BANKRUPTCY & CONSUMER RIGHTS
Debt is a fact of life for most folks. Credit cards, first and second mortgages, medical debt, car payments, insurance, student loans: it all adds up. Interest rates have skyrocketed, even for consumers with a stellar credit history, making it difficult to keep up with payments and cover even basic living needs. Before you know it, creditors have sold your debt to someone else, and now some company you’ve never heard of is calling you at home and at work.
These third parties are called debt collectors, people and companies who regularly collect debts owed to others. They include collection agencies, debt buyers and attorneys who regularly collect debts for their clients. Depending on your situation, you may qualify for bankruptcy or need a debt collection defense attorney to address your debt issues.
Personal bankruptcy allows you to discharge specific debts and get a “fresh start.” Chapter 7 bankruptcy discharges most debts that are not excluded, while Chapter 13 bankruptcy requires a 3-5 year repayment plan for all or a portion of your debts (based upon your disposable monthly income). Common exclusions, debts that cannot be discharged in bankruptcy, include child support, alimony, student loans, certain taxes and certain judgments. Although the process may be delayed, property subject to liens or mortgages typically may still be foreclosed or repossessed (home or car). Contact me today if you are considering personal bankruptcy.
Debt Collection Defense
Ignoring phone calls and letters from creditors or debt collectors will not make them go away. It can and often does lead to a lawsuit and garnishment. If a debt collector serves you with a lawsuit, legal documents called a summons and complaint, you must answer in writing within 20 days.
It’s a common misperception that your wages and bank account cannot be garnished until there’s a court judgment against you, but Minnesota has pre-filing garnishment, pre-judgment garnishment, and post-judgment garnishment. In Minnesota, if you don’t answer the lawsuit, a debt collector may be able to garnish your wages or your bank account even before they’ve gotten a court judgment.
It can take weeks to get your money back, even if all or part of your wages or bank account are exempt from garnishment. If you have a joint account, the other account holder’s funds are also seized, and you have to prove what money is yours and what money belongs to the other person. In the meantime, you’ve incurred bank charges and overdraft fees that you probably won’t get back, and probably had checks and automatic payments “bounce.” Don’t wait until you get garnished. Contact me today for a free case evaluation.
Debt Assistance / Debt Management / Debt Negotiation / Debt Settlement Companies
You may have seen or heard advertisements promising to wipe out your debt. These companies, frequently out-of-state outfits, claim to have secret methods and systems to eliminate or drastically reduce your interest rates or balances owed. They falsely claim that you are entitled to settle your debt for pennies on the dollar if you have more than $10,000 in debt. What they really offer is a chance to give up more of your hard-earned money in the form of hefty upfront fees. Consumers are often better off negotiating with creditors and debt collectors directly instead of using one of these companies. Remember, if it sounds too good to be true, it’s probably a scam. Visit the MN Department of Commerce for information on finding a reputable credit counseling service.
Fair Debt Collections Practices Act (FDCPA)
This federal statute prohibits debt collectors from using abusive, unfair or deceptive practices to collect a debt. Debt collectors are required by law to treat consumers with truth, fairness, dignity and respect. This is true even if you actually owe some or all of the money the debt collector’s trying to collect. When they violate your rights, you are entitled to sue the debt collector for statutory damages (up to $1,000) and actual damages, plus court costs and attorney’s fees. That’s right, the (losing) debt collector has to pay the (winning) plaintiff’s attorney’s fees. Some examples of things debt collectors CAN’T DO:
- Threaten to have you arrested
- Call you before 8am or after 9pm, unless they have your permission to do so
- Call your friends, family members or workplace to tell them about your debt
- Use profane or obscene language
- Call you after you tell them you’re represented by an attorney
- Call you after you’ve instructed them in writing to stop calling you
- Call you repeatedly just to harass you
- Contact you by postcard
There are many other things debt collectors CAN’T DO when attempting to collect a debt. Check out the Resources page for links to more information. If you believe a debt collector has violated your rights, contact me today for a free case evaluation.