Flash of panic -- can creditors come after extended family?

[gcvmom]

Just read this article about what happens when you just decided to NOT pay your credit card bill:

http://today.msnbc.msn.com/id/43690720/ns/today-money/


It caught my attention because husband informed me that one of the reasons his difficult child-parents have no credit anymore is because they decided to stop paying on one of their cards when the interest rate went up really high (don't know if they were late on a payment or what) and the lender refused to budge on lowering the rate. So being the mature and responsible people that they are (ahem!) they flipped a financial bird to the lender and are refusing to pay. I have no idea how long this has been going on. I think they may have had one other card which had it's limit reduced drastically and capped, possibly as a result of this situation.

I'm wondering if one of the reasons they have been so hot-to-trot out of Texas and relocate here is to avoid collections people who might be after them.

What happens when a lender turns someone over to collections, but there are no assets to collect? Do they garnish Social Security? Do they go after extended family to pay the debt? I sure as he!! do NOT want to be held responsible for these morons.

 

[Hound dog]

The answer. NO. They alone are responsible for their debt.

However, if someone has outstanding debt when they pass and have some sort of estate, such as a house, cars, bank acct ect........the executor of the estate does have to use estate funds, or liquidate estate assets to pay debts left behind. If there will be no estate of any sort, you're good to go.

mother in law left no estate behind. She only had a few debts.......but there was money set aside for those because we knew they were going to be there.

Does that help ease the panic?

 

[gcvmom]

Oh, and the lastest on their move...

sister in law#3 called husband the other day to tell him that dear-old-mom-and-dad need $300 to make the trip out here with the movers (I guess they scraped together enough funds via yard sales, etc. to pay the movers their $3,000). She told husband she bought M&D's tool shed and would sell it when she sells the double-wide (mighty big of her -- I asked husband if she was going to also buy from them the carport and asphalt drive they paid to have put in, something sister in law#3 as the LANDLORD should have taken care of). And she wanted to know if husband had any thoughts on what to do. I just laughed my butt off when he told me that. Supposedly someone was coming out to buy a bed they had listed on Craigs list, but it fell through. I told husband I guess they'll just have to wait until they sell the bed, won't they? We are DONE paying for their cr@p. DONE!!!

 

[DaisyFace]

Deep breaths...

NO!!! They cannot come after extended family.

They CAN come after co-signers and spouses whether they were on the original debt or not. (not always...but generally)

Changing states does NOT get you out of debt. The laws of the state where the debt was incurred will always take precendent over the state laws where you live. (IOW - rack up a cc bill in Texas - Texas laws will apply when you get sued in Louisiana).

A judgment can be awarded whether you have assets or not (but if you don't have any assets - you should consider filing Chapter 7 long before you get sued!)

Hope this helps!

 

[gcvmom]

Yes, Lisa, that does help! They won't have any assets when they go. Unless, of course, they hit something BIG at the casino, because Lord knows they won't be able to stay away from THAT place!

 

[gcvmom]

DF, I believe they did file for bankruptcy a few years ago.

 

[DaisyFace]

DF, I believe they did file for bankruptcy a few years ago.

Well, that was ONE "get out of jail free" card...

They cannot file again for 10 years.

 

[gcvmom]

I have a feeling they think they'll be dead in 10 years, lol! They're in their mid- to late-70's.

 

[DammitJanet]

gcv....only the good die young! You may have them lingering on for many more years...lmao!

 

[Hound dog]

LOL Janet, that was sort of mean. LOL

 

[gcvmom]

Yeah, but with our luck, it will prove true!

That's what I don't understand about these people. They live like there is NO tomorrow and therefore NO consequences for their actions today that they will ever have to face. It's the friggin' ostrich farm!

 

[seriously]

You can refer to this website for both general and state specific information.

http://www.creditcarddebt.org/

As others have said, unless you are a co-signer (not an authorized user) on the card OR a spouse in a community property state (both Texas and California are community property) they supposedly cannot force relatives to pay the debt. The estate will owe the debt but most states have laws regarding which assets can be used for this. For example, most states exempt a home that the spouse is still living in and retirement accounts that are supposed to go to specific people. Why NOT to have your 401K go to "your estate".

If your generous sister in law has co-signed anything with them she was very foolish. Let's hope she didn't do this - in Texas or here.

The other thing is that every state has a statute of limitations on when the right to pursue collection ends. It varies from state to state. In California, a verbal contract is 2 years, a written contract is 4 years (I needed to know this recently).

So they may also be delaying in hopes that the debt passes the statute of limitations.

The problem with that is the statute of limitations runs starting as of the LAST payment - not when the debt was incurred.

So if you've been paying $100 a month for 5 years on a debt and decide to stop paying they can still come after you for 4 years after the date you stop paying.

A lot of creditors try to trick people who don't know about this. They will call the month or two before the debt expires and say - just send us $10, anything at all will help. And that re-starts the period all over again. And you can be sure they are NOT going to tell you this information.

 

[keista]

To add to what Seriously said: Once the statute runs out, that debt is often sold to others for pennies on the dollar. Those ppl then try to collect the debt and make some money. If you acknowledge the debt with the new ppl and set up a payment plan it becomes a NEW debt and then you have to dodge those calls again for another 4-7 years (depending on statute of limitations in your area)

And even if the statue of limitations is less than 7 in your area, it still stays on credit reports for 7 years.

 

[gcvmom]

Whew! Okay, then husband and I have nothing to personally worry about with their situation. As for sister in law#3, she did not co-sign anything with them, to my knowledge. The double-wide they're leaving and the house they're moving to are both in her name (well, her and her husband since he's the one who's employed).

Well, they should be here in Socal by the end of next week. You've been warned!

 

[flutterby]

I don't think they can garnish social security, either. And depending on the amount owed, they may end up writing it off at the end of the year. If it's more than a couple thousand dollars, probably not, but if it's less they probably will write it off.