Yes, it’s true! At Steidl and Steinberg, we have dozens of clients who are kind enough to take the time to meet with us, and we never hear from them again. We know that they have generally not gone to see other attorneys and filed papers with them because we actually check to see if they gone elsewhere. So what happens with them and their debt?
Some of them are sued by one or more of their creditors, and judgments are taken by the creditor. Arrangements can sometimes (but not always) be made with creditors to pay off the debt. But that may leave the clients exposed to other lawsuits from other creditors while the clients have no more oo brmoney left over to arrange additional payments with their other creditors. A bankruptcy can take care of this.
Sometimes the creditors get judgments and either don’t try to collect them (rare) or discover there are no assets to get. The judgments just sit there and, as long as they are not taken care of, will negatively affect the client’s credit for years. A bankruptcy can help here also.
Sometimes the creditor will look for assets to collect. It’s a good thing that wages are not attachable by non-government related entities in Pennsylvania. But if the client is working and depositing money in a bank account, those monies are fair game for the creditor as once the hard-earned work money hits the bank account, it is no longer protected. Bankruptcies protect againstthis happening. The bankruptcy is will stop this from happening.
If a person does not do anything with the debt and none of the above occurs, then eventually,the entry for the debt falls off the credit report. You can get more information on when this occurs by looking at the web sites or other information put out by credit reporting agencies. But in the meantime, having open debts on your credit report might actually be more harmful than having the bankruptcy on there. Example: if you are a lender looking at two almost-identical credit reports but one client has filed for bankruptcy and has been discharged all of the debt, and the other client has not filed for bankruptcy and still has open accounts that are not beingpaid, who would you lend to? Certainly you would be more cautious to someone who owes and isn’t paying, versus another who has taken care of his or her debt by filing for a bankruptcy.
So yes, there are those who have taken the chance by not filing for bankruptcy because they either couldn’t afford it or for other reasons. But it does pay to get the best advice possible before making such an important decision.