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Dear Debt Adviser,
I have a very high credit card debt that I was paying on regularly for quite some time. However, my husband lost
his job and payments became harder.
Eventually, the debt was turned over to collections. I tried debt consolidation but that became
very expensive and my debt was not decreasing (and the collectors said they didn't work with consolidation companies).
I finally quit the consolidation and went into denial. Now I am receiving letters that I'll be sued.
I would like to make payments but they refuse to take anything and want a lump sum payment, which is impossible!
Is there a statute of limitations in Pennsylvania for this debt? Does it begin when you're issued the
card? Or does it start when it is actually turned over to collections? If the collection company changes, does it
begin again?
-- Tara
Dear Tara,
You went where? Into denial? I'll have to call you Cleopatra, queen of "de-nile!"
Seriously, I'm glad you and your
husband are facing your problems. I have a saying
that debt, unlike wine, does not improve with
age. I know how frustrating it can be to live
with seemingly insurmountable debts, but there
is help available. You don't have to hide and
you don't have to put up with unrealistic repayment
demands.
The statute
of limitations varies by state and type of
debt. The clock begins to run when you make your
last payment. Once the statute of limitations
is reached, it doesn't make debts go away. But
it does make them uncollectible in court.
So, if (hypothetically) the statute of limitations in your state is three years for credit card debts, it
will kick in after three years without any payment. A change in the collector does not reset the clock. However, you should
be aware that any partial payment you make does restart the clock on the statute of limitations.
I always recommend that whenever possible, people do their best to repay their debts. If the collector is
being unreasonable and you cannot make the payment they demand and you are near or over the statute of limitations in your
state, you may want to consult an attorney to see what options you have.
Next, your bad experience with a debt consolidation company may have been the result of the company you
chose. Most legitimate creditors and many collectors will work with a bonafide credit-counseling agency. Why? Because the
creditor or collector gets its money without having to do any work.
I suggest you reconsider this approach and contact a nonprofit agency with a lot of experience that is
independently accredited. You can find one at DebtAdvice.org or
the Association of Independent Consumer Credit Counseling Agencies Web site.
If this is all too late and you get a summons for a court hearing, be sure to show up. No sailing away
into denial again!
I strongly suggest that you bring a lawyer with you to the hearing. Although it is an added expense, when
dealing with the courts and collectors, it helps tremendously to have someone who speaks the language and who knows the
drill on your side.
Try to find an attorney who does a lot of this sort of thing. In my experience, showing up with the second
best lawyer is about as effective as showing up for a gunfight with the second fastest gunfighter!
At the very least, bring a budget (the credit counseling agency will supply you with one for free) to show
the court what you can actually afford and why. If you don't show up, the agency will get a judgment followed by a garnishment
at the maximum rate allowed.
Finally, if you end up with a garnishment that you can't afford, I suggest that you and your attorney explore
your legal options. A bankruptcy liquidation of your debts is harder to qualify for than it used to be, but a Chapter 13
allows you to pay what you can afford and sleep at night without harassment.
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