What happens if I stop paying my bills and DONT claim bankruptcy?

[westbroc90]

SO I have some debts, most are in collections. Others are getting behind.

Credit cards, old credit cards in collections, a Care Credit account that is past due and headed for collections, etc.

I have a family of 4 with an $11/hr job.... not likely that I will be paying them off anytime soon.

I want to claim bankruptcy, but my wife is hesitant.

We have no real assets, two cars that are worth less than $2k, we own a sailboat too(we live in it), other than that we have no savings, investments, property, etc.

I am afraid that if I let these collections accts and stuff go too long that I may be opening myself up to garnishments or even worse lose my home/boat somehow, or have a lien put on it.



Also, I live in Oregon.

We have a law that says that up to $80k of personal assets are protected from creditors.

I just dont know if that only applies in bankruptcy or not.


anyone?

[varik]

Well, if you don't claim bankruptcy then you are correct: eventually they may try to garnish your wages, and place liens on your properties, etc. Since you aren't a wealthy family with lots of property to seize, you won't be high up on your creditors' priority list, and you could probably go for years with nothing happening but a lot of debt collectors calling. Of course, if you're on a houseboat, that might not even be a problem.

But even if the bill collectors forget about you, sooner or later you'll want to move on with your life, and at that point you'll want to declare bankruptcy.

Of course the best thing that you can do for yourself right *now* is to stop making payments on your unsecured loans. ("Unsecured" meaning that they aren't tied to an asset like a home or car that will be taken away when you stop paying.) Credit cards are a form of unsecured debt, since there is no asset that can be directly seized if you stop repaying. Since you are going to declare bankruptcy eventually, in the meantime you are just throwing this money away. If you can't pay off the credit cards, then *stop trying.*

The worst thing that a bankruptcy judgment can do is ruin your credit score for seven years. But when you stop paying back your loans, your credit is going to be ruined anyway, so you might as well start the bankruptcy process now, rather than letting it drag on.

Bankruptcies are handled in federal court (subject to restrictions and/or protections that may be added on by state law), and there is always some allowance made for allowing the person to keep some personal property and the means to make a living.

As for the specific exemptions available in Oregon, I found this list by state:
http://www.legalconsumer.com/bankruptcy/laws/
and
http://www.legalconsumer.com/bankruptcy/bankruptcy-law.php?&ST=OR

Many states require you to file for the "Homestead" exemption with the county registrar of deeds before you file for bankruptcy, and sometimes the homestead exemption will only apply to debts incurred *after* the date the exemption was filed, so it may or may not do you any good.

At any rate, it seems likely that you'll be able to keep just about everything that you have. Consult with a bankruptcy attorney before filing, of course, and also do your own research.

***EDIT: I have done some research, and it appears that Oregon's Homestead exemption is "automatic," meaning that you need not have previously filed any paperwork in order to take advantage of it. Good show! In Oregon this means that your houseboat is exempt from seizure by creditors up to $50,000 in value. Also you should be able to exempt up to $6,000 in motor vehicles, which means that you would be able to keep both of your cars. Of course, if in doubt, talk to a lawyer.

P.S. If you have lived in Oregon for less than two years, then you may have to use the exemptions available in the state in which you used to reside.

[voliny13]

Bankruptcy.

[seager]

Eventually the creditors will file a law suit against you and, once they get a judgment, can garnish wages, bank accounts, and possibly state tax refunds and may also be able to garnish personal property and/or get a lien on real property. It some states, it is possible to get an installment payment approved by the court. As long as you make the installment payments, the creditor cannot take any other collection action.

Many people are reluctant to file for bankruptcy for many reasons, but if you have no way of paying off the unsecured debts, it may be the best answer for you. Talking to a bankruptcy attorney may help both you and your wife understand and feel more comfortable with your options. Many attorneys offer a free initial consultation.

[newyddilyn60]

They will eventually sue you and garnish your wages. They then can garnish up to 1/3 of your pay.

They may be able to force you to sell your boat as that is a luxury item.

They cannot touch your house as you must have somewhere to live so the house is ok. But they can put a lien on your house.

Being sued you have nothing to worry about unless a process server shows up at your door. But best you take care of this before that as going to court is an all day event. They have hundreds of cases and unless your file is at the top you will be sitting awhile.