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05

Aug 2018

How a cheap car payment can help you on the bankruptcy means test.

Posted by / in Before Bankruptcy, Chapter 13 /

How a cheap car payment can help you on the bankruptcy means test.

The 2005 Bankruptcy law, known BAPCPA or sometimes BARF, was designed to make bankruptcy much more painful for families making over the average income in each state.  For Virginia, in the summer of 2018, that’s $103,549 for a family of 4. Or $111,949 for a family of five. 

Bankruptcy means test applies to families of 5 over $111,949

Bankruptcy means test applies to families of 5 over $111,949

The bankruptcy means test determines whether families making over that average income can be approved for Chapter 7 anyway.  And if not eligible, how much they have to pay for five years in Chapter 13.

The bankruptcy means test formula is arbitrary.  It was designed to be arbitrary. Congress, and the credit card companies, thought that bankruptcy judges were too easy.

Most families around here, making too much to get approved for Chapter 7, end up failing at Chapter 13. Without careful Chapter 13 planning, the bankruptcy means test will put you into a Chapter 13 plan that you are not able to afford for five years.

Here’s one example where careful Chapter 13 planning can make all the difference. 

John and Tanya is live Woodbridge in a house they own with two children.  John is stationed at Joint Base Andrews; Tanya is home with the kids, one child needing special attention.

Trying to handle the debts, they have gotten by as a one car family, and John’s car now has 110,000 file on it.  

If John and Tanya go into Chapter 13 now, they get a budget allowance of $497 for the car payment (regardless of what the payment really is) and $221 for gasoline, car repair and car insurance.  It will be impossible for John to hold his car operating expenses, gas, repairs, insurance, below $221 for five years on a car that already has 110,000 miles.

John and Tonya  talk to me before their credit is totally shot. So I can point out to them that they are much more likley to survive Chapter 13 for five years, if they go out and get a low payment second car now.

Tanya buys a brand new Nissan Versa, sale price $13,500, at 4.5% for five years. Her payment is $227.00 monthly.  That $227 payment counts as $497 on the means test.  That frees up for the family budget $270 a month. (That’s $497 means test ownership allowance, minus the $227 actual payment.) That $270.00 can go to pay things like sports for the kids, which the bankruptcy means test budget does not allow.

And they get a second $221 monthly for operating expenses.  John drives the new Nissan Versa to work, and Tanya takes the older car for errands around town. They can hold their gasoline, repair and insurance below the new total operating allowance of $442.

(I should note here that it would be illegal for me to tell John and Tonya to go out and finance a car.  But it was legal for me to tell them that it’s legal for them to do it.)

People say that bankruptcy should be a last resort. But you don’t want it to be a last minute, last resort.  Careful Chapter 13 planning is very important for getting the best result.

 

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22

Oct 2016

Debt Collectors Keep Calling Me At Work

Posted by / in Before Bankruptcy, Weekly Posts /

Why do debt collectors keep calling me at work after I tell them to stop?

The Fair Debt Collection Practices Act protects you from debt collectors calling your workplace.  But, if you tell them you want them to stop, the debt collectors keep calling.

How’s that?

To get them to stop calling, you need to know the right words to say.

“Don’t call me here” doesn’t work. Nether does “please don’t call me at work.” On this, debt collectors do not have to pay attention to what you want. You need to tell them your employer doesn’t allow you to take debt collector calls at work.

Here’s the right way to say it.

 

debt collectors keep calling at work

“I told you not to call me here.” Say that, and the debt collectors keep calling.

“The boss doesn’t let me take your calls at work.”  Or, “I’m not allowed to get personal business calls at work.” 

The legal authority for this is found in the Fair Debt Collection Practices Act (FDCP) at 15 usc 1692c(a)(3).  It says “a debt collector may not communicate with a consumer in connection with the collection of any debt—at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.” 

You have to say it’s the boss—not you—who doesn’t want debt collectors calling.

What Else Works to Stop the Debt Collectors Calling?

There are three other magic word phrases that work. Two of them have to be in writing.

 “Don’t contact me any more.” On the phone, “don’t contact me  anymore” does nothing. But if you send it in writing they have to stop. That one is pretty straight forward.

“I refuse to pay.” This is another phrase where it’s easy to get the wording wrong. “I don’t know what debt you’re talking about” doesn’t help; the debt collectors keep calling. “That’s not my debt” doesn’t help. “I’m out of work and can’t pay you anything” doesn’t help either. 

To all those reasons why you are not paying, you need to add “I refuse to pay.”  Like this: “I don’t know what debt you are talking about and I refuse to pay.” The refuse to pay response, like the don’t contact me response, has to be in writing.

(One of the top FDCPA lawyers in the country, Dick Rubin, told me that sometimes telling them “I refuse to pay” can really hack off them, so instead the debt collectors keep calling. But if the debt collectors keep calling, after you put in writing that you refuse to pay, you can sue their pants off.) 

“Call my lawyer”

“Call my lawyer”—those are more magic words. “Call my lawyer” can be on the phone; it doesn’t have to be in writing. My clients often tell me that saying “call my lawyer” to pushy debt collectors can be a lot of fun. (You do have to tell them who your lawyer is. But the lawyer’s name and contact info is all you have to give them.)

This only works on debt collectors

The law assume that original creditors, like the credit card or car finance company or hospital, will be relatively polite in collecting their own debts. (They don’t want a bad reputation in the community.) But debt collector want to be known for being mean; so the law protects you against those debt collectors.  Here’s what Congress said: “Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” 15 USC 1692. 

When debt collectors stop calling, they can still send you court papers

Stopping the phone calls is only a temporary solution. The debts are still there. If you only have one debt that’s gone bad, maybe you can work something out. If you have lots of debt problems, maybe it’s time to talk to a bankruptcy lawyer.

Some people think bankruptcy is some kind of punishment because you can’t pay your bills. But actually, the purpose of bankruptcy is to help you. If you have honest debts that you just can’t pay, call me today. You’ll like our friendly service with a smile.

 

Nolo has this wrong. They say, “simply tell the debt collector to stop calling you at work.” That doesn’t work.

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08

Jul 2016

Debt Collector Chad Steur Law Refuses to Pay Up

Posted by / in Before Bankruptcy, Weekly Posts /

Debt Collector Chad Steur Law Refuses to Pay Up

Chad Steur Law, LLC, a debt collector, owes my client, Helen, $2280.58. So far, Steur refuses to pay up. 

Chad Steur, debt collector

Chad Steur is admitted to the practice of law in Utah and California. He hires debt collectors to collect debts in Virginia. So far, he hasn’t paid Helen’s judgment against him, here.

Before she came to see me, Helen was being harassed by a debt collector, calling for Chad Steur Law.  The collector told her he was calling from a law firm and they’d sue her if she didn’t pay up. That was a false threat, violating the FDCPA at 15 USC §1692e. (You might also call it a lie.) Chad Stuer is licensed to practice law only in Utah and California. He isn’t a lawyer in Virginia.

Frightened, Helen agree to let Steur take payments out of her bank account. Later, when she calmed down, she told them to stop. They took a payment anyway after she told them they were not allowed to. That’s another violation of 15 USC 1692e–taking an action that’s not legally allowed. (Taking money not authorized by law out of people’s bank accounts, happens fairly often with debt collectors. A very angry prosecutor might look at 18 USC §1334.)

Since he seems to be a respected lawyer, I contacted Steur last August, to see if he knew debt collectors were using his name. I didn’t get a reply. (I now see on his website that he hires debt collectors, in house and remote, to collect money using his name.)

We had a trial in March in the Courthouse in Manassas. Steur didn’t show up himself or send a Virginia lawyer–we won. The judge awarded Helen $2280.58. We’ve called and written Steur asking him to pay up. No answer so far.

(I’m primarily a bankruptcy lawyer.  But I hate it when credit bureaus and debt collectors do illegal stuff to my clients. So, for a bankruptcy lawyer, I’m quick to sue.)

 

 

 

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