debt collection - Long & Long

WHAT TO DO WHEN A DEBT COLLECTOR SUES YOU

Long & Long — Thu, 12 Dec 2024 20:32:30 GMT

Any legal discussion dealing with debt collectors should begin with the Fair Debt Collections Practices Act (The Act or FDCPA). The Act covers a very large subset of all debt collectors, namely, third party debt collectors for consumer debt.

The first thing you must do when a debt collector calls is to inquire if indeed they are the creditor themselves–such as the actual doctor’s office or hospital business office itself. They may be from a third party collection agency.

Next it is important to determine if they are trying to collect on a real debt or fake debt. As of late, this has become a serious problem. Although there are also many legally and ethically appropriate debt collection firms, many debt collection firms are notorious for operating outside the strictures of the FDCPA. Even with the many protections provided by the FDCPA, some debt collection efforts become too much even for the most resilient debtor.

TAKE STOCK OF YOUR DEBT

After determining whether your debt is legitimate, you should determine your overall debt. You can obtain a free credit report, and it pays to make sure that all of your information listed is correct. It is best to check your credit report at least once a year to make sure you are not the victim of identity theft.

If after review you find that you cannot realistically pay down your debt to a level you are comfortable with, you should contact a consumer rights attorney who can explain your options; this may include evaluating bankruptcy options.

FILING FOR BANKRUPTCY

Bankruptcy is a federal law that provides the ultimate trump card for almost all debt collection activity. A Chapter 7 allows debtors to get rid of their dischargeable debt without further payments. A Chapter 13 allows debtors to eliminate dischargeable debt while paying nondischargeable debt such as taxes, child support, student loans. As such, there are extremely few situations where a debt collector would not be stopped in their tracks if the debtor filed for bankruptcy.

Experienced bankruptcy attorneys understand the larger legal structure of debtor-creditor rights and responsibilities. They know what creditors are able to sue for, how to go about defending those claims and ensure that their clients’ rights are scrupulously protected. They understand whether a debt is unenforceable due to statute of limitations or if the creditor would not be able to obtain jurisdiction over you. Once you retain an attorney, they will stand between you and the debt collectors. Depending on the action plan that you and your attorney decide upon, your attorney may try to negotiate the debt down to a reasonable level, work out a payment plan or deal with the creditor through a bankruptcy proceeding.

GET LEGAL HELP

If debt collectors are harassing you, it pays to know your rights and to have an aggressive, experienced advocate that knows how to deal with them both legally and practically. The attorneys of Long & Long have decades of experience in thousands of bankruptcy cases. Few law firms can match the dedication, professionalism and experience of Long & Long. In fact, Attorney Martin Long is a former Trustee for the U. S. Bankruptcy Court. You can contact us by calling (303) 832-2655.

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The Bankruptcy Automatic Stay

Long & Long Team — Tue, 20 Jul 2021 23:42:00 GMT

One of the best bankruptcy protections afforded a debtor from his or her creditors is the automatic stay. In what ways does the automatic stay stop creditor actions and when does it not protect the debtor?

Debtor Protection Under the Automatic Stay

Once the bankruptcy case is filed an automatic stay under 11 U.S.C. §362 goes into effect. The result of the filing is that creditors and other entities are prevented from:

Commencing or continuing judicial and administrative proceedings against the debtor that was or could have been commenced before the case was filed.
Enforcing a judgment against the debtor or property of the estate.
Acting to obtain possession of, or control of, property of the estate.
Creating, perfecting, or enforcing any lien against the property of the estate.
Creating, perfecting, or enforcing any lien against the property of the debtor to the extent the lien secures a claim that arose before the commencement of the bankruptcy case.
Acting to collect or recover a claim against the debtor that arose before the commencement of the bankruptcy case.
Setting off any debt owing to the debtor that arose before the commencement of the bankruptcy case with a claim against the debtor.
Commencing or continuing a proceeding against the debtor before the United States Tax Court under specific circumstances.

These are very broad protections for the debtor in the debtor’s quest for a fresh start. Most important to debtors is it stops lawsuits, wage garnishments, bank garnishments, auto repossessions, most evictions, and home foreclosures. Violation of the automatic stay may result in contempt of court proceedings. However, there are exceptions to the automatic stay.

Exceptions to the Automatic Stay

The filing of a bankruptcy case does not operate as an automatic stay in the case of:

Criminal proceedings against the debtor.
Commencing or continuing paternity actions, modifying domestic support obligations, child custody or visitation actions, domestic violence actions, and divorce proceedings (except to the extent the divorce proceeding seeks to determine the division of property of the bankruptcy estate).
Collecting a domestic support obligation from property that is not the property of the bankruptcy estate.
Garnishments for domestic support obligations.
Suspending or restricting driver’s licenses, professional and occupational licenses.
Under specific sections of the Social Security Act, reporting overdue domestic support to a credit reporting agency, intercepting a tax refund, or enforcing a medical obligation.

Other exceptions too numerous for this article also apply. For a creditor to obtain relief from the automatic stay they usually must file a motion for relief from the automatic stay. This allows the Court and parties in interest an opportunity to analyze the appropriateness of the proposed relief.

If you have questions on how the automatic stay may affect you or your business, have them reviewed by an experienced bankruptcy attorney and former trustee for the U.S. Bankruptcy Court. Call or contact Martin Long at LONG & LONGnow at 303-832-2655, or www.denverbankruptcylawyer.net.

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Supreme Court Sides with Debt Collectors in Bankruptcy Case

Long & Long Team — Mon, 04 Sep 2017 19:43:00 GMT

On May 15, 2017 the U.S. Supreme Court ruled in the case of Midland Funding, LLC v. Johnson, 581 U.S.____(2017), that debt collectors and purchasers are not in violation of federal law when pursuing debts during a Chapter 13 bankruptcy that they know to be beyond the statute of limitations.

The 5-3 decision was a victory for the $13 billion debt collection industry. In his written opinion, Justice Stephen G. Breyer said filing a proof of claim, even for time-barred debts, does not qualify as a deceptive, false, misleading, unconscionable or unfair practice under the Fair Debt Collection Practices Act (FDCPA). Chief Justice John Roberts, along with Justices Anthony Kennedy, Clarence Thomas and Samuel Alito, joined Breyer in the majority opinion.

Justice Sonia Sotomayor dissented, as did Justices Ruth Bader Ginsberg and Elena Kagan. Their dissenting opinion stated that the majority decision could create a “trap for the unwary,” and that common sense would dictate one should not be allowed to profit on another person’s “inadvertent inattention.”

A Reversal of the Decision By the Eleventh Circuit

The Eleventh Circuit of the U.S. Court of Appeals had previously ruled that debt collectors were in violation of the FDCPA if they filed proofs of claim on debts that were time-barred or uncollectable in any way due to time restrictions.

A proof of claim is a document filed in court stating the exact amount a debtor owes to a creditor. The FDCPA was written to prohibit collectors from using “false, deceptive or misleading representation” as a means of collecting debt.

In this recent case, the Supreme Court determined Midland Funding LLC’s claim was not deceptive or misleading, and that its proof of claim falls under the bankruptcy code’s definition of the term “claim” as being a “right to payment.” In analyzing the case, the court looked at state law in Alabama, where creditors have a right to payment of debts even after the expiration of the limitations period. According to the court, an “unenforceable claim” is still “a right to payment” and considered a “claim” as the code uses these terms. It is then up to the Chapter 13 trustee to object to the claim by raising the affirmative defense of the claim being time-barred.

Additionally, the qualification of a statement as being “misleading” must be made by taking the legal sophistication and knowledge of the intended audience into account. In this case, the audience was the Chapter 13 bankruptcy trustee, who is required to examine all proofs of claim and pose objections when appropriate. The trustee will have a more sophisticated knowledge of bankruptcy law than most other potential audiences.

Creditors and debt collectors generally view the recent decision as one that upholds the status quo and clarifies some confusion that has long existed on the issue. Pat Morris, CEO of ACA International, an agency representing grantors and collection agencies, said that a decision like this was needed for the industry after the Eleventh Circuit “called that longstanding and consistent interpretation into question.”

For more information on how the Supreme Court’s decision in this case could affect bankruptcy cases in the future, consult a skilled Denver bankruptcy attorney at Long & Long