Best time to negotiate with Collection Agencies

[stress05]

California Foreclosure - Default on Line of Credit

My question involves a foreclosure in the State of: CA
Hello,

We recently foreclosed on our home and moved into what was then our rental property. To finance the purchase of the foreclosed home we took out two loans. Over time we refinanced the 2nd into a HELOC with Citibank (180K). We have assets in both IRA and 401K and also have non-retirement assets. We currently both work and in our current home we have some equity. We just started getting collection calls not from Citibank but another collection agency named Penncro. The calls average about one per week, and for some reason they are calling my parents home and have not been able to reach us at our current residence. Here are my questions:

1) Does it make sense to reach out directly to Penncro to attempt to settle - or should we hire an attorney for this
2) At what point could our wages be garnished - would this take a lot of time and would we get ample warning before this happened?
3) How can we gauge where Penncro is at with their process are they close to getting a judgement
4) How exposed is the current home we live in and the non-retirement assets?

[catleg]

I thought that even if a creditor would get a judgement against the debtor, as soon as the debtor would file BK, the debtor would not be able to then get a judge to force the debtor to fork over money, and the judgement would be dismissed like any debt.

Debt was discharged in bankruptcy is a valid defense in any proceeding to enforce a judgment.

If the attempt is to enforce as a lien against real property, a skirmish may then ensue to prove that the judgment impaired an exemption. Not sure how that would work. It could be messy.

Many folks prefer to get the judgment vacated in state court by a motion just to be sure (in case they own, or contemplate owning, real property).

[catleg]

If you're below median income, and your budget does not have any disposable income, and you have no assets to protect that exceed exemptions, you can file chaper 7

If your debts are primarily non-consumer debts, you can strike the condition that you have to be below median income to get a chapter 7.

[JackBondLove]

I thought that even if a creditor would get a judgement against the debtor, as soon as the debtor would file BK, the debtor would not be able to then get a judge to force the debtor to fork over money, and the judgement would be dismissed like any debt.

[smkrishna]

Catleg, What do you mean by non consumer debt? HELOC? But, still that will be treated like a credit card (consumer) debt? Isn't it so?

I am planning to go for Chapter 13 as my attorney said that I can make payment of $100 to $200 per month for 36 months and I will be out as I have a job.

I am planning to stop making payments to credit cards by end of this month as I have already paid for this month at the beginning.

[catleg]

Remember that debts associated with investment property are not consumer debts so it will be easier to get rid of them in chapter 7 if you go that route. (if your debts are primarily non consumer there is no means test).

[flyinbroke]

It is absolutely about intimidation. They are hoping they can scare people into crapping 100 dollar bills and paying up. Those I defaulted on here are upping the ante...calling any and all numbers associated with me. I sent out my C&D letters today; in Texas, they apply to the OC and they now have to stop calling incessantly. I look forward to peace and quiet.

Now if only there was a way to get rid of the CAs calling my home for whoever had my phone number before me....

[ryan]

I did find this on a lawyers website (tho not specifically about showing up for 341's regularly its still interesting)

Discover, the card that hits you back
By admin • August 11th, 2009
from Law Offices of J. Kutkowski, Esq

"Over the past few months there’s been an uptick in the number of credit card companies filing lawsuits in Court of Common Pleas and Magistrate courts in Pennsylvania against creditors have defaulted on credit cards.

Two of the highest rate filers are Discover Card and Capital One, with Discover Card probably outstripping Capital One at a rate of 5 to 1.

I’m not sure why they’re doing this. In Pennsylvania, credit card companies are not able to garnish wages, however they are able to garnish bank accounts. In my experience the average person being hauled into court for credit card debt doesn’t have more than a couple hundred dollars in a bank account at any given time, so I don’t really understand why these credit card companies are going to the expense of getting a judgment.

It can’t be to have priority in a bankruptcy proceeding because at the end of the day they still unsecured creditors in a Chapter 7 bankruptcy and are probably not going to get anything. They can’t garnish wages because as mentioned above they are not allowed to. So why are credit card companies now suing in the Magistrate and Court of Common Pleas courts the state of Pennsylvania?

I think it’s about intimidation. The average consumer doesn’t know that a credit card company cannot garnish wages. The average consumer doesn’t know the credit card company can garnish a bank account. The average consumer who has a charged off a credit card probably has other credit card debts and other debts pressuring them, and it might be that the credit card company wants to be the first on their list to be paid...."

[flyinbroke]

Discover is usually pretty aggressive with collections and quick to sue, but the lawyers I spoke with say that national creditors almost never show up to a 341. A few don't even file proof of claim, meaning they get zip in a BK.

If you are definitely filing BK, it does not make sense to pay CCs, and this is why you are better off not paying. Some money will be exempt from assets, and you will need it to live on once the cards are gone.

[smkrishna]

Well. I searched about 341 meeting and BK in so many places, I couldn't remember which website I found this information. I will search again and I will post it here in this thread if I find it again. But, one thing I remember is it's from an experienced BK attorney website link.

[ryan]

The other problem is I heard Discover is the only creditor who comes to 341 meeting always and they take BK seriously irrespective of the amount. I have $4.5 k balance with Discover card. I dont know whether to pay off that amount or to...

I'd be interested to hear where you got that info from?

[smkrishna]

Thanks keptdigging. Your reply gives a clarity in my mind. I totally agree with your words "rabbit hole"

I have been already told by one attorney that I need to stop paying CC's as that will give me a better handle on BK....But, I want to make sure on Monday with all the implications of stop paying CC.

The other problem is I heard Discover is the only creditor who comes to 341 meeting always and they take BK seriously irrespective of the amount. I have $4.5 k balance with Discover card. I dont know whether to pay off that amount or to

[keptdigging]

You're absolutely doing the right thing, seeing a lawyer. And let me chime in with the rest: talk to the attorney before you even think about contacting the collection agency.

That said, I suspect she/he will tell you that it is never too late to negotiate... until they're paid in full. I've seen stories of creditors who have indeed settled between summons and judgment. And since having a judgment is not the same as collecting the judgment, they still might settle. It's just business to them... how much cash can they get.

Note that even if you don't want to file BK, the fact that you can is one of the many things that might motivate a creditor to settle. But paying your other bills makes them take that threat less seriously and suspect you can pay them too. Welcome to the rabbit hole.

[smkrishna]

Thanks again flyinbroke. I never got such a quick response in any of forum like this. I really thank again for your time.

As you said, most people advise not to deal with CA's as they are tough to handle for normal people.

I am going to talk to a BK attorney on Monday afternoon and am planning to give my financials and ask all the questions that I have in my mind that will give me some solution.

I will update this thread with attorney's reply. This forum is god-sent for people who are confused/broke/don't now what to do with CA/BK/etc... Thanks guys...Let us help each other out during this tough economic situation.

[flyinbroke]

You don't need an excuse or reason to file...if your outgoing bills are greater than incoming money, that is reason enough. And talking to an attorney does not obligate you to hire them or file, but they can give a better picure of your financials.

Not sure about settlements...not one creditor has offered to settle and I am at about 90-120 days of no pay on a couple of accounts. I just don't answer their calls and only received four letters total. No offers to settle, just a lot of collectors threats.

Can't help you there...but if you are paying cards and not mortgage, this sounds like a potential BK case to me.