As an Orlando bankruptcy lawyer, one of the first things I advise my clients to do when they decide they are filing bankruptcy and hire me is to stop paying on their credit cards. Recently, though, before I could offer that advice, a client asked me: “What happens when I stop paying my credit cards?”
The answer? Your credit card company will begin the collection process, which normally proceeds in this manner:
1. You will receive frequent phone calls from the original creditor, as will your family and your employer, attempting to convince you to make a payment over the phone. The collection agent will try to intimidate you, by saying they will ruin your financial life unless you pay up.
2. In about 90 days, your original creditor will give up and sell your account to a debt collector. This third party agency will then repeat the actions above.
3. Then, around 180 days from the time you stop making payments, you may hear from an attorney. This attorney will simply try to collect on the debt, following the same protocol in 1 and 2 above.
4. At this point, the attorney might file a lawsuit, seeking a judgment against you. A judgment would permit the creditor to collect from you through a wage garnishment. Your wages cannot be garnished without a judgment.
Kind of a long process until a judgment is obtained, right? Over 6 months from the time payments stopped being made if I added correctly. So why, as a bankruptcy lawyer, do I advise my clients to stop paying on credit cards when they hire me?
You see, the objective is for my client’s bankruptcy to be filed well prior to a judgment being entered against them. As long as no judgment is entered, garnishment is not possible. Now, my client can catch up on car or house payments, for those secured debts they intend to keep through filing bankruptcy. They are not wasting that money on payments to malicious debt collectors, for credit card debts that will be discharged in their bankruptcy. They can also use the money they have saved to create that safety net, which I advocate as their Orlando bankruptcy lawyer, to be used as part of an overall, start fresh, strategy when filing for bankruptcy.
But what about those malicious debt collection agents? Here in Florida, we have some of the toughest laws in the country to protect consumers from the abuses collectors use regularly when attempting to get my clients to pay their credit card debts. Additionally, a Federal Law also restricts those abusive acts by third party collection agents in an attempt to collect on a debt. Why not sue your creditors to enforce your rights?
The debt collection process can be an intimidating experience, or an empowering one. If you know how it works and you know your rights, the empty threats the debt collectors hurl at you in a typical phone call from them will seem laughable, and more often than not, actionable.
Get the Free eCourse to find out how an experienced bankruptcy lawyer to assist you in successfully navigating the debt collection process and help you achieve that fresh start you’ve been craving.
