I filed bankruptcy and got a discharge– why are collectors still calling me?

Well there are probably many answers to this question, but let us go to the two big ones.

First answer — that debt was not discharged, or in other words, not “in” the bankruptcy.  Debt that was not included in your bankruptcy includes:

(1) Student loans

(2) Many tax debts

(3) Debt arising from fraud or similar

(4)  Debt arising AFTER YOU FILED the bankruptcy.

Second answer — if the debt being collected after discharge WAS included in the bankruptcy and was discharged – -just an ordinary credit card or personal loan, for example, then the debt collector is breaking the law.

WHAT do you do to stop a collector who is unafraid to break the law?

(1)  Send them a copy of your bankruptcy discharge notice — whatever paperwork you got saying you had a discharge, send to the creditor — certified mail — and explain this debt was covered.   Tell them on the phone as well – -giving your bankruptcy case number may be enough.

(2)  If (1) does not work, call a consumer attorney (find one at http://www.naca.net – -which is NOT the mortgage help website, it is for legitimate consumer attorneys of all types) or call a bankruptcy attorney, including your former one.

You submitted yourself to the bankruptcy system, with all its punishments and benefits, and the main benefit is your fresh start.  If collectors are calling and your polite notice “Hey, I filed bankruptcy and here is the proof” does not stop them from trying to get you to pay this discharged debt, you can enforce your rights in either bankruptcy or state or federal court — hire an attorney and tell those bullies to leave you alone!!

Cancel your “truecredit” subscription already!

Jeebus, people — why do you keep checking your credit score?  What is it really doing for you?

You get three free credit reports a year — one from each major service — at http://www.annualcreditreport.com

Unless you are a victim of identity theft, those three reports a year are all you need to ensure accuracy.

Credit scores improve with a lot of factors, but mainly living within your means, which means cutting useless expenses.  Go ahead, buy yourself an iced latte on a hot day once in while — that can actually give you pleasure and be worthwhile.  But paying to look at a number?  That’s throwing away your hard-earned cash.

My mortgage and auto lender are calling me monthly and I’m not overdue!

If your bank has targetted you as a high risk loan — it may be because you have had some late payments, because of your debt:income ratio, or because of some totally random characteristic having NOTHING to do with your character or payment history, you may be getting monthly reminder calls.  “Remember to pay your mortgage!”

These calls may be from an autodialer or even real people (!) and if there are multiple calls, especially multiple in a day, they can really become annoying.  However, in most circumstances, these calls fall into the “crappy customer service” category and not debt collection harassment.   I am not sure what can be done to stop the calls (change your number?) but you could try sending a letter requesting you only be contacted by mail.

Will the REAL free credit report website please stand up?

http://www.annualcreditreport.com

Not that other one.  Don’t go there.  Don’t do it.

Five things NOT to do when served with a collection law suit

In these tough economic times, more and more people who have always worked hard to manage their funds and pay their own way are finding it harder and harder to pay their bills.  Hard choices must be made, and sometimes that means not paying a few or even most bills.  Do that long enough and you may be hit with a collection suit.

How do you know you’ve been sued?  If things work the way they are supposed to, you will be SERVED with a summons and complaint.  That’s never a good day and a lot of thoughts will be racing through your mind.  Here is my short list of five things NOT to do when served with a collection suit.

(1)  Do not call the attorney listed on the summons and complaint.  That is the law firm who represents the OTHER SIDE.  They are not going to help you, on the contrary they have an oath to do what is best for the company SUING YOU.

(2)  Do not send a small payment to show you are an honest, well-meaning person.  This can hurt you as sometimes, lawsuits are filed after the statute of limitations has passed.  If you send a payment, in many states this restarts the time frame that a suit can be validly filed!  So do NOT do this.

(3)  Do not respond with excuses. For example, do not respond to the complaint with a court filing in which you state “I really want to pay this debt but the creditor/collector will not negotiate a plan with me, they are totally unreasonable.”  You want to pay $45 a month and the collector wants all or nothing?  Tough cookies, sista.   The collector or creditor has no duty to be reasonable, this is business not preschool where we all learn to be considerate!  I cannot think of a consumer loan contract which states that the lender must negotiate with you in the way that you choose.  Plus, you just basically admitted the debt is yours and the full amount is correct.  Don’t do that.

(4)  Do not just show up in court on the date stated without filing any paperwork.  Usually the date for the first court appearance is long after a response is due to the complaint and if no response is filed, you may show up only to find you already have a judgment against you.

(5)  Do not bury your hand in the sand and hope it all goes away.  It won’t.  The creditor or collector can get a default judgment and in some states, like California, they can begin to garnish your wages — 25%!   They can put a levy on your bank account and even a lien on your home!

OK, so what TO do?  That’s another post!  BUT — keeping it simple, get advice from an attorney who specializes in representing consumers — you can look for an attorney at http://www.naca.net or your local free legal services.  Also, there are books like those from nolo press that help you represent yourself in collection suits.

The key is to remember — this is a LAWSUIT.  If you got in a car wreck and the other driver took you to court, you wouldn’t expect the judge to award damages just based on the other driver’s statement “It’s his fault and he owes me $5000”, right?  EVIDENCE would be expected.  This is no different — make the other side prove their case before you hand over money.  I mean, if you had extra cash you would already have paid a long time ago, right?

Student Loan Collectors are not allowed to harass you!

The law is different for Student Loans then for many loans like credit cards, car notes, or personal loans.  For example, student loans can sometimes lead to garnishment — money taken out of your paycheck — without a court judgment!

However, student loan collectors are not allowed to harass you any more than any other collector.  Many times student loan collections are done by the original creditor, but in states like California and Texas, harassment is illegal no matter if it is done by outside collections or the original owner of the loan.

Some things that student loan collectors are not allowed to do include:  talking to people at your job or family members about your debt (although they can talk to co-signers), calling you before 8 a.m. or after 9 p.m., and speaking or yelling at you in a derogatory fashion, either by calling you names or telling you how you are a bad person for not being able to pay your debts.

Student loan collections are serious business — for many people, student loans are the largest debts they have and they can not get discharged in bankruptcy.  If you have outstanding student loans you are unable to pay, there are progams to help you.  However, harassment is not part of the program.  If you are being harassed by a collector, be it a student loan collector or otherwise, contact your local consumer attorney for help!

Never served but now there is a default judgment? Set that baby aside!

In California state court, a party cannot get a default judgment against someone who never knew the lawsuit was occurring.  Service of a summons and complaint are necessary to alert someone of the lawsuit and give the person an opportunity to be heard in court.

What should you do if a debt collector — or anyone — gets a default judgment against you when you were never served?  An attorney can file a motion to overturn the default judgment for lack of personal jurisdiction.

The closer in time to the granting of the judgment, the simpler the motion is — HOWEVER, if you never were served, the judgment can be set aside at any time.

PLEASE note — service does not mean that someone has to hand papers to you and you grab hold of the papers.  Substitute service, where a process server hands the papers to an adult at your residence who admits that you do live there, that counts as service.  If you run or slam the door when a process server shows up and they leave you the documents, that almost always counts as well.  This is not a “gotcha!” type cure-all for all or even most default judgments.  However, if you really were not served and can show that to be true, then contact a consumer attorney to get the judgment set aside.

How filing bankruptcy can lower your mortgage — now!

I hope my subject is not too misleading.  Right now, the law is that when you file a Chapter 13 bankruptcy, you can knock your car loan down to the value of your car (provided it is over 910 days old).  You can also knock down the value of a loan on your boat, if you have a boat, or the loan on pretty much ANYTHING except your house.

HOWEVER — there is one way filing bankruptcy can reduce the amount you owe on your house and that is by stripping your 2nd mortgage.  The following must be true.

(1)  Your house is underwater.  In other words, you owe more than it is worth.

(2)  Your house is SO underwater, that the 2nd mortgage is essentially unsecured.  For example, your house is worth $300,000, your first mortgage is $345,000 and your second is $45,000.  That second mortgage has nothing behind it, no security!

In this case, if you file a Chapter 13 bankruptcy, your attorney may file a motion and have your second mortgage determined to be an unsecured loan.  Then your second is treated the same as any credit card debt, personal loans, etc.

This is something that should be more helpful the lower the real estate market sinks.  It is too bad — ideally NO one would be in this circumstance, but if you find yourself owing so much more than your house is worth that your home value is less than your first mortgage, filing bankruptcy could help you.

Be responsible little consumers, darn it! Get out there and shop!

Is this seriously the advice that CNBC is putting out this holiday season?  Yo Ho Ho Ho — what proof rum have those drunk Santas been swilling?  With both debt and unemloyment numbers increasing nationwide, the dangers of living paycheck to paycheck or even worse, spending ABOVE your check, should becoming very clear.  However, using the same “Buy buy buy!” mentality that got us into this mess, CNBC actually encourages people to spend their way out of our bad economy.

Using the “Saving money is for ch-ch-chickens, bawk, bawk” theme, CNBC says fear is keeping shoppers from throwing away hard-earned money on crap shopping.

Here’s the article along with a pretty picture of the author.  I wonder how much shopping went into that perfect hair?

http://www.cnbc.com/id/28314950

There’s no shortage of bad news when it comes to the economy – the recession, fears of deflation and elevated jobless claims are just some of the things that people are talking about. The widespread sentiment of doom and gloom has put a damper on the holiday season. But is slowed consumer spending a result of hard economics or is the psychology of hard times holding consumers back?

Jackie DeAngelis
CNBC
Producer

In a recent study released by the Pew Research Center, it was reported that 73% of Americans say they plan to cut back on their holiday shopping this year. Nearly six-in-10 of those who said they’re cutting back report they’re doing so because they worry things might get worse; only 28% said they are cutting back because their financial situation has deteriorated.

Sure, we all need to save more and spend less, but extreme tightening might be the worst thing that consumers can do in tough times, as stopping normal spending will only put more pressure on the weak economy.

In order to fight the fear factor, consumers should not fight the urge to splurge — within reason of course. In fact, they should take advantage of falling gas prices to get out and about, take advantage of deep discounts in the stores and online for gift giving, and remember that giving this holiday season will lift spirits more than ever before.

Jackie DeAngelis is a writer and producer at CNBC. Previously she worked as a financial analyst at Oaktree Capital Mgmt. Jackie earned her J.D. from Rutgers Law School in 2008 and her B.A. in Asian Studies from Cornell University in 2002

Pants guy loses his appeal — thank goodness!

If I have to hear about the idiot who sued a drycleaner for millions of dollars over some mishap involving pants — AND how this is an example of trial attorneys ruining the country one more time I may have to SCREAM.

Doesn’t anyone notice that the idiot represented himself? He’s a judge, yet he could not find a single attorney to represent him? Maybe that is a sign that attorneys actually DO screen their cases? But really, why mess up a good fund-raising story with logic…

I cannot believe honest thoughtful people would allow this story to be a bonanza for groups trying to change the Consumer Protection Laws.  I mean seriously — one nutter and his pants and now suddenly we need to rewrite laws?  That makes no sense, that is simple hysterics.