What happens to a person if they walk away from their home

[tavalon]

and their credit card debt? I know one's credit rating will be destroyed but what other things happen? Can wages be garnished? Just what happens in the catastrophic situation where one just walks away?

[grannie4peace]

1. i guess that depends on where you live.

:shrug:

[DesertRat]

2. I know that you can't walk away from all debt

Student loans are one type of loan that you will always owe, and they will garnish your wages.

[tavalon]

3. I knew that one and the IRS too but what about the rest of it?

We don't have debtor's prison's yet and it just occurred to me that the discussions always talk about how to salvage the situation but I've never seen any discussion about what happens to a person if they just walk.

[DesertRat]

4. I really don't know

Maybe there's a lawyer here who might know the answer. :shrug:

[Tangerine LaBamba]

5. A lot depends on where you live

You'd do best to ask a lawyer. This is a very serious question, and you're not going to get what you need on a message board.

Good luck.

[Old Codger]

6. Hard to do

Depends almost entirely where you live, all states have their own laws on this situation. If you work they will almost certainly garnishee your wages, they can also take a portion of your checking/savings accounts. If you can get away and do not pay a cent on a bill it automatically becomes void after a period of time, I think this also depends on where you live, some places that time frame is 7 years, but you have to not pay anything on it nor even admit you owe it or time starts over. I am not an attorney so my advice would be to consult an attorney before doing so, at least then you will be aware of what can happen. Filing bankruptcy is probably best option.

[intheozone]

15. I don't believe the holdlers of mortgages or credit card debt can attach the

debtors' paychecks. In order to do that, they would probably need to sue in state court, obtain a judgment and then enforce the judgment.


Edit to fix typo

[Old Codger]

18. You bet

They definitely have to do that but they do things like that every day, they send you a notice to appear usually, some states all that is necessary is a notice in the local paper for a set period of time and believe me they go out of their way to see that you have small chance of seeing it. If you do not see the notice and if you fail to appear they get a default judgement and precede to attach your assets, checking, savings and wages... They have to allow you to make a hardship claim saying that if the money is taken you will not have sufficient funds live...But by the time you even realize the money has been taken from your account you may already have written checks on it and end up with NSF charges with bouncing checks all over the place... Anyone contemplating just "walking away" be advised to look into state laws involved.

In California when I lived there you could turn a car back as a voluntary repo and owe nothing on it,the finance company got whatever he could and wrote the rest off, in a lot of states if you return the vehicle they can sell it at wholesale and you were still on the hook for the difference. Oregon is one like that. Not sure what others are.

[ThomWV]

7. After we lost our home in an earlier recession we never heard another word about it

I didn't apply for a credit card for another 10 years either, but when I did I got it.

[tavalon]

8. Someone close to me did it 5 years ago and they haven't had a single issue

but that's only one case. It's more academic than personal.

[Horse with no Name]

9. In Texas

You just walk away.
They can't garnish your wages, however, I do expect for THAT to change at some point.
When they say that Texas is going to grow exponentially in the next few years--for some reason, I think THAT is the reason why.

[Chemical Bill]

10. I talked to a lawyer...

after someone close to me walked away from her home. He said that the mortgage holders rarely get tough. The same cannot be said for credit card companies, AFAIK.

Bill

[gollygee]

11. I've known several people who have walked away from their homes

and haven't had trouble. I guess because the bank at least has the house? But I haven't known anyone who has been able to just walk away from credit card debt.

[TexasObserver]

12. Better to try to convey it to your lender

Your lender may want to foreclose, to wipe out any inferior liens to their first lien, but they may be willing to accept a deed in lieu of foreclosure. You can ask them if they would prefer that to the process of foreclosure.

In some states, foreclosure triggers a period during which the person whose home has been repossessed has a right to reclaim the property by meeting certain conditions. Your lender can avoid that if you cooperatively reconvey the title, in what is sometimes called a "friendly repossession."

Some lenders will even pay you NOT to trash the place on your way out.

Bottom line is you are better to try to communicate with your lender and find out how to best deal with this situation. Ask them "will you agree not to negatively report this for credit purposes, and not consider it a repo or a foreclosure?" They may be willing to do it, if it means they get clear title faster, with less cost.

As for credit cards, if you stop paying them, you will hear from phone collectors, and you will get mail, but it is unlikely you will get sued. Anything you agree to pay them, no matter how little, will encourage them to call you about paying more. If you're going to stop paying, and take the credit hit that comes with it, you're best to simply stop talking to any of the card companies. It's harsh, but if you're really going to walk away, focus on getting by now and accept that you cannot fix the big pile of consumer debt you racked up.

[MrScorpio]

14. The motherfucking CC companies sued me

The assholes

I sold my house and paid the fuckers off

[MrScorpio]

13. It's like apples and oranges

Credit card companies are sharks, they'll sic the lawyers on you in a heartbeat

Mortgage holders, OTOH, LOSE money on foreclosures, plus they know that there's no point in going after you.

Your credit rating gets fucked over but they won't try to hunt you down

[Greybnk48]

16. Susie Ormand said recently (no link) that credit card debt is an unsecured

loan, and that if you simply stop paying, all they can do is pester you on the phone. Those of you who are schooled in this area--is this correct?

And so what if your credit is destroyed. Who the hell is going to have good credit after this mess is resolved? There will probably be a government amnesty in the future on bad credit to allow people to buy houses and cars again.

[Hassin Bin Sober]

19. Suzie Ormand is an idiot if that is her advice.

Chase sued my roommate for $4500 dollars and then moved to garnish his wages before he had to file bankruptcy. Discover was next in line and had a court date pending.

The CC companies have tons of attorneys on retainer around the country that spend their days in courts filing these cases.

[remoulade]

20. Interesting vignette that has no chance of being true.

Amazing how many bullshit answers a question like that can generate...but then I forget everyone's an expert.\
bah
Banks (your version of 'credit card companies') virtually NEVER take debtors to court.

[Hassin Bin Sober]

21. Huh?

Are you saying I made that up? Perhaps I'm not understanding your response.

I watched it happen - I saw the documents they sent to his employer regarding the discovery of assets....in this case it was income for the wage garnishment.

Discover had a case pending but was dismissed after he filed BK.

http://www.semissourian.com/article/20090125/NEWS01/701259951

Lawyers, judges expect increase in debt lawsuits

Every Thursday morning, bailiffs in Associate Circuit Judge Peter Statler's courtroom call out the names of people being sued to collect debts. Few people appear to contest the cases, and Statler regularly issues default judgments that can follow people for decades.

Last week, Statler heard 63 cases, which he said was a light load. Because of the delays between a creditor being unable to collect and the decision to pursue a judgment, Statler said he hasn't seen a dramatic increase in filings due to rising unemployment. But he doesn't doubt it is coming.

<snip>

Of the 302 cases filed in December, Cape Girardeau's two hospitals, Southeast Missouri Hospital and Saint Francis Medical Center, filed 127. Medical collections and credit card collectors make up most of the docket on any given Thursday.

[Lex]

23. Oh but they do.

Credit card companies do take it to court and get judgments/liens against the creditor.

[Hassin Bin Sober]

26. Yep. And most people never show up so they get an easy slam-dunk judgment.

Then it goes to discovery of assets.

A kind of funny story in my friend's situation - He had his credit cards for years before he had financial trouble so the CC companies didn't have his current employment information. They were able to harass him through his cell phone but they never bothered him at work as he never updated his current employment information in their system........


......untill a friend of ours went on a "Linked in" kick and signed us all up on that professional networking website. Right after she did that he started getting calls at work and, in about two months, his employer received the subpoena for income disclosure on the judgment that was already entered.

He already had the BK papers in his hand but he was in denial so he hadn't returned them to the attorney. He had to rush them through and file the BK to avoid the garnishment that was about to happen........they were going to nick him for 15% of his gross.

[artemisia1]

25. No longer true...

That is no longer true - unless, of course, you mean Credit Card companies rarely sue but Collection Agencies for CC debt surely do. Debt scavenging is the newest cash cow business. Collection agencies buy up debt at pennies to the dollar and sue on credit card debt up until the Statute-of-Limitations expires and sometimes even past it by counting on the ignorance of the law of those being sued. If you have as little as 1000.00 in CC debt - and collection agencies add fees and interest and court costs that far exceed the original balance - you stand a better than even chance of being sued on that debt. Do some Googling on "Debt Scavengers" if you don't believe me. Walking away from Credit Card debt nowadays WILL GET YOU SUED.

[Hassin Bin Sober]

27. In my friend's case the CC companies were the plaintiffs.

Chase was REALLY aggressive - they offered him a settlement one month, accelerated the debt the next and served him thirty days later.

I think it was about 6 months from his stopping payments to judgment. Discover was a little slower but they were right there with their attorneys also.

I imagine they have attorneys camped out in county courthouses all around the country.

What does it cost to file? 50? 100? bucks? It's been a long time since I filed a lawsuit but it doesn't take much. I suppose they spend a couple hundred bucks to file and make that up with one or two wage garnishments

[backscatter712]

17. Mortgage debt is secured debt.

In other words, it's a loan with collateral - the house. You don't pay the mortgage, the bank takes the house and sells it to recover their losses.

In a normal economy, that would be the end of it (except for the utter ruin of your credit record.

In this economy, lots of people are upside-down on the house. In other words, they owe more on the mortgage than the home's worth. That means if they default, the bank takes the house, sells it, and after that's done, you still owe money. At that point, they sue you, get a judgment, and take your bank accounts and garnish your wages and put liens on anything valuable you might still own.

Which is pretty much the same thing that happens with unsecured credit card debt. There's no collateral there, so if you default, you get sued, and since you didn't pay, the court gives the bank the right to take - they seize your bank accounts, garnish your wages and put liens on your property.

There are limitations. You could declare bankruptcy, of course you're subjected to the Bushies' fucked up bankruptcy law, but if you're broke and pass the means test, you can get a Chapter 7, put all your stuff up on auction except for basic necessities (they'll let you keep a car, the clothes on your back, and so on). The proceeds from the auction pay the creditors, and whatever's left is written off. Your credit is torpedoed for ten years, but you get to start over.

Of course, if you don't pass the means test, you're forced into Chapter 13, which means that the judge only writes off part of the debt, and puts you on the hook with a payment plan for the rest.

[serrano2008]

22. Try it and let us know what happens

This will be an fun experiment for us. (not as enjoyable for you)

[stewartcolbert08]

24. I dont know.

I have considered this myself just because I am tired of trying to keep up but I am too afraid that it will take forever to build everything back up ya know. I think the bankruptsy laws are alot more strict now arent they? I think depending on the loan they can garnish you. They are garnishing a friend of mine for student loans.

[pengillian101]

28. Losing one's good name is nothing to sneeze at.

Future employers could notice in a background check.

Best wishes determining your plan of action. :hi:

[juno jones]

29. Consult a bankruptcy lawyer.

It cost me $1250 and a morning in court (WA, last year), but I got out from under a buisness lease, house and CC debt run up mostly for the buisness.

Bankruptcy's a bit harder and more expensive than it used to be, you pretty much have to be resolved to walk away from it all. But my chapter 7's given me peace of mind, even tho my credit took a hit.

Good luck with everything.