Dsouza and Strachan Lawgroup | Legal Blogs | Bankruptcy Attorney FL | Page 53

Blog

Debt Consolidation Versus Bankruptcy: Which Fit Is Best For You

Finding a way to manage burdensome debt is no easy task. Many people will tell you that you can handle the matter on your own, by calling your creditors and asking for a reduced interest rate or lower payments. In some instances there might even be talk of skipping payments in order to let you get through a rough financial patch, or repaying only a portion of what is owed. Still yet there is the possibility of consolidating your debt into one loan so only one payment is made every month, or filing for bankruptcy which would eliminate some of your debt and free up your disposable income.

The choice is yours, but should only be made after thoroughly reviewing all of your options. Some key components of each type of debt relief include:

 

● Debt consolidation is not the same as filing bankruptcy, and will keep the notation of bankruptcy off of your credit history. But, keep in mind not all of your creditors will participate in a consolidation program so the benefits may be minimial.

● Bankruptcy will eliminate worrisome debt, but will impact your credit.

 

Perhaps the most significant element to keep in mind when deciding whether to file for bankruptcy or to consolidate debt is that many debt consolidation companies make promises they are unable to keep. As stated, not all creditors participate in debt consolidation, and a company may “sell” this option to you by promising to coordinate lower payments on your behalf. What is often times left out of the information provided is that creditors are not required to accept the offers made. This can put you in the position of making payments to the company, anticipating the company will pay your debts, but the payment being rejected by your creditor. If that happens you will find yourself making payments to the debt consolidator and still being required to pay some of your bills outside of that arrangements. This can actually lead to paying more per month than you are able to do, and expose you to possible collection lawsuits. Bankruptcy is Court sanctioned and approved, and even contains a provision very similar to consolidation. For more information, call our office.

If you have overwhelming debt, call our office for help. We will review the facts of your unique circumstances and develop a strategy that works best for you, your family, and your budget. Call a Plantation, Florida debt relief attorney today for more information.

How Do I Sue A Debt Collector?

Most collection lawsuits involve a creditor suing a consumer for a past due debt. There are certain procedures that the creditor is required to follow, and when the creditor fails to play by the rules you can and should take action against them. Possible results from a lawsuit against a debt collector include monetary damages for the amount you are out of pocket for having to bring the action as well as possible punitive damages. Punitive damages are designed to “punish” the offender, and prevent repeat of the offensive behavior in the future.

The Fair Debt Collection Practices Act governs the way in which a debt collector is allowed to collect debts. The Act also provides for remedies to consumers who have been the subject of an abusive or harassing collection practice. Remedies include:

● Actual damages incurred.

● Payment of attorney fees for having to sue the collector.

● A mandatory $1,000.00 fine per violation of the Act.

You can sue a debt collector in state court, in federal court, or within a bankruptcy proceeding. Where you bring suit will depend on the specific facts of your case, and a trained attorney will know which option fits your case. We have experience bringing actions against debt collectors and place an emphasis on this type of case within our legal practice. For help, call one of our trained legal professionals.

If you are being harassed or threatened from a debt collector, call our office for help. We will fight for a full and fair compensation for your damages while holding the creditor’s fee to the fire for accountability. Call a Plantation, Florida debt relief attorney today for more information.

What Is The Automatic Stay?

Filing bankruptcy provides many benefits. The most important benefit is that you are able to have most of your debt eliminated, and no longer considered due by the creditor. Another important benefit is that of the automatic stay. This legal mechanism is put in place automatically, upon the filing of the case. What this means is that all creditors are automatically prevented (stayed) from contacting you to collect a debt. The purpose of bankruptcy is to give the honest but unfortunate debt a fresh start, which begins with being given a chance to breathe and get a break from the calls and letters from collectors.

The bankruptcy law is where the provision of the automatic stay can be found. It stops the following actions by creditors and debt collectors:

 

● Collection calls must immediately cease.

● Any wage garnishment must be released and no further wages withheld from your paycheck.

● Foreclosures must stop, giving you the opportunity to stay in your home without fear of it being auctioned off or sold out from under you.

If a creditor fails to abide by the automatic stay and persists in calls or other collection activities you do have recourse. You can file a case against the offending creditor within your bankruptcy and depending on the severity of the violation, are entitled to monetary damages. We have experience going after creditors that break the law, and are happy to help you if this has happened to you.

If you are receiving collection calls or letters after having filed bankruptcy, call a knowledgeable attorney to discuss your options. We can help you understand your choices and make a decision that works for you. Call a Plantation, Florida debt relief attorney today for more information.

Is Bankruptcy The Answer?

The decision to file for the protection of bankruptcy is on that should be made only after careful consideration. While the stigma that was once associated with bankruptcy is all but gone in today’s society, there are still consequences to filing a case. When you are armed with the knowledge of possible outcomes and how a bankruptcy filing impacts things like your credit score, an informed decision is more easily made.

The decision to take bankruptcy is personal and will depend on the particular circumstances of your financial condition, but there are some tips that apply to all cases. These tips include:

 

● Analyze your finances to see which chapter of bankruptcy you qualify for, a Chapter 7 liquidation or a Chapter 13 debt reorganization. This important distinction may dictate whether you file or try to streamline your budget outside of bankruptcy court.

● Be honest about future possibilities to repay your debt.

● Make a list of the type of debts you have, which requires you to identify which loans are secured by collateral and which are not. The difference between secured and unsecured debt is important during a bankruptcy case because unless you wish to continue making payments on debts secured by things, you will have to surrender the property that secures the debt. With unsecured debt, like a credit card or signature loan, there is no collateral to give back and so it is beneficial to have this debt eliminated (discharged) in bankruptcy.

● Accept the consequences of filing, such as how long the information stays on your credit.

If your options are limited and bankruptcy will give you a fresh financial start, filing is a viable option for you. For some, walking away from debt is emotionally difficult because they feel a sense of obligation to repay what was borrowed. If you are able to reconcile this fact with your circumstances, filing might be right for you. Keep in mind many celebrates and professional athletes have sought the protection of bankruptcy, and doing so is not frowned upon as it once was. Call our office today to learn more.

If you are having difficulty meeting your monthly obligations, call a knowledgeable attorney to discuss your options. We can help you understand your choices and make a decision that works for you. Call a Plantation, Florida debt relief attorney today for more information.

How To Stop Collection Calls

Being saddled with overwhelming debt can create undue stress and anxiety on you and your family. This is especially true if you are receiving collection calls and/or letters. For some, it can get to the point where you don’t answer your phone or check your mail. When collection letters start stacking up and the calls are never ending, it is important to know your options. Getting the calls and letters to stop will give you some much needed peace and can even give you a chance to catch your breath so you can come up with a plan to handle the debt.

Debt collectors are required to follow certain laws when attempting to collect a debt. If you are being called by a collection agency, here are some ways you can put an end to those calls:

 

● Advise the caller you are requesting a cease and desist, then follow up this verbal command with written correspondence.

● Request the agency prove the debt, in writing, to you.

● Ask for confirmation of the name of the original creditor and to be provided a copy of the documents the collection agency claims created the debt.

These are effective techniques that will put a stop to collection calls and letters. However, these remedies offer only temporary relief. For a permanent stop to the calls you should turn the matter over to a skilled attorney. We will review your case and provide you options to alleviate the debt you have, and will also field all the collections calls you are receiving. Whether by bankruptcy, negotiation for repayment of a lesser amount, or other work out options, we can help you get back on your financial feet. Getting your finances in order helps to give you a positive outlook for the future, let us help you get back on track.

If you are receiving debt collection calls or letters, let an experienced attorney help you. We fight to protect your rights and stop the collection calls. Call a Plantation, Florida debt relief attorney today for more information.

 

 

Phantom Debt or Zombie Debt

These names may be foreign to some, but the companies that operate within their confines are not. If you (or someone you know) have ever been subjected to debt collectors, then you probably are well aware of who phantom or zombie debt collectors are. According to a report issued by CNN in July 29, 2014 one in three Americans are now dealing with debt collectors.

Types of Debt Collectors

Debt collection practices fall into three major categories – house accounts, collection agencies or debt purchasers. With house accounts, employees of the company (their representatives) are tasked with collecting past due debt. Their goal is to resolve and collect outstanding balances before a debt becomes too old (typically six-months) and is written-off as uncollectible. Once the debt is written-off, it is usually sent to an outside collection company that is tasked with collecting the outstanding balance. In most cases (but not all), the collection agency gets a percentage of any monies they collect, some get upwards of 50% of all the money they collect. The last category of debt collectors are debt purchasers. These collection companies buy old debt that is no longer being worked by the original creditor or an external collection company. In most cases, the debt has aged substantially (often three or more years since the debtor defaulted).

How the Phantom/Zombie Debt Works

The reason it is called phantom or zombie debt is that these old debts tend to arise from the dead or are not owed or belongs to someone else – like someone with the same name or a deceased child or parent. After years of not hearing about an old debt, suddenly and out of nowhere, a letter or phone call comes from ABC, XYZ, (or whatever) Asset Management Fund (Company, LLC, etc.). The letter will state that they are attempting to collect on the debt owed to “such and such” company. They will lead you to believe that they are a debt collector working for the original creditor. However, this is not true.

The truth is they have purchased the debt from the original creditor or a collection agency (one that has given up on collecting the debt) for mere pennies on the dollar. They might have purchased your old debt that was originally $1,000 for as little as .50 cents. In the extreme, they may have spent several dollars for the debt. The asset purchase companies relish buying this debt for two reasons – it is a fraction of the original cost and with cumulative interest added it is now worth many times more than the original amount you owed the creditor.

Why the Misrepresentation?

Most (if not all) of these asset purchase buyers want you to think that they are representing the original creditor and that they are going to make you an exceptional, but limited time offer. They try to convince you that you can finally settle this debt and put it behind you. They hope that you, the debtor, is ignorant of zombie debt collectors and will easily fold to their demands and antics.

If they were honest and forthright and explained that they purchased the debt for pennies on the dollar, they would lose their ability to extort monies from you using deception. The asset purchase model is so lucrative that if only a small percentage of accounts paid up, the profits become staggering. One of the leaders in “debt asset purchasing” claims the retail value of their portfolio is over a billion dollars – are you starting to see the picture.

Consumer Rights and Protection

As with all debt collection, there are laws, regulations, and practices, which govern and provide protection for debtors. Unfortunately, overzealous collectors sometimes (all too frequently) go beyond what the law allows in attempting to collect a debt. In some cases, a collector may have violated federal law and could be subject to fines/penalties or both. It is important for a consumer to understand their rights and to seek the help of legal counsel when these rights are violated.

The next blog will detail the rights of consumers, and the standards that creditors and collection agencies are expected to adhere as defined in the Fair Debt Collection Practices Act.

If you are having problems with debt or debt collectors, Dzousa Legal is here to help you. We will gladly meet with you to discuss your options. The initial review of your matters is without obligation or fees.

Should I File for Bankruptcy Protection now or wait until a later date?

Clients frequently ask that question of Dsouza and Strachan Lawgroup. However, the answer depends upon many factors, and each individual’s legal situation is different; as such, we review the facts on a case-by-case basis.

A bankruptcy filed too early could result in the loss of property, which otherwise might have been retained. A determination needs to be made regarding which Chapter of the bankruptcy code would serve the debtor best. In some cases, it might be more preferable to file a Chapter 13 versus a Chapter 7. It is possible that seeking protection from creditors using the provisions of the federal bankruptcy code will not be the best solution. There are other remedies available instead of filing for bankruptcy protection.

Mortgage Modification or Bankruptcy

A strategy we are finding among some individuals facing foreclosure is to file bankruptcy. Although this can be a good strategy, it can also work against the borrower if done at the wrong time. The timing in filing for bankruptcy protection is critical, as typically, new lenders will not enter into underwriting a mortgage before the bankruptcy is discharged. In addition, in bankruptcy, the promissory note portion of the loan is cancelled, but not the lien.
As such, the borrower loses a negotiating tool. A straight modification may prove to be a better option than bankruptcy in bringing down mortgage payments. A qualified attorney should be consulted before making any decisions regarding bankruptcy or loan modification.

Chapter 7 versus Chapter 13

In determining the type of bankruptcy to file, the debtor will be subject to a “means test.” The test is used to determine if the debts can be paid off (typically a portion of the debts) using a structured repayment plan. Although the filer may want to discharge all their debts using the Chapter 7 provision of the bankruptcy code, they may not be eligible because their income for the past six months has been too high. Everyone’s circumstances are different and unique. It is important to consult an attorney who specializes in the handling of bankruptcies to receive the best advice.

New Debt Coming

If the candidate for bankruptcy knows that new and significant debt is in the near future, it would be wise to hold off on filing. Typically, a Chapter 7 bankruptcy only eliminates the debt you owe as of the filing date. Debts incurred after the filing date would be the debtors responsibility to pay. There are times when a bankruptcy case can be reopened to include debts that were not part of the original filing. However, it can be costly and whether the debts can be discharged will depend upon qualifying circumstances.

Seeking Legal Advice

Consumer debt and laws that protect individuals (and businesses) are complex, vast, and comprehensive. The federal government has Constitutionally established a mechanism, which helps consumers get a fresh start. In addition to federal laws, each state has provisions, which specifies how personal property and assets are treated and protected. Consumers should understand their rights regarding their property. It is to the advantage of all consumers to understand what creditors (including collection agencies) can “say” or “do.”