Thursday, April 15th, 2010
Earlier this month I received a call from a Chapter 7 client that I had represented several years ago. He is attempting to refinance his house and has discovered that a judgment creditor has a lien for several thousand dollars. The creditor was listed on the case, but neither he no I knew that there was any judgment.
I directed him to visit the county courthouse and pull the file for this case. He did and he reports that the return of service shows that his wife was served by a sheriff's deputy. His wife has no recollection of being served. We did list the creditor on the bankruptcy petition but because we did not know that there was a judgment, we did not file a motion to avoid the judgment lien. What can he do?
There are a number of lessons you can learn from this man's experience. First, you should always obtain copies of credit reports from all 3 credit bureaus prior to filing bankruptcy. In Georgia, you can get a free credit report from each of the 3 main credit bureaus twice a year. Online, you can go to annualcreditreport.com and download your reports. Because credit reports obviously contain sensitive information the annualcreditreport.com system will ask several questions to identify yourself. These are usually multiple choice questions – for example, the system may say "your credit report shows that you previously lived on one of the following streets: (a) Oak Street (b) Thompson Street (c) Ivers Road (d) none of the above.
If you are unable to answer these questions, the system will instruct you to mail away for your credit reports – here is a link to a page on my website with the credit report request letters.
Credit reports are helpful because they will usually show pending lawsuits as well as the names, address, account numbers and debt amounts for most of your creditors. Obviously I can't require all bankruptcy clients to bring me credit reports but it sure helps avoid "forgotten" creditors or judgments.
As far as what we can do, there are a couple of options. First I want to make sure that service of process was correct. If you are served with a lawsuit in Georgia, the sheriff's deputy (or private process server) has to complete a document called a "return of service" that states when a party was served and by whom. Section 9-11-4 of the Official Code of Georgia provides that service on an individual must be made on the defendant himself, or "by leaving copies thereof at the defendant´s dwelling house or usual place of abode with some person of suitable age and discretion then residing therein."
In this case, if the sheriff's deputy served my client's wife, then service is most likely valid.
However, I sometimes see situations where the return of service is unclear as to who was served or even situations where the return of service is blank. In these cases, a defendant can "collaterally attack" the judgment on the grounds that service was not made and he did not know about the lawsuit.
If it turns out that service is valid, my client will have little choice but to negotiate a settlement of the real estate debt. Interestingly the Chapter 7 discharge would eliminate any personal liability he might have for this debt, but the liability remains as to his real estate.
My experience has also been that judgment creditors will become more amenable to negotiation the longer a real estate lien remains unpaid. Here, my client could forego a refinance (or threaten to to forego a refi) and use the argument that the judgment creditor might have to wait for years to get paid as leverage to negotiate a reduced payoff.
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Saturday, February 27th, 2010
This week saw the much-anticipated date (February 22) on which the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) took full effect. And, while it theoretically introduces many new consumer protections, it leaves plenty room for “creativity” from card issuers.
Center for Responsibility Lending Responds
The Center for Responsible Lending released a humorous (though cynical) animated video that highlights some of the areas not addressed by the new act—and illustrates ways in which credit card issuers have adapted their policies to maintain profit levels. These include:
- Interest rate hikes: To compensate for lost revenue, some card issuers have already raised users’ interest rates. Even users in good standing may be “forcibly eligible” for this, as the video claims.
- Over-limit fees: If you accidentally exceed your credit limit, your cardholder likely charges a fee. And, with new restrictions in place on other charges they can assess, you might see this fee jump.
- Inactivity fees: On the other hand, if you use your card too infrequently, you might see a fee for that, as well, because that means you’re less profitable for the company.
- Increased minimum payments: Another technique some card issuers are using is to up the minimum amount you can pay each month. This could be profitable for those who won’t be able to afford the increased payments and can be charged an under-payment fee.
The Regulation-Creativity Relationship
As the video illustrates with a graph, more consumer protection may seem like a good thing, but in practice, it often means that card issuers just get more “creative” with fees they charge reasons they charge them.
If you’re thinking now is a good time to get out of credit cards altogether, you’re not alone, but, before you cancel your cards, consider this:
- Your credit score: Part of your credit score is based on age of accounts (older ones are better); another part is based on diversity of credit (so eliminating one type entirely would hurt you).
- Your reentry: If, at some future time, you decide you want a credit card again, you’ll likely have to contend with uber-high interest rates (above 70 percent) because you won’t have any recent credit card history.
The video exaggerates a little (by mentioning, for example, a “legibility fee” for left-handed users), but by doing so draws attention to the more serious matter of how significantly your credit card could change.
Be sure to read all correspondence from your card issuer, even mailings that seem like junk: some of them might contain important details about the new rates and fees you may have to pay. These statements will also come in handy if mounting fees and interest force you into bankruptcy.
Additional Resources
Credit CARD Act
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Tuesday, January 19th, 2010
Matthew Hick asked: If you are considering bankruptcy, you’ll need to know what to expect during each phase of the process after filing.
Here’s a basic overview of what to expect during the entire process:
First, you must decide which type of bankruptcy you want to file. Chapter 7 will free you of all of your debt, and allow you to begin rebuilding your credit after a few years. Many people do not qualify for this type of bankruptcy under new government guidelines established in 2005, however, which allow the court to determine if you indeed do qualify. Basically, the law requires you make less than the medium income in your state to file for Chapter 7 bankruptcy.
Chapter 13 bankruptcy requires you to pay back all of your debt within a specific timeframe in accordance to a schedule set by the court. While this may sound like a good solution, after all it’s allowing you to pay back everyone you owe, it can be difficult since the court decides how much of your income is used for debt payments, and how much you are able to keep to live on. Their criteria is usually stringent, and doesn’t allow for anything but necessities during the repayment period.
Once you’ve decided which type of bankruptcy to file for, it’s time to start filing out mounds of legal paperwork. If you’ll be filing yourself, be prepared to file app. 30 to 60 pages in your petition, including schedules and other papers filed at the time of your bankruptcy. You must follow all local and federal bankruptcy court rules carefully when completing these forms. It can be very tedious and confusing work. You must learn and understand a variety of bankruptcy laws and requirements specific to your state, and be able to type them in a specific manner.
About 4-6 weeks after filing for bankruptcy with the court, you will be required to attend a hearing presided over by the bankruptcy trustee called the First Meeting of Creditors. You will be required to answer detailed questions about your bankruptcy papers, assets, debts and other matters from both the trustee and your creditors.
Your creditors now have 60 days in most states to contest your bankruptcy filing. Once that deadline has passed you can expect the court t notify you of your official debt discharge in about 60 to 75 days.
Does filing bankruptcy mean the end of credit for a lifetime? Absolutely not! You can begin to reestablish your credit two years after the discharge of Bankruptcy. However, it will be recorded for 10 years and must be reported if asked. You may not file a new bankruptcy request for six years.
Bankruptcy Questions
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Monday, December 28th, 2009
mom03222007 asked: I need to file for bankruptcy and I need a lawyer that is cheap and will let me do payments because I am a single mom. I have to file and because I can’t afford to pay all the bills and it cost a lot to file. Is there a way to file and be able to make payment on it? If so . Where can I go to get this done?
Fill This Out For Free Bankruptcy Evaluation!
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Thursday, November 19th, 2009
Phillip Allen asked: People who are considering filing for bankruptcy may have already tried loans, consolidations and other methods of getting out of their debts, but failed. Filing for bankruptcy can have serious consequences for the borrower, as the bankruptcy will be recorded on their credit file for 6 years. The need for bankruptcy comes when people are not able to pay off their minimum balances on the credit cards, car payments and home payments. Debtors who are facing financial crisis and who are considering for filing for bankruptcy should definitely speak to a bankruptcy specialist.
Filing for bankruptcy can be a very complex and time-taking process and can leave and person overwhelmed. Therefore seeking the help of an experienced insolvency practitioner for doing the task has numerous advantages, including peace of mind. There are practitioners who deal only with businesses, while others deal only with individuals; therefore, it is important to choose a practitioner who best suits the individual requirements and situation of the borrowers. If you need bankruptcy explained, a professional practitioner will be able to help the debtors in familiarising them with the legal procedures of the bankruptcy filing process.
An insolvency practitioner also helps in dealing with the creditors and working with the systems of the court for coming up with a better repayment plan. He or she is the one who will deal with all the extensive paper work needed to file for bankruptcy, by filling and filing all the paper work needed for their client. Otherwise, there is such a broad requirement of paper work during the bankruptcy process that can overwhelm any normal person. In addition to that, the practitioner will also help the client in gathering and liquidating the assets so that he or she can become debt free.
Taking help of a professional insolvency practitioner will help the borrower in getting out with the best possible deal. Although in some cases, legal proceedings can be done without an insolvency practitioner, it is still advisable to have a one so that the borrowers can get the laws of the bankruptcy explained for them, unless the borrowers have extensive knowledge about the legal procedures of bankruptcy.
Bankruptcy Questions
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Thursday, November 19th, 2009
Muna wa Wanjiru asked: From time to time someone may become bankrupt. As there are different forms of bankruptcy the person will need to decide what type of action to take. For the person who is unsure about the type of bankruptcy filing action to take they need to discuss with their lawyer all of the different courses and options that can help. One type of bankruptcy that is well known is that of the chapter 7 bankruptcy.
This bankruptcy claim deals with consumer bankruptcy. In consumer bankruptcy you don’t have enough money to pay off your creditors. To give you some time to recover from this problem and to help appease your creditors you can file for a chapter 7 bankruptcy claim.
In this claim all of your property that is not exempt from credit payment will need to be turned over to the bankruptcy trustee. This person will proceed to convert this property into cash. Once all of your property has been liquidated into cash it will be distributed among your creditors.
There are certain people who can file for a chapter 7 bankruptcy claim. These people are those who live or have a residence in the US. People who work, own property in the US or a municipality of the US.
You can also file for chapter 7 bankruptcy if you have not filed for a chapter 13 plan or you have not had a chapter 7 bankruptcy filed during the last 6 years. On the other hand if you have had a bankruptcy claim dismissed with a reasonable reason and cause then you will need to wait for 180 days before you can file for chapter 7 bankruptcy.
When you decide to declare that you are bankrupt this fact must be verified by your lawyer. A means test will be used to prove that you are in fact in financial trouble which can only be solved by a chapter 7 bankruptcy declaration.
The means test that you will have to undergo will see if your monthly earnings are more than what is the norm for your state. Your cost of food, rent, mortgages and other living expenses are deducted from your monthly income.
If the IRS finds that your monthly salary is $100 less than your state’s median wages then you have the right to claim chapter 7 bankruptcy.
With chapter 7 bankruptcy almost all of your debts will be erased and you have the chance to start your life and business matters up again. You will however need to rebuild your credit reputation.
As chapter 7 bankruptcy can remain on your public record for more than 10 years you might want to think about using this bankruptcy filing only as a last resort.
Bankruptcy Questions
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Monday, November 16th, 2009
The CreditLawGroup asked: Bankruptcy is an individual’s legally declared inability to pay back debt owed to creditors. There are several different types of bankruptcies. Most are voluntary where the individual files themselves because they are no longer able to pay back debts that they owe. Another type is involuntary bankruptcy where the creditors file a petition against the debtor to try and receive some of the money owed to them.
What are the different types of bankruptcies?
There are six types of bankruptcies in United States law and they are broken into six different chapters (7, 9, 11, 12, 13, and 15). The most common chapters filed are chapters 7 & 13. Almost 65% of all bankruptcies filed are chapter 7.
What is the outcome of a bankruptcy?
In most cases, filing for bankruptcy will stop creditors from calling, at least until all your debts are sorted out in accordance with the law. Most times filing for bankruptcy can relieve an individual from temporarily getting their home foreclosed, getting wages garnished and getting automobiles repossessed. Chapter 7 bankruptcy is the most common and it allows you to discharge most of your debts with your creditors. However, you have to liquidate your assets to be auctioned off. Some things you normally are allowed to keep are: your primary residence, car, clothing, work related tools, and basically necessities. Chapter 13 is basically a court organized payment plan and usually does not require you to liquidate your assets.
How does bankruptcy affect my credit and credit score?
Bankruptcy does not look very favorable on your credit report and should be considered a last resort for overcoming your debt. In most situations, bankruptcy will damage your credit rating so severely that you may not be get approval for credit for many years. It is one of the few items that will stay on your credit report for 10 years. All other items such as late payments and delinquent accounts stay on your credit report for only 7 years. Having a bankruptcy on your credit report for 10 years will most often than not prove to be a severe burden for most people. The severity of the damage a bankruptcy does to your credit score is right up there with foreclosure.
How we can help you
CreditLawGroup.com provides low cost legal representation in disputing inaccurate, incorrect or unverifiable information contained on credit reports from the three major credit bureaus, Equifax®, Experian® and TransUnion® and their affiliates. You can monitor your progress online, as well as speak to your Paralegal whenever needed by phone or email. We have excellent customer service, and are always there to meet your needs! Speak to a credit repair analyst today!
Bankruptcy Questions
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Monday, November 16th, 2009
Gen Wright asked: When big Investment banks like Lehmann Brothers and Washington Mutual filed for a bankruptcy claim, did you ever wonder what the reality behind the claim was? What is there for the companies filing for a bankruptcy and how did the creditors get their money back? If yes then read on and you will not only get answers to your doubts but also get to know bankruptcy claims inside out.
Most of the countries in the world have a clause in the companies act, under which companies are incorporated, which gives the provision to a limited company, to file a document with the court to register a claim against the assets of the company.
This claim determines the amount the company owes to its creditors as of the date of the bankruptcy filing and, in some cases the claim also determines the priority status awarded to any creditor. This process is known by different names throughout the world. In the United States this document is called proof of claim. This document also is the point from where the proceedings start. The form is different although they share many similar aspects.
Upon receipt the proof of claim or document of claim, the Trustee in bankruptcy must notify the creditor or creditors about the claim being filed and have to seek their assent regarding the proceedings of the claim. If the creditors allow, which, is usually the case, then the case proceeding starts in the court of law.
But, if the claim is objected by the creditors then the court sets a hearing date to resolve the dispute by court hearings.
The assets of the bankrupt firms are dissolved to pay creditors their share. The claims are first paid to administrative creditors, then to priority unsecured creditors according to their statutory priority, and finally to the non-priority unsecured creditors, with all claims paid pro rata with other members of the class.
But is it a good idea to go for bankruptcy? Most of the companies which run out of funds and get debt ridden, on most of the occasion start thinking of going for a bankruptcy route to get out of debt. But if the intention is to get out of debt then bankruptcy is not a wise way. A lot of reputation is lost en route.
Bankruptcy also comes up with a lot of bad consequences like poor credit rating. If you or your company has filed for a bankruptcy claim then the credit report is marred for as long as 10 years and thus chances of raising a loan or even a job again, will be minimal.
Banks will seize your bank accounts and cancel your credit cards and everything bought in the name of the company will be sold.
Bankruptcy should thus be used as a last resort and not an easy way out. Filing a bankruptcy is a very complex process and credible and legal help should be sought before going for the claim.
Bankruptcy Questions
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Monday, November 16th, 2009
Muna wa Wanjiru asked: When a person files for bankruptcy they will need to fill out bankruptcy forms that pertain to their case. These bankruptcy forms must be court approved and they must be valid. You can get these bankruptcy forms when you talk with your lawyer about the best way to solve your financial problems.
There are different places where you will be able to find bankruptcy forms but you should let your lawyer examine the forms before you start filing them. Sometimes to become familiar with the different questions that you will find in these bankruptcy forms you can use free downloadable bankruptcy forms.
As bankruptcy filing is a very complicated process you will need to discuss the different questions that are in these bankruptcy forms. It is best to ask questions about the different aspects of these forms as sometimes you may become very confused.
You should also find out what will happen to your bankruptcy claim once the filing process is concluded. As there are different types of bankruptcy you should make sure that you are filing a bankruptcy form that is applicable to your case.
You can find also see about using bankruptcy kits. These kits provide you with information about the different types of bankruptcy and what you need to fill on the various bankruptcy forms.
You should be aware that these bankruptcy forms will be very lengthy as there may be many pages of information and questions for you to fill out. In the process of looking through the different bankruptcy forms you may find that some of these forms state that you have no need to hire a lawyer.
The smart individual will be cautious with such claims as sometimes your lawyer will have trouble deciphering the terms that are being set out. To prevent your getting into problems you might want to see what your lawyer has to say about these different bankruptcy forms.
You can download the different instructions that are needed for bankruptcy forms and see what type of information that you need to have prepared for your lawyer. Having the various information and data ready can help you to fill your bankruptcy forms with a minimum of hassle.
So the next time that you are looking at bankruptcy forms you should see your lawyer. This way you can take advantage of the information that you have about bankruptcy and finalize the necessary bankruptcy forms.
Bankruptcy Questions
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Sunday, November 15th, 2009
Rayven Perkins asked: Bankruptcy can be emotional and embarrassing. You may have a hard time looking your children in the eye, and feel that you have let everyone including yourself down. The main thing is to promise yourself to learn from the experience, and try to change your life so that you don’t end up back in the same situation again.
If you are a low income family, and have little or no actual assets you will probably want to simply file for a chapter 7 bankruptcy and discharge of debts. This requires that your estate be liquidated, and as much funds as possible divided up among your creditors. The remaining debt is discharged, and creditors are no longer allowed to pursue it but must write it off.
Liens on your house and / or vehicle should be examined to see if they are exempt from this process, and if not you will need to consider whether you should have them excluded from your chapter 7 bankruptcy filing. A house that is mortgaged for more than it is worth and has payments too high for you to realistically afford may have to be relinquished.
If you have good employment, but have had a tragedy including overwhelming medical bills or some other type of devastating but temporary setback, you may wish to consider a chapter 13 bankruptcy filing. This type requires a trustee to oversee your finances and work out a re-payment to submit to a judge for approval.
Normally, the chapter 13 bankruptcy repayment plan will call for a set dollar amount to be paid regularly for a specific amount of time, and the remaining balance will be discharged. Both you and your creditors will be expected to abide by the terms of the agreement. This ensures that you can continue to live normally, but gives you the chance to catch up on bills and regain your stability.
A word on refinancing a home after a bankruptcy; many people think that this will be impossible, but there are many lenders willing to give second chances in return for your business, and in an odd way the bankruptcy confirms one thing - at least you aren’t a risk for filing bankruptcy as you will be disallowed from filing again for several years.
In fact, people who file bankruptcy often see their credit score bump up a little almost immediately. Strange as it seems, many lenders view filing for bankruptcy as a sign that you are trying to turn your life around, and by bearing that out over a course of a year or two you will probably be viewed as an average loan applicant rather than a high risk one.
The main thing to take away from a bankruptcy is self forgiveness and the determination to change your life and avoid having to ever take such action again. Learn from your mistakes, instill better financial practices in yourself and your family, and put the bankruptcy behind you. Move forward, and make sensible money decisions and financial choices a part of your everyday life!
Bankruptcy Questions
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Earlier this month I received a call from a Chapter 7 client that I had represented several years ago. He is attempting to refinance his house and has discovered that a judgment creditor has a lien for several thousand dollars. The creditor was listed on the case, but neither he no I knew that there was any judgment.
