Can you go to jail for not paying your credit card debt?
Many people have emailed me asking if they could go to prison for not paying their credit card debt. It seems that some collection agencies are trying to intimidate debtors with the threat of arrest and imprisonment. A collection agency representative might comment “if you don’t start making payments on this we can take you to court and put you in jail.” DebtPrison.net doesn’t offer legal advice. As such, the information contained in this article is easily assessable to anyone with access to internet search engines. There’s a lot of information on this subject and I will attempt to organize it in an intelligent manner. The correct answer to this question is - it depends!
This article and the comments below it are full of useful information about the consequences of defaulting on your creditors (about 20 printed pages worth). So take your time to review this post and feel free leave questions or comments. However, due to the popularity of this particular article and the number of comments from readers - I’ve closed the comments (because this page has gotten so long!!). My other articles referenced here still have the comments section open so you can still drop a question or thought at one of the other posts. To hear a podcast of this article in windows media player click here. See also DebtPrison related article How to deal with Collection Agencies.
Failing to make payments on debt is not considered a crime in the United States. The U.S. hasn’t utilized a debtor’s prison since the 1850’s. Some countries will still place a debtor in prison for failing to make payments. However, the U.S. government has a vested interest in making debt a desirable circumstance, therefore debt is not criminalized. In order to go to prison you must be convicted of criminal behavior. Laws regarding these issues will vary state to state. See also DebtPrison related article How to settle your debts on your own.
Here are your options with debt you’re defaulting on:
1. Settle your debt (but you’ll need some cash).
2. File bankruptcy (an often nightmare).
3. Ignore it and possibly go to jail for contempt of a court order (very rare).
4. Start paying it back in full.
What will most likely happen
It’s always been my understanding that your creditor can take you to civil court and obtain a judgment against you saying that you owe the debt. Through the judgment the collector can then garnish your wages or even get liens against your assets. But getting to this point of wage garnishment or liens against assets is time consuming and usually never occurs. That’s because the collector has to go through a process that I’ll explain later in the article.
Going to jail for contempt wasn’t something that I thought could occur, but then I’ve read some comments from my readers below. I’m assuming there’s more to the cases than just the average default. It seems that in some rare cases an arrest warrant can be issued for contempt of court. I think this is somehow related to your not showing up in court, but from what I’ve read these arrest warrants are very uncommon.
This was stated by Sherri below in the comments “They tried to take me to court in 2000 ish. I tried to set up a payment plan and the guy told me he would not allow a payment plan and wanted me to ask friends and family to pay the bill. This week I got a letter in from the sheriffs dept stating it was a warrant for arrest. The attached paperwork was showing a court date for 12/20/07. In which I NEVER received any paperwork stating I had a court date in Dec.”
And this was stated by Deb “I owe around 3,000 in credit debt, and a sheriff keeps banging on my door leaving me a note from the sheriffs dept, what the hell is this all about? And can they arrest me in my own home?”
I have no way of knowing specifically what occurred in the two above mentioned cases that led to the Sheriff’s Dept. getting involved. In general, the negative outcomes (negative credit reporting, wage garnishment, liens, or jail) often depends on the amount of money involved and the aggressiveness of the creditor. The more money involved (almost always in excess of $1,000) the more likely the creditor or collection agency will pursue legal action.
Usually the process follows these guidelines:
You have defaulted on your payments. Your creditors collection division calls you daily to try and talk you into making a payment. After a year or two they give up on the phone calls and letters. They can’t get you to pay so they (this could now be a collection agency, not the original creditor) sue you in civil court. This can happen even if you are in a debt settlement program. It’s a lot of trouble and expense for them to sue you, so normally they won’t bother unless they figure they can get some money out of you.
Keep in mind that there are rules that collection agencies must follow according to the Fair Debt Collection Practices Act. If they don’t follow the rules you can actually hire an attorney and file suit against them! For example, if they have your phone number, they are not allowed to call your family, friends, or employer (if you request them not to). Also, you can write a cease and desist letter which instructs them to only communicate with you via U.S. snail mail.
Scenario 1 - You don’t show up and the judge rules in favor of the creditor and against you. This judgment is an acknowledgement that you owe the money. I’ve read that 80% to 90% of judgments are never collected! This is because the judgment is usually just an acknowledgement that you owe the money, and that is all. In order to collect another court date must be assigned to conduct a discovery. The purpose of discovery is to allow all the parties to fully inform themselves of the relevant facts in the lawsuit. Typical discovery includes asking questions of parties and non-party witnesses through written questions (interrogatories) or through oral questions under oath (depositions), and reviewing documents obtained by subpoena or by a request for production of documents.
If you don’t show up for this one you may be arrested for contempt of court. This is the part of the process where the facts will be laid out. This is the part where they get your employment information for wage garnishment or asset info for liens. But bear in mind, most collections will not get to this point. It really just depends on how aggressive they are on your particular case. And many people are actually in a position where they cannot be collected on. Perhaps you are disabled and on limited income. Chances are they can get a judgment but will never be able to collect. There is also a federal minimum (I think this figure is 30 hours of minimum wage pay per week), which if you make below, they cannot collect. For example, if minimum wage is $5.80 per hour, times 30 hours, comes to $174/week or $702 per month. If you make that or less they cannot touch you. Money that is in IRA’s, custodial accounts, trusts, annuities, and insurance contracts are often untouchable.
Scenario 2 - You go to defend yourself against the creditor. You explain why you do not owe the money. Or you explain that you owe the money and cannot pay it because of personal circumstances. The judge may or may not rule in favor of the creditor. If you don’t owe the money or really can’t pay - just walk into court and defend yourself, you’ll be glad you did.
Please understand that the garnishment of wages depends on many factors such as: your level of income, possibly your spouses income may be considered, and the number of dependents you have. To read about someone’s personal experience in using debt settlement companies read Tell Debt Settlement Companies to Kiss Your Ass. If this article doesn’t convince you to stay away from these companies, I don’t know what will.
Can you be arrested at airport returning to U.S.?
I’ve seen this question come up quite often. Some people moved away from the United States into another country. However, they left behind tens (or hundreds) of thousands of dollars of debt. Now they need to re-enter the U.S. for a vacation or to visit family. They are worried about an outstanding arrest warrant related to the debt. I’ve not been able to find an absolute answer to this question. If you are concerned about this possibility try performing an information search on yourself at a site like this one. Perhaps avoiding entering the state where you used to live would be a good idea. Now if you have a warrant for fraud (related to your debt) the possibility for arrest may carry a bit more weight since this is a criminal, not civil arrest warrant. Keep reading to learn more about fraud and other issues related to debt and jail.
Fraud
Also, if you obtained debt by committing fraud you can go to jail. For example, let’s say you just moved into a new apartment. Mail for the previous tenant is still arriving at your apartment. A credit card offer comes in the mail for the previous tenant. You fill out the application, mail it in, and start using this new credit card which is in someone else’s name. This is fraud and if convicted you could serve time in prison. This happened to my cousin. He moved out of his apartment and the following tenant received his mail and ran up thousands of dollars in retail charges. He had to get a lawyer involved and it took years to get this completely removed from his credit report.
Perhaps you have ‘borrowed’ your sister’s credit card to go out and spend a couple of grand without her knowing about it. In this case you could be fined and or imprisoned for fraud. This type of conduct is also considered criminal in nature.
You could possibly be looking at prison if you ran up thousands of dollars of debt on credit cards with no intention of paying it back. Recently the federal government changed the law regarding filing bankruptcy on credit card debt. The new law makes it harder to erase the debts you owe to credit card companies. Before this law went into effect, bankruptcy courts received a record number of new filings. Broke Americans were all trying to file for bankruptcy before the new law kicked in.
At the time I had an acquaintance that had in fact, filed bankruptcy on debts to various creditors, worth over $60,000. We were discussing the new law and he suggested that I run up tens of thousands of dollars in credit card debt. When the bills came due I would simply file bankruptcy before the new law took effect. Many people did exactly that. If the credit card company can prove that this was your intention, then some judges would find you guilty of fraud - taking out loans that you had no intention of repaying. However, it is usually difficult to prove that someone had no intention of repaying the debt. For example, if you applied for six credit cards, maxed out the limits for a total of $15,000, and then never made a payment, you could be in serious trouble. It would be obvious that your intent was criminal.
In general if it can be proved you received money or goods by deceptive practices you may be eligible for a criminal conviction.
You could also be imprisoned for the following:
If you violate a court order (a judgment against you to pay child support).
If you are convicted of willfully failing to pay your income tax to the government.
If you are attempting to hide assets or income to avoid paying a debt for which there is a judgment against you.
Bankruptcy related acts that can result in criminal penalties include:
If you defraud tenants
If you forge a bankruptcy judges signature
If you commit perjury during the creditor’s meeting
Keep in mind that there is a difference in a judgment (civil court decision about money you owe another party), and a verdict (criminal court conviction of a crime). In a civil court case the outcome will largely depend on the judge and his interpretation of the circumstances.
Simply defaulting on your debt is not a crime
If failing to pay your debts equaled prison time then half the people you know would be in jail. Even the author of this article, although my debt is caught up now and will be soon be paid off in full. Many people have lost their jobs or had unexpected medical issues force serious changes to their financial lifestyle. Through no fault of their own a debtor may no longer be able to make the minimum payments. This is not a crime and one cannot go to jail for these reasons. Like I said earlier, collection agencies will do anything they can to convince you to send them a payment. If you have credit card debts or medical bills that you can no longer pay, you can’t go to jail. This is why we have debt settlement, bankruptcy, and ruined credit scores.
Although you can’t go to jail for failing to pay your debts, there is a list of negative consequences you may be eligible for;
Collection Agencies can call your phone several times a day.
They can even call your place of employment, asking for you or where they can find you.
They can call your neighbors and ask them if they know where you are.
They can sue you in civil court for the balance of debt you owe them.
They can win a judgment in civil court against you for the debt owed.
Through the judgment they can garnish wages from your paycheck.
Through the judgment they can garnish your banking accounts.
They can (in some states) get a lien against your assets (house) and sell it to pay off the debt.
They can report the collection information to credit bureaus which lowers one’s credit score.
So the short answer is no - you can’t go to jail for simply not paying your debts, unless you are in contempt of court (very rare). But, creditors and collection agencies can make your life a living hell. So it’s in your best interest to get this situation handled in a manner that benefits you.
Remember that some debt collectors will scare you anyway they can to force you to pay up. The best advice I can give is to educate yourself about your options. Take the time to read information across the web about debt and collection. There are a lot of articles out there - most of them are accurate and truthful. Please feel free to leave questions or testimonials at the forum. Go forth and be debt free!
Discuss this article, share ideas, and meet new people at Debt Prison Forums.
If you have found this information to be useful, please leave a donation for Barry.
Related Articles
* The Fair Debt Collection Practices Act
* Get Everything in Writing: Collection Agencies and Their Lies
* Reasons not to file Bankruptcy or Settle Your Debts
* Can you go to jail for not paying your debts?
* How to settle your debts on your own
* How to deal with collection agencies
* Sample Debt Validation Letter
* Information on Credit Card Balance Transfers
* How I Escaped Credit Card Debt
* What You Should Know About Credit Cards
February 17th, 2008 at 7:55 pm
I have a lot of credit card, a secure debt about 8,000 dollars, two credit to buy furniture for a living room and and credit to repair my windows. I started to pay last year. Sometimes the minimum or more. since September my husband and I have a big difficulty even to eat. We try debt consolidation but those lied. Now, we don’t know what to do. We taught with our tax return we can pay, but this year we don’t have tax return. They didn’t take enough at our pay check. We change our telephone number. I am really afraid to loose my home. We want to sell the house to start a new life but the market is not good for that. I would like to know what they can do in our situation.
Thank you for your time. Sorry for the vocabulary, I don’t speak english very well
February 17th, 2008 at 9:11 pm
You can’t go to jail - so don’t worry about that. I would make sure the house note gets paid and everything else can wait. Probably your creditors will turn you over to a collection agency. Eventually - usually at least a year they may take you to civil court to get a judgement against you to force you to pay. If this happens the judge will most likely do what is logical and fair. Sounds like you need to get rid of this house and move somewhere cheaper. You should take some time and read this article
http://debtprison.net/wordpress/48/how-to-deal-with-collection-agencies/
good luck
February 24th, 2008 at 7:31 am
Worldwide Asset LLC has over the past 6to 7 years taken a debt that I disbuted from the start, $1243 and ballooned it too $2865. It was for a Bank of America Credit Card which had a limit of $1000. Charges appeared on that card that I disputed and over several months, they kept charging me fee’s associated with none payment. which brought it over my limit which added more fees, and that is how it ballooned to over $1200. Then when I refussed to pay, they turned it over to the before mentioned idiots. I have sent over the years two letters telling them to decease contact to no avail. Now I recieve a letter telling me that if I don’t call them, they will send a Sheriff to get me and detain me for not showing up to a court that I could not have even if I had wanted too, supposedely for contemt? I understand taking care of things, but I will and still do refuse to pay any fee’s on this card when they were injustly applied in the first, place. I have had to live with this credit ding on my credit for a very long time now. What truly bothers me is that, these same people kept calling my Aunt, (to me my mother), but she was a tough old women and told them where to go. She understood why I would not pay and even more now, before she passed. I understand that I can’t go to jail for a debt but what I am concerned with is the way, we are being taken to court over these things so easily and how our law’s are being abused by lawyers working for these companies with no regard for anything but profit. it seems to me we are punished twice, Credit, and Judgements? Sounds like double jepardy to me. What really makes me mad is that I never wanted the bloody thing in the first place but it was an employee thing. I left Bank of America as did my daughter and both of us are very much happier for it. Advise of any kind would be appreciated. Right now, I will continue to do nothing because I will not give them the time of day nor allow them to call and harasse me which they have been unable to do.
February 24th, 2008 at 9:06 am
What about the statute of limitations in your state? Let’s say it’s been 6 years since you’ve made a payment on this debt. If the statute of limitations is 6 years then legally that should be the end of it. Unreconciled debt has a way of never dissappearing. Some collector’s are buying debts that were written off through bankruptcies and are trying to collect on them. Here’s one article about it
Prisoners of DebtÂ
Also, as bad as this may sound - paying this debt may be one way to ultimately get it out of your hair. I know it’s not right, and that what is going on here may seem immoral from your perspective - but payment may be a solution.
Last but not least you could hire a lawyer or at least seek legal council if you haven’t already. Might not be anything they could do or……a lawyer may be able to recommend a solution.
I wish you the best of luck!!
Barry Broome
March 3rd, 2008 at 4:11 am
I opened a Sears acct in 1996 ( I was 18/19). I had a credit limit of $900 which was increased to $1200 because I always paid on time. I stopped making payments around fall of 1998 due to many surgeries from a car accident ; I was out of work. They tried to take me to court in 2000 ish. I tried to set up a payment plan and the guy told me he would not allow a payment plan and wanted me to ask friends and family to pay the bill. This week I got a letter in fromt he sherriff’s dept stating it was a warrent for arrest. The attatched paperwork was showing a court date for 12/20/07. In which I NEVER recieved any paperwork stating I had a court date in Dec. I would of gladly paid on this bill but like I stated, they won’t allow any kind of monthly payment plan, and now that bill of $1200. is well over $2400. NOT including interest and fees. My questions are this, can the creditor still charge me all of that interested even though the acct has been frozen for 8-10 yrs? Also, is it really legal to send letters stating I will be arrested because I didn’t pay this debt? I mean, if they could throw me in jail for only “technically” oweing $1200, I would hate to see the rest of the world. Also, I thought there was only a 7 year time frame it could be on your credit report? Why is it that its been over 7 yrs and they are still trying to threaten me in every way? Thanks for any thoughts on this.
March 3rd, 2008 at 5:57 pm
First of all you need to contact the court and inquire about the court date. Where I live they have to send someone to personally had you a summons to make you aware of the court date. Look into this - call the court and find out what happened. Now in regards to the old debt - find out if it is past the statute of limitations for your state. There’s a link to SOL on my article “How to deal with collection agencies” But if it’s past the sol then I don’t see how they can collect the debt. Anyway you may be in comtempt of court for not showing up so get on top of that now and figure it out. There’s probably a way around this - if court was held and you didn’t arrive then was a judgement issued by the judge against you in regards to this debt? You also need to find this out - anyway let me know if you have more questions!!!
March 9th, 2008 at 4:38 pm
Well, i have 2 credit cards, and yes its true that ure living in hell if you’re not going to pay your debt. I lived here in Philippines, and i am asking if how will you pay your debts to them.?
I don’t really have money right now, i am pregnant and a very delicate one, and i dont really know how to pay them, and I don’t have a job.
Please do reply…
March 9th, 2008 at 6:05 pm
Hey Melanie,
You are living in the Phillippines. Are your credit card debts with U.S. banks? If so how much do you owe on the two cards combined? You say you have no income… is there anything that you can sell to pay these debts? Is there a family member that you can get the money from? How long has it been since you’ve made a payment? The answers to these questions would help me give you more accurate advice.
March 13th, 2008 at 7:45 pm
I was served with a court order from a constable officer, but in the court order,was not a court date for me to go to, some time has past and I’m finding out that is too late or that I already past the time given to response when really there was not a specific time to response, and from friends I hear lots of stories about cases like mine and it looks like the same at the end, that they can’t do anything about it, my friends tell me if I can’t pay they can’t make me pay or put me in jail, but what about the court order thet realy did not have a court date? I went to a lawyer and told me even though it’s late he would charge $1,500 but will not guarantee anything ( I don’t trust these people it seems like they only want money and try to scare you just as much as these credit card companies )and also told me that this credit card company could eve put a lean against my home.
Is all of these true? I’m worry about, it should I be?
Thanks
Jose from Houston Tx.
March 13th, 2008 at 9:52 pm
Jose,
Summons should of had a date or you should have called court and at least looked into it. if you miss court the judge may issue a warrant. You need to call the court and talk to them. Creditors can obtain a judgement against you and possibly have the court garnish your wages or come after your assets. Best thing to do is pay off this debt.
March 21st, 2008 at 8:11 am
I owe aroung 3.000 in credit debt, and a sheriff keeps banging on my door leaving me a note from the sheriff’s dept, what the hell id this all about? and can they arrest me in my own home?
March 21st, 2008 at 8:52 am
Sounds like they’ve been trying to have court and you didn’t show up. The court propably sent you a summons to appear in court against the credit card company. If you weren’t home then they mail you a copy. If you didn’t read it then you missed the court date. If you didn’t show up in court the judge has probably placed a judgment against you. They may have held court again to perform a discovery. You have to show up for a discovery so the judge may have issued a warrant for contempt related to you not showing up. They’re not interested in putting you in jail - they just want your attention and cooperation. Call the court and see what’s up - or they are going to arrest you. At least that’s the way it sounds. Unfortunatly you can’t hide from debt - it comes knocking.
They’re not arresting you for the debt….they’re arresting you for being in contempt of court. It’s always better to go voluntarily than by force.
March 25th, 2008 at 4:55 am
I have about 60K in CC debt. Was planning to go bankrupt but have since move out of the country. (not to avoid debt) I found out now that I can’t declare bankruptcy since I don’t live in the US. What will happen since I can’t be served a summons and the collection companies can’t contact me. At least I am not being harassed.
March 25th, 2008 at 5:43 am
You’ve got me on this one Jack. I’m not sure, but if you plan on coming back to the U.S. expect to deal with it….unless it’s past the SOL. I’d discuss with a lawyer if you are returning.
March 25th, 2008 at 8:46 am
Thanks for the reply. We are not planing on returning in the next twenty years except for vacation maybe. Can they get a judgment against me without serving me? Mainly I don’t want a warrant out for me for a “failure to appear”.
March 25th, 2008 at 7:30 pm
I would think they would have an outstanding warrant for contempt of court even though they don’t know where you are. For example, perhaps the summons was delivered to an old address and no one was home. Maybe they mailed it later and receiver just threw away cause it wasn’t their name on mail. The court placed a judgement against you and you haven’t paid it. Then you could be looking at a warrant for contempt of court. It’s a possibility. Just to make sure why don’t you call the sheriff or police where you used to live to see if you have any outstandings. Also, you could try doing a search on yourself on one of the websites which tracks public records. I don’t know if they track outstanding warrants but a little googling should help you find the answer.
March 27th, 2008 at 1:00 am
HI MY CASE IS VERY SIMILAR TO JACKS…I DONT LIVE IN THE STATES ANYMORE , I HAD TO LEAVE FOR FAMILY ISSUES .
I HAVE AROUND 25 000 IN CC DEBT AND I DONT THINK ILL BE BACK UNLESS FOR VACATIONS….MY QUESTIONS ARE:
DO THE DEBT GO AWAY AFTER A WHILE ……YEARS,IF YOU DONT DO ANYTHIGS ABOUT IT?
IF I COME TO THE STATES FOR VACATION CAN I GET ARRESTED, IN THE AIRPORT?
IF I TRY TO GET CREDIT IN ANOTHER COUNTRY …DO THEY SHARE INFO ABOUT DEBT IN ANOTHER PLACE?
IF IS THE SAME BANK OUT OF THE STATES DO THET CROSS INFO?
HOW DOES IT WORK
PLEASE ANSWER BACK…..
March 27th, 2008 at 6:08 am
Debt will eventually pass the statue of limitations - do a google search “credit card debt statute of limitations” and read up. Even if you had a warrant for ‘contempt of court’ I’m pretty sure it would only be valid in the state in which you used to live. I’m not sure about whether they share info or not - I’m pretty sure that some do. To test this idea try and get a credit report on yourself in your present country and see what turns up. I’m not sure how these banks share info across borders - but it makes sense that they try and close as many escape holes as possible. Otherwise people can just borrow all they want and then skip the country, so I would think they’ve made it a little bit harder than that.
April 1st, 2008 at 2:37 pm
I owe several thousand in debt to several creditors. Most have been given to debt collectors. I have been paying about $100 each per month (even though that have said that that is not enough). Is this consistent payment enough to keep them from coming after me in civil court? Please just give me your opinion. Thank you.
April 1st, 2008 at 3:09 pm
Hey Julian, I would think so. The fact that your paying 100 per month shows that you are committed to staying on top of the debt - at least in my opinion. I once did the same thing. Paid the minimum on some so I could pay off the others. Then I came back and paid down those too. Hope all works out for you. But keep in mind these people may continue to add interest or fees if your 100 per month is below their ‘minimum payment’.
April 3rd, 2008 at 9:08 am
I settled a debt for my wife about 6 month ago. I did receive a letter stating it was settled, but has “pending clearance of funds” . I asked them to send me an update without that since the funds cleared back in October 2007. They refused and said staple my bank statement to it. Don’t they have the responsibility to give me a proper fulfillment letter so I do not have to pay to get my duplicate statement and not have to worry in 10 years they will say it was not fulfilled as agreed?
April 3rd, 2008 at 9:10 am
Also if I should expect that letter updated how do I force their hand to get it? Is there any agency that enforces this?
April 3rd, 2008 at 4:15 pm
I would think you’re good to go here. You have the letter stating it was settled “once the funds clear”. And you have a copy of your bank statement showing it cleared. How is it reported on her credit report? If it says “settled” then it should be over with. The creditor is not obligated to give you an additional letter. Sounds to me like you handled this correctly. The only way I can think of this coming up later would be if the creditor sold the remainer of debt to a collection agency for “pennies on the dollar” - in which case they couldn’t collect because you have the documentation showing it was settled. In this case I really doubt this would ever happen. But some collection agencies do buy junk debt like this - sometimes they even buy debt that was written off in bankruptcies. Why would they do this unless some people are dumb enough to pay it?? You should make a few copies of these letters/statements and make sure you never lose them….
April 14th, 2008 at 12:42 pm
I was unemployed for seven months and used my credit cards to continue living and to pay for my child support. I finally found a job right as I reached the maximum on my credit cards and now cannot afford to pay the minimum monthly balances on the total $43,000 of debt. I want to settle these debts on my own but it is going to take me about 3 years to save the money for all of the lump sums required to settle for about 50% of the balance. My question is: how can I keep the creditors and collection agencies at bay for this long before they take me to court and when I am able to settle, will they usually settle for 50% of the original balance at the time that I stopped making payment or do they also account for late fees, accrued interest, etc.?
April 14th, 2008 at 5:45 pm
They will continue to accure late fees and interest. If you stopped paying them cold, they will probably assign or sell this debt to a collection agency within 6 months to a year - but they aren’t even interested in talking about settling for at least 6 months. Just to be fair i would call them - ask to speak to a supervisor - tell them your situation - and give them an opportunity to halt the fees and interest. I feel confident that they won’t, but at least you we’re up front with them about the situation. There is no method for keeping the collectors at bay. But sometimes 3 years can by without this even making it to court. The best thing to do is only communicate with these people via u.s. mail. Take about 15 minutes and read my other two articles “How to deal with collection agencies” and “How to settle your debts on your own” Just do a search for these articles using the search box in the top left of this webpage. Now there is no sure method for settling your debts - it will depend on whether or not the original creditor is still in legal possession of the loan or if they have ’sold’ it to a collection agency. You can apply the Federal Fair Collection Practices Act to ‘collection agencies’ but not the original creditor. Those two articles I just mentioned go into more detail about this. But anyway, if you are cash poor then yes, I would think that the collectors would settle for 50 cents on the dollar. Your going to be in for a bumpy ride… Good luck and feel free to ask more questions..
Barry
April 16th, 2008 at 12:49 pm
okay.. i’m so glad someone is answering questions..!! I had this credit card when i was 18 years old.. the limit was only 500 dollars.. and now the outstanding balance i think is like 1,000 something .. but i reported this credit card stolen long long time ago.. they never stopped it.. long story short i never paid this balance.. so THis morning.. like freakin 3 years later i get a call from someone saying that they tried to contact me through mail.. and basically they want to take me to court.
The thing is.. I just moved to Colorado 6 months ago.. i used to live in Texas my whole life.. I’m just surprised.. and then he went on saying that I have a new car loan.. Because I just got a new car.. he says i have 2 days to figure out if i’m gonna call this place to work out some payment .. or go to court.. first of all.. lol. he says the court date will most likey be in 30 days after he issues it out on friday.. well i’ll be out of town in Texas.. at a concert.. in 30 days and i’m not missing this..lol.. but my question is..WHat do i do.. like what can they do to me?
because.. i read other people’s on here.. i dont have a home. i just got a job. um.. i just got this car. which is like not even new not even on like a expensive one cause its all i could get.. and most of all.. my my limit was 500 dollars.. and i went over 500 dollars..lol. so my debt is 1,000 dollars !!! so i dunno.. I told my husband i’ll try to call them and make payment arrangements because its only one grand.. its not like 15,000 dollars.. or anything. but I just want to know what they do in court? do they just they make u pay it? do they just make it a bad credit report!!! and another thing.. do they do this with cell phone bills? cause i’m new to this credit stuff.. i’m 21.. and just started getting credit..!!! and i already DONT WANT IT!! lol. i’m scared of all this.. i have 2 other credit cards that i just got.. and i need to pay something on them because this is scaring me..!!!!!!! but what should i do? and what can they do to me?
April 16th, 2008 at 6:08 pm
Hey Deanna - you sound like a fun person. LOL. Anyway, you goofed up a little by not seeing this thing through immediately after you reported it stolen - but that’s all water under the bridge now. I’m assuming that since it’s been 3 years that this $1,000 debt has been sold to a collection agency some time ago. For example, let’s say this credit card account was orginally issued to you by MBNA visa. After you stopped paying on it they probably sent you mail and called - since it was only for $500 it wasn’t worth taking you to court over - so they probably just sold this debt (which became $1,000 because of all the late fees, over the limit fees and such) to a collection agency. Now let’s just assume the collection agency paid MBNA $200 for this debt, and now they are trying to collect $1,000. So, who exactly called you - was it the original creditor or was it a collection agency??? If it was a collection agency I would ask them to validate the debt, you don’t want them to screw you over here. Collection agencies call people all the time and threaten with this court and jail stuff. If you owe the money then you’ll pay it, but ask them to prove you owe THEM the money first. Take a few minutes and read my other article - How to deal with collection agencies. There’s a link to it at the end of the first paragraph in the above article. Even if you received a summons to go to court on a certain date - you could contact the courthouse and move it back to another date, so don’t worry about the date. But court is a big waste of time for everyone. So ask these guys to validate the debt. Which basically is just a break down of why YOU owe what they say you owe. Even in court they would at least have to produce that much in writing. If they can show you in writing why you owe this $1,000 then work out a payment plan with them. But here’s the thing……get all the details in writing up front from them before you give them a dime. You don’t want them changing the terms just when you think you’ve gotten this thing paid off. For example, they could write you a letter saying that you will pay $100 per month for 10 months and this will fully satisfy this debt. And that no further fees or monies of any kind will be added to this $1,000. After you pay the amount in full they will report to credit agencies that this debt was “Paid in Full”. If they won’t give you that in writing up front as part of the payment plan then tell them to meet you in court. Then tell the judge what they did. And don’t worry, court is not a big deal……..
April 16th, 2008 at 6:24 pm
Oh yeah - cell phone bill will normally just go down as a negative strike on your credit report. With the collection agency in court the judge will listen briefly and say “OK Deanna, you owe the money” and then he/she places a ‘judgement’ on you - declaring that the court has ordered you to pay these people. They will probably give you like 3 to 6 months to pay it. Then after that if you haven’t paid it the collection agency can contact the court and they might come after your husbands stuff or garnish your wages or something along those lines - yes, they do have the power to do these things.
April 22nd, 2008 at 5:07 pm
I have a question. I do have 80000 in credit card depts and I don’t think i will be able pay this off. Iam thinking to get to hell out of this country and not pay them since I am a Australian citizen as well. I do have 2 houses though which I have tenants in them and they do paytheir rent on time. Therefore I am and will be making the mortgage payment with no problems. If I don’t pay off the $80000 credit card depts, can the creditors go after my houses? But my houses are not even paid off. Not even close. Tenants are paying for the mortgages and I wanna live in Australia but do wanna visit US some time. Can they go after my houses? When I enter US, would they take me to jail?
April 22nd, 2008 at 6:30 pm
Hey Lyle, you’ve got quite a problem - but you already know that. The credit card companies will go after any assets you have, whatever they are. First they’ll probably take you to court, if you don’t show the judge will rule against you. Then you’ll have a judgement against you to pay them back. Since you won’t be in the country the judge will most likely issue a warrant for ‘contempt of court’. At this time the court and creditors will try and determine what your assets are (like houses) and place liens on them. This way you could never sell the house without at least first paying off the creditor and satisfying the judgement. Now I’ve heard (strictly speculating) that if the credit card companies try and pursue ‘fraud’ charges against you then they can put an arrest warrant on you that can be exercised at U.S. Embassies around the world. Fraud is a criminal case not a civil case. So your treated like a criminal instead of just a guy with too much debt. Fraud charges can be pursued if they can reasonably show that you ran up your credit card debts and had no intention of paying them back. If they choose to go that route then you could be in trouble - even in Australia. And don’t think that a bad credit report won’t follow you to Australia. The Aussie and U.S. banks are quite friendly I hear. Getting arrested would be a possibility for you if they pursue ‘fraud’ charges. And No I don’t think all of the solutions are in Australia (although it IS a great place to be).
I think perhaps you should consider not making any more payments. At least for some time. Here’s why, although I strongly believe in repaying all our debts, once your ‘over the limit’ and in trouble, they really pile on the fees and penalites and extremely high interest rates. And as long as you are making some payments this process will continue. Eventually the accounts will be closed and the interest and fees will stop. Then later you can try and work out payment arrangements with these collectors. If you don’t have the money to pay your minimum balances then I would consider halting payment to all credit card banks. I would then take a sobering look at my life and try and figure out how I can repay this debt. That’s my advice. Your options are:
1. Go flip hamburgers at McDonalds and file bankruptcy.
2. Stop making any payments with a plan on paying the debt back later.
3. Move to Australia and hope it solves itself (which it won’t) and have to deal with this crap for the next ten years of your life.
April 23rd, 2008 at 9:24 am
Thank you for great advices. There are somethings I did not follow. Here is the scenario. I owe 80 thoused dollars on credit cards. I owns 2 houses that tenants are paying the mortgage. After quitting my job and move to Aystralia, the tenants will continou making my mortgage payments. So I won’t be able to pay the 80 grand in credit cards depts, but 2 house payments will be done with no problems. Can the credit card companies still go after my houses. But my houses are not paid off. If they go after, my mortgage company may get mad at them because my mortgage companies do not have any problems with me.
I could file bancrupcy as well. If I do can they still go after my assets? This is the part I am not understanding. My portgage is a called “secure” loan. If my secure loand are paid with no problems, how credit card companies could go after them?
April 23rd, 2008 at 5:19 pm
Hey Lyle,
If you can file bankruptcy you should be able to wipe out all debt, but it’s up to the court to decide. In 2004 a law was passed which made it a lot harder to ‘erase’ your debts through bankruptcy - here’s the article from CNN.MONEY
http://money.cnn.com/2005/04/20/pf/bankruptcy_bill/index.htm
If you don’t file bankruptcy and don’t work out a repayment plan - then I would expect the court to put a lien against your house (even though they aren’t paid for) - For example, let’s say the court puts a lien on your house because you owe a creditor $40,000. So you sell the house in a few years for a profit of $100,000. The court would get $40,000, leaving you $60,000 in profit. The court becomes a sort of co-owner of the house with you.
I don’t personally know of anyone who has had a lien like this applied against them. So I’m not positive as to how all of this works. It would be a good idea for you to spend about 1 hour talking with an attorney. The reason they would put a lien against your houses is because it’s the only assets you have. Even though they aren’t paid for yet.
Good Luck!
April 30th, 2008 at 8:17 pm
hi i was 19 when i got my loan with a co signer my friends dad, it was a 20000$ dollar commerical loan we did not put anything down but i made payments as much as i could then i wasnt able to make payments due to finaincal reasons and my friends dad is tired of having to make payments and so i was wondering if i am not able to make the monthly payments what should i do..cuz monthly payment is 700 $ amonth and i only make 750 a month from which i have to pay rent and food and bills so leaves me with like 200 a month which i save but a not able to pay it off ….what should i do
April 30th, 2008 at 8:43 pm
Hey bobby,
In this case the creditor comes after your friends father. That’s the price he has to pay for co-signing - and that’s what co-signers are for, to give the creditor someone else to chase after for a payment. This is what I would do. I would pay my friends dad what I could each month, and keep a tally of what I owe him. Then as the years go by I would repay the man until I had paid back all that I owed him plus more.
Your other options are:
sell something to generate cash
earn more money each month
Good Luck!!
May 4th, 2008 at 11:12 am
Okay, I am in the same debt situation as everyone else, and I have done alot of research too. And from what I can see you most likely not be found in contempt of court for a simple creditor issue.
I have been researching this for months, and came across some very good websites. To begin with NEVER forget you have rights. There is some thing know as the Fair debt collection practices act. This regulates how the collection agencies are allowed to collect on you. NO they are not allowed to call neighbors, family and friends, IF they have a valid way to get in touch with you. They are not allowed to tell or talk to anyone about your debt. They are not allowed to call before 8:00 am or after 8:00 pm, and can not call you at work if you tell them not too. Also, if you tell them not to contact you at all about the debt, they can only contact you in writing. They can not threaten you with jail. They can not threaten you with court if they know they will never sue you. If they break any of these laws, you can legally sue them.
I came across a website where a police officer pretty much explained the procedures. He said that a summons is a form letter, and everyone gets the same one- even him, and they all say failure to appear could lead to contempt of court. BUT, he also said that it is EXTREMELY rare in a basic creditor\debtor cases. Contempt of court is usually reserved for criminal matters.
Having said that it is also not as simple as they put a judgement against you, with a payment plan in place. I have done alot of research here, and I am in a debt settlement program and have had it explained to me by professionals extensively:
Step ONE- They (creditor) attempts to sue you in court, and this process usually takes along time to get to this point. It takes alot of money and resourses for them to sue you, so they usually dont unless they know it will be profitable. Also, with all the debt in this country it will mostlikely take a long time to get a court date. So, we are not talking about 1-2-3 here. If you dont show up to court worst case scenario is they put a default judgement against you. You DO NOT get a contempt of court for this. UNLESS, some kind of criminal charges went along with this. NO MONETARY JUDGEMENT IS ENTERED- JUST THE FACT THAT OWE THE MONEY.
Step TWO- This is where you will a get another order to appear for discovery. This is a grey area. I have read that most likely if you miss this you will not go to jail for contempt, but under certain circumstances that is possible. Either way, this is the time they will obtain a monetary judgement if any. Now, just because you have a judgement against you doesnt mean they will be able to collect from you. For instance in Florida if you are deemed head of household- meaning you are responsible for 50% or more of a dependants needs then 100% of your salary is safe from garnishment. And if those wages are deposited in a bank account they are safe for 6 months from a bank freeze.
There are alot of differentials in all this- state, properties, ect. PLUS federal laws state that either the states maximum, or the federals maximum of 25% - which ever is SMALLER- ONLY can be taken out of anyones wages, and there is a formula to it. And if there is more than one creditor, all garnishments together can not exceed 25%. There is also special circumstances if you are paying alimony, child support, student loans- where the cost of the payment- plus the cost of the garnishment can not together exceed 25%. Plus, if you collect any kind of Retirement pensions (my husband does) SSI, unemployment, (there are alot of others) these funds are all exempt from wage garnishments and bank freezes. People can actually be found to be judgement proof. All with out having to claim bankruptcy. Plus, there is a FEDERAL minimum that if you make below it your wages cannot be garnished. So, the judge can declare you owe the money, but that there is no way for anyone to collect on it.
Also, remember with all this you cant go to jail for failure to pay. So, it doesnt make much sense that the Judge just issues a payment amount on the first round, and if you dont pay you are in contempt of court, arrested and jailed.- Because that would mean you are being jailed for not being able to pay your debts.
Also, judges dont often put a Court Ordered ruling of payment to a simple creditor. A Judge will just order that it is okay for the bank to garnish your salary or freeze your bank account to get the funds if that is applicable. A Court Ordered payment is usually reserved for alimony and child support. In that instance if you dont pay I dont believe you can go to jail, but I do believe you can be found in contempt of court in that instance, and brought into court to explain why you havent paid.
Plus, from what I understand 90% of judgements go unpaid. And I also understand the process between round 1 and round 2 can take years.
Also, step 2 is very hazy, because I have read for Florida for example if the judge finds that a creditor can garnish your wages they will make a court ordered ruling. The creditor takes that ruling to the County Sheriff, (if they so choose- they can choose not to collect on it too) and he intern calls the debtor, if the debtor can be found, and offers them a chance to make payments through him or have their paychecks garnished. This is the time when you would tell the Sheriff that you are head of household (if you are), and your wages cannot be garnished. Then for head of household you are found to be uncollectable at that point. For anyone else you can either make payment arrangements with Sheriff or your wages get garnished.
Also, take into account that it also counts if you are in a debt settlement program, or a debt consolidation program. And in round 1 a number of the judgements are in default, because people dont show up, and a number of them get over turned for showing that you were not properly served the summons.
Also, in round 2, I am sure, dont know for a fact, but in the benefit of logic, that if you can show the judge that you are in a program and these people will get their money once you have enough money to settle with them, I am sure the judge will not be so quick to let them garnish your wages, and freeze your bank acct.
I am not an attorney, and if I am incorrect please let me know- for my own debt delimma as well. But, please only comment if you know for a fact. Being in debt and dealing with individuals like these collection people are scary enough, it is not pleasant to be scared further by maybe, mights, what ifs, and not really sures.
May 4th, 2008 at 12:13 pm
A couple of the sites are:
http://www.fair-debt-collection.com
http://www.nedap.org
http://www.ofcpa.com/credit/52136.htm
Also, Weikki is exellent on answers, and I find that the people are knowledgeable. After I read an answer I research it 95% of the time they are correct.
Actually, I got answer about garnishing a spouses wages for the other spouses debt there.
Basically, it depends on the state you live in. If it is a community property state like California- then yes, because regardless of who owns the debt it is considered joint. BUT….If you live in states like NY or FL they are considered equitable distribution states- which would mean no they cant garnish one spouses wages for another ones debt. If it is not a joint debt- meaning their name needs to physically be on the debt to be held responsible for it, and being an authorized user on a credit card does not count, for responsibility.
May 4th, 2008 at 12:27 pm
oh and alittle extra P.S.- to the man moving to austraila go to http://www.ofcpa.com/credit/52123.htm.
Some one else had an identical question to you, and apparently no your credit reports here in the US are not linked to the credit reports in other countrys. Actually, Austraila was the example used.
May 4th, 2008 at 12:36 pm
Natalie,
Thanks so much for sharing this information. I understand this process as you do, that is that creditors won’t even pursue the court judgment route unless it will prove profitable. And even with a judgement against a debtor - it can be very hard to collect. But for most of us who have a job and $5,000 to $15,000 in credit card debt, the only solution is to get back on track with the original creditor - or have to live in fear and stress for the next 3 to 4 years.
I’ve tried to provide accurate information in this article. I am not a lawyer nor do I administer legal advice. But what I can do is offer my ideas - always with the hopes that they are accurate. I’m always speculating, I’ve tried to use this article as a collection of information on the possibilites of going to jail for debt - which is rare from everything I’ve read too. The other two articles mentioned “How to deal with collection agencies” and “settling your debts on your own” go into more detail about the rights of the debtor and the fair debt collection practices act. My hope is that this website would become a one stop discovery for handling the problems of defaulting on your debt. When I was behind in debt it seemed there was no website which seemed to offer the correct advice. So I decided that part of overcoming my debt would include building these articles to document my research and personal experience.
I try and discuss these topics without getting too specific because the circumstances vary wildly for each and every debtor. It would seem a judgment against a debtor - basically is like the court has acknowledged that the creditor does have the legal right to collect this debt, often this does not describe how they will accomplish this.
This whole subject is what ifs and maybes. Creditors take you to court why? Because they can use the process to force you to pay. If they couldn’t - they wouldn’t use it. You took out debt with a creditor, which means that you signed a ‘legally’ binding contract to repay the debt. Getting caught up with a debt settlement company won’t change the creditors process for collecting the debt from you. Sure you have rights, but most people don’t know how to enforce them. And if you can afford a lawyer - why can’t you afford to pay your debts? That’s my basic attitude on this subject because most people (not all) are in this situation because they are irresponsible and undisciplined. Our entire country embraces this phenomenon…
But to answer your question….no, it certainly is not as easy as I make it sound in this article. But it is a possibilit - under some circumstances.
Responding to your questions has made me realize that I need to go back and elaborate more extensively in this article. So this week I’m going to work on re-writing the first half of it. Do you think that would help?
Barry
May 4th, 2008 at 1:03 pm
Hey Natalie,
My response to the sharing of credit history internationally. Here’s a line from an article at worldbank.org/ on credit reporting agencies.
“Reflecting the demands of globalization,many CRAs have allied with one another in order to provide better coverage. These networks include ALIAC (Latin American Business Credit Reporting Association), TCM Group International (headquartered in Australia), American Business Information Association (based in New York City), and Eurogate, among many others.”
worldbank.org
But it doesn’t make any sense, logical or legal, that you could run up tens of thousands of dollars in the U.S. and then just move to AU and live as though it never happened. Not in this modern age in which we live. Although ‘technically’ your ‘credit report’ doesn’t follow you. But again I’m purely speculating
May 4th, 2008 at 2:52 pm
Hey Thankyou for responding!
I agree with you 100% on everything. And just to let you know I agree about people being undisiplined in this country. I am particularly sensitive about this because my (my husband and I) our problem wasnt caused by us.
We bought a house. Our credit at the time was so good that we put no money down, and they didnt even verify that my husband had a job.
Then, right after closing we discovered that our loan was costing us 270.00 more a month than it was suppose to. AND they gave us two loans AND we had to refinance those loans with in 12 months otherwise just one of the loans was going to go over $4000.00.
We refinanced before had I tried to do my homework. Unfortunately, with what they did to us only they could get us out of- So, we borrowed $8000.00 from my mother in law, and they wrapped another 5 into the house again, and we refinanced.
This time at closing I noticed that once again- we were suppose to be saving 500.00- only have one loan- and be on an interest only for 10 years. WELL….. My original mortgage payment for both was 3185.00 this loan was going to cost me 3275.00. The new loan ended up costing me $100.00 more than the original loan. I didnt want to sign but the attorney looked at me and said- well, if you cant afford this how are you going to afford next month when the payment goes up to $4000.00. So my husband and I signed.
Prior to this we were never late with a payment. They also lied to us about having 90 days to pay. Guess what 60!!!! So, when I made my first payment it was already 30 days late!!!!!!
Then it got to the point of mortgage or creditcards, and the mortgage came first. I live in NY and I tried to sell the house and I couldnt. So, finally we just gave up and asked the bank to foreclose on us. Prior to the house problems we never even had a late payment iwith a credit card.
Now we are in debt settlement- which is frustrating the hell out of me, because they want me to just ignore the debt for how ever long, and I read I am not a stupid person I know what can happen if I ignore the debt. BUT I also know I cannot afford to pay a lump sum settlement out and debt settlement plan is the only way to do it. I cant even get a small personal loan to pay them off now because of our credit.
I dont know what to do anymore, and sometime I wish I could stop thinking!
May 4th, 2008 at 10:21 pm
Hey Natalie,
If you happen to read this could you leave a comment about your experience with your debt settlement. I have only disdain for these companies. I figure I can sit on my money and talk debt settlement with Citibank just as easy as a “lawyer” can.
Your thoughts?
May 5th, 2008 at 4:26 pm
hi ..its really nice to see u responding to all the queries..I have a debt problem too. I am an australian permanent resident .i live in melbourne. I dont have an own house. I am still renting. I just have a car which is paid off and i have credit cards summing up to $55000 AUD. I am finding it real hard to cope up with the minimum payments and so i have decided to just walk away from the whole scenario. I know it would take me atleast 9-10 years to repay my debt with the kinda job i am currently working. I just want to know what will happen to me if i just walkaway. If i just change to a new house and change my mobile number. Will i be still harassed? I am not worried about my credit rating as i have no plans of buying a house or anything for the next ten years. And i am applying for my citizenship. will my bad credit rating be considered to become a citizen. i will be really thankful if u can respond to my query.
May 5th, 2008 at 6:25 pm
Hey Kashu, wish I could visit AU in the near future. I’m not familiar with collection in AU but I’ll give you my opinion anyway :). In the U.S. they can get access to your credit report, and thus get your new address. Then they could send you letters over the months. Then eventually sue you in civil court. Through the court they could garnish wages from your check or even get liens against your assets (like the car you own). In the U.S. this can take years to come to fruition. And it depends on your income. So do some googling on Australia collection agencies credit card debt.
Now that is what would happen in the U.S. - at least some version of this. Read this:
Does credit report effect citizenship
May 5th, 2008 at 7:09 pm
Hi
Natalie, thanks for all of your info. I have several joint accounts with my mom. I have settled 2 with the help of debt settlement. I now am trying to do the remaining on my own. I owe 15 and 14 K on each. I am only an authorized user on one. My mom is elderly and is getting harassing calls daily at her assisted living. I am responsible for the debt as I was an authorized user. So I called the collection agency..BIG mistake! Now they are trying to say they need to to talk to my mom and I gave them an offer of 20% as that is what Discover offered me a LONG time ago and the collection company laughed and said they would never take that and that Discover would have never offered that! This agency just got this acct 3 days ago. I have tried to call Discover directly and work out a deal but was unsuccesful in getting to the right dept. I believe this is the second collection agency it has been turned over to. My mom is in process of selling her home and I am concerned about them moving fast on trying to “cash in legally”. I don’t know if I should try to make little payments to them or what I should do? I just don’t want them to take this to court and I want the calls to stop to my mom..she is very upset and has had actual bouts of real clinical depression and even hospitalized over the anxiety of this debt. I want to get it paid but can only make about $200 a month in payments.HELP??!! any advice would be beneficial!!I guess I probably shouldn’t have called them..but I want them to leave my mom alone and work with me!THNX!!
May 5th, 2008 at 7:33 pm
Hey Susie,
Well you can send this collection agency a cease and desist letter - which means you are telling them that communication with your mother must occur through the mail only.
fairdebtcollection.com
If you want to keep them at bay then pay them, this will stop the phone calls. But first I would get back on the phone with Discover and find out if you can deal with them directly. Did they assign or sell this debt? You make it sound like they assigned it. I was thinking that with your mother being on limited income then there would be no way they could collect from her. But if this house is gonna sell then why can’t use the house money to pay the debt? I’m sure she needs it to help pay for assisted living. Which brings me to the idea of court.
Your mother is in assisted living. I’m not sure that a judge would even allow a judgment under these circumstances. In all honestly, I think you should take $100 or $200 and go talk to a local lawyer about the house sale and this collection agency. I think in this case, that’s the best route to take.
May 5th, 2008 at 9:21 pm
One more question.. I live in a different state than my mom..As I had mentioned, I was not a co-applicant on the cards, only an authorized user..how do both affect us legally as far as the statute of limitations and the case of whether or not they can take me to court etc as an authorized user? Any input would be helpful.. I will also heed your advice and speak to an attorney regarding the sale of her home..but not sure of which state we need to contact.. I am assuming it would be her state?
Thanks again!
May 5th, 2008 at 9:48 pm
Yes, you need to talk to a lawyer in her state - preferably the town in which she lives, since he/she will be familiar with local courts. Since you were not a co-applicant I wouldn’t think that you are in any way responsible for this debt. The ‘legally binding’ agreement was between the creditor and your mom. Good luck!
May 12th, 2008 at 1:30 am
If my wife hasn’t been payin her debt fo over 6 months now, can the collectors collect from me or force me to pay her debt?
thanks
May 12th, 2008 at 6:12 am
If she was the one who originally applied for the credit card (instead of you) then chances are they won’t bother you about the debt. Most states have laws that prevent collectors for coming after a spouse, but some states consider debts to be joint. You need to do a little research about your particular state in this case.
May 15th, 2008 at 5:11 am
I recieve a judgment against me in Dec 07, During this time I was going through a divorce. This charge was suppose to have been placed with my ex in the divorce decree. He was filing bankruptcy and agreed to take responsibilty.During this stressful time, I never recall getting a court date, however I didn’t go and now they have entered this judgement against me. I truly have no way of paying it. Now the charge has went from 6000. to 15,000. They are charging me 30.74% interest. What can I do to get rid of this charge. I am disabled, on a fixed income and unemployed. How can the juge allow them to charge someone such ridiculous fees. thank you. Cathy
May 15th, 2008 at 6:43 am
Hey Cathy,
I think your probably going to be O.K.. Now a divorce decree doesn’t undo an agreement you made with a lender! I know because the same thing happened to me 10 years ago. They still consider you to be the one who owes the money.
But in your case, since you are disabled, unemployed, and on a fixed income, I don’t see how they are going to be able to collect it. Meanwhile I would call them and discuss your situation. Tell them about the divorce decree, your disability, and the fact that you are unemployed. You may have to wait this one out. Also, you need to contact the court who dished out the judgment on you and try and talk to the judge. Meanwhile, I know you probably don’t want to hear this, but you could also pay a local lawyer, that handles civil court suits, for one hour of legal counseling.
But first I would call your creditor and the court and see what they say!
Good luck Cathy, and I’m sorry you’ve found yourself in this position
May 15th, 2008 at 11:41 am
Thanks so much Debt Prison for your timely response. And thanks from all of us who rely on your expertise and valued opinion.
Thanks Again!
May 15th, 2008 at 6:26 pm
w0w! You, my friend truly rock … thank you for getting this info together and even providing a podcast of it. I’m sure you sleep well at night ;]
I’m in some kooky debt. I had 2 credit cards ( one was shared by my ex-wife … whos name wasnt on it … who ran up some serious bills while we were married and hasnt paid into any of it … we owe a little less than 40,000 combined ) plus a car loan. I lost a great job while in the throws of going through my divorce because my company just couldnt make it anymore … they let us all go within 1 month. My unfortunately comfy life style was a thing of the past, but my credit debt wasnt. It took me until 3 months ago ( I got divorced and lost my job about 4 years ago ) to just get a job that would support me, my 2 kids and hopefully give me the $$ to start paying off the debt.
I have gone through talking to credit collection agencies … who did indeed threaten the exact things you mentioned in your podcast. I was trying to be the good guy and just keep in contact with them to let them know where I was with my job situation and the debt I owed. They finally told me that I was going to have to pay about 1400 a month to them so they would leave me alone. I couldnt and still cant.
I havent been in hiding, I just stopped answering their calls. My car was repoed last fall because I was so strapped for money that I couldnt pay exactly when they wanted all the time … though I was in constant contact with them and let them know what was happening with my money. They didnt care … I was 20 days over due on the monthly and they came at 10:30pm and took my car. Now I have an old Honda that happens to work great and I have NO car payments. One of many things I have done ( or that have been done for me ) to get myself in a position to pay this debt off. I really dont want to go bankrupt … although its inviting to say the least.
I have always had a job since my divorce ( I had to live with friends and strangers for quite some time until I was able to just make enough money to get my own place ) … I want to pay this back as I did help spend it ( although my ex-wife could be a little more into helping me ).
I havent received anything in the mail yet as far as court goes … but I keep expecting it.
should I go bankrupt? Can I even? Should I just go to court and try and settle on a payment option?
I am a pround and good parent and good person in general … I feel that doesnt matter anymore and that I am destined to be broke and scared for quite some time.
May 15th, 2008 at 6:49 pm
I just want to ad that I have witled down any money that I pay out to only the essentials … I dont have cable tv ( just internet which is $70 a month ), I havent bought any new clothes for myself in years, I dont have a land line telephone ( just a cell phone ), I dont go out to dinner or movies or bars … basically I’ve cut it all off to just pay for health insurance, bills and child suppport. I havent had a vacation in 5 years as I’ve gone from job to job, climbing the latter to get more money.
I’m finally to a point where I can address the money I owe, but feel I’m too late.
Thanks again for your togetherness … I aspire to that and more.
Cheers //
Phil
May 15th, 2008 at 7:06 pm
Hey Phil,
In your case I would go the debt settlement route. Let’s say you owe $50,000 total. I would shoot for 20 to 30%. I would like to see you pay these guys back in full because that’s the right thing to do. But I know that may not be a realistic solution for you.
Alright, so going with the 20 to 30% settlement, since it’s been a while since you’ve talked to them they may just go for it! What I would do is call each and every creditor (this could be an all day affair) and begin negotiating with them. You might want to pick up a six pack of beer before you begin this process :).
I would strongly urge them to accept the debt settlement. Because if they want to go to court thats fine with you. You are broke, owe a lot of debt, make child support payments (on time hopefully, this would look good to judge). So there’s a chance they may get very little anyway. Even if they get a judgment you could tell them “fine, you’ve got the judgment, now I want to see you collect it. You can’t get blood out of a turnip you know.” So I think in this case you stand a good chance of settling this debt. Don’t use a debt settlement company. Why pay someone else to talk for you, besides these companies screw most people anyway.
I would try and avoid bankruptcy at all costs - I really don’t think that it’s going to be necessary for you. I think you can settle it.
Alright so if they agree to settle this is what you want to do. Work out the arrangements and get on paper with them. Do not give them your banking account info. On the paper, let’s say you are going to pay one collector $2,000. The paper should say something like $200 per month for 10 months and this fully satisfies this debt and will be reported as “settled” on your credit report. Read my other article How to settle your debts on your own - for a little more info. And don’t forget, you can always talk with a local lawyer for one hour of counseling. They should no longer be adding any intersest of fees to these amounts. If they are then don’t work them but they probably aren’t. If you’ve got more questions ask.
Good luck!!!
May 17th, 2008 at 4:39 pm
Hello, A rule for contempt of court was ordered against me for not paying a civil personal debt owed of $1300. I’m suppose to show cause on or before May 28th. Can I go to jail if I go to this hearing? I know I can go to jail if I don’t go. On the paper it shows a $50 fine and 24 hours in jail. Can the Justice of the peace do this? I live in Louisiana. Thanks
May 17th, 2008 at 4:47 pm
I also want to say that I was paying $100 month on this but due to my work slowing down I wasn’t able to pay on it for a few months. Thanks
May 17th, 2008 at 5:15 pm
Hey Ron,
Monday morning you should call the court and talk to them. Tell them what happened with your work. I would think, in this case, that you won’t serve anytime, not even 24 hours. I believe this to be a common occurence they implement to encourage people to contact them. Would you please come back and comment again after you talk with the court? That would mean a lot to me, I need information such as this to keep my articles and advice accurate.
Even though they technically possess the authority to place you in jail, they most likely have no desire to do so. All they want is your attention and cooperation.
Thanks….
May 18th, 2008 at 11:09 am
Dear readers,
If some of you have time, could you go to this site and fill out a review on the listed Debt Prison article?
Also, you can submit a quick review of Debt Prison at blogged.com.
Thanks!!
May 22nd, 2008 at 8:45 pm
oooh yes.. thanks for the information i’m sorry i didnt get back sooner to u..um.. yea so i just decided to NOT PAY IT!! lol.. just joking.. no i did work out a payment arrangement and i got it settled for 700 dollars they took off 300 for me. and i do have a fax over contract or like a statment .. of them saying that i only have to pay 700 dollars and its paid in full again.. so yay! so far i’m down to 450!! so thanks for the advice.. because yea i just called back and you were right the people that called me were only harrasing and scaring me.. they gave me the number to credit people to pay.. yea and they never even set up a court date or nothing because that was like a week later that i did it.. and they said i would of received it in the mail after 3 days so.. never got it! lol.. thanks for information.. by the way I HATE CREDIT!!!
May 30th, 2008 at 5:20 pm
Hello!
I read all articles, and in my cituation, i need to ask more. I have several cards that i can’t pay. I was thinking to declaren a bankruptsy, but i have a call from Government to work overseas. Can i declare a bankruptsy after i return from overseas in 1.5 years?
May 30th, 2008 at 5:40 pm
Hey Isabel,
So you’ll be gone from the country for 1.5 years and then return? Yes, you can begin the bankruptcy process when you return. But first, you will need to speak with a bankruptcy lawyer. In some cases, bankruptcy courts are not removing the debts owed on credit cards, thanks to a new law that was passed. Whether or not you can erase this debt through bankruptcy depends on how the court views your circumstances.
Hope this helps!!!!
June 1st, 2008 at 11:33 pm
I called that Monday like you said and the lady in the office told me If I paid the $1300 (the balanced owed) then I would not have to show up in court on the 28th, but I didn’t have it, so I went to court. I had $300 on me, and said this is all I have, and explained about my work to the judge, he took the $300 and said to continue paying the $100 a month. No jail time or fine was given. The lady who I owed the money to was not happy when the judge said I don’t care if you pay $25.00 a month, just bring something. Thanks for your help.
June 3rd, 2008 at 8:42 pm
i got a mail from UNITED STATES BANKRUPTCY COURT and i got so confused. the letter saying NOTICE of Chapter 7 bankruptcy case meeting of creditors and DEADLINES. does it mean that the debtor is suing me? and also the letter included DEADLINE TO FILE A PROOF OF CLAIM (06/12/08) governmental unit (7/9/08). do i need to file a proof of claim. also what does it mean if you file a proof of claim.i searched over the internet and i have read that if you agree that you owe the company that money YOU DO NOT NEED TO FILE. but im still worried and still confused what will happen..pleasee help me!!!
June 3rd, 2008 at 8:54 pm
Hey Veronica,
From what little I’ve read filing a proof of claim is done if you are a creditor and want to be paid on a debt - by someone or some company that is filing bankruptcy. Does someone owe YOU money? That’s the way this sounds to me. If so then I would think you should file a proof of claim - which (bear in mind I’ve briefly looked at this) states how much money the debtor owed you and for what etc,etc…
Failure to file a proof of claim is the like saying you don’t care if you get repaid or not…
June 4th, 2008 at 8:37 am
thank you so much for your explanation. this is why i got really confused. for all i know i owe that company.and the letter stated that i am the creditor of the debtor etc…so i didnt know what they are talking about. i thought all this time i was being sued by the company. so i was wondering why did i become the creditor of this company??
June 6th, 2008 at 10:36 pm
My daughter was told by a person who represented himself as an attorney that she would go to jail if she didn’t pay her credit card company 2000.00 by this coming Monday. Come to find out he was a from a collection agency. Isn’t it illegal to misrepresent oneself and threaten people over debt? Of course when I called him on this, he denied saying either statement. She has previously tried to work out a payment plan with this company and at one point she had a deal worked out where she would pay them $50.00 a month and they would cut the over limit fees and reduce the interest. Well apparently the $50.00 a month didn’t stop the over limit fee as it didn’t bring her under the limit in the first place. Her debt went from approx. 1500 to over 3000. Collectors were calling my house all of the time looking for her. I told them she doesn’t live here numerous times and was told that as long as I didn’t give them another phone number for her they had to keep calling me. She doesn’t have another phone number and they have her cell phone # but still call me. When she tried previously to make payments she was told that $50. was not acceptable and she had to pay 1300. in one lump sum which she didn’t have so she stopped paying them. Now I’m really furious because it looks like I get stuck paying the money because she is so frightened that she will be arrested. I’m not trying to get her out of paying her debt, but I wonder if she has any other recourse than me bailing her out. She really is financially responsible and her job situation has caused her to fall behind. Even the collecter said that she had excellent credit before this happened. What if anything can she do?
June 7th, 2008 at 6:18 am
Hey Elaine,
Yes, you guys are uninformed and these collectors are taking advantage of it. First of all, your daughter cannot go to jail. Yes it’s illegal to do what they are doing - but how can you prove they said what they said? They do this stuff to everybody and sometimes it works. If they’re talking they are lying.
As far as the jail goes, you can’t go to jail for not paying debt. The only possible way she could go to jail is if she was in contempt of court for not showing up in court for a discovery. You see first these guys would have to file a civil suit against your daughter. She would get a summons about the court date. However, based on what you’ve already told me, things most likely won’t even get to this point. After receiving a summons she would just simply go to court (which is probably held in your county) and explain to the judge that she has tried to pay but couldn’t satisfy these collectors ridiculous demands. The worst case scenario would be that the judge rules in favor of the collector and tells your daughter to pay them $50 a month until it’s paid off.
Now if she didn’t pay them, the collectors would have to go back to court to request a discovery. A discovery is where the court would summons your daughter so they could possibly set up arrangements to garnish her wages. But keep in mind, if you read the article above, that there are restrictions on how much they can garnish from some people. And some people don’t make enough money to even be garnished by law.
Also, you mentioned over the limit fees and interest. The only way the fees could still be applied is if the account hasn’t been closed by the original creditor. If so, then she needs to stop all payments until the account is closed. Because otherwise this will continue as a vicious cycle of fees upon fees - and you’ll be lucky to ever pay this off. If I was her - I would stop all payments and just put $50.00 per month into a safe deposit box (or your savings account) and just simply settle the balance in about 18 months for the $1,500. This was the original balance that was defaulted on and all the rest of the current balance is just silly fees.
Elaine these guys are intimidating you and your family with lies. You need to have your daughter write them a cease and desist letter - this informs them that they are only allowed to contact you by mail.
If I was you and your daughter - I would tell them that you’ve decided that since they have been so ridiculous, that your daughter refuses to pay another penny on this debt until she stands before a civil court judge so she can tell them all the illegal things they’ve been doing.
Elaine, DO NOT PAY THIS DEBT FOR YOUR DAUGHTER. First off - she got herself into this and needs to figure out how to get herself out. Besides, having a negative opinion of debt is a great way for a young person to start out their financial career. Debt destroys our ability to achieve financial independence. Stop talking to these collectors. I can assure you that these phone calls are only making this situation worse for you in every possible way.
I will be more than happy to continue to provide you with more detailed advice on this matter. It sounds like you have had no one informed to discuss this matter with. And running this website has made me very informed - I would be happy to assist you any way I can. If you have more questions please leave another comment below.
Best regards,
Barry
June 7th, 2008 at 5:22 pm
Hi, Im Elaine’s daughter-my mother got a few details wrong so I’d like to explain the situation myself and see if you have any further advice.
Chase is one of the credit card companies that I have and the only one that refuses to help u in times of need. I have been ignoring calls from them for months b/c I was told that I needed to pay the minimum payment of over $1300, I explained to the rep that that was not a possibility and they told me that there was nothing Chase was willing to do to help me. My interest rate sky rocketed and the payments did as well. While my other credit card company put me on a payment plan, reduced my interest rate and got me back on track, Chase refused. I was basically told that until it went to collections I was not going to receive a reduction or any type of help.
Now, the other day I received a message from someone claiming to be from some Firm. When I spoke to him he explained that he was representing Chase from some firm in regards to the debt that I owe, in the conversation (which went quite quicky on his end) I was told that my credit was great until about a year ago, that I needed to pay this debt as soon as possible b/c I am close to or on the same level of bancruptcy and that this is my only chance to strike a deal. Also in the conversation he said something regarding court and jail. I took this seriously, obviously! I explained to him that I had made numerous attempts to strike a deal with the Chase representatives and try to get on a budget plan and lower my interest rate, but Chase was unwilling to do so. He agreed and told me that Chase is very strict and rigid. He asked me a number of questions regarding my current financial status and told me that he was going to do a “hardship application” to see if he could get a deal with Chase. I was placed on hold and he came back saying that Chase would be willing to forego the interest, but they needed a lump sum of $2000. I asked how long I had to come up with the money, 30 days or 15? He chuckled and said that at best he could get me until Monday of the up coming week. I was obviously destraught and did not know where I was going to get that much money. But according to him this was basically my last chance.
Now as you know I got my mom involved and apparently this guy denied saying any of those things to me.
My question to you, now that you have the correct facts, is, does this as far as the hardship application goes, sound like my best bet or should I ignore the calls and wait for whatever comes next??
Thank you,
Amber
June 8th, 2008 at 7:53 am
Hey Amber,
Everything this guy has told you is a lie - except for wanting the $2,000. Let me explain. First of all, if Chase agreed to a hardship application, why would they want a large lump sum up front? I can assure you, if you can afford this lump sum you can afford to continue to make payments in full - that’s what Chase would say. But this guy is lying. The fact that your mother called him and he retracted his story is proof. But I can promise you, this guy is just telling you anything he can to convince you to pay. That’s his job. That’s how he gets paid.
One sure way to tell if he’s lying is to say “O.K. that sounds like a decent idea. I’m just going to need you to put those details in writing and fax or email me a copy of the agreement before I can make a payment.” Think about it - if they were serious and honest, wouldn’t they do this? But instead he’ll give you all sorts of reasons why your request can’t be satisfied.
Now you’ve already done the right thing by contacting Chase months ago, explained your situation, and asked them to work with you. They refused so the burden is off your back in my opinion. If you make any payment - the fees will continue and the balance will continue to go up. The only way to stop this process is to stop all payments and start ignoring the phone calls.
I would put some money aside, like in a safe at home or safety deposit box each month. Soon Chase will close this account (you need it to be closed). The fees and interest will stop and they will assign or sell the debt to a collector.
Later, probably a year or two years from now - you can begin talking with the collector again and then settle this debt for 40%.
Take some time to read my other article How to settle your debts on your own. And don’t you dare consider using a ‘Debt Settlement’ company. Those guys are blood thirsty vultures too.
If you try and work with these collectors this burden will continue for a long time and you’ll be out thousands of dollars in fees and interest.
Sure your credit report will suffer but so what! It’s already got a blemish from this Chase agreement. Eventually your credit report will show that this one particular debt was “settled”. The other option you have is to pay the lump sum directly to Chase, make more money so you can pay a larger monthly payment, and try and have this thing paid off in full within a year or two. That would make your credit report look better because the balance would be paid in full and the only negative marks would be the fact that you were months behind once.
In my opinion you, and every other American, will be better off in life if you just forget about using credit - EVER. Word to this wise, it’s the way to go….
Barry
June 8th, 2008 at 8:53 am
Hi Barry,
Elaine here. After reading your post to Amber, I need to tell you that this company did send a fax stating that they are representing Chase. It doesn’t say anything about the account being closed but does state that per the phone agreement if their office receives the $2000 by Monday that the account will be paid and Chase will report the account settled to the credit bureau. As far as I know Amber hasn’t seen the fax because they sent it to me at my job. I agreed with your advice to Amber but now I’m confused, after knowing that they sent the documentation to me, is your adivce still the same?
June 8th, 2008 at 10:13 am
Hey Elaine,
This sounds legitimate. However, before I paid a dime I would first contact Chase and try to discuss this arrangement with them directly. For example, you don’t want to pay the $2,000 and then have Chase sell the remainder of the debt to a collection agency later on.
What I’m saying is that you don’t want there to be any grey area in this matter. You need to make sure that Chase affirms that the $2,000 payment 100% satisfies this debt. And therefore they will report the debt as “settled” to credit bureaus. Also, you need to make absolutely sure that this collection agency or “firm” or whoever they claim to be - actually possess the legal right to collect this debt and represent Chase.
What bothers me about this situation is all the lies that this collector has already thrown at you and your daughter. As a result, I would take extra caution in determining how to settle this debt. To insure this matter is closed and behind your family - make sure that the actions you take will 100% satisfy this revolving account and permanently fulfills this debt obligation.
So I would contact Chase just for the purpose of insuring that your faxed agreement with the collector is legitimate, and that Chase agreed to those terms. I would then document the date and time of the phone conversation, as well as the person with whom you spoke and their supervisors name. Like I said earlier - you don’t want any grey areas here.
If, after speaking with Chase, you find the agreement to be legitimate and decide to pay it - make sure you always keep copies of the faxed letter and the documented phone conversation. Also, depending on how you pay it - keep a copy of where the $2,000 clears your account (bank account, credit card account, etc..).
If you have about 15 to 20 minutes you can also read the Fair Debt Collection Practices Act. This explains the federal governments guidelines for what a collection agency can and cannot do - like calling other family members or lying about who they are and threatening time in jail.
Wishing you the best!!!
Barry
June 8th, 2008 at 1:57 pm
Thanks Barry. I’ll let you know what happens.
Elaine
June 15th, 2008 at 11:29 am
Hello, First off let me start off by saying this is a great website and I appreciate all the great info you guys are sharing! Now my situation is quite different but I was hoping you can give me some input and possibly tell me the reprucussions I face if I follow through with this.
Im in my mid 20’s, Im married and have no kids. My wife works and I work. We are very good with money. I have a brand new car that we paid off early. Our credit scores are great , we own 2 houses, One for 84,000 that we rent,and one for 43,000 on a 15 year mortgage wich we currently live in. We are doing good, We are able to save 1,250 dollars a month, I can have the 43,000 dollar house paid off within 3 years!
Now here’s the bad part