Collection calls before and after filing bankruptcy

A major benefit of filing bankruptcy is that it can lift a load of stress off of you. Before you file you may worry about judgments, garnishments, and repossessions. Often you get call after call after call from collectors. The caller may tell you that you will be sued. That may be true, but no one is going to jail just because you didn’t pay a credit card debt.

Calls should stop cold when your case is filed. This is because filing the bankruptcy creates what is call “the automatic stay”. This is, in effect, a court order which orders creditors to stop trying to collect their debt from you. Major creditors will get their notice of your filing electronically; small creditors will likely get their notice by mail, which means there is a lag of a few days between filing and the creditor getting the notice. If you are contacted in the first few days after your case is filed, you should politely tell the creditor that you filed bankruptcy, that your case number is such-and-such, and that that your attorney’s name is Sam Calvert, whose number is 320-252-4473. But after the first few days, you should not be contacted.

If a debt collector keeps calling you after the case is filed, and if they know about the bankruptcy, you can actually take them to court for violating the automatic stay (or the discharge order, once that is filed at the conclusion of the case). If you get such a call, write down the name of the creditor, write down the date and time of the call, and the name whoever is calling you (that is, if they don’t hang up on you as soon as you start asking!).

Now, there are exceptions, for instance, debts that are not discharged (recent taxes, student loans, etc.). And your mortgage company or car lender may keep sending you notice that you want—because you want to keep your house or your car.

And there is an industry that buys up old debt and tries to collect it later. If one of those writes or calls you, they may say “If you filed bankruptcy, this is not an attempt to collect a debt.” Which of course it is, but the collector will pretend they didn’t know (and it’s possible they really don’t know, because they didn’t look for the information.) In that case follow the instruction above: Politely tell the creditor that you filed bankruptcy, that your case number is such-and-such, and that that your attorney’s name is Sam Calvert whose number is 320-252-4473. This possibility is another reason to periodically check your credit report (which you can get for free from annualcreditreport.com) to make sure that old debt does not reappear on your credit report – and if something does appear, dispute it with the credit reporting agency.

If you are struggling with debt, feel free to call me at 320-252-4473 to talk about your options.

Bankruptcy Can Reinstate A Suspended Driver's License

Over the years I have had several clients whose driver's license was suspended  because of unpaid judgments from having an accident when driving without insurance.  (Note: I do not recommend driving without insurance!!!)  Not having a drivers license is terrible, because almost everyone uses a car to get to work.  If you can't work, you don't earn money;  if you don't earn money you can't pay your bills.   

If you have such a judgment on your record, Minn. Stat. 171.182 provides that your judgment will be suspended on account of the judgment until it is paid.

In order to avoid having your license suspended, you usually have to get auto insurance and set up a payment plan for the judgment for the damages caused in the accident. If the judgment is large, or just too large for your budget, or if you fail to set up a payment plan with the judgment creditor, the judgment creditor reports you and your license is suspended until the judgment is paid or expires.

But, if the accident which led to the judgment was not a result of DUI (alcohol or drugs or "another substance"), and if the injury was not intentional, filing  bankruptcy will help you get your  driver's license back.  This is because the bankruptcy will wipe out the judgment. 

If you have this situation, call me to discuss whether bankruptcy may help you get your license bank.  I'm at 320-252-4473.

Help your Chapter 13 plan succeed.

If  you are in a chapter 13, here are some pointers that will help your case succeed.

1.              You can make your plan payment several ways.  If your trustee is Kyle Carlson, you can make your plan payments in several different ways. You can make make one-time or automatic monthly payments from your checking or savings account online. The link can be found at http://carlsonch13mn.com. There is a $1.50 service fee per transaction.  You can also pay by phone (1-888-548-0787).  You can mail paper payments to a lockbox in Chicago;  however, the trustee will not take personal checks.    You can also set up wage withholding through the court.  Similar options are available if your trustee is Greg Burrell    --you can find the link at https://www.ch13mn.com;  however, Mr. Burrell's office will also set up automatic debits from your checking account.

 2.           You can track payments.  You can sign up with the National Data Center (NDC) for free.  Go to their website – www.ndc.org –and create an account and a password.   You will need your bankruptcy case number, your trustee’s name, the last four digits of your Social Security number, and the list of creditors from your case.  Once you have set up the NDC account you can check on your case.  You can see if the trustee has received your payment, what creditors have been paid, and how much they have been paid.  Did I mention that it is free?

 3.            Remember that the trustee wants copies of your tax return every year.  Every spring the trustee will want a copy of your tax returns, state and federal.  This is for two reasons:  a)  the plan will call for you to give the trustee refunds over $1,200.00 for a single person or $2,000.00 for a couple.  (This does not include Earned Income Credit or Working Family Credit);  b)  the trustee wants to know if your income has gone up a lot.  If it has increased, the trustee may ask the court to increase your plan payment.  We can argue with the trustee that your expenses have eaten up the increase.

4.            Let me know about changes.  If your income falls or your expenses increase, we may be able to amend your plan.  Importantly, if you can’t make your plan payments, call me.  We may be able to amend the plan.  It is better to amend the plan rather than let the roof cave in on you and have the case be dismissed.

5.            Keep track of  your house payments and your plan payments!   If you miss your mortgage payments, the mortgage company will bring a “motion for relief from stay” to ask the court to permit the mortgage company to foreclose on your house.  They will add $1,000 or so to your debt, so insult to injury.  It is really tough when you say you have made your payments but the mortgage company says you haven’t.  Likewise, if the trustee says you have missed payments the trustee will bring a motion to dismiss your case.   So – keep careful track of your payments so we can show the mortgage company or the trustee that you are current.

 6.            Keep your contact information current.  A chapter 13 plan lasts at least three years, often going to five years.  Stuff happens and we may need to get in touch with you.  And the court and trustee need to be able to get in touch with you.  So, if you move, if you change email addresses, if you change phone numbers, let me know!   You can reach me at 320-252-4473.

I was hacked!

Like lots of people, I have an Amazon account.  And in that Amazon account I had a credit card listed as for payments.

When I looked at my credit card statement last month I noticed a charge for $299.00.  I did not remember what I bought for $299.00, so I tried to figure out what it was.

I looked at my order history and did not see having purchased anything for $299.00.

Then I tried to call Amazon.  Surprise!  Their phone number is NOT prominently displayed on their website.

I eventually stumbled across an order for "gift cards".  Well I knew I had not purchased any gift cards for $299.00, so I realized that was the fraud.  Turns out someone in Delaware bought a gift card and then used that gift card to buy an Oculus headset and have it delivered to himself.  Ouch.  

(And by the way, Jeff Bezos, owner of Amazon, if you're reading this:  It was really not obvious how to find that charge.  As I mentioned, it was NOT in my list of regular orders.  I just tried to re-create the search and I think Amazon erased it.)

When I confirmed to myself that the mysterious charge was fraudulent, I contacted my credit card company;  they very nicely "stopped payment" on the $299.00.  The credit card company cancelled that card and sent me a new one. 

As a backstop, I added to my Amazon account a feature that to complete an order Amazon texts me a six digit number that I must enter in order to complete the purchase.  

So:  Two morals to this story. 

First, look at your credit card statements and track down charges you don't recognize.

Second, promptly dispute charges that you don't recognize.

You can do this yourself, of course, so you don't need to call me about this.  But if I can help with other legal problems, call my office at 320-252-4473.

"Fraudulent Conveyance" -- Sounds scary, right?

 The Bankruptcy Code defines "fraudulent conveyance" as a transfer made within 2 years before the date of the filing of the petition, if the transfer was made with actual intent to hinder, delay, or defraud any creditor, OR if person making the transfer received "less than a reasonably equivalent value" and was insolvent when the transfer was made.  (This is a little abbreviated).  Minnesota law refers to this as a "voidable transfer", which may sound less scary, but the statute of limitations is longer.

The roots of fraudulent conveyance law go back to 1571 -- the time of Queen Elizabeth I of England (really!).  

The classic example of a fraudulent conveyance is that Bob is being sued because his business went under and in order to protect his 40 acres of hunting land in Cass County, he deeds it to his brother Ted without getting any payment.

Another example is that Bob sells the 40 acres of hunting land to his brother Ted for $5,000.00.  On the surface that looks okay, but it turns out that the land was actually worth $50,000.00.  In effect, Bob has made a gift to Ted of $45,000.00.  A bankruptcy trustee (or, outside of bankruptcy) a creditor can go to court and have the transfer reversed.

Fraudulent transfers can a be unintentional.  For instance, in a case called DeGiacomo v. Sacred Heart University, Inc., parents paid $64,000+ to a college to cover the tuition bill for their daughter, who was over age 18 at the time.  A court of appeals held that the payment was a fraudulent conveyance, because the parents were insolvent when they paid the college.  

These situations are why I ask if you have transferred something to a relative or friend in the past.  If I know about the transfer before you file bankruptcy, we can evaluate the situation.

As always, if I can help you deal with your debts, call me at 320-252-4473.

This email will save you $149 per year!

I periodically hear on the radio or see advertisements offering to "prevent home title fraud".  For instance, Newt Gingrich endorses a company called Home Title Lock which for "only" $14.99 a month or $149.00 a year will guard you against title fraud, which that company defines as:  

"Title Fraud:

When someone steals the title or deed of your home for financial gain.

Thieves simply change ownership of your home from YOU to THEM. Then they TAKE OUT LOANS on your home and just disappear - leaving YOU with the payments and a mountain of legal bills."

Well, there is such a thing as title fraud, although if you are a victim of that type of fraud, call me and it should be fixable.  

However, at least Stearns County will let you sign up for a similar service for free!  Here is a clip from their website:

"Real estate and mortgage fraud are growing crimes in America today. Land Notification alerts help property owners prevent fraud by providing them with information about documents being recorded against their name, business, or property. Each time there is recording activity on a specific property or name, an email is generated, notifying the appropriate person of this activity.

This service is a great opportunity for property owners of Stearns County to use. It is a free service that allows you to monitor and protect your most valuable assets.

How It Works....
The Land Notification System gives you the ability to monitor personal or business names on records related to your property. You can create one or more alerts that are triggered when real estate records are recorded with Stearns County for names identified in the alert.

When an alert is generated, an electronic notice will be sent to the email address you provided at the time you registered for the service. This email will contain more information about the activity and will include contact information for Stearns County Recording Services. Once you have registered, the system will perform a search on your name after a real estate document has been verified and recorded by this department. Please understand, when subscribing for this service, common names like "John Smith" may produce many results.

Things to Know....

What do I need to sign up for this free service?
You will need an email account with Google or Yahoo to sign up for Land Notification alerts.

Will I receive unwanted emails?
You will receive an email only when a document with the name you provided is recorded in the official real estate records. You can unsubscribe to the service at any time."

Don't make let collectors pressure you into bad decisions about debt

When you are in financial trouble, take a deep breath and step back and think about your overall situation.

I often meet with people who have let "important debt" go unpaid because of pressure from collectors.  What is "important debt"?  It is debt which can hurt you if you don't pay it.

If you don't pay your rent, your landlord can evict you.

If you don't pay your mortgage, your mortgage lender can foreclose on you and evict you.

(At present, there are rules about eviction and foreclosures, due to Covid, but eventually we will get back to normal).

If you don't pay your car loan, your car lender can repossess your car.

If you don't pay your utility company, it can turn off your heat or lights.  (And yes, there is the cold-weather rule, but spring eventually comes!)

So, these are important debts.

Debts that are much less important include credit cards.

The reason that these credit cards are less important is that they can do much less to you.  

Yes, they can sue you and get a perfectly valid judgment against you.  But what can they do with the judgment?  They can take your non-exempt assets.

Well, what are your non-exempt assets?  

Your home is protected, generally up to $420,000.00 of equity and 160 acres in size.

One car is protected, up to $5,000.00 of equity.

Your household goods and clothing are protected, up to about $11,000.00.

Your IRA is protected up to at least $75,000.00 (much, much more in bankruptcy).

Now, it is true that a creditor with a judgment can try to take a portion of your paycheck -- one-fourth or the amount over $403.20 per week, whichever is less for the creditor and more for you)  

But a credit card judgment cannot take your exempt home, your exempt car, your exempt household goods, your exempt IRA.

A collector may threaten suit, but threats don't mean that the suit will invariably happen.  And even when suit does happen, we have time to respond to the claim.  But if the collector can pressure you into not paying an important bill in order to avoid a suit that may never come, and if use the money to pay his credit card claim instead of an important bill, the collector may put you onto the slippery slope to losing your house.

Yes, it's good to keep a good credit score.  But it's better to have a place to live.

If you are having to choose which bills to pay, give me a call at 320-252-4473 to talk about some of your options.

Sam Calvert