are charging me an astounding 29.99% interest rate.

This is one of the worst things you can do - ignore a problem.  Anytime you run away from your responsibilities instead of facing them bad things can happen.  Did you buy the stuff (ie. it wasn't fraud)?  If so, then you certainly enjoyed your spending while you were doing it.  You bought goods and services from merchants, who like you are trying to make a living, and then you choose to screw them.  How would you feel if you did work for a client and then they choose not to pay or simply ignored your inquries?

Bankruptcy exists exactly for your situation, so that you can get your debts written off and start over.  It sounds like you are making good progress and I think your best bet is to contact your creditors (or the third party agents) and try to work out payment plans (with reduced principals).  If you can't then I would consult a good bankruptcy lawyer and get this problem behind you.

docmims wrote:

The repurchasers of credit are criminals -- plain and simple.

signalfire wrote:

These people who 'buy debts' and try to get you to give them money (you don't owe THEM a penny!) are evil bloodsucking criminals.

Why do you say this?  Who should pay for the debtors excesses?  There is no fairy that creates things with magic (well other than the Federal Reserve).  When you default on a debt you are screwing someone.  Perhaps a small business, perhaps a large corporation (in which case it's shareholders and employees).  So how is that right?  The criminals are the people who purchase stuff on credit and then do not pay.

The thrid party debt collectors are a massively regulated industry.  If you think they are behaving fraudulently there are many avenues available for recourse under the FDCPA.  However, perhaps it's better to understand why the third party collectors exist.  If you are a merchant, calling up people who have choosen to shaft you is not your core business.  It takes away time that is not productive for you since trying to collect on a owed debt just takes away time for you to sell your goods or services to a new customer.  As a merchant, anytime you have to collect on debts owed it adds to your expenses.  So many merchants contract with a collection agency allowing them to make the calls, letters, deal with the legal issues or to sell them the debt outright.   This is not criminal - this is a merchant trying to make the best of a bad situation.  They are hoping to recoup some of their losses in the least expensive manner possible.

If you think collection agencies are criminals, then what do you make of the debtor?  Not paying for things you bought on credit is no different that you walking into a store and shopplifting.  Yes, bad things can and do happen - medical emergency, loss of job, etc - but facing the issues and trying to work out debt payment plans or declaring bankruptcy is the responsible way to handle the situation.

docmims wrote:

Just claim you don't owe it

So, in addition to theft you are advocating lying?

docmims's picture
docmims
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Rhare you are quite naive. 

Rhare you are quite naive.  These people are criminals.  They violate the fair credit reporting act every time they open their mouths.  The act actually protects them limiting them to 1000 in damages if you sue them.  They buy accounts for 5 cents on the dollar then inflate the amounts owed by hundreds of percent.  If you negotiate with them for repayment the credit report ticker starts another 7 yr ticker.  they will accept 10 percent repayment plan then when you pay the 10 percent they will claim you owe them more and ruin you credit for 7yrs from your last payment to them.

Oh by the way did I say they were criminals?

I was a partner in a radio station deal.  My partner who ran the station died of a heart attack.  Unbeknownst to me he had not paid employment taxes for 2 yrs.  I then got socked with a 1.2 million tax levy lost my house and every thing I owned up to then (1999)  Ended up in chapter 11.  Last year I was contacted by Greentree financial which had bought my forclosed 2nd mortgage.  I informed the collections guy of the bankruptcy and the following is no Lie:

Him: "we just bought this loan so you owe it to us now and the bankruptcy doesn't matter."

Me " laughed at him"

Him annoyed at my laughter.  "If you don't pay us.  I'm reporting it on your credit report as a current default. (It had already fallen off because it was over 10yr old default)"  -- this is criminal extortion in anybodies book.

I'll be damned if he didn't go right out and report it starting a new 7yr ticker on all 3 credit reporting agencies.  I wrote them all contesting it.  they checked with him and he verified it.  So they did 'all they can do' and it remains on my reports 11 years after the default.  I don't really care because I am credit free now and use debit cards and cash.  But you can see where I regard them as criminals.

DID I FORGET TO SAY: "THEY ARE CRIMINALS"!!

RANT OFF.Smile

RNcarl's picture
RNcarl
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Posts: 382
who gave the "credit"?

UUmmm....

Interesting.

rhare, who gave this person 100K of "unsecured" credit??? Did the bank not have a responsibility to their shareholders to make a good loan in the first place? What about a moral if not legal responsibility to the person to whom they extended the credit? Are not all parties involved in a contract responsible to act legally, morally and ethically?

Remember when you had to prove you "didn't need" a loan before you got it? A Sears "charge card" (remember them?) was one of the hardest things to get and when I got one with a $200 limit I thought I had just secured a huge positive thing.

Years later, when I had gone back to school and was working for $8/hr lived with roommates and had little need of a credit card, Citibank gave me a credit card with a $2000 limit. Then they upped it to $4K - Then $8K..... I was still making $8/hr..... now, had I bitten the forbidden fruit and maxed out the card....and  believe me I could have used a little relief from being a "poor college kid" .... I was in my mid-thirties... I would still be making payments on the $8K balance!!!

It is criminal when someone who knows better - in this case the bank, extends credit to someone who they know, won't be able to pay back the full amount of credit extended for thirty years based on the persons income at the time the credit was extended. If the company was doing this down on the docks, they would be hauled in for "loan-sharking". Of course you can be like Nancy Regan and "just say no" to the loan.... We all know how well that works with drugs.... chemical and financial.

It all comes down to risk..... The banks now want their risk to be ZERO. Yet, they charge high risk rates. (29.9% in this case) When the deal goes south as in the above example, it is the card companies who cry foul when the borrower defaults.

I say, they knew the risk they took when they made an unsecured loan for $100K - Too bad for them.

The laws are tipping more and more to the loan shark banks. The mob should be upset.

C.

rhare's picture
rhare
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Posts: 1329
RnCarl wrote:It all comes
RnCarl wrote:

It all comes down to risk..... The banks now want their risk to be ZERO.

Don't get me wrong. I believe the banks should have to face the fact they made a bad loan.  Whomever made the loan may face write-offs of the loan, hence the 29.9% interest.  In this case, the interest rate was probably not high enough, since in a default they probably lost.  But this does not excuse the debtor who cranked up debt, then just decided to ignore it and call those to whom they owe criminal.   If the bank or other company makes too many bad loans, yes they should fail.

At some point you have to have personal responsibility.  You can choose to play and build up huge bills, but when someone you promised to pay comes knocking and you choose to simply ignore them, well that's a choice, but you do have too live with your choices.  It just like if you choose to party instead of getting an education, choose to use drugs, eat poorly, drink excessively, or you choose to not save for retirement.  These are all choices we make and when you whine about the bad outcome, sorry - no sympathy.

In the original posters case, they clearly said they "had rose colored glasses" and spent  They benefited from the work of others and when they couldn't pay they ignored the situation instead of facing it.  They could declare bankruptcy but it would have been to expensive.  So that tells me they aren't taking responsibility for their actions. 

This mirrors the whole situation in politics right now.  We aren't willing to face the bad decisions made and want to continue pain free, well, at some point we will be forced to take responsibilty and the longer we wait the more painful it will be as a nation.

RnCarl wrote:

The laws are tipping more and more to the loan shark banks. The mob should be upset.

Exactly what laws?  The recent consumer protection laws are making it even more difficult for anyone to lend money.  What the current laws are doing is forcing companies that lend to distribute the risk across a larger population instead of targeting it to higher risk individuals.  Instead of charging those most likely to default the highest rates, instead they are being forced to charge everyone higher rates. Exactly how is that fair?  It means you reward the irresponsible while punishing the responsible.

Wendy S. Delmater's picture
Wendy S. Delmater
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Posts: 1988
loans lived on; savings wiped out; debt never dies

debtor: pay your debts (use a reputable debt consolidation firm and be CAREFUL as many of them are sharks, too!), or if you cannot pay then file for bankruptcy protection! If you don't it just gets worse and worse. NOTE: I understand that in the Great Depression the banks that failed swallowed the deposits but kept and sold the debts.

We just bought a used car and the loan is at 6%. According to Shadowstats the actual rate of inflation is presently hovering at between eight and nine percent.  If we paid the car loan as agreed we'd make two or three percent (compounded per month) but we'd  rather pay it off early in case there's a crash. Deposits will die; debt will live on.

to Docmims and RNCarl: speaking about debt collection agencies making a debt last forever, I have a tiny amount I supposedly owed an Atlanta, GA cell phone company--it was identity theft and I flagged the credit card companies and let them know I'd been a victim. But my mother was dying and I was going to college and raising three pre-teen and teen boys while working...I never filed with the police in time to clear it off my record. Now it is too late and the damned collection agencies make sure that the credit reporting agencies keep treating the debt like it's new. Every seven years they sell it and it shows up as a new debt! My credit rating is still way over 700 but this is a burr in my saddle. So while my debt is nowhere near the size of yours, Docmims, the same principles apply.

r's picture
r
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Posts: 262
debt never dies

Easy credit has ruined this country and, if I understand Dr. CM correctly, the weak links stretch all the way to Greenspan.

I have to agree with "debt never dies".  Banks and credit card companies with a common credit history database are conspiring to keep us permanently in a debt prison.  I agree also with declaring bankruptcy.  For example, if you live in your home, you can turn your second mortgage into unsecured debt and strip it off. I disagree though with "debt consolidation" which means, I think, take out a debt to get out of debt.  Better are the debt settlement companies, and there are reputable ones out there, which with power of attorney can settle the debt for ~.50 cents on the dollar.  Criminals or not, it's important to talk with your creditors.  Some are law firms by the way...

debtor's picture
debtor
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debtor replies...

Thanks for the great discussion... 

To clarify some points.   No, I am not, and have not, been living a
fancy lifestyle etc.   I got into trouble in a business that was involved
with greedy vendors, and partners who didn't get it.
I spent a lot on "education" etc.   And yet, I have not yet found a
new business to grow back my income.  At this point
working harder, making less, no room for savings to put
away for going bankrupt.   (So much for justifying.)

It would be fair and ideal to pay back the principle.  
but not the outrageous interest.  

By the way, I totally disagree that 29.99% interest is reasonable.
it's called usuary: http://en.wikipedia.org/wiki/Usury

I would embrace a plan that allowed paying a percent of my net income.
So that when I find a good and succesful business, I pay larger dollar amounts

and finally pay of the full debt based on percentages, alot like the income tax system.  

So far, the deals I see are to pay of the debt in huge chuncks that I don't have.

When I start saving for bankrupsy, perhaps it would be
better to spend on getting prepared a la the advice here at CM...
and postpone bankruptsy as long as practical. 

Thanks for the great discussion and views and recommendations.

-Daniel Debtor

Johnny Oxygen's picture
Johnny Oxygen
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I'd like to respond to the

I'd like to respond to the 'moral' part of this thread.

Banks are simply loan sharks the government will always side with them. Both the banks and the government commit crimes everyday and are immune to punishment.

When everybody plays by the rules then I will too.

I don't use credit any longer but I used to before I realized I was being taken for a chump. Discussing weather or not it is immoral to pay off a loan shark is laughable. The bait is your morality and the hook is their corruption.

TD's picture
TD
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Posts: 51
I recommend gettting a copy

I recommend gettting a copy of the book... "How to instantly eliminate credit card debt" by Michael Mack.

Poet's picture
Poet
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Posts: 1892
To Anyone Who Thinks Debts Should Not Be Repaid

YES, credit collectors can be evil. Yes, they often break the law. Yes, they are annoying pests. You got that.

BUT... You stil owe the money if you incurred the debt, even if it's been sold by the original who was stiffed by YOU. That is the risk you take when you buy something on credit: you know if you don't pay the debt, it may be sold and/or interest (of various kinds) may accumulate and snowball. And you will likely get annoying calls from collectors who will also use dirty tricks to get to you. (Anyone who thinks none of the above could happen if they don't pay their debts, is naïve. Everyone hears about it in TV ads, movies, newspapers, books, family members, friends, etc.)

Seek help, counseling or legal assistance, etc. Get advice. Negotiate a settlement. Or file bankruptcy if you must - that is the risk the lender takes in lending to you, knowing you may file (which is why they charge interest to cover both the time value of money and the possiblity of default). Heck, if I were in the same boat, I might file, too.

But don't pretend you don't owe it or that the debt didn't deserve to be paid. The proper moral attitude of someone filing bankruptcy is, "Yes, I know I owe the money. Yes, it is a shame I can't repay it due to (foolishly taking on too much debt, or valuing my health or my family member's wellbeing more than my credit report, or job loss, or disability, or medical issues, etc.). That is why I am filing bankruptcy and I am grateful there is yet still such an option for some forms of debt in this great country."

Bottom Line: You purchased something and chose to use DEBT to buy it. You decided it was worth it despite knowing there could be serious problems down the road if you didn't repay. To admit you cannot repay a debt is acceptable. To now say you don't owe the money is morally wrong and repugnant.

P.S. - If it is identity theft or fraud, that is a different situation, obviously. Fight it! However, I truly feel sorry for those with student loans. A bankruptcy won't wipe it out. And as for usury (in the sense of excessive interest rates), it's unfortunate, but Congress won't do anything about it. (A several years ago, some lone Democratic Congressman tried to even set a cap on interest at 75%, but it was voted down.) This country is truly bank-owned. Since usury (in the sense of excessive interest rates) is legal, you have to take that into consideration when you decide whether to borrow money or not.

Poet

Locavorous's picture
Locavorous
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Posts: 26
"Debt Management Plan" may be an option for you

First of all, do yourself a favor and stop referring to yourself as a "debtor". Change the language and your perception, and the road gets easier. You aren't a bad person for incurring debt, or considering not paying it. Don't let the banks and their apologists grind you down.

I have 6 cards totalling $35K in credit card debt. The combination of high rates and minimum payments spurred me to contact the local "Consumer Credit Counseling Service" to discuss options. We had an hour interview discussing income and expenses, and I turned over statements to all credit cards to be managed by them in a "DMP" (Dept Management Plan).

The CCCS negotiated very low rates with all of my cards (like from 2%-6.5%, down from 29% etc.), and I now make one payment per month to the service, who pays the credit card companies in my name. They have pretty decent service if you want to change a payment up or down, or renegotiate payments/terms. This service does cost my an extra $25/month, but to me that makes up for the amount of time and frustration during bill payment time. Also, it reduces the probability of a missed/late payment.

So, I save money with low negotiated rates, I save time by not having to pay those bills, and I feel better about taking positive steps paying debt I incurred.

The bad side: CCCS didn't tell me that many creditors consider a DMP to be 'one step away from BR (bankruptcy)'. In fact, CCCS described this as a way to repair damaged credit scores. If that's true, then the credit score won't be repaired until the DMP is complete, and I don't owe any more CC debt. Also, the CCCS rep earns her living on getting your debt into their program. Its not a free lunch, but its not a 'debt settlement service' either, which is frought with pitfalls, unintended consequences and longterm ramifications.

All the points about reduced income, morality, us vs. banks etc. are fine over pints at the pub, but won't help pay the bills.

Good luck!

 

r's picture
r
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Posts: 262
debt settlement pitfalls
locavorous wrote:

Also, the CCCS rep earns her living on getting your debt into their program. Its not a free lunch, but its not a 'debt settlement service' either, which is frought with pitfalls, unintended consequences and longterm ramifications.

You're right -- one consequence is that the Bank will very likely not discharge the settled debt.  Consequently around tax time you'll discover the unsettled remainder added to your income.  Unfortunately, neither the Bank nor the debt settlement service has any incentive to inform you (which should be illegal??).  That's how the game is played.

Wendy S. Delmater's picture
Wendy S. Delmater
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Posts: 1988
debt reduction

Welcome, aperillo [Moderator note: aperillo is a spam user whose account was deleted]. I found Dave Ramsey to be very, very helpful in paying off my debts.

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