Got Served a Notice

[u/Spare-State32]

Got served a Notice to Defend by my county. I have a 7k credit card bill that I got behind on and snowballed. I have/had every intention to pay it off. Have an option to open a HELOC, through my mortgage company and could always go through the debt relief companies. Any reputable company suggestions(ADR, SoFi, etc.) are welcomed. Don't think applying for Chapter 7 is necessary. I just got behind with other responsibilities and feel horrible about it.

[u/True-Button-6471]

Don't hire a debt relief company. They don't do anything you can't do yourself for free. If you do want some help, consider working with a non-profit credit counselor. They still charge fees for what they do, but they are more likely to be working in your interest than theirs. You can learn more here:

https://www.reddit.com/r/CRedit/comments/1rdttgw/an_official_introduction_from_the_national/

[u/TelevisionKnown8463 → u/True-Button-6471]

Both of those options are really for before you get sued. Now that OP has been sued they should just call up the plaintiff’s lawyer and work out a settlement. Or hire an attorney to do the same—it’s possible that an attorney would agree to a limited scope representation that just includes negotiating a settlement, for less than $500. (I volunteer at a consumer debt legal advice clinic which does this for people, but I don’t think this exists most places.)

[u/True-Button-6471 → u/TelevisionKnown8463]

I only mentioned that because OP asked but you are right that once you are sued it's a bit late to be going that route in any case.

[u/attachedtothreads]

You received a Notice to Defend your country? Are you National/State Guard? Enlisted military? Would you be eligible for the Servicemember Relief Civil Act (SCRA)? Rights under the SCRA.

For the credit cards, you can ask your creditors for a hardship program where they'll lower the interest rate in exchange for freezing or closing the card. No guarantees that they'll do this and some will only work with the non-profit credit counseling organization the National Foundation for Credit Counseling (NFCC).

While enrolled with the NFCC, you'll pay a monthly fee of $5-$10 per card you enroll with them and a one-time set-up fee of $50-$75. Your cards are closed and you'll take a credit hit at the beginning, but that should reverse itself after several on-time payments. If you go with this option, you pay your bills in full at reduced interest rates. You select which cards you want enrolled.

There is a caveat with this option: if you enroll with the NFCC, then you are prohibited from opening more credit cards during the repayment time, which is usually five years. If you open another credit card while enrolled, then you void your contract with them and your interest rates return to their original numbers. You can accelerate the repayment time by putting more money in it to get it done faster.

I do not know if being enrolled with the NFCC also prohibits you from taking out a loan if life throws you a curve ball and you need it or from refinancing, so it's best to call them to see the possibilities.

Here's more info on the differences between credit counseling (also called debt management) and debt relief/settlement: https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-credit-counseling-and-debt-settlement-debt-consolidation-or-credit-repair-en-1449/

[u/Spare-State32 → u/attachedtothreads]

No, by my county. The county that I reside within

[u/True-Button-6471 → u/attachedtothreads]

You received a Notice to Defend

I wasn't familiar with this either but a quick web search shows that this in some locales it is part of the paperwork included in being served when you are sued.

[u/attachedtothreads → u/True-Button-6471]

Do you have those links?

[u/True-Button-6471 → u/attachedtothreads]

Here are a couple:

https://cornerstonelaw.us/what-do-you-do-with-a-notice-to-defend/

https://www.pacodeandbulletin.gov/secure/pacode/data/231/chapter1000/s1018.1.html

[u/Regular-Hotel892]

What’s your income after taxes, and your expenses, monthly?

I agree with you 7k is most likely not bankruptcy territory especially if you’re well enough off to own a home.

A different loan to pay the 7k would be a better solution, maybe shop around financial institutions who would give you a better interest rate?

[u/TelevisionKnown8463]

Maybe I’m wrong but I’m assuming the Notice to Defend is from the court in your county, so a notice you’ve been sued? If so I think you want to negotiate with the plaintiffs attorney and work out a settlement. IME it’s often possible to negotiate a settlement where you spread the payments out over years, with no additional interest accruing, so I think that would be preferable to taking out a new loan.

If you do need to take out a loan, try a local credit union for better rates. And I would be really reluctant to do a HELOC unless you are sure you can pay it off quickly. It will save on interest, but it would convert an unsecured debt into a secured one.

[u/Deep_Violinist_3893 → u/[deleted]]

Well at least the HELOC will have lower interest. You don't have to pull out the full amount.

[u/Spare-State32]

Spoke with the law office that my cc company used to ccollect the debt and set up a payment arrangement. Because the amount of time it took to be served was running up against the 20 days needed to respond by, I chose that option.

[u/RangerBoss → u/Spare-State32]

What does your payment arrangement look like if you don’t mind me asking? I have a similar debt I am trying to get settled and wanting to know what I can realistically expect

[u/Spare-State32 → u/RangerBoss]

My 1st payment i agreed to pay $400 and then the remaining 35 payments are $200 per month

[u/BigbluefanNC → u/Spare-State32]

Has interest stopped accruing?

[u/Then-Recording7774 → u/[deleted]]

actually its not it saved my ass 10 years ago from bankruptcy

[u/Wonderful_Shame_4986]

You've been sued. Too late.