topic Re: Can credit card collectors come for my house and how long do I have after defaulting? in Rebuilding Your Credit

Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 15:08:57 GMT

Long story short, due to divorce and some terrible investments within the last 2 years, I've lost everything and I'm about to stop making payments on my cards. The only valuable asset I have is about 80-100k equity in my 280k house. I have about 10k equity in my car which is worth about 40k. I work for myself so I don't have any wages that can get garnished. Also haven't' filled taxes in 2 years if that makes any difference.

My cards are 15k to 25k each. Totaling about 200k. Can/will any of these creditors, some of which I owe 50k+ (multiple cards), come after my primary residence if they obtain a judgment? I know the homestead exemption in Georgia is about 21k so it would seem that they would come for my house, but how typical is it for them to do that? How long do you think it would take before the first judgement? I'm thinking about a year?

Just trying to figure out if meanwhile I should sell my house and take my equity before any of that happens.

Tough times but I know I won't stay down so I'm going to try to avoid bankruptcy and just settle the debts in a year or two. Beside, I think I'd have a better chance of losing the house in a bankruptcy vs prolonging it with collectors. What do you guys think?

Re: Can credit card collectors come for my house and how long do I have after defaulting?

dynamicvb — Wed, 28 Nov 2018 15:32:35 GMT

That is a lot of CC debt. I would expect the interest to be killing you. Might want to talk to a lawyer about BK13. You can keep the house and the car and just make payments for 3-5 years. Most of the CC debt would get wiped. This may protect you better than fighting them in court. with those amounts, I would definitely expect to be sued.

This is just my opinion and others may have some better different advise on handling this one.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 16:35:12 GMT

Credit card debt is "unsecured" debt, so they can't take your house for that. If you believe you can truly pay this debt off in a year, then I would contact each creditor and honestly discuss your situation and see if they can work with you to lower your payments until you can get back above water.

You won't be doing yourself less harm by defaulting but not declaring BK, that's for sure. A lot of people are initially hesitant to declare BK, myself included, because of the stigma that used to be attached to it. You have to take emotion out of the equation & look at it from a purely financial outlook. Will you be in a better or worse financial situation by declaring BK? Also, if you do qualify for a BK7 your credit will not be any better off by filing a BK13, in fact it may suffer more for a longer period of time. Do some serious investigating and consult an attorney.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 17:31:43 GMT

@ScooterMcDoodleButt - actually they can. The card itself is unsecured - BUT If they sue you and win judgment they can then put a lien on your house for that judgment. Also - the judgment can stay on your report for 7 years....that can do more damage than a bankruptcy over time.

If you really want to protect your house - I recommend what the previous poster said about BK13. It's probably the best way to protect the assets you have.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 17:39:59 GMT

Honestly I want to avoid bankruptcy just so I don't have to explain to the judge why I emptied out the credit cards on random things before defaulting on them. Pretty large amounts. I also don't know for sure if I can pay them back, I'm just hopping things will workout but they might not.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

dynamicvb — Wed, 28 Nov 2018 17:44:13 GMT

@Anonymous wrote:
Also, if you do qualify for a BK7 your credit will not be any better off by filing a BK13, in fact it may suffer more for a longer period of time. Do some serious investigating and consult an attorney.

This is not really correct. People like bk7 as there are no payments to make, but it stays on your CRAs for 10 years, versus 7 years for a 13 from filing date. You are actually paying a portion of your debt, both secured and unsecured during the payment period. The secured stuff always comes first so the car will be in the payments and any other secured stuff you have. The house will most likely be left out and you will have to reaffirm keeping it. They will give something to the CC companies but not near 200K. But they can't sue you for anything they don't get paid.

It won't cost you anything to just meet with an attorney and see what options you may have. You can then decide what may be the best path. I fought it for longer than I should have because I did not want to feel like a failure. I got over that and learned from my mistakes. Overall filing a BK 13 was the best thing I ever did.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

dynamicvb — Wed, 28 Nov 2018 17:54:14 GMT

@Anonymous wrote:
Honestly I want to avoid bankruptcy just so I don't have to explain to the judge why I emptied out the credit cards on random things before defaulting on them. Pretty large amounts. I also don't know for sure if I can pay them back, I'm just hopping things will workout but they might not.

I never got asked anything about why a balance was a certain way. I did not include a lot of CC debt when I filed, but there were 7 or 8 accounts that where unsecured. None of the creditors even showed up, they just sent documents. I was in and out of the courtroom in about 10 minutes once I got to the judge. It was actually pretty painless he just asked if I could afford to make the payments and asked a couple of questions about assets as in bank accounts. I did not have to surrender anything and we had about 12K in cash and an extra car.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 18:07:17 GMT

you also may want to go do a little reading in the BK forums as well as talking to an attorney. It may help you make the most prudent decision. Sometimes pride gets in the way - I WISH I would have went forward with the BK years ago - it sure would have helped in the long run.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 18:36:01 GMT

@Anonymous wrote:
Honestly I want to avoid bankruptcy just so I don't have to explain to the judge why I emptied out the credit cards on random things before defaulting on them. Pretty large amounts. I also don't know for sure if I can pay them back, I'm just hopping things will workout but they might not.

There is no reason at all to file bankruptcy right now. The only time you really want to file for bankruptcy is if they are on the verge of taking your assets in some way. Before they can take you assets, they first need to:

1) File a lawsuit

2) Win the lawsuit to get a judgment

3) Then do a debtor examination to find out where you work, where you do your banking, where you keep assets, etc.

All of that will likely cost your creditors about $10,000+ for EACH of them to do it.

The reason why most defaulted unsecured debts result in only collections and phone calls is quite simple. 90% of judgments result in the "winner" collecting $0.00. Many banks and credit unions do not bother with lawsuits. They just try to collect with their internal collections department for 6 months, then they charge it off and sell the bad debt for 5% to 10% of face value to a Junk Debt Buyer. Then the JDB will just annoy you with phone calls and threatening letters. It is all silly and meaningless. You can make all of those collection efforts stop with one written letter to cease contact per the FDCPA.

Your odds of getting sued are actually quite small. Lawsuits are the exception, not the norm.

I would NOT file for bankruptcy over unsecured debt. Unsecured debt is ridiculously ease to dispose of on your credit files and thru the court system. It is crazy easy to chase off collection agencies.

The ONLY reason for you to file for bankruptcy in your scenario would be if they already have judgments against you on credit card debts and are on the verge of placing liens on assets that you care about, such as your house. If that is about to happen, THEN you file for bankruptcy and reaffirm your commitment to the mortgage company that you want to keep making your payments on your house.

Just remember, the odds of you getting sued are very low. The VAST majority of these things are just sent to collections for annoying phone calls and threatening letters. You can just ignore that stuff. It is just mind games that they use to get weak low hanging fruit.

Focus instead of just getting all of the negatives deleted from your credit files. Get a new cell phone number. If any of your old creditors find your new cell phone number, just say they have called the wrong number, please update their files. Change the addresses for all of the accounts (that you have to default on) to some random address in another state. Also change the phone number to something random you find somewhere. Whenever you get a bill from them, fill out the change of address section to some new random address in another state, then send it back to them.

Seriously, just adopt the right attitude about this and it will all be gone in 12 months.

Focus on rebuilding your credit and getting your life in order.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 18:44:41 GMT

@Anonymous wrote:

You won't be doing yourself less harm by defaulting but not declaring BK, that's for sure. A lot of people are initially hesitant to declare BK, myself included, because of the stigma that used to be attached to it. You have to take emotion out of the equation & look at it from a purely financial outlook.

It is called a "strategic default".

People just need to evaluate whether the debt makes sense or not.

If it doesn't make sense, then let it go and reboot.

I sort of call it an "internal bankruptcy". You are defaulting on the debts you cannot afford, but just skip the part about filing officially with the BK court system. There is no need to get the BK court involved.

Everyone just needs to remember this ... the vast majority of defaulted unsecured debt (credit cards) are just sent to collections for annoying phone calls and letters. You can make all of that stop with the FDCPA cease communication letter. Lawsuits to recover unsecured debt are rare. Yes they do happen, but 95% of the time they do not.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 18:58:02 GMT

@dynamicvb wrote:
That is a lot of CC debt. I would expect the interest to be killing you. Might want to talk to a lawyer about BK13. You can keep the house and the car and just make payments for 3-5 years. Most of the CC debt would get wiped. This may protect you better than fighting them in court. with those amounts, I would definitely expect to be sued.

This is just my opinion and others may have some better different advise on handling this one.

The OP has too much debt for a CH13 - would have to go Ch11.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 19:47:45 GMT

Yeah I've dealt with collection and rebuilding my mothers credit before so I'm somewhat familiar. From what I remember reading, if you send them a CND they'll either sell it to another collector or file for a judement? I think I would get a new number for this purpose just so they don't bug me on my own phone but also don't want to make them keep looking for me because one fear I have which wsan't an issue in the old days of credit repair is if they find my social media accounts and start contacting friends with the excuse that they couldn't find me. I can't hide on social media due to the nature of my business but I will if I have to. I'm willing to deal with all of that at this point. Just looking to minimize the damage and keep as much as I can. Your answers seem to be what I was looking for. Thanks

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 19:53:58 GMT

@Anonymous wrote:

My cards are 15k to 25k each. Totaling about 200k. Can/will any of these creditors, some of which I owe 50k+ (multiple cards), come after my primary residence if they obtain a judgment? I know the homestead exemption in Georgia is about 21k so it would seem that they would come for my house, but how typical is it for them to do that? How long do you think it would take before the first judgement? I'm thinking about a year?

Also, something else to think about when this is all going down. If you do get sued in court over this stuff (it is rare, but it does happen) then that doesn't mean you are sunk. That is merely a new front in the war.

The key is that you want to avoid a default judgment. Collection attorneys are the lowest qualified in the legal game. They are typically from the worst law schools that take any mouth breather. The reason why is because there is very little money to be made suing poor unemployed people with defaulted debt. So most real lawyers won't touch this stuff. The few low rent lawyers that play in this arena are filing 20-100 lawsuits at a time and they are praying that nobody responds so that they get an easy default judgment with very little actual legal work to do.

If you merely file an ANSWER to the lawsuit, that messes up everything in their game plan. Filing an answer is easy. You basically just respond with, "The defendant does not have enough information to admit or deny the allegations. Therefore the defendand denies all allegations." Google how to file a lawsuit answer. It is easy. Mail a copy to the plaintiff's lawyer. File a copy with the court. Then show up on court hearing day and refuse to settle.

So now the plaintiff's lawyer will be ticked off because he didn't get the easy default judgment. He was only paid a token fee by the bank based on some basic paperwork and one hearing. So now he has to go back to the bank and say, "hey, this guy responded. That $700 you paid us for this file now requires $10,000 because we have to plan for discovery, a few more hearings, plan for trial, engage in mandated mediation, etc"

So the bank manager in the legal department is now saying, "christ, this defaulted debt is only worth $10,000. Does it really make sense to pay $10,000 in legal fees to chase a $10,000 debt? And even if we "win" we probably still won't collect anything. Phuck it. Just try to settle with the guy. Will he pay us $500 and we all dismiss?"

Then their lawyer tries to negotiate with you for a token settlement to each walk away because they really don't want to go to trial on this matter. The bottom line is that you can basically make them go away and pay them nothing.

If you are really advanced you file a counter lawsuit for violation of the FDCPA and/or FDCPA and defamation and libel. Then you force them to pay you $1,000 as a token settlement to allow them to walk away with mutual dismissals and them deleting all negatives on your credit files.

It is all great fun. I actually get excited when it happens.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 19:56:36 GMT

@Anonymous wrote:
From what I remember reading, if you send them a CND they'll either sell it to another collector or file for a judement?

There is no such thing as "file for a judgment". They have to file a lawsuit and go through the entire court process. With just some basic paperwork you can mess with them in court. See my previous post.

If they sell it to another collection agency, just send another CND. No big deal.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 20:33:54 GMT

Thanks for all the info! I remember reading about not ignoring the lawsuit and all that but since we're talking about 20-30k cards i wasn't sure if they'll make an extra efford to go after me.

One thing I might try doing is while it's still with the OC's internal collection department I'll send in a couple hundred bucks every now and then to see if it would prolong the 6 month period that it takes them to sell to a JDB. Just to buy me some more time and make the debt older/less valuable. I wouldn't do that once it's with the JDB though as that would be admiting that I owe that money.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

vntrsc — Wed, 28 Nov 2018 21:21:00 GMT

Depending upon your state laws, a payment could reset the statute of limitations on the account.

Whether or not collection lawsuits are the exception rather than the norm really doesn’t matter. Even if they are the exception, there is no way to predict if you will be one of those that will or will not be sued.

If if it were me, I would talk to some attorneys about my options so that I could determine what is best under my circumstances.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Wed, 28 Nov 2018 22:09:16 GMT

@Anonymous wrote:
Thanks for all the info! I remember reading about not ignoring the lawsuit and all that but since we're talking about 20-30k cards i wasn't sure if they'll make an extra efford to go after me.
One thing I might try doing is while it's still with the OC's internal collection department I'll send in a couple hundred bucks every now and then to see if it would prolong the 6 month period that it takes them to sell to a JDB. Just to buy me some more time and make the debt older/less valuable. I wouldn't do that once it's with the JDB though as that would be admiting that I owe that money.

The only think a couple of hundred bucks will do is re-start the Statute of Limitatuins clock - something you don't want to do.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

ItsCASHual — Thu, 29 Nov 2018 00:18:30 GMT

I am not an expert by any means but I will say that I would be nervous in your situation. I've had a lawsuit filed against me a year ago for $1,400 owed on a defaulted Care Credit account with Synchrony Bank. My salary is $85 K so I'm not a millionaire or anything close. It was about 6 months after charge-off that the process server came to my house.

I did file a response with the court within 21 days and I did go to the court hearing on the assigned date and time. The lawyer that I met was able to work out a deal with me right then and there and I was lucky to avoid a judgment on my record. I worked my deal out for payment in full over 5 months time. I fulfilled my end of the deal.

I would think for the amount of debt you are referring to, you can expect some filed lawsuits to follow. It's just a matter of time. Maybe not all, but some will, in my opinion.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Thu, 29 Nov 2018 01:52:08 GMT

@OP you have received some good advice/options from the great MyFico members. I will say be careful with some of the stuff told to you.

The claims that @rocketgoboom made about fees the creditors pay the firms to collect couldn't be further from the truth. THey don't pay a "fixed rate" to collect a file (maybe only exception could be a small credit union or some one off, but something tells me your credit cards are with major creditors), major creditors place hundreds of files a month with a firm to collect. If it really cost $10,000 a pop everytime discovery, hearings, trial, no creditor would ever sue. As much as these attorneys and firms are bashed, they are sophisticated and are a well oiled machine for the basic default judgment all the way to propounding discovery, depositions, motions, mediation, hearings, you name it. Its not an overly complex process at all. JDB's are "easier" to try to strong arm, but they are more likely to sue for any amount.

FDCPA does not apply to original creditors, so the only way a token settlement would work is if the law firm or collection agency messes up. In some states they have mini FDCPA's i.e. California that apply to original creditors.

If you are comfortable saying what creditors you have, you might get some specific feedback from people and their experiences.

Re: Can credit card collectors come for my house and how long do I have after defaulting?

Anonymous — Thu, 29 Nov 2018 02:37:27 GMT

@Anonymous wrote:
@OP you have received some good advice/options from the great MyFico members. I will say be careful with some of the stuff told to you.

@Anonymous claims that @Anonymous made about fees the creditors pay the firms to collect couldn't be further from the truth. THey don't pay a "fixed rate" to collect a file (maybe only exception could be a small credit union or some one off, but something tells me your credit cards are with major creditors), major creditors place hundreds of files a month with a firm to collect. If it really cost $10,000 a pop everytime discovery, hearings, trial, no creditor would ever sue. As much as these attorneys and firms are bashed, they are sophisticated and are a well oiled machine for the basic default judgment all the way to propounding discovery, depositions, motions, mediation, hearings, you name it. Its not an overly complex process at all. JDB's are "easier" to try to strong arm, but they are more likely to sue for any amount.

FDCPA does not apply to original creditors, so the only way a token settlement would work is if the law firm or collection agency messes up. In some states they have mini FDCPA's i.e. California that apply to original creditors.

If you are comfortable saying what creditors you have, you might get some specific feedback from people and their experiences.

Pretty much all the major banks. Amex, Citi, Chase, BOA, PNC, Discover, US Bank, Nationwide Bank, Wells Fargo. I have business credit(with PG) with most of them too. The business was just a real estate holding LLC which hasn't owned any real estate in more than a year.