Stop paying credit cards - what happens with debt and you
When it comes to advise on credit card debt, you can find plenty of rubbish around the web these days. Just a few days ago, someone I know very well decided to stop paying credit cards. She thinks she knows what happens next. She owes no more than $7,000 in credit card debt to Capital One and Discover. Works as a cashier in a local grocery shop making $8 per hour. The husband is a carpenter who makes around $14. They have very little money in the bank. With $900 monthly rent, cable, two latest cell phones and $400 monthly payment on 2008 Camry, there is not much left after food and other necessities. So the lady found this post, which explains how you can legally stop paying credit cards. The whole thing almost encourages you to stop. Not so fast. As explained in Defaulting on credit cards, can you just stop paying?, things with debt are rather complicated. You can't just stop paying it back. Bad stuff happens.
If you got yourself into the debt, without breaking any laws (not sure what it means), you can not stop paying it at any time without consequences. You can only stop paying credit cards legally, if you are able to file for Chapter 7 Bankruptcy and have all credit card debt discharged under it. Then it is wiped out clean and for good. Otherwise, you very legally must pay it back. Just look at your credit card agreement.
If you can not file Chapter 7, then you will get sued. Especially when you are dealing with Capital One, Discover and Chase. So in this case, the whole legal thing will turn against this lady and she will get her wages garnished. Even her husband wages can be taken in Wisconsin or any other community property state.
What happens with defaulted debt? It will be charged off by the credit card issuers, sold to collection agencies. More than often, the same debt ends up with several collectors. Then it may be resold again. They all will call you and try to collect. Sure you can extricate yourself from such a mess, but not too easily. Thus, to stop paying credit cards and cut them up once they are maxed out, is hardly a legal and smart thing to do.
Changing you phone number or address or even both does not help much these days. Ever heard of skip tracers? In this day and age, they will look for you and they will find you. Before statute of limitations expire. Even if you move in the different state with lesser statutes, credit card issuers will go after you armed with statutes from the state where debt was accumulated. And if you are gainfully employed, your wages and liquid assets are there for garnishment. That is why telling the creditors and debt collectors to stop calling you at work will be the last thing on your mind. What will be the first and the only one? Hiding you wages and assets, which is not very legal.
If, after you stop paying credit cards, you are served a summons, don't hope that you can get away following tips found on the debt forums and credit boards. First read them and see for yourself, it is not easy. That what moderators on those boards and forums will tell you. Debt collectors read them too, so they know the legal tricks. And many of collection agencies today are law firms. Chances are, they are more legally adept than you, I and bunch of authors who write those posts.
Now, about the retirement accounts. Yes, they can't be touched by lawsuits and are yours to keep when filling for Chapter 7 Bankruptcy. But before you save any money left after you stop paying credit cards and deposit it into a retirement account, as that post recommends, check with a local bankruptcy attorney to make sure that the after-you-stop-paying-money won't be taken back from your IRA or 401K by the plaintiff.
Wed Feb 23, 2011 11:02AM | Copyright: www.bad-credit-advisor.com | More in Credit Card Debt | Comments (0)
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