FDCPA and Consumer’s Questions

[Note: Some of the contents here are taken from the Federal Trade Commission’s website as contents of general nature and for wider circulation. The writer does not claim this article to be his own creation exclusively.]

FDCPA is enforced by the Federal Trade Commission (FTC). FDCPA prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Who is a debt collector?

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Following is some of the highlight of consumer areas in debt collection and their rights under the FDCPA.

What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.

Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.

Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

What does the debt collector have to tell me about the debt?

Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

Can a debt collector keep contacting me if I don’t think I owe any money?

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

What practices are off limits for debt collectors?

  1.  Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
  • use threats of violence or harm;
  • publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
  • use obscene or profane language; or
  • repeatedly use the phone to annoy someone.

False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

  • falsely claim that they are attorneys or government representatives;
  • falsely claim that you have committed a crime;
  • falsely represent that they operate or work for a credit reporting company;
  • misrepresent the amount you owe;
  • indicate that papers they send you are legal forms if they aren’t; or
  • indicate that papers they send to you aren’t legal forms if they are.

Debt collectors also are prohibited from saying that:

  • you will be arrested if you don’t pay your debt;
  • they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
  • legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Debt collectors may not:

  • give false credit information about you to anyone, including a credit reporting company;
  • send you anything that looks like an official document from a court or government agency if it isn’t; or
  • use a false company name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

  • try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
  • deposit a post-dated check early;
  • take or threaten to take your property unless it can be done legally; or
  • contact you by postcard.

Can I control which debts my payments apply to?

Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don’t think you owe.

Can a debt collector garnish my bank account or my wages?

If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.

Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

Can federal benefits be garnished?

Many federal benefits are exempt from garnishment, including:

  • Social Security Benefits
  • Supplemental Security Income (SSI) Benefits
  • Veterans’ Benefits
  • Civil Service and Federal Retirement and Disability Benefits
  • Military Annuities and Survivors’ Benefits
  • Federal Emergency Management Agency Federal Disaster Assistance

Federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.

Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.

What should I do if a debt collector sues me?

If a debt collector files a lawsuit against you to collect a debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.

Where do I report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General’s office, the Federal Trade Commission, and the Consumer Financial Protection Bureau. Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

Does filing of chapter 7 stays collection activities?

Inherent in the filing of chapter 7 is an automatic stay which comes into life right after the filing of chapter 7 petition. Creditors are notified officially of the automatic stay in the notice of meeting of the creditors. However, this notice is not mailed sometime many days after and meanwhile the collection activities continues. The other problem is that when it is mailed, it only goes to the creditors listed in the schedules. Sometimes the creditors keep on changing names, addresses, and even entities when they sell their debtors to other collection agencies. Also, landlord and other entities whom no debt is owed, are not informed. Sometime the unsophisticated creditors does not understand the implication of the automatic stay.

Well, the only solution is for the debtor’s attorney to send them direct mail, or additional notices of the stay. This notice should be sent by certified mail

Action taken in violation of the stay are void.
It has been a long time view that actions taken in violations of the stay are void. This includes foreclosure, sales, collection, lawsuits and judgments. This rule applies whether or not the violator acted with the knowledge of the stay.
Courts have the power to undo violations of the stay by injunctions. The Bankruptcy Code in section 362(k) contains a specific cause of action against a creditor who causes injury to an individual by a wilful violation of the section 362 stay. A wilful violation is one committed knowingly. Even if a violation is done innocently, a refusal to rectify or failure to act affirmatively, is a violation. In such cases, section 362(k) provides for actual damages, costs and attorneys fees as well as sometime punitive damages.

Contempt Remedies:
In addition to remedies, under Section 362(k), the debtor also has remedies for violation of the automatic stay as contempt of a court order. Contempt sanctions can be imposed regardless of whether the violation is in willful disregard of the stay. So long as the enjoined party knows of the stay, it is responsible for the consequences.

Can Objections Be Raised Against Discharge?

As we had discussed it few times in this forum that the purpose of filing Chapter 7 is to get a discharge from the accrued debts, and that is one foremost objective. This discharge gives debtors fresh start that the bankruptcy is meant to provide. However, discharges are not automatic and can be contested by Trustee or its attorneys. Even, if discharges are granted, it can be revoked. We have previously mentioned that the procedure to get discharges is not complex rather it is simple. This discharge is generally granted within 60 days in the normal course of business after the first meeting of creditors i.e. 341 meeting in Chapter 7. In Chapter 13, the discharge is granted after the debtor completes payments under a confirmed plan or upon the court granting a motion by the debtor for a hardship discharge. We at the Law Office of Malik Ahmad, are willing to give free consultation to genuine clients (not for academic discussion only) www.fastbankruptcynevada.com

Objections to Discharge in Chapter 7 Cases.
The objection can arise from a complaint filed by the United States Trustee if there are matters concerning the passing of Means Test, or a wrong calculation was used. The grounds for denial of discharge listed in section 727 only apply in Chapter 7 cases. 11 U.S.C. Sections 103(b). This motion must be filed within 30 days. In addition, the court may deny discharge on its accord. If a discharge is denied in chapter 7, all the non-exempt property to the creditors is lost and property taken as exempt can be used to set off these claims.

What are the Grounds for Objection to Discharge?
1. Debtor is not an individual. Only individuals can be discharged, corporation cannot be discharged.

2.Intentional concealment, Transfer or Destruction of Property 11U.S.C. Section 727(a)(2)
This applies when debtor has intentionally concealed assets in order to prevent creditors from obtaining access to them in bankruptcy. The debtor must have committed the act with actual intent to hinder, delay, or defraud a creditor or officer of the estate.

3. The debtor had unjustifiably failed to keep books or records as to finances. (11 U.S.C. Section 727(a)(3)

4. The debtor had shown dishonesty in conjunction with the bankruptcy case. (11 U.S.C. Section 727(a)(4)

5. The debtor had failed to explain loss or deficiency of Assets (11 U.S.C. Section 727(a)(5).

6. The debtor has refused to obey court orders or to testify. (11 U.S.C. Section 727(a)(6)

7. The debtor had committed some prohibited acts in connection with another bankruptcy case concerning an insider ((11 U.S.C. Section 727(a)(7)

8. The Code also bars a chapter 7 discharge in many cases when a debtor has received a discharge under chapter 13 or its predecessor within the previous six years.

9. The Court may deny a discharge based upon a court-approved written waiver of discharge executed after the order for relief.

10. The debtor had failed to complete course in personal financial management.

Divorce and Bankruptcy

We always advise our clients to first file bankruptcy and then if need arise, to file divorce. A divorce before bankruptcy complicates things, and a bankruptcy prior to filing divorce is a prudent matter as this divides the property more amicably than in a typical divorce courts where emotions run very high.

As we know, divorce is the end of marriage, but it is not the end of many things including liabilities and obligations, which sometimes outlast the marriage itself.

Nevada is considered a community property, which means both husband and wife are responsible for each other’s debt after marriage, and sometime prior to marriage if they were acquired, payments made, or improvements done on the joint or even separate property. A separate property is the property, which is acquired prior to marriage by each spouse and kept that way without any transformation. A joint property is property, which is jointly acquired during marriage or even if acquired in individual’s spouse name during marriage. Bankruptcy can have devastating effect on the non-filing spouse. Sometime, it is prudent to keep one spouse outside bankruptcy but such decision should be made with the consent and advice of an attorney who know such tricky and complicated matters. In addition, one should know that only one spouse filing of bankruptcy can leave the non-discharged debt to the other spouse. Sometime, it can be used as a vendetta against the other spouse. As such, an advice from a helpful attorney is important and can be very helpful in such divisive issues.

Exemptions: Most Important Consideration When Filing Bankruptcy

Section 522 governs debtors’ rights in bankruptcy as this relates to exemptions of property. This section 522, of course, makes bankruptcy more attractive than anything else does. In addition, this gives debtors protection for a fresh start. As usual, the law office of Malik Ahmad at http://www.fastbankruptcynevada.com provides a free consultation to prospective bankruptcy clients. One should have a thorough evaluation of the availability of exemptions before deciding to file bankruptcy. You do not want with too little assets to start your life after bankruptcy. As you may know, the trustee is eager to take away what is not exempted from your estate. Significant assets can be lost in bankruptcy through chapter 7. The exemption provision of the Bankruptcy Code is also related to other parts of Bankruptcy Code. For example, they give the debtor many of the trustee’s power to avoid prepetition transfers of property.

The turnover provisions of Section 542 specifically require that the property, which is in the possession of a third party, and the debtor, which can make it, exempt, must be turned over to the trustee. In addition, the right to redemption applies only to abandoned or exempt property.

What is an Exempt Property?
The Bankruptcy Code has no special definition of exempt property. The exempt property is such property, which the debtors are entitled to keep and which the trustee cannot liquidate and the debtor is permitted to keep it under Chapter 7. Other assets, which are not exempt, can be taken over by the trustee for the benefit of the creditors. As such, we suggest to only seeking legal help from qualified attorneys. Paralegal s are basically typist, cannot provide such exemption list and if provide can be defective and practicing law without a license.

What the Code does not provide?
1. The Code does not specify when exempt property loses its previous character as property of the estate.
2. The Code does not provide who shall possess exempt property during the period before the time for objections has run.
3. The courts had generally assumed that the debtor has the right to remain in possession of the exempt property throughout the case.

What is the Purpose of Exemption?
The sole purpose of exemption is to give a fresh start to the borrowers so that he/she can start his/her life with at least some foundation, and yet to provide him with home , car, furniture, jewelry, IRA accounts, and some other tools of the trade. The basic purpose is that borrowers can have life started again with dignity, self-respect to which we as decent law-abiding society deserves.

What are the typical Trustee’s questions in 341 Meeting?

As we stated previously, a 341 meeting is a semi-formal meeting which is recorded also, but no need to be very tense as this is usually done in a very friendly manner. This also may not last longer than few minutes. It is an open and public meeting and everyone can watch you. Also, just dress the usual attire, no need to wear suits or fancy dress. We had discussed what to wear separately in this blog. The following are the general questions all of which may or may not be asked in a given day and by one trustee.

1. Are there any creditors or parties in interest here today?

2. Debtor, I have handed you a debtor’s oath form and now asked you to verify your signature on that form. Is that your signature?

3. In signing the form you are indicating that the statements you are about to give will be true and correct under penalty of perjury. Do you understand that?

4. I note for the record that the attorney representing the debtor in this proceeding is [name].

5. I asked previously are there any creditors of the debtor or other parties in interest in the courtroom today for this case and I hear no response.

6. Please state your full name and current address.

7. Please show me your picture ID.

8. Please show me some proof of your Social Security Number.

9. Do you rent or own your home?

10. What is your spouse’s name?

11. When were you married?

12. What was her (your) maiden name?

13. Did you ever have another name?

14. Have you filed a petition seeking relief under the Bankruptcy Code?

15. I show you your petition and ask if that is your petition.

16. Did your spouse file a joint petition with you?

17. If no joint petition was filed] Does your spouse have notice of these proceedings?

18. Is your spouse present today?

19. Is he or she responsible for any of the debts listed?

20. I have handed you a copy of your petition and ask whether you recognize this as the petition you executed and filed with this court.

21. Is that your signature at the bottom?

22. When signing this petition, did you review its contents and assure that all the information contained in the petition was true and correct?

23. Have you ever filed a bankruptcy proceeding before?

24. If you did, did you receive a discharge? If so, when?

25. Have you made any voluntary or involuntary transfers of
real or personal property within the last year?

26. Are any of these credit card claims?

27. Have you returned the credit cards or destroyed them?

28. Do you understand the potential consequences of seeking a discharge in bankruptcy and its possible effects on your credit rating?

29. Are you aware that you may be able to file under a different chapter of the bankruptcy code?

30. Do you understand the effect of receiving a discharge?

31. Do you understand what it means to reaffirm a debt and that you are under no obligation to reaffirm any debts?

32. Does schedule E contain a complete list of all your creditors having priority? If none, state none.

33. Does schedule D contain a complete list of all your creditors having security? If none, state none.

34. Does schedule F contain a complete list of all your unsecured creditors? If none, state none.

35. Does schedule A contain a complete list of all your real property? If none, state none.

36. Does schedule B contain a complete list of your personal property? If none, state none.

37. Have you voluntarily or involuntarily transferred any real estate or personal property within twelve months before you filed your petition?

38. Does schedule C contain a list of all property claimed as exempt and indicate the statutory provisions providing for those exemptions?

39. Does the summary of schedules contain a complete and accurate total of your property and debts?

40. Please show me copies of your most recent bank statements.

41. Are you currently employed and, if so, by whom?

42. Please show me some proof of your current income, such as your most recent pay stub.

43. Has your attorney filed a disclosure of fees?

44. Is that the correct amount that you will pay your attorney for representing you in this matter?

45. What caused your financial difficulties?

46. Are those difficulties continuing or have they ended?

47. Have you paid filing fees and costs?

48. Are there any creditors or other parties in interest who wish to ask any questions?

How to File Proof of Claims?

This is our part two here. In the first post, we had defined various actors like debtor, creditor, unsecured creditor, priority of claims. In this post, we would address how to file proof of claims. It is important if you need to get some money from the estate, and the bankruptcy has been transformed to an Asset kind of bankruptcy.

Court, Name of Debt, and Case Number.

Fill in the name of the federal jurisdiction where the bankruptcy case was filed, the name of the debtor in the bankruptcy case, and the bankruptcy case number. If you received a notice from the bankruptcy, all of this information is near the top of the notice.

Information About the Creditor.
Complete the section giving the name, address, and telephone number of the creditor to whom the debtor owes money or property, and the debtor’s account number, if any. If anyone has already filed a proof of claim relating to this debt, if you never received notices from the bankruptcy court about this case, if your address differs from that to which the court send notice, or if this proof of claim replaces or changes a proof of claim that was already filed, check the appropriate box on this form.

Basis for Claim
Check the type of debt for which the proof of claim is being filed. If the type of debt is not listed, check “Other” and briefly describe the type of debt. If you were an employee of the debtor fill out your social security number and the dates of work for which you were not paid.

Date Debt Incurred.
Fill in the date when the debt was first owed by the debtor.

Court Judgment
If you have a court judgment for this debtor, state the date the court entered the judgment.

Total Amount of Claims at Time Case Was Filed.
Fill in the total amount of the entire claim. If interest or other charges in addition to the principal amount of the claim are included, check the appropriate place on the form and attach an itemization of the interest and charges.

Secured Claims
Check the appropriate place if the claim is a secured claim. You must state the type and value of property that is collateral for the claim. Attach copies of the documentation of your lien, and state the amount past due on the claim as of the date the bankruptcy case was filed. A claim may be part secured and party unsecured.

Unsecured Non Priority Claim
Check the appropriate place if you have an unsecured priority claim, and state the amount entitled to priority.

Credits
By signing this proof of claim, you are stating under oath that in calculating the amount of your claim you have given the debtor credit for all payments received from the debtor.

Supporting Documents

Finally, you must attach to this proof of claims form copies of documents that show the debtor owes the debt claimed or, if the documents are too lengthy, a summary of these documents.