THE DEBT COLLECTION AGENCY GOT A JUDGMENT AGAINST ME EVEN THOUGH WE WERE NEGOTIATING A PAYMENT PLAN!

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Consumer debtors are often surprised to learn that a judgment has been entered against them even as they are negotiating a payment plan with a debt collection agency.

What the SAM hell is happening here?

Debt collection agencies are in business to recover as much money as possible, as quickly as possible.  In that effort, they will pull out all the stops and proceed on parallel paths to recover unpaid debt.

Litigation proceeds at is own pace and negotiations for debt settlements do not necessarily stop the litigation process.

It is therefore critical then while negotiating a debt settlement after you have been sued to get an agreement in writing with the debt collection agency to forbear from continuing to prosecute the lawsuit pending reaching an agreement regarding the debt and documenting whatever settlement is agree upon.

This is particularly important if you have not yet filed an answer to the summons and complaint.

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

HOW CAN I GET MY NAME OFF A CAR LOAN?

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This is a question that gets asked a lot.  Usually in the context of a broken relationship.

“My ex-boyfriend wanted a car and I agreed to co-sign the car loan. He and I no longer see each other and he refuses to take my name off the car loan.  What can I do?”

Let’s attack this question in four easy steps.

First, the boyfriend has no power, by himself, to get his former girlfriend’s name off the car loan.

Second, only the car lender can agree to release a loan party who is obligated to repay the car lender.

Third, the car lender has no incentive to release anyone because doing so makes recovery of the car loan less certain.  The car lender knows that it’s easier to get repaid if the lender can go after two people as opposed to just one.

Fourth, the car lender may be enticed to release a co-signer under two circumstances.  In the first scenario, if the party who will remain obligated on the car loan pledges additional security that is satisfactory in form and amount to the car lender, the lender may agree to release a co-signer.

The additional security can be foreclosed on by the lender if the remaining borrower defaults on the car loan.

In the second instance, if the co-signing party that wants to be released can find another party of equal or better financial standing to substitute in the place and stead of the departing co-signer, the lender again may be willing to release the original co-signer.

This way the lender still has two parties from which to recover on the defaulted loan.

The Key Takeaway?

A bankruptcy judge once commented, in chambers, that “a guarantor (one who co-signs for another) is a schmuck with a pen in his hand.”  “Schmuck” is Yiddish for a foolish person.

Be careful if someone who is not a natural object of your affection (i.e., your children) plead with you to co-sign a loan of any kind for them.  Only do so if you are fully prepared to pay off the loan in full — by yourself.

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

HOW TO DEAL WITH A WAGE GARNISHMENT

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Garnishments, Generally

If a creditor sues you and gets a judgment against you, the creditor (now a “judgment creditor”) can recover the judgment amount by “garnishing” your wages and/or seizing certain property.  In New York, garnishment is more officially known as “income execution.”

Garnishment Process

In practice, the creditor secures an order for income execution and serves it upon your employer.  The employer then is required to deduct a certain portion of your wages each pay period and remit the withheld amount to the sheriff or marshal or other court official, who in turn transfers the moneys to the judgment creditor.  The process continues until the amount of the judgment is paid in full or “satisfied,” or you cease to be employed.

What to Do if Your Wages are Being Garnished?

What can you do if your wages are being garnished or subject to income execution?

Each situation is different and the wage earner may be well served to confer with an attorney to consider all options, but here is a non-exhaustive list of certain considerations if you become subject to wage garnishment:

  1. Is the underlying judgment valid? You may be able to get the judgment vacated (set aside) if the judgment was obtained without appropriate due process protections.
  2. Has the judgment already been satisfied by previous payments made in the ordinary course or pursuant to a settlement with the creditor or collection agency? 
  3. Has the judgment creditor given you appropriate credit for all prior payments made?
  4. Is the amount being garnished excessive in light of your gross pay and available exemptions?  Various federal and state laws limit the amount of garnishments during any particular pay period.  Make sure the amount does not exceed the appropriate amount.
  5. Are you already being garnished by another creditor?  Multi-creditor garnishments may be prohibited in certain circumstances, particularly if applicable federal and state law limits have been exceeded.
  6. Can you pay the judgment creditor a discounted amount of the judgment in the form of a lump sum in exchange for a full release?
  7. Can you negotiate a payment plan with the judgment creditor to avoid wage garnishment, in exchange for a promise by the creditor to forbear from further garnishments and collection activity?  It may be difficult to persuade a judgment creditor to rely on your promise to pay, when the judgment creditor can reasonably rely on the garnishment process.
  8. Is bankruptcy an option?  Bankruptcy will stop a wage garnishment in its tracks and generally results in a discharge of the underlying judgment and a perpetual ban on further garnishments and collection efforts.

If you learn you are being garnished, keep calm and work your way through the foregoing considerations.

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

 

 

The Nine Principal Debts That Are Non-Dischargeable in Bankruptcy

Discharge

Most consumer debtors file for bankruptcy protection to get a discharge of debt.

The discharge granted in chapter 7 and 13 bankruptcy cases does two things.  First, the debtor is released of all legal liability for payment of the discharged debt.

Second, the creditors holding discharged debt are forever prohibited from attempting to collect the debt from the discharged debtor.

Not all debts may discharged in bankruptcy, however.  The following is a list of the top 9 debts that are generally NOT DISCHARGED in bankruptcy:

  1. Most taxes.  Not all taxes are non-dischargeable and careful analysis is required in connection with pre-bankruptcy planning to secure the broadest discharge of tax debt.  Special provisions apply in chapter 13 cases.
  2. Debts incurred through false pretenses, fraud or false financial statements.  These debts are only non-dischargeable if the relevant creditor objects to the dischargeability of the underlying debt  and prevails in an adversary proceeding commenced within stringent time limitations.
  3. The claims of creditors not listed or scheduled by the debtor.  This exception to discharge highlights the importance of listing all creditors and debts after a thorough and careful analysis of the debtor’s financial situation.
  4. Debts incurred through fraud or defalcation while acting in a fiduciary capacity, or embezzlement or larceny even if not in a fiduciary capacity.  Like debts incurred through false pretenses, fraud or false financial statements, these debts are only non-dischargeable if the relevant creditor objects to the dischargeability of the underlying debt  and prevails in an adversary proceeding commenced within stringent time limitations.
  5. Domestic support obligations. Alimony, maintenance and support are not dischargeable in bankruptcy under chapters 7 and 13.
  6. Debts incurred as the result of willful or malicious injury to another entity or the property of another entity.  Like debts incurred fraud, this category of claims is otherwise dischargeable unless the relevant creditor objects to the dischargeability of the underlying debt  and prevails in an adversary proceeding commenced within stringent time limitations.  Special provisions apply in chapter 13 cases.
  7. Fines and penalties of a punitive, as opposed to a purely compensatory, nature are not dischargeable in bankruptcy, but certain fines and penalties may be dischargeable in chapter 13 cases.
  8. Student Loan Debt.  In order for such debt to be discharged, the debtor must demonstrate that he/she and his or her dependents would suffer continuing undue hardship if the debtor were compelled to continue to pay student loan debt.
  9. Debts relating to personal injury or death incurred as the result of the operation of a vehicle while intoxicated. 

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

 

 

Can I file a Chapter 7 Bankruptcy if I Filed 6 Years Ago?

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Financial distress can sometimes linger like a bad cold that you cannot shake.  What happens if you need to file for bankruptcy a second time.

Can you do so immediately?

Or are there waiting periods?

Let’s look more specifically at the question posed in the title of this article: Can I file a chapter 7 bankruptcy if I filed 6 years ago?

The answer is YES — but that is only half of the story.  Although you may file for bankruptcy again, the real question is what can you achieve in the second case?

Most consumer debtors file for bankruptcy to get a discharge of debt.  If a discharge cannot be achieved, then for the vast majority of debtors, it makes no sense to file for bankruptcy.

If the Prior Case Was a Chapter 7 Case

If your prior case was (a) a chapter 7 case, (b) filed within 8 years before the second chapter 7 case, and (c) was a case in which you were granted a discharge, you most assuredly can file for bankruptcy again, BUT YOU CANNOT GET A DISCHARGE IN THE SECOND CHAPTER 7 CASE.

You can only get a second chapter 7 discharge if the second case was filed eight (8) years or more after the petition date in the first case in which you were granted a discharge.

If, on the other hand, your prior chapter 7 case did not result in a discharge, you can file away without delay and still hope for a discharge in the second chapter 7 case.

If the Prior Case Was a Chapter 13 Case

What if your prior case was a chapter 13 case?  Here the matter is a little more complicated.

You cannot get a discharge in a subsequently filed chapter 7 case if your prior chapter 13 case was commenced within six (6) years of the chapter 7 filing — unless payments under your chapter 13 case  totaled at least 100% of the unsecured claims in the chapter 13 case or 70% of such claims and the plan was proposed in good faith and was the debtor’s best effort.

Stated differently, you generally have to wait for 6 years to file a chapter 7 case after a chapter 13 case in which you were granted a discharge.

If, as before, you did not get a discharge in the prior chapter 13 case, you can file away without delay and still hope for a discharge in the subsequently filed chapter 7 case.

A subsequent post will discuss limitations when the second case is a case under chapter 13 of the Bankruptcy Code.

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

 

Can a Creditor Come after Me for a Debt Discharged in a Chapter 7 Bankruptcy Case?

 

 

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The Bankruptcy Case

Joe Debtor files for chapter 7 bankruptcy.  He lists credit card company “Easy Credit” as a creditor holding a claim for $12,000.

The Discharge

Four months later, Joe receives notice of the discharge of his debt.  Easy Credit’s claim is wiped out in Joe Debtor’s bankruptcy case.  Joe’s been released, or discharged from any future liability on the debt to Easy Credit.

Joe Debtor’s New Credit Card Application

Anxious to restore his credit rating, Joe Debtor applies for a new credit card from Easy Credit, and other credit card companies.

Joe Debtor knows he may have to pay higher fees and interest for a new card because he filed for bankruptcy.

But Joe Debtor also knows he can restore his credit score by paying the card balance in full each month.

The Credit Card Company Violates the Discharge Injunction

Easy Credit denies Joe Debtor’s application, which is understandable.  Easy Credit also sues Joe Debtor for payment of the balance on Joe Debtor’s credit card, that is the same debt Joe Debtor listed on his schedules in his chapter 7 case.

Can Easy Credit sue Joe Debtor for a claim that was discharged in Joe’s prior chapter 7 case?

The answer is NO.

Joe is Protected and Can Take the Offensive

What can Joe Debtor do?  Joe can sue Easy Credit for violation of the discharge injunction in Joe’s prior chapter 7 case and perhaps collect money for damages Joe Debtor suffers as the result of the violation.

If you think you could benefit from a bankruptcy discharge, shoot us an email for more details.

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

 

 

 

 

 

 

 

 

HOW TO BOOST YOUR CREDIT SCORE USING YOUR CREDIT CARD

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Click here for a brief and interesting article on how to boost your credit score by using your credit card.   The article highlights the major factors that go into credit score calculations and offers helpful tips on how to raise this very important number.

ATTORNEY ADVERTISING — PAST RESULTS DO NOT GUARANTEE FUTURE OUTCOMES

We are a debt relief agency, we help people file for Bankruptcy under the Bankruptcy Code. This Blog is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.