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Opinions please...debts past SOL in FL


rog
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Hello everyone,

I was hoping to get some opinions from some of the posters here. I have multiple charged off debts that total about $48,000. I defaulted on almost all my cards in April '04. I think the original debt was about $27,000 but with penalties and interest it ballooned to about $48K.

I should have filed for bankruptcy back then but was too afraid to. I basically walked away from my debts and buried my head in the sand. Stupid move, I know, but it is what I did. I was getting about 80 phone calls per day and just ignored them.

After two years into delinquency, I was searching various bankruptcy forums and found one I liked. I was sure that I was ready to file and get it over with. I posed the question on why I should NOT file, and some of the posters told me to see if I could wait out the SOL. So with that info, I decided that I wouldn't file until I was sued and forced to. I was sued last year, and you can find the results of that on another post I started in January in the Ask A Lawyer forum.

According to my credit reports, most of these accounts will fall off of my report in two years. If the SOL in FL is 4 years for credit card debt, then I am well beyond that. If the SOL is 5 years, then most of my accounts will be past that this month.

Here's my dilemma: do I just file bankruptcy anyway? I don't have anywhere near $48K to pay them off. If they would all agree to settle for about 5 - 10% (no way) I might be able to do that...but then I would have my head handed to me for the taxes. The only assets I have are my personal items. I rent a house and I don't own a car...I'm a taxi driver so I lease the vehicle. So if I filed for bankruptcy, I wouldn't stand to lose much. The ONLY reason I didn't file before was because I was worried about future employment...I wasn't always a taxi driver (haha). I wasn't worried as much about my credit because that can heal over time. And in my business, it's a cash only basis. I receive cash, and pay all expenses in cash. I've learned to live without credit, although I know good credit is important to have.

Or do I just do nothing? Just wait for more lawsuits to be filed against me and answer them citing the expiration of the SOL? A part of me says I should file BK, and another part says I've already gone this long and enough damage has been done.

I know that bk attorneys will try to push me into bk. Settlement attorneys will push me into settlement. Maybe both sides are right. I'd appreciate any and all of your opinions.

Oh, let me add this. These are my debts. I've never DV'd a CA or JDB...I knew that this was my debt, but ignored them. I can say that if you begin to experience financial problems, either tackle them immediately or take a proactive approach to dealing with them. DO NOT bury your head in the sand like I did. I caused myself more problems that way. And understand this...I may have beaten the SOL, but that is no way to live your life.

I'd appreciate any and all opinions. Enjoy the rest of the weekend!

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.but then I would have my head handed to me for the taxes.

That may happen in any event. The IRS requires a 1099 to be issued upon certain trigger events -- a settlement of the debt is only one of those events. As I recall, there are 8 trigger events.

I would advise you to talk to an accountant familiar with these rules and see if you can figure out what works best for you. There will be a lot of disagreement, but I personally think that bankruptcy may make a lot of sense for you as a potential way to discharge the tax liability.

By the way, the SOL in FL for a credit card is 5 years.

You said you've been sued on one. Was a judgment granted or is it still pending? You are still at risk on this.

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Wiser Now,

Thanks for the reply. I haven't been issued a 1099 on any of the deliquent accounts...and that amazes me. My guess is that if I settled with the CAs I would have been issued a 1099 on the remaining balance.

Thanks for clarifying the 5-year SOL for credit card debt in FL.

And yes, I was sued last year by a Commonwealth on behalf of Citibank. They were initially awarded default judgment because I was a no show. But I received (to my astonishment) a letter from the court denying final judgment because of insufficient proof of debt. You're right, I might still be on the hook for this, but this was decided in January and there haven't been any changes since.

Again, thanks for your reply.

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I thought I might chime in on this one because I'm also trying to resove an old situation regarding the 1099 trap.

One thing I found was EXTREMELY interesting to me....

Look into INSOLVENCY.

If you can prove that you were insolvent at the time the debt was charged off you apparently are not responsible for the taxes. First, let me just say that the IRS definition of insolvency is having more debts than assets. These can include student loans, car loans and mortgages.

Example.... say you owed 50K to the cards and they were written off. The IRS would assume that this is 50K in income.....BUT

If you can show that you were more than 50K insolvent.....having a debt load 50K greater than your total assets, you may not have to pay anything.

check out this link....there was a good article on it that i read but cant find it now but this should get you started......

http://goliath.ecnext.com/coms2/gi_0199-7295961/Insolvency-exception-to-debt-forgiveness.html

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I should say 1 other thing.....

I would not file for banruptcy UNTIL I looked into the strategy above.

It could be that you will be able to settle for 25% but won't have to pay the taxes like you might think.

The BK will be much more damaging than will be any settlement agreements you can negotiate.

And....BELIEVE ME.....this day in age you are in very good company with regard to having this sort of trouble....just get the best info you can and move forward from here.

Good Luck!

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Turk7, thanks for the reply. Interesting info regarding insolvency. I will look more into it.

But it seems to me as though the creditors/CAs would have to initiate the process by sending me a 1099, no? I guess this is where I'm confused the most. They've had time to sue (one did), but they didn't. They've had time to issue 1099's, but didn't do that either. And now the SOL has passed. Hmm.

And there haven't been any settlement offers from CAs in a long time. It seems like it would be easier for me to contact the creditors, notifying them that the SOL has passed, and ask for a 1099.

Thanks again, turk7, for the info on insolvency...I thought it only really applied to businesses and not individuals.

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You can look here to check the IRS about canceled debts:

http://www.irs.gov/pub/irs-pdf/p4681.pdf

The debt is still owed after the SOL runs; however, you have an affirmative defense in a suit.

If you have a judgment against you, in Fl the judgment is good for ten years and can be renewed for another ten. You would need to check your name in the public records to see if there are other judgments about which you may be unaware. It is not unusual for some of these CA's to get a judgment and never notify you. You can go online to the Clerks office and check to see what may be outstanding in the way of lawsuits .....most jurisdictions are online now.

IMHO, the 'cleanest' way is to file BK because it just discharges the debt - except for certain items like student loans. There are no taxes due. You have a "line in the sand" - before BK and after BK. Actually the recovery period is quicker too with a BK than the other way (settlement or letting the debt fall off).

It is a myth that you can not have credit or buy a car or home for ten years after BK. You can buy a home 2 yrs after BK unless you surrendered a home, then you are looking at 3 yrs on a FHA transaction.

Sounds like you have really turned your life around and have everything working for you with your new cash budget. Now it becomes a matter of what is best to handle the past?

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I guess I fail to see how bankruptcy can in any way worsen your situation or why you want to avoid it. You are already living on cash, and your credit is already ruined. Why not get a fresh start now, rather than waiting for more lawsuits?

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How quickly can one file bankruptcy? I feel the vultures are circling me all ready to sue me. They can't hurry up the process to get a judgment before the bankruptcy goes through, can they? And are you allowed to keep any assets? I have a 15 year old car and a small amount of savings left that is technically my 401k. I would need this to keep paying rent. Thanks for your help.

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Denita: Thank you again. Just looking at the numbers, I believe I more than qualify. Won't an atty give you a flat fee estimate? Will they make all appearances for you? I have agoraphobia. Or, is it all paper work with no court appearances? Thanks.

p.s.: I thought they made it difficult for people who have credit card debts to apply for bankruptcy. Again, thanks.

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Denita: Thank you again. Just looking at the numbers, I believe I more than qualify. Won't an atty give you a flat fee estimate? Will they make all appearances for you? I have agoraphobia. Or, is it all paper work with no court appearances? Thanks.

p.s.: I thought they made it difficult for people who have credit card debts to apply for bankruptcy. Again, thanks.

Most attorney's have a flat fee for BK. Usually there is only one appearance, especially for a simple BK and that is for the 341, also called the creditors meeting. In many jurisdictions the 341 is held in a small conference type room rather than a large courtroom. Usually it is just you, your attorney and the Trustee. Sometimes in some locations there are other filers waiting their turn. Most of the work in BK is paperwork.

As to making it more difficult to file, it turns out all the change in the law did was make it a little more paperwork intensive to show that there is no BK abuse. You have nothing to fear if you have not made charges within 90 days or insider type transfers or payments within the past year. Most people have simple BK's. There are exceptions, but an attorney can help you with the 'rules' so you experience as smooth a BK as possible.

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Denita, thanks for your reply. I do check the public records for my county and no other lawsuits were filed. One was filed by a local attorney, who was hired by Commonweath, on behalf of Citibank. The judge denied judgement because of insufficient proof of debt. I've never heard anything from them since. Also, thanks for the info re: bankruptcy. The only debts I have are charged off cc acounts. In fact, I finally paid off my student loans last week. I'm not so much concerned about my credit as I'm more concerned about future employment. But you're right...I'm trying to figure the best way to handle my past.

Admin, thanks for the info re: 1099s. It actually makes sense that it would be the OCs that would issue them. I'm just surprised that they haven't sent any, irregardless of settlement, because up until now collections haven't worked for them. My guess is that I might have fallen through the cracks.

Alva, thanks for your response as well. You might just be 100% correct. In hindsight, I probably should have filed 4 years ago. But I rode it out and now I'm here. My credit tanked over the last few years...in fact, I use Identity Guard and their credit score simulators indicates that my credit scores would increase with two of the CRAs if I filed BK. But to be honest, I'm not so concerned about my credit right now as I am about future employment with a BK on my record. Not ruling BK out though.

Samsam, get your own thread...just kidding! :wink:

Thanks to everyone that has replied so far!!!

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Most attorney's have a flat fee for BK. Usually there is only one appearance, especially for a simple BK and that is for the 341, also called the creditors meeting. In many jurisdictions the 341 is held in a small conference type room rather than a large courtroom. Usually it is just you, your attorney and the Trustee. Sometimes in some locations there are other filers waiting their turn. Most of the work in BK is paperwork.

As to making it more difficult to file, it turns out all the change in the law did was make it a little more paperwork intensive to show that there is no BK abuse. You have nothing to fear if you have not made charges within 90 days or insider type transfers or payments within the past year. Most people have simple BK's. There are exceptions, but an attorney can help you with the 'rules' so you experience as smooth a BK as possible.

What do you mean "charges" or "insider type transfers or payments"? I plan to use what little I have of my savings to pay my taxes which I haven't paid for two years and a couple months rent in advance because I have a fear of being homeless.

Like rog, I should have done this years ago. I'm not so afraid of having a BK on my record for future employment but when I have to find a new place to live (my landlord is elderly and when he goes I know they will tear this place down - the land is worth more than the bldg.) Again, thank you.

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  • 4 months later...

Hi Alva,

Sorry it's been awhile since I've been to this thread. It's not the type of work that I want to do...it's a matter of public records. I know for a fact that there are companies that don't run credit checks but do search public records. I'm not saying that having bad credit is something to be proud of, but some companies overlook the credit check. It's once they get to the public records search that the bankruptcy surfaces.

Now this might be a moot point as I may file for bk anyway. But it just seems like overkill to me at this point since the SOL has past and most of the bad credit will fall off of my report in about a year in and a half. I understand what bk can do for me, but it is necessary at this point?

Sorry it's been so long since I've replied, but thanks for your response.

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  • 7 months later...

Hi everyone,

I just wanted to give a quick update. I spent an hour with a bankruptcy attorney this afternoon. BK is his only practice and he's been at it for 12 years. He advised me not to file.

His advice was based on the age of my debts. The SOL have definitely passed and some of them will fall off of my credit reports in about a year, and others will fall off in less than a year.

He advised me to open a savings/checking account at a new bank (preferably credit union) as I have a checking with BOA and defaulted on one of their credit cards.

He also told me that since I haven't tried to rebuild credit in the past 6 years that I should do so. I should respond to/apply for a credit card and keep it at 10% - 30% utilization. I asked about secured cards, but he thought that I shouldn't have to if I didn't want to since my credit scores are in the low to mid 600's.

He was surprised that I was only sued by one creditor (for $16,500) whereas he has clients that were sued for less than $2000. I explained my lawsuit from 2 years ago and that it hasn't gone anywhere since...he told me that I probably didn't need to worry about it.

He told me that I kind of resembled a surfer. Somehow I managed to surf my way through this.

I asked about collection calls and letters and he told me to basically send them cease and desist letters. Told me to send them in writing and by certified mail. Build a paper trail in case they get out of line.

He told me to do my own credit repair. He said that he could help me but he charges $250 for 5 creditors (that would be $50 per letter). lol He also said that because he is a licensed attorney, he cannot demand the CRA to remove their entries if they are valid.

I was impressed with him...he knew what he was doing. He told me that if I saw him 3 - 4 years ago, bk was the way to go.

That's all for now. Time to get the C & D letters going.

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