Attorney vs. Debt Settlement Services: Which One Protects Your Interests?

NJ credit repair attorney

If you’re one of the millions of Americans facing a large amount of personal debt, you may have been tempted by the numerous ads you’ve seen for debt settlement companies. Debt relief sounds like a miraculous shortcut to a fresh financial start, but is it too good to be true?

In a word? Yes.

Like the deadly Venus fly trap plant, debt relief companies and consolidation services put up a beautiful, welcoming front, but once you’ve given them your trust and access to your finances, they’ll slowly devour you. This article will show you the truth about debt settlement services and outline the reasons a personal attorney will protect YOUR long-term financial wellbeing at every opportunity rather than using your troubling financial circumstances to endanger you even further.

 

First, let’s take a look at the methods debt settlement services will use to lure you in and subsequently destroy you financially.

 

Emotionally Manipulating Advertising

Debt settlement services rely on their aggressive advertisements to attract individuals who have poor financial literacy and are in dire straits regarding their current personal debt. They know that people who are paying attention to their ads are desperate for help and feel like they have no one else to turn to.

Dishonest Sales Pitches

Once they entice you to make contact, they’ll bombard you with an emotional sales pitch that will purposefully attempt to break down any critical thinking you might be using to analyze whether or not their services are a good match for you. Just when you’re at your most vulnerable, they’ll present a sales contract that seems to promise that they will arrange for you to be able to pay off your debt quickly.

Usually, these debt settlement companies will require money upfront. Alternatively, you may be asked to open a new bank account that you will be required to funnel money into. This money is supposed to pay off your debts.

No one in the financial world trusts or respects debt settlement service companies.

These companies are viewed with distain because they are for-profit. While it’s true that everyone needs to make a living, debt settlement services usually aim to siphon as much money from you as they can without actually helping you resolve your debts. This reprehensible approach is known far and wide in the financial world, so unfortunately for their customers, most creditors refuse to work with these scam services.

Worse yet, debt settlement companies won’t tell you about this huge barrier to success until you have already signed their contract. Once you’ve signed up, they have what they need. You will be left with a plan that won’t help you at all. Your creditors won’t have a good working relationship (or any kind of working relationship) with your debt settlement company, so your chances of being able to successfully get out from under your debts is actually worse once you’ve signed up.

We aren’t blaming consumers for getting tangled up with this awful companies.

Debt relief scams like this are highly skilled at spinning half-truths that we fully understand why people get sucked in. They cherry-pick information about their results and research; they might present evidence that their program helps clients at the 3-month mark. What they DON’T say is that their clients will be drowning in interest for years afterward. This unethical practice further demonstrates that debt relief services exist just to take your hard-earned money out of your hand when you need it most.

Your interest rates and credit score will be destroyed.

The first thing these companies will do is tell you not to make your minimum payments. They will instruct you to ignore any overdue notices or letters you will certainly receive. They’ll tell you that it’s all part of the plan, and that they have everything well under control.

While it’s true that after a long, hard-ball fight with your creditors, they MAY give up and reduce or write off your debts, but only at a great cost to your financial reputation. Your creditors will inform the credit bureaus that your debt has been negotiated, which will damage your credit score. A poor credit rating will raise your interest rates when you apply for credit cards, a mortgage, or a car loan. In some career fields, having a damaged credit score can even prevent you from being hired at all!

Creditors will still come after you directly, and debt settlement services can’t stop them.

The debt settlement company version of debt reduction will drag on for such a long time that creditors might decide to pursue legal action against you. Even if you do everything your debt settlement company has directed you to do, your creditor can gain a court order to seize your home, your vehicle, valuable belongings, and even garnish your wages directly.

If this happens, a debt settlement company cannot defend you in court, or help you with any legal proceedings. They aren’t lawyers. They don’t provide access to legal counsel, and they are not on your side.

Hire a consumer debt relief attorney to represent you.

Debt settlement companies, credit counseling and debt consolidation businesses cannot represent you in court when you are sued by creditors, they can’t give you legal advice, and they can’t represent you in court when you have the opportunity to sue creditors and collectors for violating your rights — ONLY lawyers can do so.

Why Should I Avoid Debt Settlement Companies?

Non-attorney companies that offer debt settlement services have a poor reputation in the U.S., particularly with the very creditors with whom you need to negotiate and who may sue you. And the industry is, unfortunately, plagued by scams.

A debt settlement company may commit to contacting your creditors on your behalf, but fail to do so. They may even succeed in having the debt frozen, but actually fail to negotiate the debt to an amount you can afford and then just withdraw money to pay themselves.

Assuming the debt negotiation company does as promised, they will still face many obstacles that affect you. To begin with, a creditor, most of whom are represented by a large team of attorneys, may up their game when they discover you are working with a debt settlement company instead of a law firm. This means the creditor could accelerate their collections process and file a lawsuit against you more quickly.

What makes an attorney different?

An attorney will represent you in court if your debt negotiations escalate. Your attorney will be able to give you accurate information about your legal options, your rights, and the risks you face during litigation.

Your attorney’s entire focus will be protecting YOU. Your attorney only cares about your immediate and long-term financial well-being.

Furthermore, your attorney will guarantee total confidentiality. Every communication with your attorney, their firm, and any member of their staff is protected. Only attorneys are bound by this confidentiality ethos.

Veitengruber Law can help you resolve your debt. Come in and meet with us at zero cost to you. Let us analyze and assess your current financial situation. We’ll give you the truth about whether hiring an attorney is in your best interest. If we aren’t sure that you need us, or if we aren’t sure we can help you, we will tell you up-front.

If we think there’s a high likelihood that we CAN help, then we will begin to protect you immediately. We will do everything we can to prevent your creditors from dragging you into court. We will carefully and skillfully negotiate and document each settlement to stop creditors from suing you.

In the event that you are sued, we will be prepared to ferociously defend your interests in court. You will not be alone at any stage of negotiation, litigation, or settlement.

Give us a call today to set up an appointment. The stress of mounting debt can start to take over your life; before you lose any more sleep or waste another hour fretting, allow us to step in and take action on your behalf. We can turn the tide and start taking back your life one negotiation at a time.

Image: “Broke” by Christian Schnettelker – licensed under CC 2.0

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What to do When Your Client Files for Bankruptcy

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From the perspective of a company owner doing business with a client (or company) who files for bankruptcy: how can you go about getting (even some of) the money you’re owed?

The second someone files for bankruptcy of any type, the Automatic Stay slams down like a sledgehammer – coming between the bankruptcy filer and anyone they owe money to. The Automatic Stay protects debtors during the bankruptcy process by making it illegal for any creditor to make contact asking for money.

Why can’t I contact my client?

After all, you and your client likely signed a working contract wherein you agreed to provide services and they agreed to pay you X amount of dollars for said services. Even though you continued to provide your end of the deal, your client filed for bankruptcy and now you aren’t even allowed to contact them. This can be very frustrating for a business owner who is owed payment(s) – money that may very well be making or breaking the creditor’s own business.

The reason you can’t contact a bankruptcy client is because the Automatic Stay is a protective measure put into place by the bankruptcy court to protect struggling debtors. It gives them enough time and breathing room to gather their financial information and meet with their bankruptcy attorney and/or a potential NJ credit counselor to come up with a plan that makes sense for getting them back on their feet again.

Chapter 11 and 13 bankruptcies are filed with the intention of reorganizing monies owed into a more feasible and achievable payment plan. As soon as these bankruptcy cases are complete – you will once again begin receiving payment from your client. According to their debt reorganization plan, you may not receive the full amount due, but you will get paid.

That’s the good news.

The bad news is that the vast majority of bankruptcies filed today are chapter 7, which entails debtors liquidating assets and discharging many of their debts altogether. If your client files for chapter 7 bankruptcy, you may have to write off their past due amount as a loss. In any case, remember NOT to contact them at all until you receive notice that their bankruptcy case is no longer active in the NJ Courts system.


To contact a debtor while they are actively going through the bankruptcy process (if an Automatic Stay is in place) means that you risk being sued. You will have broken the bankruptcy code if you even attempt to contact a bankruptcy client.


 

What You Can Do:

  • File a Proof of Claim – Downloadable from the USCourts online and easy to fill out.
  • Attend the Meeting of the Creditors; also known as the 341 Hearing – At this meeting, you will be able to question your client. You’ll also be permitted to object to the repayment or reorganization plan if you deem it unfair.
  • Thoroughly review any plan that is formulated by the debtor and their trustee. If less than half of their creditors do not consent with the plan, it won’t be approved by the bankruptcy court.
  • Make sure you are listed on the Creditor Matrix.
  • Wait and see. Truthfully, most of your time will be spent waiting to find out the outcome of your client’s case. If the case is dismissed, or “thrown out,” you will once again be allowed to attempt collection. If an agreement or repayment plan was formulated, you will receive a notice about how much you can collect. Be sure that all of your contact information is correct with the bankruptcy court and your client’s bankruptcy attorney to ensure you will receive any and all payments.

 

Equifax Data Breach 2017: Were You Affected?

equifax breach

Unless you have zero credit history and no report exists on file for you with any of the credit reporting bureaus, you may have been affected by a recent security breach at Equifax.

Up to 150 million people (in the US alone) had their private, personal, identifying information exposed and potentially misused. This breach in security occurred only with Equifax. Neither of the other two credit reporting agencies, Trans Union or Experian, were affected.

What happened during the Equifax breach?

Between the months of May-July 2017, hackers were able to bypass some of the cyber-security that was in place at that time at Equifax. They gained access to millions of pieces of personal information, including:

  • Full names and aliases
  • Dates of birth
  • Social Security numbers
  • Current and past addresses
  • Driver’s license numbers
  • Credit card information

Even if you haven’t noticed any strange charges popping up on any of your credit cards, it’s important that you take action if you haven’t already done so. If any of your identifying information was accessed, the first step to righting the wrong is knowledge.

How can I find out if my information was accessed?

Although the general public opinion of Equifax dropped as soon as news of the security breach hit the airwaves, they deserve kudos for initiating a plan of action for those who may have been affected. They created a program called TrustedID Premier that gives consumers one year of free credit monitoring.

Visit http://www.equifaxsecurity2017.com. There, you’ll be able to read details about the security breach; you’ll also be able to enroll in the credit protection and monitoring program.

With two clicks, you’ll learn if your personal information was accessed, or “potentially impacted.” From there, you should move forward and initiate your enrollment in the credit monitoring program. Again, you’ll be given an easy prompt to “Enroll Now,” after you’ve determined if your information may have been affected.

How can I feel safe with a company that experienced such a substantial breach?

While you do have to give your name, address and part of your social security number in order to verify your identity, you can feel secure as long as you are using a secure computer as well as an encrypted network.

Is there anything else I can do to protect my personal information?

Aside from enrolling in the TrustedID Premier program, you should carefully read through your credit reports in their entirety. Go beyond checking your Equifax report; order a free copy of your credit report from each of the three reporting agencies. You can request all three reports at one convenient site: http://www.annualcreditreport.com.

Other potential steps to protecting your private and sensitive data include:

  • Freezing your credit
  • Placing a fraud alert on your credit 
  • Preventing tax identity theft – A lesser known form of identity theft, tax identity theft, can occur if your social security number was stolen. File your 2017 taxes as soon as possible so that no one else can fraudulently claim your tax refund.
  • Continue to carefully monitor all of your bank accounts and credit cards and be on the lookout for any suspicious charges.

If your personal information was accessed and you discover false information on your credit report or unrecognized charges on a credit card, contact a NJ credit repair attorney immediately to protect your financial reputation from incurring any further damage.

 

Image: “Broken Lock” by Chad Cooper – licensed under CC 2.0

Collection Defense vs NJ Bankruptcy

If you have been sued by a collections company or “debt collector,” and the debt truly belongs to you, the most important piece of advice is: Do not ignore the lawsuit.

With that being said, people in your position naturally wonder if they have options. Being sued for a debt that perhaps you thought had been forgiven, or that had reached its statute of limitations, can come as a surprise. Many times we put these things out of our minds because it is easier than focusing on it and worrying about it.

Unfortunately, by putting a large debt that you failed to repay out of your mind, you are now faced with a lawsuit that asks you for the entire lump sum that you owe. This sum may even be larger than you remember due to late fees, attorney fees for the collections agency, and interest.

Is filing for bankruptcy your only option?

While it is impossible to give a blanket answer to this question (as everyone’s case will vary wildly) – the general answer is that no, bankruptcy is not your only option when you are being sued for an unpaid debt.

There are several things your NJ bankruptcy attorney will ask when you meet with him or her. Is this your only significant debt? What is your income? Can you repay this debt if it is broken down into payments?

If you have other debts along with the one in the lawsuit, and your income doesn’t allow you to get ahead on paying them back, it may be that bankruptcy is right for your situation.

Can you negotiate with the debt collector?

On the flip side, if the debt in this lawsuit is literally your only debt (outside of your mortgage and car payment), and your income is steady, you might want to have your bankruptcy/debt resolution attorney negotiate with the collection company.

For example, if your unpaid debt amount is $15,000, you may be able to talk the debt collector down several thousand if you pay in a lump sum. It is also possible to negotiate a payment schedule if you wish to avoid bankruptcy.

Is collection defense an option for you?

Collection defense is only appropriate if the debt in the lawsuit doesn’t belong to you, or if the lawsuit contains errors. So, if you are being sued in error, then collection defense is an option, but the reason many people opt for a different resolution is that collection defense representation can get expensive. Regardless of how much you pay your attorney, you can still end up losing the case, even if the debt collector is in the wrong. This is because NJ law doesn’t require strict proof of signed agreements when it comes to credit cards. Therefore, you may end up owing hefty attorney’s fees and still have to repay the debt in full when all is said and done if you go this route.

The only way to know for sure which direction you should go is to sit down with a NJ bankruptcy lawyer or debt resolution attorney. Often, bankruptcy attorneys also specialize in credit repair and debt resolution strategies other than bankruptcy, so look for an attorney who is well-versed in all areas in which you need assistance.

Can Wages be Garnished for Money Borrowed from a Friend?

There are certain situations in life that call for borrowing money from a family member or friend: if your financial situation is less-than-optimal, and if your credit score is poor. When you’ve exhausted all traditional lenders and “bad credit” lenders, your Hail Mary may be asking someone you know to lend you money.

In these situations, most people make grandiose promises to pay the money back (sometimes with interest). Out of sheer gratitude, it can be easy to make promises you’ll never be able to fulfill. On rare occasions, the friend or family member (especially if it’s one of your parents or grandparents) will wave you off if and when you try to pay them back. Note the use of the word “rare.”

The honest truth of the matter is that, unless they’re abundantly wealthy with cash flowing in faster than they can spend it, your personal lender is going to expect to be repaid the money that you borrowed from them. In all likelihood, they’ve probably dug into a savings account that was specifically earmarked for something important in their own life, like paying for a child’s college education or putting a down payment on a home, in order to help you out of a bind. Failure to repay this ultra-generous favor is frankly very uncool.

Just as you wouldn’t borrow money from a traditional lending company or banking institution if you had no means to pay back the loan (because they wouldn’t lend you the money if you didn’t qualify in the first place) – you shouldn’t take money from a friend or relative if you have a pretty solid hunch that repaying them isn’t in the cards.

What can happen to me if I never repay a debt I owe to a friend?

Just as any debt that you leave unpaid, the lender (in this case, your pal) has every right to collect the money from you. Naturally, most loans of the personal nature tend to start out with the lending party casually mentioning the money he’s owed. This may happen several or a multitude of times, depending on the nature and patience level of the person who loaned you the funds.

You can prevent straining your friend’s patience by making a plan to pay him back the very second his money hits your hand. After all, “it takes many good deeds to build a good reputation, and only one bad one to lose it.” Electing to borrow money from anyone and then ignoring their requests for repayment is a bad deed, indeed.

Your good-natured lending friend is likely to tire quickly of gently asking you for the money he’s owed, and personal relationships are bound to suffer the longer you fail to make good on your handshake agreement. What many people don’t know is that even personal loans between friends and family members can be enforced in the NJ court system.

What started out as a buddy helping a buddy out can end with a nasty court case wherein you’ll be sued for the money owed, and wages can be garnished from your paycheck if you don’t have enough money to satisfy the judgment straight away.

Save yourself the hassle and a relationship that you likely value: start repaying the money you borrowed, even if it’s a small amount at a time. Good faith often goes a long way, especially when life-long friendships are involved.

How to Dispute a Debt and Win!

We’ve talked a lot on our blog about how to handle your unpaid debts so that your credit score doesn’t tank, because a low credit score makes it much harder for you to borrow money, buy a house, and purchase a vehicle. Even potential employers today have the ability to find out how you handle money before deciding whether or not to hire you. For the aforementioned reasons, keeping a decent credit score is something that rightfully demands your attention.

Keeping tabs on your ever-shifting credit score and the details contained within your credit report(s) is the easiest way to ensure that you don’t have any long-lost debts doing serious damage without your knowledge. If and when you discover an unpaid debt that belongs to you, it’s important to pay the debt ASAP to avoid losing valuable credit score points. Working with your credit repair attorney in NJ, you can negotiate a debt pay-off schedule that works for you. Remember to check back in with the credit reporting bureaus as soon as you’ve paid off said debt to make sure it has been removed from your credit report.

What happens if you receive a notice from a collection agency for a debt that you have no recollection of owing? While your first instinct may be to toss it in the trash with the rest of the “junk mail,” slow down for a minute. There are two very good reasons why you should NOT ignore any letter from a debt collector.

  1. Everyone makes mistakes. It’s possible that you do owe an original creditor money. Bills are be misplaced, mis-sent, and lost every day. The original creditor may have also made a billing error when they originally charged you. The bottom line is that it is possible that you owe money that you forgot about or didn’t know about.
  2. Debt collectors can continue to attempt to collect on a debt, even if it was never your debt to begin with, unless you respond to them, in writing, within 30 days. Therefore, even if a collection agency is completely falsifying information in the hopes that you will simply send them some money, do not ignore it.

If you are being held responsible for a debt that you don’t recognize or remember, you can dispute the debt by sending the collection agent a letter via Certified Mail, with return receipt requested. In your letter, state that you are writing to dispute the alleged debt, and that all collection attempts should cease unless they can provide you with all of the following:

  • The full amount of the alleged debt
  • The name and address of the original creditor
  • Proof that you are responsible for the alleged debt
  • Documentation showing that the collection agency is licensed to collect debts in New Jersey

If the person attempting to collect money is doing so fraudulently, you should never hear from them again once they receive this letter from you. On the other hand, if there is a legitimate debt that you’re responsible for, you will receive the information you requested. Either way it is advisable to contact a credit repair attorney and/or a consumer fraud attorney in order to get your desired results and to keep your good credit score safe.

Image: “Credit Dispute” by Cafe Credit – licensed under CC 2.0

Disclaiming Your NJ Inheritance to Avoid Creditors

The news that you have been named a beneficiary in someone’s will is generally considered a positive thing; although you (hopefully) aren’t looking forward to the passing of your loved one, it usually feels good to know that they cared enough to bequeath part of their estate to you. There are times, however, when you may not wish to receive your New Jersey inheritance. Do you have the ability to say “thanks but no thanks?”

In New Jersey, estate law says that you can refuse to accept a gift, which in this case is your inheritance. This right to refusal is known as a disclaimer.

While it may seem strange that someone would choose to turn away inheritance money or life insurance proceeds, there are a few reasons for doing so. One of these reasons is avoiding creditors.

Do you have a lot of debt? Are creditors constantly calling? If so, you may worry that all of your inheritance money will go directly to paying off your debts. This is a very valid worry, because that is precisely what would happen if you accepted any kind of windfall while swimming in debt.

If you are attempting to disclaim your inheritance so that your creditors don’t have access to it, you may be hoping to divert that money to your children or other beneficiaries. Unfortunately, in New Jersey, it is illegal to use a disclaimer to get out of paying your creditors. If you choose to disclaim your inheritance under these circumstances, it is highly likely that your creditors will still be able to access the funds due to the Uniform Fraudulent Transfer Act.

Discussing your situation ahead of time with your loved one will give them a chance to protect the money that you are hoping to avoid giving directly over to your creditors. One way to do this is to set up a protective trust or to simply leave you out of the will altogether and instead name your children or other family members as beneficiaries. Your creditors have zero claims to any money that is inherited directly by your children.

Going to these lengths to avoid paying your creditors signals that you are significantly deep in debt. While we understand the desire to keep from handing a large windfall directly to creditors, we also must note that there are steps you should take to get out of debt, and the sooner, the better.

Your options for debt relief in New Jersey depend a lot on the specific details of your situation.

  • How much debt are you carrying in comparison to your income?
  • Are you living beyond your means?
  • What is your credit score?
  • Do you own a home that you wish to keep?
  • How many different kinds of debt are you carrying?

NJ debt negotiation and relief is available to you. Beyond refusing windfalls, disclaiming your inheritance and any other steps you’re taking to avoid paying your creditors, imagine if you didn’t have to worry about those creditors at all anymore. Ridding yourself of a large chunk (or potentially all) of your debt is very possible; your financial future can look anyway you want it to as long as you take the right steps, now.

 

 

Can I Close My Bank Account to Avoid Repaying a Payday Loan?

First, let’s be clear: Payday loans are illegal in the State of New Jersey. NJ state laws prohibit interest rates above 30% (which is exceptionally high already) and payday loan interest rates are much higher. Additionally, New Jersey banking laws prohibit the concept of advancing money based on a post-dated check.

What is a payday loan?

A payday loan is a very dangerous undertaking. It is process that is only entered into by those who find themselves in extremely dire financial straits.

The payday “lender” provides the borrower with a relatively small loan (usually less than $1,000). This cash loan is due to be paid back in full to the lender within a very short window of time – often when the borrower next receives a paycheck.

Those who are desperate for immediate money and don’t want to have their credit checked can often be fooled into thinking that a payday loan is the perfect solution to their problem. Borrowers who take out payday loans typically say that they don’t want to borrow money from friends or family, and their credit scores are usually already suffering, so taking out a proper bank loan isn’t on their radar.

Why do payday loans get such a bad rap?

In theory only, the concept of a payday loan is perfectly fine:

“You need rent money and your landlord is breathing down your neck about it. Due to unforeseen expenses this month, you’re short a few hundred dollars. If only you could simply borrow $400 to keep your landlord happy; you’ll have NO problem paying it back the next time you get paid.”

Sounds ok, right? The inherent problem with payday loans is this: if you are even a day late in repaying it, interest starts to accrue at an astronomical (up to 400%) rate. This, combined with the fact that by the time someone considers a payday loan, they are already having money trouble, leads the borrower down a path that can only end badly.

All payday loan borrowers talk themselves into believing that they’ll have the money to repay the loan on time. Most of them, however, arrive at their loan’s due date confounded and overwhelmed. Although they let themselves think their next paycheck would be enough to cover the cost of the loan plus their usual expenses, this is almost never the case.

Therefore, the average payday loan borrower ends up late in repaying their loan, either partially or in full. As soon as that interest starts building, their amount due climbs FAST. What started out as a $400 loan can end up as thousands of dollars in debt, leaving the borrower unable to even begin to make good on their promise to repay.

How can I get out from under a rapidly rising debt?

It can be an extremely scary feeling to know that your debt is rising higher and higher day by day at a rate that you can’t really even determine how much you owe. Drastic measures, like trying to close your bank account or moving away from the payday lender – will not solve your problem. Creditors can garnish your wages (up to a certain percent) until they get their money back, and unless you plan to leave the country and change your identity (not recommended) – they’ll go the distance needed to find you.

Although payday loans are illegal in New Jersey, that doesn’t mean that NJ borrowers aren’t taking out payday loans in neighboring states. If you’ve found yourself indebted to a payday lender, or if you are right now considering taking out a payday loan, you should consider filing for bankruptcy instead. Not only will this wipe out the money you owe to the payday lender, but many of your other debts can also discharged – giving you an opportunity to take stock of your money management with a clean(er) slate.

 

I Received a Bankruptcy Discharge – Why am I Being Sued?

Filing for bankruptcy can be a momentous decision for many people, and it usually isn’t a decision that is made lightly. Most people don’t want to have to file for bankruptcy and have genuinely tried in earnest to reduce their debts on their own.

Once you’ve decided to move forward with a bankruptcy filing, you’re likely to feel a certain sense of relief – especially as the case progresses and everything is going as planned. After your debts have been successfully discharged by your bankruptcy court judge, all of your dischargeable debts will be erased, lifting a heavy weight off your shoulders.

After a debtor receives a bankruptcy discharge, every creditor listed on their bankruptcy paperwork will receive notification of the bankruptcy. Creditors are no longer allowed to contact you to collect on debts that have been discharged. Just knowing that those aggressive phone calls are going to stop is a huge relief.

That being said, sometimes you may receive the unpleasant surprise of being sued by one of the creditors you thought you had seen the last of. This is a scary moment for anyone! Thinking that you’ve gotten out from under your debts only to discover that one of them is still after you for money is disheartening.

Can a creditor really sue me after my debts have been discharged?

Oftentimes, if a creditor is still trying to get you to repay a discharged debt, it means they didn’t receive proper notice of your bankruptcy. It’s also possible that your bankruptcy information was not shared through the right channels within the company – even if they did receive notice. Attempting to collect on a debt that has been discharged via bankruptcy is against the law.

Do I have to respond to a post-bankruptcy debt-related lawsuit?

This is where is gets kind of tricky. Even if you are no longer responsible for the debt in question, if a creditor has initiated a lawsuit against you, it cannot be ignored. Doing so will only prolong the lawsuit’s life.

Your bankruptcy attorney will be able to advise you on how to respond to any creditors who attempt to contact you after your discharge, including any that attempt to sue you for money you no longer owe. It is important to consult with your bankruptcy attorney to ensure that the debt(s) in question were actually discharged and you truly are no longer responsible for them.

An answer to any lawsuits should state the fact that you filed for bankruptcy, including a copy of your discharge and a list of all creditors. In doing so, virtually all lawsuits of this type will immediately dismissed by the court. Even if you inadvertently left a creditor off of your bankruptcy paperwork, generally all dischargeable debts will be forgiven as long as the creditor knows you’ve filed for bankruptcy.

Although you will almost never be responsible for any debt that was discharged, it is important to notify your lawyer if you are sued by one of your creditors after bankruptcy. Some debts are non-dischargeable, and you need to know what they are so that you continue making payments on them. However, chances are good that your NJ bankruptcy lawyer discussed any debts of this type with you prior to your filing date.

 

I’m Being Sued for More Money than I Owe!

Is a debt from your past coming back to haunt you in the present? Although not ideal, sometimes it happens. Perhaps you weren’t making sound financial decisions at that point in your life and accidentally (or intentionally) ignored some past due notices until they just stopped coming.

It can feel like it’s easier to ignore bills when you don’t have the means to pay them. However, the end result is almost always going to be substantially worse than your original debt.

While it can take some companies awhile to take action on smaller debts, the bad news is that your (once) small-ish debt has had a load of time to compound upon itself, rolling around in interest rates, gathering late fees and potentially even picking up attorney’s fees. If your original lender or credit card company has hired counsel to address getting you to pay up, it is possible for them to tack their attorney’s fees on to the amount owed.

What can I do?

Your credit card company is hoping that you’ll get scared by the big number they’re asking for – as you should. If you receive a summons and complaint that says you owe double, triple or quadruple your original debt amount – now is the time to obtain counsel yourself.

How can I afford an attorney if I can’t even pay my debt?

Working with a New Jersey debt settlement attorney on a matter like this is highly unlikely to cost you thousands of dollars. In all likelihood, the right NJ lawyer will have the required negotiating skills to bring the amount owed down to a much more reasonable number – simply by making a few phone calls and/or sending some letters.

Your attorney can then work to coordinate a payment plan that is manageable for you so that you can pay off the (now much lower) balance. The lender/credit card company will almost always be happy to get some form of payment from you as opposed to nothing.

What will happen if my case goes to court?

If, by chance, your credit card company does not want to settle via your credit repair attorney, New Jersey courts will set up a mediation wherein the same kind of talks will take place. A court appointed mediator will work with you and your attorney, along with counsel for the opposing side, to negotiate a resolution that everyone can agree to.

The bottom line is: if you have been served with a lawsuit to collect a debt in a much higher amount than you originally owed, you’re probably not going to get out of paying at least part of the debt unless you file for bankruptcy. If you have the means to pay back the amount that your lawyer negotiates for you, you should do so in a timely manner so that your credit score doesn’t take an even bigger hit.

On the other hand, if you are completely strapped and cannot imagine even one dollar of your debt (and likely other debts that you owe) being repaid, it is definitely time to consider filing for a NJ bankruptcy. This will wipe out a significant amount of your total debt, leaving you much more financially stable, which will allow you to “start over” with a much cleaner slate.

 

Image: “Breaking into your Savings” by Images Money – licensed under CC 2.0