St. Louis Bankruptcy Lawyers Blog

Published on: February 13, 2012

Why Do Some People Have To Do A Five Year Chapter 13 Plan?

By brinkmanandalter2 brinkmanandalter1

Because the Bankruptcy Code makes it clear that if you are an above-median household, and you are filing a Missouri or Illinois Chapter 13 bankruptcy, then you have to commit to a five (5) year plan. Other situations allow for varying lengths of time, but that is the general rule.

When you file for bankruptcy in the state of Missouri, it is necessary for you to disclose any and all sources of household income over the previous six (6) months before filing. This would include obvious things like money earned from your (and/or your spouse’s) job, like wages, bonuses, or other earnings. But it would also include monies from the government, such as unemployment benefits, Social Security Income, and food stamps; or money received from rental units, part-time jobs, pension/retirement funds, and anything else that you may have made money from over the entire six months prior. All of this data is collected by your attorney, and entered into what is called a “Means Test”. This test determines whether or not you are above or below median income for your particular household size.

For instance, according to the federal government, the average or median income for a household of four (4) is: $67,255.00. If your household income exceeds this level, then you are considered to an above-median income household (in other words, the total income earned in your household per year is above the national average for a family of four). When you file a St. Louis Chapter 13 bankruptcy, and you are above median, then you are required to enter into a five year repayment plan. If your household income level is below the national median, you can choose to do either a three (3), four (4), or five year plan.

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Published on: February 11, 2012

Can I Keep More Than One House Or Car If I File For Bankruptcy?

By brinkmanandalter2 brinkmanandalter1

Yes, you can. But there are certain details that you must first be sure of before you file so that you know for sure if those assets will be safe. This is why it is so very important to hire an experienced attorney who knows the ins and outs of bankruptcy law. Because unfortunately, there are many people each year who file cases in which they lose valuable assets when it was not necessary for it happen.

When you file a Missouri or Illinois bankruptcy, the court requires that you disclose all of your assets, whether this property is personal in nature (like books, clothes, or your checking accounts) or real (like your house, land you own, or a timeshare). Once these disclosures are made, it is then necessary to provide the court and Trustee with what you believe to be the fair market value of these assets. For personal property, it is sufficient to provide ‘garage sale’ value. But for real property, you will need to establish what the market value is of your home. This is not an exact science, but you should keep in mind that when you make a determination as to the value of your home, you are looking at the value of your home ‘as is’. In other words, you do not want to think about what your house would be worth if you got the roof fixed and leak in the basement repaired; you also want to take into consideration what other houses in your area are actually selling for; and you will want to look at what at the most recent assessment the county has made.

With an automobile, you will also want to take stock of the current condition of the vehicle(s). For instance, if it has ever been in an accident before (even if was subsequently repaired); or if there is existing damage to the interior or exterior of the car; and of course what value publications such as the Kelly Blue Book give to it (although the values represented in this book do not always paint an accurate picture of the car’s worth).

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Published on: February 9, 2012

Is It True That I Have To Have A Certain Amount Of Debt Before I Can File For Bankruptcy?

By brinkmanandalter2 brinkmanandalter1

No, that is not true at all. There is no debt total that you must reach in order to qualify for a Missouri or Illinois bankruptcy. All that is necessary is your decision, based on all the information that you have attained on the subject, to file the petition for relief.

I am frequently asked by clients whether or not they should in fact file for bankruptcy. And to be honest, there are occasions when I will look at their debt levels, income earned, and equity in their assets, and tell them that, no, they do not need to file for bankruptcy protection. A good lawyer can look at your information, and honestly tell you if it is in your best interest to file such a case.

But more often than not, it is the individuals who believe that they absolutely do not need to file that are in need of relief the most. I am not in the business of trying to convince someone that they should file for bankruptcy, but there are any number of times when I have had to tell someone that the best and only option at this point is pulling that trigger. Most of the time, the apprehension comes from the stereotype that is attached to someone who files. There is a feeling in society that if you file for bankruptcy, this means that you are a deadbeat, or that you cannot handle your finances, or that you are ill-equipped to manage your money. This kind of stereotype comes largely from the credit industry. They of course have a vested interest in you not filing for bankruptcy, so they put out a lot of bologna information about the effects of filing.

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Published on: February 8, 2012

If The Law Is So Clear About What A Collection Agency Can’t Do, Then Why Do They So Frequently Break The Rules?

By brinkmanandalter2 brinkmanandalter1

That is an excellent question. But the answer may surprise you.

To begin with, the area of law that regulates what a debt collector can and cannot do when they attempt to collect on a debt is the Fair Debt Collection Practices Act (FDCPA). This is a federal statute that makes it very clear what is a violation of someone’s consumer rights. In fact the language of this law is so clear on its face that it is difficult to see how anyone could ‘accidently’ break the rules found within it. But break the rules they do (with frequency).

So why is this the case? Well, most people have never even heard of the FDCPA (chances are, this is the first time you have ever read about it). And even if people know that there is probably some kind of protective regulation out there making some the tactics used by collectors unlawful, most individuals do not pursue any sort of recourse. They believe that it will be too time consuming, or costly, or that there won’t be a satisfactory outcome anyway.

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Published on: February 7, 2012

What If A Collection Agency Tells Me That They Are Acting On Behalf Of The Police When They Call Me?

By brinkmanandalter2 brinkmanandalter1

Then they have clearly broken the law. This is a somewhat common tactic used by some debt collectors in their (not so noble) attempts to get money out of you. It is a shame that such tactics are resorted to, but it happens all the time. The problem, of course, is that it is completely unlawful.

The body of law that governs the activities of the collection market is the Fair Debt Collection Practices Act (FDCPA). It is a federal statute that lays out precisely what a collector can and cannot do while collecting on a debt. The language of the law is very straightforward, but it is amazing how frequently it is broken. For instance, Section 806(6) of the act state that, “… the placement of telephone calls without meaningful disclosure of the caller’s identity” is a violation. Or Section 807(1), which states, “The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof” is a complete violation of your consumer rights.

This means that if a collection agency calls you and states (or implies) that they are acting under the authority of the local police, they are lying through their teeth (and more importantly, breaking federal law). So long as such a violation can be shown to have happened, the damages to you are monetary (usually about $1,000). The other great component of the law is that the collector has to pay for your attorney fees. This means that there are no upfront costs to you for having an attorney file a case for you.

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Published on: February 6, 2012

Can A Debt Collector Talk To Someone Other Than Me About My Debts?

By brinkmanandalter2 brinkmanandalter1

No, they may not speak direct to someone other than yourself (or your attorney) without your express permission. And if they do, they are in violation of the law.

The Fair Debt Collection Practices Act (FDCPA) is a federal statute that regulates what a collection agency can and cannot do in their attempts to collect on a debt. The law spells out precisely what is unlawful conduct on their part. The most surprising thing about the whole thing is the number of people out there who are not even aware of the fact that such consumer protection exists at all. Most people think that since they owe the debt, they must endure the non-sense that the collectors spew.

So let me give you an example: Section 805(b) states that, “… without the prior consent of the consumer given directly to the debt collector, or the express permission of the court of competent jurisdiction, or as reasonably necessary to effectuate a post-judgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.”

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Published on: February 3, 2012

Can A Collection Agency To Garnish My Wages For Not Paying My Debts?

By brinkmanandalter2 brinkmanandalter1

No they cannot. And if they do, they are in violation of federal law.

The body of law that regulates what a collection agency can and cannot do in their attempts to collect on a debt is the Fair Debt Collection Practices Act (FDCPA). This statute lays out with specificity what is lawful and unlawful conduct. For instance, it is not lawful for a debt collector to threaten you with a law suit, or make it seem as if you have committed some sort of crime, that they are going to report the debt to the credit bureau, or that they are going to garnish your wages. The only time a collector may properly make such a threat is if they have already gained the original creditor’s permission to do so (which is never), and they have the petition for breach of contract already prepared in hand to file against you. Otherwise, it is simply an idle threat that is most likely being used to intimidate you into making a payment (because who wants their wages garnished when they are just barely making it by as it is).

If in fact such a violation occurs, and sufficient facts can be shown, the collection agency will have to pay you damages (usually in the amount of $1,000). In addition, the statute provides that any and all attorney fees must also be paid by the debt collector. This means that you will not have to pay any upfront costs for filing suit against a collector for their unlawful activity.

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Published on: February 2, 2012

What Kind Of Debts Are Paid Back In A Chapter 13 Bankruptcy?

By brinkmanandalter2 brinkmanandalter1

Only certain kinds of debts are paid back in a St. Louis Chapter 13 bankruptcy. These would include mortgage arrearage (in other words, the amount of money you have fallen behind on your house payments), car loans, tax debt, back child support, and sometimes a portion of your unsecured debt (like credit cards, medical bills, and payday loans). But the exact amount you pay back per month depends on a several key factors.

A Missouri Chapter 13 bankruptcy is described as a repayment plan over the course of three (3) to five (5) years during which you pay a certain monthly amount to the Trustee. The Trustee then distributes these funds to the various creditors listed in your Chapter 13 plan. At the end of the plan, all the remaining unsecured creditors are discharged (i.e. knocked out forever). This in contrast to a St. Louis Chapter 7 bankruptcy, where all the unsecured creditors are discharged right away.

The main reason why someone would file a Chapter 13 would be because they have fallen behind on their mortgage, are risking foreclosure, but are not in a position to come current on the note right away. Filing a Chapter 13 will stop the foreclosure sale from going through, and allow you pay back the arrearage over a period of years (which is far better than coming up with the funds immediately). Another major example would be a case in which your car is repossessed. A 13 will allow you to get the car back, and pay off the balance of the loan with a much better interest rate than you are probably handling right now. In addition, it may also be possible to cram down the amount owed on the car to the actual fair market value of the vehicle. This can often end up shaving several thousand off of what you owe.

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Published on: January 31, 2012

If I Tell My Creditors That I Am Filing For Bankruptcy, Can They Still Contact Me?

By brinkmanandalter2 brinkmanandalter1

That depends on which type of creditor you are speaking with. Different rules apply for the original creditor and collection agencies. It may very well be that the one of them (or both) has violated your rights.

When you fall behind on your debts, the creditor will no doubt start calling you to demand payment and/or send you letters. So long as the conduct of the creditor does not rise to the level of criminal activity (like you are physically threatened, or your property is damaged as a result of their attempts to get money from you), then the original creditor can do just about whatever they want. That’s right. The original creditor can do things like: come to your home and knock on the door to demand money; call you as many times during the day as they wish; send you letters threatening law suits, late fees, charges, and reporting the debt to the credit bureau; pretty much anything that is not criminally related. If you were to inform the original creditor that your intent is to file a Missouri or Illinois bankruptcy, they may or may not stop calling you (even if you give them your attorney’s information). Although it is always a good idea to give the original creditor this information, because this may cause them to stop contacting you.

If the debt has been passed on to a collection agency, the rules change dramatically. The area of law covering this activity is the Fair Debt Collection Practices Act (FDCPA). This statute regulates what a debt collector can and cannot do in their attempts to collect on a debt. For instance, if a collector calls you, and you notify him/her of the fact that you are represented by an attorney for the purposes of a bankruptcy, and they continue to contact you thereafter, they have violated your consumer rights under the act. The damages that have to be paid to you are in the range of $1,000, and they can no longer demand money from you. In addition, the act states that if a violation can be shown to have occurred, the collection agency has to pay your attorney fees. This means that there are no upfront costs to you (which is a nice little bonus!!)

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Published on: January 30, 2012

Does Filing For Bankruptcy Stop A Wage Garnishment

By brinkmanandalter2 brinkmanandalter1

Yes, it does. And depending on how quickly you get your Missouri or Illinois bankruptcy filed, you can actually prevent the creditor from taking any action at all (so as to avoid any money being garnished from your pay checks).

The filing of a bankruptcy is accompanied by what is called an Automatic Stay. This is a fancy way of saying that everything stops. All creditor activity must immediately cease, including phone calls and letters. This Stay also extends to anything awarded to the creditor by way of a hearing. When a creditor sues you for breach of contract on a debt that you owe, the judgment from the court allows the creditor to do one of three things: 1) garnish your wages; 2) levy your bank account; 3) place a lien against your property. The creditor can execute one of these options, or it can do all three at once. The most likely, of course, is the wage garnishment. The creditor simply sends your employer the necessary documentation, and the payroll department begins to deduct.

But once a bankruptcy is filed (whether it is a St. Louis Chapter 7 bankruptcy, or a St. Louis Chapter 13 bankruptcy), the garnishment must end. Your bankruptcy attorney simply notifies the creditor’s attorney of this fact, and that attorney then sends a Release of Garnishment to your payroll department. In addition, the underlying debt is discharged, along with the rest of your unsecured creditors (whether they be in the form of credit cards, medical bills, payday loans, deficiencies from a repossession or foreclosure, etc.)

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