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26

Mar 2011

Before bankruptcy: Can I go to jail if I ignore this summons?

Posted by / in Before Bankruptcy, warrant in debt / 35 comments

Around 100,000 people a year get arrested because they owe unpaid bills and ignore a court paper.  Does this happen in Virginia.  Yes!

I’m a Virginia bankruptcy lawyer.  About one-third of my clients don’t come to see me until the sheriff brings court papers to their door.

Then it’s panic time!  Here are questions people ask.

“What do these papers mean?”

“Is it too late to file bankruptcy? ”

And the big question, “Can I go to jail?”

First the good news.  In case you didn’t learn this in school, debtor’s prison was abolished in America in the 1830’s. You can’t go to jail for not paying your debts.

Arest for ignoring summons to answer interrogatories

You can't get arrested for not paying your bills. You can get arrested for ignoring court papers.

Here’s the bad news.  You can get arrested for not appearing in court to answer questions from your creditor.

The Wall Street Journal found that over 5,000 people were arrested for that last year in just nine big counties.   (If smaller counties did the same thing, and I hope they don’t, that would calculate to 100,000 arrests each year.)  Wow!

Can that happen to you?  Yes.  Here are the steps that could get your arrested for a debt lawsuit in Virginia.

The first paper you get is a warrant in debt.  Warrant makes it sound worse than it is.  (And just ignoring court papers is never a good idea.)  The warrant in debt cannot get you arrested.  It’s the paper when a bank, credit card company, can loan or debt collector says, “hey, you owe us this money.”  People often  call the lawyer for the creditor when they get a warrant in debt and ask, “do I have to go to court.”  The answer you get is, No.  But when you don’t go to court you admit you owe the money.

Once you miss that first court date, the machinery of the law goes to work to collect money from you.  If the creditor knows where you bank, or where you work, they can file papers for a garnishment.   You get notice of the garnishment about the same time you find out your bank account is frozen or your pay is short.  There’s a court date on the garnishment and people think that’s there chance to dispute it.  It’s not.  That’s the day the bank or your payroll is supposed to turn the money in.  When you didn’t show up at the warrant in debt court date, you automatically gave the creditor the right to garnish you.

If the creditor doesn’t know where you bank or work, they can file a “summons to answer interrogatories.”  That paper tells you, come to court and answer our questions so we can garnish you.

Some people think a “summons” sounds less dangerous than a “warrant.”  So if they ignored the warrant in debt, they should be able to ignore the “summon to answer.”  Bad idea.

The summons to answer comes with an “or else.”  If you don’t appear, the judge can order you arrested.  Usually you get one more chance.  Your last chance is called a Rule to Show Cause.  The show cause tells you to come to court to explain why you shouldn’t be arrested.  (If you explain, “Sorry, I didn’t know, I’m here now”–that usually works. )

If you miss the “show cause,” the judge will issue a capias.  Capias is an order to the sheriff to pick you up and bring you in.

That’s where you can end up if you ignore court papers.  So if you get a warrant in debt for a bill you owe and can’t pay, why start down that road at all?

Bankruptcy is a new start in life and a clear field for future effort. That’s usually a lot better than a free ride to the court house courtesy of the sheriff.

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07

Mar 2011

Before bankruptcy: Stopping automatic withdrawals.

Posted by / in Before Bankruptcy / 2 comments

<h2>Before bankruptcy: Stopping automatic withdrawals</h2>

 

While trying to avoid bankruptcy, people sometimes authorize debt collectors to take monthly withdrawals from their bank accounts.   (Or authorize withdrawals by these “debt settlement” scams.  Or credit card companies or bank loans.)

When people face the fact that bankruptcy is the better way to go, they struggle with turning off those automatic withdrawals.

A bank with good customer service should be happy to help, if you explain the problem to them.   So I’m constantly surprised at how often my bankruptcy clients report they won’t won’t help–and act like it’s not their problem.

The law–the Electronic Transfer of Funds Act–places the responsibility squarely on the bank.

Here are the steps the law says you have to take:

First, tell the debt collector (or debt negotiation scam or creditor) that they are no longer authorized to take money out of your account.  (Keep notes.)

Second, tell your bank.  You can do it orally or in writing.  I like taking a letter into the branch.  Show them where on your statement the money came out last month–and say that’s no longer authorized.   You need to talk to the bank at least three days before the next payment is scheduled to come out.

If the money comes out anyway, tell the bank to put it back.  Orally or in writing; obviously writing is smarter.  They have ten days (ten working days–two weeks).

If the money doesn’t come back, you can sue.  You get the money back, plus money to pay your lawyer, plus a penalty of up to $1000 thrown in.  Not bad.

The problem comes up if you agreed to such big payments, you can’t make the car payment if it takes the bank two weeks to get the money back.

In that case, you need to close the account.

Just last week I had a couple see me about bankruptcy.  They had an automatic withdrawal set up an a loan (not a credit card) owed to a Capital One Bank.   They called Capital One and said those withdrawals are no longer authorized.  “Can’t stop this month,” they were told.  “We need 15 days’ notice.”

(Fifteen days notice!  The law says a transfer is “unauthorized” if they don’t have your actual permission.  And taking money from your bank account, unauthorized–well, folks used to call that stealing.)

bank check

Back when I went to law school, your bank wouldn’t let someone take money out of your account, unless they had a signed check.

They then called their own bank–the law says you need to give three days notice to your bank.  The bank said, sorry.  We can put a stop payment, but when Cap One tries a second time, it will go through.

What now?  I told them, go back and close your account.  When they went down there–miracle of miracles.  Now they are told, don’t need to close your account.  We can stop that money from coming out, no problem.  And they did.

What’s the lesson?  The whole idea of banking is this.  Your bank pays people you want paid–and does NOT let other people take your money.  (Not without a court order, anyway.)   The law doesn’t allow your bank to give your money away.  And you shouldn’t allow it either.

This is one area where the law is clearly on your side.

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06

Feb 2011

Before bankruptcy: "Can debt collectors call my neighbors?"

Posted by / in Before Bankruptcy / 7 comments

I’m a Virginia Bankruptcy Lawyer.   I talk to a lot of people in financial trouble.  I talk to a lot who are harassed by debt collectors.

Many people–before they decide to file bankruptcy–don’t know what to tell debt collectors.  Often, they just stop answering the phone.

That can lead to debt collectors calling your neighbors.  That’s probably illegal.

Before bankruptcy, can debt collectors call my neighbors?

Before bankruptcy, can debt collectors call my neighbors?

The Fair Debt Collection Practices Act (FDCPA) says debt collectors can talk to people other than you.  But only “for the purpose of acquiring location information.” They cannot talk to other people for other reasons–like asking you to return their call.

That means it’s OK for them to call your neighbors and ask, “Does Virginia Consumer lives next door?”  But it’s illegal for them to say, “Can you ask Virginia to call me?”  Which is what they  often do.

I saw this news release a few months ago, that makes me wonder if even calling to ask “Does Virginia live next door?” isn’t nearly always illegal.

This news release talks about a service that offers “real-time . . .  enhanced … skip trace service.” It talks about how they check more than four billion records–to find out where you are living right now.

Probably you are living where you’ve lived last month and the month before–and not answering your phone does NOT mean you moved.   So they don’t need to acquire location information.  They already have it.

For our bankruptcy clients,  our law firm sues debt collectors for calling neighbors–but only after you have started answering the phone, again.  I’m wondering if we should start suing every time.  At least if you’ve been living at the same place for six months or more.

Since I’m a bankruptcy lawyer, I want to say one more thing:   If you have debt collectors calling, on a debt you do owe, you should think seriously about filing bankruptcy.

If you need a bankruptcy lawyer in your area, you can find one at the National Association of Consumer Bankruptcy Attorneys.  (NACBA).

If you want to find a lawyer who sues debt collectors, look at the National Association of Consumer Advocates.  (NACA).

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