Total Credit Card Default

[kshurika]

I am, quite literally asking this for a friend. I suggested she post on this forum, but she finds it mind-boggling.

After nearly 3 years of unemployment, huge medical bills and running up c.$75K in credit card debt, my friend has decided to simply go into default, because she doesn't have the (as she's been told) $3.5K for a lawyer to file a bankruptcy for her and she has been warned off doing it herself.

I and others have prepared her for the intense full frontal assault she can expect, but she seems most interested in only one aspect - how do creditors discover a bank account? I told her that any account she has been using to pay credit cards will immediately be identified. She practically said "Duhhh" to me and said she has set up a couple of checking accounts that, to date, have not been used to pay anything. Due to the amount she owes, it's almost certain that court judgments will be forthcoming. How do creditors find where she banks?

I'm asking here because so far she's gotten about seven different answers from as many people.

Thanks and cheers.

[FireMedic1]

They can check the requirements for Legal Aid in your state. As long as they dont exceed 125% of the Federal Poverty Income Guidelines. Its a state by state thing. ChexSystems and/or EWS has all banking info which can be checked.

[sarge12]

A few points to consider...Lawyers who handle BK will advise her how she can proceed. There is no debtors prison, and CC debt is unsecured. If she has no assets, then a judgement is not enforcable. I strongly advise her to find a way to declare BK as opposed to just defaulting and dealing with all the headaches that come with that approach. The problem will not just go away, it needs to be dealt with. A bankruptcy is much easier on a persons life than, than being hunted, hounded, harrassed, and having to answer a summons in lawsuits. Filing bankruptcy is the avenue allowed by law, to reclaim her life, and be provided protection from debt collectors. It is not easy, and it will take time, but in many cases, it beats the heck out of the alternatives. The Lawyers that handle bankruptcy usually have a free initial consultation, and they usually know how to secure their services, even though you may be broke. She at least needs to talk to a lawyer before choosing the path she suggests.

[MileHigh96]

Not sure who advised her that it will cost $3.5K to file bankruptcy. Bankruptcy lawyers are actually a fairly competitive business, so pricing can vary wildly. When I filed in the summer of 2021, It cost me only $1200 and that was for everything.

She should start calling around and making appointments with several different attorneys to find one that (A) she feels comfortable with and (B) one that isn't wildly overcharging for services. You don't need a lawyer with a fancy office and many employees to find a competent bankruptcy attorney. My lawyer was her own practice and she had one person working for her in a tiny office and she was absolutely awesome.

Best of luck to your friend.

[Catbird_Seat]

---

@MileHigh96 wrote:
Not sure who advised her that it will cost $3.5K to file bankruptcy. Bankruptcy lawyers are actually a fairly competitive business, so pricing can vary wildly. When I filed in the summer of 2021, It cost me only $1200 and that was for everything.

She should start calling around and making appointments with several different attorneys to find one that (A) she feels comfortable with and (B) one that isn't wildly overcharging for services. You don't need a lawyer with a fancy office and many employees to find a competent bankruptcy attorney. My lawyer was her own practice and she had one person working for her in a tiny office and she was absolutely awesome.

Best of luck to your friend.

---

Ditto, my BK7 was filed in 2020 & cost $1400 in lawyer fees. My lawyer also allowed me to make payments to pay it off, which is something your friend can also look for, a lawyer who will allow her to make payments. I also paid $338 (which is standard) to file in Federal court, the court fee is separate from the lawyer's fees. Depending on the district, there are some judges that allow the court filing fee to be paid in installments too. 

Costs of bankruptcy fall into categories, which include:

• Required pre-filing credit counseling and pre-discharge financial management course
• Federal Bankruptcy court filing fees
• Trustee fees
• Attorney fees

If your friend is sued & judgements are awarded to the creditors, they will find her money & serve her banks with proof of garnishment, along with her employer, if she's working again. 

[Drifter73]

FWIW,

Bankruptcy option = lenders may give you another chance in 7 to 10 years.

Total default = Lifetime ban with some lenders (e.g. 30+ years since my Amex default and still black listed - they wont even send me a payoff amount statement option)

My suggestion is to go the BK route so that there is at least a rebuild option 7 to 10 years later with specific lenders.

Sure, there's other lenders and cobrands that can be leveraged, but they generally aren't as good as the prime's. Don't burn bridges so bad they can't be repaired.

Good luck. 

[OmarGB9]

Agree with the consensus - friend should review all options and at least do a free consult with a lawyer. BK is the proper way of handling this, IMO. And yes her bank accounts would be discovered whether she's "paid anything with them" or not. 

[RootDet]

In my state, after a judgement is awarded and 30 days have lasped attempting to collect the judgement, they can ask the court to order a financial disclosure. The court will then order you to disclose all assets, bank accounts, etc. Refusing means you will be summoned to appear before the judge and held in contempt for not answering. Lieing on it means they get you for purgery, contempt of court, yada yada. In either case the outcome is the same, time spent in jail. 

So besides places like chex, tax forms when bank sends interest statements, databases for check printing, etc. They have ways to find it out, and then the old fashion is force you to reveal. 

But i am sure many try it, some probaly get away with it. Others get to find out how nice the judge is. 

[DogwoodLynx]

Agree with all the above. As someone that is 4 days away from discharge, I can say its the best decision financially. 

I would say that 2k (that was my attorney total costs) is well worth it to have a chance at life again (kinda literally lol). 

A cashed out my 401k to be able to pay the fees. No regrets. 

[SUPERSQUID]

---

@kshurika wrote:

I am, quite literally asking this for a friend. I suggested she post on this forum, but she finds it mind-boggling.

After nearly 3 years of unemployment, huge medical bills and running up c.$75K in credit card debt, my friend has decided to simply go into default, because she doesn't have the (as she's been told) $3.5K for a lawyer to file a bankruptcy for her and she has been warned off doing it herself.

I and others have prepared her for the intense full frontal assault she can expect, but she seems most interested in only one aspect - how do creditors discover a bank account? I told her that any account she has been using to pay credit cards will immediately be identified. She practically said "Duhhh" to me and said she has set up a couple of checking accounts that, to date, have not been used to pay anything. Due to the amount she owes, it's almost certain that court judgments will be forthcoming. How do creditors find where she banks?

I'm asking here because so far she's gotten about seven different answers from as many people.

Thanks and cheers.

---

She can shop around for a lawyer, they all charge different hourly rates, fees, and set price,.

3.5k sounds high for bankruptcy.

Most lawyers will start the case with a retainer and most offer pay as you go.