The Fair Debt Collections Practices Act

If you currently owe money to a creditor, you may be getting calls from third-party debt collection agencies. However, you may be unaware that there is a law that regulates how these collection agencies may operate. The Fair Debt Collections Practices Act, or FDCPA, sets up rules for everything from how often a collection agency may contact you to what the collection agency representative may say to you. If a collection agency violates these rules, you could sue them for these violations and be rewarded a cash settlement. Here is a brief list of FDCPA rules.

I. What is the Fair Debt Collections Practices Act (FDCPA)?

a. The FDCPA is the federal law that governs the way third party debt collectors operate.

b. The FDCPA only governs third party debt collectors. This means that only collection agencies and law firms that collect debt are governed by this law and NOT the original creditor such as Chase, MBNA, and Discover etc.

c. Many states have their own laws that are similar to the FDCPA.

II. What is considered a violation? (This is just a short list of the major violations and is not intended to be exhaustive)

a. Threat of a lawsuit when there is no actual intent to sue at the time the threat is made.

i. There is case law that states that if the balance is so low and a lawsuit is not feasible then you can assume there is no intent to sue. Generally, this occurs when the debt is less than $250.

ii. Also, if you are dealing with an out of state collection agency, generally you can assume that they do not have anyone licensed to practice law in your state. Therefore they can not legally file suit at the time the threat is made.

b. Threats to take an action that cannot legally be taken.

i. Example: Threats to garnish a debtor's wages when the debtor lives in a state that does not allow wage garnishment.

ii. Example: Threats to seize a house or car when the debtor lives in a homestead state.

iii. Example: Threats to have debtor arrested for the debt.

c. Third party disclosure.

i. The only people to whom a debt collector can disclose the fact that the debtor owes money is the debtor, their spouse or their attorney.

ii. It is also a violation to leave a message on a voicemail or answering machine disclosing the fact that a debt is owed.

d. False representation or implication of attorney involvement.

e. Communication with a debtor after the collection agency has reason to believe that the debtor is represented by an attorney.

f. Communication with a debtor at their place of employment after the collection agency has reason to believe that such calls are not permitted.

g. Communication with a debtor before 8am and/or after 9pm.

h. Abuse on the phone, calling the debtor names, calling the debtor a liar, calling multiple times in a day (5 or more without the debtors consent) or just being generally harassing.

III. What type of recovery can you expect?

a. A typical settlement is between $1000 and $5000 depending on the violation.

b. If the debtor has any actual damages then this will increase the settlement.

c. There is a 1 year statute of limitations on these types of cases. This means that if you have a claim against a collection agency, you must file your lawsuit within one year from the date the violation occurred.

more on Fair Debt Collection Practices Act...

Federal Trade Commission

http://www.legalhelpers.com/legal_helpers/brc_articles_fair_debt_collection.html

Credit card onslaught, Increased healthcare costs

Bankruptcy has helped many people out of financial struggles - giving them a fresh start to rebuild their lives and their credit ratings. The immediate benefits of eliminating overwhelming debt are obvious and unmistakable, but there are also many long term rewards to a discharge in bankruptcy. As reported in a recent Newsweek article, many mature adults have turned to bankruptcy in situations where paying creditors makes it impossible to set aside necessary contributions to a retirement plan or where anticipated social security or retirement benefits do not leave enough excess income to pay off creditors after paying basic living expenses.

The U.S. Department of Commerce's National Institute of Aging projects that by 2010, the number of people over the age 60 in the U.S. will be growing at a rate of three and a half times as high as that of the general population. This means that social security benefits will likely continue to be cut more and more as time goes on. Accordingly, those of us approaching retirement age will need to take the important step of setting funds aside to help us through our retirement years and to eliminate any existing debt that we have, prior to the inevitable decrease in income that comes along with retirement. Even those people who have carefully planned for their retirement are finding that the recent fall in stock values has left them less prepared than they had hoped. Whatever the reason, Bankruptcy can be a method of strategic financial planning to help ensure that you will be able to live a comfortable lifestyle during your "golden years."

The number of people over 65 who file for bankruptcy has tripled in the past 10 years. One obvious reason for this is that most retired adults experience a decline in income along with an increase in expenses, such as health care and housing. Research has shown that social security is the main source of income for the average Chapter 7 debtor. For these people, credit card debt was the most common type of debt discharged. One suggested reason for the increase of credit card debt in seniors is the fact that credit cards can now be used for payment for medical prescriptions and physician co-payments. Exacerbating the problem is the deregulation of usery laws in most states, permitting creditors to charge higher and higher interest rates, along with aggressive marketing programs directed toward seniors and increasing levels of credit extended. This has caused a problem for retirees who are unable keep up with the interest compounding on the balances charged.

In its series of papers examining the economic security of different populations, Demos has set forth a number of suggested solutions to the problem of seniors and their increased financial challenges. Among them are increased regulation of lenders' practices and prevention of Congress' proposed legislation, aimed at inhibiting the ability for many people to file bankruptcy. In the meantime, bankruptcy can be a helpful tool for planning ahead for retirement or for improving the quality of life for those of retirement age.

http://www.legalhelpers.com/legal_helpers/brc_articles_retirement_bankruptcy.html

Taxes and Bankruptcy: The Nuts and Bolts

The filing and subsequent discharge of either a Chapter 7 or a Chapter 13 bankruptcy may eliminate some types of personal income tax liability. There are, however, certain rigid restrictions which must be met in order to completely eliminate personal income tax liability through bankruptcy.

Some personal income taxes may be eliminated through the filing and subsequent discharge of a Chapter 7 bankruptcy. The following requirements must be met for the personal income tax liability to be eliminated in a Chapter 7:

• The tax return must have been filed on time
• The filing should not be fraudulent
• The tax return must have been filed over three years ago as of the bankruptcy filing date (e.g. IRS debts for the last three years generally, would not be dischargeable)
• Alternatively, in some cases, if the tax return was filed late, was not fraudulent and was filed over two years ago as of the date of the bankruptcy filing, the tax debt may be deemed dischargeable. For example, if you filed your 1986 tax returns in 1990, and in 1994 filed a Chapter 7 Bankruptcy, this tax debt would be dischargeable as long as it was not related to a fraudulent filing and the tax debt was assessed by the IRS over 240 days before the bankruptcy filing.

Even if all of the above requirements are met, personal income taxes can still sometimes be non-dischargeable in a Chapter 7 bankruptcy. This occurs when the IRS has placed a tax lien on the debtor's property. In this case, the tax liability must be paid in full, but the IRS may be forced to accept a payment plan or substantially eliminate penalties through the filing of a Chapter 13 bankruptcy.

In a Chapter 13 bankruptcy, the debtor makes payments to a bankruptcy trustee and the bankruptcy trustee in turn distributes a percentage of the payment to the creditors. A Chapter 13 plan is filed with the court which determines the amount distributed to each creditor by the trustee. A bankruptcy judge can force the IRS to accept extended payments on personal income tax liability through a Chapter 13 plan. This type of bankruptcy works well when the IRS has a tax lien on personal property and the debtor has enough income to pay back the IRS over a three to five year period. Tax penalties may be discharged in a Chapter 13 bankruptcy because they are lumped in with all the other unsecured creditors of the debtor, such as credit cards. These are generally only paid back through the bankruptcy at 10% or ten cents on the dollar.

Filing either a Chapter 7 or a Chapter 13 bankruptcy may be a useful tool for debtors to eliminate tax liability.

http://www.legalhelpers.com/legal_helpers/brc_articles_taxes_bankruptcy.html

Do I Have to Go to Court?

Yes. Whether filing a Chapter 7 or 13 Bankruptcy, you must attend one hearing called the "Meeting of Creditors" . The purpose of the meeting is to allow the trustee, a non-judicial court -appointed official, to question the debtor about his/her assets and liabilities. The trustee administers the meeting and is there to verify the accuracy of the information listed on the documents filed with the Bankruptcy Court. The trustee is also appointed to determine if you have assets that exceed the amount that your state or federal exemptions permit you to protect. This meeting usually takes place about 30 days after the filing of the case. The meeting is informal and lasts 5 to 15 minutes. Generally, you should arrive 15 minutes before your meeting to meet with your lawyer. You must present a Photo ID and Social Security Card before the meeting can be held. Attendance of the 341 meeting of creditors is mandatory or you will not receive your discharge. Although your creditors also have a right to appear at the meeting and ask questions regarding your debts, they usually do not.

At the meeting the trustee will ask questions regarding the documents filed on your behalf. Here is a sample of a few questions that may be asked:

1. What is your name and address?
2. Did you review the bankruptcy petition with your attorney before filing?
3. Did you list all of your debts?
4. Did you list all of your assets?
5. Are the schedules accurate or are there corrections that need to be made?
6. Have you ever filed a bankruptcy?

Basically, the purpose of this meeting is to ensure that one qualifies to file bankruptcy and that one has disclosed all their assets and debts.

http://www.legalhelpers.com/legal_helpers/brc_articles_341meeting.html

House Passes Bankruptcy Bill

The House voted 315-113 to approve a proposal to overhaul the nation's bankruptcy laws on March 19, 2003. The House Bill is nearly identical to the Bill passed in the last session of Congress but never voted into law. The bill's supporters acknowledged it was only an early step in what is bound to be a long march toward possible enactment. While proponents, who included Republicans and a sizable number of Democrats, argued that the bill would clamp down on debtors seeking to take advantage of the bankruptcy system and make them pay more of what they owe, Democratic opponents said it would also sweep in debtors in truly dire straits. The bill received nine votes more than the similar bill from 2001.

The latest bill would apply a means test to funnel more debtors into Chapter 13, a less permissive section of the Bankruptcy Code, requiring more individuals to restructure their debt as opposed to wiping the slate clean.

Rep. Jerrold Nadler (D-N.Y.) urged colleagues to take a fresh look at the measure in light of changing economic circumstances during the six years that have elapsed since the bill's inception, reported CongressDaily. House Judiciary Chairman James Sensenbrenner (R-Wis.) responded, "If you can pay some of your debt-that's your obligation, and why should you pass that on to people who pay 100 percent of their bills all the time?" The House also defeated a proposed Democratic substitute, which among other things would have addressed what Nadler characterized as the lending industry's "irresponsible extension of credit" to individuals clearly unable to pay back the loan, the newswire reported.

House bill supporters in the course of floor debate alluded repeatedly to a future House-Senate conference-indicating they have little faith the Senate will take up and approve the House-passed bill.

http://www.legalhelpers.com/legal_helpers/brc_articles_house_passes_bill.html

STOP: HOWEOWNERS BEWARE

Homeowners are constantly barraged by all types of solicitations from companies trying to tap into their home equity. Often, these lenders use deceptive tactics and pay little regard for your long-term benefit. Below are some common scams to watch out for:

Income Padding

Income padding involves a lender encouraging you to exaggerate your income in order to get you approved for a home equity loan. The lender or broker isn't concerned that you will not actually be able to make the monthly payments, because once the loan is extended, the creditor holds the home as collateral, and is able to foreclose.

Loan Flipping

Loan flipping occurs when a lender repeatedly encourages you to refinance your mortgage and borrow more money. Mortgage brokers make their money by closing on as many loans as possible and often encourage homeowners to refinance even when it is detrimental. There are often high hidden fees involved in the loan and a slightly lower monthly payment may still mean a significantly higher amount of total debt and longer loan term.

Deceptive Loan Servicing

Many times, lenders fail to provide you with all of the information regarding fees and costs associated with a new loan. You may be looking for a lower monthly payment or a better interest rate, but often aren't told the long-term obligations that you are undertaking or are deceived about hidden costs and fees.

The Home Improvement Loan

Watch out for contractors offering to do work on your house and stating that they can arrange all the financing for the work done on the property. Later, you find out that you have agreed to a home equity loan that could jeopardize your rights to own the home. With a lien on your home, the contractor has little motivation to do a good job on the home repairs and some even disappear.

Signing Over Your Deed

Beware when a lender offers to help you bring your mortgage payment current in exchange for you signing over the deed to your home. Often, the lender will allow the homeowner to remain in the property as a lure to sign over the title. Once the transfer is completed, you have signed away your ownership interest and have simply become a tenant in a house that you no longer own.

http://www.legalhelpers.com/legal_helpers/brc_articles_homeowners_beware.html

Real Life Success Stories

We understand that no one deliberately gets into financial trouble. But circumstances in life can sometimes be very unfair and unkind, especially in harsh economic times. Mounting bills, unemployment, medical bills, embarrassing telephone calls from bill collectors can each appear to be an insurmountable obstacle in regaining a strong financial foothold.

Take, for example, the case of a Mary L. from Milwaukee, WI, a 20-year-old single mom. Medical bills in excess of $80,000 quickly mounted up because of unforeseen medical problems related to the birth of her new child. Mary had no financial assets or employment that could reasonably be expected to even make a dent in the huge bills. She had only been at her current job for 2 months, and was not yet eligible for the employer's health insurance plan. Proud but realistic, Mary asked Legal Helpers to assist her in obtaining a legal remedy to her financial woes.

Legal Helpers was able to eliminate all of Mary's medical bills. Mary and her child are now both back at home, happy and healthy. Mary may now be able to achieve her goal of buying a house within the next 2-3 years.

http://www.legalhelpers.com/legal_helpers/brc_articles_success_stories.html

Medical Bills Major Cause of Bankruptcy

One-half million people filed bankruptcy last year because they could not pay medical expenses, according to a study published May 2000 in Norton's Bankruptcy Adviser. A total of one million people filed for bankruptcy last year in the United States. According to Harvard Professor Elizabeth Warren, who conducted the study, the problem stems from the US health care system.

While loss of work remains the number one cause of bankruptcy, "when people lose their jobs, they also lose their health insurance. The combination often creates a blow that families cannot recover from without bankruptcy." The groups most often affected by medical debt include seniors, women and families, according to the study. People hardest hit by medical debt often have some insurance, but not enough to cover all the costs of treatment.

http://www.legalhelpers.com/legal_helpers/brc_articles_medical.html

There is Life After Bankruptcy!

Your ability to reestablish credit after filing bankruptcy is better than it has ever been. After you get your discharge, you will receive many solicitations from lenders offering to finance homes, vehicles and credit cards.

Here are some tips on responsibly and successfully reestablishing your credit:
1. Open a checking or savings account. Lenders may look at this to determine if you can responsibly handle money.
2. Apply for store and gas credit cards that you would normally pay cash.
3. Apply for a secured card where you deposit cash and charge against it. Pay advances back over two months so that they will be reflected as positive marks on your credit report.
4. Pay your utility bills and rent on time for at least a year.
5. Find a friend or relative to cosign for you on a loan and pay it on time.
6. Look for car dealers and mortgage brokers that attest to be "bankruptcy friendly". Buy a used car so you do not get hit with the depreciation that occurs during the first two years of a new car purchase.
7. Stay away from payday loans that are at high interest rates and are a "bad credit" trap.
8. Write a letter to each credit reporting agency explaining the circumstances that lead to you filing.
9. Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.
10. Pay your reaffirmed, pre-bankruptcy debts on time.

http://www.legalhelpers.com/legal_helpers/brc_articles_life.html

The Parent Trap

Two children, two incomes, a home with a white picket fence; it's the quintessential American Dream. However, this American Dream has morphed into a survival regimen that many families simply cannot endure.

Parents are in worse economic shape than ever before. Married couples with children are twice as likely as childless couples to file bankruptcy. Having a child is the best indicator of whether someone will end up in financial collapse, according to the authors of recently published book, "The Two Income Trap," by Elizabeth Warren and Amelia Tyagi. The authors maintain that the introduction of mothers into the workforce, rather than easing the financial strain of raising a family, sets their families up for financial disaster as the cost of raising children spirals out of control. More children will go through their parents' bankruptcy than their parents' divorce. One in seven middle-class families will file bankruptcy by 2010. These figures are staggering for middle class families.

At first glance, that argument seems counterintuitive. Two incomes ought to create a larger financial cushion than a single income. The modern two-earner family brings in 75% more inflation-adjusted income than the traditional one-income family. Yet, families today have less discretionary income than the traditional one-income families for a variety of reasons.

The decline of public education has raised housing costs in good school districts, prompting parents to overextend on mortgages. Couples with children are spending more on housing than ever before. At the same time, the free-wheeling, unregulated lending industry resembles a carnival sideshow with lenders assuming the role of "carnival barkers;" step-right-up folks we'll finance 120% of the purchase price of that home for 3% down. Families are spending themselves into financial collapse. The lending has industry has buried American mailboxes in a tsunami of 5 billion pre-approved credit card offers in 2003.

This perilous situation is compounded by the fact that married couples with children work in an era of unprecedented job insecurity, where employers regularly slash salaries and insurance benefits. The rates of the medically uninsured are increasing, the cost of healthcare is through the roof and families are more likely to be caring for elderly parents. In fact, nearly 90% of families with children who file bankruptcy cite three reasons: job loss, medical problems, or divorce, according to the Harvard University Consumer Bankruptcy Project.

Having children is a leap of faith, rather than a cold, hard economic calculation. However, many families may not have the financial capacity to land safely on the other side.

http://www.legalhelpers.com/legal_helpers/brc_articles_parent.html

Chapter 7 Process Versus Bankruptcy Chapter 13 Process

In some ways, the process in bankruptcy Chapter 7 and bankruptcy Chapter 13 are the same, but in many ways they differ. In both, you file a Voluntary Petition and related documents prepared with the help of an attorney. In both, you attend a 341 meeting of creditors where you are examined by a Trustee regarding the Voluntary Petition and related documents. That is where the similarities end.

In a bankruptcy Chapter 7, you do not make payments to the Trustee. You may continue to pay a mortgage or car loan and keep the house or car by signing a "reaffirmation agreement" which makes it as though you did not file bankruptcy on that particular loan. Chapter 7 also gives you an option to redeem a vehicle, by paying the secured creditor the value of the collateral in exchange for a release by the creditor of their lien. The Chapter 7 process is relatively short, lasting approximately 3.5 months from filing to discharge. There are usually no motions filed by anyone in a chapter 7 case. Nevertheless, the process is complicated, and there are many pitfalls for the unwary, so we urge you to hire an experienced attorney. If you have low income but a lot of unsecured credit card or medical debt, Chapter 7 is for you.

In a bankruptcy Chapter 13, you do make payments to the Trustee, with the first payment due 30 days after your case is filed. Also, in addition to a Voluntary petition and related documents, you file a Chapter 13 repayment plan, proposing to repay your debts by making 36-60 monthly payments to the Trustee. After the 341 meeting of creditors, there is another hearing called a "confirmation hearing" where your case goes before the Judge. You do not have to attend the confirmation hearing, but your attorney will be there to represent you. Creditors can file objections to confirmation if they have a problem with the proposed Chapter 13 repayment Plan. Your case will be confirmed by the Judge at the confirmation hearing if you are current with your Chapter 13 payments to the Trustee, any amendments requested by the Trustee have been filed, and any objections filed by your creditors have been resolved. After that, all you have to do is make all your monthly payments under the confirmed Chapter 13 repayment and you will receive your discharge. There are usually many motions filed by creditors, the Trustee, and by your attorney on your behalf, during a Chapter 13 case. Chapter 13 is even more complicated than Chapter 7, so do not attempt to proceed without an experienced attorney. We have represented thousands of Chapter 13 clients, and are a fixture in the bankruptcy courtrooms throughout the land.

http://www.legalhelpers.com/legal_helpers/brc_articles_chapter13_vs_chapter7.html

Want to Declare Bankruptcy Under Chapter 13? Are You Eligible?

Businesses can't declare bankruptcy under Chapter 13

A business, even a sole proprietorship, cannot file for Chapter 13 bankruptcy in the name of that business. need to declare bankruptcy under Chapter 11 when they need help reorganizing their debts.

If you own a business as a sole proprietor, however, you can file for Chapter 13 bankruptcy as an individual and include the business-related debts for which you are personally liable.

You Must Have Stable and Regular Income

You must have stable and regular income to be eligible to declare bankruptcy under Chapter 13. That doesn't mean you must earn the same amount every month. But the income must be steady -- that is, likely to continue and it must be periodic -- weekly, monthly, quarterly, semi-annual, seasonal or even annual. You can use the following income to fund a Chapter 13 plan:

• Regular wages or salary;
• Income from self-employment;
• Wages from seasonal work;
• Commissions from sales or other work;
• Pension payments;
• Social Security benefits;
• Disability or workers' compensation benefits;
• Unemployment benefits, strike benefits and the like;
• Public benefits (welfare payments);
• Child support or alimony you receive;
• Royalties and rents; and
• Proceeds from selling property, especially if selling property is your primary business.
  

You Must Have Disposable Income

For you to qualify for Chapter 13 bankruptcy, your income must be high enough so that after you pay for your basic human needs, you are likely to have money left over to make periodic (usually monthly) payments to the bankruptcy court for three to five years. The total amount you must pay will depend on how much you owe, the type of debts you have -- certain debts have to be paid in full; others don't -- and your court's attitude. A few courts allow you to repay nothing on debts, which legally, don't have to be repaid in full, as long as you repay 100% of the others. Some courts push you to repay as close to 100% of your debts as possible. Most courts fall somewhere in between.

To determine if your disposable income is high enough to fund a Chapter 13 plan, you must create a reasonable monthly budget. If you are not proposing to repay 100% of your debts and the court, the trustee or a creditor thinks your budget is too generous -- that is, it includes expenses other than necessities -- your budget will be challenged.

Your Debts Must Not Be Too High
You do not qualify to declare bankruptcy under Chapter 13 if your secured debts exceed $922,975.00. A debt is secured if you stand to lose specific property if you don't make your payments to the creditor. Home loans and car loans are the most common examples of secured debts. But a debt might also be secured if a creditor -- such as the IRS -- has filed a lien (notice of claim) against your property.

In addition, for you to be eligible for Chapter 13 bankruptcy, your unsecured debts cannot exceed $307,675. An unsecured debt is any debt for which you haven't pledged collateral. The debt is not related to any particular property you possess, and failure to repay the debt will not entitle the creditor to repossess property. Most debts are unsecured, including bank credit card debts, medical and legal bills, student loans, back utility bills and department store charges.

http://www.legalhelpers.com/legal_helpers/brc_articles_eligible_chapter13.html