I owe about 40k to about 5 different credit cards which I defaulted on the payment. I'm receiving several pre - legal notifications and would like to start paying and get all this behind. I lost my job in 2015 and was off for a 1 1/2 years. I will admit that I over spent on thing that's that I shouldn't. What do you think is the best course of action.
1 Answer from Attorneys
When you have difficulty paying your debt, you have 3 options, negotiate, ignore, or bankruptcy. A lawsuit will likely result in a judgment and can also result in loss of bank accounts and personal property.
If you simply want to negotiate with the creditors, as opposed to the other 2 options, my best advice is to speak with a US Trustee approved credit counseling agency who will determine a budget and negotiate on your behalf. I can direct you to the list if you want that option.
If you want to consider bankruptcy relief, there are generally two types of bankruptcies, Chapter 7 and 13. The former is generally for those who simply require the elimination of unsecured debt such as credit cards. The latter is generally for those who have fallen behind in secured debt such as a mortgage. Chapter 13 allows you to repay any arrears over five years.
A bankruptcy protects just about all consumer assets. There is a $20,000.00 minimum homestead exemption in your principal residence per person. The contents of your home, if any one item is not worth a great deal, are exempt up to at least $10,000.00. There are many other exemptions, as well. Vehicles are exempt to a minimum amount of $3,500.00 and, there is what is commonly known as the "wildcard" exemption. You may use up to one-half of the homestead exemption for any asset you want to protect.
An exemption is a dollar amount assigned to an asset so that, if a Trustee ( the person charged with liquidating assets) were to attempt to sell such an asset, he would have to pay the exemption amount to you. Since the stated exemptions usually cover the value of the assets, most consumer cases are determined to be "no asset". Thus, you simply obtain a discharge of your debt.
You should speak with experienced bankruptcy counsel to discuss all the ramifications.
I trust this has been helpful, but feel free to call or e-mail on a free initial basis.
Very truly yours,
Matthew R. Nahrgang, Esquire
35 Evansburg Road
Collegeville, PA 19426
(610) 489-3041 ph
(610) 489-3042 fax