Texas Lawyer for Credit Card Debt

This video features David Shuster, a Bankruptcy attorney based in Texas.

Dallas—Fort Worth Bankruptcy Attorney Explains Debt Relief Solutions

Video Transcript:

David Shuster: 

Now just because you start missing payments doesn't mean you have to run off to bankruptcy court or get sued right away, you have time and you have options.

Tom Mustin: 

If you have credit card debt, what options do you have? We're talking to Attorney David Shuster about that on today's episode of AskTheLawyers. David, thanks for joining us.

David Shuster: 

Yeah, thanks. I'm glad to be here, thanks.

Tom Mustin: 

Great to have you. When someone is dealing with credit card debt, what is something you recommend they do?

David Shuster: 

Well, I recommend they take a look at how much this debt is costing them to maintain. I mean, you're making the payments, it feels good, your current credit's good, but how much is it costing you per month to maintain the debt? Can you pay it off sooner and if you can't, when will you be able to pay it off? And depending upon the answers to those questions, you may wanna call a local attorney, like myself to try and figure out the timeline of your options. Just because you start missing payments doesn't mean you have to run off to bankruptcy court or get sued right away, you have time and you have options.

Tom Mustin: 

So, if someone is at risk of falling behind on payments, talk about some of those options they do have.

David Shuster: 

Well, the best get-out-of-debt-plan is going to be a Chapter 7 bankruptcy to just wipe the slate clean. You can do it with only one hearing, typically, it's by telephone... They are by telephone and typically doesn't require any other hearings. And so, within a matter of about 90-100 days, three to four months, let's say, one telephone hearing in between there, you can discharge hundreds of thousands of dollars worth of debt. You just need to talk to an attorney to find out if you qualify based on your income, and confirm you're not gonna lose anything.

David Shuster: 

Here in the state of Texas, the exemptions are fairly generous, as compared to other states let's say, and so, most of my cases are households where they've contacted me with a lot of debt, "What are my options?" Do the Chapter 7 bankruptcy, and three-four months later, it's business as usual as it was before, but without all the debt. And you're gonna be able to open up new accounts almost immediately. Obviously not $10,000 CitiBank cards, okay? [chuckle] But you can start off very small and build up, and within a few months you can get a good credit score and be back to a good position within a year, certainly a lot better scenario when you consider alternatives. And of course, there's the Chapter 13 bankruptcy, you also can get rid of debt there, but that involves making payments first.

Tom Mustin: 

And another option are debt settlement companies, how do you feel about that?

David Shuster: 

A lot of people get a lot of stuff in the mail as they begin to default on debt or as the debt progresses, or of course they see advertisements, or even really mainly just searching on the Internet is how most people find these places. And the companies typically are just too... They're cost prohibitive. So you're paying money to a company, company is taking your money and it's gonna get their fee first, and then eventually they'll start using your monthly payments to settle the debt. But I've seen these things in the beginning and mid-way through and some towards the end, and the percentage of what you're going to repay creditors is 85%-90% in most cases, when you consider all the payments that you've made to this debt settlement company.

David Shuster: 

They take fees as a percentage of your outstanding debt, so if you have more debt, it gets really costly. I don't even wanna tell you some of the figures that I've seen. And then if you get sued and you're, "Oh, I've got a debt settlement company," well, they might act like they have an attorney for you, but they really don't, and you're gonna be in a bind there. So, local attorneys are gonna be cheaper than debt settlement companies, so I recommend avoiding them. You don't need them.

Tom Mustin: 

And with the economy being what it is right now, times are tight for a lot of folks, what happens if someone just simply can't pay the debt? What options do they have there?

David Shuster: 

Yeah, it's important for people to know that just not making payments to unsecured creditors, if you owe Bank of America a certain amount of money and you stop paying them, that's an option that you have, just don't deposit your checks there. And so, really you just look out for things like, "Am I depositing my hard earned money with a bank that I have defaulted debt with?" That could create a problem, you don't wanna do that. But as long as you're banking somewhere else, it's gonna be a long time before... Between default and actually a creditor pursuing its rights. So again, if you're not banking with the bank that you stop paying on, you could have three, four, five years even before you actually have to sort of come to the table and avoid a judgment and things they can do with a judgment.

David Shuster: 

And so you have a lot of time there, between not paying and going into court. So, just prioritize your budget, cut out the credit cards, especially if you're not using them. Stop paying them, you know what I mean? And then, it doesn't mean you have to do anything the next day. The sooner you come up with a plan it's gonna create less stress in your life, but you have a lot of time. So just cut off the payments to creditors, that's the first step, you gotta prioritize.

Tom Mustin: 

That's some great advice there. So, what if bankruptcy is on the table? What happens to the credit card debt, then?

David Shuster: 

Well, that's like I was saying with the Chapter 7/Chapter 13, the discharge means that once you get the discharge and the bankruptcy, and again, Chapter 7 is just a very quick three to four month process, once you get that, the creditors have a permanent injunction against them from ever trying to collect on the debt again. So it is... A discharge is the nail in the coffin of the creditors coming after you, and so, the bankruptcy option is preferable if it makes sense for your family. I mean, everybody's different, the person or family. I mean, if you qualify... It just depends on what you qualify for, what's the most bang for your buck? What's gonna put you in a good situation?

David Shuster: 

If you're looking to move in the near future, you wanna keep your credit good for a loan or renting, obviously, but once you consider the important things like that, then you can just lay out a timeline and say, "Which option is best for me?" If you're making a lot of money, but your household expenses are high, putting kids through college, just stop paying the credit cards, get over that hump and then we can deal with it. We can deal with the creditors, like I said, three-four years later by settling the debt with them. If you're gonna be retiring or not making as much money in the not too distant future, then you would wanna wait until the time period, stop paying the creditors, wait till that time period and then pursue a bankruptcy discharge. So a lot of... Timing is a big part of it.

David Shuster: 

If there's changes in your household, then you'd wanna talk to an attorney, you can take those changes into consideration. Here in my office, myself and my social attorney, we always consider, obviously, what's best for the client and how they can get in a better position without exhausting most of the family's hard earned money. That's always the consideration.

Tom Mustin: 

What about settling debts in court? Talk about some of the pros and cons there of that option.

David Shuster: 

Yeah, you can always settle in court. And so, you'll spend a little bit more money in attorney's fees once it gets to that point, but it is not super expensive compared to what you'd spend in attorney's fees for other legal matters. And you have options. And as I said, so when you default, stop paying the creditor, because you just have to pay something else, you gotta pay for kid's college, you gotta move, you have to do this, you gotta help out someone who's sick, you yourself have medical bills. So you default and stop paying, and then think about the time span there. I mean, from the time that... If they sue you in two years and then it's in court for another year, conservatively, you have three years, okay?

David Shuster: 

Like, that's a long period of time. Different things can happen, you can free up money in that period of time. You can still settle the debts three years later, in most cases, for a discounted amount. Every bank and creditor obviously have different settlement parameters, but at the end of the day, we look to something close to a 50% average. And so you do have time, you can settle it in court, and we do debt defense of lawsuits as well, most of the time geared towards a settlement or whatever's in the best interest of the client. And you can still file bankruptcy and get rid of the debt, even if it's three years later and you've got three lawsuits at your doorstep, you can still do bankruptcy, it'll dismiss the lawsuits, dismiss the debt, and as I said, in a few short months, you'll be back up and running again.

Tom Mustin: 

Well David, great answers, fantastic insight as always, and we certainly appreciate you joining us.

David Shuster: 

Yeah, always glad to be here, thanks for having me.

Tom Mustin: 

Thanks again, Dave. And that's gonna do it for this episode of AskTheLawyers. My guest has been David Shuster. If you wanna ask David about your situation, call the number you see on your screen. Thanks for watching. I'm Tom Mustin for AskTheLawyers.

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