“Dear Steve,
I have an american express debt of 7200 tried to call when i couldn’t make monthly payments to get payment lower; they wouldn’t have continued to send them $25 per month although they have debt collectors calling me. i haven’t worked since October and have a summons to go to court.
i have 26000 in stocks set aside for retirement although not a 401k which i am using and will continue to use to pay bills until i find a job – can they take this money even though i have no income right now? what should i do take a chance in court?
Jan”
Dear Jan,
If the asset is not in a retirement account they can go after it. It sounds like you might be a candidate for settling the debt.
I asked a couple of members of the AACC for some advice for you. Here is what they said.
If you are paying less than your minimum payment, your account is considered delinquent and will be placed in the collection pipeline used by your creditor in the normal course of business. Unfortunately, this includes filing a lawsuit.
The stocks you own will not be taken from you. What could happen is that you would be called into court after a judgment is entered for an asset hearing. You will be under oath and asked questions about your assets.
I would encourage you to deal with this prior to judgment for the following reasons:
The balance will grow at the interest rate allowed for judgments in your state.
Legal costs will be added to the debt.
Having access to funds you can use to get this behind you without a judgment being entered does provide you the option of settling the account.
The rate the debt can be settled at is going to be higher than it would have been if settled prior to litigation being started.
You may qualify for chapter 7 bankruptcy, but the stocks may be forced to be liquidated anyway. Also, if this is the only problem debt you have and assuming you can settle for 50%, you would be filing over $3600.00.
You will not be taking any chances in court unless you fall and injure yourself in the building, as the judge will rule in favor of your creditor in all likelihood. – Michael Bovee, Consumer Recovery Network
I think right now your most important priority is to put food on the table and a roof over your head. I appreciate your desire to want to handle your debts right now but at the moment the only concern you should have is survival and capital preservation. Not until you have a steady job should you even be too concerned about your obligations, believe me. They can wait.
The likelihood of a creditor knowing about your stocks are very slim and even if they knew they would have a hard time getting to them. If a creditor happens to send you a summons, my suggestion is to go to court, get in front of the judge and explain the fact you DO NOT have a job and are trying to survive. I would not even discuss the stocks.
The judge will probably rule in favor of the creditor and that is perfectly ok. Keep in mind that you do owe the money. The important factor is that a creditor cannot get any money from you that you do not have. The stock is something that will be very difficult for them to have any access to, their only chance would be if you liquidated some and put the money in your bank while they served a levy on your bank account. Their timing would have to be impeccable to make that happen.
The truth is you do have intentions of paying it back the reality Is that you cannot. DO NOT let anyone bully you around. You have rights and you need to protect your rights. Let them know that as soon as you have steady work you will contact them and make arrangements. I might even suggest that you ask them to communicate with you only in writing, so you can get your life back on track.
Remember, there is no shame in being in debt, only shame in not doing something about it.
When you get back on your feet, you will do something to address that but for now. Survive. – Alex Viecco, New Era Debt Solutions
My advice is that it if this is the only debt that you are struggling with then using some of the cash on had to settle it might be a good investment as Michael suggested. You would probably be able to eliminate your problem debt for around $3,600. This would give you some peace of mind and reduce your stress so you can focus on getting some income and a job.
However, if this is not your only debt the the advice Alex gave is good.
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