Quick Answer: Roy faces $51,000 in credit card debt with a $17,000 Citi lawsuit threatening wage garnishment that could jeopardize his mortgage payments. While credit card companies cannot directly foreclose on homes, garnished wages or frozen bank accounts could prevent mortgage payments, making bankruptcy consultation essential to protect the family home.
“Dear Steve,
I have recently taken over management of finances and bill paying from my wife. I always knew we had some lingering credit card debt that had been following us since college, but I had no idea what the real situation was.
At this point we are $51,000 in credit card debt. We have a mortgage, a HELOC, and a car payment, and have been keeping up with the payments on those. We also owe $9900 to Discover Card. We negotiated with them and they are no longer charging interest as long as we continue to pay it off at $450 a month.
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I received a letter from the county court today notifying me that I am being sued by CITI bank for one of the cards that has a balance of $17k. My credit score is already totally shot, so I am not really worried about that at this point, but I am worried that this is going to explode in my face and I’ll end up losing everything.
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I have 2 kids, and losing the house would devestate them. I am worried that I could end up getting forclosed because the credit card companies will get access to take money out of my bank account or paycheck, and then I won’t be able to pay the mortgage. The collections people call constantly, but want all the monry now, and don’t want to talk about payment plans.
What can I possibly do to get out of this disaster?
Roy”
I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.
Dear Roy,
I don’t think there is a lot of question here. You and your wife need to make an appointment with a bankruptcy attorney immediately and at least explore options. You might preface this action by contacting a Debt Management company and seeing if a Debt Management Program (DMP) is workable but it is possible it may be too late for that option. But trying is clearly worth an attempt
But I am more inclined to think Chapter 13 may be the wisest choice although that is a call for you and your bankruptcy attorney to make. In many ways a Chapter 13 is sort of a court order debt management program where a repayment plan is worked out. You usually maintain your home and car and agree to pay every one back. It is possible some of the debts are forgiven but the point is, it is all court ordered and you are offered a fresh start and some clean breathing air.
You might want to take a look at Steve Rhode’s article, Is Bankruptcy Right For Me?
Sincerely,
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