Legal Question in Credit and Debt Law in Pennsylvania

First, are you deaing with collection agencies or actual credit card companies. It makes a big differnce on the way to approach these people.

1) your chances of working out a payment plan with collection agencies are somewhat easier than actual credit card companies. In many instances, collection agencies buy the debts, in bulkk, from credit card companies for pennies on the dollar. As a result, collection agencies are more willing to recover anything they can, and most are willing to enter into payment plans. Credit card companies, on the other hand, while they ight enter into an agreement installment plan, are not set up to do so, and will continue to charge you interest on the outstanding debt. You have nothing to lose by contacting these creditors and seeing if they will enter a payment plan that you can afford. The worst they can say id "no".

2) Once again, if you are dealing with a collection agency, they would much rather take a reduced lump sum payment, then a payment plan. I don't know if they'll go as low as 25%, but they might. Credit card companies are less likely to negotiate a reduced lump sum payment, and they will send yuo a 1099 for any amount of the debt that is forgiven. Citibank is known for this practice. Once again, it can't hurt to call and ask.

3) If you were sued, the worst that can happen is that you will end up with a judgment against you. Depending upon the amount of the debt, it may pay you to hire a lawyer. At the least, a lawyer is in a better situation to drag things out and negotiate for you. It really depends on whether you are sued in District Justice Court or Common Pleas court. If Common Pleas Court, you should definitely hire a lawyer. After a judgment is obtained, the creditor can execute on your personal property. Since you are married and live in PA, only your belongings that are solely owned by you can be executed against, as most property that you and your husband own will be treated as Jointly Held marital property. For example, if your bank accounts are in the name of you and your husband, and the judgment is against you only, the creditor cannot touch this property. If they try, you can file objections to the execution and levy with your local District Justice who issued the judgment. You would simply have to prove that you are married (bring your marriage license) and any lease or deed that shows that you own your property jointly with your husband. PA is somewhat unique in this practice, but unless the judgment is against both you and your husband, your personal creditors can rarely tough your property. Finally, under PA law, your ways cannot be garnished to satisfy a judgment, unless it is for child support or taxes.

4). Bankruptcy should always be a last resort and should only be undertaken if you stand to lose everything. If your assets are jointly owned, your husband could be added to the bankruptcy, even if the debts are only against you. The bankruptcy will be on record for 10 years, and will hurt your credit rating (although many credit card comapnies freely give credit to those who have been through bankruptcy, because they know that you can only declare bankruptcy once every 10 years.).

5) See my answer to No. 3 above. If you are married now, and the debt is in your name only, your husband cannot be sued by your creditors. I assume you are living together, share the same furniture, TV's, cars, etc. If you own any property in your own name, such as a car, you should have the title changed to reflect that both you and your husband are listed as owners of the car. As stated above, in PA a judgment against only one spouse cannot be executed against your husband's property, or jointly owned marital property. So your husband is in good shape so long as he is not listed on these credit cards.

Finally, there are some things you should know. If you receive a letter from a collection agency, respond to it and it says : "Failure to respond to this letter within 30 days, will result in your being unable to contest the validity of the debt" or words to that effect. In those occasions you should write to the company and request validation of the debt, which means that the collecton agency will have to come up wth the appropriate documments proving 1. their entitlement to sue, and 2. the detailed documentation of the debts, which probably are some in computer in South Dakota, and not easily retrievable.

For a very detailed discussion of your sitution, you should Google the law firm of Morrow and Artim in Pittsburgh. Their website is extremely informative.

Good Luck.

My question is if you enrolled in a "more reputable" program, why are you posting here? Why is your "more reputable" company not assisting you? They should at the very least have answered all of the questions that you raised.

Why do you want to do a payment plan? I don't like them in general but try not to enter into them at all for my Pennsylvania clients. Most of my clients are "judgment proof" meaning that their assets cannot be levied upon. There is no wage garnishment in PA for most debts. So, unless you have a lot of assets owned free and clear, I would not recommend a payment plan of any kind. It would be better to save your money and try to settle later.

Your chances of settling for 25% will depend on a whole lot of factors. It depends on the creditor and the law firm. It depends on whether suit has been filed and, if so, whether judgment is entered. It depends on the time of the month. It depends on how long the debt has been outstanding. It depends on how you got behind and what assets/income you have.

If you are sued, at a minimum, the judgment will earn interest at a rate of 6% so it will get bigger over time. Whether the creditors will try and collect depends on the creditor and the law firm. Some creditors are more aggressive than others. Some creditors get a judgment and that is it. Some will try and serve you with post-judgment discovery. Some will even try to sell your possessions.

Things most at risk are bank accounts where you have more than $300 in the bank. There is no exemption in PA for cars and land. If you own assets free and clear and they are easy things to sell (like a valuable car), then it will be at risk. If you have a 1992 clunker with 300,000 miles on it, unlikely. Same for land - if is encumbered and has little equity or is jointly held with a spouse and this is your debt only, the land is probably safe. There is no wage garnishment as I indicated for most debts.

Bankruptcy truly is an option of last resort. It can stay on your credit report for 7 to 10 years from the date of discharge (when you get an order from the bankruptcy court granting your bankruptcy). Not all debts can be discharged in bankruptcy. Get a consult with a bankruptcy attorney in your area. Many attorneys give free consults. Getting one does not mean that you must file. If you go to my website www.rachelhunterlaw.com, I have a few links to some helpful sites that will explain how bankruptcy works. It involves too much to tell you here.

If the debts were prior to your marriage, your husband is not liable for your debts. Only you need to file bankruptcy if that is what you wanted to do and your bankruptcy generally would not affect him. However, to the extent that you own something jointly, it may indirectly affect him if you file bankruptcy (this mostly concerns the reporting of things on his credit report).

You indicate that the debts predated your marriage. However, I don't know how long it has been from the time you last paid on the debt (by any means - through a debt settlement company or on your own) to the time when you were sued. Assuming that the debts were all incurred in Pennsylvania, the statute of limitations is 4 years. If it has been 4 or more years, you may want to go see a litigation attorney. I know that Greg Artim here at law guru specializes in credit card defense and he is in your area. There are also many others.

I don't know what company you are with, but I have to question whether they are really doing you a service. I give free email consults. I settle debts privately as well as provide legal services to the clients of a very reputable debt settlement company. Please contact me at [email protected]. I can look at what you have and better advise you as to what you need to do.

The best way to deal with the lawsuits is to fight them. This is often successful due to legal mistakes of the firms who sue. I am local to you and would be able to help. Email or call me if you wish.