DEBTS

From: BOB FORD <BOB_FORD@compuserve.com>
Subject: DEBTS
Date: Thu, 22 Mar 2001 19:42:35 -0500

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>>
>Date: Thu, 22 Mar 2001 07:46:48 -0500
>From: Jack Schnapper <jack@kajor.com>
>Subject: Big Time Debt Problems
> =

>Due to circumstances that I am certain are familiar to some of you I hav=
e
>gotten myself (as well as my wife) very deep in debt.  Of course we have=

>the first mortgage and then the second mortgage that I took out to pay o=
ff
>all the plastic.
 =

>Well, I didn't learn my lesson and got right back up there (actually muc=
h
>more) and my employment situation changed, greatly reducing our income. =

So
>here we sit owing an enormous amount of unsecured debt (plastic plus
>checking account overdraft line of credit).
 =

>Recently I have been hearing from several of the credit card companies
that
>they are very close to charging off our account as a bad debt.  They the=
n
>go on to tell me that they may still turn it over (or sell it) to a
>collection agency or attorney to try to collect whatever they can.  I ha=
ve
>been told that they could possibly file a lien against our house or even=

>force us into bankruptcy.  Our house has inflated quite a bit since we
>bought it 14 years ago and in our state (Maryland) only $7,500 in equity=

is
>protected.  We have quite a bit more equity than that.  We have consider=
ed
>refinancing but our credit scores are so bad that the best rate we can
>expect to get is @ 10% or more.  Our existing first mortgage is a 15 yea=
r
>fixed rate loan (6.375%) with @ 7 years to go.  Our second mortgage is f=
or
>30 years at @ 9.25%.
 =

>If a credit card company writes off our account (and, from what I
>understand, deduct that amount from their income for tax purposes as a b=
ad
>debt) can they still sell it to someone who will then harass and threate=
n
>us and possibly force us to either sell our house or to file for
bankruptcy?
> =

>I'd appreciate it if replies can be sent via email to jss@mailzone.com a=
s
>well as posting them here for others to see.
> =

>Thanks,
>Jack
 =

JACK

I am not an attorney and this is not legal advice.

A debt is always a debt until it is paid.  It does not make any differenc=
e
what the credit card
company does with the debt.  You will always owe it unless it is forgiven=

by the creditor or it is
paid. A forgiven debt is income to you and you must pay income tax on the=

amount that was
forgiven.  However, I have never heard of a credit card company forgiving=
 a
debt.

A creditor can not harass and threaten you.   They can simply ask you to
pay the debt.  They can
even get a lien on you house.  State laws are different but in most state=
s
a creditor can not force
you to sell your house to satisfy a lien.  No one can force you to file
bankruptcy.  There is a form
of bankruptcy called involuntary bankruptcy.    It is possible but very
unlikely that a creditor will
do that to a person.  It is usually done to a business.

You don't go to jail for not paying a debt unless you own to the
government.  You just get a bad
credit report which means you will have a hard time getting credit in the=

FUTURE.

However in your situation , this is probably good.  You have got to learn=

to live within your
income.  From a creditor's position, granting credit is a business
decision.  They know some
people will not pay what is owed.  The just sell these debts for what the=
y
can get for them and
move on.  You could if you wanted to, treat credit as a business decision=

also.  You could just not
pay.  I do not know if this is the best thing to do in your situation.  I=
f
you can do without
additional credit for 7 years, these debts will be erased from your credi=
t
record.

A word of caution about your mortgage.  You have a low rate first and
second mortgage. Keep
paying the monthly payments on your mortgages.  If you don't pay them, yo=
u
will loose your
house in a foreclosure.

GOOD LUCK
BOB FORD
BOB_FORD@COMUSERVE.COM

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