Learn about your options when filing a Bankruptcy in Brevard County
An important benefit of filing for bankruptcy protection is that the automatic stay goes into effect immediately upon the filing of your petition. The stay prevents creditors from continuing any collection efforts against you while your[…]
If you are drowning in credit card debt but you want to avoid filing a Chapter 7 or Chapter 13 case, we can help you discover the wide variety of defenses that may be available to you. It is imperative that you contact us as soon as possible because there is a strict deadline for submitting these defenses or they will be deemed to have been waived. Below are a few examples of defenses that may be available to you in a debt collection lawsuit:
Improper service. The law requires a creditor to follow strict requirements when serving you with a lawsuit. If you can establish that service of process to you was invalid, it is a valid defense.
Statute of limitations. A credit card company has a deadline for filing the lawsuit to collect the debt from you. If the statute of limitations for collecting the debt has expired, the lawsuit can be dismissed.
Standing. It is common for credit card debt to be sold to debt collectors or debt buyers, so it is also common for the supporting loan documentation to not get transferred properly. In other words, if the creditor cannot prove that it owes the debt, the lawsuit can be dismissed.
Discharge. If you filed a prior Chapter 7 of Chapter 13 bankruptcy case and included the collector’s debt in your filing and it was discharged by the court, the collection lawsuit is prohibited.
Identity fraud. If your identity was stolen or the debt does not belong to you, it can be a valid defense.
Accounting error. If you can prove that the plaintiff has sued you for an incorrect amount, you have a valid defense. This may include the creditor failing to properly apply your payments or charging fees you do not owe.
Abusive tactics. If a debt collector that has illegally harassed you or been abusive in its attempts to collect the debt from you, you can file a counterclaim seeking to recover monetary damages.
Contact Faro & Crowder, PA today to schedule a consultation
If you are facing financial difficulties and debt collectors have started calling, it is important that you understand what your rights are under the law. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using unfair, deceptive or abusive practices when trying to collect a debt from an individual borrower.
What Is a Debt Collector?
A debt collector, as defined under the FDCPA, is a party who regularly collects money owed to others. Included in this definition is collection agencies, lawyers who routinely collect debts, and companies that buy past due accounts and attempt to collect on them.
There are a variety of tactics used by debt collectors that may be considered unfair or abusive. The FTC website provides extensive information regarding the actions that are prohibited under the law.
Below are a few of the more illegal common practices you should be aware of when dealing with debt collectors.
It Is Illegal for a Debt Collector To:
Attempt to collect additional amounts that are not permitted by the contract you signed with the creditor or under the law
Falsely claim that the borrower has committed a crime by not paying the debt
Use profane language when talking to the borrower
Deposit a post-dated check before the date on the check
Threat to publish the borrower’s name on a public list if the debt is not paid
Lie about the amount owed
Threaten to seize the borrower’s assets unless it can be done legally
Contact a borrower by postcard and revealing confidential information
Threaten violence if the debt is not paid
Call the borrower repeatedly in an attempt to annoy the borrower into paying
Lie about who they are or who the work for
Provide false credit information about the borrower to third parties
Contact Faro & Crowder today
If you are being harassed by a debt collector in one or more of the above ways, contact us for help. We will investigate whether the debt collector is legitimate (and not a scam artist) and make the illegal collection activity stop. In certain circumstances, you may be able to recover damages for the debt collector’s illegal activity!
If you own a business, it is imperative that you take precautionary measures to protect it legally. In other words, you need a great business attorney and contracts that protect your best interests. There is no easy answer for what legal agreements are the most effective, because every case is different. However, there are three main types of contracts that most businesses can benefit from having in place.
If you own the business with another party or parties, it is important to have a written contract between all of the co-owners. This is true whether you are a LLC, partnership or corporation. Common examples of this type of agreement are operating agreements, shareholders’ agreements, founders’ agreements and partnership agreements.
The purpose of ownership agreements is to solidify the deal made between the co-founders. They should cover topics such as ownership percentages, salaries, capital contributions and what happens to the business if the co-owners part ways.
Most businesses only use agreements for their employees, not for their independent contractors. However, an independent contractor may have access to your network, databases, website or financial information. Thus, having a formal agreement is essential to protect you by outlining the job to be performed, a confidentiality agreement to prevent disclosure of your proprietary information and non-solicitation provisions. You should also confirm with legal counsel that you are not treating your independent contractors like employees, because there can be stiff penalties for improper classification.
Depending on your industry, you may depend upon vendors and suppliers to meet your customer’s needs. Thus, it is important to have a carefully drafted agreement that helps ensure that your (and your customer’s) needs will be met and that protects if you they are not. You may also need a contract with your customers outlining the business relationship and providing legal protections.
There are other types of contracts that may be necessary to help ensure the success of your business, but the above contracts provide a good place to start. If you have questions regarding the agreements discussed above or you would like to learn more about the legal services we provide, call us to schedule a free consultation.
Our nation is facing an overwhelming amount of student loan debt – estimated to be approximately $1 trillion – and it is having a serious impact on the economy. While several markets are being affected, the housing market is feeling it the most. Recent college graduates, formerly one of the largest sources of new home buyers, are no longer rushing out to buy a house because they cannot afford a mortgage payment in addition to their student loan payment.
A study by the Cambridge Consumer Credit Index reveals that three-quarters of Americans with outstanding student loans say that their debt is large enough that it prohibits them from making major purchases. Not only is the amount of debt prohibitive, any student borrowers who fall behind on their loan payments face difficulty in obtaining credit, including mortgage loans and vehicle loans.
Economists have been predicting that the student loan debt load would negatively impact the economy nationwide. When it comes to mortgages, the credit standards for qualifying for a home loan were heightened in 2008. As a result, we are now seeing that first-time homebuyers between the ages of 25 and 34 are the smallest group of purchasers in the housing market in more than a decade.
If you are facing burdensome student loan debt, you have likely heard that it can be difficult (but not impossible!) to discharge this type of debt in a personal bankruptcy filing. However, that doesn’t mean that an individual Chapter 7, 11 or 13 case couldn’t help you manage your student loan payments. Whether you benefit from discharging other forms of debt or by reducing your monthly payment while your bankruptcy is pending, there are ways a bankruptcy could help.
We will write more on this topic in future blogs, but in the meantime, if you have questions regarding how a personal bankruptcy may provide you with assistance in managing your student loan debt, contact us for a free consultation.
Your credit score is how lender’s determine whether you are going to be a good customer or not, and bankruptcy means many of your creditors did not get what you agreed to pay them. Many people believe that they are not allowed to borrow money for a certain period of time after they file bankruptcy. You are not allowed to borrow money while you are in Chapter 13, Chapter 12, or Chapter 11 without permission (sometimes from the Court, sometimes from the Trustee). After your bankruptcy is closed (or with the required permission) you are allowed to borrow. However, lenders are not required to lend to you. Some will, but you will pay a premium for being high risk in the form of higher interest rates, and the amount they will be willing to lend to you will be less. Unfortunately, while you just got out of debilitating debt, the only way to rebuild credit is to borrow money, and pay it back.
For some people, that may mean a credit card that either requires a security deposit or just has a very low credit limit. Charge something every month, pay off the bill in full every month and your credit score goes up every month. It does seem to be true (the formulas for determining credit scores are closely guarded secrets) that paying in full doesn’t boost your credit as much as paying most of your balance does. That makes sense because the score is supposed to tell lenders whether you are a good customer, and they make more money if you maintain a balance (as long as you don’t default). Even though your credit will rise more slowly, the difference is not worth the interest you will pay, let alone the risk that you will get back into a situation where your debt load is more than you can handle.
Other people count on staying current on their secured debts, such as a house or car. If buying a new car is a priority, there are some important things to remember.
First, stay away from huge dealers. A small or mid-sized dealer is probably more willing to work with people with lower credit scores.
Second, lower your expectations. You don’t have to buy the cheapest car on the lot, but you probably won’t qualify for the nicest one, and you don’t need it. Remember, you want to own a car, not be owned by a car. When I see people lease cars they could not afford to buy or finance them and trade them in as soon they have enough equity to make a down payment on a new car with the highest payment they can qualify for, I know their quality of life suffers, their stress level is through the roof, and they are likely candidates for a future bankruptcy. It’s better to own a modest car outright than to rent a luxury car, and if you are leasing or financing without equity, you are renting.
Third, be upfront with the lender. Before the salesperson runs your credit report, tell him or her that you filed bankruptcy (they will find out anyway, and if they ask directly and you deny it you are committing fraud). If you can provide a reasonable explanation for why you filed (such as unemployment) and offer a convincing reason why your financial circumstances have changed (you’re working now), lenders are much more understanding.
You also should wait until after the 341. If you filed Chapter 7, you may need to wait until the discharge. That’s only an extra few months anyway. If you filed Chapter 13, you may need the trustee’s permission to acquire new debt. Make sure the payment fits comfortably inside your current budget. If you cannot afford to pay your ongoing expenses AND put away some money for a rainy day, it does not fit within your budget.
If you are trying to rebuild your credit, savings is crucial. If you do not have savings, any gains you make in rebuilding your credit are a broken transmission, layoff, or illness away from being undone.
The credit counseling requirement was one of the more talked-about Chapter 7 reforms in the last round of legislative updates. Now, almost a decade later, what does this prerequisite mean in practical terms? Does the average consumer filer even notice this requirement?
The main reason that legislators took up bankruptcy reform in 2005 was that consumer bankruptcy had finally lost its stigma as a financial failure and was instead seen as a logical alternative to repaying an excessive amount of debt. That attitude was good news for consumers, but very bad news for credit card companies and other moneylenders.
So, the moneylenders lobbied Congress to change the rules and make bankruptcy harder to file. The idea was to create obstacles that made bankruptcy less attractive.
Credit counseling requirement
Beginning in 2005, Chapter 7 filers were required to attend and complete a certified credit counseling class, which, at least in theory, delved into the reasons behind the contemplated bankruptcy filing. Ten or fifteen years ago, when the Internet was still in its infancy, speaking with a licensed credit counselor still probably meant an afternoon off from work for a trip to someone’s office.
Today, there are literally hundreds of providers approved by the Florida bankruptcy courts. Typically, the approved classes are offered online in both English and Spanish. There is still a nominal investment of time (about 30 minutes) and money (about $30) involved.
After your bankruptcy is filed, there is a second class to take. The debtor education class may be taken in the same manner as the pre-filing course. Faro & Crowder PA sends clients to the Dave Ramsey debtor education class. Clients rave about the class because they actually learn to change the way they live and free themselves from the cycle of debt and insolvency.
A previous post discussed some of the general aspects of a Chapter 13 Bankruptcy plan. For homeowners who are delinquent on their mortgages, the amount to be repaid may be substantially lower than the amount the moneylender claims that you owe.
Most mortgage companies are upfront and evenhanded when dealing with their customers. However, it is not uncommon for mortgage companies to charge some outlandish fees, such as:
Excessive application fees
Property inspection fees
Be on the lookout for such fees, and question them if they pop up. An attorney may also be able to argue that such fees are not reasonably related to the mortgage transaction, and have these fees stricken from the delinquency amount.
Avoiding the lien
Ask your attorney about some lien-reduction options that may be available. In some jurisdictions, you might file a motion to avoid the lien and dramatically reduce the past-due amount:
Cram-down: In some cases, you may be able to repay the current Fair Market Value of an item as opposed to the contract price. For example, if you bought a house for $100,000 but it is now only worth $80,000, you may be able to cram down the mortgage $20,000.
Strip-off: If there are multiple liens on a house and the FMV is too low to secure both lies, the junior lien may be subject to removal. Many people who bought real estate with an 80/20 financing package may be in this situation.
Statute of limitations: A Texas court has held that if a lender sends an acceleration notice but fails to foreclose within the proper time period, the lender has forfeited its right to foreclose on the note.
A major mortgage lender is returning to the subprime market.
Since the mortgage collapse in 2008, skittish banks have only loaned money to the most credit-worthy consumers. Now, faced with a major revenue loss as mortgage lending volume declines overall, Wells Fargo may be loaning money to consumers with credit scores as low as 600. Other banks may follow suit, rolling out such programs as “second chance mortgage” or “alternative mortgage programs.”
The 2010 Dodd-Frank Act, along with some other structural changes, may have given banks the confidence they need to begin loaning more money to more people.
Borrowing money again
Wells has stated that it will steer clear of some of the more controversial sub-prime lending programs, such as zero-documentation loans and introductory-rate mortgages (a/k/a adjustable-rate mortgages). Just like a bank must lend money responsibly to make a profit, a bankruptcy consumer must borrow money responsibly in order to fully recover:
Chapter 7: As soon as you receive your discharge, you may be inundated with credit card offers. That is because the moneylenders know you cannot file another Chapter 7 for another several years. Don’t give into temptation or fall back into old habits. Start with one card with a very low limit, paying off the balance in full every month, and move forward from there as your credit score improves.
Chapter 13: Depending on the circumstances, you should be able to start borrowing money again after making a handful of on-time plan payments. The same rules apply: start slowly and build up gradually.
Bankruptcy gives you a fresh start. It is then up to you as to whether you move forward or move backwards. By borrowing money responsibly, your bankruptcy filing will only be a memory in just a few short years.