Do I need to file bankruptcy if collectors are calling me and I cannot pay what I owe?

Question

I have a couple collection companies calling me and telling me to pay a certain amount of money that I don't have and threating me that they have lawyers hired to take me to court if I don't pay that amount. I have tried to give them what I could but they won't take it. I have to pay them the amount and I'm not sure what to do.

Austin Hirschhorn · Answer

If you can't pay your bills you may need to file bankruptcy.  You should consult with a credit counseling service to discuss your situation.  They will need information regarding your income and expenses, assets, and liabilities in order to properly advise you as to what you should do.  If arrangements can be made to restructure your debt and get it paid without filing for bankruptcy that is a much better choice than a bankruptcy filing which would show up on your credit history and stay there for at least 10 years.  Many of the credit counseling services are free or charge only a small amount for a consultation.  If they can help you solve your financial problem they will try to set up a payment plan that works with you and your creditors.  If they can't help you with a solution to the problem they will probably recommend that you file for bankruptcy relief.  You would then have to hire a bankruptcy attorney to represent you.

S Hunter · Answer

Whether not an individual needs to file bankruptcy is entirely up to them. When an individual owes a debt to someone (meaning they actually signed for or received the value of the debt), they are generally on the hook. Exceptions to the rule are if the debt is not yours or if it has been more than six years since you last made a payment. If in fact you do owe the money in question, and you do not have a defense, then the creditor (the person you owe money to) will be able to sue you for the debt. If you owe the money then they will most likely get a judgment against you. Then they will try and collect on the debt. They will be able to do things like garnish your wages, bank accounts, tax refunds etc. If you own a home they will put a lien on it. If you own a car they can repossess it and sell it. If your only income is government benefits (SSI, SSD, Social Secuirty Retirement etc) then they are generally not allowed to garnish these funds even after they are deposited into your bank account. Qualified pensions also cannot be garnished. However, any fund in a bankn account that came from a pension may be garnished. Therefore, it is a good idea if you have a pension not to deposit it in your bank account. The only way to get rid of the debt is to file bankruptcy. As far as trying to make partial payments to the creditor, I would not do it. You can try and negotiate a payment plan or payoff amount with the creditor. However, before you give them any money I would ask to get your paymnt agreement in writing. Collection companies lie all the time. The only way to hold them to their word is to get it in writing.

Beth Bizousky Carter · Answer

Filing bankruptcy is a choice and many factors should be evaluated in making this choice - one of those being your ability or inability to pay the debts you owe.  A consultation with a bankruptcy attorney to become informed about the benefits and detriments of bankruptcy may be most helpful.  Bankruptcy can provide debt relief in the form of a discharge provided if you comply with the requirements of the bankruptcy code to receive this discharge. Bankruptcy can also provide honest individuals a fresh start credit-wise.

Burton J. Green · Answer

You are in a typical position.  This is what bk is for.  If you  can't pay  the debts then you should definitely consider filing bk.  Do not  pay these  creditors any money if they are for unsecured debts like credit cards  or  medical bills.  Those debts will all be discharged no matter what you  owe.   You should definitely look into filing bk once a creditor  actually (not  threatens) files a lawsuit.

Roger Bus · Answer

I would seriously consider filing Chapter 7 at this time.

Eric Lewis · Answer

What you describe is exactly why bankruptcy exists.

David Benson · Answer

Bankruptcy may be an option, but you should find one who can also explore whether there is a violation of the Fair Debt Collection Practices Act.

Giovanni Orantes · Answer

You describe the traditional scenario that leads to a bankruptcy filing.  The next step for the bill collectors is to file lawsuits to get judgments, which they can then enforce by levying your bank accounts or garnishing your wages.  You have three choices: pay off what you owe; enter into an agreement with the bill collector under its terms; or file for bankruptcy relief.  Now, some places offer another option, "debt consolidation" or "debt settlement", but I have found that you must have a substantial steady income to make the large monthly payments the debt consolidators require plus the fees the debt consolidators charge; otherwise, you end up filing for bankruptcy relief anyway because your creditors either do not agree to be bound by the consolidation contract or the agency skips a payment (if it ever actually even starts making the payments) and the creditors seek payment through a lawsuit, which the debt consolidators usually do not respond to because they are not lawyers or refer you to hand-selected lawyers who may overcharge you for a bankruptcy filing, and may not be actual bankruptcy experts.  Defending the lawsuit is not likely at this stage because it costs a multiple of what a bankruptcy filing usually costs and, if you do owe the funds, you will lose anyway as the Court only has power to find liability, not to force them to accept payments in any particular manner the collectors do not want.  So, the bottom line seems to be that you either pay them the amount they want or explore whether a bankruptcy filing would give you the relief you seek before you take another step.

Harry Roth · Answer

"Have to" is a relative term, but if you cannot pay your bills and they are pressing down on you, bankruptcy is probably your best choice.

Asaph Abrams · Answer

Creditors want to get paid and they'll sue, garnish and levy in the process.  If you can't pay, then chapter 7 and chapter 13 bankruptcy are proactive and legal mechanisms to obtain forgiveness from debt.  This answer (by San Diego bankruptcy attorney, Asaph Abrams) doesn't address all facts & implications of the question; it's general info, not legal advice to be relied upon. It creates no attorney-client relationship; it may be pertinent to CA and/or its Southern District Bankruptcy Court only, and it's independent of other answers. It may be time sensitive, as in past the "Use by" date: laws and case law change.  Hire legal counsel before acting or refraining from bankruptcy/legal action. Chapter 7 and Chapter 13

Phong Thanh Tran · Answer

If you are unable to pay your debts, you can seek protection from your creditors by filing for bankruptcy.

Jay Moreland · Answer

Having creditors call you for debts you cannot pay is a reason to find out if bankruptcy is appropriate for you. Depending on your circumstances, it may be a good idea or it may not. It would be wise to sit down with a bankruptcy attorney who could go over your entire financial situation and give you good advice. Creditors are trained to make you feel bad to get money from you that you would not otherwise pay. If you have nothing, even if they sue you and get a judgment, it won't guarantee that they receive payment. It may not be collectible and we no longer have debtors prison. Creditors can be VERY persistent nonetheless.  The reason you can't pay your bills is also an important consideration. Did you just lose your job? Were you injured and can't work? Do you have uninsured medical bills? Were you recently divorced? Did you just overextend yourself with credit cards? While bankruptcy can eliminate your debts as of the time you file bankruptcy, it won't cover future debts. If you are living beyond your means, bankruptcy will only delay rather than solve your problems. If you had an illness or lost a job and fell behind on your bills and cannot get out from under it, a bankruptcy may work for you. Everyone has a different situation and bankruptcy is not right for everyone. That is why you need to sit down with an attorney who handles bankruptcy cases to determine what is best for you.

Diann Moseley · Answer

File chapter 7 bankruptcy and discharge your unsecured debts. You will no longer have to pay any unsecured?debts. Further, the debt collectors will not be allowed to call you, write you or in any way attempt to collect their debts.

Kevin Bruning · Answer

Thanks for your question. Depending on the amount of debt you owe, as well as other factors such as your income and assets, you may be eligible for bankruptcy, and it may be a good option for getting relief from the harassing calls of your creditors. You would need to meet with an experienced bankruptcy attorney to go through your options and analyze your specific situation. An attorney can discuss your options under the different chapters of bankruptcy, or provide you with other options depending on your situation, such as negotiating your debt down to an amount you can pay.  S

Edward Olson · Answer

You do not HAVE TO file bankruptcy.  However, I recommend that you DO CALL an attorney.

Shilo Naomi Borja · Answer

Yes, you can file Bankruptcy. Ask a lawyer if Ch 7 or Ch 13 is best for you.

Jason Richards · Answer

Typically collection companies will start with harassing phone calls, threatening letters, and eventually file a lawsuit against you. 

Unless you can arrange some kind of settlement with them or otherwise defend yourself from their lawsuits- they will eventually start to garnish your wages, seize bank accounts, etc. 

Bankruptcy can be a way for you to stop debt collectors in their tracks and keep your money and property from their grasp. Your best bet is to call a bankruptcy attorney and find out what your options are.

Steven Alpers · Answer

Yes it sounds like you need to file quickly.

Stuart Nachbar · Answer

As a bankruptcy specialist, I would suggest that you contact an attorney who knows about bankruptcy and explore your options with him/her.  Depending on the amount you owe, the items of real property and personal property you own, and your income, you may find bankruptcy to be a valid option for you.

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Do I need to file bankruptcy if collectors are calling me and I cannot pay what I owe?

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