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How Debt Collections Work

debt-150x108If you have debt, such as credit cards, there is a timeline followed by your creditors in collecting these debts.

Thirty Days

If you miss a payment on one of your debts by more than thirty days, the creditors will immediately start making phone calls and sending you letters about paying the debt.In some situations, the lender will also report to credit reporting agencies that you were more than thirty days behind on the payment of a debt. If you should find that you cannot

make a payment, you should call the creditor and explain your financial circumstances and advise the creditor when a payment will be forthcoming.

Sixty Days

You now are two months behind in paying the debt. This will cause credit cards to go into collection activity. This is an area maintained by the creditor to deal with nonpayment of credit cards. The amount of collection activity will become more forceful. The creditors may warn you about some type of delinquency action to be taken against you. The creditor will contact credit bureaus and provide them with information that you are sixty days behind. It is still not too late to contact your creditor and try to work out some type of payment plan.

Ninety Days

You are now three months behind on paying your debt. The creditor, in most situations, will cancel or suspend your credit privileges. You will definitely be reported to a credit bureau concerning your delinquency. Late fees and interest will be charged to your account. This may be the last time you have an opportunity to reactivate your account by entering into a payment plan. The creditors will become confrontational if a payment plan is not worked out.

Charge Off and Litigation

After more than ninety days, a creditor can charge off your debt as un-collectable. This may trigger the matter being sent out to a third party collection agency or collection lawyer. The collection agency or collection lawyer will send aggressive letters and make very aggressive phone calls trying to motivate you to pay your debt. They will also threaten

you with legal action if the debt isn’t paid. Should the collection activity by the collection agency be unsuccessful, your debt may be turned over to a collection lawyer who will institute a lawsuit against you. Should you receive a summons and complaint with regard to the debt, it is important you either go to court and submit a written answer to the summons and complaint or retain counsel to represent you.

debt1-150x150Bankruptcy

If you have multiple creditors chasing you regarding the payment of credit cards or other debts, bankruptcy may be an option for you. There are two types of bankruptcies available to individuals, which are Chapter 7 and Chapter 13 bankruptcies. The filing of a bankruptcy will stop debt collection activity, stop foreclosures from moving forward and assist you in re-establishing your credit in the long run. Chapter 13 bankruptcies, in certain situations, can also eliminate second mortgages.

There are many myths that people believe regarding bankruptcy that are simply untrue. Should you have questions regarding debt collection activity or bankruptcy issues, feel free to call the Law Offices of Schlissel DeCorpo. Our office has filed hundreds of bankruptcies and assisted our clients in numerous lawsuits against them regarding alleged debts. Feel free to call us for a free consultation

How To Deal With Student Debt?

student-loansBlogPic-150x150Students have been borrowing more and more money in recent years to pay for college expenses. Due to the downturn in the economy, many students have been unsuccessful in finding employment upon graduation. Even those who find employment often have difficulty paying off their student loans. Filing for bankruptcy can help with problems involving credit card, home or other types of debt; however, student loans are not dischargeable in bankruptcy. This is true even if the student loans are from a private lender, such as a bank or Sally Mae.

Congress is considering new laws to ease the burden on students who took out loans for educational expenses and are unable to pay them back. There are two types of student loans: loans underwritten by the federal government (such as Stafford and Perkins loans) and loans underwritten by banks.

Current Bankruptcy Law:

Under the current bankruptcy law, debtors can discharge students loans if they experience “undue hardship”. This condition is almost impossible to prove in bankruptcy court unless the debtor has become totally disabled.

There is concern that if the bankruptcy laws are changed to allow students to discharge loans underwritten by banks for educational purposes, then the banks will stop lending money to students.

In the event that bankruptcy laws are modified to allow the discharge of student loans, the cost of such loans in the future will most likely increase. Congress should liberalize the laws concerning the discharging of student loans but the statue should be carefully written. Student loans should become dischargable only under limited circumstances.

Should you find yourself in financial difficulty, bankruptcy may be a solution to your problem. Call the bankruptcy attorneys at the Law Offices of Schlissel DeCorpo at 1-800-344-6431 or by email to discuss your situation.

Foreclosure – Don’t Give Up – You Can Fight

foreclosure_sale_bank_mortgage_modification_attorney_lawyerMany Americans unfortunately find themselves having difficulty paying their mortgages. When a family falls behind on their mortgage payments, there are a number of ways to deal with the situation. Houses go into foreclosure for a variety of reasons. Loss of employment, divorce, injuries, illnesses and disabilities. In this situation, you have a number of options:

1. Mortgage Modification

An application to your financial institution can be filed for a mortgage modification. This is a long and difficult process and unfortunately in many situations, the request for mortgage modification is denied.

2. Forebearance Agreement

Forbearance Agreements are agreements to allow you to catch up on your Mortgage while either freezing or modifying the mortgage payments. They are very similar to mortgage modification arrangements.

3. Bankruptcy

You can file a Chapter 13 Bankruptcy in the United States Bankruptcy Court. Bankruptcies are Federal Proceedings whereas the foreclosure proceedings are initiated in state courts. The bankruptcy filing gives you an automatic stay (freezes) the foreclosure proceeding and allows you to enter into repayment plan thru the bankruptcy court concerning your debt. Deed in Lieu of

4. Foreclosure

You can simply deed your house back to the financial institution.

5. Sell Your House

You can sell your house, pay off the mortgage and keep the balance of the proceeds from the sale. If your house is worth less than the amount of your mortgage, you have to initiate a short sale with the permission of your financial institution.

6. Fight Back

Experienced Foreclosure Defense Attorneys can help you in defending foreclosure proceedings. Due to the large volume of cases, currently pending in New York State Courts, it could be 12 to 24 months for the foreclosure to be completed.?

7. Foreclosure

Does this mean the bank owns my house?

Foreclosure is the start of a process whereby a financial institution that has a mortgage or equity loan on your home seeks court intervention to have the house either sold or have the deed put back in the name of the financial institution. It is a long and detailed process. The foreclosure Is the start of the process and not the end of the process. The end of the process is the point at which you lose your home. The best way to deal with this process is to hire competent, experienced, Foreclosure Defense Attorneys.

Fighting foreclosures are difficult but they can be dealt with by experienced dedicated attorneys who understand the foreclosure process. Feel free to contact our office anytime for information or a free consultation regarding our mortgage modification, foreclosure, and bankruptcy services. We will help you decide which path is right for you and then we will help guide you through the entire process.

You can reach us 24/7 at 800-344-6431 or click here to e-mail us.

Picture courtesy of planohomesandland.com.

Waiting Period for Receiving Another Bankruptcy Discharge

clock alarm tickingIf you have already completed your Chapter 13 payment plan or Chapter 7 bankruptcy proceeding, and have received a discharge, you will hopefully be in good shape to begin a new financially unencumbered life. You will hopefully have taken our advice and attained financial health. But life does not always cooperate with our plans and so you may need to know whether you can refile for bankruptcy protection again.

In the event that this does become necessary, it is worth noting that a second (or third or fouth) Bankruptcy filing is possible and may be advisible, based on circumstances. However, time limits do apply.

The waiting period after a Chapter 7 Bankrutpcy discharge is 8 years for another Chapter 7 discharge, but only 4 years for a Chapter 13 discharge. However, if you received a Chapter 13 discharge, the waiting period is 2 years for another Chapter 13 discharge and 6 years for a Chapter 7 discharge.

As always, it is worth noting that our firm has a significant bankruptcy practice and can assist anyone with information and help with filing for bankruptcy. Just contact the office.

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Can A Creditor Pursue a Debtor’s Co-Signor After Discharge?

co-signorMany people have loans or debts where a friend or relative has guaranteed or co-signed a loan. In these situations, individuals considering filing for Bankruptcy are often concerned whether any discharge of indebtedness would absolve co-signors of their responsibility for the debt.

Generally, Bankruptcy discharge does not absolve a co-signor or guarantor of the responsibility to pay a creditor for any deficiency owed by the party who filed for Bankruptcy.[1] Creditors can still go after a co-signor for any unpaid balance after a Chapter 7 Bankruptcy discharge. Similarly, under a Chapter 13 repayment plan, at the conclusion of the payment plan, a creditor can still go after a co-signor for the difference between the amount paid under the payment plan and the original contract amount of the debt (the “deficiency”).[2]

A Chapter 13 Bankruptcy filing stays actions by creditor against co-signors during the pendency of the Bankruptcy case,[3] but this is not the case in a Chapter 7 Bankruptcy.

The Ninth Circuit Court of Appeals explained that “[g]enerally, discharge of the principal debtor in bankruptcy will not discharge the liabilities of co-debtors or guarantors.”[4] Explaining that “[t]he bankruptcy court ‘has no power to discharge the liabilities of a bankrupt’s guarantor,” the court clarified that “‘[t]he bankruptcy court can affect only the relationships of debtors and creditor. It has no power to affect the obligations of guarantors.’”[5]

The New York Appellate Division further clarified that “a defendant’s liability as a guarantor generally is not impaired by the discharge of a principal’s obligation in a bankruptcy proceeding and, thus, plaintiff may seek recovery from defendant notwithstanding [the debtor’s] bankruptcy petition.”[6]

The exact language of the agreement in which the co-signor or guarantor took on the obligation is important. If the co-signor only assumed the obligation to pay the debtor’s indebtedness where the debtor himself was still obligated to pay the loan, then the debtor’s discharge would probably absolve the co-signor of her obligation to guarantee the loan as well, pursuant to the terms of that original guarantee. But where the guarantee never says that the co-signor’s obligation is contingent on the primary party’s obligation, or where it states explicitly that the co-signor is obligated regardless of any discharge of the primary party’s indebtedness, the creditor can still go after the co-signor for any amount still due.[7]

Based on these rules, it is imperative that anyone who would like to help out a business associate, family member, or friend by co-signing a loan or guarantee should carefully consider whether they are willing and able to pay that person’s debt off if the person who asks for help becomes unable to fulfill his financial obligations or files for Bankruptcy.

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[1] 11 U.S.C. § 524(e).

[2] Id.

[3] 11 U.S.C. § 1301(a), (c).

[4] Underhill v. Royal, 769 F.2d 1426, 1432 (9th Cir. 1985), rev’d on other grounds 494 U.S. 56, 64 (1990).

[5] Underhill, at id. (citations omitted).

[6] Culver v. Parsons, 777 N.Y.S.2d 536, 538 (N.Y. App. Div. 2004).

[7] First National Bank of Scotia v. Proem-a-Net Economics Corp., 652 N.Y.S.2d 405, 407 (N.Y. App. Div. 1997).

How Do I Rebuild My Credit After Bankruptcy?

bankruptcy rebuild credit

Many individuals who file for bankruptcy already have heavily damaged credit due to late payments, repossessions, foreclosure proceedings and judgments. In this case, one of the factors that has driven down that person’s credit is a very high debt-to-income ratio. A bankruptcy may actually help such a person raise his or her credit score by eliminating part of the debt that was throwing off the ratio.

Although a bankruptcy will appear on someone’s credit score for up to 10 years, one’s credit score can be raised almost immediately after a bankruptcy discharge by implementing healthy credit and budgeting habits. There are several things that one can do to rebuild credit over time.

  • You may be tempted not to use any credit at all lest you fall back into bad credit habits. This may be necessary if you know that you lack the self-control to use credit responsibly. But if not, you should be aware that your credit score will not go up unless the credit beaureaus see some evidence of responsibly held credit. This is why it is a good idea to get one credit card whose balance you paid off every month. This will help raise your credit score.
  • Two types of credit are needed to bring up the credit score. One must develop a history of making timely payments on both “installment credit” accounts and “revolving credit” accounts. “Installment credit” means long-term set payments on a credit account like mortgage or car payments. “Revolving accounts” involve payments on accounts whose monthly payments are determined by one’s current balance, like credit card payments and home equity line of credit payments.
  • If you have car payments or a mortgage after bankruptcy, one should consider developing credit using a credit card. Sometimes one of a debtor’s credit card companies may allow that person to keep a credit card after bankruptcy, in exchange for an agreement that some of the debt from that card will carry over after the rest of his debt is discharged. If you pay the balance of the credit card every month, this will slowly improve your credit rating.
  • Alternatively, you can build up your credit score by getting a “secured credit card.” This is a credit card with your bank that is secured by an account balance to ensure that the lender can collect on any unpaid bills.

It goes without saying that one must leave behind all of the old habits that lead to high debt in the first place. One must make a budget and live within it. Sometimes this may involve taking on an additional job to make sure that all of one’s financial obligations are met on a timely basis.You may contact our office for a free consultation with an experienced bankruptcy attorney with regard to whether this or another type of bankruptcy may be appropriate for your situation.

Picture courtesy of AskMrCreditCard.com

Chapter 13 Bankruptcy

the-facts-about-bankruptcyIf you have a regular income and, after paying off all of your necessary expenses, you have some money left over to pay down your debts, the court will “restructure” your debts over a 5 year payment plan with little or no interest. The major advantage of this type of bankruptcy is that you will be able to keep all of your assets and will not be forced to liquidate them to satisfy your debts.

100% of secured debt must be paid off or made current during this payment plan. This refers to debts which are secured by a specific piece of property like a car or home. With regard to these secured debts like a mortage, the payment plan will give you time to become current and avoid foreclosure. These overdue amounts must be fully paid at the end of the five year payment plan.

Non-secured debts, on the other hand, like hospital bills, credit card bills, lawsuit judgments and payday loans will only be paid back over the payment plan period according to how much you can afford to pay. When you complete the payment plan, most unpaid balances of these debts will be discharged by the bankruptcy court.

Over the course of the three to five year plan, you will make the ongoing agreed-upon payments to your creditors and they may not try to collect more than they are entitled to under your Chapter 13 payment plan. Once you complete all payments during the five year period, the court will grant you a “full discharge” of your outstanding balances.

However, as with Chapter 7 bankruptcy, the discharge will not absolve you of the obligation to pay certain non-secured debts like child or spousal support obligations, most student loans, and many tax obligations.

You may contact our office for a free consultation with an experienced bankruptcy attorney with regard to whether this or another type of bankruptcy may be appropriate for your situation.

Other related Posts:

  • Who Should file for Bankruptcy?
  • Which Type of Bankruptcy Should I File?
  • Chapter 7
  • How Do I Rebuild My Credit After Bankruptcy?

Picture courtesy of torontobankruptcytrustee.com

Chapter 7 Bankruptcy

bankruptcy lawyer new york

In order to qualify for Chapter 7 Bankruptcy, you must pass the “means test.” That means that if your income is less than the median income in your county, you qualify to apply for bankruptcy protection. In order to find out if your income is above or below the median income for your area, please contact our office and one of our experienced bankruptcy attorneys can apprise you of where your income falls in the context of the “means test.” If, however, your income is above the median income for your county, you may still qualify, but additional information that you provide will have to be.

When one files for Chapter 7 bankruptcy, the court appoints a trustee who will collect and sell (“liquidate”) all non-exempt property and distribute the proceeds to the appropriate creditors. Any remaining dischargable debts will be discharged at the end of the process.

The definition of “exempt assets” varies from state to state, but in New York, the following assets are generally exempt from liquidation in Chapter 7 bankruptcy:

  • $2,500 in cash and $2,500 in clothing and household furniture, or $50,000 in equity in a home that is located in New York and is the principal residence of the debtor
  • a car with up to $2,400 in equity,
  • “qualified” retirement plans, such as 401ks and 403b plans,
  • IRAs
  • up to $600 in work tools
  • personal injury compensatory recoveries to up to$7,500 (not including pain and suffering)
  • security deposits

Any excess equity in your home or car, above the levels outlined above, must be “cashed out” in order to pay your creditors. It should be noted that certain debts are not dischargable in a bankruptcy proceeding. The following debts are among the most common that generally may not be discharged:

  • Child Support
  • Spousal Support
  • Back Taxes
  • Most Student Loans

Contact our office for bankruptcy filing information and help.Other related posts:

  • Who Should File for Bankruptcy?
  • Which Type of Bankruptcy Should I File?
  • Chapter 13
  • How Do I Rebuild My Credit After Bankruptcy?

Picture courtesy of NateBurnsteinlaw.com

Which Type of Bankruptcy Should I File?

bankruptcy-main-imageBasically, if you have few assets, do not have a regular income or you do not have enough income to meet your basic needs and have something left over to help pay down your debt, then Chapter 7 bankruptcy might make the most sense for you. It will allow you to start fresh as quickly as possible, with the possibility of receiving a discharge of your debt in as little as a few months.

If, however, you have a regular income and can meet you basic living expenses with a little bit left over every month, your goal may be to reorganize your debts to a manageable level in order to pay your way out of debt. In this case, Chapter 13 bankruptcy would probably be the right choice.

In a Chapter 7 bankruptcy, all of your non-exempt property would be sold (“liquidated”), and the proceeds of the sale would be used to pay off a portion of your debts. If you have few assets, this type of bankruptcy may be the best option. For more information on which assets are considered exempt from sale in a bankruptcy proceeding, see the page on Chapter 7 bankruptcy.

If, on the other hand, you have a lot of non-exempt assets, such as a house, or you have regular income, you may have more to lose by having your assets liquidated to satisfy your debts, or a portion of your debts, than you would by creating a payment plan to pay off your debts over several years. In that case, you should probably consider filing for bankruptcy under Chapter 13.

Contact our office for bankruptcy filing information and help.

Other related articles:

  • Who Should File For Bankruptcy?
  • Chapter 7
  • Chapter 13
  • How Do I Rebuild My Credit After Bankruptcy?

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Who Should File for Bankruptcy?

bankruptcy court sign

Generally, if you do not have enough money to pay your other debts after you pay the bills for your necessary expenses each month, you may file for bankruptcy.

Most people who file for bankruptcy are either unemployed, have large medical expenses, have seriously over extended credit, or encounter large unexpected expenses.

In order to qualify for bankruptcy protection, there are several primary prerequisites:

· You must either live, have a place of business, or own property in the United States

· You must not have been granted a Chapter 7 bankruptcy discharge within the last eight (8) years, or, if you have received relief under Chapter 13 of the bankruptcy code, you must have completed your Chapter 13 payment plan.

· You cannot have had a bankruptcy petition dismissed for substantive reasons within the last six months.

· It cannot be “fundamentally unfair” for you to receive relief under Chapter 7 of the bankruptcy code.

After you have filed for bankruptcy, your creditors may no longer contact you. The court will notify all of the creditors listed in your bankruptcy filing that you have filed for bankruptcy. Once they receive notice from the court, usually a couple of weeks after filing, they must stop all collection efforts and you should then be free from collection calls or any other type of collection efforts. If, despite notice of your bankruptcy proceeding, your creditors continue to contact you, they may be liable for court sanctions or your attorney’s fees.

If you are drowning in debt and you feel that you are unable to pay your way out on your own, we can help you make a new start by filing for bankruptcy. Read this article to help you decide which type of bankruptcy is appropriate for your situation.

Contact our office for bankruptcy filing information and help.

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