Legal Question in Bankruptcy in California
bankruptcy or doing nothing
Hello,
I owe a considerable amount of money to credit card banks and for a repossessed lease vehicle. I have been and still am unemployed and have just relocated from LA to the UK. I am working on becoming re-employed and getting re-established. My credit card debt is about 4 to 7 months delinquent. I have enjoyed a high income in the past in the high-tech industry and I am confident I will do the same in the near future. I have less than a $1000.00 in two accounts in the USA (and more in the UK). I sold the majority of my assets prior to relocating and have no assets of significant value in the USA or UK. I would prefer to pay off my unpaid bills but have not secured employment yet. My questions are thus: What ramifications am I facing by doing nothing until I have a source of income and can then offer a repayment solution? Specifically, are my USA bank accounts at risk? Is there any value of even repaying these debts at this late date or will these bills show up as due via the IRS? Any other legal or other ramifications I should be aware of by doing nothing?
Sincerely,
Gold172
2 Answers from Attorneys
Re: bankruptcy or doing nothing
If left unpaid, creditors may file suit, and if they cannot find the debtor (the person who owes money), they can get an order from the court which would allow them to serve the debtor/defendant by "publication" in a newspaper and if the defendant does not file an Answer with the court, they can get a default judgment. At such time, the creditor can take actions to seize assets such as bank accounts, etc., and have them applied toward satisfying the judgment. The IRS is a governmental taxing agency, and unless they are the ones you owe the money to, they have nothing to do with other debts (if they ARE the ones you owe the money to, then there is little you can do to get away from them, if you ever intend to relocate back to the US). Also, all unpaid debts bear interest at some rate; the legal rate of interest on a judgment, for instance, is 10%, so if a creditor gets a judgment against you, it will grow at 10% per annum. The bottom line is that if you have the money, you should pay your debts; not only because that is the responsible and ethical thing to do, but because they do not go away on their own.
Re: bankruptcy or doing nothing
Judith wasn't completely correct. She just hasn't had as many federally relocated witnesses as clients as I've had. The debts do go away on their own. It's called economic reality. Since most people that have your problems are judgment proof (no assests to collect against), and it costs as much to try to collect the money as there is debt. A creditor is facing the reality that they can spend more money collecting a debt. Than they recover after all their good work. So most creditors will in the end walk away from a debt. Failure to pay your debts has already damaged you by giving you a bad credit report. So if you decide to pay your debts. You will want to negotiate a payment on your debts if the creditor will strike the bad credit report. After a certain period of time the bad credit reports disappear. I don't recall off hand if it is seven or ten years. So as Uncle Guido once said, "You can only be as ethical as you can afford to be." However, that's my Uncle Guido, not Judith's uncle.
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