Dear Liz: I am 75, in poor health and live only on Social Security (I get $1,046 per month). I’ve been told that if I want, I can stop making payments on two credit cards that I owe on and will never be able to pay off. Is that true? I can’t afford to file for bankruptcy.
A: Normally, when someone stops paying a debt, the creditor will start collection attempts and may file a lawsuit. If the suit is successful, the creditor gets a judgment and can take further actions, such as garnishing wages or taking property.
If your only source of income is government benefits, though, and you have no home or other assets that can be legally taken to satisfy your debts, then generally you’re considered ‘judgment proof.’ That means a creditor is unlikely to get any immediate payment if it sues you in court.
That doesn’t mean lawsuits won’t be filed, however. A creditor may get a judgment against you hoping to get something out of your estate when you die. Even if no suit is filed, you may have to deal with collection calls and letters that can continue for years, even decades.
If you really can’t pay these debts, then you might want to consult with an experienced bankruptcy attorney about your options. Many offer free initial consultations, and they may be able to help you find an affordable way to file your case if that seems like the best course.
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