Alabama Consumer Law Blog

There are many reasons to consider bankruptcy. Maybe you are dealing with abusive debt collectors or you are facing foreclosure. Or maybe you have lost your job and are drowning in debt.

Bankruptcy is a very serious option with serious consequences. Those consequences can be good overview of the bankruptcy laws, particularly for the Birmingham, Alabama areagood or bad.

It makes sense to do what you are doing -- research to find out about your options.

On our website Alabama Consumer Protection, we have a page which gives you a good overview of the bankruptcy laws, particularly for the Birmingham, Alabama area.

You can also watch videos related to bankruptcy and read articles about bankruptcy and blog posts about bankruptcy. Our goal is to give you resources that can help you.

We wish you the best in your research and if we can help you understand the law or your options, and if you live in Alabama, please feel free to call us at 205-879-2447.

For several years we have sent out every Thursday (except when I am running late!) a free email newsletter where we talk about suing collection agencies, defending against collection lawsuits, correcting errors on your credit reports, fighting wrongful foreclosures, protecting against identity theft, and other consumer issues.

We call it "Consumer Power" as our intention is to give you knowledge and to give you encouragement to take action. Knowledge plus action is truly power and we want to empower consumers.

We have now set up a website, ConsumerPowerNewsletter.com, where we have all of the back issues. Usually a day or so after we put out our weekly newsletter, we will have the new issue up.

Feel free to check it out and let us know your thoughts, comments, and suggestions.

Thanks so much.

John Watts

While we are still working on it, we did want to let you know that we have at least parts of AlabamaConsumerProtection.com up and running and hope you will take a moment and check out our new website.

Our intention is to do a complete overhaul on our websites and to add a number of new websites, such as this consumer oriented site. Most, if not all, of our new sites will be specialized sites but we did want to have another site similar to AlabamaConsumer.com in order to present information about bankruptcy, debt collectors, credit report errors, foreclosures, etc. in a different format. We have lots of videos and we are adding blog posts and articles every day to this site.

Thanks for checking it out and let us know what feedback you have for us.

Sometimes when we file bankruptcy we are doing it because of the wrongdoing of someone else. Maybe a drunk driver ran a red light and hit us and we can't work. Maybe a debt collector called our work and got us fired.

Any potential lawsuit we have should be listed in our bankruptcy papers. If we don't list them, then we may have lost the right to bring the suit forever.

Here is the concluding paragraph to a good short post by David Leibowitz:

So if you are filing a bankruptcy case, list all your assets. And that includes all lawsuits you have against anyone for anything. It includes any claims you have even if you don’t know what their worth. It includes any claims you have even if there are significant defenses to the suit. Don’t get thrown out of court by playing it cute in your bankruptcy case.

Excellent advice.

The Arizona Bankruptcy Lawyer Blog has posted an article that discusses why it's so important for you to be honest about your assets when you're filing for bankruptcy. You can't pick and choose what assets or debts to include while filing, you have to list any and all you may have.

However, just because you list an item of property on your bankruptcy schedules and statements that are filed on your behalf with the Bankruptcy Court does not mean that you will automatically lose that item of property to the trustee administering your Bankruptcy case. To the contrary, it is very possible that your state has a law on the books that would shield that particular item of property from being lost to your bankruptcy trustee, thereby making it "exempt."

Sometimes people come up with grand schemes to make a property or asset "disappear" by getting rid of it at the last minute or by selling it to a friend or family member with the intent to purchase it back. This type of scheme can have very serious and unfortunate results. Recently, a couple from Iowa tried to cheat their creditors out of $380,000 when they were filing for bankruptcy. Mr. and Mrs. Schuerer attempted to unload some of their assets by selling them to friends and family members right before their bankruptcy case was filed and intended to purchase them right back after the case went through. The couple was found out, spent time in jail, has been ordered to pay $394,984.00 in restitution to the United States Trustee, and has also been required to pay substantial fines to their creditors.

No asset or property can possibly be worth the price you will have to pay when you're caught trying to hide assets when filing bankruptcy.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. Our firm doesn't cover bankruptcy, but if you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The Florida Bankruptcy Attorney Blog has posted an article which discusses how bankruptcy can actually help you improve your credit score.

Most people decide to file bankruptcy when they find they can't pay their current debts. Not being able to pay has severely reduced their credit score and filing bankruptcy shows the credit bureaus that you are being proactive and taking steps to improve your situation. About a year after filing bankruptcy, you will find that your credit score should have improved because you aren't missing loan payments

It might sound backwards that your credit score would improve after filing bankruptcy, after all, it means that your creditors probably won't get paid. The fact is that they probably wouldn't have been paid in full anyway even if you hadn't filed bankruptcy.

While they would have retained their rights to collect on their debts if you ever came into money, it is often the case that debts (especially credit card type debts), are written off by these companies long before you are able to pay it back completely.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

How Do I Fix False Credit Reporting After A Bankruptcy Discharge?

This is a problem that was very common several years ago and then it improved but now seems to be coming back with a vengance: companies who have their debts discharged are refusing to properly report those debts on consumers' credit reports.

If you have received a discharge from a chapter seven or chapter thirteen bankruptcy, then your credit report should list all of the discharged accounts as having a zero balance. Now, if you reaffirm the debt then this is a different matter.

But assuming you did not reaffirm the debt, then you don't owe it anymore. And the creditor or any collector can't try and collect it from you.

This means the collector or the creditor can't put a balance on your credit report to pressure you into paying the debt.

This is called "parking" an account on your credit reports. The idea is eventually you will need a higher credit score for a loan, an apartment, a job, etc and you will be forced to pay the creditor or collector to "fix" your credit reports.

See, that's why this is illegal. That is why the creditors and collectors love to put false balances on your credit reports. It brings all of this pressure to bear on you and it brings all sorts of profits to the creditors and collectors.

If you are facing this, you should get with a consumer attorney in your area. Normally, but not always, the best way to handle this is to dispute the false balance with the credit reporting agencies (Equifax, Experian, Innovis, and Trans Union) and copy the creditor or the collector (known as the "furnisher"). Explain when you received your discharge and ask the credit reporting agencies to fix this false entry on your reports.

If it is not fixed, you may have the right to sue the furnisher (creditor or collector) and the credit reporting agencies who kept this on your reports. Get with a consumer attorney to advise you of your rights.

You will be helping yourself and doing your part to help encourage these big companies to stop breaking the law....

If you live in Alabama and have had problems with credit reporting errors and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The Kentucky Bankruptcy Blog has posted an article that discusses how some debts aren't dischargeable under bankruptcy, except under special circumstances. For example, student loans, income tax debt, and child support payments are common types of debt that cannot be easily discharged.

The rules surrounding the discharging of income tax debt can be very tricky. How much of the debt that can be discharged largely depends on what type of bankruptcy has been filed for. Chapter 7 and Chapter 13 each have different stipulations.

Ms. Julie O'Bryan, author of the blog, says that:

An income tax debt arises from a tax return for a particular tax year. In general, an income tax debt for a particular tax year may be discharged if the following criteria are met:

The due date for filing the tax return was at least three years prior to the bankruptcy filing date. This due date includes any extensions.
The tax return was filed at least two years prior to the bankruptcy filing. This date is the time the return was actually filed with the IRS.
A tax assessment was made at least 240 days prior to the bankruptcy filing. The tax assessment is usually measured from the IRS proposed assessment sent to the taxpayer.
The tax return was not fraudulent, and the taxpayer has not attempted to evade the tax laws. Dishonest taxpayers do not receive the benefits of the bankruptcy laws.

Any taxes that don't fall under the guidelines listed above will not be discharged in bankruptcy, including unfiled tax returns. When an income tax debt becomes discharged, any corresponding tax penalty is also discharged too. However, in a Chapter 7 bankruptcy filing, a tax penalty is discharged as long as it and the corresponding tax debt are less than 3 years old. In a Chapter 13 filing, all unsecured tax penalties are treated as any other debt during the time indicated in the bankruptcy repayment plan. The Chapter 13 prevents any new tax penalties from forming.

The federal bankruptcy laws contain specific provisions for discharging income tax debt. Bankruptcy can provide you with time to repay your obligation, without the threat of IRS seizure or garnishment; or, in some circumstances, can permanently discharge your tax debt.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

NorthJersey.com has posted an article that discusses how some heads of non profit agencies specializing in bankruptcy counseling are using the lagging economy to line their personal pockets. There are 44 non profits nationwide who are federally approved to provide bankruptcy counseling. 12 of the 44 pay their executives $300,000 or more annually.

"The money that's coming in is coming off the back of consumers," said John Rao, a lawyer with the National Consumer Law Center in Boston. "It certainly makes you question the concept of them being non-profits."

The non profits who specialize in consumer credit counseling argue that they pay their executives what other non profits of the same size pay their executives and claim the bankruptcy fees they collect from clients are just a small part of their funds. In 2005 Congress passed a law that required consumers to have a 90 minute counseling session with a financial counseling agency before being able to file for bankruptcy. They can charge up to $50 for this required session, but have to waive the fee if the person can't afford to pay. Typically, most of these non profits' income comes from 2 places: fees paid by consumers and grants and fees from banks and other financial institutions.

Because many of the non-profits bring in a significant portion of their revenue from debt-management fees, some consumer lawyers say the agencies have an incentive to steer debtors away from bankruptcy filings and into the debt-management plans. Industry officials, however, insist they steadfastly avoid doing so.

What's indisputable is that some counseling agency officials are among the nation's highest paid non-profit executives. Topping the list in 2009 was Ivan L. Hand, president of Money Management International in Houston, at $918,641, including bonuses, deferred compensation and other fringe benefits. MMI is by far the largest non-profit credit counseling agency, with revenues of $105.9 million.

Also high on the list are Jane E. McNamara, president and CEO of GreenPath in Farmington Hills, Mich., who received $565,352, and Etta W. Money, president and CEO of InCharge Debt Solutions and four related non-profits in Orlando, Fla., whose total compensation came to $476,171.

Some bankruptcy lawyers and consumer advocates argue that such massive paychecks are ridiculous and make it appear that some people are, in fact, making a profit off a non profit organization. Executives and officials at larger non profits argue that their pay is comparable to what executives at organizations of a similar size earn...which is allowed by federal tax laws. Gail Cunningham, vice president for public relations at the National Foundation for Credit Counseling in Washington, says that the salaries are reasonable given the size of the non profits.

The Consumer Law Center- which advocates to Congress- has been arguing that the required 90 minutes sessions are a waste of time and money. They claim that the session remains identical to how it was before the 2005 law passed, and that consumers only do it because they are required to and already know that they will end up filing bankruptcy. The required session is just a cost added to them.

However, Ms. Cunningham counter-argues that no one needs credit and debt counseling more than someone considering bankruptcy. Sometimes the counseling session results in consumers who were going to file for bankruptcy being steered to sign up for a debt-management plan. The non profit agency then works out a payment deal with creditors and charge the consumer a monthly fee.

Sandy Shore, a supervisor of a non profit debt counseling agency, says that her agency doesn't allow bankruptcy counselors to steer their consumers away from filing bankruptcy.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The Kentucky Bankruptcy Blog has posted an article that discusses why borrowers should sometime be cautious when taking out loans with credit unions. The author of the blog, Ms. Julie O'Bryan, has an extensive bankruptcy law practice in Louisville and also has an excellent book available for Kentucky residents who are considering bankruptcy.

In the article, Ms. O'Bryan opens by reminding borrowers that credit unions and some banks use "Loanliner" documents, which were developed by CUNA Mutual Group and are standard loan documents that are sold to financial institutions. About 70% of credit unions use Loanliner documents, which require a lending provision in which the borrower agrees that all other loans with the lender would be cross-collaterized.

Cross-collaterization is when the credit union uses the collateral from one loan for other loans, too.

The cross-collateralization clause from a recent Loanliner agreement reads: “the security interest also secures any other loans, including any credit card loan, you have now or receive in the future from us and any other amounts you owe us for any reason now or in the future.” Credit unions are fond of using this clause in vehicle loan agreements to secure all other credit union debts with the vehicle. This often causes surprises (and anger) when an unsuspecting credit union member tries to trade-in his car and discovers that the debt on the vehicle includes a personal loan, a line of credit, and credit card balances.

There are some options you have if you are confronted with cross-collaterization on an auto loan. You could file Chapter 13 bankruptcy and knock the amount you owe on the loan to match the actual value on your vehicle. In a Chapter 13 case you can "cram-down" over 3 to 5 years and any remaining debt is discharged at the end of the case.

You could also file for Chapter 7 bankruptcy. In a Chapter 7 case, the attorney would ask the credit union to re-draft an affirmation agreement for your vehicle without including other debts. You're basically asking the credit union to remove the cross-collaterized loans. If they refuse you can surrender your vehicle to them to remove the debt on it or you can redeem the vehicle. Redeeming the vehicle is only an option in Chapter 7 and allows the debtor to keep the vehicle and only make a lump sum payment based on the vehicle's actual value. Monthly payments are not an option.

Ms. O'Bryan suggests if you have a loan through a credit union you should review the paperwork carefully with a qualified bankruptcy attorney to see if there is a cross-collaterization stipulation.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Philly.com has posted an article about why filing for bankruptcy is no longer considered a financial "doomsday." Many people are afraid to file bankruptcy because they don't want to feel they are branded as 'financially ruined' their whole lives.

Bankruptcy actually offers a lot of benefits. For example, even though bankruptcy stays on one's credit report for 10 years, it offers those deeply in debt a fresh start while still usually keeping their most important assets. Bankruptcy lawyers have even said that people who are serious about putting their lives back together after bankruptcy can even get a home loan in two or three years. They can also get credit cards, but the interest rates are much higher.

Even though it's possible to rebound rather quickly from bankruptcy, it's still important that you consider other options before filing, such as trying to work out payment agreements with lenders.

With 15 million people jobless and about one in four homeowners underwater on their mortgages, many people have learned that charging today on the belief that they can pay tomorrow is a dangerous trap. Following a lull in bankruptcies after Congress tightened rules in 2005, personal bankruptcies are increasing. According to the U.S. government, about 1.5 million Americans filed for bankruptcy in the 12 months ended Sept. 30, a 14 percent increase over the number who filed during the 12 months ended Sept. 30, 2009.

And studies show "people are in worse shape than ever" when they file, said Robert Lawless, who teaches bankruptcy law at the University of Illinois at Urbana-Champaign. Too many people wait until it is too late "and suffer more than they need to," he said.

If a lender threatens to seize your home or car, it's a wise move to talk to an experienced bankruptcy lawyer. Talking to a debt counselor can also help you determine if your debt is manageable by living on a strict budget, or if bankruptcy is your best option.

If bankruptcy is your best option then it's important that you not wait too long to file. Once you file, only the debts you have had up until the point of filing are relieved. Credit card companies might cancel your card since you filed, but other companies will bombard you with offers because you can be considered a "safer risk" now that your debt is wiped out or significantly reduced. These new credit card offers may be tempting, but remember debt acquired after filing bankruptcy isn't included.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The BKBlog has posted an article about a recent Supreme Court case's outcome that ruled in the favor of creditors.

The U.S. Supreme Court issued a creditor friendly decision in the case of Ransom v. Fia Card Services. At issues was the "ownership expense" deduction in the means test.

The means test is a calculation used to determine whether a debtor has enough "disposable income" to afford a Chapter 13 bankruptcy repayment plan.

In the Ransom case, the debtor (Jason Ransom) claimed a means test deduction for both operation of a vehicle ($338 per month) and for ownership ($471 per month). The problem – Mr. Ransom owned his vehicle free and clear.

The 8-1 decision held that if a debtor owns his vehicle then he can only claim a vehicle operation deduction, but not an ownership deduction. For Mr. Ransom, it means that for bankruptcy calculations it looks like he has an extra $471 that could be used to pay credit card companies in a Chapter 13 bankruptcy.

Chapter 13 cases last 5 years, so assuming Mr. Ransom has his car paid off it's probable that the car isn't new. If he had to replace his car in that 5 year period, he wouldn't have the funds to do it because of the money he's paying to fund his Chapter 13. It's quite unreasonable to assume that Mr. Ransom, or anybody for that matter, won't have an emergency in the next 5 years that will cost money.

The Supreme Court's decision ignores the realities of life. In the immediate near term the debtor may have $471 to pay towards his Chapter 13, but is it reasonable to expect that this "disposable" money will be there month after month? The Chapter 13 trustee will expect it, and these funds will come out in a payroll deduction. But I fear that even more Chapter 13 cases will fail when debtors lose their jobs because they do not have transportation or checks for mortgages will bounce because the funds were used for plumbing repairs or other emergencies.

The outcome of this case sends mixed messages to debtors who are about to enter into the process of bankruptcy. It doesn't encourage people to avoid debt, but rather rack up even more debt before filing for bankruptcy. For example, a debtor would be able to benefit from taking out a car title loan before filing bankruptcy because owing money on a car allows the person to claim it as an ownership expense and not be penalized for it.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The Arizona Bankruptcy Lawyer Blog has posted an article that discusses how bankruptcy could negatively impact your retirement savings. Retirement accounts are usually left alone by creditors, whether you're filing bankruptcy or not.

Here are some tips to help you avoid damaging your retirement if you file for bankruptcy:

1. Don't take out a loan against the retirement account. This happens a lot because people will do most anything to avoid filing for bankruptcy. However, taking out a loan against your retirement savings should definitely not be one of those things. Before you do this, it's very important that you consult with a bankruptcy attorney.

2. Don't withdraw money from your retirement savings to live off of. Withdrawing money opens the account to being accessible by creditors when it otherwise wouldn't be. Again, be sure you talk to an attorney before withdrawing money from your retirement savings.

3. Never use the account as loan collateral. Using it as collateral will keep the account from being protected.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below: