Major Credit Card Debt - delinquency questions

[cxm322]

What is the name of your state? Pennsylvania

HI,

I am in serious credit card debt and I will no longer be able to afford to pay them come August 2005. The debt is about 40K. Up until now I have never been delinquent at all.

I found an honest, legit debt mgmt company (found on Tom Martino's Troubleshooter.com Referral list) that can negotiate a pay off sum with the credit card company(s), however, I must be delinquent on payments for at least 90 days before they can help me. Also, the longer I am delinquent the lower the payoff sum they will be able to negotiate with the credit card company(s) from what I understand.

My questions are...

1. For how long are credit card companies allowed to keep adding finance charges to a delinquent account? (It is my understanding that they can only add finance charges every month for only so long and then must freeze the account and stop adding anymore finance charges).

2. By going delinquent, can they take assests from me to sell off to gain some of the money I owe them? I have the following and only the following that are really of any worth...

- A 2003 new car that I am financing and I owe about 8K on it still.
- A small tract of land that I co-own with a family member that is worth about $15-20K.

Can they legally go after either of these assets of mine if I go delinquent? If so, how long must they wait after I have gone delinquent before they can go after these assets?

3. Can they drain any bank accounts I have money in? If so (same as above question), how long must they wait after I have gone delinquent before they can even touch the money in my bank accounts?

Thanks in advance and I appreciate your responses.

 

[Debt Guy]

1. For how long are credit card companies allowed to keep adding finance charges to a delinquent account? (It is my understanding that they can only add finance charges every month for only so long and then must freeze the account and stop adding anymore finance charges).

A. Most credit card companies will continue to charge interest and add fees until the account is charged off -- which is usually 180 days delinquent.

2. By going delinquent, can they take assests from me to sell off to gain some of the money I owe them? I have the following and only the following that are really of any worth...

- A 2003 new car that I am financing and I owe about 8K on it still.
- A small tract of land that I co-own with a family member that is worth about $15-20K.

Can they legally go after either of these assets of mine if I go delinquent? If so, how long must they wait after I have gone delinquent before they can go after these assets?

A. Can they go after assets? Yes. But, to do so they must first sue you and be awarded a judgment.

3. Can they drain any bank accounts I have money in? If so (same as above question), how long must they wait after I have gone delinquent before they can even touch the money in my bank accounts?

A. Same answer as #2

 

[cxm322]

Thank you very much for your really quick response. My only question remaining pertains to # 2 and 3.

I understand they have to sue me to get my money and asstes and then be awarded by a court to do so, but do you know exactly how long they usually wait or must wait after you've gone delinquent to actually file such lawsuits?

BTW, I was very surprised to see that they must file a lawsuit in order to take money from my bank account. I heard in many forums, including this one, I think, that they cna just withdrawal money from your accounts without actually suing you first. Maybe this is specific to my state? No?

 

[Tayla]

Most often after you missed the agreed upon date of payment the entity(business,company,persons) may file suit in court for judgement . A debt doesnt have to have a long length of missed payments to be pursued thru the courts.

 

[cxm322]

Most often after you missed the agreed upon date of payment the entity(business,company,persons) may file suit in court for judgement . A debt doesnt have to have a long length of missed payments to be pursued thru the courts.

Please forgive me but I find it a little hard to understand your post. It sounds like you are saying they can take it to court after the first time you miss a monthly payment if they want to??? Is that what you're saying?

 

[Tayla]

Your comprehending correctly. Read your credit card agreements and any bank loan contract...the verbage is there, its just written in a way that allows them the right to pursue if you default in accordance with the agreed upon payment & or time frame.

 

[cxm322]

Thanks for your replies.

Looks like I better get that lube ready for the insertion that is about to happen.

Thanks for hearing my rant.

 

[Tayla]

Your welcome.

Was the rant somehow a legal question?

Heres an eye opener truth: You signed the credit cards and/or loan willingly. Being financially responsible has its challenges....

Bankruptcy is a viable option if indeed you want to pursue that avenue.

 

[cxm322]

Thank you for your help. I think I should just get an attorney....and get that lube warmed up and ready. It's gonna be a long rendez-vous with corporate and judicial America, it seems.

 

[Debt Guy]

Tayla is correct but misleading.

Technically, the creditor can file suit after they have declared the loan to be in default. So, if you are 1 day past the due date, it is possible for the creditor to accelerate the loan and file the lawsuit as soon as the cure period has expired.

Practically, credit card companies don't work that way. There are many factors and no company uses the exact same policy or practice. But, here is the general outline.

The first 2 months of delinquency is handled by an internal collections staff whose job is to get the payments brought current. Usually (but not always), they are relatively low key and non-aggressive. They will call continually until they make contact with you and then give you a week of peace.

The next 2 months is handled by collectors who are somewhat more aggressive. Again, their goal is to bring the loan current. Again, expect calls like before.

The next 2 months is handled by collectors even more aggressive. They have a goal to bring the loan current or to settle it at some discount. Again, expect calls like before.

At 180 days delinquent, the loan will charge-off. This is an accounting term and nothing more. It just means the balance of the loan has been charged to earnings and taxable income thereby reduced (some people will tell you it is a tax write-off but it is not).

At this point one of several things can happen. The creditor can keep the loan in-house and give to their most aggressive collectors; or they can assign it to a 3rd party collection agency; or the sell the loan to a junk debt buyer or they refer it for litigation.

Eventually, the loan will reach litigation. Most commonly, this will take 12 to 18 months from the initial default. Some creditors sue faster than others. Again, there is no hard and fast rule. The most aggressive are American Express, Citibank and MBNA.

If your loan was purchased by a junk debt buyer, then they have their own internal guidelines. Some never sue and some always sue and some are in between. There are even a few whose buisness model is to sue everyone as quickly as they have acquired the debt. However, there are ways to combat and frustrate collection agencies and junk debt buyers but this is not the place for that discourse.

Let me share with you some key issues that you should understand: (a) the PA statute of limitations is 4 years, (b) in PA real property is exempt from attachment by a general creditor, (c) in PA your wages can be garnished by a general creditor but 75% of your after tax wages are exempt from garnishment, (d) any bank account with your name on it (even if it has other names on the account and is not "your" money) can be garnished and wiped out.

 

[cxm322]

DebtGuy,

Thank you very much for your informative responses. Can you please tell me, though, what you meant when you said...

"in PA real property is exempt from attachment by a general creditor, "

Are you saying credit card companies and junk debt buyers they may buy off the debt form the CC company canNOT go after and eventually take any real estate or my currently financed car from me? I guess I got confused when you said "rteal property". I di not know exactly what "real property" is.

Also, what does that mean to me, in my situation, that PA statue of limitations is 4 years?

Again, your respponses are greatly appreciated. Thanks for your time in responding. I am totally determined to resolve my revolving credit debt issues without bankrupcy, if possible. You are a great help.

PS. Also, if you can give me any experience you have or heard of about Chase (which bought out Bank One) and even Discover and Bank of America as far as what I can expect them to be like in this situation, if you can.

Again, thanks.

 

[Debt Guy]

Q. I di not know exactly what "real property" is.

A. Real estate -- specifically, your home.

Q. Also, what does that mean to me, in my situation, that PA statue of limitations is 4 years?

A. The statute of limitations begins to run from the date of first default -- which is generally 30 days after your last regular payment on the debt. Any legal action should be brought before the SOL expires -- 4 years. Now, it is possible to be sued after the 4 years has expired -- but the expiration is an affirmative defense and will cause the lawsuit to be dismissed. But, you must file the motion for dismissal -- failure to do so will result in you losing the defense of SOL>

Q. Also, if you can give me any experience you have or heard of about Chase (which bought out Bank One) and even Discover and Bank of America as far as what I can expect them to be like in this situation, if you can.

A. All creditors want their money back. All creditors will and do sue people every day. On the whole, in my opinion, Discover is more aggressive than is Chase of Bank of America. You will likely be in court faster with Discover than with the other two.

 

[cxm322]

Funny how it works. Chase may not pursue suit as fast as Disc but they raise your APR to astronimical rates. Mine went from 17.99% to 27.50% just because I accidentally skipped one payment. Called back in 6 months, and the best was 24.50% I hav eto call back in 6 months to get a better rate, which will be about 21.50% probably. The second I go delinquent, I'm quite sure my APR with chase will go through the roof at over 30%. Figure that in at 190 days before they "charge-off" and my debt will double or more in 190 days.

Thanks for the replies.

 

[Tayla]

And I repeat- see my post numbered 8.
Your welcome to post legal questions or aid in a posters quest for information , otherwise mosey over to creditboard.com where venting is welcomed...(plus you might learn a few things
PS: Glad you edited that one post, most here dont welcome that kind of discriminating comments.

 

[cxm322]

I appreciate your opinions Tayla. However, my questions were already ansewred by DebtGuy. I think I'll close this thread now before you start to flame me even more and give more biased, rude advice/info.

Have a good day.