Shady debt collector calls

Most of the calls I get are just fine. But some calls are misleading and even shamelessly deceptive. Just listen to this downright shady voicemail I got the other day.

Hi. This is Brian Moore, compliance officer calling with “the state.” I have a legal notice here that I will be bringing out in the next 72 business hours. Now I have been retained to come out between the hours of 4 and 6 p.m. to the address or place of employment. Now a valid state ID will be assigned to us. If you have any questions or concerns, or to be rescheduled, you will have to contact the filing party. The district office number, as showing here, 833-470-0485. Thank you for your time. You have officially been notified.

Note the casual use of pseudo-legal terms: compliance officer, retained, the filing party. Note the ominous references to “the state” and “valid state ID” and “the district office.” The voicemail also contains a thinly-veiled threat: the possibility of in-person confrontation with this person in the next “72 business hours,” whatever that is intended to convey. And the threat mentions a place of employment, too. For those not already scared enough to return the call, there’s a final menacing kicker: You have been officially notified.

Generally speaking, I’m not a big fan of scammers. But I truly detest it when someone tries to scam my clients. So I called the number.

I reached a company called S&S Check Services, supposedly based in Amherst, New York. The representative (who refused to identify himself) disclaimed any knowledge of a Brian Moore, or why their phone number was linked to this voicemail. But S&S is a debt collector. And they had one of my client’s accounts. It’s not a coincidence. It’s just plain shady.

We will take your shady debt collection calls

When you retain us, Lee Legal will take your debt collection calls. We do this for two reasons. First, debt collection calls are really, really annoying, and you need to focus on getting your bankruptcy filed. And second, as stated above, I hate it when creditors try to mess with my clients. We’ll take your creditor calls up to two weeks before filing.

Once we file your bankruptcy case, the calls stop. That’s because the automatic stay takes effect, and attempts at collection once a bankruptcy is filed can subject the creditor to heavy penalties and attorney’s fees.

When you must file quickly

You must file your bankruptcy prior to a foreclosure auction or you will not be able to save the property. Filing bankruptcy after a foreclosure auction has already been held will not save your home. If you file a Chapter 13 prior to the auction, then the automatic stay takes effect. That stops the auction. Then can make up missed mortgage payments over an extended period of time. But filing bankruptcy after a foreclosure auction is too late.

Likewise, if you file Chapter 13 after your landlord has obtained an eviction judgment, then the bankruptcy will not prevent eviction. You must file the bankruptcy prior to your landlord’s obtaining an eviction judgment.

Filing bankruptcy after a repossession, in some cases, will allow you to get your vehicle back. But the creditor will charge you handsomely for the repo costs and fees. It is usually preferable to file Chapter 13 prior to repossession.

When waiting to file makes more sense

Filing a Chapter 13 bankruptcy during a civil litigation case will not result in the case’s being dismissed. Instead, the case will only be “stayed” temporarily. Usually, bankruptcy courts will allow the plaintiff relief from the automatic stay to allow the litigation to go forward. This allows the claim to be litigated — and liquidated — in the proper venue. Often it makes sense to allow the litigation to run its course prior to filing a Chapter 13 bankruptcy.

Waiting to file until the first of the month might make sense, too. Filing a Chapter 13 bankruptcy after your latest mortgage payment comes due allows you to include that payment in your Chapter 13 plan. On the other hand, if you file near the end of the month, then your first mortgage payment will come due within a few days after your filing. Sometimes this can strain your budget and even cause missed payments.

Especially at the beginning of a Chapter 13 case, you don’t want timing issues to trip you up. The Chapter 13 trustee will scrutinize your case for feasibility to determine whether you have the ability to repay. If you miss mortgage or vehicle payments or fail to make your Chapter 13 Plan payment, your case may be in peril.

Don’t let timing throw you off

Call Lee Legal to schedule a free, comprehensive financial analysis. When to file a case is often just as important as whether to file at all. We will help you identify the issues and develop a plan to allow you to move on with your life.

File bankruptcy to stop a lawsuit

When you file bankruptcy the “automatic stay” takes immediate effect. The automatic stay is a nifty feature of the Bankruptcy Code that orders your creditors to cease all collection attempts. That includes lawsuits. The bankruptcy court will find liable for damages litigants who violate the automatic stay.

In one scenario, a plaintiff may sue you for a large sum. If you have no affirmative defenses or cannot afford to mount a defense in the litigation, then you should consider filing bankruptcy to stop the lawsuit.

In another scenario, an aggressive creditor (Midland Funding, American Express, On Deck Capital) may sue you in order to lien against your home or to garnish you bank accounts or wages. You can not only file bankruptcy to stop the lawsuit, but the bankruptcy will also discharge the underlying debt.

Bankruptcy does not stop every type of lawsuit

Bankruptcy does not halt lawsuits for divorce, or for the establishment of paternity, child custody, or child visitation.

In addition, where a creditor alleges that a debt may be nondischargeable, bankruptcy may delay but not stop the lawsuit. For instance, bankruptcy may only temporarily stay the lawsuit if you are being sued for fraud or for an intentional injury. In those cases, the bankruptcy court will likely allow the lawsuit to move forward to determine whether the debt is dischargeable in your bankruptcy.

Talk to an attorney if you get sued

In many cases, but not in every case, it can be a smart choice to file bankruptcy to stop a lawsuit. If you get sued, talk to an experienced bankruptcy lawyer to discuss your options.

Bankruptcy stops collection efforts

At the start of every bankruptcy case, an order for relief is issued by the bankruptcy court. The order for relief informs your creditors that the automatic stay is in place. Your creditors must stop contacting you or pursuing any collection efforts whatsoever.

Creditors usually stop collecting when they know that your case has been filed. The sooner they find out, the sooner the phone calls and letters stop.

But until you file a bankruptcy, your creditors can continue to contact you. That’s where we come in.

Lee Legal will take your collection calls before you file bankruptcy

There are several situations where it makes sense to delay a bankruptcy filing. Sometimes, you just need to save up for the attorneys fees and filing fees. But generally speaking, if you know you have to file bankruptcy, start the process immediately.

If you have retained counsel and your filing is imminent, a good bankruptcy lawyer will take your creditor calls for you. Lee Legal will take your collection calls up to two weeks before your bankruptcy filing. That “breathing room” allows you to focus on your bankruptcy and get on with your life.

In those cases where there are many creditors, often there is at least one particularly collection agent. Don’t let aggressive debt collectors disrupt your life. We will reach out to them on your behalf to inform them of their rights in your bankruptcy. Most creditors back off at that point.

Motion for Relief from Automatic Stay

Secured creditors usually file motions for relief from the automatic stay. If you have a mortgage and miss payments during your Chapter 13, the mortgage company will file a MFRS to allow them to initiate foreclosure proceedings. Likewise, if you have a car loan and miss payments during your Chapter 13, the lender will file a MFRS to allow them to repossess.

In a Chapter 7, motions for relief can be filed by landlords to allow them to evict. And sometimes, in a Chapter 7, car lenders will file a MFRS to allow them to auction a vehicle that has already been repossessed. In other cases, where litigation has been ongoing, a plaintiff will file a MFRS to allow the lawsuit to continue despite the bankruptcy.

Defenses to a Motion for Relief from Automatic Stay

The best way to defeat a motion for relief from the Automatic Stay is to reinstate the loan. If you can afford to catch up post-petition payments in full, then the MFRS may be deemed moot. Likewise, if you can reinstate your loan in Chapter 7, then the MFRS is moot.

If you cannot afford to fully catch up the post-petition arrearage in full, then your attorney may be able to negotiate a consent order to resolve the MFRS. In a consent order, you will resume your monthly payments and spread arrearage payments over a short period of time, usually a maximum of six months. For this reason, resolving an MFRS sooner rather than later is usually in your best interest.

Talk to Your Lawyer

You must take seriously a motion for relief. You must respond promptly and attend the hearing. Try to resolve the issue prior to hearing. Do not simply ignore the motion.

The filing fee for a motion for relief is $176. Your creditor is not paying a fee (and paying their attorneys) just to scare you. They want to take your property.

Respond promptly to your bankruptcy lawyer to determine the best way to respond to a motion for relief from automatic stay.

Bankruptcy has downsides

First the negatives. There are downsides to filing bankruptcy. A bankruptcy filing remains on your credit report for seven to ten years. Bankruptcy may also make it more difficult or more expensive to buy a home or car for a couple of years. Other types of credit, like credit cards or lines of credit, may be more limited for even longer.

Some people also feel embarrassment or shame and procrastinate filing bankruptcy, trying to delay the inevitable but in turn just making things even worse. In most cases, once you know what you have to do, you should file bankruptcy immediately.

Finally, bankruptcy isn’t for everyone and for every situation. There are certain circumstances under which you should not file for bankruptcy. Always discuss your options with a bankruptcy attorney before making any big decisions.

But there is a silver lining to filing bankruptcy, too

First of all, bankruptcy allows you to eliminate your debts. In most cases, you will also be able to keep all of your property. Once you are debt-free, how you choose to use your financial fresh start is up to you. Many people treat bankruptcy as a life lesson and become more responsible financially. Most people consider the biggest benefit to be the bankruptcy discharge.

The Automatic Stay is a bright silver lining to filing bankruptcy, too. The Automatic Stay is, in fact, automatic and goes into effect immediately when you file. The stay prevents creditors from contacting you. Bankruptcy provides breathing room, which is often all that you need to form a plan of action.

Bankruptcy has pros and cons, but in the end, bankruptcy could actually improve your credit score. The downsides of bankruptcy all happen when you file. But the positive effects to your credit all take place over time.

Yet in many ways, the greatest silver lining to filing bankruptcy is peace of mind. You are addressing issues instead of ignoring them. You are avoiding problems before they become unmanageable. And you are taking charge of your life instead of letting your creditors make the decisions.

Most Common Uses of the Adversary Proceeding

Creditors and bankruptcy trustees use adversary proceedings to allege fraud or void certain transfers of property. Debtors use adversary proceedings to strip liens and to hold accountable recalcitrant creditors.

Dischargeability disputes. Both creditors and bankruptcy trustees can file an adversary proceeding to deny discharge of a specific debt. Usually, these lawsuits (or “dischargeability” actions) allege some type of fraud on behalf of the debtor. Dischargeability challenges often result in litigation, which requires discovery, pleadings, and trial.

Voidable transfers. The bankruptcy trustee will file an adversary proceeding to recover property transferred to a third party within certain statutory periods prior to the bankruptcy. The trustee will sue the transferor to recover funds or other property subject to liquidation distribution to unsecured creditors.

Lien stripping. Debtors, too, can file adversary proceedings. In a Chapter 13 case, you can file an adversary proceeding to completely eliminate your second mortgage or home equity line of credit (HELOC). Through a lien-strip adversary proceeding, the mortgage debt is then classified as “unsecured.” The lien against your property is “stripped.”

Automatic stay violations. Debtors may also file adversary proceedings against creditors who violate the automatic stay. If a creditor commences or continues any judicial, administrative, or other action against the debtor, then that creditor may be in violation of the automatic stay. Debtors can seek damages from the creditor through an adversary proceeding.

Litigation in Bankruptcy Court

Litigation in bankruptcy court differs from litigation in other courts. Timelines are generally shorter. Procedures and deadlines also differ. Federal Rules of Bankruptcy Procedure Rule 7001 et seq govern adversary proceedings procedures, however the entire Bankruptcy Code will control litigation results. Retention of experienced bankruptcy counsel in adversary proceedings is advisable.

Bankruptcy Stops Foreclosure Proceedings

Chapter 13 bankruptcy offers you the opportunity to reorganize your mortgage debt and repay missed payments over a period as long as 60 months. You will need at least enough income to meet both the monthly payments plus some extra toward the missed payments. Or perhaps you only want to buy some time to find a buyer and sell the property. Bankruptcy provides that, too.

When you file for Chapter 13 bankruptcy, the court issues an automatic stay, which immediately stops all creditor actions, including foreclosure. The automatic stay immediately stops a foreclosure auction.

Mortgage companies incur most of the costs of a foreclosure auction up-front. These costs include attorneys fees, court costs, and publication expenses. As a result, mortgage companies have little incentive to stop the foreclosure process unless legally forced to do so.

Can Foreclosure Be Stopped Without Filing for Bankruptcy?

You have three options to stop foreclosure without filing for bankruptcy: reinstatement, modification or refinancing, or an emergency injunction.

Reinstatement. If you pay a lump sum amount equal to the arrearage, fees, costs, and interest incurred as a result of the default, you have reinstated your loan. Foreclosure cannot take place at that point. Getting current on your mortgage is a great way to stop foreclosure. Once your mortgage company reinstates your mortgage, simply resume your normal monthly payments.

Modification or Refinancing.  Your best option for avoiding foreclosure is to pursue a mortgage modification. But you will only be able to obtain a modification if you act early enough in the foreclosure process. Your mortgage company will not grant you a modification if they have already gone through all of the trouble and expense of scheduling a foreclosure auction. Likewise, most people do not qualify for refinancing once they are in foreclosure.

Emergency Injunction. You could sue the mortgage lender and the substitute trustee and request a preliminary (emergency) injunction. Courts grant these types of injunctions only in very rare circumstances, and under no circumstances should you attempt to secure an injunction to stop a foreclosure without an attorney. In most cases, the quicker, easier and least expensive option is to avail yourself of the automatic stay injunction of bankruptcy.

Bankruptcy is the Only Surefire Way to Stop Foreclosure

You can stop foreclosure without filing for bankruptcy only if you take steps very early after default. If you have fallen behind on your mortgage payments, act quickly before your lender adds thousands of dollars of legal fees and costs to your bill by initiating a foreclosure.

Once a foreclosure auction has been scheduled, however, can a foreclosure be stopped without filing for bankruptcy? Not so much. If you are facing a foreclosure auction, you run a terrible risk if you do not file for bankruptcy prior to the auction. Bankruptcy is the only foolproof legal means by which to stop a foreclosure auction.

If you are facing foreclosure, contact an experienced foreclosure defense attorney immediately to discuss your options.

Bankruptcy Stops Eviction in Most Cases

If you let your rent go unpaid for too long, or you are habitually late in making rent payments, your landlord will begin proceedings against you to obtain a writ of possession, or eviction order. Some landlords proceed quickly upon default, while others will give you some time to cure.

If you owe back rent and want to repay it through a Chapter 13, bankruptcy will stop the eviction. But only if your landlord has not yet obtained an eviction order against you.

Likewise, if you need time to find a new place to live and want to discharge the back due rent in Chapter 7, bankruptcy will stop the eviction. But again, bankruptcy stops eviction only if your landlord has not yet obtained an eviction order.

If you have significant unpaid back due rent amounts, your landlord will sue you to obtain an eviction order against you. In those cases where the landlord has obtained a writ of possession, filing bankruptcy will not stop the eviction.

Eviction After Filing Bankruptcy

Once you file bankruptcy, you must remain current on your rent payments. In some cases, you may need to pay a month’s rent to the bankruptcy court. The court holds those funds in escrow while your case is being initiated. You should discuss whether this will be required with an experienced bankruptcy attorney.

If you are unable to negotiate a suitable repayment schedule for your past-due rent, your landlord will file a motion with the court to lift the automatic stay. If successful, the landlord can then attempt to obtain an eviction order, despite your bankruptcy filing.

A rental property is not a part of the renter’s bankruptcy estate and therefore cannot be used to pay the renter’s creditors. It may have significant value to the renter, and may even be essential to the renter’s income. But bankruptcy courts and the bankruptcy code generally favor landlords in cases of back due rent.

If you are fighting eviction for you primary residence, you may also want to consider finding a new place to live. Fighting eviction for an established business is a different story. Either way, sometimes the amount of the back rent you owe justifies simply vacating the property and moving to a new place. If you terminate a lease prior to the end of the lease term, the lessor may sue you for the balance of the rent due under the lease. In some cases, it makes sense to discharge the balance from a broken lease after you have vacated the property.

File Chapter 7 to Stop Foreclosure

If you want to stop foreclosure, but you do not want to keep your home, file a Chapter 7 bankruptcy. Stopping a foreclosure with Chapter 7 gains you some breathing room and allows you the time to move to another place. In these cases, you are not “stopping” the foreclosure, but simply delaying it.

Chapter 7 can temporarily stop foreclosure, but you must get current on your mortgage if you want to keep the property. Otherwise, the foreclosure will eventually continue. After falling behind on your mortgage, a Chapter 7 bankruptcy filing will signal to the lender that you are accepting the foreclosure but may need time to move. If you cannot afford the monthly mortgage payments, even with a modification, then Chapter 7 is a good choice for you.

File Chapter 13 to Stop Foreclosure

Chapter 13 bankruptcy takes 3-5 years to complete, so it much more complicated than a Chapter 7. However Chapter 13 allows you to pay missed mortgage payments, late fees, and escrow advances over an extended repayment plan. To complete a Chapter 13 Plan, you will need at least enough income to meet both the monthly mortgage payments (and condo or homeowner association payments) plus some money each month toward the missed payments.

In other words, Chapter 13 bankruptcy allows you to reorganize your mortgage debt and repay missed payments over a period as long as 60 months. Chapter 13 can also, on the other hand, simply buy you some time to figure out what you want to do with the property. You may be able either to find a buyer and sell the property or obtain a mortgage modification.

Chapter 13 may also help you eliminate the payments on your second or third mortgage. If your mortgage is greater than the value of your home, Chapter 13 allows you to strip away junior liens. Any second or third mortgages or home equity lines of credit will be recategorized as unsecured debts.

IMPORTANT: If you have fallen behind on your mortgage payments, act now before your lender adds thousands of dollars of legal fees and costs to your bill by initiating a foreclosure.

So Should I Chapter 7 or Chapter 13 to Stop Foreclosure?

You want to stop a foreclosure. Only the automatic stay of a bankruptcy filing will stop the foreclosure auction. Should you file Chapter 7 bankruptcy or Chapter 13 bankruptcy? The answer depends on your intentions toward the property and your larger financial goals. If you are ready to let the property go, then in most cases, Chapter 7 bankruptcy is your best bet. If you want to keep the property, or buy some time to explore other options (like modifying your mortgage or selling the property), then Chapter 13 is probably a better option. Either way, you should seek the advice of an experienced bankruptcy lawyer to help you weigh your options.

When you get into trouble with debt and are not able to pay your bills, consider seeking bankruptcy protection. As an individual consumer, there are several different kinds of bankruptcy that you can file. These types of bankruptcy are named for the chapter in the Bankruptcy Code that contains the relevant laws. One of those types of bankruptcy is Chapter 13 bankruptcy.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is also called wage earner’s bankruptcy. This type of bankruptcy protection is one of two commonly used by consumers, along with Chapter 7 bankruptcy. However, there are some important differences between the two different bankruptcy types.

Chapter 13 bankruptcy is available to almost every consumer debtor, unlike Chapter 7. This is because Chapter 13 bankruptcy does not have a maximum income, or means test. In other words, you can generally file for a Chapter 13 bankruptcy no matter how much money you make. If you haven’t filed bankruptcy recently and don’t have millions in debt, you should be eligible to file.

The automatic stay

Once you file for Chapter 13 bankruptcy, an automatic stay goes into effect. This prevents your creditors from taking any steps to try to collect money from you. Your creditors are not even able to continue with a foreclosure or repossession after you have filed, unless they get special permission from the court to do so by filing a motion for relief from automatic stay or unless you refuse to pay after the bankruptcy ends.

The repayment plan

During the Chapter 13 bankruptcy process, you will propose to your creditors a repayment plan. This plan involves paying some portion of the debts that you owe. Your household income and type of debt you have will determine the amount that you will repay in your Chapter 13 bankruptcy. If you have secured debts, such as a car loan or a mortgage on your home, you are typically going to need to make full payments of these debts each month if you want to keep the home or car.

Chapter 13 doesn’t require you to sell any assets as part of the bankruptcy, unlike a Chapter 7. Instead, you get to keep all of your stuff but you must make payments towards the debt as part of the repayment plan. The repayment plan can last anywhere from three years to five years. And at the end of the plan, the remaining balances on eligible debt will be discharged. This means that creditors cannot try to collect any more from you on those debts.

Chapter 13 bankruptcy solves problems

Filing for a Chapter 13 is a good option for many people because it allows for debt payments to become manageable and for debt to be discharged, without requiring you to give up assets. An experienced bankruptcy attorney can help you to make the determination about whether Chapter 13 is the best option for you.

Wage garnishments, or payroll garnishments, are a bit different. State laws limit wage garnishment to allow the wage-earner money for living expenses. Your jurisdiction’s garnishment laws set the maximum percentage at which your paycheck can be garnished.

In Virginia, Maryland and the District of Columbia, the maximum percentage is capped at 25 percent of disposable earnings. And in Maryland and D.C., judgment creditors must also send a statement each month to the debtor and employer. The report should show application of payments to interest, principal, attorney’s fees, and costs. No such requirement exists in Virginia.

Bankruptcy Stops Garnishment

Filing bankruptcy immediately stops garnishment of both wages and bank accounts. But it is better to pay close attention during the collection process. If a creditor has obtained a judgment against you, the next step is to attach that judgment to your assets. And a judgment creditor will garnish a paycheck or bank account as quickly as possible. So long as you owe that debt, then your assets will be vulnerable. Filing bankruptcy protects your income and assets from garnishment. In many cases, we will be able to recover some or all of the garnished funds owed to you.

Continue to Pay the Bills You Will Still Have After Bankruptcy

First the No. You must continue to pay certain bills. These include your rent or mortgage, auto loans for any vehicles you intend to keep, current utility bills, and other basic living expenses. Your bankruptcy Statement of Intention will indicate whether you intend to keep your car or residence.

While you may intend to discharge past utility bills from a former address, you should continue to pay the utilities for your current residence. Sometimes it makes sense to obtain a phone carrier or other utility. This is especially true if you owe a lot of money on a current bill.

Stop Paying the Bills That Will Be Discharged in Bankruptcy

Now the Yes. If you intend to file for Chapter 7 bankruptcy, you should immediately stop paying most unsecured debts, including credit cards, medical bills, and personals loans. Unsecured debts are debts that are not tied to an asset that can be seized once you stop paying, like a vehicle or residence. Since these debts will be discharged in your bankruptcy, making payments to your creditors is just sending good money after bad.

Moreover, the Bankruptcy Code requires disclosure of payments totaling more than $600 within the three months prior to filing bankruptcy. If you pay creditors prior to your bankruptcy, the trustee assigned to your case may attempt to get back that payment for distribution to all of your creditors.

Timing: File Your Bankruptcy Soon After You Stop Paying Your Bills

Of course, once you discontinue paying, your creditors will attempt more aggressive collection efforts. They may send your accounts to collection agents, who will attempt to harass you into paying. Creditors will eventually sue you, obtain judgments, garnish your wages, or file liens against your real property and bank accounts. Missed payments will also be reported to credit bureaus, further degrading your credit score. For these reasons, you should file your bankruptcy as soon as possible after you stop paying your bills.

Once you retain Lee Legal, our office will take your creditor calls up to two weeks before you file your bankruptcy. When your case is filed and the Automatic Stay kicks in, you will be protected from all collection efforts by operation of law.

If you are asking yourself, “Should I stop paying my bills?” then you should be considering filing for bankruptcy. Call Lee Legal to schedule a free consultation.

When Should You File?

Bankruptcy Filed Before Marriage. When an individual files for personal bankruptcy before his or her marriage, debts discharged are typically isolated to the debtor. The previous bankruptcy, in most cases, will not affect the new spouse in any way. New applications for joint credit, however, will be affected by the past bankruptcy filing.

Bankruptcy Filed During Marriage. If a person is currently married and files an individual Chapter 7 bankruptcy, that person’s household income will be subjected to the means test. The means test requires that your total combined household income be considered. That’s true regardless of whether both spouses intend to file bankruptcy jointly. Your spouse’s income could therefore be the tipping point that decides whether you will qualify for Chapter 7.

Bankruptcy Filed After Divorce. Bankruptcy filings following divorce are common. Divorce proceedings are often complicated, exhausting, life-altering events. Bankruptcy allows people to get their finances back on track after the devastating effects of a failed marriage. In most cases, joint property is divided during the divorce and is considered the separate property of each former spouse. Like assets, the divorce decree divides any jointly-held debts. The decree determines who will be personally liable for joint debts after the divorce.

Who Owns the Debt?

Individual vs. Joint Bankruptcy Filing. A major concern of married couples is whether to file bankruptcy individually or jointly. You do not want your non-filing spouse to become the sole target of joint creditors. Opting for joint bankruptcy filing often offers greater protections for each spouse. Yet it may be unnecessary (or unwise) for both spouses to file. The decision whether to file a joint or individual petition depends on numerous factors. These factors include: the percentage of joint-to-individual debt, the type and sources of household income, and the state exemption laws for the jurisdiction in which the couple resides.

Joint Debts and Debts During Marriage. How and when a couple’s debts were acquired strongly affect whether that couple should file a joint or individual bankruptcy. Many types of debts accumulated during marriage are presumed to be owned by both spouses. For other debts, the legal act of marriage does not establish automatic shared liability on debt. If only one spouse files an individual bankruptcy, however, the non-filing spouse will continue to be liable on joint debts.

Who Owns the Assets?

Virginia, Maryland, and the District of Columbia are “equitable distribution” states. Under equitable distribution, the bankruptcy estate will consist of all of the debtor’s separate property, as well as half of the value of any jointly-owned marital property. At the same time, all of the non-filing spouse’s separate property acquired before the marriage will not be considered property of the bankruptcy estate. Nonetheless, the bankruptcy estate consists of any community or jointly-owned property to the extent that a bankruptcy filer has interest in that property.

How Will Bankruptcy Affect My Spouse’s Credit?

It is natural to want to protect your spouse’s credit from damage related to your bankruptcy filing. Every person, including married spouses, has his or her own individual credit report and individual credit score. Nonetheless, creditors of jointly-owned debt will sometimes report the bankruptcy filing on the non-filing individual’s report. Creditors do this to show that the non-filing spouse is now solely liable for the formerly co-owned debt. In turn, this may affect the non-filing spouse’s debt-to-asset ratio, although both co-debtors were jointly and severally liable on the debt before the filing spouse’s bankruptcy.

Depending on what percentage of debt is co-owned by both spouses, a married couple may decide to file a joint bankruptcy. In a joint bankruptcy filing, all of the debts and all of the assets of both spouses will be subject to the bankruptcy process. Any debts jointly or severally held by the spouses will be fully discharged.

Bankruptcy and Marriage

The best time to consider the ramifications of bankruptcy and marriage is beforehand: before you get married, before you get divorced, or before you file bankruptcy. As outlined above, timing is important. Talk to a reputable bankruptcy attorney to discuss your specific circumstances.

The steps to Chapter 7 bankruptcy

1. Run your credit report.
You may think you know your finances inside and out, but until you know what the credit bureaus know (or believe) about you, you’re operating only on your own subjective opinion.

2. Meet with a bankruptcy lawyer.
Schedule a free consultation with Lee Legal and determine whether bankruptcy is right for you. There are other options to bankruptcy.

3. Get credit counseling.
Prior to filing a bankruptcy, you must attend a brief course, either online or over the phone, called the pre-filing credit counseling course. You will obtain a “certificate” which is valid for 180 days. Most of my clients have reported credit counseling to be a waste of time and money (it costs about $50), but it is a requirement for filing.

4. Sign off on your paperwork.
You will meet with your lawyer again and sign your bankruptcy petition and schedules. You must disclose all of your debts and all of your assets. When you sign off on your bankruptcy filing, you do so under penalty of perjury, so you must pay close attention and be completely forthright with your attorney during this step.

5. Direct your creditors to your attorney.
Once your bankruptcy has been filed, the Automatic Stay of your bankruptcy directs your creditors not to contact you directly. If your creditors, for some reason, did not receive notice, of if they are willfully violating the Automatic Stay, you should provide them with your case number and your attorney’s contact information. Then hang up.

6. Attend the meeting of creditors.
Also known as the “341 meeting,” the meeting of creditors is a mandatory hearing where the trustee will question you, under oath, about your bankruptcy filing. Your creditors may also question you at the meeting, however creditors attend only under certain circumstances.

7. Respond to your attorney’s request for documents.
Occasionally the trustee will raise questions at the meeting of creditors that will require additional documentation. Because the trustee is operating under statutorily-defined deadlines before which he or she must raise objections, it is important to communicate with your attorney after the meeting of creditors and to promptly respond to requests for documents.

8. Complete the debtor education course.
That’s right, you will need to attend another course, called the debtor education (or personal financial management) course. Very much like the pre-filing credit counseling course, you may attend either online or over the phone. You wil obtain another “certificate” which must be filed by a pre-determined date. If you do not take the course, you will not be granted a discharge.

9. Play the waiting game.
Your creditors have 60 days to file an objection in your case. If this period elapses without objection, then you are entitled by matter of law to a discharge of your debts. Your attorney will notify you by phone or email, and you will receive your Discharge Order from the court by mail.

10. Keep an eye on your credit (and your creditors).
Once you have received your discharge order, you should immediately take steps to rebuild your credit. About four months after you receive your bankruptcy discharge, you should run your credit reports to ensure that they are accurate. After all, your goal post-bankruptcy is to boost your credit score quickly. Inaccurate information on your credit report will only prolong the time it takes to score high enough for conventional credit. Request reports from all three of the major credit bureaus carefully review all of the entries on each report.

We help people file Chapter 7 bankruptcy in DC, Maryland, and Virginia

Would you like to learn more on how to file Chapter 7 bankruptcy? Call Lee Legal at (202) 448-5136 to schedule a free, confidential consultation with an experienced bankruptcy attorney.

Vehicle finance agreements are usually rock solid, and the finance company has all the power. Car repossession can happen without advance warning and without going to court. The finance company will take every measure necessary to repossess your car. They call it “securing the collateral.”

Lee Legal can assist you if you are facing repossession.

The Repossession Process

Once your car is repossessed, your creditor will sell the car at auction. Usually, the vehicle sells for a dramatically reduced price. Laws require creditors to ask for a fair price for a car, but a fair price is not the market price. You will owe the difference between the car note and the auction price. The auction will take place quickly, typically about 10 days after repossession.

Once the car is auctioned off, the car company will sue you for the balance. Losing your vehicle is tough. But owing even more on a vehicle you no longer own can be devastating.

If your creditor sues you, the court will notify you of a hearing date. Once you receive notice, you should immediately contact a knowledgeable car repossession defense attorney.

Repossession Can Be Costly

The repo truck man may be working off outdated information. Or a finance company representative may not have correctly entered information from a recent call. Some repo companies even charge borrowers for the cost of retaining the personal property removed from the car at the time of the repo. Every car repossession compound charges a daily “storage fee” (or lot fee or impound fee) for every day the vehicle is parked in their lot.

Even if there was some mistake, repossession of your vehicle can be expensive to you. The headache, inconvenience and costs often come altogether at the worst time.

The best way to prevent repossession of a car is to stop it before it happens. But if a repossession does happen, you should act quickly to minimize the damage.

Stop Car Repossession

In many cases, we can negotiate alternative arrangements for repayment on a delinquent loan. Negotiation prior to car repossession usually produces the best outcomes.

If the car repossession has already happened, a Chapter 7 bankruptcy can eliminate the debt you owe for the deficiency or judgment.

But if you still have possession of the car, stop car repossession before it happens. Chapter 13 bankruptcy automatically stops certain creditor actions, and that includes repossession. The bankruptcy will legally “stay” your creditor from seizing the vehicle. We may also be able to use Chapter 13 bankruptcy to restructure your vehicle loan and propose a more manageable repayment schedule.

Myth 1: You will lose everything you own.

In most cases, you will be able to keep all of your property. Washington, D.C., Virginia and Maryland all have “exemption” laws that allow you to protect your assets. In most cases, you will be able to keep your house, car, retirement accounts, household goods, and other property. The government will not seize and sell everything you own. In fact, most bankruptcy filers keep everything they currently own. If you have a mortgage or a car loan, you can also keep those as long as you keep making the payments.

Myth 2: Everyone will know you filed for bankruptcy.

Bankruptcy is public record, and bankruptcy will appear on your credit report. But unless you are a very prominent person or a major corporation and the media gets word, only your creditors will be notified that you have filed bankruptcy. Newspapers in the Washington, D.C. area do not carry bankruptcy filing information, except in large Chapter 11 (business) cases.

Myth 3: Filing for bankruptcy hurts your credit for 10 years.

A bankruptcy will stay on your credit report anywhere between seven and 10 years. However, you can start rebuilding your credit immediately after your bankruptcy is discharged. Fore more about this, read my article Repairing Your Credit After Bankruptcy.

Myth 4: Both spouses must file bankruptcy.

Whether you and your spouse file together or separately depends upon who owes the debt. Any spouse who co-signs a debt owes that debt. If there are debts that a married couple wants to discharge on which they both signed, they will need to file together. Otherwise, the creditors may be able to collect from the spouse who does not file. It is common, however, for just one spouse to owe a significant amount. In that case, only the spouse who owes the debt will need to file.

Myth 5: Creditors can still collect against you if you file for bankruptcy.

Once you file for bankruptcy protection, the automatic stay takes effect. The automatic stay prohibits creditors from contacting you for any reason. No calls, no letters, no bills, no lawsuits. Once you received your discharge order, your creditors can no longer attempt to collect against the debts in any way. Instead, they must report to credit bureaus that the debt is discharged. In short, the bankruptcy discharge acts as a permanent injunction against all collection activity.

Myth 6: You can only file for bankruptcy once.

You can file for Chapter 7 bankruptcy only once every eight years. But the wait between Chapter 13 bankruptcies is only two years. And you can file a Chapter 13 bankruptcy immediately after a Chapter 7 discharge. There are many valid reasons for multiple bankruptcy filings. But you should consult with your attorney to determine what options best suit your circumstances.

Myth 7: You can max out all your credit cards before filing the bankruptcy.

Taking out personal loans, cash advances, or maxing out your credit cards just before filing for bankruptcy is considered a form of bankruptcy fraud. This kind of activity is easily detected by creditors. The creditor, usually a credit card company, will file a nondischargeability action in your case. And you will have to repay the entire balances that you accrued prior to filing. If you are considering bankruptcy and have recent credit card purchases, talk to a bankruptcy attorney to assess your options.

Myth 8: You will never get credit again.

Actually, bankruptcy will improve your debt-to-asset ratio dramatically, and as a consequence you will seem quite attractive to creditors. Within three months of filing a Chapter 7 bankruptcy, you will likely be bombarded with credit cards offers. At first, the interest rates will be very high. But over time, you will receive the same rates as everyone else.

Myth 9: Chapter 7 eliminates every type of debt.

Chapter 7 bankruptcy presents a perfect solution for many people. For other people, Chapter 7 offers an excellent but imperfect solution. For yet others, Chapter 7 in completely unavailable or does not make sense at all. Unfortunately, many debts cannot be discharged by a Chapter 7 bankruptcy. Child support, alimony, student loans, criminal restitution, certain types of back taxes, and debts incurred as the result of fraud are all generally not eliminated by the bankruptcy. If these types of debts comprise the majority of income, you may want to consider a Chapter 13 bankruptcy instead.

Myth 10: Only deadbeats file for bankruptcy.

If you are living paycheck to paycheck and never getting ahead, then bankruptcy may be the most responsible choice you can make. People often file bankruptcy after a life-altering event, job loss, divorce, or serious illness. Sometimes bankruptcy is the smart choice after chronic financial strain. Falling further and further behind on debts will not improve your circumstances. rarely improves a situation. Bankruptcy is a legal means by which honest debtors obtain a financial fresh start.

Myths About Bankruptcy Are Calculated to Create Fear

Many of the myths above are circulated by creditors, banks, and debt collectors. Don’t fall prey to the fake news. If you think bankruptcy might be right for you, look beyond the myths about bankruptcy. They’re all calculated to create fear.

Emergency Bankruptcy and the Automatic Stay

The whole reason to file an emergency bankruptcy is to invoke the protection of bankruptcy’s Automatic Stay. The Automatic Stay immediately stops any collection efforts against the bankruptcy filer, including home foreclosure, vehicle repossession, eviction, wage garnishment, execution sale, tax levy, or utility shut-off. As implied by its name, the Automatic Stay takes effect automatically. Any creditor actions that take place after the automatic stay are void by law. The Automatic Stay protects your property and interests until you can complete and file the rest of the forms.

Lee Legal has assisted in numerous emergency bankruptcy filings. In cases where an emergency bankruptcy is necessary, it is critical that you work quickly and closely with your attorney. Completing the required paperwork and documentation is usually a intensive effort. And an emergency bankruptcy, by its nature, has more pressing deadlines than a regular bankruptcy filing. It is crucial that you return your lawyer’s calls and quickly respond to his or her request for documents.

If you live in Washington, D.C., Maryland or Virginia and want to prevent foreclosure or garnishment, or to stop repossession of a vehicle, you must act quickly. Contact an experienced emergency bankruptcy attorney to discuss your situation.

In other words, the discharge order forever prohibits any type of collection effort against you for a discharged debt. The bankruptcy discharge entirely and eternally eliminates your personal liability on all discharged debts.

Your discharge acts as a legal release for all debts that you will no longer be legally required to pay.

A Permanent Injunction Against Debt Collection

Once statutory objection periods have elapsed, the clerk of court will issue your discharge. The Order of Discharge permanently enjoins creditors from collection on any discharged debt. The discharge injunction permanently replaces the Automatic Stay that takes effect with the bankruptcy filing.

Your discharge not only prohibits creditors from calling you, but also permanently prevents any lawsuits, garnishments, correspondence, and all other collection tactics. Any judgments on debts arising before the bankruptcy was filed are void after the discharge. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy have a bankruptcy discharge.

Certain “Pass Through” Debts Survive the Discharge

Although the discharge will eliminate your liability on most debts, the general rule is that secured liens will survive (or pass through) the bankruptcy unaffected. Secured liens include mortgages, vehicle loans, security interest finance agreements, and most tax liens.

Recent taxes and student loans also pass through bankruptcy discharge, along with other specific but less common types of debts.

Consult with an Experienced Bankruptcy Lawyer

Finding yourself on the wrong side of a technical rule or disclosure requirement may jeopardize your case. You should file bankruptcy only if you are confident in the outcome of your case.

Achieving the maximum benefit from your discharge should be your main goal. Consult an experienced bankruptcy attorney to maximize the effect of your bankruptcy discharge.

The Automatic Stay Immediately Stops All Creditor Activity

Contained in the bankruptcy code at 11 U.S.C. § 362, the Automatic Stay acts as a legal injunction, halting all creditor actions immediately at the moment the bankruptcy petition is filed.

Foreclosure. The Automatic Stay stops a foreclosure auction if your home is scheduled for a foreclosure sale. If the he mortgage company conducts the auction anyway, the sale is void ab initio, in other words, as if it never took place.

Lawsuits. If the creditor sued you prior to the bankruptcy, the lawsuit will be stopped (or “stayed”) pending the outcome of the bankruptcy. If you file bankruptcy prior to a lawsuit, the creditor may not sue you without first seeking permission from the bankruptcy court.

Repossession. If you still have possession of your vehicle, the Automatic Stay will prevent the creditor from repossessing it. Your bankruptcy legally enjoins the creditor from seizing the vehicle.

Collection calls or correspondence. While you are under bankruptcy protection, your creditors may not contact you or attempt collection on any debt. Once the Automatic Stay is in place, creditors cannot call your home, cell phone or place of work. Creditors may not send you mail in an attempt to collect on a debt.

Garnishment. Creditors cannot collect on judgments or pursue new collection actions. If the creditor has garnishmed your wages, the garnishment must stop immediately. While you are under bankruptcy protection, creditors may not lien against your property or levy your bank accounts.

Eviction. In most situations, the Automatic Stay stops eviction. Bankruptcy stops eviction in almost every case, but not if your landlord has already obtained a writ of possession.

The Automatic Stay Lets You Breathe Easy Again

When you’re facing legal action and time is running short, it’s not always easy to make the best decisions. Because the Automatic Stay immediately stops all creditor activity, you can catch your breath and think things through.

In short, the Automatic Stay buys you some peace of mind by immediately ceasing all collection efforts and creditor harassment. If a creditor, creditor’s attorney, or collection agent violates the Automatic Stay, then they run the risk of sanction by the Bankruptcy Court. Penalties for violating the Automatic Stay include monetary damages and attorney’s fees.

An experienced bankruptcy lawyer can explain to you how the Automatic Stay will work in your case. Get your creditors off your back. Give Lee Legal a call at (202) 448-5136.