can you file for bankrupty while being threated by a lawyer with court action?

Question

I have just recieved a letter from a laywer stating if i don't pay the balance of a old accout he will take me to court. well i 'm not working right now and have offered to pay ten dallars a month until i find work. can i declare to keep him from sueing

Answer 1

I agree with Studly. If the debt is small, filing bankruptcy may not be the way to go.
I also agree that $10 a month is not a viable amount unless the amount you owe is only one or two hundred.

You did not say how "old" the debt is, what kind of debt if is or your state. I did notice in one of your other questions you mentioned a state, so the following statute of limitations (SOL) that I've listed are for that state:

Statute of limitations for your state
Sales (UCC): 4
Open Acct.: 5
Written Contract: 10

IF this is for a credit card and it 'has been 5 years or longer' since you first became 30 days late and never brought the account current leading to the charge off, then you would be out of SOL for collections on the debt.

If this was for a written contract, like a car loan etc, then your SOL would be 10 years.

Send a debt validation letter. Make them prove that you not only owe the amount they are claiming, but also that you are not out of SOL. Send the letter certified mail return receipt. Create a paper trail.

If the collection agency, that the atty is representing, is listed on your credit reports, send a dispute after you receive the green card back from sending the debt validation letter. If the collection agency verifys with the credit bureaus before validating with you, it is a violation.

If you are out of SOL, you are not legally bound to pay the debt. If you are out of SOL, they cannot "legally" sue. They may sue, but it would be a violation to sue on a time barred debt. If that is the case you can file a counter claim for that violation.

If the lawyer or the collection agency is reporting on your credit reports and reporting inaccurate information - that inaccurate info can also be listed on your counter claims.
If they had verified with the credit bureaus before validating with you, add that to your counter claims.

If you have enough counter claims, if they sue, the ball may be in your court. They might just drop the suit rather then having to "pay you".

If/when they do send you validation and you "know" that you are out of SOL, you have every right to send them a SOL letter, which basically tells them the debt is uncollectable and to take a hike.

Go to the site that I've listed. Do some reading in the newbie forum and then in the credit forum. Learn your rights and how to use them.

You can also find letter samples to use.

Everything on that site is free to read and use.

Answer 2

It really depends on several factors especially how much you owe on this old account and if you have an any other old debts that may crop up as judgements.

If the balance you owe is small and you let the atty take all the steps necessary to get the judgment, you can file an answer with the court stating you've offered to pay $10/month until you are back at work. Depending on the balance, the judge may issue a consent judgment for that amount with the stipulation that it is increased when you go back to work or something.

If you owe a large sum of money and/or have other debts that other creditors will be after you to collect, then bankruptcy may be the only option. If you file it will be on your record for 10 years and it can greatly affect your future borrowing power and some future employers may also hold it against you if you plan to work in the financial industry. The threat of a lawsuit has no affect on whether you file or not. However, you can't avoid some things when you file such as past due taxes, student loans, etc because Uncle Sam always gets his first.

I would contact your local Consumer Credit Counseling Service and meet with one of the counselors. They may be able to work out something that is agreeable to all parties and you can avoid bankruptcy.

Regardless of what you do, keep all of your correspondence so you will have it if you do go to court. I know from my experience in collections that documentation is everything when you get to court and it almost guaranteed the atty will have his files in order so you better too.

Good Luck!!

Answer 3

If all you have is this one debt, and it's not for a lot of money (over 10k) then I would not even consider filing bankrptcy.

You don't have a job, so they can't garnish anything. Do you own a home or other property? That may be at risk.

Keep in mind that it will cost you about $1000 to file a chapter 7. It doesn't make sense to do this for a small debt. Just deal with the court and see what happens.

Regarding the $10 a month payment...keep in mind that once you have paid anything on this debt, you restart the Statute of Limitations, giving them much longer timeframe to sue you.

Also, if your debt is (for example) $5000, offering $10 is a joke! You want them to wait 41 years to collect it? Of course they will turn it down. Trust me, so will the judge. Anything less then $100 is not a serious offer.

Answer 4

For a very similar situation a found a great solution at: CREDIT-AND-FINANCE.COM-

RE Can you file for bankrupty while being threated by a lawyer with court action?

I have just recieved a letter from a laywer stating if i don't pay the balance of a old accout he will take me to court. well i 'm not working right now and have offered to pay ten dallars a month until i find work. can i declare to keep him from sueing

Answer 5

All the court can do is get a judgement against you. Let them do all the leg work, filing, etc. They are just blowing smoke. Filing Bankruptcy is a whole different matter.

Answer 6

If you file for bankruptcy, creditors have to cease their actions against you & deal with the bankruptcy court.