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17

Oct 2010

Before bankruptcy: Why I like experian.com/reportaccess

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Before bankruptcy, I like to meet with you and go over your credit report.    The credit report I like best is at experian.com/reportaccess.

One reason I like that report is big print.  (I’m 62 and I’ve worn glasses since I was 8.)  But the other reason is that Experian report shows the balance history of your credit cards.

We don’t get that balance history on credit reports from freecreditreport.com.  Even though freecreditreport.com is owned by Experian, the report you get there doesn’t have that detail.  And the print is a lot smaller.

(I hate them for another reason, too.  I don’t think something is “free” if you have to sign up for an annual subscription to get it.)

Knowing your balance history is important in the timing of your bankruptcy.

The bankruptcy code, at 11 USC 523(a), provides that the bank can object to discharging their debt if you made a “false representation.”

The “false representation” they like to bring up is the small print when you sign a charge slip.  The small print that says something like  “I will pay according to my credit card agreement.”

If you haven’t made six payments since your last big charge, there’s a good chance the bank will object to your bankruptcy.  They say your claimed you would pay when you know you couldn’t.  That’s the “false representation.”

If they file objections, we can fight back and win.  Especially if there was a change in your situation–you lost your job, you got sick, your husband split.  If you have something like that, the judge will probably side with you.

But unless there’s something specific you can point to, it’s a good idea to make six payments after your last big charge, before filing bankruptcy.   A credit report with your balance history helps me see when the last big charge was.   That helps us plan a bankruptcy that gets approved without objections.

PS.  In the bankruptcy court here, I see more objections filed by Chase Bank credit cards, than any of the others.

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30

Sep 2010

Leslie beats a warrant in debt

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How Leslie Beat a Warrant In Debt

Leslie, not her real name, came to see me two months ago about filing for bankruptcy.

It was clear, after we looked at her forms and talked it over, bankruptcy would work for her.  It would take a couple months, though, to gather up everything we needed for her bankruptcy to go right through.

But, she had a warrant in debt scheduled for the following week.   If she just ignored it, she was likely to get garnished.   (We didn’t want that.)  So, I told her to go to court, and follow the instructions at my warrant in debt blog.

Leslie went to the courthouse (in the picture) on the “return date” and asked the judge for a trial.  In Virginia, the trial is usually set six or eight weeks later–depending on the county and the judge.

Warrant in debt in Prince William Courthouse

Leslie’s warrant in debt hearing was in the Prince William County Courthouse.

 

She knew to ask for a bill of particulars, and the creditor asked for her grounds of defense.  The bill of particulars under Virginia law is how the creditor plans show the amount of the debt and why there is a debt.

Leslie was in luck–because her creditor was Asset Acceptance, a debt buyer.  Debt buyers often cannot prove what the debt is about or what the amount of the debt really is.   Asset Acceptance proof must have been really weak in Leslie’s case, because they filed nothing at all as their bill of particulars.

So, for her grounds of defense, Leslie wrote to the court and to Asset Acceptance, that they never filed their bill of particulars.  Also, for good measure, she also listed statute of limitations in her grounds of defense.

(The statute of limitations sets a deadline to sue you after you’ve stopped paying debt.  Wait too long, and the creditor is out of luck.)

We expected that would mean Leslie would win at the trial, but she won sooner.

Asset Acceptance wrote to the judge and said they were dropping the warrant in debt case.  Under Virginia law, that’s called a non suit.

Is Leslie home free?  Not quite.  In Virginia law–not like most states–after a non suit, the creditor could come back and try again.  But, we’ll have the bankruptcy filed before that.   (This debt with Asset Acceptance was only a small part of her problem.)

Because of her good work, she now has plenty of time to get ready to file for bankruptcy, without having to worry about getting garnished.

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29

Aug 2010

Before Bankruptcy: Do You Need to Change Banks?

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As a Virginia Bankruptcy lawyer, I often tell my clients to “change banks.” Why?

If you have been hit with and ignored a warrant in debt,  and the return date is past, you may be about to be garnished.  What checking account did you use when you last paid that debt?  Since they know where it is, that’s the one you can expect will be first garnished.  Unless we can file your bankruptcy right away, it’s time to change.

(Changing your account number is not enough.   A garnishment will hit all the accounts you have at that bank.)

You also need to change if have a loan where you bank .   If you are falling behind on your second mortgage–for example–with Bank of America and you save or check with Bank of America, they can dip into your account to pay themselves.   Credit Unions can also pay themselves for credit cards.  Banks can’t.

What do I recommend? I like to say that the universe is full of banks.  You want to go to a bank you never used before.  And one you don’t owe money to.

Some people’s before bankruptcy credit is so bad they cannot open an account at most banks.   I recommend TD Bank, which has a number of locations in Northern Virginia.   I send TD four or five people a months, with no complaints.  Many people  have told me TD is their all-time favorite.

(TD is also right across the street from the bankruptcy court.  They are always very nice when I need change for parking.)

Woodforest Bank, found in some Northern Virginia Walmarts, will also open an account for most people with really bad credit.

Even if they haven’t done it before, your bank, if you owe them money, can freeze your account and help themselves to what you had there the day the bankruptcy was filed.

After bankruptcy, your account is safe.  Being able to keep your money safe from offsets and garnishments is one important reason people file bankruptcy in Virginia.

Here are the steps.  Stop the direct deposit.  Spend down the money you have in your existing account:  pay bills, buy groceries, whatever.  Open a new bank account.  Start the direct deposit going to the new bank.

There’s a very remote danger your bankruptcy could be challenged if you transfer money from the old bank to the new one.  So spend that money on real needs as quick as you can.  Switch the direct deposit to the new bank.

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NORTHERN VIRGINIA BANKRUPTCY LAW OFFICES