I’ve Been Unemployed And Behind on My Discover Card. They Are Suing Me. – Liz


“Dear Steve,

I have been unemployed due to downsizing since June 2008. I fell behind on my Discover card payments, and now they are suing me for $10,000 plus court costs and interest. I can’t make ends meet on my unemployment check, and even that is due to run out in May.

I am receiving food stamps and will soon have a medical card from public assistance. I own my car, and have a mortgage that is up to date (mostly by borrowing cash from friends), although I doubt I can make the next payment at this point.

I have cashed in my life insurance policy already, and spent my tax refund on the mortgage. I have contacted a free legal service, but was advised to simply “wait it out” because I have no way of fighting it, or means of paying it.

I am terrified as to what they might try to take from me or if they can garnish my unemployment check. I live alone and desperately need a car if I am able to find work.

I guess my question is what can they do to me? If they garnish my unemployment or take my car, I will probably become homeless. If they wait til I’m working and garnish my pay, it will have the same result. Was the free attorney right? Is it best to just sit back and let them make a default judgement? I am in Pennsylvania, if that makes any difference.


Dear Liz,

A default judgment huh? I hate to see that happen. If you don’t defend yourself you will lose but I’m not sure you have much of a defense. I’d listen to the lawyer that gave you that advice.

We have two separate situations here. One is the Discover Card debt. It is unfortunate but it is what it is.

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The second is the employment issue. I’m sure you are trying to find new employment. That is going to critical to your future.

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You might be eligible for free LegalAid. If that is the case I think you need to ask them if they provide any kind of help or assistance with going bankrupt. Without a job, there is no expectation that you are going to be able to take care of this debt.

While your unemployment benefits may be protected from garnishment, any new job you get would not be. If you can’t afford bankruptcy right now, wait until you get a new job and then go bankrupt.

Many people worry if creditors are going to take their television or bed. Creditors don’t want your used stuff. If your car has some real value then that might get their attention but the bankruptcy lawyer can address this issue.

Most bankruptcy lawyers do offer a free bankruptcy consultation if LegalAid says they can’t help.

I know this is stressful and makes you nervous, but if you follow my advice, the situation will be resolved. Now, let’s focus on finding a new income.

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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.
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