How Serious is Bankruptcy Threat from Collections?

[aaronmark]

Someone I know has gotten several letters from a collection agency threatening legal action for an old credit card debt. It’s from about 8 years ago, but last contact was about two years ago, maybe more. This last letter is from a lawyer’s office saying, the person has “committed an act of bankruptcy” and that they won’t file the petition if full payment is made.

I’ve read before that a lot of the time, these are empty threats, but this looked more serious. The debt is over $1K, but less than $10K. They can’t afford to pay the debt right now, so not an option.

 

[frozenking173]

@aaronmark No one will petition you into bankruptcy for this debt. I have worked in a bank 33 years and have never petitioned anyone into bankruptcy. If they have no collateral, they wouldn’t get anything out of it.

 

[resjudicata]

@frozenking173 So I don't need to pay my credit card bill. Sweet.

 

[andyintheuk]

@resjudicata If you want to destroy your credit and never have a loan/CC ever again, yes you can. Hopefully you don't have any assets, cause you will lose that too.

 

[john3and30]

@aaronmark Its an empty threat, as a former bill collector I can tell we didn’t even try to get a judgment or garnish wages below 10k and that was ~20 years ago

 

[oliviacutie]

@john3and30 What if it’s 80 thousand dollars

 

[dccox55]

@john3and30 Debt collectors and bailiffs are the bottom degs of society.

 

[serenatomlin505]

@dccox55 Well, I guess their would be no need for debt collectors if people just, i dont know, paid their bills? Weird how that works

 

[dccox55]

@serenatomlin505 Im glad its that simple for you.

 

[melschoey]

@dccox55 It’s that simple for me too. Is there some nuance that we’re missing?

 

[sharon78]

@melschoey It’s that simple…period.

 

[nameholder]

@dccox55 Because... It is..
No one makes you borrow.

 

[wordpracticer]

@nameholder Our entire society is set up to make you borrow money in order to get, well, pretty much anything major in life. School, homes, vehicles. So that's not entirely fair assessment

 

[nguyenhaongnam]

@wordpracticer Any thing major beyond your current ability to consume. Thats the whole concept of borrowing. No one forces you to buy a car, home, or go to top law school.

 

[wordpracticer]

@nguyenhaongnam Do you not remember school? That's all that was drilled into us as kids. Societal pressure forces you into these things. To get anywhere or do anything, we were taught that we NEED a good credit score to any semblance of a life. Thankfully, things are slowly starting to change, but a majority of what we were told our entire lives put majority into those positions. If that is something you disagree with, that is fine, but I felt that in order to do anything in my experience that I needed to have credit. It wasn't until I got myself over in my head that I started to disagree, but you still see it being pressured on kids today. Having credit certainly makes life easier but not unlivable.

Most of our cities in NA are not pedestrian or public transit easy either, making a vehicle almost a nessacity depending where you live and work. And now, even to rent somewhere, you need to have a decent credit score or be able to prove you make 3x the rent.

 

[nguyenhaongnam]

@wordpracticer The credit score system is not where the problem lies. In fact I think it is a pretty good system. It is the personal finance education that is lacking - people need to learn how to use and manage their debt properly.

In terms of car dependency, yes I agree the degree of car dependency in NA is absurd. But can you live without a car? It is absolutely doable in urban areas. In case you are talking about rural areas, I am pretty sure a "functional" vehicle wouldn't put you in debt trouble. It is those "fancy" (relative to the current ability to consume) cars causing the major debt problem.

And you also mentioned rent: if you are unable to afford a place, you wouldn't even be able to sign your name on the contract. Logically, that wouldn't put you in debt trouble either - a pretty good mechanism to prevent debt trouble from happening in the first place. Again, it is because consumption is beyond current ability. I don't see why and how minimum wage workers should consider anything other than having roommates in HCOL cities from a personal finance perspective.

If you are concerned about credit score: you don't have to take out large unmanageable amounts of debt to build a good credit score. A small amount of credit card debt works as well as a large amount of LOC or other forms of personal loan.

 

[aaronmark]

@nguyenhaongnam When rent gets increased and your wage doesn’t, the rental agreement when you first moved in doesn’t matter anymore. I’ve heard of rent going up by $700 for some. It’s bananas.

 

[serenatomlin505]

@wordpracticer Seeing as how we are begging for more people to join a trade, you really do not need fancy collage or university to get ahead in life. Actually in some cases you come out better off by going into a trade

 

[dccox55]

@nguyenhaongnam Tell me about the people who can move around and get to the services they require without a car or live without a home?

 

[nguyenhaongnam]

@dccox55 Me, renter and public transit commuter for years. Sometimes inconvenient but absolutely doable