The collections process- in debt.?

Question

I am about 200K in debt (failed business) all financed with various Lines of Credit, CC, etc. My wife has fine credit, and will be unaffected by this. I am probably going to file bankruptcy, as I don't see anyway of repaying this debt. They were all business loans and business debt- this wasn't me buying big screen tvs and Coach purses. One of my debts (27K- amex) has just gone to collection (Allied Interstate). I just got the first threatening phone call from the collection agency. They said I had 2 days to pay this debt.I am asking, how long will it be before they file a judgment against me, and then how long will it be before the judgment is issued and I have to go to court. I ask, because I will be selling one of my businesses in the next two weeks, and I would like to have the proceeds of that sale go to my other debtors, before Amex and BoA step in. Please give good advise if you ARE INFORMED and knowledable. Thank you so much!

Answer 1

The creditors will have to file a complaint and depending on how busy your courts are, it will take some time to get a judgment. Assuming you don't contest the claim, I don't think it can happen in two weeks. As others have said, if you make a payment "not in the ordinary course of business" to one creditor within 90 days (1 year if it's paid to an insider) the other creditors have a right to challenge the payment and ask the bankruptcy court to declare it a preference payment. The court can order the creditor you paid to disgorge the payment and it will be divided between all of your unsecured creditors. (I assume we are talking about only unsecured debt here.) It is not a fraudulent payment (assuming you are not in collusion with one of your creditors) and will not cause a debt to fail to be discharged. It will just get the money back into the bankruptcy estate. Assuming the judge agrees

I am not a lawyer and you should not take this as legal advice.

Answer 2

Any large payment to a creditor just prior to bankruptcy can be viewed as a fraudulent preference and overturned by the courts.
If you're planning bankruptcy then pay no one.

Before anyone can file judgment against you they have to sue you. That process is like this.
- Creditor issues a Statement of Claim
- Debtor has a minimum of 35 days to file a defense
The usual defence agrees that money is owing but disagrees with the amount claimed and holds the plaintiff to the strictest proof thereof.
- Creditor submits addendum to the courts substantiating the amount claimed
- Debtor does not defend
- Default judgement is granted to the creditor
- Creditor applies for execution and garnishees

The whole process can take up to a year and a minimum of 2 months.

My advice......don't pay any creditors that aren't secured by assets of the business from the proceeds of the sale. Hang on to the money. You will need a few dollars to pay your lawyer or trustee.

Good luck

Answer 3

I would not suggest you sell the business, and pay off some of your preferred creditor but not the others; and then declare bankruptcy. To do so would constitute fraud. If your creditors find out what you did, they could survive your bankruptcy.
Most creditors do not want to force you into bankruptcy. Before going to court, they probably contact a lawyer. The lawyer would then prepare a statement of claim and serve you a copy. You would have 10 to 15 days (this should be stated on the statement) to file an apprearance. If you failed to file an apprearance, the creditors would go to court and ask for a defraud judgement. The defraud judgement could be issued on the same day. It is up to you to decide how long it would take them to do so.

Answer 4

The best advice for u Foremost and very important NEVER NEVER settle any payments to Amex or BOI. Whatever little cash u have keep it safely. Go and meet ur lawyer and take his advice. Handle the threatning calls thru police and file a complaint of harassment and criminal intimidation. If ur lawyer suggest u for filing bankrupt then proceed and buy permanent peace of mind. That is why I am telling u do not pay to the banks that does not help u. They swallow everything u have and still show so much is outstanding debt they buy time and bloat ur debt on mysterious service and other charges. Simply leave them in their own way and u get legal protection. Go get an attorney now. Even with the attorney please tell them u r broke and cannot pay anything. Save what u have got it will help in the future.

Answer 5

Be careful about doing that. Sometimes a judge will review large payments made immediately before a bankruptcy. I have seen a judge order creditors to repay a portion of the proceeds so that those funds can be redistributed fairly amongst all creditors.

This is not legal advice. I would recommend being careful about doing so. Also, if this is a business bankruptcy, it should not affect you personaly (as long as the business is incorporated). Good luck.

Answer 6

Here are your options! Do nothing! This is actually one of the option alot of people try doing and finally put themself into deeper problem. You will eventually start getting calls from collection agencies and they will offer you settlement of around 50 to 70% meaning you will have to pay around 60% back in 1 payment which is not easy... Debt Consolidation Debt consolidation loan will help you to consolidation all your debts into 1 and you will start making 1 payment every month and they will start paying your creditor. This is something which will lower your interest rate but you need to understand debt consolidation will not do anything good to the principle amount. Bankruptcy Filing for a bankruptcy is another option but i am sure you understand you don't want this because this will stay on your credit report forever. This takes control out of your hands for more than 7 years and you still make monthly payments, so lets forget about this for now CCCS - Credit counseling program CCC organizations are usually designated as non-profits by the IRS, although many of these firms recently lost that status because the IRS felt that had "for profit" motives. These organizations combine your payments to one monthly payment, where you pay back all of the principal, some interest and some fees. Many CCC organizations receive funding from creditors as well as payment from their clients. Many times these programs are generally drawn out over four to six years and less than one out of four actually complete the program. Many times these payments are higher than the original credit card payments and this program can have a non flattering affect on your credit. So here is what you need! Debt Settlement Debt settlement or debt arbitration is a legal process used by both people in debt and their creditors to negotiate a settlement of an existing legal debt. This proactive approach is the most cost-effective option to pay off your current debt while avoiding the negative effects of bankruptcy. Any person owing credit card debt, or any other debt, has the legal right to contact and negotiate with the creditors. This practice however, takes time to master and certain skills to get the maximum benefits. The Debt Settlement Company works diligently and professionally with your creditors on your behalf to reduce your current unsecured debt balances down 40-60% by arbitrating an agreed settlement amount with your creditors. Me & wife were in the same problem around a year back and we went with this debt settlement company. They reduced our debts down to 48% and obviously that was a big Relief... I like talking good about this company! Debt Care USA 866-534-0754

Answer 7

you did not say how your business is set up ... sole prop.. ltd.. joint ..
unless that business you have is a corporation of some kind .. then all your assets in your and your wifes name is up for grabs..
do not sell this to pay favorite creditors... a bankruptcy judge can reverse that sell within one year of fileing...
are you set for payroll , tax id ,, state id tax number..
and you may call them business loans ,, but there had to be a person responsible to these credit card companies...

you want to try to avoid a judgement,,

you may want to check out chapter 11 bankruptcy,, if your debt is less than two millon. then you can quality for a small business ,, and it can put you on the fast track .. you need a good attorney for this... number one ,, do you want to save the business and pay creditors.. or do you want it gone ?..
ther are so many varibles in this..
above all get a good bankruptcy attorney and find out what your rights are... i am sure you know there have been some big changes in the last 1 to 2 years in bankruptcy law.

good luck