Category Archives: Creditors

DALLAS BANKRUPTCY ATTORNEY: DON’T FALL FOR DEBT COLLECTION SCAMS!

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When you are in debt, sometimes it can be difficult to keep track of who you owe money, because creditors get bought out, change names, and turn the debt over to collection agencies or law firms.  Con artists are taking advantage of this fact.

Dozens of people have called Cooper’s Consumer Protection Division to report calls from scammers posing as debt collectors calling to harass and intimidate them, sometimes even at work.

“Don’t fall for these calls from crooks demanding that you pay phony debts,” Cooper said. “Never agree to share your personal information with someone you don’t know who calls you, no matter how convincing they sound.”

The callers often use fake names designed to sound like a law firm or government agency.

Recently, Cooper warned consumers about similar harassing calls from scammers claiming to be with law enforcement. Those callers, from the nonexistent “Federal State Bureau of North Carolina,” threaten to arrest consumers who don’t pay.

Investigators are trying to determine how the scammers get consumers’ personal information, but several consumers say the calls began after they applied for loans or credit cards online. Some getting get the calls owe money on Internet payday loans, but many people who get the calls haven’t taken out a payday loan.

Consumers should follow these simple rules to avoid being scammed by phony debt collectors:

• Never give out your personal information, such as bank account and credit card data, to anyone you don’t know.

• Check your credit reports for free at www.annualcreditreport.com or 1-877-322-8228 to spot any unauthorized credit cards or loans taken out in your name.

• Consider a free security freeze to block unauthorized use of your credit.

• If you get one of these calls after completing an online application, file a complaint with the Internet Crime Complaint Center at www.IC3.gov.

(Source: huntersvilleherald.com)

DO I HAVE TO LIST ALL OF MY CREDITORS IN BANKRUPTCY?

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Debtors often ask me not to include a specific debt in their bankruptcy.  In most cases the motivation behind these requests is that the debtors wish to keep a house or a car and they believe that if the debts that are secured by their property are listed in the schedules, they will lose the property.  That belief is inaccurate.  The following is a general rule for listing creditors in bankruptcy schedules.

Debtors are required to list all of their creditors in their schedules when they file bankruptcy.  Being listed in bankruptcy schedules affects creditors differently depending on the type of debt.  Secured creditors have to be listed in the schedules but the debts don’t necessarily have to be discharged.  For example, a debtor who has a car payment must list the debt in her schedules but can choose to reaffirm the debt so that it will not be discharged in the bankruptcy.  Priority debts, such as child support or income tax liability, must be listed in the schedules, but these debts are generally nondischargable, meaning the debtor will still be liable for the debt after the bankruptcy case is closed.  Unsecured debts, with the exception of student loans, are almost always subject to full or partial discharge in bankruptcy.  Debtors cannot choose to reaffirm these debts.  Making payments to one unsecured creditor in preference to other unsecured creditors is not permitted and can result in the money being seized by the trustee.  As you can see, just because a debt is listed in bankruptcy schedules, it doesn’t necessarily mean that the debt or the property will be affected by the bankruptcy case.

BANKRUPTCY: WHAT IS A 341 MEETING?

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A 341 meeting, also known as a creditor’s meeting, is presided over by the United States Trustee, and allows creditors and the trustee an opportunity to question debtors about the schedules and statements filed in their bankruptcy case.  This meeting is required under 11 U.S.C. § 341 of the Bankruptcy Code, hence the name.  Creditors are not required to attend the meeting, and in most consumer cases they do not.  In Chapter 13 consumer bankruptcy cases, the only creditors that generally attend the 341 meeting are representatives of the Attorney General when the debtor pays child support and the Internal Revenue Service when the debtor owes taxes.

 

Trustees use this meeting to question the debtor regarding their assets and financial situation in order to determine whether or not to file an objection.  The 341 meeting also starts the clock on several deadlines.  In a Chapter 7 bankruptcy case, creditors have sixty days following the 341 meeting to object to discharge.  In a Chapter 13 bankruptcy case, secured and unsecured creditors have ninety days following the 341 meeting to file a claim in order to receive payments from the trustee.  The meetings generally last between five and fifteen minutes.  For most debtors the 341 meeting is the only hearing that they will have to attend while in bankruptcy.

CAN I KEEP A CREDIT CARD WHILE IN CHAPTER 13 BANKRUPTCY?

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I probably answer over a hundred questions for my clients each week.  Unfortunately, my answers are often long, complicated or the oh-so-helpful “it depends.”  Luckily, once in a while, I get a question like the one in the title of this article, and I get to give a simple, easy to understand answer.  “No.”  I have answered the question and it seems like I should be able to stop now, but I am an attorney, and therefore sometimes long-winded, so I feel compelled to elaborate.

 

The first reason you cannot keep a credit card is because you are not allowed to show preference to specific unsecured creditors while in bankruptcy.  When you file Chapter 13 bankruptcy, you must list all of your debts.  Debts are divided into three general categories in your schedules.  These include secured, priority and unsecured debts.  Credit card debt falls into the unsecured category.  In bankruptcy, you cannot make payments to an individual unsecured creditor in preference to other unsecured creditors.  They must receive equal treatment.  If you make payments to an individual credit card, excluding disbursements from the Trustee, then you are showing preference to that creditor.

 

The second reason you cannot keep a credit card while in Chapter 13 bankruptcy is because The Bankruptcy Code specifically states that a debtor in bankruptcy cannot incur new debt without permission from the Court.  Depending on your situation, bankruptcy courts will allow you to incur new debt to modify mortgage loans and purchase or lease new vehicles, but I have yet to see an order granting a motion to allow a debtor to keep a credit card.

DOMESTIC SUPPORT OBLIGATIONS GIVEN PRIORITY IN BANKRUPTCY

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The Bankruptcy Code provides special protection for parties’ owed domestic support obligations, such as child support, alimony, and spousal maintenance.  In its present form, the Bankruptcy Code provides that domestic support obligations cannot be discharged in a Chapter 7 case and receive priority status in Chapter 13 bankruptcy plan.  This priority status guarantees that domestic support obligations are among the first debts to be paid, and creditors owed this type of debt are entitled to be paid in full in a Chapter 13 plan.

 

I would like to take a moment and discuss an issue that affects those people who are owed a domestic support obligation by someone who has filed Chapter 13 bankruptcy.  In this article, I’m going to refer to the person owed the debt as the “creditor” and the person who owes the debt as the “debtor.”  As discussed above, the creditor is entitled to be paid in full in the Chapter 13 plan.  However, it is not always wise to require the debtor to repay the entire debt in the bankruptcy.  In order for a Chapter 13 bankruptcy case to be successful, the debtor has to prove that they have enough income to pay their household expenses plus their Chapter 13 plan payment.  If a debtor cannot show that their income is sufficient to pay these expenses, then the bankruptcy court will eventually dismiss their case depriving the debtor from the relief offered by a discharge.

 

In some instances, a debtor may owe so much in domestic support obligations, that they have no hope of making a Chapter 13 plan payment and still paying their other bills.  In these cases, if the debtor is required to pay their entire domestic support obligation, they will not be able to continue in bankruptcy.  The creditor should consider how the debtor’s other debts affect their financial situation.  If a debtor has substantial credit card debt, medical bills, or other debts, they may be behind on their child support, alimony, or spousal maintenance because they are financially overwhelmed by these other debts.  In this situation, the creditor should consider allowing the debtor to pay less than their entire debt in the Chapter 13 plan.  This will allow the creditor to receive partial repayment of what they are owed and allow the debtor to receive a discharge of their other debts.  Once these debts are discharged, the debtor will be in a better position to repay the remainder of the domestic support obligation.  Don’t forget, the domestic support obligation is not dischargeable, so allowing partial repayment in the Chapter 13 plan doesn’t mean that the creditor will not be paid in full eventually.  Sometimes accepting less than full payment of a domestic support obligation in a bankruptcy plan is the best way for a creditor to ensure that they will be paid.