Unsecured debt and asset

[sivmtrohs]

My friend asked me to ask here a few questions. Can the creditors of unsecured debts, such as credit card companies, take away assets of the debtors? Shouldn't it be only credits that the debtors are losing? Also, she has $70,000 of credit card debt and is making $35,000 per year. Can she file for Chapter 7 or 11? Thank you very much.

[SinkingFast]

Most CC debt is unsecured. Sometimes, Store Cards will contain a Security Purchase Statement in their agreement. You use your Sears card to buy a riding lawn mower or TV from Sears, that debt is "secured". Depending on your friends CC's Line of Credits and the terms, most, if not all, of that debt will be unsecured and dischargeable.

Debt to income ratio is not how Chapter being filed is decided. Whether your friend can file Ch 7 or not depends on her income level compared to the Median for where he/she lives.

http://www.usdoj.gov/ust/

Click on the Link for Means Testing Information.

Then look for Median Income Figures on the next page.

[miss puff]

Best Buy/Circuit City are also popular "secured" credit cards. If you recently bought a big screen plasma TV they will probably want it back.

[Interlaw]

My friend asked me to ask here a few questions. Can the creditors of unsecured debts, such as credit card companies, take away assets of the debtors? Shouldn't it be only credits that the debtors are losing? Also, she has $70,000 of credit card debt and is making $35,000 per year. Can she file for Chapter 7 or 11? Thank you very much.

Unless they sue, obtain a judgment, and issue a garnishment of property, general unsecured creditors can't go after assets.

[Interlaw]

Best Buy/Circuit City are also popular "secured" credit cards. If you recently bought a big screen plasma TV they will probably want it back.

They may *ask* for it back, but even if secured it probably isn't worth their money to *force* you to give it back.

Having a security interest in an item such as a TV doesn't allow a creditor to simply knock on your door if your payments are behind, come in and take the TV. It must first hire a lawyer, file suit for replevin in state court, hire a process server to sue you, have the lawyer show up in court to obtain a judgment, hire a mover to go to your house and pick up the TV, hire an auctioneer to auction it off, pay for a newspaper ad to advertise the sale, and then have the lawyer file documents with the Court showing that all the above was done, and accounting for the proceeds and expenses.

In the vast majority of cases, it's simply too expensive for a creditor to do this. They'll instead try to convince you to "voluntarily" return the item.

Maryland, DC and Federal bars
Member, National Association of Consumer Bankruptcy Attorneys

--> Read our Bankruptcy FAQ at [url][url]

************************************************** ***************
The Small Print: This response is for discussion purposes only.
It isn't meant to be legal advice and you shouldn't treat it as
such. If you want legal advice, speak with a local lawyer
familiar with your state's laws who can review *all* of the
facts and the law applicable to your situation.
************************************************** ***************

[kcj]

They may *ask* for it back, but even if secured it probably isn't worth their money to *force* you to give it back.

Having a security interest in an item such as a TV doesn't allow a creditor to simply knock on your door if your payments are behind, come in and take the TV. It must first hire a lawyer, file suit for replevin in state court, hire a process server to sue you, have the lawyer show up in court to obtain a judgment, hire a mover to go to your house and pick up the TV, hire an auctioneer to auction it off, pay for a newspaper ad to advertise the sale, and then have the lawyer file documents with the Court showing that all the above was done, and accounting for the proceeds and expenses.

In the vast majority of cases, it's simply too expensive for a creditor to do this. They'll instead try to convince you to "voluntarily" return the item.
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If you get bored, search for my posts on Circuit City. They filed a replevin for the television we purchased in January 2005 (filed September 2005). They got to attend small claims via teleconference. And in the end, it looks like Chase (CC's card) will be getting less than $100. We settled for $1000 lump sum; their paperwork shows over $900 in attorney and filing fees.

[SinkingFast]

If you get bored, search for my posts on Circuit City. They filed a replevin for the television we purchased in January 2005 (filed September 2005). They got to attend small claims via teleconference. And in the end, it looks like Chase (CC's card) will be getting less than $100. We settled for $1000 lump sum; their paperwork shows over $900 in attorney and filing fees.

Sometimes, I think, the legal representatives of companies just run hog wild and unbridled.

Obviously this was a case where the Law Firm did not act in the best interest of their Client, Circuit City/Chase. It seems to me that the Law Firm acted in their own best interests to line their wallets with billable hours, and the Court System thru filing fees for Motions and such.

I know if I were the Chase Rep in charge of your case, I would not have authorized this action. It's simply not worth the time and expense to get back $100. Seems to me that Chase would have faired better to have written off the debt and taken the tax deduction.

Sounds like that's a person employed in the Collections Dept of Chase who's simply trying to justify their existence to the Company.

[kcj]

Just imagine how much it would have cost Circuit City had we not settled. They would have incurred several hundred dollars more just to pick up the television, store it, and sell it.

They definitely didn't get their money's worth out of this case. I wonder how it will affect future cases. Really, had they come to us before filing the papers and asked for their property back, we would have settled with them at the same price, and they actually would have gotten a few dollars out of the deal.

[no_it_all]

In the vast majority of cases, it's simply too expensive for a creditor to do this. They'll instead try to convince you to "voluntarily" return the item.

True, and often those <requests> for the <voluntary> return of the merchandise are printed on the letterhead of an attorney...so make sure and read the fine print..

[Interlaw]

True, and often those <requests> for the <voluntary> return of the merchandise are printed on the letterhead of an attorney...so make sure and read the fine print..

And when you read the letterhead, see if the attorneys listed on it are even admitted to practice in your state. Most times they are not, and they could not file suit against you--they would have to hire separate local counsel to do this (at additional cost).

I love it when my clients get dunning letters from out-of-state lawyers--it means the creditor isn't serious about going after them.


[Member, National Association of Consumer Bankruptcy Attorneys

--> Read our Bankruptcy FAQ at ww[url]www.

************************************************** ***************
The Small Print: This response is for discussion purposes only.
It isn't meant to be legal advice and you shouldn't treat it as
such. If you want legal advice, speak with a local lawyer
familiar with your state's laws who can review *all* of the
facts and the law applicable to your situation.
************************************************** ***************