Within the tug o struggle of which creditor to pay, why is it that bank cards win over taxes and little one assist?
I’m accustomed to shoppers who pay collectors quite than present for their very own well being care, emergency fund, or retirement. That’s caring for commitments to others earlier than self.
However I haven’t discovered why embattled debtors select to pay the bank card collectors as an alternative of kid assist and taxes. But that was simply what this week’s shopper had completed: $10,000 in taxes and $24,000 in assist for a kid went unpaid, whereas he chipped away at bank card debt.
To a chapter lawyer, that is insane, since each household assist and up to date revenue taxes are precedence claims, not dischargeable in chapter.
To an outsider, it’s nonetheless insane, because the IRS can merely take all the cash in your checking account, with out suing you first. And your little one depends and yours, to not point out that failure to pay little one assist is the one debt that can get you jailed.
These are the collectors to worry.
I’ve two theories of why individuals select to pay bank cards as an alternative of taxes or assist.
- Terror of the Phone: the bank card firms name, and name, and name in case you don’t pay. They invade your private house at house, and so they confront you together with your monetary shortcomings incessantly. It’s onerous on the nerves and the ego.
- Credit score Report Obsession: fixated on credit score reviews and credit score scores, shoppers give attention to the quick “injury” that bank card delinquencies can inflict, and put aside the extra lasting injury that tax liens and wage intercepts may cause in case you ignore the feds and the kid assist authorities.
Bank card firms can’t take your cash with out suing you first, so that they should use worry and disgrace to get you to distort priorities and pay them first.
We have to get that phrase out.
Who to pay when you may’t pay everybody
Money owed that don’t go away in chapter
Picture licensed below Inventive Commons, courtesy of Javier Kohen.