Alabama Consumer Law Blog

Max Garnder, III, has an excellent article on some of the abuses that servicers inflict upon consumers who are in a Chapter 13 bankruptcy that we suggest you carefully read.

This is an entertaining and informative article by Max and you can get a taste of it from the first paragraph:

Wayne Gretzky once said that his success was due to the fact that he focused on where the puck was going to be, not where it was. For most consumer debtors who have home mortgage loans and are involved in Chapter 13 bankruptcy cases, this Gretzkyism is somewhat of a double entendre. The fact of the matter is that most of these debtors have no idea who really owns their home mortgage loan and they most assuredly do not know why the balance owed keeps going up. Or, as Yogi Berra might say, these “guys have been double-pucked!”

Read this article if you are interested in securitization and what it means for consumers in a Chapter 13 bankruptcy....and even if you are not in a bankruptcy, you will find useful nuggets as well....

If you live in Alabama and would like to talk with us about this issue, or foreclosures, or any other issue, please feel free to call us at 205-879-2447 or fill out our inquiry form on our website.

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The Florida Bankruptcy Attorney Blog has posted an article that discusses the effect bankruptcy has on student loans. Previously it was possible to discharge student loan debts after seven years if someone couldn't make their monthly payment. However, amendments passed by the BAPCA (Bankruptcy Abuse Prevention and Consumer Protection Act) recently have made that more difficult.

These amendments require the person to prove to the court that you are undergoing "inordinate hardship" for bankruptcy to include student loans. The requirements for "inordinate hardship" are very strict and most people simply cannot fulfill the conditions.

We do not cover bankruptcy, but would be happy to discuss options with you if you have questions. Feel free to contact us.
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MSNBC.com has posted an article about the rise in personal bankruptcies. According to the article, 124,790 bankruptcies were filed in September of this year, a 41% increase from September 2008. September 2009 also had the fourth largest amount of filings since the bankruptcy law changed in 2005.

September's filings pushed 2009 consumer bankruptcies to about 1.05 million, the highest for the first nine months of a year since 1.35 million in 2005.

The American Bankruptcy Institute says the high bankruptcy numbers are because of the high unemployment rate and lagging housing market. The ABI estimates a total of 1.4 million consumer bankruptcies to be filed this year.

We don't cover bankruptcy, but if you have questions, feel free to contact us to discuss possible options.

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The Arizona Bankruptcy Lawyer Blog has posted an article about what a bankruptcy discharge is and what it includes. The "discharge" of a debt means that it no longer exists and can't be held against the debtor. However, debt discharge "has its limits" and doesn't include every financial responsibility.

To begin with, debt discharge doesn't deal with every debt. Child support, "spousal maintenance" and newer income tax debt can't be discharged.

Even though the personal liability may no longer exist as a result of the "discharge", liens recorded against the debtor's property, may survive the bankruptcy unless they are modified or removed.

There are time limits that prevent a person from receiving continual debt discharges. The creditor has to be allowed time between bankruptcy filings to collect their money.

Not everyone needs bankruptcy for purposes of obtaining a discharge. Some need it for other reasons, like saving a home from foreclosure or restructuring the repayment of debt. These people don't care as much about the discharge as others. For those debts like credit card, repossession related, old income tax and medical bill debt that are typically governed by it, not only are they "gone", the discharge acts as a "permanent injunction" or a court order at the close of the case, against those same creditors. It replaces the "automatic stay".

If creditors persist in attempting to collect after you have obtained a debt discharge, the creditors can be "punished". Often this "punishment" means they have to pay the former debtor.

We don't cover bankruptcy, but if you have questions we would be happy to discuss options with you. Feel free to contact us.

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Bankruptcy Law Network has posted an article that discusses if a company going bankrupt is obligated to honor a warranty. It depends on the type of bankruptcy that was filed for.

If it was Chapter 11, there's more of a chance that the company will honor your warranty that was purchased prior to filing for bankruptcy. One main reason is to maintain a positive business image.

If the company filed Chapter 7 then they aren't obligated to honor a warranty, but might do so anyway to keep the same "goodwill" image.

Otherwise, you’re out of luck. This wasn’t a rip-off, this was just the bad luck of doing business with a company that didn’t make it. You’ve lost your warranty. The owners lost a significant asset, and the workers lost their jobs.

If you have questions regarding bankruptcy, feel free to contact us.

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The Alabama Consumer Lawyer Blog has posted an article that discusses the pros and cons of filing for bankruptcy and the differences in Chapter 13 and Chapter 7.

John W. Sharbrough, the author, suggests that for people who have a house they want to keep filing Chapter 13 bankruptcy is more effective. However, for a totally fresh start, Chapter 7 is the way to go.

The pros of filing bankruptcy, according to the article, are:

It can wipe out or “discharge” all or some of your debts;

It can give you a chance to “catch your breath” by temporarily prohibiting creditors from foreclosing or repossessing your home or car;

It can temporarily prohibit wage garnishment or disconnection of utilities;

It will stop harassing creditor phone calls and letters;

The cons are:

It puts a blemish on your credit report that will remain there for 10 years;

Can be a source of embarrassment and may be seen by potential employers, insurance companies and such.

If you are considering or interested in filing bankruptcy feel free to contact us - we don't file bankruptcies but we will be glad to recommend you to a bankruptcy lawyer in your area and often people are seeking bankruptcy protection because of harassing debt collectors. We have been able to keep people out of bankruptcy by suing the collection agencies for violating the law .

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The BKBlog has posted an article that discusses if an individual can file for Chapter 7 bankruptcy and still keep their business. Often times, the owner could have used personal credit cards and finances for the business, so they are being held responsible for that debt.

This article suggests that one needs to close down the business if filing for Chapter 7 and waiting 6 months to a year before reopening. This enables the owner to have a fresh start.

Except in the case of a personal service business that has no inventory or receivables or any value other than the daily efforts of the owner, my experience has been that if you file a Chapter 7, the trustee will demand that you cease operations and turn over the books, the keys and the inventory to the trustee's office.

If you have questions or have had problems with issues relating to bankruptcy, feel free to contact us.

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StayViolation.Com has posted an article about a lawsuit between creditor and debtor. In Texas, Brad Collier bought almost $1,000 worth of mobile home parts and supplies from Hill's Mobile Home Parts & Service, owned by Paul Hill.

Collier soon after filed for Chapter 13 bankruptcy and failed to immediately notify Hill. However, after receiving notification, Hill hired Josh B. Maness as a representative "in regard to collection of the pre-petition claim." Maness sent a letter to Collier's bankruptcy attorney and demanded to be paid the full balance of Collier's debt.

Misstatements were made in the letter that Mr. Maness attributed to an unfamiliarity as to how to use the Bankruptcy Court's PACER/ECF system. Regardless, the Court found the letter constituted a willful violation of the automatic stay issued in Mr. Collier's Chapter 13 bankruptcy because no good faith defenses are allowed as to stay violation. The Court concluded this "ill-informed conclusion based upon an insufficient investigation" was "not a technical violation based upon an innocent mistake" as "[t]his is precisely the type of behavior that the automatic stay is intended to preclude".

Following the letter, Hill then posted a sign out at a major intersection of US Highway 80 in Scottsville, TX, near where Collier and his friends, family, etc live, that said: "BRAD COLLIER OWES ME $984.23 WILL YOU PLEASE COME PAY ME!"

Hill refused to remove the sign and it remained posted in public for 21 days.

Paul Hill only agreed to remove the sign at the hearing scheduled by the Bankruptcy Court on Brad Collier's requested expedited hearing for an injunction.

Mr. Hill contended throughout the litigation that the directive on the sign -- "WILL YOU PLEASE COME PAY ME!" - did not constitute an effort to collect a debt because there was no question mark at the end of the sentence. However, the Court found that the use of an exclamation mark in lieu of a question mark demonstrated that the opposite was true. "The exclamation mark transforms the sentence into a directive, which demands that the Debtor pay the debt." The Court further found that the Bankruptcy Code was clear. "Any effort, action, or demand by a creditor to collect a pre-petition debt violates the automatic stay".

Hill also argued that putting up the sign was his right given by the First Amendment. However, Hill's actions caused him to have to pay $21,820 in punitive damages.

If you have problems with debt collectors following bankruptcy, feel free to contact us.

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The BKBlog has posted an article that discusses if you are responsible for debt incurred by the failure of your business, and if personal bankruptcy can help.

Jonathan Ginsberg, author of the blog, is based in Georgia and thusly "can only speak to how Georgia law works" but he still offers good insight. He says that the owner of the business can be held personally responsible, in spite of bankruptcy, if:

-the lease was in his name and not in a corporate name .
-he personally guaranteed a corporate obligation.
-he engaged in fraudulent conduct that would permit the plaintiff lessor to "pierce the corporate veil."

In most of these cases, commercial landlords do require the individual business owner to personally guarantee the lease. Assuming that is the case here, a personal bankruptcy would create an automatic stay that would prevent the plaintiff landlord from garnishing wages or bank accounts.

Settlement negotiation is also a possibility. The landlord may be approached with a settlement offer and is likely to accept it because if bankruptcy is filed the landlord will get very little or nothing.

If you are considering or dealing with bankruptcy, feel free to contact us.

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The BKBlog has posted an article that discusses the effects bakruptcy has on student loans. Student loan creditors have become more active in collecting their money in light of the current economic decline. Different "collection resources" are available for student loan companies looking to collect their money, however

There is one statute that permits student loan creditors to garnish wages without the need to first go to court.Student loan claims can also offset tax refunds.

The blog cites an email that was sent to them.

I am unemployed and have defaulted student loans. I was married last April and my husband's tax return was offset as a lovely wedding gift. I am researching how to file for bankruptcy for my other debts and also looking into how to prove "undue hardship" regarding the student loans. In the meantime, we were curious about whether or not my husband's wages could be garnished? Since I am unemployed, this would devastate us. Also, once I get a job, if they are garnishing my husband's wages, would they be able to garnish mine as well — at the same time?

According to this article, both spouses are subject to wage garnishment, as well as having their tax return seized. Bankruptcy would do little good.

If you are considering or dealing with bankruptcy and have questions or concerns, feel free to contact us.

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The New York Bankruptcy Litigation Blog has posted an article about what debts remain unresolved should you file for bankruptcy.

Exceptions include child support, alimony payments, "certain cooperative housing fees", "debts brought about by intentional injury or property damage caused by the debtor" (this also includes personal injury debts caused by driving under the influence of drugs or alcohol), and any debt owed to a form of a government agency ( such as tax claims and penalties or fines).

If you are filing, or considering filing, for bankruptcy, feel free to contact us for assistance. We don't file bankruptcies but often times what causes a consumer to consider bankruptcy is dealing with abusive debt collectors which we can sue so sometimes this can be a better option that actually filing for bankruptcy.

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Anthony Bush with Anderson Nelms & Associates filed a case on January 22, 2009, against Beneficial Assurance LTD, Inc., Homecomings Financial, LLC, America's First Federal Credit Union, Credit Bureau Services International, Inc. and Experian.

This case arises out of a bankruptcy discharge that the plaintiff received several years ago (2007) but the defendants continued to report discharged debts as having a balance owed. A discharged account must be listed as a zero balance as no money is owed to the defendant/creditor.

This lawsuit alleges violations of the Fair Debt Collection Practices Act, Fair Credit Reporting Act and state law including deceptive trade practices.

This type of misconduct (leaving false balances on accounts that have been discharged) has been going on for some years and we have filed numerous lawsuits over the last three years related to this but creditors and collectors continue to violate the law in attempts to extort money out of consumers who no longer owe the creditors and collectors any money. We wish Anthony Bush the best of success with this suit in his efforts to help encourage creditors and collectors to obey the law.

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Our friend Anthony Bush with Anderson Nelms & Associates filed a case on February 2, 2009, against Bay Finance Company, Redstone Federal Credit Union and the consumer reporting agencies of Equifax, Experian and Trans Union.

This case arises out of a bankruptcy discharge that the plaintiffs received last year but the defendants continued to report discharged debts as having a balance owed. A discharged account must be listed as a zero balance as no money is owed to the defendant/creditor.

This lawsuit alleges violations of the Fair Debt Collection Practices Act, Fair Credit Reporting Act and state law including deceptive trade practices.

This type of misconduct (leaving false balances on accounts that have been discharged) has been going on for some years and we have filed numerous lawsuits over the last three years related to this but creditors and collectors continue to violate the law in attempts to extort money out of consumers who no longer owe the creditors and collectors any money. We wish Anthony Bush the best of success with this suit.

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Our friend Matthew Dunaway has several good recent posts on bankruptcies on his Birmingham Bankruptcy Blog.

*Chapter Seven Bankruptcies - 10 Things You Need To Know

*Bankruptcy Basics - 10 Things You Need To Know

*Finally, Bankruptcy Right For You? - 7 Things To Consider

Stay current on Matt's blog as it will be providing, we are sure, more and more useful information to you.

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We recently ran across a good blog by Richard Collins - the Alabama Bankruptcy Blog. Check this out - Richard has some very interesting blog posts on here relating to Alabama bankruptcy law.

There is a lot of mis-information about bankruptcy floating around and we noticed Richard has published a book entitled "Bankruptcy Myths" that we plan on requesting. If you are considering bankruptcy this would be an excellent place to start.

We wish Richard all the success in the world.

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Our friend Jay Fleischman earlier this month pointed out two ways creditors and debt collectors violate the discharge order. As you may know, the discharge order prevents anyone from trying to collect debts that have been discharged.

Jay points out that collectors and creditors will either directly contact you to collect the debt or leave false information on your credit reports.

Both of these are illegal. If you are facing this type of misconduct in Alabama, please feel free to contact us.

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Unfortunately sometimes consumers must file Chapter Seven Bankruptcy ("straight bankruptcy") and this results in debts, including debts owed to Capital One, being discharged. Years later the consumer may need to file a Chapter Thirteen Bankruptcy to save a house or because of medical bills and Capital One will file a fraudulent "proof of claim" in the new bankruptcy case to get paid on the discharged debt.

Capital One knows the old debt has been discharged as it was a part of the original bankruptcy but it appears that Capital One has thought it had a "free shot" to try and illegally get paid in the second bankruptcy.

Our fellow consumer lawyer Jay Fleischman has an interesting post about Capital One agreeing that it has received hundreds of thousands of dollars from this type of illegal activity. If you are currently in a chapter thirteen bankruptcy after having been through a chapter seven bankruptcy, and you have had a Capital One card, you may want to see if you have also been a victim of this evil practice.

If you live in Alabama and you have any questions about this issue, feel free to contact us.

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Many Alabama consumers have made the hard decision of filing bankruptcy and then after going through it expect to be given the "fresh start" promised by federal law only to find that debt buyers and collection agencies are waiting for them "on the other side" of the discharge order. There are several ways to deal with these scoundrels - sue them in federal court under state law and the Fair Debt Collection Practices Act - but another way is to sue for violating the discharge order. This is, in effect, a request that the Bankruptcy Judge hold the violator in contempt for thumbing his nose at the federal discharge order.

The question comes up - do you have to re-open the bankruptcy to go this route? Read this post by Jay Fleischman and this follow up post that contains a statement from Texas attorney Chuck Newton. It may not be a requirement to re-open but that is what is typically done. Perhaps it is unnecessary.

Regardless of whether you should re-open, or you sue in federal district court, do contact us or a consumer or bankruptcy attorney to understand your rights so that you truly can get that fresh start that you are entitled to under the law.

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An Alabama consumer recently filed suit against Citibank and Compass Bank related to their false reporting of accounts which had been discharged in bankruptcy last year. Citibank and Compass Bank received notice of a bankruptcy and instead of following the law and properly updating the accounts to show that the accounts were discharged in bankruptcy and had a zero balance, they continued to report a current balance of over $9000 for each of the accounts.

We have previously blogged about errors in post-bankruptcy discharge reporting. In other words, oftentimes when you receive a discharge, the creditors refuse to follow the law and instead will either leave a balance (known as “Parking”) or will update the account but refuse to tell the credit reporting agencies (Equifax, Experian, TransUnion) that the account has been discharged and should have a zero balance.

As we often point out, we suggest that everyone should check their credit reports, review them for errors, and dispute them if errors are present. There are situations where it is appropriate to sue before a dispute when it is apparent that the furnisher/creditor has put false information on your report. If you have any questions about any of your discharged accounts and how they should be reporting after bankruptcy, or credit report errors in general, please do not hesitate to contact us for a free consultation.

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Here is the final post on the things NOT to do if filing bankruptcy..... We recommend you read these if you are considering bankruptcy as knowing these things may save you a lot of misery.

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