Chapter 7 Bankruptcy in Louisiana Part I, Update
If you haven’t read my first post on my bankruptcy proceedings, please read it here.
I’ve been working on my To-Do list
I located the Capital One law suit papers in my business file cabinet and took them to my attorney’s office yesterday afternoon. Hopefully, she’ll get a cease and desist letter out to them this coming week.
I’m about half way finished with the 26-page information packet. As soon as I get everything done on that I will get online and get another pre-bankruptcy certificate. I’m working on those two things this weekend.
I called my accountant and my 2007 tax return should be finished in 1-2 weeks. I need to call back and discuss what tax implications bankruptcy has. I haven’t ever seen anything about bankruptcy and taxes. I have to conclude from this that 1) it has no affect on your taxes, 2) any affect is minimal, or 3) nobody is worried about taxes unless you owe the IRS. I’m going to talk to my accountant again and do some more research to see if there are tax implications when you file for Chapter 7 bankruptcy and whether they will affect me.
My Attitude About My Debts
Just before I retained my attorney I received another letter from Capital One that they reported my delinquent account to all three credit reporting agencies. The first words that came to mind were “so what, it’s not like my credit isn’t already in the toilet”. It may seem like I don’t care about my debt anymore. I sure don’t care about my FICO score. In some ways I do care about the debt. I spent the money and I feel bad that I can’t pay it back without jeopardizing my future and my son’s future.
But in some ways the credit and collections systems have abused me so much now that they don’t deserve anything more from me, especially not my fear of any actions they may take against me. The debts I defaulted on are unsecured. They took a calculated risk when they gave me unsecured credit. That risk is built into their interest rates and fees and they know about how many debtors default and for about how much. They have recouping systems in place to cover those losses and still make a profit. They didn’t make such a bright decision when they gave me a bunch of credit in the first place. I didn’t make such a bright decision in applying for all the credit either. We were both stupid and we both deserve to pay some stupid tax.
I feel I’ve paid my stupid tax over the last two years of attempting to catch up on what I owe and to pay whatever was fair when I could no longer catch up.
The original creditors have already taken a tax write-off on the defaulted debts and sold them to collectors to recoup some of the money. The collectors bought the debts for pennies on the dollar and received some payments toward them. Some collectors sold some debts to other collectors. Two of my debts have been sold three times. Those collectors also jacked up the interest rates so much and added so many fees to each balance that the majority of what I still owe is added interest and fees, not original interest or principle. I no longer feel a moral obligation to pay off legal loan sharks.
Capital One sued me in 2006 and hasn’t taken any further legal action against me, so it’s just another empty threat. Since they have a judgment against me they could file for a writ of garnishment of my earnings. They haven’t done that. They could get a writ of seizure of my assets but that’s far less likely than garnishing wages. They could get a writ to just seize money in bank accounts. They haven’t done that either.
Now I’m legally under the bankruptcy protection umbrella and they can’t do anything more to me. The report to the credit bureaus was the last action they could take. I retained my attorney a few days after receiving that letter.
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Pingback by Interest Rates » Chapter 7 Bankruptcy in Louisiana Part I, Update | June 14, 2008
Chapter 7 Bankruptcy in Louisiana Part I, Update…
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Trackback by capital | June 14, 2008
The whole credit card experiences outlined here point to a dark underbelly in the credit and collections industry. It can be really frightening if you don’t have somebody guiding you.
Comment by Bankruptcy Lawyer | June 19, 2008
@Interest Rates & capital: thanks for the pingback and trackback!
@Bankruptcy Lawyer: you are absolutely right. It also goes to show that a radio show host who writes self-help books with admittedly solid basic ideas is still no substitute for individual counsel and a thorough review of your financial situation by an independent adviser.
Attempting to pay off debt after it’s been turned over to collectors, and possibly sold to a few different collectors, may not work, as in my case. Once you start getting sued, you need to start thinking in terms of covering your backside. If they’re taking legal action, you’d better be prepared to get legal protection and representation. Writs of garnishment and seizure can follow judgments quickly, and you won’t know if a collector will go further once they have a judgment against you.
Comment by joubess | June 21, 2008