“Dear Steve,
I live in Florida, am a 50 year old female, make only about $800/mo ($250 VA disability payment, $550 from a part time job), own a 2005 Toyota Matrix in fair condition and own nothing else of value. I am an air force veteran and being treated through the VA. The last time I held a full time job was three years ago.
My home is now in foreclosure (FC) after not making payments for almost 3 years. Recently I was blessed to find an attorney to work with me pro bono through my local Legal Aid to try and buy myself more time before having to move or to try and get a loan modification (if I’m able to find full time work before the FC is finalized). The atty said it could take up to two or more years before I will have to move if foreclosed on.
A couple months ago I was served a summons for a credit card debt of about $13,000, (I stopped making payments on the card at about the same time as the mortgage). I answered the summons the best that I could and took a copy of my answer to the courthouse to file and sent a copy to the attorney by certified mail, which he received. Since then I haven’t heard anything back from that attorney.
I believe the best decision is to file bankruptcy, Ch 7, because full time work prospects do not look good yet. Within the last week I was notified by Legal Aid that there is a bankruptcy attorney who might possibly take my case pro bono but nothing is confirmed. I have three credit cards totaling about $40,000 and my mortgage of about $120,000.
I know if the credit card case goes to court, they can probably get a judgment against me and take my car and probably part of the $550 I earn per month from the part time job. I don’t think they can garnish my VA disability payment, can they? I also know if I file the bankruptcy then there would be no point of them coming after me because the debt will be included in it. But if I file bankruptcy now to stop the credit card attorney from getting a judgment – – then I will reduce the amount of time I have for the foreclosure or modification process to work because the foreclosure will be included in the bankruptcy, which means I may have to move within six months.
Lastly, one of the 3 credit cards listed on my credit report was opened by my father more than 40 years ago, of which I became an authorized user for 10 years ago. Six years ago my father passed away. The company never closed the card, I didn’t use it for a long time but in the last year have been using it for emergencies like tires on the car, auto repairs, etc. The balance is $2000, I’ve been making payments on-time and would like to keep it open after the bankruptcy to help re-establish my credit.
Here are my questions:
(1) If I notify the credit card attorney by registered mail that I am filing bankruptcy will this automatically make them give up their proceeding legally on me, which will allow me to file the bankruptcy much further down the road?
(2) Or will I have to file the bankruptcy within a certain amount of time to prove to the cc attorney that this is definitely my course of action?
(3) Will I have to provide the cc attorney the name of the bankruptcy attorney who is working with me, if I do get one or notify him I will be filing it myself?
(4) And if the CC atty gives up pushing forward with my case, will he or his office notify me that they have dropped the case?
(5) if they were to get a judgment for the credit card, can they touch my VA disability checks?
(6) Since the one credit card was opened by father many years ago, and since my credit report states a discrepancy that the credit line for this card is older than my established credit history, do you think I can file Ch 7 and leave the info for this credit card off the bankruptcy thereby keeping the card open to help build my credit score back up?
(7) Or can including this card in my bankruptcy actually get me in hot water since the card was never closed when my father passed away?
Thank you so much for all your help and your terrific website Steve! The help and comfort you give to so many in such stressful financial situations is truly immeasurable!!! Thank you again.
Elaine”
Dear Elaine,
I can certainly appreciate this is a stressful time for you. Let’s see if I can help. My answers to you questions are below.
(1) If I notify the credit card attorney by registered mail that I am filing bankruptcy will this automatically make them give up their proceeding legally on me, which will allow me to file the bankruptcy much further down the road?
No point in notifying them. The only point that matters is when you actually file and what the case number is. Telling them you plan to will not stop anything.
(2) Or will I have to file the bankruptcy within a certain amount of time to prove to the cc attorney that this is definitely my course of action?
See above.
(3) Will I have to provide the cc attorney the name of the bankruptcy attorney who is working with me, if I do get one or notify him I will be filing it myself?
Do not file it yourself. Give them the name of the attorney when you file.
(4) And if the CC atty gives up pushing forward with my case, will he or his office notify me that they have dropped the case?
I doubt they will stop anything till you actually file.
(5) if they were to get a judgment for the credit card, can they touch my VA disability checks?
No.
(6) Since the one credit card was opened by father many years ago, and since my credit report states a discrepancy that the credit line for this card is older than my established credit history, do you think I can file Ch 7 and leave the info for this credit card off the bankruptcy thereby keeping the card open to help build my credit score back up?
No. But it’s actually very easy to rebuild credit. See this post.
(7) Or can including this card in my bankruptcy actually get me in hot water since the card was never closed when my father passed away?
I’m sure they will say you took over the responsibility of the card when they were failed to be notified of his death and you continued to use it.
It sounds like you are headed in the right direction. But I’d get going with the bankruptcy sooner than later and stop the lawsuit before it even gets to a judgment.
Please post your responses and follow-up messages to me on this in the comments section below.
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Steve, thank you so much for answering my questions. I cannot thank you enough for your time and knowledge. There was such an important question that I see now I didn’t ask, and it was one of the most important variables here. Can you possibly still offer a quick answer? Because the foreclosure is included in the bankruptcy, how can I file the bankruptcy ‘without’ speeding up the foreclosure process so that I may still have time to work on employment and a loan modification? My biggest concern is that the bankruptcy filed now will put me out of home much faster than waiting for the foreclosure process to work thereby giving me time to try and reestablish myself. Thank you again Steve!
In a perfect world you’d let the house go back first and include any deficient from the mortgage in the bankruptcy. BUT! Every situation is different and the best course of action would be for you to connect with the bankruptcy attorney for 15 minutes and get a plan of action on how to deal with your specific situation.
Please keep me posted.