Being Sued for Unpaid Credit Card Balance...Now What?!?

[flintysooner]

I agree with solitude.

Working something out yourself is best but it may be too late. Your lender will be pretty certain of at least garnishment returns. But that route is not necessarily great for either party so there is definitely room to negotiate. Your ability to negotiate will be greatly enhanced if you have a knowledgeable and experienced attorney representing you.

Then if you are left with no alternative at all the attorney can help you move into bankruptcy. But it is not a good experience, creates new problems of its own for you, and does not solve all of your existing problems.

[PennyQuilts]

I think there is a lot of competing interests going on that have been brought up by this thread. On the one hand, you have a young person who got in over their head, the way so many of us have.

On the other, with the credit crunch and overall bad economy, there is a lot of resentment if anyone defaults on institutions that supply cash - and there are a lot of us who will end up picking up the slack - which just goes back to the fact that what we do as individuals affects other people. I think there is some real resentment that this poster talked about options that put himself first and society and the credit card company last. Thing is, as a culture, we are frequently no longer taught to own up and pay our bills (which works as the perfect incentive to keep from getting into trouble in the first place). We are taught when times get tough to do the "smart" thing instead of the "right" thing. Which irritated some on the board but this person is not doing anything or suggesting doing anything that our cuture is not encouraging him to do.

Here is a pretty good example of the great divide on the credit problem. We feel for the individual who messed up - as people of course we have sympathy - but that mess-up ultimately is going to fall on us, too, if he doesn't own up and pay his bills, in full. Which really isn't fair. And to hear someone try to deal with this in a "smart" way is aggravating. But that is what we are teaching young people to do. So this person is coming in, has gotten himself over his head and quite intelligently asked for advice. He got good advice and I personally hope he takes it.

But that doesn't change the fact that a lot of people have done the same thing and it hurts the economy and it hurts us in our OWN pocket books. Again, is it fair to the rest of us? Of course not. But I don't think a lot of people think about it in those terms. Those of us who think going into debt for a wedding and honeymoon is the height of irresponsibility (people used to save for years so that they could afford to marry!) just shake our heads. And when it becomes our problems because someone defaults - yes - it is frustrating. We as a culture aren't asking ourselves the right questions and if we did, we wouldn't be in this mess.

What is the right thing to do? What is the smart thing to do? Well, sometimes, once you get in to deep, the question is, "What is the only thing to do?" This person has relatively few options at this point. The horse is out of the barn and in my opinion, it is better to get a few dollars back that none at all. He will have screwed over some other people (ultimately, others pick up the tab) but if he learns from it, picks up the pieces, ends up not making the same mistakes, ends up starting to make more money and paying more taxes, donates to charity what he doesn't end up paying this time, he can make it right down the road and I hope he considers that a moral obligation.

I am using him as an example. Seven thousand dollars seems like a lot when you are standing in his shoes but it is not worth ruining his credit over. Especially if he makes a personal commitment to remember that he owes a certain amount to society in general and pays it back when he can.

Don't mean to be pounding on this person . He is simply behaving the way he has been encouraged to behave, no matter how shortsighted and detrimental it is to society. And he wants to fix the problem. Just because he is asking the smart thing to do vs. the right thing to do doesn't mean that he hasn't thought about what the right thing is. He is just getting advice, which makes perfect sense.

[bretthexum]

Give me a break kiddo, 3 of your 4 proposed options were just that, an attempt to weasel out of paying. Even your 4th was waiting until a judge forced you to pay.

I notice you've never addressed the fact that collection agencies sue as a last resort. So, obviously they've been trying to collect for some time with no response from you.

Don't give us that trying to feed and dress my kids routine. In Oklahoma you don't need a job or money to feed or dress your kids. We give out food stamps and WIC like crazy. If you can't get that there are literally dozens of places (mostly churches) that will provide free food and clothing.

Also, yes, I throw stones when I think they need to be thrown and couldn't care less what the people here think about it. Get over it. But mixed in there was advice that I haven't heard anyone else claim to be absurd.

If you really took David Ramsey to heart a couple of months ago then you would have contacted all those you owed money then and not after they've sued you.

Did you really have to post to a public forum to come to the mature and correct conclusion? If so, that is very troubling.

Here, I'll even provide an answer that will satisfy the liberals amongst us... Wow, that really stink. Shucks, you gotta hate those credit card companies and their evil, evil ways. You're trying really, really hard and all they can do is try to starve you and your family. I'm sure you're doing the best you can and how dare they expect your wife to get a job or for you to have to spend one extra second away from your family working a second job. Don't worry yourself one bit. Either call and offer them $100, offer to pay $2 a week or tell them you're going to declare bankruptcy. Nighty nite.

Dude, get a life. Someone comes asking for advice and you have to throw your cheap shots in. I guess you've never made a mistake and asked for advice huh?

[bretthexum]

Don't mean to be pounding on this person . He is simply behaving the way he has been encouraged to behave, no matter how shortsighted and detrimental it is to society. And he wants to fix the problem. Just because he is asking the smart thing to do vs. the right thing to do doesn't mean that he hasn't thought about what the right thing is. He is just getting advice, which makes perfect sense.

I don't understand. Encouraged by who??

[oneforone]

My guess is that Bailjumper is still living off the earnings/success of mommy and/or daddy their for he has never had a financial crisis.

[PennyQuilts]

I don't understand. Encouraged by who??

I have read about a ton of articles advising people what to do if they get into trouble on debt. Not one of them says to just pay up - they all tell ways to minimize the consequences. You've read them, too. It is just the mindset we have.

[TaoMaas]

I have read about a ton of articles advising people what to do if they get into trouble on debt. Not one of them says to just pay up - they all tell ways to minimize the consequences. You've read them, too. It is just the mindset we have.

To be fair, the credit card companies are doing everything they can to maximize the consequences to the consumer, so of course people have to fight fire with fire. These are companies whose predatory practices have brought them to the edge of federal regulation.

[Jesseda]

Dont listen to bailjumper he has a bug up his u know what, judging people and talking to them like they are scum without knowing the person!!! I hope everything works out for you UPTHECREEK. A lot of us younger families are having some problems right now, hang in there, whatever you do, dont get a loan to pay that money off, and for extra stuff do be ashamed to get some help ther is churches that will help familys with some food and clothing, you guys are really going to struggle i know you mentioned you are the only worker in the house (believe its no point for your wife to have to work with young children daycare cost are crazy). how old is your boy? my son is 2, i believe we still have some size 12 month-2t clothing, we where planning on putting some in a garage sale next month, but if you need it for your son just contact me privately. Just trying to help

[BailJumper]

My guess is that Bailjumper is still living off the earnings/success of mommy and/or daddy their for he has never had a financial crisis.

Actually, I haven't lived off my parents since I moved out and went to college at 18. Which is exactly as it should be. I know what debt is. I worked various jobs while going to college and lived with 3 other roommates to keep costs down. I certainly didn't get married, start having babies and rack up debt and not pay it back while trying to go to school and get my act together. I bought my first home at 21 and took on $72K in debt. To do that I said no to credit cards, babies, and new cars.

You may not like my tone, but I defy you to find fault in my advice.

[PennyQuilts]

It is perfect advice. There really is a simple tried and true formula for getting ahead but a lot of young people completely ignore it and then act surprised when things don't work out. Actually, I don't think they "act" surprised. I think they are genuinely surprised because they simply have not been taught what to expect and they don't understand the value of delayed gratification.

I feel bad for them, actually. A lot of parents have not done their job and young people are being bombarded with cultural advice that is flat out stupid. The prolonged adolescence we've structured into our society does a horrible diservice to our young people. The bright ones will figure it out but they will be dealing with difficult financial setbacks at a time when they should be making small but significant steps in the direction of financial security. And the pressure to keep up with their peers who want nice homes and furniture and vacations is intense. At my age, I honestly don't care if I have new furniture. At 23 - 25 - sometimes that gives a thrill like one of those compulsive people who stalk the shopping channel. They want stuff and fun times and those things bring them happiness. But that stuff just turns to crap in short order. All kids want those things and that is nothing new. Unfortunately, instead of teaching them to resist it the way we used to, as a culture and as weak parents, we've encouraged them to give in to reckless consumption.

More long walks, less movies. Let your parents hand off their cast off furniture before you go buy new. Buying new furniture is like throwing money down a hole in the ground. Just live a little simpler and save.

[USG '60]

The ability to delay gratification used to be a hallmark of being middle class. Not any more, is it? One could measure their success by their savings. Now it is how much is left on their credit limit. We have all become miniatures of the whole economy.

[Jesseda]

well said usg'60

[jsibelius]

Bankruptcy does not always mean your whole credit card balance is discharged. Sometimes, your debt is merely restructured so you can manage the payments. So, anyone who might say otherwise, bankruptcy does not necessarily mean getting out of paying your debts. You can stop passing judgment now.

Something else you should know - a lot of collections agencies out there are not aboveboard. I would absolutely demand proof I owed them the money before I paid it to them. There's a strong possibility they could be trying to collect the money fraudulently and by trying to be a stand-up guy, you could get taken to the cleaners. Just because someone says you owe them money doesn't necessarily make it so.

[bornhere]

I can speak from experience on that. I had a collection agency try to collect a bill from a hospital which I had already paid to the hospital. I don't think there was an intent to defraud... just a typical billing screwup. Hospital billing always seems to be a nightmare.

[BailJumper]

There's a strong possibility they could be trying to collect the money fraudulently and by trying to be a stand-up guy, you could get taken to the cleaners.

I had a collection agency try to collect a bill from a hospital which I had already paid to the hospital.

Jeesh, did either one of you actually read this guy's version of events. He doesn't deny he owes the charges. Actually he admits to racking up the debt. He was simply considering giving them the run around - to which I called B*ll Sh*t.

[metro]

File bankruptcy.
Pros: My credit score is sub-600 already, how much more can I hurt it?

As Dave Ramsey says, don't worship at the alter of FICO, so a FICO means nothing to Dave Ramsey. Yes, we are taught that debt can be "good" and used as "leverage", etc. Look how well that methodology is doing for Wall Street and other investors these days...now you can't change your past, but going forward, buy everything with cash and don't worry about your credit score, etc.

[GWB]

As Dave Ramsey says, don't worship at the alter of FICO, so a FICO means nothing to Dave Ramsey. Yes, we are taught that debt can be "good" and used as "leverage", etc. Look how well that methodology is doing for Wall Street and other investors these days...now you can't change your past, but going forward, buy everything with cash and don't worry about your credit score, etc.

That's true. Dave was on Fox News recently and he made that exact point. He said his own FICO score is low because he doesn't have credit card balances and pays cash for everything. Interesting.

[FFLady]

Dont listen to bailjumper he has a bug up his u know what, judging people and talking to them like they are scum without knowing the person!!! I hope everything works out for you UPTHECREEK. A lot of us younger families are having some problems right now, hang in there, whatever you do, dont get a loan to pay that money off, and for extra stuff do be ashamed to get some help ther is churches that will help familys with some food and clothing, you guys are really going to struggle i know you mentioned you are the only worker in the house (believe its no point for your wife to have to work with young children daycare cost are crazy). how old is your boy? my son is 2, i believe we still have some size 12 month-2t clothing, we where planning on putting some in a garage sale next month, but if you need it for your son just contact me privately. Just trying to help

What a nice gesture Jesseda!!

[Midtowner]

As Dave Ramsey says, don't worship at the alter of FICO, so a FICO means nothing to Dave Ramsey. Yes, we are taught that debt can be "good" and used as "leverage", etc. Look how well that methodology is doing for Wall Street and other investors these days...now you can't change your past, but going forward, buy everything with cash and don't worry about your credit score, etc.

Bad analogy. Wall Street was repackaging debt as securities and selling it.

There is such a thing as 'good debt.' So long as the debt is producing more income than it takes, it's a good debt. Many businesses wouldn't function without being able to borrow money. Most folks wouldn't be able to go on to higher ed without borrowing money. A house is good debt if you can afford it as it's generally a better deal for your money and you build equity.

I don't think Dave Ramsey talks enough about good debt.

[Karried]

Of course you shouldn't worship a FICO score.. but it does help in things like getting better loan terms and lower interest rates on big purchases.

A high FICO tells the lender that you are responsible and chances are good that they will get their money back ... it's a tool for them to help in their decision to loan you money.

Plus, it's convenient when you want to get in and out buying a car or anything else for that matter. Instant loan approval, gotta love it.

Of course, ideally, we'd all pay cash for big ticket items but often times, that's not possible. Used to be, by the time you save enough money to pay for a house, it's usually appreciated and the rate of inflation out paced your savings.. so yeah, a high FICO score can be very helpful.

[jsibelius]

Jeesh, did either one of you actually read this guy's version of events. He doesn't deny he owes the charges. Actually he admits to racking up the debt. He was simply considering giving them the run around - to which I called B*ll Sh*t.

I read it. All of it. Did you read my post? Do you keep up with the news? Are you aware of all the so-called collections agents that run around representing themselves as owning your debt when they do no such thing? Are you aware of how many so-called collections agents who use bullying and other illegal tactics to collect debts from people, regardless of whether they actually own the debt or not? I think our OP is entitled to proof that he does indeed owe the money to this particular company before he plunks down a dime in their direction. To do otherwise would be extremely foolish. That's not avoiding responsibility, that's BEING responsible.

You'll notice I did not recommend for or against bankruptcy. I don't know enough about finances to be able to offer that kind of advice. I know what I have done in the past (and it was not bankruptcy). But I do know about consumer protection. If you would even consider handing over money to a collections agent without them proving you owe the debt to that company (whether you think you owe it or not is beside the point), you need to sit down and do some reading this weekend. You're just spoiling for someone to clean out your bank account.

[PennyQuilts]

Back when you did business with people you saw face to face, getting out of debt "legally" was the kiss of death because no one would trust you to stand behind your debt. The "smart" thing was the "right" thing. Not anymore. Be that as it may, the poster admits this is his debt. Insisting that they "prove" it is just a delaying or negotiating strategy. Goes to character, I suppose. Plenty of people would do exactly the same thing.

[Martin]

when you ask for an entity to validate a debt, you're not just asking not only to 'prove' the debt but to 'prove' the amount of debt claimed. it would be unwise to start paying on something without first determining how much is actually owed... as already discussed, collection agencies typically add on junk fees, inflating the amount claimed to be owed by an individual... once the first payment is received, the person paying implicitly agrees to the amount claimed by the collection agency. therefore, there's less room for negotiation. so... asking a collection agency to validate a debt that you already know you owe is not weaseling out of anything... it's a wise decision.

-M

[PennyQuilts]

And doing the smart thing is what it is all about. Doing the right thing is secondary.

[Martin]

i see... you're suggesting that it's 'right' for debt collection agencies to tack on bogus fees and pretend as if that's the amount actually owed and therefore it's the 'right thing' for an individual to take this third party at its word when it's really just pulling an amount out of thin air.

-M