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Thursday, December 06, 2007
Credit card debt and how to deal with it
Due to a previous hardship I have accumulated roughly $200,000 on 15 accounts, in unsecured credit card debt over the past 4 yrs. With my current income I am unable to continue my payments on these debts. Bankruptcy has been on my mind but is something that I will not do until it is proven there is no other way out.

I have hired an attorney based debt settlement agency to negotiate the accounts so that I am able to pay back some of what owe I to avoid filing. They will be keeping constant contact with each creditor I owe to complete each settlement successfully. However I am aware it is advisable that I complete a payback to each creditor as soon as possible. It was suggested I keep the timeframe under 36 months.

Even with a plan to pay back a gross $101,193 including program fees, I am unnable to afford the 3 year time frame. The company I am working with has agreed to extend my settlement program to 48 months, while still upholding a 55% settlement guarantee. However I am afraid if one of my creditors take me to court on a debt that I will be unable to complete the settlement program. What are the chances of this taking place?

Also if that does occur, what are my chances of fighting the judgment in court? Due to my budget, is there a chance the judge will allow me to continue to settle as long as there is proof of my intention to pay off the debt? I do need help and I will not file bankruptcy until I find it impossible to avoid. I appreciate any assistance.

First of all, you need to get away from that debt settlement company because regardless of the guarantee the creditors are not bound by any agreement between you and the debt settlement company. Any statement to the contrary by any debt settlement company is nothing more than horse feathers.

If a creditor gets tired of waiting for their money they can sue you at any time and don't have to tell your so called debt settlement company anything. What are the chances of their filing a lawsuit against you? I'd be willing to bet they are greater than 60-40 that you will be sued by one or more of your creditors or a debt collector.

What are your chances of fighting the judgment in court? That depends on how you go about defending the case. Tell the judge you have this great attorney based debt collection company who guaranteed you this would not happen and he will probably laugh you out of court. All the money you paid that great debt settlement company will have gone down the drain.

Yes, the judge will allow you to continue to settle via a garnishment of your wages. No problem. He will offer you other options as well. He will offer to let you give up any and all money you have in any bank accounts through garnishment and he may even let you pay off by selling of any excess property you might own such as guns, boats, coin or other valuable collections, maybe even furniture taken out of your home by the sheriff.

Of course, he will not want to actually tell you that because if he did you might decide to hide all such assets from your creditors and he wouldn't want you to get into trouble for hiding assets so he will just shut up and quietly issue orders allowing them to show up at your doorstep one fine day with a truck to haul it all away and sell it for whatever they can get out of it at auction.

And of course they will even be nice enough to force you to pay the costs of the auction too plus their time and trouble and expense to come and take it away from you. And will bankruptcy help you? Yes, I'm sure it will. If you can qualify that is. Whether or not you can qualify depends on many factors and the bankruptcy court will be nice enough to let you pay your attorney about $1200 plus the filing fees and maybe other expenses to find out. And all your creditors will find out that you are trying to qualify for bankruptcy instead of paying them and that will tick them off even more. If you don't qualify they will probably come after you like a swarm of hornets. So, if you fail and get a garnishment they can't get more than 25% of your wages and only one creditor can garnish at a time. So the other 14 will have to stand in line.

So lets forget about all the court costs, attorney fees and maybe about 29$ interest just for ease of figuring and say you are making #100,000 a year it will only take about 8 years to pay it all off. Add in the interest and you might very well be eating little more than Ramen Noodles for the rest of your working life if you can't qualify for bankruptcy for some reason. If you can qualify for bankruptcy you may very well have to pay them all off instead of getting the debts completely discharged.

You need to remember that the new bankruptcy law was written by MBNA Bank so that should tell you how much relief you are likely to get out of bankruptcy. My best advice to you is to start learning how to fight back against the almost inevitable motions for summary judgment before they start happening. The best way to do that is to visit or or call me at 405-616-7901
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