The week I retained my attorney, I was served papers from one of the collectors (Eaton Group Attorneys) that they were going to seize the money in my bank accounts.
I called my attorney so she could stop them from carrying it out. She had already drafted a letter to that collector that had a judgment against me to cease and desist.
I hadn’t had a chance to write a post about it. I’ve been trying to focus on bigger articles on this and other blogs.
Lesson?
Once a creditor or collector has a judgment against you they can proceed with getting a writ of seizure or a writ of garnishment or both. They can force you into bankruptcy.
Even though a debt is unsecured, they can still legally come after you and take money and assets. Just because the credit card company probably won’t do it doesn’t mean the collectors they sell your debt to won’t do it.
Technorati Tags: bankruptcy, lessons on collectors, writ of seizure
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June 27th, 2008
Posted by
joubess |
Legal Issues |
no comments
For the third time in the last 9 months, my laptop is on the fritz. This time it’s the hard drive and the DVD-CD/RW drive (multi-drive).
Total cost to repair and recover my data: $350
- Hard drive and data recovery: $150
- DVD-CD/RW drive: $100
- Labor: $100
Replacing the hard drive is self-explanatory. Why do I have to replace the multi-drive? It’s how all the software will be loaded back onto the computer. Without it, I’m screwed. I’ll have all my data but none of the associated programs.
I would say this is unexpected, but it’s really not. I’m lucky the hard drive and multi-drive lasted over 4 years. They usually don’t last that long. I was just hoping the hard drive would hold on until fall when I have less time to work online and more money coming in from tutoring.
Plans
As soon as the bankruptcy is over and my income stabilizes, the first thing I’m saving up for (after a baby emergency fund) is a Mac Book. They are about the same price as a Windows machine now, and I soooo miss my Mac.
Productivity
My productivity isn’t what it would be if I had my own computer in my office. I’m back working on the desktop computer until they get my laptop fixed. In the last 9 months I’ve had my laptop in working order for about 6 months. That’s 3 months of lost work.
If I’m going to make a living online, I’ve got to get a reliable computer. I’m praying that keeping the Toshiba going for 6 more months will do the trick and turn the tide on my earnings. I’ve been improving steadily over the last 3 months, but I’ve got to improve exponentially over the next several months to replace the full-time income I’m earning at two part-time jobs.
I still plan to continue tutoring part-time regardless of how much I earn with any other endeavors, online or off. I enjoy it and I would do it for free if money were no object.
Technorati Tags: hard drive, laptop, multi-drive, repair cost
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June 27th, 2008
Posted by
joubess |
Maintenance & Repairs |
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Debts Paid in Full:
- Debts paid in full: 8
- Amount paid in full: $5,345
Status Report:
- May 2008 payments: $526.84
- Total amount of payments made to date: $13,983
- Debts left to pay off: 22
Balance Report:
- Original Debt Balance: $246,281
- Current Debt Balance: $250,654
- Balance change since starting the plan (April 2007): $4,373 (increase)
Total debt balance including 1st mortgage on house: $368,270
After Bankruptcy Projection:
Debt remaining after bankruptcy:
Debt snowball:
- CFCU Visa: $4,596.53
- Chase HELOC: $5,020.19
- Capital One HELOC: $21,576.12
First mortgage balance: $117,616
Debt Balance excluding co-signed student loans and first mortgage: $31,193
Total debt including first mortgage, excluding student loans: $148,809
- 148,809/368,270 = 0.53 x 100 = 53% of the total debt will remain
Student Loans:
- Co-signed student loan approximate balance: $45,238 (need a complete audit on these accounts; not sure this balance is correct or even close)
Possible total balance including 1st mortgage: $194,047
Discussion
When I calculate debt remaining, I mean everything but my house (1st mortgage), so remaining would be $31,193 if I don’t have to pay the student loan, and $76,431 if I do. Total debt excluding the 1st mortgage is $250,654.
Calculating what I’ll have left to pay as a percent without the student loans is as follows: 31,193/205,416 = 0.152 x 100 = 15.2%
Including the student loan, the percentage will be: 76,431/250,654 = 0.305 x 100 = 30.5%
I’ll be wiping out 84.8% to 69.5% of the debt in the bankruptcy.
Why do I leave out the debt on my first mortgage?
- We have to live somewhere and pay either rent or a mortgage. Selling my house would wipe out almost all of those debts, but it wouldn’t change the fact that we have to pay for a place to live.
- Rent in our area is still inflated from Hurricanes Katrina and Rita. A smaller rental house runs $1500 to $1800 per month. Even with the 2nd mortgages we’re better off staying where we are, paying less per month to live, and not incurring all the expenses of moving.
My 1st mortgage payment totals $980.73 and includes the following:
- P & I - $739.14
- PMI - $66.34
- Remaining escrow (taxes, insurance) - $175.25
Second mortgage payments are:
Total to stay in current house: $1,186.73
Why a house? We have 3 animals, including two large dogs (65 lb and 85 lb). It’s hard to find any rental at all that will allow one large dog, let alone two. An apartment is completely out of the question. Our animals are part of the family and we’re not giving them up.
FYI: The going rate for a 2 bedroom, 1 bathroom apartment is currently $900/mo anyway. If we move to an apartment I’d have to pay to store some furniture, and storage facilities also have inflated rental prices. The size I would need costs $100/mo.
Co-signed Student Loan
I still haven’t received anymore notices from the student loan people. It’s possible the friend I co-signed for is paying them again. The bankruptcy trustee will require an audit of these accounts as part of my remaining obligations and I have to call and request it.
I didn’t pay anything on the debts I’m going to bankrupt. I don’t see the point of spending money on them when they will be gone soon.
Tutoring is busy this summer
I don’t have many LEAP students, but my tutoring company has scheduled me for 10 hours per week so far, and more students are coming each week for summer enrichment in math and reading/language arts. If you don’t know what LEAP is, please go back to my May 2008 Debt Report and read about it there.
I’m pleasantly surprised because I didn’t have any company students last summer. This summer I started tutoring the week after Memorial Day week, just after school was out here.
I’m deliver pizzas on my free evenings part-time.
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Technorati Tags: balances, bankruptcy, debt report
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June 18th, 2008
Posted by
joubess |
Debt Reports |
3 comments
There is a difference between defaulting on unsecured debts and secured debts. I defaulted on unsecured debts.
First, remember that I’m not a lawyer and I’m not giving legal advice, but if anyone is telling you that you can default on a secured debt and end up keeping the asset, you’re getting bad advice. If the debt was secured they can repossess that asset. They can seize the asset itself and any other assets you may have that would cover the total debt you owe. There is a process they have to follow.
For example, if you default on a car loan they can repossess the car and sell it at auction (read pennies on the dollar). They won’t sell the car for as much as you owe on it so they will sue you for the difference. You can attempt to work out a payment plan with them by appearing in court and presenting your financial situation to the judge to get a payment plan or some other relief the judge orders. You will lose the law suit because you owe the money. The legal term for what the collector now has against you is a judgment.
If you didn’t appear in court they can take further legal action. They will get a writ of garnishment and/or seizure. That means they can garnishee your wages and seize any money in your bank accounts. They can come into your house and take assets until they have enough in value to pay off your debt at sheriff’s sale prices, which amounts to pennies on the dollar. They can take your family heirlooms, the baby’s crib, your furniture and electronics, whatever they decide until they have enough to cover what you owe. You can’t stop them or you will be arrested and put in jail. They bring the sheriff with them in case you cause any trouble.
I don’t know much about foreclosures on a first mortgage beyond what I’ve heard and read, but I know they take your house and sue you for the difference between what they sell it for and what you owe. They don’t usually come in and take your personal assets but they can.
If you default on a second mortgage, either a home equity loan or line of credit, they usually don’t want the house, they want their money. Defaulting on a second mortgage will usually get you sued and your wages garnisheed unless you can work out a payment plan in court or with the creditor before they file for a writ of garnishment. You will very likely end up with payments or a settlement for a second mortgage default, unless it’s for most of the value of the property.
Dealing with Repossessions and Foreclosures
There are ways to deal with repossessions and foreclosures. You can file for bankruptcy protection and get the repossessions and foreclosures under it so the debt is settled. You lose the assets but they can’t come after you for the differences you would owe outside of Chapter 7 bankruptcy. If you file a Chapter 13 bankruptcy, these debts will be a part of the total debt settlement agreement the court makes with you. After paying off the Chapter 13 bankruptcy (5 years), you no longer owe any of the debts that were discharged.
If You’re Not Bankrupt
If you’re behind on a car payment:
- catch it up and keep it current while you –>
- sell the car yourself before they repossess it. You’ll get more for it and may be able to finance the difference with a local small bank or credit union. Since the difference between what you owe and what you sold the car for will be much smaller, it’s less likely that they will try to seize your assets.
- work out a payment plan in which they don’t sue you and garnishee you wages or seize your assets
- get sued and have your wages garnisheed. If they sue you, you can appear in court and present your total financial situation to the judge, even though you will lose the suit, and the judge will set the payment terms.
- come up with the cash yourself. It would be better to take a cash advance on a credit card to pay these sharks off than to allow them to continue to harass you.
- If you don’t appear in court and work something out or pay the debt, expect further legal action that you won’t like including writs of garnishment and seizure
It’s in your best interest to make one or more of the less distressful options work for you than to allow the finance company to continue taking legal action against you.
If you’re behind on your mortgage payments you can do the following:
- work out a catch-up plan with the mortgage company (get the agreement in writing)
- sell your house for the amount you owe on it and pay off the mortgage(s)
- do a short sale without recourse (the price you get is less than what you owe on the house but the bank agrees in writing not to come after you for the difference)
- do a short sale with recourse (you have to pay the difference somehow and the bank will likely sue you)
- do a deed in lieu of foreclosure where you give the house back to the bank (with or without recourse)
- as a last resort, the bank forecloses on your mortgage
You have a lot of options when you’re facing foreclosure, and foreclosure is your last resort if you can’t make any of the other options work for you.
Banks and mortgage companies will work with you on other options if you’re persistent, have a written plan or actual offers to present to them, and you sit down with someone at the bank or mortgage company face-to-face who has the authority to make a deal with you and put it in writing.
The bank really doesn’t want your house. If they end up with your house then they have to sell it. Foreclosure sales are usually by auction at the court house directly after a set of properties are foreclosed on. The bank or mortgage company will then sue you for the difference between the auction sale price and what you owe. They will win the judgment and can take further legal action to garnishee wages and seize money and other assets. Again, it’s in your best interest to work something out before a foreclosure happens.
Technorati Tags: bankruptcy, difference between, options, secured debt, unsecured debt
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June 15th, 2008
Posted by
joubess |
Legal Issues, Resources |
4 comments
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.
Technorati Tags: bankruptcy, Chapter 7, Louisiana, update
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June 14th, 2008
Posted by
joubess |
Bankruptcy |
4 comments
