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Advice about Letter From a Collection Agency

My wife has received a citation letter from a collection agency in Ohio. What do we need to do now?

Bill, My wife has received a citation letter from a collection agency in Ohio, who now owns a chase bank credit card debt. Over the past 10 years I and my wife have had medical issue, recently she had a stroke. the orginial debt was about 5000, with interset and fees it was 9500, now they are seeking 21,000 plus 5000 in lawyer fees. What can we do? We are 66 and this would wipe out any savings.

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Given your age, the fact that this collector has filed a lawsuit against you, and that you do not have sufficient assets to repay the debt, I would encourage you to consult with a bankruptcy attorney to determine whether or not your filing for bankruptcy protection will help you resolve this debt. I am not an attorney, so I cannot provide you with legal advice, but in my experience, once a creditor had filed a lawsuit against a debtor, the creditor generally becomes less willing to negotiate with the debtor, which is why bankruptcy, which would force your creditor to stop its collection activity, may be a good choice for you. As I said before, I am not a bankruptcy attorney, and I do not know all of the details of your financial situation, so I am not in a position to tell you whether or not you should file bankruptcy. However, I can discuss some common issues that may help you decide if bankruptcy is the right option for you. To read more about bankruptcy and how it may be able to help you, I invite you to visit the Bills.com Bankruptcy page at http://www.bills.com/bankruptcy/.

There are two basic types of consumer bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, also called a liquidation bankruptcy, a bankruptcy trustee will examine your assets, and if you have any assets which are not exempt, sell those non-exempt assets to repay your creditors. Once your non-exempt assets have been sold to pay your creditors, all remaining unsecured debts will be discharged by the bankruptcy court. Many people who file for Chapter 7 protection are able to keep all of their property because they have no non-exempt property. Each state has its own schedule of exempt assets, so you should consult with a qualified bankruptcy attorney in your state to find out if Chapter 7 is a workable solution for your situation. An attorney will also be able to tell you if you qualify to file Chapter 7 under the guidelines enacted by Congress in 2005. To read more about the property exemptions in your state, you can visit http://www.bcsalliance.com/y_bankruptcy2.html.

A Chapter 13 bankruptcy, also called a “wage-earner’s bankruptcy,” allows you to propose a plan to repay creditors over time–usually five years. Your monthly payment amount will be based on your monthly disposable income as defined by the bankruptcy code. After you have made payments to your creditors for five years, any remaining unsecured debts will be discharged. Chapter 13 is commonly used by debtors whose assets exceed the exemptions offered by state and federal law. It is also used by many consumer debtors who do not qualify for Chapter 7 relief under the means test, which went into effect in 2005 with the Bankruptcy Reform Act.

If you find that you cannot practically file for bankruptcy protection, or if you find that it will not help your financial situation, you should consider some of the alternatives to bankruptcy available to consumers. Programs such as credit counseling (CCCS), debt settlement, or debt consolidation may be able to help you resolve this debt. However, given the fact that the creditor has already filed legal action against your wife, I strongly encourage you to first consult with a bankruptcy attorney to determine if bankruptcy, which is the definitive solution to your problem, is a viable option. For more information about the debt help alternatives mentioned above, I encourage you to visit the Bills.com Debt Help page at http://www.bills.com/debt-help/.

I invite you to explore the Bills.com website, which offers a wealth of information about mortgages, bankruptcy, and many other topics. I hope this information will help you Find. Learn. Save.

Best,

Bill

www.bills.com

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