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Author: Windowseat Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308547  
Subject: Re: Credit Card Debt - Best Approach? Date: 10/6/2012 11:12 AM
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By legal help do you mean bankruptcy? Yes, he can file. And it appears that he will be eligible for Chapter 7, which wipes out unsecured debts.

However, before he can file, he'll need to save up some money to pay the lawyer and he'll have to undergo credit counseling. (Lawyers refuse to put their charges on a credit card if someone is filing; they want immediate payment).

Here's a link to a national group of credit counselors.

http://www.nfcc.org/

And here's list of approved credit counselors.

http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm

As Gingko said, the creditors can't touch his 401(k) and his home, but they can file a lien against his home which will make for difficulties if he needs to sell it. A lawyer can explain all the risks he might face. (Bankruptcy, while filed in Federal court, has different rules in different states, so your nephew will really need to talk to a lawyer about what exactly might happen).

My greatest concern is if your nephew has stopped the spending spree. Has he changed his habits and his way of living, or is he likely to start spending again once the debt is gone? There are plenty of people who wipe out their debt, and once it's gone charge up the cards again. They'll never get out of that way of thinking.

Hope this helps.

Nancy
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