Mickey Asks...

Q: Hi, I don't know where to start but I am at a point to where I may be drowning in debt ($50k + not including house mortgage). Should I consider filing for personal bankruptcy?

A: Filing for bankruptcy is a legal and valid option that you should consider when evaluating your situation. I like to suggest to my clients that they go and speak with a bankruptcy attorney as part of the investigative process of deciding what path works best for them.

Either call a few bankruptcy offices and talk to them on the phone or make an appointment to go in and speak with them. Ask all the questions you can think off, but don't make a decision to file right then. Remember, you are not there to file bankruptcy, just investigate the option.

At the same time you should be following my advice on reducing expenses and the Get Out of Debt Emergency Checklist.

Once you have obtained some clarity about the reality of your situation and you have all the facts you can then make a decision about which path feels best for you.

LaWan Asks...

Q: Hi Steve,

I was making payments to a collection agency, that was handling my Citibank account. The lady who was handling my account was very nice. On one or two occasions she let me skip the payment and on one or two occasions she allowed me to pay only half of the $240.10 that was due for that month. All the Citibank accounts were taken from this collection agency and given to another collection agency. The agency wants me to pay approximately $453.00 a month, and they want about $1600 upfront before they will even start collecting the new monthly payments, or they said they will file a lawsuit to garnish my wages. Can they do this? What are my rights? I can barely pay the $240.10 a month. I don't even have $10.00 in my savings account. They don't seem to want to work with me. I had 30 days to dispute the debt, which I did. I never got the information or history data of my account. So, I contacted Citibank. They said they never got the fax from the collection company.

To make a long story short. I sent a new fax to Citibank. Who eventually sent me copies of my bills, after sending them several faxes, because I didn't get all the history of my bills at once. They said I should receive them by the 10th of April, 2005, but that doesn't mean they will stop the processing of suing. I told them in the letter I wanted them to work out a payment plan with them, but I wanted to speak to a supervisor who had the right to negotiate, since that would not let me speak to one on the phone. Can they sue me before allowing me to work out a payment plan after I have received the history of my bills that disproves or proves the validity of the debt. Do they have the responsibility of responding to the mail I sent them certified regarding this. Do I have to call them or do they have to call me now that I think I have received all my documents. I think I told them I would contact them after I received the documents. What are my rights? I can't pay $453.00 a month and I don't have $1600 to give upfront. Please help me.

Sincerely,
LaWan

A: LaWan, it sounds like you are in an administrative snafu. From what you wrote you finally did receive documentation proving that the debt is not yours and it sounds like you don't feel you should repay it.

We have a couple of hurdles to overcome here. First, is the fact that you had made payments for some time on this debt. That might come back to bite you. Second, if you can find legal counsel in the state you live in to help you, a little legal intervention by your attorney would be a good thing. Finally, it sounds like you have done a good job of gathering the documentation about this debt and if you do get sued, go to court and present your case.

The creditor can't sue you and win a garnishment. As I understand it they have to win the case first and then go for the garnishment. So in your situation the opportunity to present your situation before a judge may not be the worst outcome for you.

Your situation shows everyone that what is right and what is real is often two different things. You can be 100% right but when you are dealing with creditors there is often no way to easily clear up administrative mistakes.

Bottom line here is that we need to put your overall situation in context. Agreeing to a repayment amount of even the $240.10 does not sound like a safe option. If you only have $10 in your savings account you are living far too close to the financial edge. And what happens when some unexpected expense crops up?

Karrolle Asks...

Q: Can you reestablish credit after filing bankruptcy twice

A: Once, twice, three times, it does not matter, the process is the same. Here is my guide.

I believe there is no sense wasting a perfectly good failure so be sure you look back on the two past bankruptcies and evaluate what you can avoid repeating in the future so you don't file for yet another time.

Your Money Coach For Comfortable Success,^sm

The Only Way I Can Offer This Free Service

I have always wanted to be able to help as many people as possible without money getting in the way of getting help.

My free Q&A assistance is subsidized by the small amount of revenue I generate from advertisers. While I have always resisted advertisements on my site, there is no doubt that it does allow me to offer more services for free.

I encourage you to visit the advertisers below. My site receives a few pennies when you do. If you do not see any advertiser links below and you would like to help me continue this free service, please visit my site and visit the advertisers.

My site receives no compensation from the banner advertisers unless you take advantage of their program. I have selected top quality programs with good benefits. I always keep my eye out for good money saving and beneficial links for you. The text links you may see below or on the left side of my site are displayed without my selection.