What is the Fair Debt Collection Practices Act?

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The Fair Debt Collection Practices Act is an act that was passed to keep consumers from being abused by creditors.  Already feeling abused and harassed by the constant calls or the condescending tones or the threatening letters?  There is something you may be able to do about it.

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Whenever my mother was frustrated by someone or some corporation she would firmly state, “I’ll show them, I am going to write them a letter.”  It doesn’t sound empowering, yet in this case, she was definitely onto something.  Under this act, you are allowed to write a letter to each creditor requesting they stop contacting you.  This is also commonly revered to as a cease and desist letter. Make sure you make copies of this letter and send it certified mail to all your creditors.  One caveat: this only prevents them from contacting you on a regular basis; the company is still within their own rights to take legal action they deem necessary.  Also, this letter does not magically erase this debt- but a Chapter 7 bankruptcy may be able to wipe out your debt!  Once the creditor has received this letter the only contact they may engage in is to let you know they have received your request and will honor it, or to let you know they have taken legal action.

In addition, this Act also limits the times and the places a creditor may solicit payment from you.  For instance, they are only limited to the hours of 8am to 9pm to call- not that your phone gets much rest, but at least you can sleep with your phone on and know only emergencies are calling you during the night!

Now the important question: are creditors allowed to contact me at work? Unfortunately, they may call once if they somehow obtain your work number, but if they are verbally told or in writing told they are prohibited, it is in violation of this act if they continue to do so.  This also goes for third parties, such as family members.

I have retained Duncan Law, PLLC for our bankruptcy, will that stop creditor calls? Once you have retained an attorney, you may give the creditor your attorney’s information.  At that point, they will typically stop contacting you because they know they aren’t going to be able to collect the debt – they would rather move on to the next person they think they may actually be able to get money from.  However, they are not required to stop all forms of communication to collect a debt until you have actually filed the bankruptcy.

If you feel as though you are being treated unfairly by a creditor who is trying to collect a debt from you, visit the Federal Trade Commission’s Guide for Consumers to learn how to report improper collection attempts.

Garnishment- yikes! Can creditors take my paycheck or tax refund or bank account? The only way a creditor may access your funds and assets is by entering a legal action with the court, such as a suing you.  If the creditor wins, then the court will enter a garnishment order on the creditor’s behalf.  Federal Benefits: most of these are protected and may not be garnished under any circumstance.  However, if you owe student loans, taxes, child support or alimony, be prepared to have you monthly income docked automatically if you are behind on these payments.

If you are being sued, always answer the complaint.  You may represent yourself, which is also known as pro se representation. If you choose to work with us we can help show you how to answer the complaint served against you.

When all seems lost and you feel as though no one is on your side, take a second and read over your rights under the Fair Debt Collection Practices Act.  Most people in your position are at this point due to unforeseen circumstances and have already exhausted every option.  Bankruptcy is a way to get a fresh financial start, but until then, use this Act to protect your privacy, your phone, and your sanity.

Am I Required to Pay Property Taxes On My Vehicle if I Surrender it in Bankruptcy?

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Are Debts Ordered in a Separation Agreement Dischargeable in Bankruptcy?

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When the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) became effective October 17, 2005, debts ordered in a separation agreement, divorce decree or other order of the Court became non-dischargeable.  This can be reviewed in detail at 11 U.S.C § 523(a)(5) and 523(a)(15).  Domestic support obligations, inclusive of alimony, child support and other debts ordered to be paid by the court, cannot be eliminated in bankruptcy regardless of whether it is ordered before, during or after the date of the bankruptcy filing.  In addition, the debts cannot be eliminated regardless who is owed the debt – spouse, ex-spouse, child, guardian of the child or a governmental unit.  1 U.S.C § 101(14A).

If you are in the process of a separation and divorce, it is important to understand what you are obligating yourself to pay prior to signing the paperwork.  A couple of common examples are provided below:

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Example One: You and your soon to be ex-spouse have a credit card with a balance of $10,000.  You and your spouse incurred this debt when trying to start a business.  During the negotiations of the separation agreement, you decide to take responsibility for the credit card.  You feel this is the right thing to do since you pushed the development of the business.  In this case, your spouse is “held harmless” for this credit card balance.   As a result, you must pay this debt.

Example Two:  You and your ex-spouse own a home.  Your ex-spouse and two children live in the home and want to continue to live in the property.  Both of your names are on the first mortgage loan but only your name is on the second mortgage.  You have agreed in the divorce decree to pay the mortgages on the home until your youngest child graduates from high school.  Once again, since you took responsibility for the debts under the divorce decree, you cannot file bankruptcy to eliminate the debts on the two loans.  You are now solely responsible for the debt on the house.

There are obviously many examples, but these are two of the more common scenarios we see at Duncan Law.    Again, it is extremely important to assess your ability to pay prior to accepting responsibility for the debt¸ since it will not be dischargeable in bankruptcy.

What Happens If We Get A Divorce While in A Chapter 13 Bankruptcy?

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What is a Motion to Avoid a Judicial Lien in Bankruptcy?

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What Are the Most Common Reasons A Bankruptcy Case is Dismissed?

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There are numerous reasons a bankruptcy case may be dismissed. A dismissal of a bankruptcy case is when the federal judge issues an order terminating a case.  Usually the debts are not eliminated if the case is dismissed.  In contrast, a “discharge” means the debts have been eliminated.  Listed below are the most common reasons a bankruptcy case could be dismissed:

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1)    The debtor gives a false oath or information on the bankruptcy petition with the intent to defraud creditors,

2)    The debtor has filed a previous bankruptcy within a certain time period and is not eligible to file another bankruptcy and receive a discharge of the debts,

3)    The debtor has not filed all the required documents with the bankruptcy court,

4)    The debtor did not take and complete the required court approved credit counseling and/or financial management courses as required by federal law,

5)    The debtor fails to provide certain documentation to the bankruptcy Trustee upon request of such documents by the Trustee,

6)    The bankruptcy Trustee has objected to the discharge of the debtor’s debts based upon his investigation of the debtor,

7)    In a Chapter 13 repayment plan, the debtor fails to make the required Chapter 13 plan payments to the Chapter 13 Trustee,

8)    The debtor has non-exempt property and fails to turn such property over to the Trustee upon request,

9)    The debtor fails to obey a lawful order of the court, and

10) The bankruptcy judge believes there is good cause to deny the debtor a discharge and dismisses the bankruptcy case.

In conclusion, the above list is not exhaustive, but does highlight some of the most common reasons a bankruptcy case could be dismissed.

Can I Collect Workers’ Compensation Benefits If My Employer Files For Bankruptcy?

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Most employers’ employees are covered by workers’ compensation insurance.  This workers’ compensation insurance is provided by a third party insurance company, not the employer themselves. Insurance companies are required by the state to keep a reserve of money on hand to cover the cost to pay out benefits to the injured worker. Therefore, if your employer files bankruptcy and they had workers’ compensation insurance at the time you were injured, the insurance company will be required to pay you your benefits.

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However, there are a few exceptions to this rule, especially if your employer is a large company that is “self insured”.  In the event your employer is self insured, they must usually have a bond through an insurance company that will “guarantee” injured workers receive their benefits in the event the employer files bankruptcy or cannot provide benefits to the injured worker.

Sadly, if your employer does not have workers’ compensation insurance and they file bankruptcy, it may be difficult to collect money from them if you were injured on the job because they are “broke” and you “can’t get water from a dry well.”