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I Was Out of Work Due to Cancer. I’m Working With a Debt Renegotiation Company and Getting Sued – Praying

By on April 16, 2011
I Was Out of Work Due to Cancer. I’m Working With a Debt Renegotiation Company and Getting Sued – Praying

“Dear Steve,

I was out of work for about a year due to cancer and treatments. I used up all of my credit and could not get caught up on payments when I returned to work. I tried to work with my creditors to give me smaller payments, but a couple of them would not budge. Now, I am in a debt restructering company who I have been paying for a year and in litigation with several of my creditors. I owe approximately 58,000 in unsecured debt. I do not want to file bankruptcy because I do not want to lose my home or my vehicle. And I also would like to pay my own debt.

Even though I am working with a debt restructuring company, I am in litigation with several creditors. I do not feel like this company I have hired is doing what I am paying them to do…..to settle my debt. I have gone to court to represent myself two times already and I am scared that my wages are going to be garnished. How do I keep this from happening?

Praying”

Dear Praying,

The bottom line is that unless you pursue some legal intervention for your situation this will only continue. The undisputed fact at this time is that for whatever reason you were not able to repay the debt in accordance with the contractual terms you signed when you took on the credit.

Hey, cancer and life happen. I understand. There are ways to deal with the financial mess. But one thing can nearly be guaranteed, if you stop paying your creditors and give the money to someone else over a period of time, your chances of getting sued increase dramatically.

At this point the two logical approaches are to either negotiate with the creditors directly to end the suits and accept payment or avail yourself of your legal rights under the law and engage in a repayment plan the creditors must follow and are prevented from suing you under.

That legal second chance fresh start program is called bankruptcy. It would be incorrect to assume that bankruptcy means you would lose your home and car. If someone told you that, it was incorrect information. Sadly, I’ve seen many sites selling debt help that have all sorts of scare information on them about bankruptcy so they can sell their product.

READ  I Had Cancer and My Husband Was Unemployed. We Are Struggling With Payday Loans. - Kim

What I would do at this point is beg you to find a local bankruptcy attorney and go talk to them as quickly as possible. Don’t make assumptions about bankruptcy, get the facts on what it offers you in your specific situation.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

I simply can’t imagine that your health situation is aided by the stress these lawsuits and fear of asset attachment or wage garnishment have put you under. Bankruptcy would have prevented all of that and given you protection against your creditors for a much lower cost than what you probably paid the company you are working for.

Once you file bankruptcy, it stops the current litigation. And don’t worry about your credit. It’s already shot, the legal cases against you don’t help it but the good news is rebuilding credit after bankruptcy is a relatively quick and easy affair.

Think about it like this, your cancer required intervention with chemotherapy or radiation. Your financial cancer needs treatment also. Think of bankruptcy as the chemo for the financial cancer.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

20 Comments

  1. Praying

    June 3, 2011 at 2:35 pm

    Thank you for all the information. I did go to another attorney. I do not qualify for a Chapter 7. I have to go the Chapter 13 route. At this point, this is my only option.

  2. Steve Rhode

    May 17, 2011 at 2:43 pm

    I would get a second opinion with another bankruptcy attorney and get a specific idea of the exposure for the home and if you qualify for a Chapter 7 based on income. These are not issues to assume or guess about.

  3. praying

    May 17, 2011 at 2:34 pm

    The attorney’s office that I spoke with during the consult told me that’s the way it works…..that they garnish your income with a chapter 13….or they just take it out of your, which to me is the same thing as a garnishment.

    I would rather not do the chapter 7 because I believe that my income is above the amount limited for that. And also, I am not taking any chances on losing my house at this point, if I can help it.

  4. Steve Rhode

    May 13, 2011 at 12:32 pm

    A Chapter 13 does not “garnish” your income. The amount of the payment is developed on a number of factors, including some that are local. You will need to talk to your bankruptcy attorney for specifics.

    Is there a reason you would not just look at a Chapter 7 bankruptcy and discharge your debt in a few months?

  5. praying

    May 13, 2011 at 10:19 am

    Would rather not say what debt settlement company I am using at this time, but definitely will do that in time.
    At this point, the debt settlement company I am using is “supposed” to be attorney based. I am supposed to be represented by an attorney should any of my debt go to court. Well, I  have represented myself on two occasions so far. And guess what? My wages have become garnished without me even knowing about it. I am not a happy camper at this point. I am out of so much money because of the money I pay to the debt restructuring company plus the garnishment, I cannot even pay my house note or my bills I still have to live. I am sick.

    I have requested to get out of the contract with this company and get a refund of my money. I have a feeling this is not going to happen.

    So, with a chapter 13, approximately what percent of the income from ones wages is garnished? And is it always for five years?

      Thank you.

  6. Steve Rhode

    April 24, 2011 at 11:25 am

    Did you discuss the trustee payment options with the bankruptcy attorney?

    Your original question indicated you were afraid of a wage garnishment and appeared to not want to deal with being sued.

    With a large amount of equity you could sell your house and settle your debt and probably avoid bankruptcy. You may have to rent until you rebuild your credit and would then be eligible to consider purchasing again in a few years.

    The risk with allowing yourself to be sued and getting a judgment is that it could result in a lien against the home. The lien would continue to accrue interest at the rate legally available in your state. The lien would have to be satisfied when you later sold your house.

    I think it’s time to refocus this and identify the primary goal you want to achieve. Is it peace of mind, to make the suits stop, to be able to move forward; what?

  7. Sduran165

    April 23, 2011 at 8:32 pm

    What debt settlement company are you using? Usually, you are supposed to forward any threatening letters to the attorney working on your settlements. Sometimes, they can intervene with the creditor and start paying them some money each month just to keep you out of court. Or they can take that particular debt out of the program which would make your monthly payment go down. With the extra savings, you can start paying that creditor to keep them off your back. The attorneys can’t help you unless you let them know what’s going on…Maybe the company you are using is non-attorney based?? Also, why did you go to court? It didn’t help you any, did it? What happened at court? Did the creditors get a judgement against you? A judgement is nothing to freak out over. It basically means that the debt was recognized by the Judge what you do owe the debt. Also, judgment can also be settled. A judgement will have an impact on your credit, but at this point that’s the last of your worries, UNLESS you are looking to go out and get qualified for more debt…As far as the garnishments, every state is different, but the rule of thumb is that the MOST a creditor can garnish your wages is 25% of your weekly “disposable” income. This is your income after taxes are taken out. So, if you gross $1,000 per week and are in the 25% tax bracket, then your disposable income $750. Twenty-five percent of $750 is $187.50 per week IF the judge grants it which in most cases they don’t. Also, for the most part, only one creditor can garnish your wages at a time. Don’t let the BK attorney scare you by telling you everybody is going to garnish your wages. From my experience, the Chapter 13 BK payment is usually about the same as the debt settlement program payment, and it will be on your credit report for at least 7 years! If you can’t qualify for a Ch. 7, then you might want to rethink the BK. Usually the only time when a Ch. 13 BK makes sense is when you are trying to “lien strip” the 2nd mortgage, and for that to happen, the balance on your 1st mortgage would have to be more then the value of your home.

  8. Sduran165

    April 24, 2011 at 12:32 am

    What debt settlement company are you using? Usually, you are supposed to forward any threatening letters to the attorney working on your settlements. Sometimes, they can intervene with the creditor and start paying them some money each month just to keep you out of court. Or they can take that particular debt out of the program which would make your monthly payment go down. With the extra savings, you can start paying that creditor to keep them off your back. The attorneys can’t help you unless you let them know what’s going on…Maybe the company you are using is non-attorney based?? Also, why did you go to court? It didn’t help you any, did it? What happened at court? Did the creditors get a judgement against you? A judgement is nothing to freak out over. It basically means that the debt was recognized by the Judge what you do owe the debt. Also, judgment can also be settled. A judgement will have an impact on your credit, but at this point that’s the last of your worries, UNLESS you are looking to go out and get qualified for more debt…As far as the garnishments, every state is different, but the rule of thumb is that the MOST a creditor can garnish your wages is 25% of your weekly “disposable” income. This is your income after taxes are taken out. So, if you gross $1,000 per week and are in the 25% tax bracket, then your disposable income $750. Twenty-five percent of $750 is $187.50 per week IF the judge grants it which in most cases they don’t. Also, for the most part, only one creditor can garnish your wages at a time. Don’t let the BK attorney scare you by telling you everybody is going to garnish your wages. From my experience, the Chapter 13 BK payment is usually about the same as the debt settlement program payment, and it will be on your credit report for at least 7 years! If you can’t qualify for a Ch. 7, then you might want to rethink the BK. Usually the only time when a Ch. 13 BK makes sense is when you are trying to “lien strip” the 2nd mortgage, and for that to happen, the balance on your 1st mortgage would have to be more then the value of your home.

    • praying

      May 13, 2011 at 2:19 pm

      Would rather not say what debt settlement company I am using at this time, but definitely will do that in time.
      At this point, the debt settlement company I am using is “supposed” to be attorney based. I am supposed to be represented by an attorney should any of my debt go to court. Well, I  have represented myself on two occasions so far. And guess what? My wages have become garnished without me even knowing about it. I am not a happy camper at this point. I am out of so much money because of the money I pay to the debt restructuring company plus the garnishment, I cannot even pay my house note or my bills I still have to live. I am sick.

      I have requested to get out of the contract with this company and get a refund of my money. I have a feeling this is not going to happen.

      So, with a chapter 13, approximately what percent of the income from ones wages is garnished? And is it always for five years?

        Thank you.

      • Steve Rhode

        May 13, 2011 at 4:32 pm

        A Chapter 13 does not “garnish” your income. The amount of the payment is developed on a number of factors, including some that are local. You will need to talk to your bankruptcy attorney for specifics.

        Is there a reason you would not just look at a Chapter 7 bankruptcy and discharge your debt in a few months?

        • praying

          May 17, 2011 at 6:34 pm

          The attorney’s office that I spoke with during the consult told me that’s the way it works…..that they garnish your income with a chapter 13….or they just take it out of your, which to me is the same thing as a garnishment.

          I would rather not do the chapter 7 because I believe that my income is above the amount limited for that. And also, I am not taking any chances on losing my house at this point, if I can help it. 

          • Steve Rhode

            May 17, 2011 at 6:43 pm

            I would get a second opinion with another bankruptcy attorney and get a specific idea of the exposure for the home and if you qualify for a Chapter 7 based on income. These are not issues to assume or guess about.

          • Praying

            June 3, 2011 at 6:35 pm

            Thank you for all the information. I did go to another attorney. I do not qualify for a Chapter 7. I have to go the Chapter 13 route. At this point, this is my only option.

  9. praying

    April 23, 2011 at 5:08 pm

    So, I consulted an attorney and I probably do have to go the chapter 13 route because of my income and also to avoid losing my home. I would sell it and pay off a large portion of my debt with the equity, but at this point I have horrible credit and would not be able to purchase another home.

    I have also found out that with the chapter 13, they basically garnish your wages as they just pull out whatever they feel necessary from your income to pay all of your debts, including your mortgage. This would be for five years. My income would be totally controlled by this for five years. I am stuck between a rock and a hard shell. Either way I go, there seems to be no light at the end this tunnel. What do you suggest?

  10. Steve Rhode

    April 17, 2011 at 9:07 am

    Talk to the attorney you find about a Chapter 13 bankruptcy which would allow you to keep your home, if you have too much equity for a Chapter 7. While you’d be in a payment plan with the Chapter 13, it would stop all lawsuits by your creditors.

    Report back on what you learn, please. I need you in financial remission, ASAP.

  11. praying

    April 17, 2011 at 1:18 am

    So, it looks like if I find a reputable attorney to represent me to file the bankruptcy, it would be a better alternative than to wait another four years with my credit continuing downhill and the lawsuits multiplying as well. I would have a fresh start sooner if bankruptcy is the path I choose and I could be getting my credit in order alot sooner also.

    I was told by an attorney that I could lose my home at the beginning of all this mess is why I did not go the bankruptcy route….plus of course I wanted to be able to pay the debt I incurred. I will work on finding an attorney for a second opinion to hopefully end the cancer of my debt and become renewed.
    Thank you so much for your advice!! :)

  12. praying

    April 17, 2011 at 5:18 am

    So, it looks like if I find a reputable attorney to represent me to file the bankruptcy, it would be a better alternative than to wait another four years with my credit continuing downhill and the lawsuits multiplying as well. I would have a fresh start sooner if bankruptcy is the path I choose and I could be getting my credit in order alot sooner also.

    I was told by an attorney that I could lose my home at the beginning of all this mess is why I did not go the bankruptcy route….plus of course I wanted to be able to pay the debt I incurred. I will work on finding an attorney for a second opinion to hopefully end the cancer of my debt and become renewed.
    Thank you so much for your advice!! :)

    • Steve Rhode

      April 17, 2011 at 1:07 pm

      Talk to the attorney you find about a Chapter 13 bankruptcy which would allow you to keep your home, if you have too much equity for a Chapter 7. While you’d be in a payment plan with the Chapter 13, it would stop all lawsuits by your creditors.

      Report back on what you learn, please. I need you in financial remission, ASAP.

      • praying

        April 23, 2011 at 9:08 pm

        So, I consulted an attorney and I probably do have to go the chapter 13 route because of my income and also to avoid losing my home. I would sell it and pay off a large portion of my debt with the equity, but at this point I have horrible credit and would not be able to purchase another home.

        I have also found out that with the chapter 13, they basically garnish your wages as they just pull out whatever they feel necessary from your income to pay all of your debts, including your mortgage. This would be for five years. My income would be totally controlled by this for five years. I am stuck between a rock and a hard shell. Either way I go, there seems to be no light at the end this tunnel. What do you suggest?

        • Steve Rhode

          April 24, 2011 at 3:25 pm

          Did you discuss the trustee payment options with the bankruptcy attorney?

          Your original question indicated you were afraid of a wage garnishment and appeared to not want to deal with being sued.

          With a large amount of equity you could sell your house and settle your debt and probably avoid bankruptcy. You may have to rent until you rebuild your credit and would then be eligible to consider purchasing again in a few years.

          The risk with allowing yourself to be sued and getting a judgment is that it could result in a lien against the home. The lien would continue to accrue interest at the rate legally available in your state. The lien would have to be satisfied when you later sold your house.

          I think it’s time to refocus this and identify the primary goal you want to achieve. Is it peace of mind, to make the suits stop, to be able to move forward; what?

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