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     | Monday, June 05, 2000 - 05:52 pm  Hello! I have been reading your wonderful board for the past four hours now--there is such a wealth of information here! But I can't seem to find an answer to my particular problem so I was hoping that someone might be able to guide me in the right direction. I am a 25 year old married woman and my credit is an absolute disaster. Four years ago my husband was in a terrible accident at work and thus in the hospital for 2 months and in a wheelchair for another 6 months. It is just recently that he has been able to get a real job. We lost EVERYTHING!! ...The house, our credit cards, I took the big "D" with my student loan you name it. And, I have only been working full/time permanent for the last year. So, being young and ingnorant in the ways of credit, I just ignored all my credit card bills and collection notices because I could barely afford to pay the water bill--we ate nothing but mac and cheese and hotdogs for a few years! (i know, dumb me, i should have called and told the creditors what I was going through) Now we are financially better off (but not that much)and we would like to buy another house in 10 years or so. So I am agressivly trying not to fix my credit report (because all the bad marks are true) BUT to not make it any worse. Well, I just got in two more collection notices for two different credit cards, both wanting me to pay a sum of money they say is reasonable but to me is still out of my range. I put my family on a good and realistic budget and without my husband making any overtime pay, I only have about $300 at the end of the month to repay my credit (including my student loan--which is my first priority to pay). Here's what I need advice on-oh and I live in Florida and have about $32,000 in debt including a $13,000 student loan: 1. Should I try to bargain with the collection agencies and have them put me on another payment plan? I know all my debts have been charged off since 1998 (i know because it is on my credit report), i know 2 years isn't a lot of time but I sure would hate to have to re-set the clock. 2. If i ignore the credit collectors, should I be overly worried that they will take me to court and garnish my wages? They have already threatned to garnish my wages for my student loan but haven't yet--and they said this in September of 1999--but I imagine that they will eventually. I'm So afraid that my student loan will want 10%, City Bank will want 10% and so on that i will be working for nothing. But also if I start paying back the creditors I won't have a dime to put in savings which means I won't be ablt to save for a house (which i'm going to need at least 20% down and will have to have paid the student loan off by then). 3. We are trying like crazy to establish new credit. We got secured credit cards and used them and paid them off like deamons. My mom just helped me buy a new car. Will things like this help me for my future or is there something else that I need to do? 4. What do I have to do to get someone to tell me the truth-AND-is all this (credit) really just a crap shoot? I called 3 different comsumer credit agencies this afternoon and I got 3 completly different answers!!!!! Thank you in advance so much for taking the time to read my situation and offer any help. =o)
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| | Monday, June 05, 2000 - 06:26 pm Sigh. I was in a similar situation, and I decided to start over - at the very least, I think you need to talk to an atty in Florida - Mitch??? Bk is NOT a bad, or evil thing - it's there for you to start over, and for just this kind of circumstance - that's why they wrote it into the constitution.
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| | Monday, June 05, 2000 - 06:27 pm I know the hell you and your husband have and are experienced/experiencing. You should take a long and hard look at the amounts of debt that are facing you and don't try and be noble or feel guilty because you have a "moral" obligation for repayment. Get it through your head, they don't care if you pay it back. They have already hurt your credit for seven years and every payment you make could perhaps prolong the agony. I went through almost four years of trying to negotiate with creditors and, in the end, lost everything also. Try to talk to a "good" bankruptcy lawyer and not a bankruptcy mill. If your income doesn't cover everything, see if you can qualify for a seven. if you declare a bankruptcy, you could have "A" rated credit within two years if you clean up your credit reports (they will be really messed up and require an effort to monitor them). Follow the advice on this board, it is so good. First, get a copy of the credit reports. Look at the date it first became delinquent. Then look at the Statute of Limitations and see if the time to collect the debt has expired either in the state in which you live or the creditor's state. Be prepared for garnishment. If you are served papers, do yourself a big favor and get an attorney pronto and make the bankruptcy decision--yes or no. Good luck. Keep posting. We all care. There is much to do. You need to have a game plan with options from which to select.
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| | Monday, June 05, 2000 - 08:38 pm If I do chapter 7....won't we loose one of our cars or other "stuff" that we have??? (athough mine is the only one currently financed) And, it seemed like things were on the up-swing for us...for instant, we just got a visa check card (could never get one of those before)and we got an increase on our secured credit card (Capitol One is the best!)and everyone finally takes my checks again. Won't claiming chapeter 7 make life miserable again for a few years? Because I'm not really sure I want to go through with it if I have to loose everything again. And if my creditors try to take me to court, can't I plead to the judge not to garnish my wages and instead let me pay????? Or does it work out that if they take you to court, they garnish your wages???? Sorry to ask so many questions but it seems the more research you do on this subject, the more amounts of DIFFERENT answers you get!!!! Can anyone give me the un-biased truth? Like i said, it seems that dealing with credit is like shooting craps! lol =o)
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| | Tuesday, June 06, 2000 - 02:23 am Each case is different. Each state, each creditor, everything just depends. there are no fast and secure rules except what course of action you decide upon. Creditors call, write, harass--collection agencies threaten. Ignore their calls. Get a caller id or an unlisted phone number. Never talk to them or listen to them, hang up. You can roll the dice about the SofL. You can negotiate with them if you get everything in writing--never agree to pay and have them report payments. Get them to not verify so that when you challenge the listing, it will be deleted. Depending on where you live, you will have state and federal exemptions for a 7--hopefully, you are in a better state than Missouri which screws its people with little to nothing exempt. You need to identify secured versus unsecured debts. You reaffirm secured debts you want to keep and throw away the rest. On unsecured items, tell the creditors what you are going to do and that you want to or will reaffirm. After a year after my 7, my credit scores are cleaning up; I have a new car. Getting a mortgage is proving to be a problem but I had a home that I couldn't pay for due to downsizing. I'm working with a broker that I found through this website. All in all, you can also do planning ahead of the bankruptcy if that is what you decide to do. Do it however with a good bankruptcy lawyer.
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| | Tuesday, June 06, 2000 - 10:46 am I agree with the Senator. Good advice. I've had these %^%&s from the collection agencies call and harass, bother, push, pull, etc. For the most part, a simple cease and desist letter will shut them up. However, I think that as these collectors realize that months have come and gone, one hears a bit of desperation in their voices and other correspondence. Here's what I mean: (1) I have some lackluster woman named Nena calling me left and right, parents, friends, you name it, over a pittance of a debt. Last time she called, she virtually pleaded, saying that she was all alone at work on a Saturday and that the end of the month was coming, boo hoo, etc. My wife and I thought it was somewhat amusing that she would look to us for sympathy! (2) The letters from these dufi always COME IN ALL CAPS MAKING IT VIRTUALLY IMPOSSIBLE TO UNDERSTAND WHAT THEY ARE SAYING. Inevitably, after all the threats, you get the soft touch, and back to the threats again...Ooooo. Angela, take the Senator's advice, and get everything in writing, or, alternatively, fire the collection agencies by stating in writing that you will only deal with the oriiginal creditor. Remember, remain always vigilant and know your rights. You've been through enough.
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| | Wednesday, June 07, 2000 - 03:07 pm The statute of limitation in Florida is 4 years for an oral contract and 5 years for a written contract. As far as garnishment, there is always the federal limitation on the amount that can be garnished. Goto a local law library and ask to see 15 USC 1673. Last time I checked (not recently) it was the LESSER of 25% of DISPOSABLE EARNINGS or the amount by which disposable earnings exceeded 30 times the federal minimum hourly wage. There is a state limitation on garnishment also. Ask the librarian for Florida Statute 222.11. You apparently have children (you mention a family) which entitles one of the parents to be protected from garnishment if certain criteria are met. As far as the car, legally you can protect $1,000 in total equity in any motor vehicle. If both you are your husband file together, then there is a spin on it and you can protect more. That is legally. Now for practically. Practically speaking, one can protect even more equity in a car than that.
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| | Wednesday, June 07, 2000 - 03:26 pm PS. If I read your post correctly, and you have not paid ANYTHING on the credit cards or medical debt for 4 years, then the SOL is going to run soon. And in either 3 years or in 3 years plus 6 months, it will not even show on the credit report. While I don't have much information to work with, I lean towards ignoring the debts until the SOL runs, and then until the FCRA makes them fall off the credit report. Plenty of room to spare to buy a home in 10 years. On the other hand, if you file chapter 7 then you place something on the public records section of the credit report for 10 years. And you take debts that would have dropped off anyway in 3 years, and make them appear for an additional 4 years (to wit, for 7 years or so). Why surrender before someone fires a shot? Nobody is suing you or placing a lien on your homestead property. And they have to do and get a judgment that before there is even a chance of garnishment. You live in a debtor's haven. People move here to file bankruptcy. It's EZ. The creditors know that. They do not usually sue when they threaten to. Rather than jump at shadows, speak to someone locally to make sure that your ducks are in a row in case multiple creditors do sue and you are forced to file chapter 7. In other words make sure that your assets are in a protected form. If only one creditor sues and it is a small enough amount, then you can always pay that and ignore the others. If none sue then just read on about how to remove the adverse info in 3 or so years. In a debtor's haven the mortgage lenders do have programs for credit challenged people. They deal with it so often here, that they have had to develop the programs. Watch out for the Florida bankruptcy attorneys. Worse than most. Because of the volume of chapter 7s in this haven, most attorneys run mills and file in volume. It is unlikely that any of them will sue this late in the game. If they do sue, then you only have that one to pay. If you
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| | Wednesday, June 07, 2000 - 04:19 pm I would be very reticent to say that the statute of limitations has passed on the credit cards. Almost all credit card agreements state that the credit card agreement is governed by the laws of the state where the creditor has its principal place of business. Should the creditor attempt to gain a judgement they will most start proceedings right there in their own back yard where not only do they enjoy favorable statutes of limitation, but the attorneys often know the judges personally as well as professionally. Getting a change of venue to Florida may be impossible or costly. Even if the statute of limitations has passed a failure to respond in a timely manner to a complaint will result in a default judgement in favor of the credit card company. I recommend the tried and true approach of negotiating a settlement with the collection agencies in exchange for a deletion of the negative entries.
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| | Thursday, June 08, 2000 - 01:36 pm I have never seen a credit card sue a Florida resident outside of Florida. I have never even heard of it happening. In every case that I have read, the Florida state SOL has applied. Someone may get creative someday, but as a practical matter, it does not seem to be a real worry.
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| | Friday, June 09, 2000 - 06:54 am The Fair Debt Collection Practices Act (FDCPA) requires that lawsuits to collect consumer debts be filed in the state where you live (or signed the contract). It reads as follows: § 811. Legal actions by debt collectors [15 USC 1692i] (a) Any debt collector who brings any legal action on a debt against any consumer shall -- (1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity -- (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action. Attorneys who perform collection activities, including filing lawsuits, on behalf of their clients are considered "debt collectors" under the FDCPA (Heintz v Jenkins, US Supreme Court, 1995). Therefore, any lawsuit filed to collect this debt would be filed in Florida and (normally) Florida's statute of limitations would apply. If the contract specified that it is "governed by the laws of the state of ..." (use Delaware for example) then the lawsuit would still be filed in Florida, but either you or the creditor could argue that the laws (and statute of limitations) of Delaware apply. This argument gets complicated and very expensive quickly (I know--I've done it), so it's not likely a creditor would offer this argument unless it was a VERY large debt. So I agree with Voigtkampff--the SOL of Florida applies and seeing as it's almost up, you may as well wait it out. I'm not sure, but I think the rules for student loans are different than standard credit card debt, so this might not apply to your student loan. Maybe someone else can help on the student loan?
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| | Friday, June 09, 2000 - 01:04 pm Thank you very much Rhonda, a VERY helpful posting. I'd say in combination with Mitch's postings this is some of the best info I've gotten ANYWHERE in a while. Shylock, I have seen many contracts stating plain ILLEGAL terms and conditions, I think corporate is just trying to misinform consumers. A good example are loan docs by a high interest mortgage company doing biz in California stating that the prepayment penalty applies for 7 years, while California's law specifically limits prepayment penalties to 5 years. Thanks all, I've been wondering which State's SOL applies. How can you beat the combo of the written law AND real life experience? If anyone has different experiences or law quotes, please post! And yes, student loans are a different issue, but I don't know much about them. Check http://www.ed.gov/offices/OPE/DCS/ for info and I know it's been discussed here. (Keyword Search!)
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| | Friday, June 09, 2000 - 01:21 pm Student loans will follow you around forever. They are only dischargeble in a BK under certain conditions (see above link) and basically will not go away unless paid. I've been fighting that fight for over 10 years now, and cannot get any relief. Mine were aged wrong (at the wrong interest rate) and the Dept of Ed doesn't care - they just want a pound of flesh. I'm now able to pay them (and am) but have had no luck getting the Dept of Ed to reage them, or at least change the status on them from "Default" (which was ILLEGAL per the Soldiers and Sailors Civil Relief ACt) to something else - the real kicker is, the loans are too SMALL to rehab! IF you have a student loan, and the ballance is large enough (that you can make 12 monthly payments and still have at least $1500 left after that year) then by all means - REHAB THAT LOAN! It's much better that way. Either way, unless you are completely destitute (or there abouts) you will not discharge one in a BK. I BK'd (CH.7) in 1996, and made too much money (at $12k a year!) to discharge mine.
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| | Saturday, June 10, 2000 - 04:56 am Scott, You mention the soldiers and sailors civil releif act. Are you in the armed forces now? Since you are mentioning student loans, are you an officer in any service?
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| | Saturday, June 10, 2000 - 05:40 am No, that was the problem I think. I was a Hospital Corpsman in the US Navy for 8 years. They defaulted the loan during the Gulf War (which I served during) and charged 8% simple interest. Repeatedly telling the Dept. of Ed. has not produced a result even vaguely within what the law says. Basically, it's at around $1100 now, and I've grown tired of fighting it. I'm making more now than I did when I was in the service, so I'm paying it. Normally, I'd stick to principle, and if it wasn't the government, I'd sue. Basically, I was on Active Duty from 01 Aug 90 to 12 Mar 99, with a break in service (I was in the reserves though) from 31 Jul 94 to 13 Mar 95.
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| | Saturday, June 10, 2000 - 09:10 am Scott, Okay, I was just curious. At this time, I am a second class petty officer (Sonar Technician) in the navy currently on active duty. I was considering pursuing a commission. I was kind of curious on what the laws on student loan paybacks were. I guess there are some links somewhere on this board but I haven't found them. After seeing what the officer life was like compared to that of an enlisted person, I decided not to pursue the commission after all. (My wife and I don't like cake and ice cream socials and she does not have a desire to be married to the Navy). After my time is up, though, I wish to pursue formal education on the civilian side using my GI bill money. I am just so afraid of graduating college and not finding a job in time and having these loans go into default and have to give another 7 years of my life to the credit system.
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| | Sunday, June 11, 2000 - 05:46 pm Angela, Have you considered contacting the Ford Foundation to manage your student loan? Regardless of the status of your loan, the Ford Foundation will pay it off and you can make low monthly payments to them. If you allow for automatic withdrawal, the William D. Ford Foundation (and the U.S. Department of Education) will charge an annual rate of 7.85%. Plus, your payments are based on your income. Call the U.S. Department of Education at 1-800-848-0979 and ask about the program. With regard to your other financial woes, I do not suggest bankrupcy. I suggest you write to the collection agencies to have them cease unlawful contact. When you're in a better financial position, you can deal with the collectors on your terms (often leading to the early removal of a bad trade line on your credit report). Good luck.
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| | Monday, June 12, 2000 - 05:12 am Michael, I agree, that is a real possibility. Honestly, try not to take out loans at all. There are several institutions that will not cost more than your GI Bill. Get good grades, try to get scholarships to cover the rest. People are giving away lots of money every year for education that never gets claimed.
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| | Monday, June 12, 2000 - 09:30 am In response to Scott's post on June 9th (and this is a little off topic) I was reading recently in the student loan regulations (34 C.F.R), that the government will not even bother to defend themselves from an attempt to discharge them in bankruptcy IF the expected costs of defending from your attempt will exceed 1/3 of the principal of the loan. Also, while being destitute helps in showing undue hardship in bankruptcy, it seems like what really matters is the other factors. Like medical problems or something that just pulls at the heartstrings.
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| | Monday, June 12, 2000 - 12:55 pm Thanks Mitch! I wish I had known that in 1996. I had a good firm too, I'm suprised they didn't get me out of it! The loans were higher then, and I might have got out of them. :-(
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| | Tuesday, June 13, 2000 - 07:29 am As a Credit Repair Expert (and I've got the scars to prove it), I'd like to explain why a paid collection is no better than an unpaid collection with respect to the FICO score. "Factor Code" 22 (at XPN and TU; 39 at EFX) is "serious delinquency" [anything 30+ days delinquent within the past 12 months], "derogatory public record" or "collection agency filing." When a 22 (of any of the three kind above) is the first FC in your list of four, it's the biggest hit to your score. As such (and this is where the "Fair" Isaac score is totally UNFAIR), a collection account carries the same weight as a BK!! Crazy, huh? When you pay off a collection account just to get a loan, the FICO software, in a sense, recognizes that, and turns the "paid collection" into a "serious delinquency." So you still have a 22 (or a 39, as the case may be)! I tell my credit repair workshop attendees: if you have, say, 5 collections, don't pay ANY of them unless and until ALL of them agree to give you a deletion in exchange for money. It can be tricky to deal with collection agencies, and there's a right way and a wrong way to do it, so before paying anybody, it's best to get expert guidance so that you don't spend your money with no accompanying benefit. So, unfortunately, it's true, you won't improve your scores by today paying collection and chargeoffs UNLESS you get the creditor to agree to either a delete or a "paid as agreed" report to the bureaus. If the item is a collection account, "paid as agreed" is NOT positive. As your paid collections "age," however, they have less and less impact on your score. So DON'T pay them without a delete. When collection agencies are out of state, it's a bit more tricky to pay them. They ALL lie to get the money in door; then say, "Oh, we don't give delete letters; we'll send you a paid in full letter, however," which, of course, is useless. So you have to get a "promise to delete" before you send/wire money. Then, if they renege on their promise, you present the promise to the bureaus and the bureaus will delete based upon the promise. When you ask for a delete/paid as agreed, don't expect the creditor to also discount the amount owed. Remember, you can usually get "price" or "terms" but not both unless, of course, you're one heckuva negotiator.
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| | Tuesday, June 13, 2000 - 03:29 pm Yup. I strongly believe that 95% of all people with severe credit problems should hire someone to handle the negotiations. A professional would have to be really really bad at his job to not be able to save AT LEAST enough to cover his fee.
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| | Tuesday, June 13, 2000 - 08:07 pm I forgot to mention (when dealing with collection accounts or chargeoffs) that ANY statement other than "we will instruct the bureaus to delete (or remove) this account from your profile" is not going to help you! If they say, "settled in full," "settled for less than owed," or anything else like that, you've paid money for nothing.
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