Which of these CC's will close my account after BK?

[DVH1980]

Long tstory short, I had an old judgement pop up from 2002, and may very well have to file BK as I have no way of paying back the 24k I now owe after interest/attorney fees(original amount owed was 6k). I cant afford to have my paychecks garnished as I pretty much live check to check anyways, so BK is most likely my only option. This isnt a question of whether I owe the money but basically Im trying to plan my rebuild, again   .

So.....my current credit cards are listed in my sig line, I know Amex will surely close my accounts, does anyone have any first hand experience with the others? Id like to be able to keep as many as possible post BK for rebuilding without have to start back at square one)i.e. secured, first premiere, cap one).

I should note that none of the cards will actually be listed in the BK schedule since they will have 0 balances at that time. I know most will still find out but im hoping some of my cards can be spared.

[DaveSignal]

I don't have first hand experience, but I would be surprised if they weren't all closed.  Maybe you can find another way to pay the 24k.

[DVH1980]

Ive considered most options but they just arent financially possible. They are charging 12% interstest on the amount owed until paid in full, going back to 2002, addiotnally there are 3k+ in attorney fees at 10% interest. Even if I paid what liittle money I had left every month, Id barely cover the interest and be lucky if I paid it off in 10 years.

[chasmith]

They will probably all be closed, the lenders have monitoring services that will catch the filing.

For rebuilding, if the cards were in good standing when you filed and they were closed, they won't accrue a negative status just by your filing. 

Since it seems the one judgement is the issue pushing you to BK, you might want to try to settle for much less than the claimed value.  I would offer $3,000.00 in full satisfaction.  But here's the big deal - interview BK attorneys, and have the one you select write a letter making the offer.  But be carewful and ask for and take your attorney's advice - don't take on new debt once it can be said you have decided to file.

[chasmith]

A letter from a BK attorney stating you have retained him or her to review your options including filing bankruptcy will get their attention.  Offer a fraction of what the original debt was.  You might even start with offering the cost of the BK filing (you'll have to spend that anyway.  It's worth paying $200.00 for that letter, IMHO.  You can also find out from a BK attorney exactly what garnishment this creditor can get - it may not be as crippling as you think.  But I agree you need to be ready for a quick BK filing to avoid getting garnished.

Many years ago I had a problem with business debt, that was cross-secured by my home.  The bank thought they held all the cards, and filed foreclosure.  I opposed the foreclosure with counterclaims and went to a meeting with them taking my regular business attorney and a BK attorney.  My attorney told them they could choose door #1 (BK) or door #2 - settle on my terms.  That certainly got their attention, they settled on my terms and fired the collection officer who had handled (and abused) the process.  The BK attorney charged me for one hour of his time.

So don't assume this judgement creditor really expects to get paid in full.  Use the opportunity to receive nothing (BK) to get their attention and make them settle.

[DVH1980]

Would it be better to just close them myself before BK? Or does it really matter, as far as getting these cards back down the road. 

Ive considered making a settlement offer but since they just renewed the judgement and can garnish my wages if they choose to, I dont see the advantage for them accepting the offer. Maybe if they see that Im going to file BK if they dont accept, it may make them rethink, im assuming that s why you mentioned having the BK lawyer write the letter?

As of now there is no sign they will try and garnish my wages, they did garnish them when I worked for another company in 2007 but nothng since ro before that, even though the original judgement was in 2002.

My goal is to get a house in 2014, my choices right now are to file BK and ensure this judgement will not follow me around forever or, plan B, bank on the fact that they havent garnished my wages in 5 years and will not do so in the future and hope I can ride out the 2 years garnish free and get the house and save my credit in the meantime. The judgements dont show on my reprts so it doesntn affect my scores at all.

[DVH1980]

I should note, my end game is to buy a house in 2014, while my scores are just over 700 now, I had a Deed in Lieu in 2011 and will not be eligible for a loan until 2014. My line of thinking was to file bankruptcy now to ensure this judgement, while relatively dormant now, doesnt rear it ugly head 2 years from now forcing me to file bankruptcy then and pushing back my house purchase another 2 years, rather than just filing today, wiping out this debt forever and still be able to be on track for a 2014 home purchase since both the Deed in Lieu and BK will not affect lending in 2 years time.

Basically I have to wait 2 years for the house anyways, I should probably wipe out the 24k judgement so it doesnt follow me around forvever. Sounds good short term but having the BK on my report for 10 years is daunting, even though it wont affect my getting a house in 2 years.

[DVH1980]

That sounds like a really great idea chassmith, I think I will make that plan A as I dont really care for plan B or C. I could possibly come up with as much as 5k for a setllement.  I was basing the amount of garnishment off of what they took in 2007, which was roughly 35% of my net income.

[StartingOver10]

---

@DVH1980 wrote:

Would it be better to just close them myself before BK? Or does it really matter, as far as getting these cards back down the road. 

Ive considered making a settlement offer but since they just renewed the judgment and can garnish my wages if they choose to, I don't see the advantage for them accepting the offer. Maybe if they see that Im going to file BK if they don't accept, it may make them rethink, im assuming that s why you mentioned having the BK lawyer write the letter?

As of now there is no sign they will try and garnish my wages, they did garnish them when I worked for another company in 2007 but nothing since or before that, even though the original judgment was in 2002.

My goal is to get a house in 2014, my choices right now are to file BK and ensure this judgment will not follow me around forever or, plan B, bank on the fact that they haven't garnished my wages in 5 years and will not do so in the future and hope I can ride out the 2 years garnish free and get the house and save my credit in the meantime. The judgments don't show on my report so it doesn't affect my scores at all.

---

Your idea of closing the cc's is exactly right. You would need to pay them off entirely so they are a zero balance before you close them, that way when you file you don't owe anything to the cards you want to keep. The creditor/card services will close the account. Every once in a while someone posts that their accounts remained open during the BK but that is a rarity and an error. If you have paid off the debt, then the card issuer *ought* to be receptive to you opening an account after your discharge. I don't know this for a fact because one of the accounts I had a zero balance prior to my BK is now serviced by someone else that I did have a balance with at the time of filing. At least you would have a good chance if you don't owe the creditor and the account is 'closed by consumer' before filing.

If you decide to do this, be aware of the various dates that are important in BK. For example, all payments made on a preferential basis 90 days prior to filing can be clawed back by the trustee for the BK estate. So you have to time things accordingly. For cards you want to keep you might consider having them paid and closed well before the 90 days prior to your filing date. JMO.

Of course, you have the best idea by settling with the judgment holder. Why don't you negotiate for a lump sum payment (if possible) AND have the creditor vacate the judgment upon payment? This would be the best of all worlds for you. It may cost you less than filing BK, maybe not. Don't mention you want to buy a house or they will stick to their figures and you will be SOL (as is S* out of luck - not the other one).

[chasmith]

I suggest you offer half or less of what you feel you "could" pay.  They may not take a first offer.

State laws govern garnishment, but usually it's 25%, but that may be 25% of gross pay.  You may also want to be sure the technicalities (for example judgements expire and must be renewed to stay in effect) have been met to keep the judgement valid, that the interest charged complies with statutory interest charges, etc.

I only had one retail card survive my filing.  One zro balance card was closed the day of filing.  Some that didn't were incorrectly reported as IIB (even some the lenders had closed as my scores declined) and I had to fight to force them to take that designation off.  So closing before filing is probably something I would do if I had it to do over - but I firmly intend not to get into trouble again.

You or your BK attorney will want to pull copies of your credit reports before filing.  Be sure to keep copies.  Being able to PROVE account status pre-filing kept about four negatives from being added to my credit file.