Archive for the ‘the’ Category
Monday, June 6th, 2011
Yesterday, my son graduated from high school. His class selected a math/environmental sciences teacher named Nicole Brite to deliver the faculty address to the senior class. Ms. Brite delivered a spectacular address which was meaningful, witty and thoughtful (and she received a well deserved standing ovation from both the students and the audience).
In one part of her speech, Ms. Brite turned to the graduates and said "now I am going to offer you some words of advice that I wish someone had said to me when I was leaving high school." One of the points she made I think is applicable to everyone, not just high school students.
"Stay away from credit cards," said Ms. Brite. "When you get to college, you will see tents set up by the credit card companies. They will offer you frisbees and t-shirts and free food to entice you to sign up for a credit card. They'll tell you that a credit card will help you build up your credit and you can use it only for emergencies. Don't believe it. You will be tempted to decide that an emergency takes the form of a pizza at 2 in the morning, or putting your entire fraternity's dinner on your card because no one has cash. Credit cards will mess you up."
I hope that each and every one of the graduates in my son's class heard these words of wisdom and I wish this advice could be included in the "welcome to school" packets given to incoming freshman.
Over the years I see dozens of young adults in their late 20's and early 30's who are still dealing with thousands of dollars of college years credit card debt and the associated damaged credit ratings. It is so easy to find oneself behind the proverbial eight ball, and digging out from a credit hole is a lot more difficult than avoiding the problem in the first place.
If your son or daughter recently graduated from high school, congratulations on an accomplishment and a milestone. Let your graduate know that while college isn't exactly the real world, they now have assumed the capacity to get themselves in adult level financial trouble. As uninteresting as household budgeting ten years hence may seem, they most definitely do not want their college aged mistakes to lead them to a bankruptcy lawyer's office in the future.
Posted in Advice, Consumer Protection, General consumer bankruptcy info, Georgia Bankruptcy, a, address, aged, and, applicable, brite, class, class , college, credit cards for college students, dangers of credit cards, delivered, financial advice for high school graduates, graduated, graduates, high, leaving, math environmental, mistakes, ms, named, nicole, said , school, sciences, selected, senior, spectacular, students, teacher, the, wisdom, words, years | Comments Off
Monday, May 30th, 2011
I have written before about the pros and cons of entering into a reaffirmation agreement with one or more of your secured creditors. On the plus side, reaffirming a secured debt gives you a degree of certainty – you are once again in a contractual relationship with your creditor. You know how much you are supposed to pay each month and you know the payoff balance, interest rate and terms of the agreement.
Further, you may be able to negotiate a more favorable deal when you reaffirm. Other than cars, secured creditors are often not set up to liquidate used merchandise and since you already have possession of the property (collateral), many lenders are happy to negotiate more favorable terms with you so they can avoid the hassle of recovering and disposing of property. This negotiation option is less true with motor vehicles, because there is an active used car market, but the negotiation option can work well when you are dealing with furniture or electronics.
Reaffirmation can also help you rebuild your credit because you are re-assuming personal liability for payments, and regular, timely payments usually will be reported as positive information to the credit bureaus.
On the other hand, when you reaffirm, you are re-obligating yourself personally to pay an installment note. If you should default, you are fair game for all collection activities including wage garnishment.
Reaffirmation Must be in Writing, Signed by You and the Creditor and Approved by the Bankruptcy Judge
At least once or twice a month, I get an email from a frustrated individual who has received his bankruptcy discharge, and has continued to make monthly payments, but sees no mention at all about these payments on his credit report.
It is not enough that you checked the "reaffirm" box on your bankruptcy Statement of Intention. You and your creditor have to complete a formal reaffirmation agreement. These agreements usually consist of about 10 pages of legal speak and your attorney has to document that your budget can handle the reaffirmed payment. Your attorney also has to sign the reaffirmation agreement and assert in writing that he thinks that reaffirmation is in your best interest.
Usually, reaffirmation agreements are prepared by the creditor or creditor's attorney. Sometimes lenders simply will not cooperate – they may not have any objection to accepting your payment and leaving you alone regarding possession, but they may forward a reaffirmation agreement to you.
I have also seen situations where lenders fail to file the signed reaffirmation documents on time and the reaffirmation agreement does not get court approval even though the debtor and his attorney did everything they were supposed to do.
If you and your attorney confer and decide that reaffirming a particular secured debt makes sense for you and that you can afford the reaffirmed payment, you should encourage your lawyer to quickly and aggressively request a reaffirmation agreement from your creditor. Once your case is discharged and closed, it is difficult and expensive to try to re-open a closed case solely for the purpose of reaffirming a debt.
Posted in Attorney, Creditor, Post bankruptcy credit rebuilding, Reaffirmation and negotiation, a, activities, aggressively, agreement, agreement , and, assert, chapter 7 reaffirmation agreements, collection, complete, documents, entering, file, formal, forward, garnishment reaffirmation, including, keep and pay, negotiation in bankruptcy, possession, quickly, reaffirmation, request, sign, signed, the, time, wage | Comments Off
Wednesday, May 25th, 2011
Because I handle both personal bankruptcy cases and Social Security disability cases, I frequently get questions about the interrelationship between these two areas of law. A question I get at least once a month has to do with whether a Social Security disability overpayment is dischargeable in bankruptcy.
The short answer to this is "yes," a Social Security overpayment is treated like any other unsecured debt. There are exceptions to the dischargeability of a particular debt under Section 523 of the Bankruptcy Code and exceptions to the discharge as a whole under Section 727 of the Code.
Specifically, this means, however, that fraudulent behavior can result in a finding that this Social Security debt is not dischargeable.
Overpayment issues typically arise in disability cases when a claimant continues to accept and receive disability payments even after returning to work. The question then becomes – "did the debtor/claimant knowingly and with intent to deceive the Social Security Administration continue to accept disability payments even when not entitled to do so?"
A 2009 case decided by Judge Joyce Bihary, chief judge of the Bankruptcy Court for the Northern District of Georgia offers helpful insight into how a bankruptcy judge will analyze this issue.
In the Rodriquez vs. United States of America case, debtor Diego Rodriquez collected over $70,000 of disability benefits after returning to work. Mr. Rodriquez filed Chapter 7, then asked the Bankruptcy Court to rule on his request for waiver of overpayment. Judge Bihary found that the Bankruptcy Court did not have jurisdiction over this issue and denied Mr. Rodriquez' motion about the waiver issue, but she took the unusual step of addressing some of the substantive issues arising from the overpayment problem.
In what is known as "dicta," the judge explained that under her understanding of the law, "an overpayment debt of Social Security benefits is dischargeable" and will be treated like any other unsecured debt. The judge cited a 1982 7th Circuit case called Neavear v. Schweiker as support for her conclusion. Since Social Security did not file a timely objection to discharge, the overpayment debt owed by Mr. Rodriquez is dischargeable.
What is interesting to me about this decision are the judge's discussion of the facts. Apparently, on several occasions, Mr. Rodriquez attempted to advise Social Security about his return to work, but all of these disclosures were ignored by SSA. Further, the judge noted that Social Security had put Mr. Rodriquez in limbo by failing to respond to his request for administrative review.
The judge devotes almost a page of her decision to suggestions about how SSA might appropriately satisfy its statutory obligations to Mr. Rodriquez. Reading between the lines, it seems apparent to me that the judge found Mr. Rodriquez' testimony credible about his efforts to report his employment income to Social Security, but she did not believe Social Security's assertions (apparently gleaned from documentation and perhaps testimony) that it had not received notice of employment from Mr. Rodriquez.
The judge references Social Security's ineptitude regarding file management. Mr. Rodriquez' deliquentcy grew so large because "SSA lost debtor's file for a period of five years."
In my mind, the obvious question in an overpayment case is this – how can a debtor not be guilty of fraudulent behavior if he accepts Social Security payments while at the same time he is working and earning money. Wearing my Social Security disability lawyer hat I can tell you that Social Security's rules about trial work periods, its Ticket to Work program and its extended period of disability and work that does not reach the level of "substantial activity" is by no means intuitive and even a sophisticated claimant would not necessarily know when he might be allowed to keep his disability check as well as his paycheck.
The judge in the Rodriquez case did not reach this issue (because Social Security did not raise it) but I get the sense that the judge felt that in this case at least, the debtor tried to play by the rules but received little cooperation from Social Security and that Social Security's "unclean hands" might very well be held against the agency in a dischargeability inquiry.
So, what can we learn from the Rodriquez case? I think that if you are attempting to discharge an overpayment you will need to show that you tried to engage Social Security to resolve the issue prior to filing bankruptcy. If you were confused by Social Security's rules it would not be a bad idea to explain your areas of confusion in your correspondence with Social Security. Finally I would make sure that you and your lawyer identify specific addresses where notice of your bankruptcy filing ought to go. Social Security is such a bloated bureaucracy that they will most likely not file an objection in time – there is no need to give them added life by not offering notice at the correct address.
Posted in 1982, 7th, Bankruptcy, Creditor discharge actions, Lawyer, a, administration, and, bihary, called, case, cases, circuit, cited, continue, debt , deceive, disability, discharge of social security disability overpayments, earning, employment, handle, hat, intent, judge, money , mr, my, neavear, overpayment, overpayment , personal, references, rodriquez the, schweiker, security, social, social security overpayment and bankruptcy, the, treated, unsecured, v, waiver, wearing, working | Comments Off
Monday, May 9th, 2011
Most people know that Chapter 7 allows you to wipe out unsecured debt – credit card bills, medical debt and other signature loans. But what about secured debt – loans you are still paying to finance your home, your car, perhaps some jewelry or furniture?
This past March, I discussed redemption of property in Chapter 7. Redemption of property is a viable option but it is far less common than "reaffirmation" of debt.
Why Do You Need to Reaffirm?
Secured loans actually contain two different kinds of obligations. On one hand, you obligate yourself personally to pay a particular debt. This is typically in the form of a promissory note. The second layer of obligation ties the specific item of property to the loan. This is called a security agreement.
When you file a Chapter 7 and a discharge is issued by the judge, your personal liability on your secured debt is extinguished. This is why payments on a non-reaffirmed car loan or home loan will not be reflected on your credit reports. You have no personal obligation to pay. However, a Chapter 7 discharge does not extinguish the lender's security interest against property. This is why a vehicle lender can repossess or a mortgage company may foreclose to recover property. In such a situation you would not have any personal liability for any deficiency amount.
A reaffirmation serves two main purposes:
- you will have the certainty of knowing that you are once again in a contractual relationship with the lender. If you do not reaffirm, you could wake up one day to find that your vehicle has been repossessed or that you are being foreclosed upon.
- secondly, payments on a reaffirmed debt will appear as positive information on your credit reports. This means that your credit score will recover more quickly
Can You Negotiate Better Terms in a Reaffirmation?
Because a reaffirmation agreement is a new contract between you and your lender, you absolutely can negotiate different terms. I have negotiated reduced payments, lower interest rates and reduced balances on furniture, electronics, and vehicles. I have also negotiated lower payments on 2nd and 3rd mortgages.
It has been my experience that some lenders will just not play ball. They would rather incur the expense of recovering, storing and reselling a used item. I think this attitude of "we do not negotiate with debtors" is silly and counterproductive, but some lenders take this position (I suspect that some of these lenders do not have the staff or protocol for handling a negotiated debt).
On the other hand, many lenders will agree to a deal with terms a lot better than the original contract. But you do have to ask, and, of course, if you agree to any terms, you must live up to the deal. Reaffirmation agreements can be canceled by the debtor within 60 days after the agreement is entered, or the case is closed, whichever comes first.
Posted in Debt negotiation, Obligation, Reaffirmation and negotiation, a, agreement, agreements, amount a, and, balances, deal , debt, deficiency, handling, item, layer, lower, negotiated, payments, protocol, rates, reaffirmation, reaffirmation because, reaffirmation of secured debt, reduced, serves, specific, terms , the, ties | Comments Off
Saturday, March 19th, 2011
If you are purchasing a vehicle and you file Chapter 7, your options are (1) surrender the vehicle, (2) reaffirm the existing loan, or (3) redeem the vehicle by paying the lender fair market value. Redemption, which is described at Section 722 of the Bankruptcy Code used to be an uncommon choice. More recently, however, several lenders have entered the market to finance Section 722 redemptions. In this video, I discuss how redemptions work and how to know if a Motion for Redemption under Section 722 is a good idea.
Posted in 722, Chapter 7 issues, Finance, Lenders, Purchasing, Reaffirmation and negotiation, Redemption, a, and, chapter 7 and personal property, entered, fair, lender, market, paying, reaffirmation vs. redemption, redemptions, redemptions , section, section 722 redemption, the, type, value , vehicle, work, www youtube com watch v 3ebx9zlcsku, youtube | Comments Off
Sunday, February 27th, 2011
Earlier this month on my Atlanta-bankruptcy web site blog I discussed an interesting case involving mortgage loan deficiency claims that was issued by the Georgia Court of Appeals and Georgia Supreme Court. In the River Farm vs. Suntrust case, the Georgia courts ruled that a mortgage lender could sue a defaulted borrower on the promissory note and thereby bypass the deficiency confirmation process associated with a foreclosure. This ruling is important because property values in Georgia have been trending downward and more and more often I am seeing cases where the balance due on a mortgage exceeds the fair market value of my client's home.
This court case should be of concern to you if you intend to walk away from your home because you are delinquent or if your are so "underwater" with your mortgage that it does not make sense to fight to keep a home that may never be worth what is owed on it. If you do walk away (without filing bankruptcy), your lender may sue you on the mortgage loan contract instead of foreclosing. The lender would refrain from foreclosing to avoid a legal requirement associated with foreclosure that would require the lender to appear before a judge to argue that the foreclosure sale price was reasonable.
In my article, I pointed out that this change in the law might encourage more people to file bankruptcies since a bankruptcy can discharge any deficiency claim.
However, there is another potential problem area that could arise if your lender holds off on foreclosing. This problem area relates to homeowners' association (HOA) dues.
Under Georgia law, homeowners' associations enjoy special protections. Unpaid dues can automatically can become liens that encumber your property. As HOA lawyers read the law, if you file a bankruptcy and surrender your home, your delinquent HOA dues as of the date of filing will be discharged. However, ongoing dues that accrue after the filing remain your obligation until title passes. In other words, if your HOA dues are $100 per month and you file Chapter 7 bankruptcy on February 28, your dues begin accruing again on March 1. If your lender does not foreclose until November, you would, in theory, be responsible for 8 months of dues, or $800, after your filing, even though you have stated your intention to surrender your house in bankruptcy.
Obviously, a provision of the law that involuntarily re-obligates you to hundreds or thousands of dollars of monthly dues on an asset you have surrendered seems contrary to the public policy associated with bankruptcy. Nevertheless, this is how lawyers for homeowners' associations read the law.
I discussed this issue with an attorney at a law firm that represents HOA's in the Atlanta area and throughout Georgia. This lawyer offered the above explanation of the law but he said that as a practical matter, his firm has not and does not plan to sue a homeowner for HOA dues that arise after a bankruptcy case has been filed, as long as the homeowner vacates the premises. However, the homeowner is presumably fair game if he remains in the house (or rents it out) while the bank is dilly-dallying about foreclosing.
He also advised me that his firm does not report post-petition HOA delinquencies to credit bureaus.
The problem here, of course, is that the HOA lawyer's explanation of policy is just that – a voluntary policy. Is it possible that this HOA law firm or one like it could change its policy? Is it possible that the HOA itself might sell this receivable to a debt buyer who would not hesitate to sue you?
I would not assume that an HOA or a debt buyer will necessarily write off otherwise collectible debt, but until this issue is litigated in a Georgia court, we will not know the answer to this issue. I do think that a homeowner who remains in a house after surrendering that house in a bankruptcy will face an increased likelihood of an HOA lawsuit. I will also continue my practice of rejected the HOA contract as part of my bankruptcy filings.
Posted in Foreclosure issues, Georgia Bankruptcy, Mortgage, Repossession issues, accruing, an, area, associations, case, claims, deficiency, delinquent, dilly dallying, discussed, dues, enjoy, foreclosing he, foreclosing , hoa, homeowners, homeowners association lawsuits, interesting, involving, law i, loan, month, mortgage deficiency claims, ongoing, problem, protections , read, relates, special, the, unpaid | Comments Off
Wednesday, January 12th, 2011
Yesterday, the U.S. Supreme Court issued a creditor friendly decision in the case of Ransom v. Fia Card Services. At issues was the "ownership expense" deduction in the means test.
The means test is a calculation used to determine whether a debtor has enough "disposable income" to afford a Chapter 13 repayment plan.
In the Ransom case, the debtor (Jason Ransom) claimed a means test deduction for both operation of a vehicle ($338 per month) and for ownership ($471 per month). The problem – Mr. Ransom owned his vehicle free and clear.
In an 8-1 decision written by Obama appointee Elena Kagan (the lone dissent issued by conservative Justice Scalia), the Supreme Court held that a debtor who owns his vehicle free and clear can only claim a deduction for vehicle operation but not a deduction for ownership.
In Mr. Ransom's case, this means that for bankruptcy calculation purposes, he has an extra $471 sitting around that he can use to pay credit card companies in a Chapter 13.
At first blush, the Supreme Court's decision would seem to make sense – why should a debtor get to claim an ownership deduction if he does not have a car payment?
Here is the issue: Chapter 13 cases last 5 years. Assuming that Mr. Ransom has a paid off car, it is likely that his car is not new. What happens when Mr. Ransom needs to replace his car? He will have no funds to do so because any funds that he might have left over are being used to fund his Chapter 13.
Further, the means test budget is derived from IRS numbers that are used in tax settlement cases. These means test budgets are a little better than a "rice and beans" budget but there is very little else. Is it reasonable to expect that a debtor will have no emergencies during the next five years – a funeral to attend? a roof to fix? a major car repair?
The Supreme Court's decision ignores the realities of life. In the immediate near term the debtor may have $471 to pay towards his Chapter 13, but is it reasonable to expect that this "disposable" money will be there month after month? The Chapter 13 trustee will expect it, and these funds will come out in a payroll deduction. But I fear that even more Chapter 13 cases will fail when debtors lose their jobs because they do not have transportation or checks for mortgages will bounce because the funds were used for plumbing repairs or other emergencies.
The Ransom decision also sends a very strange message to debtors entering the bankruptcy process. Instead of encouraging people to avoid debt, the Ransom decision encourages filers to incur more debt prior to filing. In this upside down logic, a debtor would benefit from taking out a car title loan prior to bankruptcy since having debt owned on a car will allow that debtor to claim an ownership expense.
Creditors like credit card companies are concerned about getting as much as they can as quickly as they can, and such an position makes sense in a business context. But who loses when court supervised repayment plans (Chapter 13) are doomed to fail because there are no accommodations for emergencies or other likely needs during a looming 5 year time span.
Posted in 13, Bankruptcy budgets, Creditor, Filers, Means Test issues, Obama, Ransom, Ransom v. Fia Card Services, a, afford, appointee, automobile operation expense, automobile ownership expense, card, case, chapter, court, decision, dissent, elena, emergencies the, encourages, fia, friendly, issued, kagan, lone, means test budgets, month, mr, owned, ownership in, plan in, problem, repayment, services , supreme, the, u s, v, yesterday, | Comments Off
Monday, December 20th, 2010
With the decline in Atlanta area housing values, a seldom used bankruptcy technique has taken on new life. The technique is called "lien stripping" and it arises from Bankruptcy Code Section 506(a) and (d). A lien strip allows a Chapter 13 debtor to use the power of the Bankruptcy Court to transform a secured second mortgage or home equity line of credit into an unsecured debt, thereby eliminating a monthly payment and reducing total debt by tens of thousands of dollars.
Here's how it works: Let's say that you own a home worth $250,000. Perhaps that home was worth $350,000 three or four years ago but its market value has dropped because of the recession. The balance on the first mortgage is $270,000 and the balance on the second mortgage is $45,000.
In this case, a Chapter 13 debtor can ask his bankruptcy judge to "strip away" the second mortgage debt since all of the value in your home is encumbered by your first mortgage. In other words, if you were to sell your house, the first mortgage lender would not be paid in full and the second mortgage lender would get nothing. The second mortgage lender is, therefore, unsecured.
Lien stripping only works when:
- you are a debtor in a Chapter 13 case
- the fair market value of your house is less than the balance due on your first mortgage
The Clerk's Office of the Northern District of Georgia has provided us with sample lien stripping motions, which you can review by clicking on the link.
I suspect that mortgage companies will mount challenges to lien stripping. There has already been a Minnesota case where a local judge there refused to allow lien stripping. One day this issue may be considered by the United States Supreme Court. For now, however, most bankruptcy judges will allow lien stripping and if your second mortgage or HELOC is fully unsecured, you may want to consider it as well.
My friend and colleague, Charleston bankruptcy lawyer Russ DeMott has published a clear explanation of how he approaches the mortgage lien stripping process (in his district, they refer to lien stripping as "mortgage stripping" but the concept is identical. You can read Russ' post by clicking on the link. Russ correctly points out that out of banks and mortgage companies have not cooperated in out of court mortgage modifications and that lien stripping remains perhaps the most reliable tool to modify a mortgage.
I have successfully "stripped" several junior mortgages. Not surprisingly, the main issue that arises has to do with the fair market value of the home. You may need to pay for an appraisal to convince the judge that the second mortgage is, in fact, fully unsecured.
Posted in Chapter 13, Chapter 13 issues, Lien stripping, Mortgage, and, approaches, bankruptcy mortgage modification, called, in, lien, modifying mortgages bankruptcy, motions, process, refused, remains, sample, stripping, stripping , the, unsecured lien | Comments Off
Sunday, December 12th, 2010
The Wall Street Journal recently published a new story entitled Hidden Medical Debt Trips Up Homeowners. The report documented several cases in which small medical bills that had been turned over to collection resulted in a more than 50 point drop in a homeowner's credit score.
In one situation, a homeowner attempted to refinance his mortgage, only to discover that two unpaid medical bills totaling less than $50 had caused his credit score to drop. As a result of the lowered credit score the refinancing bank demanded over $4,000 in closing costs.
In another situation, less than $500 of medical debt reported to a collection agency disqualified a homeowner from a favorable interest rate, which would have resulted in tens of thousands of extra interest charges.
In many of these situations, the consumer never knew about the unpaid medical debt – the provider simply turned the claim over to a collection agency which immediately reported it to the credit reporting agencies as delinquent debt.
According to the Journal, "otherwise well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes marring their credit."
If you or a loved one has been in the hospital, you probably know that a single visit can result in five, ten or even more bills from separate vendors – the hospital, the hospital pharmacist, the anesthesiologist, the ambulance service, etc. I do not find it surprising at all that a patient would not know about one or more bills.
I think that an important point here has to do with the cascading effect of negative credit. Even a small late payment on an account can result in a dramatic lowering of your credit score. Other creditors will receive electronic notice about your lowered credit score and when permitted, they will increase your interest rate, lower your credit limit and increase penalties and fees.
Lenders Often Cause Delinquencies by Changing Terms Unexpectedly
On more than one occasion I have met with a potential bankruptcy client who was forced into Chapter 7 or Chapter 13 because of changed terms, not because of any delinquency. These changed terms can arise from a tiny delinquency – like the unknown, unpaid medical bill issue discussed in the WSJ story, or for other reasons. Recently I met with a small business owner who was completely current on his personally guaranteed revolving line of business credit. His bank was taken over by another bank which conducted an audit and, without warning, the business loan was "called in."
One minute, my client was operating a viable, functioning small business that was current on its obligations – and literally within a matter of days, that business was shut down by a bank for no apparent reason.
The point here: examine your credit reports regularly and challenge even tiny delinquency reports as the damage to your credit will arise from the existence of the delinquency as opposed to the amount of the late payment. Even small downgrades to your credit score can result in a negative debt snowball.
Posted in Consumer Protection, Credit, Credit Reports, Credit Scores, Credit reporting errors, Discover, FDCPA Claims, General consumer bankruptcy info, a, arise, bank, billing, bills, cases, claim, debt, delinquency, demanded, entitled, hidden, knew, lowered, marring, medical, medical debt and bankruptcy, medical debt and credit reporting problems, mistakes, provider, refinancing, reports, score, simply, small, story, the, tiny, totaling, trips, turned, unpaid | Comments Off
Tuesday, November 2nd, 2010
My Bankruptcy Law Network colleague Dana Wilkinson, who practices in South Carolina, reports on an unbelieveable scam perpetrated by a collection agency in Pennsylvania. According to a press release issued by the state attorney general, the Unicredit Collection Agency created a bogus "court system" to trick consumers into paying debts.
Unicredit employees dressed like sheriff's deputy's and "served" papers resembling lawsuits on consumers
Unicredit issued fake "court notices" for hearings and depositions
Unicredit built a fake courtroom, complete with a fake judge, where debtors would be intimidated into providing access to bank accounts or surrendering car titles
The Pennsylvania attorney general has shut down Unicredit and has filed suit against the company seeking restitution for harmed consumers.
What can we learn from the Unicredit story? First, you should always be very suspicious of anyone who threatens legal proceedings, implies that you have no right to challenge a debt or suggests that you must resolve a debt issue immediately. Under Georgia law, at least, a lawsuit must be served by a sheriff's deputy (who has identification) or a process server. After service you have 30 days to file a response. No judgment will be issued any faster than 45 days after service – 30 days to file a response and 15 days to open a default by paying court costs and filing fees (which amount to less than $200).
Secondly, sheriff's deputies are not in the business of collecting debts. Their job is to serve papers only. If the person who looks like a deputy starts discussing the merits of the lawsuit against you, a red flag should go up.
Third, recognize that collection agents are not your friends and they are not on your side. Do not believe anything a collection agent tells you. When in doubt, call a bankruptcy lawyer – we will always talk to you over the phone at no charge.
Posted in Attorney, Consumer Protection, a, agency, an, and, bogus, built, car, collection, collection agency scams, collection agency tactics, consumers unicredit, courtroom, created, debts unicredit, depositions unicredit, dressed, employees, fake, general, hearings, issued, learn, paying, pennsylvania, pennsylvania , perpetrated, press, release, reports, scam, story , surrendering, the, titles the, unbelieveable, unicredit | Comments Off
