If your life is filled with creditors hassling you to pay up, and you can't seem to get ahead in your debts at all, take charge! You may qualify for protection under the U.S. Bankruptcy Code that can help you correct your financial issues and get back on the path to financial freedom.

Are you overwhelmed with debt because of an illness, divorce, accident, loss of work or overtime, or just plain poor financial planning?

• Do bill collectors call you at home or work?
• Are you afraid that your wages will be garnished?
• Are you being sued by creditors for bills that you are unable to pay?
• Are you in fear of losing your home, your car, or your furniture?
• Has your house been foreclosed or your car repossessed leaving you with a balance due on the property that you no longer own?

If you have answered "Yes" to any of the above questions, filing bankruptcy may be the direction you should take to regain control of your financial situation.

Each year more than 1,000,000 people file for bankruptcy according to the American Bankruptcy Institute. Some are financially irresponsible individuals or individuals attempting to abuse the system; however the majority are hardworking people who would pay all of their bills if they were able. The sudden loss of a job, unexpected medical bills, a divorce, or a natural disaster can quickly wipe-out a life's savings. For many, bankruptcy provides a financial second chance.

The first step in determining whether filing bankruptcy is an appropriate option for  your situation is to schedule a free consultation. During your consultation, we'll have a conversation in which you tell me, in all confidentiality, what your current situation is based on information about your debts, assets, income and monthly expenses. Then, together, we explore the best path. Whether it's a Chapter 7 or Chapter 13 Bankruptcy, debt consolidation, or fighting back against bill collector harassment, you'll receive patient, positive and comprehensive advice. The important thing for you to know is that there are options open to you and that no situation is hopeless.

What Is The Fair Debt Collection Practices Act?

Collecting debts can be a time consuming, complicated operation for many businesses, so to help them work with delinquent debtors in the collection process, creditors often contract with debt collectors or attorneys with knowledge of collection law and procedure. A person who gets a letter or a telephone call from a collection agency or attorney's office about a bill or debt may feel powerless. It may seem as though there is nothing that can be done to protect a person from those who are trying to collect money.

The federal Fair Debt Collection Practices Act (FDCPA), 15 USCA § 1692 et seq., gives some protection. Although the law will not make a debt or an alleged debt void, the FDCPA does give a person certain rights and can prevent abusive actions on the part of debt collectors.

Who is Covered by the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act applies to anyone whose regular business is the collection of debts for another. This includes primarily collection agencies, debt collectors and, in most situations, attorneys and their employees.

It is important to remember that the Act does not apply to a business or a person who is collecting debt on his or her own behalf.

FDCPA Protections

The Act says that a debt collector may no longer contact you if you inform him or her in writing that you do not want any more contact. Remember, however, that just because you no longer hear from the collector does not mean that the debt, if valid, has been extinguished. A collector may go ahead and start a lawsuit against you to collect the debt.

The Act also states that a debt collector may not:

• Contact you before 8:00 a.m. or after 9:00 p.m., your local time, without your prior consent.
• Contact you instead of your attorney, if he or she knows you are represented by an attorney.
• Contact you at your place of employment, if he or she knows that you are not allowed to receive such calls at work.
• Contact third parties-neighbors, friends or family members-about the debt you are claimed to owe. The collector may only contact third parties about your location.
• Use obscene or profane language.
• Use or threaten violence.
• Publish a list of people who do not pay their debts.
• Call or make a telephone ring continuously.
• Call on the telephone and not identify himself or herself.
• Threaten criminal prosecution.
• Make any false or misleading statement.

Hearing from bill collectors is not a pleasant thing. You can at least be certain that the collectors stay within legal bounds if and when they do contact you.

In addition to the FDCPA, your state consumer protection laws may provide additional protections for debtors and procedural requirements or restrictions for creditors.

Penalties

Most bill collectors know the law and are careful to obey all legal requirements. Some, however, go outside the law when trying to collect a debt. If a bill collector violates the FDCPA, your first defense is to tell him or her in writing to stop contacting you. You may want to report the matter to the Federal Trade Commission (FTC) and to the Attorney General's office in your state. Remember that your state law may provide additional legal remedies.

The FDCPA allows a debtor to sue a collector in federal or state court within one year of the violation date. Violators are liable for actual damages, which may include expenses, interest and even an amount for mental or emotional distress. The Act also provides for other damages within the court's discretion of up to $1000. In determining these additional damages, the court is to consider the egregiousness of the violation and whether it was intentional. A debtor who successfully sues a collector under the Act can also collect costs and attorneys fees.

Usually an FDCPA lawsuit can be successful without showing that the collector acted negligently or intentionally to violate the Act. However, the collector can successfully defend himself or herself if the violation was unintentional and the result of a bona fide error, so long as there were procedures in place to prevent such an error.

The Act also provides for class action lawsuits where appropriate.

Debtors are protected and creditors are regulated by the FDCPA and similar state laws during the debt collection process. If you are a debtor or creditor with legal questions, contact our firm to schedule an appointment with an attorney who is knowledgeable in the law of debt collection.

Alternatives to Filing Bankruptcy

Debtors who have faced obstacles to paying off their debts when due have no doubt received more than their fair share of demanding letters and phone calls, and the thought of filing bankruptcy and getting rid of their debts, and thus the constant demands, can be quite appealing. Before making a decision to pursue that route, which can have long-term effects on credit rating and the ability to make large purchases, debtors may wish to consider other, less drastic alternatives.

Informal Methods of Debt Resolution

If the debtor's financial problems are only temporary, he or she may want to ask creditors to accept lower payments or to schedule payments over a longer period of time. Creditors may be receptive to these ideas if the debtor has been a prompt payer in the past, or if the specter of bankruptcy is raised, since creditors know that once a bankruptcy proceeding is initiated they will probably collect only a portion of what is owed. In addition, creditors may wish to avoid the difficulties of a court proceeding to collect on the debt, which can be time-consuming and expensive.

Consumer credit counselors can also help creditors work out a repayment plan. Some so-called "credit counselors," however, prey on overwhelmed consumers, promising "a clean slate," often for a flat, up-front fee. They may promise to contact creditors and convince them to accept lower payments or to charge lower fees and interest rates. In many cases, unfortunately, the only ones who end up in better financial shape as a result of these "efforts" (or the lack thereof) are the counseling organizations themselves, while the consumers are left with even fewer resources as a result of high fees and more delinquent debts.

Beware of Scams

Although reputable credit-counseling agencies that actually provide valuable services to financially overwhelmed consumers do exist, vulnerable debtors often fall prey to less scrupulous services. Tips that can help consumers avoid the scams include:

• Beware of promises that sound too good to be true; claims of helping you "get out of debt easily" are a red flag
• Deal with a reputable agency by checking with state consumer agencies and the local Better Business Bureau to make sure there have been no or few complaints against the organization, and that the complaints that have been raised were favorably resolved
• Verify that the organization provides counseling and education, as well as debt consolidation and payment services, to help consumers achieve financial stability and remain debt-free
• Carefully read through and have your lawyer review any written agreement that a credit counseling organization offers to make sure it describes in detail the services to be provided; the payment terms for these services, including their total cost; how long it will take to achieve the desired results; any guarantees offered; and the organization's business name and address
• Avoid paying up-front fees - reputable agencies do not charge big up-front fees, but may take a small monthly fee for a debt repayment service; the initial consultation should always be free
• Beware of any high fees or required contributions, like high monthly service charges, that may add to the overall debt load and defeat efforts to pay off bills

Confirm payments with creditors. Some debt repayment services require the consumer to periodically send it a lump-sum check that it divides among the creditors. Debtors who enter into these types of arrangements should verify with their creditors that the payments are actually being made.

If a debtor's financial troubles are long term or if his or her creditors will not informally agree to an alternative payment plan, bankruptcy may be the best way for the debtor to get out from under an insurmountable debt load. Although it is not without its adverse consequences, bankruptcy can be the right option to enable debtors to make a fresh start. Talking through these options with an experienced bankruptcy attorney at our firm can help make sense out of the myriad complex and confusing choices that must be made at an already stressful time.

Considering Bankruptcy? Call

Paul Benson 801 627-1323

 Chapter 7

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.

Chapter 13

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.