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Re: spouses debt
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Posted by CardReport.Com on December 23, 2000 at 18:10:33:
In Reply to: spouses debt posted by jo on December 23, 2000 at 00:09:04:
Most credit card debts are considered unsecured.
An exception would be with secured
credit cards
involving a security deposit at the issuing bank. Also note that, if a debtor has, for example, a
credit card and a checking account at the same bank,
even if the checking account was *not* originally
intended as security for the credit card, account
agreements often state that the bank may take funds
from one account to repay a delinquency on another
account owned by the same customer. The other exception is with retail store credit or
charge cards where the the store retains a security
interest in the merchandise that the customer buys
from them with the card. Sears has such a clause,
and is known to exercise it agressively by demanding
the return of goods purchased with their store card
in the event of a default or bankruptcy. In the
case of expensive items, they might attempt repossession. The creditor does *not* need to go to court before
doing any of the above-described actions. If a creditor sues a debtor for non-payment and wins
(which is usually a very clear issue in court),
they will obtain a judgement, which is basically
a document from the court acknowledging that the
debtor owes the money, and authorizing certain types
of collection actions if the creditor chooses to
do so. The creditor can then sieze money from bank
accounts owned by the debtor, including at other
banks. Depending on the state, they are often able
to require the debtor's employer to deduct part of
his/her paycheck and send it to the creditor (known
as garnishing the debtor's wages.) In *some* cases,
the debtor's car may be siezed, if it seems worth
it to the creditor (considering repo expenses, low
auction price, and the amount of any liens already
held by other parties.) Judgement creditors will
*not* generally try to sieze personal items like
clothes, etc, which don't have much resale value. The other very important concern is that judgements
appear on the debtor's credit bureau reports, and
are considered *very* negative items. It will be
quite difficult to get any new credit with an unpaid
judgement on your credit report. Depeding on the state, and on the vigilance of the
creditor, judgements can remain valid for a *very*
long time. (See the chart in our *Credit
Laws*
section.)
Be sure to check out our *Collection
Agency FAQ*,
which you can find in the *Credit
Problems* section
(link is at left) for some insight on dealing with
collection efforts by creditors. Keep in mind that
creditors will tend to examine the debtor's particular
situation (e.g. assets, income, credit
file, etc.),
to decide whether s/he is a "good target" for a
lawsuit. A co-operative attitude and reasonable
communication from the debtor can also help, along
with the subtle or not-so-subtle implication that
a lawsuit might force the debtor into a bankruptcy
in which the creditor might get nothing.
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