I went thru a divorce a few years ago and was stuck with all the credit card bills since they were in my name. I quit paying on one because I lost my job and was trying to raise two kids on my own. Three years later I am being sued for $26,000 plus interest and fees. I have three weeks to answer the summons. I thought about filing chapter 7, but my mother put my name on her joint checking and savings and put land in my name in case something happened to her. I live in an apartment and have been unemployed for a few months. She's worried they may freeze her assests since I'm on there. Can they do this? What is my best option? Should I try and settle. I heard this company AA is a horror to work with. I can't see a lawyer until next week and I'm sick to my stomach thinking about it.
You should go see a lawyer in Columbus. Without going into exemptions, transfers and whatnot, you may have a third option of challenging the alleged indebtedness and it might go away.
Yes, your mother's assets that include you may be at risk and yes, settlement is an option. There may be other options as well. A few things to be aware of:
1. You have time - this is not something the creditor will be able to do overnight so your mother's assets are not at risk today and probably not for the next month.
2. Use the time to prepare - see an attorney in your area to discuss options and the best way to respond.
3. This can work out for you - being sued never feels good. But the truth is it happens all the time in today's world becasue of the challenges we're all facing as a result of the economic mess we've experienced. You're not alone, and you can get things worked out. You're planning on seeing an attorney next week so you'll know much better then but it can work out for you.
Hang in there.
Your mother's assets are definitely in jeopardy here whether you file a bankruptcy or the creditor gets a judgment against you. You sould definitely see an attroney ASAP to get help with this issue. You can negotiate with the creditor but they are going to want you to come up with a lump sum payment.
I agree generally with my colleagues but want to expand a bit.
Chapter 7 bankruptcy would be great IF you could file it. However, they are now means-testing people - if you make too much money you can no longer file the chapter 7. The means-test amount is complicated and state-specific so it is best to review this with your bankruptcy attorney. The other issue that gives pause about bankruptcy is the fact that your mother put her land in your name. All assets have to be declared in bankruptcy which means you have to include your interest in your mother's land. You might think that you can fix this problem by taking her name off. That is fine, but bankruptcy has a rule that transfers (and that is what you are doing by taking your name off the land) made to insiders (like family members) will be scrutinized and the transfer can be undone if made within one year of bankruptcy. Also, you run the risk of possible fraud and dismissal of your bankruptcy. GA only allows you to exempt for bankruptcy purposes $21,500 in equity in property used as a primary residence. If you don't live in the mother's property it would not qualify.
You can avoid this by filing a chapter 13 which is where payments are made to creditors over a 3-5 year period. While it is good in the sense that you get rid of your debts, I don't know what all you own. All creditors of the same class have to be treated alike in bankruptcy and this would include the creditor suing and any others. If you had a to do a payment plan, you and your bankruptcy attorney would come up with that. Many of my clients often find plans that they can't live with. And if you miss a payment, the bankruptcy can be dismissed and you are right back where you started.
Whatever you do, get your name off your mother's checking account NOW! First thing on Monday. While you do have time, you cannot have a joint bank account with anyone if you have been sued or are facing a judgment. If you must use a bank, I suggest looking into a small credit union instead or very small community bank located 25-50 miles from your home. Or you can opt for an online bank account at an online bank (like ING Direct, ally or ready-debit financial (it functions like a bank but they give you a debit card). If you are a member of the military, try one of the military credit unions (Pentagon or Navy Federal) or USAA bank.
If bankruptcy is not right for you for any reason, settlement is definitely an option if you have the funds to enter into a lump sum settlement. You indicate the creditor suing is AA - does this mean Asset Acceptance? Who is the attorney representing them? Frederick Hanna? Zwicker? Zakheim & LaVrar? Pollack & Rosen? Someone else?
Asset Acceptance is not too awful as junk debt buyers go. They are not important as that is not who negotiations are with. It is the law firm and some of them are more difficult than others. Still, most credit card debts can be settled for between 50% and 80% of whatever balance they are seeking if you have the funds to do a lump sum settlement. If you want to do payments of $150 - $200 a month, then there is no settlement. The payments are made on the full balance owed and the creditor law firm will ask you to sign a consent judgment.
Since Georgia is a wage garnishment state (up to 25% maximum of your disposable pay can be taken), you need to see what the creditor could get in garnishment if anything (there are rules - if your pay is being garnished for child support, then the amount in garnishment may be limited; also, if you are self-employed, then your pay cannot usually be garnished at all). If the garnished amount is large, then it makes sense to set up a payment plan and get an agreement where there will be no levy on bank accounts or garnishment for so long as you pay. I have worked out similar arrangements for my clients so law firms are amenable to this.
You need to see a lawyer ASAP.
The land likely is possible a problem, and don't get cute and try to change it now - you could make things worse. A lawyer will need additional information as to the land.
As to a joint bank account, that needs to stop now. Bear in mind that how you stop that also could impact things so discuss that with your lawyer too.
Chapter 7 and 13 may be options (a 13 probably not because of unemployment). Settling is always a possibility but you may lack the resources to do it.
No one can evaluate options without all the information, so see a lawyer next week.
Settlement is an option, but with no income and the amount of the debt, I doubt they would accept less than $200/mo., which you may not be able to afford. With no income, chapter 7 is usually the option; however, the principal behind chapter 7 is that you have no assets that you can sell to pay off some of the debt. With the property in your name, should you file a chapter 7, the trustee could possibly sell it to pay off some of your debt. Much depends on whether it is paid off, what it is worth, and whether your name is the only name on the property. You may be fine, but you need to sit down with a bankruptcy attorney to see what the risk is, if any. One note, do not transfer the property back to your mother before you see an attorney, as this will not help you were you to file chapter 7.
In terms of freezing your mother's assets, were the credit card company receive a judgement, they can go after any property in your name, including the land and bank accounts with your name on them. The bank accounts would not be an issue in a bankruptcy so long as you can prove that the money in there came from your mother, but are up for grabs if you don't file or fight the suit. Many of us will answer lawsuits to hold off a judgement when we are retained to handle a bankruptcy case, and an answer needs to be filed within 30 days of service to avoid problems with your mother's account.
Finally, you say that you were stuck with this debt after a divorce. If the debt was joint with your ex, you could avoid the debt to the credit card company in a bankruptcy, only to be liable to your ex if the divorce agreement said you were supposed to indemnify him from it, which can be a big problem.
Go see an attorney asap for a free consultation to give him or her all of the specifics and see what your options truly are. Make sure to have a copy of your divorce decree and some documentation of the value of and/or debt amount on the house when you see them. There is a way out of this, you just need to find the way that works for you and your circumstances.
I am very familiar with asset acceptance. My parter and I are class counsel in a pending FDCPA case in federal court. I have also defended many cases like yours in state court, most of them brought by Fred Hanna. There are many potential defenses to these debt purchaser suits that may allow you to avoid bankruptcy. Feel free to give me a call for a free consultation.
