The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The statute of limitations on debt typically ranges 3 – 6 years, depending on the debt type and the state you live in.
Is there a statute of limitations on debt? It depends on the type of debt and which state’s law governs it. Find out more about the statute of limitations on suing to collect a debt by state below.
Table of contents:
What is a statute of limitations on debt?
A statute of limitations on debt limits how long creditors or collection agencies can only take legal action against you to collect a debt. The length of that period depends on the statute of limitations in the state where the debt originated.
Statutes of limitations are laws that govern the deadlines for certain legal actions. But don’t be mistaken—you aren’t off the hook for a debt just because the statute of limitations has passed. The debt might still show up on your credit report, and if you don’t pay it, you could face trouble getting future credit, especially a mortgage.
The statute of limitations does prevent you from being successfully sued for time-barred debts. That means the creditor won’t be able to get a judgment against you that allows them to garnish wages or levy your accounts.
The four types of debt
The type of debt you are dealing with determines which statute of limitations might be relevant. Read on to learn about the four different types of debt.
Oral agreements
Oral agreements occur when you borrow money from someone and agree to pay it back according to specific terms, but the agreement isn’t in writing.
This is the proverbial handshake agreement, and it’s not extremely common between traditional lending organizations and borrowers today. This is mainly because they’re difficult to prove. Oral contracts are more likely to exist between family members or friends.
Written contracts
Written contracts record the details of a lending agreement, including the borrow amount and date, the purpose of the loan, interest amount, when and how to make payments and other terms. Both parties involved in the contract—the borrower and the lender—sign the document to validate it.
Written contracts are easier to prove than oral contracts. Vehicle loans are written contracts. Medical debt or payments for services you agreed to in writing are also written contracts.
Promissory notes
Promissory notes are similar to written contracts but with less detail. In addition, they only need to be signed by the borrower to be enforceable. You generally sign a promissory note when you take out a mortgage or student loan.
Open-ended accounts
Typically, these are revolving accounts such as credit cards or lines of credit. Open-ended accounts remain open for an undetermined length of time as long as you are making regular and agreed-upon payments. You can also carry a balance on these accounts as long as you make regular minimum payments.
Statutes of limitations by state
This guide to statutes of limitations on debt collection by state is for informational purposes only. Debt laws change from time to time, and you should always check with a legal professional or your state Attorney General’s office for current information.
State
Oral Agreements
Written Contracts
Promissory Notes
Open-Ended Accounts
Alabama
6 years
6 years
6 years
3 years
Alaska
3 years
3 years
3 years
3 years
Arizona
3 years
6 years
6 years
6 years
Arkansas
3 years
5 years
5 years
5 years
California
2 years
4 years
4 years
4 years
Colorado
6 years
6 years
6 years
6 years
Connecticut
3 years
6 years
6 years
6 years
Delaware
3 years
3 years
3 years
3 years
Florida
4 years
5 years
5 years
5 years
Georgia
4 years
6 years
6 years
6 years
Hawaii
6 years
6 years
6 years
6 years
Idaho
4 years
5 years
5 years
4 years
Illinois
5 years
10 years
10 years
5 years
Indiana
6 years
6 years
10 years
6 years
Iowa
5 years
10 years
10 years
5 years
Kansas
3 years
5 years
5 years
5 years
Kentucky
5 years
10 years
15 years
10 years
Louisiana
10 years
10 years
10 years
3 years
Maine
6 years
6 years
20 years
6 years
Maryland
3 years
3 years
6 years
3 years
Massachusetts
6 years
6 years
6 years
6 years
Michigan
6 years
6 years
6 years
6 years
Minnesota
6 years
6 years
6 years
6 years
Mississippi
3 years
3 years
3 years
3 years
Missouri
5 years
10 years
10 years
5 years
Montana
5 years
8 years
5 years
5 years
Nebraska
4 years
5 years
5 years
4 years
Nevada
4 years
6 years
3 years
4 years
New Hampshire
3 years
3 years
6 years
3 years
New Jersey
6 years
6 years
6 years
6 years
New Mexico
4 years
6 years
6 years
4 years
New York
6 years
6 years
6 years
6 years
North Carolina
3 years
3 years
3 years
3 years
North Dakota
6 years
6 years
6 years
6 years
Ohio
6 years
6 years
6 years
6 years
Oklahoma
3 years
5 years
6 years
3 years
Oregon
6 years
6 years
6 years
6 years
Pennsylvania
4 years
4 years
4 years
4 years
Rhode Island
10 years
10 years
10 years
10 years
South Carolina
3 years
3 years
3 years
3 years
South Dakota
6 years
6 years
6 years
6 years
Tennessee
6 years
6 years
6 years
6 years
Texas
4 years
4 years
4 years
4 years
Utah
4 years
6 years
6 years
4 years
Vermont
6 years
6 years
6 years
6 years
Virginia
3 years
5 years
6 years
3 years
Washington
3 years
6 years
6 years
6 years
West Virginia
5 years
10 years
6 years
5 years
Wisconsin
6 years
6 years
10 years
6 years
Wyoming
8 years
10 years
10 years
8 years
Source: The Balance
When does the statute of limitations clock start?
According to the Federal Trade Commission, the statute of limitations clock starts when you fail to make an agreed-upon payment. However, you can reset the statute of limitations clock in some cases by making a payment on the debt or agreeing to make such payments in response to a debt collector contacting you.
Before you make any promises or make a payment on old debt, ensure you understand your rights under the Fair Debt Collection Practices Act and the statute of limitations on your debt.
Delinquent debt and your credit report
In most cases, negative items such as delinquent accounts or unpaid collections will fall off your credit report after seven years. That’s seven years from the date that the account first became delinquent.
As you can see from the table above, many states’ statutes of limitations are below seven years. That means that your credit could reflect an account that is past the date for legal collection methods. If you legitimately owe the debt in question, your choices include:
Pay the debt off to have it show up as paid—which can be better in the eyes of potential creditors;
Try to negotiate with the creditor, potentially for a pay for delete or a settlement that lets you pay less than you owe to have the account marked paid in full; or
Wait for the item to fall off your credit report.
FAQ
Below are a few common questions about the statute of limitations on debt.
What can restart the debt statute of limitations clock?
Making a payment on a debt in some states will restart the statute of limitations clock. In addition, promising to pay a debt also revives the old debt, and a new statute of limitations will begin.
Why are there statutes of limitations on debt?
Statutes of limitations set a time limit for when debt collectors and creditors can take legal action against a borrower who defaulted on their debt. After the statute of limitations time limit has expired, creditors and debt collectors can no longer file a lawsuit to collect on the debt. These limitations help protect borrowers from being liable for old debts.
What happens after 10 years of not paying debt?
Typically, after 10 years of not paying debt, the statute of limitations will have passed. This means that while you technically still owe the debt, debt collectors may try to collect it, but they typically cannot pursue legal action against you.
The statute of limitations varies by state, so be sure to reference your state’s specific statute of limitations to determine what legal action a creditor can take against you.
Talk to a professional if you have questions
If a collection agency contacts you about a debt after the statute of limitations has passed, they typically have no legal standing to sue to collect the debt. That doesn’t mean they may not try to collect, and if you’re dealing with an aggressive creditor or aren’t sure how the law impacts your debt, you may want to contact a professional. Additionally, if a collection agency is reporting very old debts to the credit bureaus, you might be able to dispute the information to improve your credit profile. Work with Lexington Law Firm to learn more about credit repair and how to ensure the accuracy of your credit report.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Sarah Raja
Associate Attorney
Sarah Raja was born and raised in Phoenix, Arizona.
In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts. Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
A pay for delete letter is a negotiation tool intended to get a negative item removed from your credit report. It entails asking a creditor to remove the negative information in exchange for paying the balance.
If you have a spotty credit history and you’re working to turn your finances around, you may be wondering how to remove negative items on your credit report. Late payments, charge-offs, credit inquiries and overdue account citations can all count against you.
There are, however, a few ways to potentially have past mistakes removed, one of which is a pay for delete letter.
What is a pay for delete letter?
A pay for delete letter is a negotiation tool intended to get negative information removed from your credit report. It’s most commonly used when a person still owes a balance on a negative account. Essentially, it entails asking a creditor to remove the negative information in exchange for paying the balance.
Even if you’ve gotten yourself out of debt and paid off collection accounts, without a pay for delete letter, negative credit items can remain on your credit bureau file for up to seven to 10 years.
Time heals all wounds—including credit mistakes—but if you can’t simply wait around for your credit to improve, you’ll want to consider taking some actions toward repairing your credit. Read on to learn when you should send a pay for delete letter, view sample templates and discover other credit repair options.
How a pay for delete letter works
An individual with debt writes a pay for delete letter to a collection agency with a request to remove negative information from their credit report in exchange for payment.
First, in order to understand how and why a pay for delete letter works, you’ll need some background on collection agencies.
Collection agencies are in the business of collecting debt. Some collection agencies are contracted to collect for a creditor and receive a percentage of what’s collected. Others buy the debt and seek collection as the “current creditor.”
Usually, a collection agency will only consider offering a pay for delete letter when you’re willing to pay more than it paid for the debt. There’s no magic number, but generally knowing what the other party wants gives you more information about what to include in your pay for delete letter. This increases your chances of succeeding in the negotiation.
Tips for sending a pay for delete letter
A pay for delete letter isn’t a magical fix. Not all creditors will accept pay for delete letters. Typically, many creditors like corporate banks, credit unions and even small-town banks may not be receptive to this strategy.
However, small utility bills, such as phone, cable and power bills, that go to collections are more likely to be accepted by creditors. Before you send a pay for delete letter, here are some tips to help you avoid common mistakes.
Consider the status of your credit reporting time limit. Is the debt several years old and about to expire? If so, a pay for delete letter isn’t necessary—the debt will no longer impact your credit score after the time limit has expired. If the credit reporting time limit is still far away, you may want to send a pay for delete letter. In addition, if you want to purchase a home or a car, the lender may require that the collection items are paid off, so you may want to send a pay for delete letter.
Verify your debt. Before making a pay for delete offer, it’s imperative that you’ve sent a debt validation letter within 30 days of initial contact with the debt collector and received verification of debt from them. In some cases, collectors could request payment even if your state’s statute of limitations on overdue accounts has run out.
Reassess your financial situation. If your pay for delete letter is approved, you often will only have a short window of time to make the payment. Only send one if you’re confident you can pay the agreed-upon amount.
Save details for your records. Before sending the letter, be sure to keep a copy for your records. Then when the recipient accepts your terms (hopefully), keep a copy for your records and include a copy with your payment. Also, try to utilize a method that you can verify shipping and delivery, such a “return receipt” or Registered Mail. In the event of any complications, you’ll be glad you did these things.
Pay for delete letter template
Your pay for delete letter doesn’t need to be long and complicated—or even full of legal jargon. Be sure to provide all the relevant information like dates, payment amounts and other details specific to your scenario.
The template below can help you write your own pay for delete letter. Simply update the bolded portions with your own information.
<Your Name>
<Your Address>
<Your City, State, Zip Code>
<Collection Agency’s Name>
<Collection Agency’s Address>
<Collection Agency’s City, State, Zip Code>
<Date>
Re: Account Number <XXXXXXXXXXX>
Dear <Creditor’s Name>,
I am writing this in response to your recent correspondence related to account number <XXXXXXXXXXX>.
I accept no responsibility for ownership of this debt; however, I’m willing to compromise. I can offer a settlement amount in exchange for your written agreement to the following terms:
You agree to accept this payment as satisfying the debt in full (once you receive the agreed-upon amount).
You agree to not list this debt as a “paid collection” or “settled account.”
You agree to completely remove any and all references to this account from the credit reporting agencies (Equifax, TransUnion and Experian) that you have reported to and validated this account.
I am willing to pay the <full balance owed / $XXX as settlement for this debt> in exchange for your agreement to the above terms within fifteen calendar days of receipt of payment. Understand that this is not a promise to pay. This is a restricted settlement offer and you must agree to the terms above in order for payment to be made.
Should you accept, please send a signed agreement with the aforementioned terms from an authorized representative on your company letterhead. Once I receive this, I will pay <$XXX> via <cashier’s check/money order/wire transfer>.
If I do not receive your response to this offer within fifteen calendar days, I will rescind this offer and it will no longer be valid.
I look forward to resolving this matter quickly.
Sincerely,
<Your Name>
<Your Address>
<Your City, State, Zip Code>
Sample letter to remove collection from credit report
Now that you have a template to write your own pay for delete letter, let’s take a look at a sample letter to make sure you’re fully set up for success.
What happens if a pay for delete letter is rejected
You should always be prepared for the event that the collection agency rejects (or ignores) your pay for delete letter. Not all agencies will see the value in agreeing to your terms or the practice of pay for delete letters as a whole.
It’s also worth noting that any acceptance of your offer must be made and returned to you in writing. In the event of a solely verbal agreement, you won’t have the ability to prove that an agreement was reached if the collector doesn’t follow through and remove the information from your credit report.
If your letter was rejected, there are still some other routes you can take to repair your credit.
Other ways to potentially have negative credit report entries removed:
Send a goodwill letter
Negotiate a settlement
Wait out the credit reporting time limit
Hire a professional
Common questions surrounding pay for delete letters
Pay for delete is a unique credit repair strategy, so it’s understandable if you have some lingering questions about it. Below, we address some of the most common ones.
Does pay for delete increase credit score?
Pay for delete can potentially increase your credit score if your negotiation is successful, but its impact largely depends on your overall credit profile. If you have several accounts in collections, your score is less likely to increase much from a single negative item being removed.
If you have a single account in collections, on the other hand, your chances of improving your score via pay for delete improve.
Which collection agency owns my debt?
If you’re unsure which collection agency is holding your debt, there are a few strategies you can use to try to learn more. Consider the following:
Check if you have any missed calls or voicemails from collection agencies
Ask your original creditor for help with tracking it down
Get your credit report and check the details surrounding your debt
Can I send a pay for delete letter to the original creditor instead of the collection agency?
You should send a pay for delete letter to the original creditor as long as they haven’t sold your debt to a collection agency. If the original creditor has already sold your debt to a collection agency, you can contact them to see if they are willing to reclaim your debt from collections; however, there’s no guarantee that they will agree to this proposal.
Is a pay for delete letter legal?
Sending a pay for delete letter is a legal way to negotiate to have negative items removed from your credit report. However, it’s important to note that creditors aren’t legally required to respond or accept the request.
Oftentimes, creditors have contracts with the credit bureaus that prohibit them from removing accurate information from credit reports. If that’s the case, the creditor may not be able to enter into a pay for delete agreement with you.
Are pay for delete letters still common?
In recent years, pay for delete letters have become less common. This is partially because the latest credit scoring models, FICO® 9 and 10 and VantageScore® 3.0, do not take paid collection accounts into consideration when determining your credit score. There’s a chance these letters, even if approved, won’t impact your score at all.
Credit reporting agencies also discourage pay for delete efforts, strongly recommending that only inaccurate information be removed from reports. For these reasons, pay for delete is becoming a much less common practice.
That being said, if you’re in a more stable financial position now and expect collections activity to harm your credit, a pay for delete letter may be a good option for you to try DIY credit repair.
If you’re still not sure how to proceed or your pay for delete letter was rejected, consider equipping yourself with some personal finance tools and working with a credit consultant for a free credit report consultation.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
We’re writing today to address the unintended consequences that may result from the real estate agent commission dilemma stemming from recent lawsuits. As leaders of a non-profit, the Association of Independent Mortgage Experts (AIME), we advocate for over 65,000 wholesale mortgage brokers and homebuyers nationwide. There are multiple lawsuits challenging the prevailing structure of real estate agent commissions, and, as a result, there is no shortage of industry conversation on the topic.
Specifically, these lawsuits and surrounding conversations address the convention of sellers bearing the cost of commissions for both their agent and the buyer’s agent.
In this open letter, our discussion is deliberately narrow, centering exclusively on potential adverse impacts to the mortgage industry and borrowers that might arise if, as a result of this lawsuit, buyers find themselves compelled or expected to shoulder the cost of buyer agent commissions. Our analysis does not extend to the broader market ramifications, as such considerations fall outside our expertise.
Future homebuyers will undeniably feel the impact of this conversation for decades to come. As advocates for homebuyers, we feel it’s our responsibility to address the potential ripple effects for homebuyers nationwide.
The complexity of the home-buying ecosystem is vast. A single home purchase transaction involves buyers, sellers, real estate agents, mortgage lenders, settlement companies, appraisers, insurance companies, and court systems, to name a few. Modifying the operational dynamics of one component can send shockwaves throughout the entire system. Below, we shed light on the potential unintended consequences to mortgages and specific consumer groups should buyers be compelled to cover their agent’s commissions.
Impact on military servicemembers and veterans
Foremost, this shift would adversely affect a group of individuals who’ve already given so much to our nation: our active-duty military servicemembers and veterans. VA Guidelines categorically prevent buyers from paying agent commissions (“VA Lender’s Handbook,” Chapter 8, Section 3, Subsection c). Consequently, should buyers be tasked with these fees, our military community would face the untenable choice of forgoing real estate agent representation or not availing their VA home benefit. Even in a scenario where paying agent commissions becomes a norm but isn’t mandatory, VA buyers stand to lose. Their offers — asking sellers to shoulder all commissions — might be overlooked in favor of more conventionally structured bids, especially in competitive markets.
Impact to first-time homebuyers
Moreover, first-time homebuyers (FTHB), particularly those from marginalized communities, would encounter heightened barriers. With home prices and interest rates climbing steadily, the barrier to homeownership is already too high. While the minimum down payment for FTHB on conventional financing stands at 3%, bearing agent commissions would effectively double this threshold in many instances.
Impact on the appraisal process
Incorporating inconsistent agent commission payment patterns — sometimes by buyers, other times by sellers — could compound complexities in the appraisal process. Determining property values involves analyzing several variables beyond just sale prices. Appraisers consider seller closing-cost credits, transaction nature, property conditions and more. Injecting “Who bore the buyer’s agent commission?” into this matrix, especially when such data isn’t currently available to appraisers, complicates matters further, destabilizing confidence in the value of the loan’s collateral.
Impact on down payments
Down payment costs are already a source of concern for many potential homebuyers. With this potential impact on borrowers, their intended down payment could be adversely impacted. For example, a homebuyer intending to put down a 20% down payment may now only be able to afford to put down a 17% down payment, thus needing to incur Private Mortgage Insurance (PMI), which could raise their monthly mortgage payment significantly.
Change, though often inevitable, does not operate in isolation. A shift in one part of the ecosystem can trigger unintended consequences throughout the entire ecosystem and its inhabitants. This principle holds true both in nature and in real estate transactions. While some outcomes can be foreseen, where there is smoke, there is fire, and we can be fairly certain that there are additional, unforeseen ramifications that only become clear after the fact. The issues highlighted in this letter likely serve as the tip of the iceberg.
In conclusion, we emphasize our hope that the potential unintended consequences of such lawsuits — particularly those affecting our nation’s Veterans and underserved communities — will be thoughtfully considered and integrated into the wider conversation on this issue.
Katie Sweeney is Chairman and CEO of the Association of Independent Mortgage Experts (AIME) and Brendan McKay is President of Advocacy at AIME.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the authors of this story: Katie Sweeney, Brendan McKay: [email protected]
To contact the editor of this story: Sarah Wheeler at [email protected]
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
There isn’t a specific debt threshold you must meet to file for Chapter 7 bankruptcy, but you must meet certain criteria to qualify for it under the means test, which may consider income from the last six months and compares to the median income in your county for your family size.
The world of personal finances can be difficult to navigate, and unexpected events occasionally result in stressful debt. Sometimes people consider declaring Chapter 7 bankruptcy as a way to get some relief from their debts. Chapter 7 is a legal process that can provide a fresh start by discharging certain debts, but it’s essential to understand the requirements and implications.
How much do you have to be in debt to file Chapter 7? Since everyone’s financial history and situation varies, there is no absolute amount required to file Chapter 7—but there are criteria.
In this guide, we’ll cover the factors that determine eligibility for Chapter 7 bankruptcy as well as the benefits of filing, things to consider before you file, alternatives to filing and tips to help you avoid bankruptcy.
Table of contents:
Signs that filing for bankruptcy could be an option
How to know if you’re eligible for Chapter 7
Benefits of Chapter 7
Things to consider before filing Chapter 7
Chapter 7 alternatives
7 tips to avoid Chapter 7
Signs that filing for bankruptcy could be an option
Filing for bankruptcy is a significant and complex decision that you should base on careful consideration of your financial situation and options. Here are signs that you may be eligible for Chapter 7:
You’re dealing with an overwhelming amount of debt.
Bill and loan payments are being missed consistently.
Creditors are threatening to take legal action, wage garnishment, foreclosure or repossession of your assets.
You’re facing lawsuits due to unpaid debts.
Emergency funds and savings have been depleted.
You’re at risk of losing essential items such as your home or car.
How to know if you’re eligible for Chapter 7
Even though there’s no debt threshold for filing for Chapter 7, there are still other criteria that need to be met to determine if you’re eligible. Here are some key qualifications you likely need to meet:
You are filing as a person, a partnership, a corporation or other business entity.
You haven’t been discharged from bankruptcy in the previous eight years.
You have received credit counseling through the court within the last six months.
You’ve taken and passed the means test, or you have an exemption from the test.
Learn more about the Chapter 7 means test below.
Chapter 7 means test
During the Chapter 7 means test, your average monthly income over the previous six months is compared to the median income in your county. This test is a crucial factor in determining your eligibility—the court will essentially compare your financial situation to other similar-sized households in your area.
Typically, someone can qualify for Chapter 7 if their income is lower than the state median. If your income is above the median in your state, there are further calculations to determine whether or not you have enough money to pay off your bills under a Chapter 13 repayment plan.
Note: You’ll want to work with an experienced bankruptcy attorney to ensure accurate calculations and proper application of the test to your specific financial situation.
Benefits of Chapter 7
Chapter 7 offers several benefits to individuals overwhelmed by debt and seeking a fresh financial start. Here are some of the key benefits of Chapter 7 bankruptcy:
Potential debt discharge
The primary advantage of Chapter 7 is the potential bankruptcy discharge of most unsecured debts, such as:
Debt from your credit cards
Bills from medical-related expenses
Personal loans
Now that the bankruptcy process is complete, the debtor is no longer legally obligated to repay those discharged debts.
Avoid a lengthy process
In general, the Chapter 7 bankruptcy process is faster than the Chapter 13 bankruptcy process. Filing time for Chapter 7 usually takes around four to five months from the filing of the bankruptcy petition to the discharge of eligible debts.
Obtain automatic stay
An automatic stay is put into place after someone files for Chapter 7 bankruptcy. This action immediately puts a stop to all creditor collection actions, including:
Foreclosure
Wage garnishment
Repossession
Creditor harassment
Get a fresh start
Chapter 7 bankruptcy provides a clean slate for individuals that are having a hard time keeping up with payments. Once eligible debts are discharged, debtors can work on rebuilding their finances without the burden of old debts.
Relief from unmanageable debt
Chapter 7 bankruptcy is ideal for individuals with little or no disposable income to make regular payments under a Chapter 13 repayment plan. It’s designed to provide relief for those facing severe financial hardship.
Receive financial education
Those filing for Chapter 7 must attend credit counseling before they file and a financial management course before receiving a discharge. These courses can provide valuable financial education and help debtors make more informed decisions in the future.
Things to consider before filing Chapter 7
Filing for Chapter 7 bankruptcy is a big financial decision that could have long-term implications. Explore everything you should consider before filing Chapter 7 below.
Financial and employment situation
Evaluate the severity of your financial distress and employment situation. The best candidates for Chapter 7 bankruptcy are often those with excessive unsecured debt and little disposable income to make payments.
Having a hard time keeping up with payments due to unemployment can make you more eligible for Chapter 7 bankruptcy. However, if you’re still struggling to pay your bills while employed, filing for Chapter 7 may help you keep your assets, such as your house and car, by eliminating or decreasing payments on:
Credit cards
Medical bills
Unsecured debts
Court costs
It’s important to factor in the costs to file for bankruptcy, including attorney fees and court filing fees. A court filing fee for a new petition costs around $338. While it might seem like an additional expense, an experienced attorney can help you navigate the process effectively.
Credit impact
Be aware that filing for Chapter 7 bankruptcy could impact your credit negatively. There’s a chance it will stay on your credit report for up to ten years. However, if your credit is already damaged due to missed payments, the impact might not be as drastic.
Legal guidance
Consult with a qualified bankruptcy attorney to discuss your specific financial situation. An attorney can help you consider your options, navigate through the process and make the most informed decision possible. Plus, you could get valuable information about your case that you wouldn’t have thought of otherwise.
Chapter 7 alternatives
Consider investigating other possibilities to resolve your financial troubles before filing for Chapter 7 bankruptcy. Here are several alternatives to Chapter 7 bankruptcy:
Chapter 13 bankruptcy
Chapter 13 is an option for individuals with regular income to restructure their debts. It entails developing a repayment strategy that can last up to five years to progressively repay creditors.
This provides protection from creditor actions like foreclosure and repossession. It allows debtors to catch up on missed payments while keeping their assets. Compared to Chapter 7, Chapter 13 may be a better option if you’re employed and still able to pay down debt but need an extra boost to pay it down.
Debt negotiation and settlement
You might be able to negotiate a lower settlement price for your debts by speaking with your creditors directly or with the assistance of a debt settlement firm. This can lead to reduced payments but could also lead to negative consequences for your credit.
Debt consolidation loan
Taking out a debt consolidation loan to pay off multiple debts can simplify payments and potentially lower interest rates. However, it’s important to be cautious about converting unsecured debt into secured debt (like a home equity loan) that could put your assets at risk.
7 tips to avoid Chapter 7
Avoiding Chapter 7 bankruptcy requires proactive financial management and strategic decision-making. Here are some tips that might help you steer clear of the need to file for bankruptcy:
Create a budget: Prioritize making a budget for your finances to help lower your risk of debt. Tracking your expenses can be a great way to see areas where you can cut back and use the extra money to pay back debts.
Pay off debt first: Paying down your debt amount should be the first priority. Consider using the debt avalanche method to speed up the debt repayment process.
Negotiate with your creditors: If you’re having trouble making payments, contact your creditor to see if you can work out a better deal. They might be open to lowering interest rates, cutting monthly payments or establishing a repayment schedule.
Start an emergency fund: An emergency fund helps provide padding for you if you are stuck with surprise expenses, which can help you avoid using credit cards or loans.
Start selling: Sell items you no longer need for extra cash to pay down your debt. Plus, you can clear out clutter in the process.
Get a side hustle: Consider finding another source of income, like a side hustle or a second job.
Ask for help: Connect with a financial advisor or credit counselor—they can provide personalized guidance and create a plan tailored to your circumstances.
If you think you may be facing bankruptcy, you may also want to start taking a look at your credit. In this case, consider working with the credit repair team at Lexington Law Firm. They can work with you to address inaccurate items listed on your credit reports, so you can focus on building healthy money habits in the long run. You can also get a credit snapshot that gives you your credit score, credit report summary and repair recommendations for free.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Vince R. Mayr
Supervising Attorney of Bankruptcies
Vince has considerable expertise in the field of bankruptcy law.
He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.
To the native Wintu people it was Bohem Puyuik, the “Big Rise,” and no wonder. Mt. Shasta towered above everything else, her loins delivering the natural springs and snowmelt that birthed a great river.
The Sacramento River provided such an abundance of food that the Wintu and many neighboring tribes — the Pit River, Yana, Nomlaki and others — had little to fight over. They thrived in pre-colonial times, on waters that ran silver with salmon, forests thick with game and oaks heavy with acorns.
But centuries of disease, virtual enslavement and murder wrought by European and American invaders scrambled the harmony that once reigned along the Upper Sacramento River.
Today, three tribes here are locked in a bloodless war. At issue is a proposal by one Indigenous group to expand and relocate its casino and whether the flashy new gambling hall, hotel and entertainment center would honor — or desecrate — the past.
The casino envisioned by the Redding Rancheria and its 422 members would rise nine stories on 232 acresalong Interstate 5. The rancheria — home to descendants from three historic tribes — began planning the development nearly two decades ago, envisioning a regional magnet for tourists and gamblers.
But the proposal has been buffeted by influential opponents, including the city of Redding, neighborhood groups and the billionaire next door — who happens to be the largest private landowner in America. The naysayers list a cavalcade of complaints against the new Win-River casino complex, saying it would despoil prime farmland, exacerbate traffic, increase police and fire protection costs and threaten native fish in the Sacramento River.
Those complaints have helped stall, but not kill, the project, whose fate rests almost solely in the hands of the Bureau of Indian Affairs in Washington, D.C. And now the BIA’s obscure bureaucrats have been confronted with an explosive new charge from two neighboring tribes: that construction of the casino would desecrate what the tribes say should be hallowed ground — the site of an 1846 rampage by the U.S. Cavalry that historians say probably killed hundreds of Native people.
The Sacramento River massacre has not received the attention of other atrocities of America’s westward expansion, such as the one in 1890 at Wounded Knee, S.D., where U.S. troops killed as many as 300 Lakota people. Estimates of the carnage, recorded over the decades from witness accounts and oral tradition, range from 150 to 1,000 men, women and children slaughtered along the banks of the Sacramento River.
If the higher estimates of the death toll are correct, it would rank as one of the largest single mass killings of Indigenous people in American history.
“In my heart, I find it hard to believe that there are Wintu people that are willing to build a casino on … the blood-soaked dirt of the massacre site,” Gary Rickard, chair of the Wintu Tribe of Northern California, told a state Assembly committee in August. “There are dozens of other places along the I-5 corridor and the Sacramento River.”
Redding Rancheria Chair Jack Potter Jr., himself part Wintu, called the claim that his tribe would build its casino on the massacre grounds “a slander that will not be easily forgotten.” He told state lawmakers that the real massacre site is miles away. Rancheria leaders said their opponents have manufactured the controversy for a less honorable reason: to block what would be a sparkling new competitor.
“Gaming in Indian country can be a tide that raises all of our canoes,” insisted Potter, who appeared at times to fight back tears as he spoke at the Sacramento hearing. “We should not battle against one another, in that spirit.”
Column One
A showcase for compelling storytelling from the Los Angeles Times.
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Friendships that go back decades and tribal ties of a century or more have been imperiled by the casino furor. Native people normally aligned against a hostile or indifferent U.S. government — “We’re all the children of genocide,” as one elder put it — have watched sadly as their conflicts turn inward.
It’s a dynamic that has played out before. Robbed of their ancestral lands, tribes now sometimes fight when one tries to claim new territory, often as a base for a lucrative modern endeavor: gambling.
The friction is exacerbated by the peculiar history of the Redding Rancheria — and by opponents’ eleventh-hour invocation of the Sacramento River massacre, 19 years after the rancheria began to assemble parcels for the project.
The Redding Rancheria refers to a nearly 31-acre stretch of land near the south end of Redding that the federal government bought in 1922 for “homeless Indians” who came to the area as seasonal workers for ranches and orchards. The rancheria sits in a relatively obscure location compared with the interstate-adjacent site of the proposed casino, more than three miles by car to the northeast.
In 1939, the Wintu, Pit River, Yana and other Indigenous peoples formed a rancheria government. It was recognized by the United States. But in 1958, an act of Congress “terminated” recognition of multiple California groups, including the Redding Rancheria, in an attempt to force Indians to disperse into the general population. It took a landmark 1983 court settlement to formally restore recognition of 17 rancherias, including the one in Redding.
The result is that there are Redding Rancheria members with Wintu blood, like Potter, 52, who firmly support the casino, while other Wintu descendants who are not descended from the original rancheria families, like Rickard, 78, adamantly oppose it. Rickard grew up with Jack Potter Sr. and has known his son since he was a boy.
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Cordiality prevails, at least outwardly, when Rickard and Potter meet today. But the bad blood between their groups has become fierce, exacerbated by the yawning wealth disparity between the rancheria and the Northern Wintu.
Rancheria members have thrived largely because of the success of their existing Win-River Resort & Casino, which operates 550 slot machines, a dozen table games, an 84-room hotel and an RV park.
The complex is the biggest income producer for the rancheria, which also owns a Hilton Garden Inn and a marijuana dispensary in Shasta County. Sources familiar with the tribe said each enrolled member receives a monthly “per capita” payment of at least $4,000 and perhaps as high as $6,000.
The rancheria’s chief executive, Pitt River descendant Tracy Edwards, 54, declined to discuss the amount of the payments.
That income, along with health clinics and other benefits, makes the Redding Rancheria members the envy of Indigenous groups with comparatively paltry assets. Rickard’s Northern Wintu claims roughly 560 certified members, but like many groups across America, the tribe has been laboring for years and still has not received formal recognition from the U.S. government. That means the tribe can’t put land into trust, a prerequisite to casino development and also a shield against federal, state and local taxes.
“We don’t have the resources in order to obtain the things we need,” said Shawna Garcia, the Northern Wintu’s cultural resources administrator. “We don’t have the revenue to assist our members with things like college, housing and other assistance.”
Historians and ethnographers say the Wintu were the predominant tribe around the site proposed for the casino complex, an expanse of meadow and scrubland that locals dub the Strawberry Fields because of its agricultural history. And Rickard questioned why the “pure-blood Wintu people” he represents have been left to struggle, while the rancheria — representing an amalgamation of tribal groups — stands poised to create an even bigger cash cow with its new casino.
Rancheria leaders like Edwards, a UC Davis-trained lawyer, have emphasized how the tribal group has supported Native and non-Native people, both as one of the largest employers in Shasta County and through its charitable foundation.
In just one year, 2018, the rancheria said it gave more than $1.2 million to community organizations, helping serve the homeless and victims of the Carr fire. During the early phase of the COVID-19 pandemic, the rancheria donated $5,000 each to 60 businesses struggling to stay afloat.
At a cost of $150 million, the rancheria’s new casino would feature 1,200 slot machines — more than double the number at its current casino — and with 250 rooms, the new casino hotel would be more than triple the size of the existing hotel. The tribal group has pledged to close its current Win-River casino when the new one opens.
The rancheria’s outsized community presence has created substantial goodwill around Redding, but a portion of residents have stepped forward — via petitions and ballot measures — to express disdain for large developments they feel could harm the rural character of their community.
Among the more powerful opponents is Archie Aldis “Red” Emmerson, president of logging giant Sierra Pacific Industries, whose sprawling estate looms along the Sacramento River, just south of the casino site.
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In 2020, an Emmerson-allied company purchased property from the city of Redding that included a portion of a road that would be the north entry to the casino site and created an easement that would have barred access to the rancheria land for all but agricultural purposes. The easement effectively would have thwarted the casino by blocking vehicle access to the development.
But in 2022, a Shasta County Superior Court judge voided the deal, saying that in selling the land (for just $3,000 to the billionaire) the city had violated its “own processes, procedures and the relevant law.” The ruling nullified the easement, preserving the rancheria’s unrestricted access to the property.
The Redding City Council and neighboring homeowners have maintained their opposition to the project for years, while a new conservative majority on the Shasta County Board of Supervisors recently reversed the county’s earlier objections. The supervisors supported the casino, despite admonitions from the sheriff, fire chief and county counsel that the agreement with the rancheria did not provide sufficient compensation to cover the increased costs of serving the big development.
The rancheria agreed to make one-time payments totaling $3.6 million to support Shasta County, the Sheriff’s Department and fire and emergency services. That initial infusion would be supplemented by recurring payments: $1,000 for each police service call and $10,000 for each fire/emergency service call.
No issue has unsettled intra-tribal relations, though, like the debate flowing out of the terrible events along the Sacramento River 177 years ago.
Oral histories of the Wintu and neighboring tribes recall how Native families and elders had gathered along the river known as the Big Water each year in early April for the spring salmon run. Traditionally, the season signaled rebirth.
But Capt. John C. Fremont had other ideas.
Fremont diverted his men from their ordered assignment: completing land surveys in the Rocky Mountains. The Americans instead went adventuring to California, where, in the spring of 1846, they responded to sketchy claims from settlers that they were endangered.
About 70 buckskin-clad white men set upon the Native people, the locals far outgunned by the invaders, each toting a Hawken rifle, two pistols and a butcher knife, according to UCLA historian Benjamin Madley‘s detailed account of the massacre.
The horsemen completed their grisly work with such evident pride that legendary frontiersman Kit Carson later bragged that the coordinated assault had been “a perfect butchery.”
The massacre marked the beginning of “a transitional period between the Hispanic tradition of assimilating and exploiting Indigenous peoples and the Anglo-American pattern of killing or removing them,” according to Madley’s “An American Genocide: The United States and the California Indian Catastrophe.”
Fremont (later a U.S. senator from California and a Republican presidential candidate) would say that his party attacked the natives because of reports of an “imminent attack” upon settlers. But the “battle” was one-sided, with the federal troops suffering no known casualties. Afterward, according to Madley’s account, Fremont’s men feasted on the Native people’s larder of fresh salmon.
In the nearly two centuries since, the tragedy would be more forgotten than remembered. There is no historical marker around Redding noting the event.
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The Wintu people believed to have been the principal victims have preserved memories of the mass killing in their oral history. But no ceremony marks the atrocity. And at the Wintu cultural resource center in Shasta Lake City, a wall-size timeline of the group’s history makes no mention of the 1846 bloodshed.
There’s also the now-pressing question — pushed to the fore by the casino feud — about precisely where the massacre occurred. The Northern Wintu and another outspoken opponent, the Paskenta Band of Nomlaki Indians, insist that the Strawberry Fields property was a key location in the atrocity.
The Paskenta commissioned a study by a retired anthropologist from Cal State Sacramento that drew on research from the late 1800s by a linguist from the Smithsonian Institution who, in turn, got much of his information from a Wintu elder who survived the massacre. The report, by Dorothea Theodoratus and a colleague, said that the “center” of the massacre was “opposite the mouth of Clear Creek” in the Sacramento River, a point roughly two miles south of the proposed casino location.
But other accounts from participants and witnesses said Fremont’s soldiers chased down victims after the initial assault, leaving the exact range of the bloodshed unknown. The Theodoratus report says that six villages, including two on the proposed casino property, were so thoroughly intermingled that all “would have had some direct involvement with that massacre.”
Andrew Alejandre, chair of the Paskenta Band, told the Assembly Governmental Organization Committee in August that his tribe is seeking to have the state and federal governments designate the Strawberry Fields a sacred site, off-limits to development. Alejandre, 35, said his tribe vehemently opposes building a casino “on top of men, women, children and elders. The spirit of these ancestors … Let them rest!”
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In rebuttal, Potter and rancheria CEO Edwards note that during the many years that they and others have pursued developments in the region, the rival tribes never mentioned the massacre. Divisive fights over a proposed auto mall and a sports complex (both scrapped) came and went without any discussion about desecration of a mass grave site.
“I would never disrespect the remains of my ancestors,” Potter said.
Fifty miles south of Redding in rural Corning, the 288-member Paskenta Band opened the Rolling Hills Casino and Resort two decades ago. The luxe gaming hall is just one part of an economic surge by the tribe, which has also opened an equestrian complex, an 18–hole golf course, a 1,400-acre gun and hunting center and a 3,000-person amphitheater, where Snoop Dogg performed in May.
Potter charged that the fight over the historic massacre is really a ploy by the flourishing Paskenta to squelch the Redding Rancheria’s hopes for a shimmering destination casino “because of the mistaken belief that it … will cut into the profits of their gaming facilities.”
Paskenta’s Alejandre, a designer who once ran a clothing company, denied that is the case.
While representatives for the Paskenta and Northern Wintu tribes bashed the casino proposal at the August hearing, representatives of at least eightother California tribes argued in support of the Redding Rancheria. One said the Redding group had proved itself a good steward of cultural resources.
Another speaker at the hearing was Miranda Edwards, the 28-year-old daughter of the rancheria CEO. The Stanford-educated Edwards and her mother spoke about the importance of moving the tribal group forward for the “Seventh Generation,” future descendants whose livelihoods must be planned for today.
“We work hard every day to provide for this rural community and make it the best that we can for everyone that lives there,” Miranda Edwards told legislators. “It’s disheartening to hear from those that choose not to see that. But it will not stop our work.”
Potter, the rancheria’s chairman, had a sardonic take on the dispute.
“We always talk about crabs in a pot,” Potter said. “We are like all these crabs, stuck in a pot. When one tries to get out of the pot, all the others reach up and pull him back in.”
Will arguments about the Sacramento River massacre sway the final outcome of the Redding Rancheria’s casino quest? A BIA spokesman said only that “these issues are under review.” Nearly two centuries after representatives of the U.S. military decimated a civilization here, the federal government still retains ultimate authority over the fate of Native people.
Watch L.A. Times Today at 7 p.m. on Spectrum News 1 on Channel 1 or live stream on the Spectrum News App. Palos Verdes Peninsula and Orange County viewers can watch on Cox Systems on channel 99.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Ignoring a collection agency can negatively impact your credit, cause your debt to accrue interest and potentially result in a lawsuit. It’s ultimately better to pay or dispute a debt than avoid debt collection agencies altogether.
While it may be tempting to simply ignore debt collectors, that is generally a poor long-term strategy. Several potential consequences of not paying a collection agency include negative changes to your credit, continuing interest charges and even lawsuits. Even if you can’t pay the debt in full, it’s often best to work with the collection agency to establish a payment plan.
Collection agencies are unlikely to give up on a debt, especially if you owe a substantial amount. The stress of having a debt sent to collections can be tremendous, but waiting out a collection agency and hoping the problem goes away isn’t a viable option.
Read on to learn more about four possible consequences of not paying your debt—and at the end of the article, we’ll offer some strategies for dealing with debt collectors.
1. Interest charges
Even after your debt goes to collections, interest charges can continue to accrue. According to the Fair Debt Collection Practices Act (FDCPA), the collection agency can also charge any fees or interest rates outlined in your original contract—like the interest rate of a loan.
The collection agency cannot raise your interest rate or add new fees, but it may choose to continue generating interest or charge late fees if they were part of the original agreement. That means ignoring the debt collector doesn’t just fail to make your debt go away—in fact, the amount you owe may continue to grow.
2. Credit effects
Having an account sent to collections will lead to a derogatory mark on your credit report. Unfortunately, the mark will likely stay on your credit report for up to seven years even if you pay off your debt with the collection agency. It’s also possible that paying off your collection account may not improve your credit.
Nevertheless, paying off a collection account could help your credit situation in several ways:
The account will be shown as “paid in full” or “settled.” When future creditors look at your report, a collection account that was paid in full sends a more positive signal than an unpaid debt.
Updated scoring models, like the FICO® Score 10 Suite, may regard paid collection accounts differently. Changes to the way FICO calculates credit scores may mean that collection accounts paid in full won’t affect your credit
Sticking to a payment plan could help establish good credit habits. As you work to pay off your debts, you’ll establish positive credit behaviors and work to fix your credit over time.
While you may not see an immediate improvement to your credit after paying off a collection account, it’s an excellent first step toward creating a more positive credit history for yourself. Over time, the impact of a collection account on your credit will start to decrease, which means that your new credit habits—paying on time each month and keeping utilization low, for instance—will start to have a strong effect.
3. Collector communications
Collection agencies will continue to try to reach out to you unless you pay your debt, particularly if you owe a significant amount. Collectors can contact you by phone, mail, fax, or email from 8 a.m. to 9 p.m. Additionally, they are allowed to contact your friends and family to try to locate you—so simply avoiding their phone calls is not a viable strategy.
Also, it’s important to know that collection agencies can continue to reach out to you as long as it is still within the statute of limitations. The statute of limitations, or how long your debt is considered valid, varies based on the type of debt and your state. That said, since the longest statute of limitations can be upward of 10 years, some collectors could call you long after the seven-year mark, which is when the collection account clears from your credit report.
According to federal debt collection laws, you do have the right to request in writing that agencies stop contacting you. If they don’t stop contacting you, the Consumer Credit Protection Act lets you file a complaint with the Consumer Financial Protection Bureau.
However, asking a collection agency to stop contacting you doesn’t mean the debt goes away. If you continue to ignore the debt, the collection agency may file a lawsuit.
4. Lawsuits
If a collection agency intends to get paid for your debt, it may decide to initiate a lawsuit against you. After the collection agency files the lawsuit with the state, you’ll receive a copy and a summons to appear in court.
You’ll want to consult with an attorney immediately, as failing to appear in court will mean you lose by default. In that case, the judge could award the collection agency the ability to do the following:
Place a lien on your property, which can be a mark on your public record.
Garnish your wages, which means your employer may give part of your paycheck to the collection agency before you receive it.
Freeze some or all of the funds in your bank accounts.
If you do receive a court summons, work with a qualified lawyer to help build a case, which will hopefully lead to a settlement with the collection agency.
Can bankruptcy help me deal with a debt collection agency?
Bankruptcy is a legal process that can help businesses and individuals eliminate their debts and stave off collection agencies. There are multiple types of bankruptcy plans (called Chapters) that each come with several drawbacks. Bankruptcy can also drastically hurt your credit and stay on your report for 10 years, so it’s ultimately considered a last resort.
Chapter 7 bankruptcy
Credit card debts, medical bills and personal loans can all be eliminated by Chapter 7 bankruptcy. This process usually occurs over three to four months and is overseen by a federal bankruptcy court. The court then issues an automatic stay and assigns a trustee to your case.
The trustee will then appraise your possessions and liquidate assets to help reduce your debt.
Chapter 13 bankruptcy
Chapter 13 bankruptcy covers many of the same debts covered by Chapter 7 bankruptcy. Here, filers work with bankruptcy courts and attorneys to create a repayment plan. After three to five years of routine payments, a filer’s bankruptcy will eventually be discharged. Chapter 13 doesn’t seek to liquidate your assets, so you ideally won’t have to sell your valuables.
It’s possible to avoid filing for bankruptcy altogether, which requires making a plan to deal with debt collectors rather than ignoring them.
Strategies to deal with debt collectors
Although it can be overwhelming to receive communication from a debt collector, you can formulate a plan to deal with debt collectors to improve your finances. With the right approach, you’ll be able to slowly fix your credit and get back on track.
Use the following approach to begin dealing with the collection agency:
Set up a payment plan with the debt collector, or see if you can reach a debt settlement for a smaller amount of money.
Start practicing good financial habits by keeping your credit utilization low, making payments every month and only spending what you can afford. Members of the “800 club,” Americans with credit scores of 800 or higher, often have great financial habits that you can take inspiration from.
If the debt is not yours or has already been paid, you can start the dispute process and potentially get the collection mark removed from your credit report.
Over time, you can rebuild your credit and pay your debts. However, if the debt is illegitimate or misreported, you should immediately challenge it. To help with that process, consider working with the credit repair consultants at Lexington Law Firm, who can assist with credit repair and address negative items on your credit report.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Paola Bergauer
Associate Attorney
Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.
In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.
A Koreatown apartment owner has agreed to pay $130,000 to settle allegations that one of its property managers sexually harassed tenants for nearly a decade.
In May, the U.S. Department of Justice sued apartment owner M&F Development and property manager Abraham Kesary, alleging Kesary engaged in unwelcome sexual acts, including groping, kissing and attempting to penetrate female tenants at an apartment building on Western Avenue.
The lawsuit alleged Kesary also offered to waive or reduce rent and late fees if tenants performed sexual acts.
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Under the terms of the settlement, filed Friday in U.S. District Court in Los Angeles, M&F Development will pay $120,000 to alleged victims, as well as a $10,000 civil penalty to the federal government. It will also be required to hire an independent property manager approved by the government.
As for Kesary, the agreement permanently prohibits him from from working in property management at any rental property and from contacting alleged victims.
“Tenants have the right to live in their homes free from sexual harassment by their landlords,” Assistant Atty. Gen. Kristen Clarke said in a statement. “The Justice Department will continue to vigorously enforce fair housing laws against landlords who prey on vulnerable residents.”
Neither the owners of M&F Development nor Kesary could be immediately reached for comment. However, after the government filed its lawsuit in May, a man who picked up a phone number listed for an Abraham Kesary told The Times that he was Kesary and denied sexually harassing tenants.
Seemingly forever, the average time between reaching a sales agreement and closing on that property has hovered around 45 days — a month and a half.
It’s not something consumers think about much when they set out to buy a first home or plan to upsize to accommodate life changes. In fact, if you were to describe the home buying experience solely upon the things we see in advertisements, the process would end with the sales contract and all parties would merrily proceed directly to the handing over of the keys.
Unfortunately, those ads don’t talk much about the next month or six weeks, the period real estate professionals call the “settlement process.” More than a few real estate agents will roll their eyes and sigh when asked by a client, upon the signing of a sales contract, “What’s next?”
There’s an entire industry built upon the “What’s next?” in question. When asked why it takes an average of six to seven weeks to get to closing, there are a lot of complex (and honest) answers. But there’s also room for improvement.
The process of orchestrating the collaboration of lenders, appraisers, home inspectors, one or two real estate agents, a title insurance company and possibly others is complex. It doesn’t lend itself to a 24-hour cycle. And the complex legal and regulatory web that can vary from state to state and even city to city doesn’t invite a quick and smooth passage to the closing.
Yet more can be done to ease that 45-day average. There are many processes and chokepoints that could be better addressed. The industry is finally recognizing those stubborn, delay-causing entities and processes and starting to address them head-on, giving us all hope that the 45-day close will one day be a relic of the past.
The chokepoints that the digital transformation hasn’t eliminated …yet
While much is made of the digital transformation that’s swept the title and settlement services industry in recent years, a large portion of that has addressed the core processes of issuing a title insurance policy. Title production platforms are usually the backbone of a digital or partially digital title operation. One would be hard-pressed to find many title agencies that aren’t using some level of technology in that regard.
Other complex and time-consuming tasks addressed by improved technology include title searches, document preparation, lien releases and even the closing itself, as RON and digital closings gain adoption rapidly. The good news is that this trend towards a general adoption of technology seems to be accelerating.
However, the settlement process varies from client to client, location to location. A form may be required in one county that isn’t in most others. A document might be needed closer to the closing date or as soon as a few days after the start of the process.
With all these nuances, it’s unlikely that a centralized production system developed for nationwide usage can eliminate the need to manually enter, for example, borrower information into a proprietary municipal website. There are dozens, if not hundreds, of similar tasks that, to date, have defied complete automation.
Take the wide-ranging requirement for addressing clouds on the title. For numerous reasons, the curative department of a title firm likely doesn’t have the technology to procure things like a satisfaction of mortgage or release. Instead, it’s often some combination of specialized technology, an internet search, a few emails or voicemails, a document with manually entered data and the like.
One significant hurdle to a faster closing process is the complex communication between the various professionals involved. In a typical transaction, a title agency must coordinate with several other parties, often using a mix of emails, phone calls, texts, specialized apps and online portals. This patchwork of communication methods not only makes the process cumbersome but also increases the chances of mistakes and delays.
And then, there’s the process of dealing with the property’s Homeowners Association (HOA) or even simply determining whether one is involved at all.
Dealing with the HOA — a nightmare for all parties involved
The sheer number of HOAs in the United States and the lack of uniformity involved in almost any element of their role in a real estate transaction is another glaring reason for the 45-day closing.
Nearly half (53%) of the owner-occupied homes in America are represented by some form of HOA, yet there’s no single database or central repository that comprehensively indicates which homes are part of an HOA.
There’s no uniform method of determining if a property management firm represents an HOA and, if so, which firm. There’s no easy-to-access resource advising how to communicate with every HOA or property management firm. There’s no universal means of determining what HOA documents are required in different states or what fees you need to pay the HOA to release the documents.
In addition, it almost seems that each HOA takes pride in sorting and storing that data in a unique way. Of course, HOAs and property managers are busy and have other priorities as well. Requirement by requirement, form by form, it has long fallen to the title agency or escrow company to slog through a number of blind alleys to sort the HOA process.
Those realities don’t even contemplate the numerous headaches and delays that come with identifying and dealing with multiple HOAs or the project management skills required to coordinate the Realtor, buyer and seller alike.
This is when an otherwise on-track closing is suddenly and indefinitely delayed by the realization that there is an HOA and that it’s not necessarily playing by the timelines of the closing. Even something as simple as obtaining a PDF might take weeks.
Additionally, almost each HOA in the United States has (and occasionally uses) the ability to change its requirements and documentation with almost no obligation to report these changes to any centralized authority. It quickly becomes apparent that just the process of collecting and exchanging proper HOA documentation is a massive impediment to achieving a faster closing time.
There is growing hope, however. As more title businesses clamor for new technology or improved service offerings for addressing chokepoints like these, more solutions are coming online. More professionals and firms are offering outsourced services and technology that lead to a more streamlined approach. AI and LLMs (large language models) are increasingly being brought into the fray as well.
Now that the title industry has addressed and begun to adopt the automation of core processes (title production platforms, automated search products), it is collectively putting more resources into addressing some of the more granular but every bit as stubborn obstacles to a cleaner, faster closing.
New applications are coming to market faster than ever to help process handwritten documents or non-standard forms and input them into searchable PDFs or even directly into a title agent’s production system.
“Stare and compare” is increasingly replaced by more sophisticated OCR and AI applications. Status updates and other routine forms of basic but time-consuming communication or data collection are moving away from voicemail or email toward RPA and AI applications. The list of improvements is growing at an accelerating pace.
The title industry has finally put the foundation in place for a modernized workflow. Now, it is focusing on some of the ancillary processes that have historically clogged the production pipeline. Real estate will look different in 2030, perhaps even in 2024. I am convinced that our industry will finally put the 45 days to close to bed once and for all.
Anton Tonev is the cofounder of InspectHOA.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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To contact the editor responsible for this story: Deborah Kearns at [email protected]
Stavvy, a fintech firm specializing in digital and remote collaboration for lending and real estate companies, acquired SigniaDocuments, a technology suite from Texas-based lender Evolve Mortgage Services.
Terms of the deal were not announced.
Stavvy will acquire assets, including eClosing tools, eNote and eVault services, eRegistry capabilities for agency and non-agency loans and SigniaDocuments’ SMART Doc technology – a data-driven electronic document engine.
“This strategic asset acquisition cements Stavvy’s position as a premier provider of electronic notarization technology, enhances Stavvy’s digital mortgage platform by adding SMART Doc and eVault capabilities to its existing eClosing solution and underscores its unwavering commitment to providing clients with the most complete digital mortgage experience,” the company said in a release.
Stavvy will offer eNote, SMART Doc disclosures and loan documents for all 50 states across all loan programs.
The acquisition also facilitates the adoption of digital second-lien products like home equity lines of credit (HELOCs). This is supported by Stavvy’s eClosing solution that enables lenders and servicers to choose between hybrid, remote online notarization (RON) and in-person electronic notarization (IPEN) transactions, Stavvy added.
As part of the acquisition, Evolve’s Charlie Epperson and Tim Anderson will join Stavvy.
Epperson was tapped as chief product officer and Anderson was named executive vice president of digital mortgage strategy.
Founded in 2018, Stavvy works to increase efficiency and transparency in real estate and mortgage lending. Its platform offers eClosing functionality, including eSign, digital notarization and video conferencing, designed for real estate and mortgage professionals.
Stavvy has partnerships with Guaranteed Rate, which is aimed at driving digitization in title and settlement agents to real estate professionals, and with loss mitigation and loan modification solution provider Covius to offer RON and eSignature capabilities for all loan mitigation products.
In 2021, Stavvy landed a $40 million Series A funding led by Morningside Technology Ventures, which it planned to use to triple its staff by the first quarter of 2022.
Stavvy went through a growth period in 2021 when it integrated with ICE Mortgage Technology’s Encompass Digital Lending Platform and became a MISMO-certified Remote Online Notarization provider.
In August, Stavvy acquired digital mortgage servicing tech firm Brace to provide a streamlined platform for mortgage servicers and homeowners.
JACKSONVILLE, Fla. – Atlanta-based Ameris Bank has agreed to provide millions of dollars to help people buy or maintain homes in areas of Jacksonville that are majority Black or Hispanic.
A judge this week signed off on the $9 million agreement with the U.S. Department of Justice over allegations the bank discriminated against those minority populations when it came to mortgage lending, which the bank denies.
MORE: Ameris Bank accused of ‘redlining,’ discouraging, denying loans to Black, Hispanic residents of Jacksonville
Their Jacksonville location on the Southbank is a pretty good example. The bank has a big tower there and an ATM. Just about all of their local branches are south of downtown in majority-white areas. Meanwhile, their one branch in downtown Jacksonville was closed in 2019. The DOJ said that denied people who live in the majority-minority areas north of the river equal access to credit.
Ameris Bank is denying wrongdoing but had agreed to spend millions to support homeownership for Duval County residents specifically where the population is mostly Black and Hispanic.
The bank has agreed to invest at least $7.5 million in home loans in the areas for mortgages, home improvements and refinancing. This comes amid allegations they served predominately white areas of Northeast Florida while closing branches in areas where the minority population was higher.
People News4JAX talked to downtown on Thursday said they aren’t familiar with Ameris Bank.
Jacksonville resident Keithphnine Gerald was one of those people but said he believes the allegations.
“That’s the way America is,” Gerald said.
According to the National Association of Realtors, about 73% of white households own homes, compared to about 51% of Hispanic Americans and 44% of Black households.
Lending discrimination is known as “redlining.” DOJ said it was institutionalized by the federal government during the New Deal era and was implemented by private lenders then and now, continuing to deprive communities of color of the principal means of building wealth: homeownership.
“They’re billionaires, the banks, and they got way more money to invest in the Black community,” Gerald said.
The money from Ameris can be used for several things, including direct grants for down payments and closing costs. The maximum people can get per loan is $20,000.
To Gerald, the scope is too small.
Ameris strongly disagrees with any allegations of discrimination.
“We cooperated fully with the Department’s inquiry and have entered into this settlement to avoid the distraction of litigation and because we share the Department’s goal of expanding access to homeownership in underserved areas,” said Ameris CEO Palmer Proctor.
Under the agreement, Ameris is also committing another $1.5 million toward other efforts like advertising and outreach to expand lending in those minority areas.
News4JAX asked Ameris when and how people will be able to access the $7.5 million loan subsidy funds. A spokesperson said, “As the settlement has just been finalized, we are now in the process of preparing for implementation. I don’t have further details to provide at this point.”