Alternatives to Bankruptcy: Do Nothing: Just Don’t Pay

Posted by Robert Weed / in Alternatives to bankruptcy /

For People Living on Just Social Security–Alternative to Bankruptcy: Do Nothing: Just Don’t Pay

People file bankruptcy for three reasons.

• So the bill collectors quit calling.
• So they can’t garnish you.
• And to get back to good credit.

Are you living on just social security? If we look at those three reasons, we can see why maybe you do NOT need to file bankruptcy. Your alternative to bankruptcy is: do nothing: just don’t pay.  

Will you need future good credit to buy a car?

We hope you have a lot of good years still ahead of you. We also hope your car has a lot of good years ahead of it. Is there any reason you’ll ever need good credit to finance another car? Filing bankruptcy can good for your credit.  Much better for your credit than: Do Nothing: Just Don’t Pay. But does better credit matter to you?  

If You Do Nothing and Just Don’t Pay, Are Your Worried They’ll Garnish your Social Security?

They can’t garnish your social security. They can’t garnish it from the Social Security Administration. And also–thanks to Obama–they can’t garnish it from your bank.

Can You Handle Bill Collector Calls if You Just Don’t Pay

That leaves the calls. When the bill collectors call you, tell them straight. “I am never gonna pay.” You should add, “All I have is social security; I can’t afford to pay and you can’t garnish my social security.” Finally, “Don’t call. I am never gonna pay.”

I’m Never Gonna Pay: Call My Lawyer

Some people find it hard to leave it at “Don’t call, I’m never gonna pay.” If you want to, you can add, “Call my lawyer.” For me to be your lawyer to take those calls, I’d charge $600.00. For some people, that’s worth it.

Here’s an idea. Try telling them “I’m never gonna pay” for a couple weeks. Then if you think you want to add, “Call my lawyer,” you can make another appointment and we’ll set that up.

This is America and the truth still usually works fine. “All I have is social security. I can’t afford to pay and I am never gonna pay.”

Do you own any real estate?

If you have any real estate or other valuable assets, this advice does NOT apply to you.  Talk to a lawyer right away.

 

Linda Pays through Beyond Finance and Gets Garnished

Posted by Robert Weed / in Alternatives to bankruptcy, Chapter 13, Weekly Posts /

Linda Pays Mariner $6113 through Beyond Finance. Then She Gets Garnished

Linda Cash (not her real name) wanted to clear her debts without filing bankruptcy. As an alternative to bankruptcy, she signed up for Beyond Finance.

Linda needed Beyond Finance to help her with Mariner. (She originally borrowed $5383, got behind, and now owed Mariner $6113.65.) 

Beyond contacted Mariner and then told Linda “Congratulations–we’ve settled Mariner for $6113.65.”  In 29 installments, they told her.

Now, Linda thought $6113 was all she had to pay. She paid $213 per month; $213 was what Mariner told her to pay. At the end of 28 payments, she thought she had only $150.00 to go.

Bad surprise. Mariner wanted $6113.65 at 36% interest. Mariner had agreed to $213 a month until paid in full. It would take 66 months–not the 29 Beyond told her–to pay Mariner with interest.

How bad was it? Linda had paid $5964 and she still owed $4808.  (Of the $5964 she paid, $4681 had gone to interest.)

Linda complained to Beyond. Beyond didn’t explain.

She argued with Mariner. Mariner garnished her. That’s when Linda called me.

Bankruptcy Would Have Been Better

Linda is eligible for two kinds of personal bankruptcy.  Chapter 7 bankruptcy says “sorry I can’t pay this debt.”  Chapter 13 is a court approved payment plan.

Chapter 13 would have done what Linda wanted.

If Linda had signed up for chapter 13, the bankruptcy court would have made Mariner accepts payments at no interest. (The Chapter 13 trustee does charge a handling fee on each payment–so it would have taken 32 payments at $213 to pay off Mariner. Not the 29 payments Beyond promised her.  But way better than the 66 payment settlement from Mariner.)

Chapter 7 is Even Better

As a single person in Virginia making less than $67,815, Linda is eligible to file Chapter 7 bankruptcy. Chapter 7 discharges–clears–her finance company loans, like the one she had with Mariner. If she had filed Chapter 7 in the spring of 2019, instead of going to Beyond, she’d be back to good credit today.  She could get a car loan at a good rate, or even qualify for a mortgage and buy a house.

And she would have saved the $5964 she paid through Beyond to Mariner.

Beyond This Screwup

I don’t think Beyond was intentionally tricking Linda–they just screwed up. But I do say these debt settlement outfits are rarely a good idea.

Why Not Debt Settlement? Actually They Warn You

Here’s what it says in small print on the Beyond website.  “The use of debt consolidation services will likely adversely affect your credit. You may be subject to collections or lawsuits by creditors or collectors.”  In other words, if you sign up for their program, you will wreck your credit; then expect to get sued.  Probably not the best idea.

For people who really, really want to pay their debts, and need only a little help, I often recommend debt managment programs. They can usually get each payment down a little off the regular minimum monthly and still pay everybody off in five years.  Debt management plans have to be licensed in most states, including Virginia. 

Most legit debt managements programs (they are sometimes called credit counselling) won’t BS you. If they can’t make your budget work, they will tell you so, and suggest bankruptcy.

Other alternatives to bankruptcy

For other alternatives to bankruptcy, you can disappear. Or just don’t pay.

 

 

 

PS Why Does it Take So Long to Pay off a loan at 36%.  Here’s the chart:

 

Alternatives to Bankruptcy–Disappear

Posted by Robert Weed / in Alternatives to bankruptcy, Blog, Weekly Posts /

Alternatives to bankruptcy–disappear

One alternative to bankruptcy is to just disappear.  Why am I bringing this up, now?

This week somebody asked Quora (a website I follow) how to legally disappear.  The answer, sign up for a Caribbean cruise. Get off at the Virgin Islands. Don’t get back on.

For most people, bankruptcy works. But when people ask me for alternatives, I share my best ideas.  I’ve added the Caribbean cruise to the list.