Filing bankruptcy vs just not paying CC bills?

[NeedsTylenol]

Bear with me here, I know I've made some horrible financial mistakes in the past. Here's what's going on-

I have 8 credit card accounts, and all are at the limit.

I'm on disability, as is my son. Our checks cover the rent and utilities, but not much else.

I asked a friend who declared bankruptcy about it, and he said that I would have to get rid of ALL my cards, which I don't want to do because I have a couple of autowithdrawals coming out of one of them.

A little ironic twist to this is that I can't afford a bankruptcy lawyer right now anyways.

If I stop paying, what will happen? What are the benefits of hiring a lawyer?

[JamieCatheryn]

If you stop paying they'll charge late fees, over limit fees, and eventually close and go into collections. I guess it would buy you a little time to get ready to do bankruptcy, 2-3 months anyway.

But, the autowithdrawals, are these bills you could cover, or ones you can cancel? Certainly can't go on withdrawing bills from a CC that's over the limit and you cannot pay.

[rainbowmoon]

they could try to sue you if you don't pay. if it's over 10,000 the chances are they will try. for smaller amounts likely not. your credit will just be bad for 7+ years.

if you could possibly afford to settle I'd do that. often times they will let you pay 40% or less and it will be marked as paid on your credit report.

[Sarah8Jane]

If disability is your only income, the credit card companies can sue you, but they cannot take your disability money. You can try contacting them and letting them know that you won't be paying them, but they will still charge you fees, send you to collections, etc.

You need to either find a way to live solely on your disability payment or find work that you can do. Stop using the cards ASAP and get autowithdrawal turned off. What good would bankrupcy do if you are just going to keep using ccs?

[hillymum]

I am sure these will be really stupid questions, but who on earth gave you credit cards when you basically have no income, or internet connection? Didn't they think about you not being able to pay in the future?
Aren't there other forms of help other than disability that you are entitled to?

[rainbowmoon]

I am pretty sure that is untrue about getting rid of all your cards for bankruptcy. Maybe things have changed but it didn't used to be that way, from what I understand you could pick and choose..maybe not anymore I know they changed the laws a few years back.

they won't be able to touch your disability $. that is true.

[JamieCatheryn]

Originally Posted by hillymum

I am sure these will be really stupid questions, but who on earth gave you credit cards when you basically have no income, or internet connection? Didn't they think about you not being able to pay in the future?
Aren't there other forms of help other than disability that you are entitled to?

I'll bet she qualified for them before the disability and lowered income happened. Something like this can strike and if you aren't well prepared financially, it can ruin you. That's why we should all avoid borrowing, pay off debt, and build savings if it's at all possible. Easier said than done I can tell you that!

Yes if you haven't yet, get assistance for food, maybe for housing, whatever you qualify for, so you can get back on your feet. Maybe if you negotiate a plan, and have more $$ assistance, you can get debt free without bankruptcy.

[leavemealone]

You will receive phone calls from the cards, they will then sell your acct to shady debt collection agencies from who you will receive many phone calls, and they may sue you (depending on the balance). Many bankruptcy lawyers will work on a payment plan b/c it does take some time to get things together. A lawyer would be your best bet for advice and many will give free consultations.

[NeedsTylenol]

Yeah, I got all my CCs before I became disabled, and most of the debt was accumulated in the time between not being able to work and when I started actually getting checks for it.

I'm already on food stamps and Medicaid as well. The house is a land contract, so I don't think anything will help with that.

I had been holding my own and (barely) making minimum payments on the cards, but we had some unexpected expenses come up, and now things are kind of screwy.

I wonder if there's any way I could "pause" the accounts so I wouldn't have to pay a bunch of fees? Maybe I'll call around tomorrow.

[chiromamma]

Originally Posted by rainbowmoon

I am pretty sure that is untrue about getting rid of all your cards for bankruptcy. Maybe things have changed but it didn't used to be that way, from what I understand you could pick and choose..maybe not anymore I know they changed the laws a few years back.

they won't be able to touch your disability $. that is true.

They will be closed once you file or inform them of your intent to file. Also, if you exempt one account from the bankruptcy, some banks (Wells Fargo particularly) can insist that theirs are exempt as well.
If I were the OP, I'd quit paying, create a budget that is within or below my means, hire a BK attorney and get a fresh start. CC companies can sue you and collections can follow you for years.. BK protects you from that.
FWIW, CC companies give cards to anyone. That's part of the mess our country is in right now. Colleges give CC companies tables at freshman orientation.
OP-watch Maxed Out. It may help clear some stuff up for you.

[Kontessa]

PMed you, wishing you the best in such a hard spot!

[ChristyMarie]

I know you say you cannot afford an attorney but when I filed all the ones I spoke with did an initial consultation for free. Talk to a few to find out what your options are. You can always file without an attorney - kinda a PITA because you have to do all the paperwork yourself but it can be done.

I would think filing would be better in the long run because it is a clean slate. I think I got a new cc a year after I filed? It wasn't that long.

[phatchristy]

What amount of debt are we talking about?

If you can't afford to pay your credit cards you either are going to have to stop paying or file bankruptcy. Either way, you'd likely have to stop paying anyhow before filing bankruptcy. Always pay your secured debt first...the house. And, of course necessities like food, etc.

If you stop paying, they'll likely do collections...expect lots of nasty mail, phone calls, etc. Then likely they'll file in a court case and get a judgement. However, if you're the head of the household, pretty much have no assets it's unlikely they'll be able to collect. And, after 7 years they can't collect on it (it goes 7 years from the last time you gave them any money I believe).

With bankruptcy, sure, any credit account you include in the bankruptcy will be closed. However, you can definitely get a secure credit card. Most automatically debted things can also be set up with a checking account. That would be another option.