Beware of debt settlement and consolidation companies.

Chad — Tue, 19 Jan 2010 05:28:25 +0000

It seems that everytime I turn on the television, I see a commercial for “debt settlement” companies which promise to help you cut interest rates on credit cards, reduce the balance and consolidate payments. What they don’t tell you is that they charge substantial fees for these services (that’s how they afford such a large advertising budget) and that participation by your creditors is completely voluntary. It seems that frequently when i’m in court, somebody there has a motion for summary judgment pending against them on a purported “settled debt” and they just don’t understand why because they say ” I sent the payment to the debt settlement company.” The creditors are still free to pursue their legal remedies on the purported “settled debt” and they frequently do, which can lead to wage garnishment and judgment liens being placed on your property. Before you decide to invest significant time and money into a “debt settlement” program, speak to a knowledgeable bankruptcy attorney to consider other options.

“Zombie Debt”

Chad — Fri, 12 Jun 2009 03:17:21 +0000

If you have ever defaulted on a credit card and had the debt “charged off” by the original creditor, you may fall prey to what many refer to as zombie debt. What happens after the debt is charged off by the original creditor is something right out of Night of the Living Dead. The debt is then purchased by debt collectors for pennies on the dollar, with little or no documentation of the debt. The debt collector, who is usually a debt collection law firm, then sends collection letters and uses other collection efforts. Eventually, the debt collector usually files suit and many people assume they have no defense and choose to not defend the case and end up taking a default judgment, which can lead to garnishment of wages and judgment liens being placed on their property. When defended and challenged by an attorney who is knowledgeable in this area of law, the debt collector is usually unable to produce even the most basic documents or evidence to show that they can enforce the debt in a court of law. Apparently, there are also debt collectors who specialize in buying up debts that have been discharged in bankruptcy and then attempt to collect on it from unsophisticated debtors even though this act is clearly a discharge violation under the bankruptcy code and could be pursued by the debtor.

Can I still file bankruptcy?

Chad — Sat, 09 May 2009 03:01:10 +0000

Quite frequently, I hear people say that “I can’t file bankruptcy on my credit cards anymore because they changed the law.” This is not true, bankruptcy law was changed in 2005 to provide for a “means test,” but it affects only a very small percentage of individuals, quite simply, only those who make a pretty substantial income.

If a person makes enough to where a “presumption of abuse” applies, you are then allowed to apply the I.R.S. fictitional standard of living expenses and deductions, which are quite generous, in order to rebut the presumption. The vast majority of those who need to file bankruptcy are not affected by the means test. And, in the unlikely event that the means test applies, most people would still be unlikely to have to pay back anywhere close to what they actually owed in unsecured debt (credit cards, medical bills, etc.) You could still file bankruptcy, but you would have to pay your unsecured creditors a percentage determined by your amount of discretionary income.

So, the answer is yes, you still can file for bankruptcy.