Archive for the ‘Debt Collection’ Category

Bankruptcy for Creditors 101

Tuesday, May 30th, 2017

By: Sarah Saville

Ever loaned money to a friend? Are you a landlord or have a roommate? Does someone pay you child or spousal support payments? You may not think of yourself as a “creditor”, but if the person who owes you money files bankruptcy, you will be a creditor in bankruptcy.  Here’s 3 things to know when that person files bankruptcy:

 

  • STOP in the Name of the Automatic Stay!

The moment a person files bankruptcy, an automatic stay is issued and all collections activities must come to a screeching halt.  That means no phone calls, no notices, no court actions, no texts or tweets or communications of any kind to the debtor about any contract or debt owed before the bankruptcy was filed. Although the stay has limitations, violating the stay is a punishable offense, so it’s best to consult with an attorney before taking any action.

 

  • Know the Chapter

The most common bankruptcy is Chapter 7, in which the debtor’s non-exempt assets – if any – will be paid to their creditors.  In a Chapter 13, the debtor makes monthly payments under a 3-5 year plan.  In all Chapter 13 and Chapter 7 – Asset bankruptcies, creditors must file a proof of claim to be paid through the bankruptcy.  Mark the claim deadline on your calendar as soon as you learn there’s a bankruptcy so that you don’t miss it!

 

  • Know the Debt

Is your debt secured? Are there monthly payments that will accrue after the petition is filed? Can the debt be discharged? These factors will determine your rights as a creditor. If your debt is secured, your lien may survive the bankruptcy.  If a debtor fails to make ongoing monthly payments, the court may give you relief from stay to collect the debt.  Some debt may not be discharged in a bankruptcy.  That means you will be allowed to pursue the debt after the bankruptcy is over.  Understanding how the bankruptcy will affect your debt can help you plan for protecting your rights as a creditor.

Stop in the name of bankruptcy graphic

 

Do I need to pay the hospital bill?

Wednesday, December 12th, 2012

I was in court yesterday and had the opportunity to listen to a number of cases where the hospital was bringing legal action against people for non-payment of hospital bills.

One was a very sad case where a woman had died and the hospital had filed suit against her son for payment of her bill.  As I’ve discussed before, children are not normally responsible for the payment of their parent’s bills.  However, in this case, the son had signed the hospital admittance form agreeing that he would be personally responsible for the bill.

There were also a number of cases where people said that they were still in discussions with the insurance company about how much the insurance company would pay.  Again, the people had signed the admittance forms saying that they would be responsible for payment.

You can pay a hospital bill yourself, even if you have insurance and a claim has been submitted.  If  you have already paid a bill and the insurance company then sends money to the hospital, you can talk to the hospital about getting a refund.  I’ve never personally seen a case where the hospital has refused to send a refund when a bill was overpaid.

Hiding from the bill and hoping it will go away isn’t really going to help you much.  Most hospitals that I have seen will work with you on a payment plan if you can’t afford to make the entire payment all at once.  This will help eliminate the legal fees that the hospital will pass on to you if they have to go to court to get payment.

Generally, by the time the hospital brings you to court for non-payment, your account is what is commonly called ‘seriously past due’ and the normal insurance payment process has not covered the costs and it is very likely that the costs will not be covered.  If you really think that the insurance company should have paid the bill and they did not, then your fight is with the insurance company, not the hospital that provided the care.

Bottom line?  If you sign the paperwork saying that you will be responsible for the bill, then it is your obligation to pay.

If you are not able to make any sort of payment arrangements, perhaps it is time for you to talk to an attorney about bankruptcy.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Some Financial Effects of Divorce

Tuesday, May 1st, 2012

When two people are dating, they often decide to move in together for a number of reasons, and one of those reasons can be financial.  After all, why pay for two sets of living expenses (rent, electric, cable etc.) when you are spending all of your time together?  It is cheaper to combine expenses.

The opposite happens when people get divorced, but for some reason it seems to come as a surprise to people that they are not able to continue to maintain the same lifestyle that they had as a couple.

Often, the couple’s financial difficulties are one of the reasons they got into marital problems in the first place, and now that same combined income needs to pay for two separate households.

Everyone seems to understand that the ‘stuff’ to be divided at the time of a divorce includes the house, the cars, the televisions and the other tangible items.  What they often don’t understand is that debts are also considered marital ‘stuff’ that will be divided.  Debts are contracts made between parties where one side (the creditor) agrees to provide something (money) in exchange for the other side’s agreement to pay the creditor back, usually with interest.

Most of the time, the divorce will assign the debt to the person who signed this debt contract as the ‘responsible party’ for the debt.  For example, if Bob gets a credit card in his name alone, he is the ‘responsible party’ for that debt and he will probably be assigned that debt in the divorce.

If the debt is in both of their names, the divorce may assign the debt to one party, but the contract with the creditor has never been changed.  What this means is that the creditor can still file a lawsuit against both Husband and Wife to try to get repayment of the debt.

As an example, Bob and Carol were married when they applied for a credit card to cover the cost of furniture for their home and they both signed the credit card contract.  Now, Bob and Carol are divorced and that debt has been assigned by the divorce to Bob.  Bob does not make the payments on the credit card and the credit card company sues both Bob and his ex-wife Carol for repayment.  Carol will need to defend herself against that lawsuit in court so that the court can order that Carol is not to be held responsible for this particular debt.  Carol can do this herself, but she will probably hire an attorney to assist her.  If the divorce decree is worded correctly, Carol can then file suit against Bob to have him reimburse her for her legal fees.

There are also times when one or both of the parties files for protection under the Bankruptcy Code.  Again, a careful drafting of the divorce decree can help protect the other party from being held responsible for a debt that has been discharged by the other ex-spouse.

Divorce is an emotional and difficult process that can have immense and varied financial implications that should be discussed with an attorney who can help provide you the assistance and protection you need.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Someone owes me money, how do I get it? part 3 — collecting the debt

Tuesday, April 17th, 2012

Once the court has granted you a judgment, you now need to collect on that debt.  You and the debtor may be able to come to an agreement about payment, which will be the easiest way to get your money.

You may want to hire a ‘debt collector’ who will handle this part for you and who will know the laws and follow the rules of the Fair Debt Collection Practices Act (FDCPA).

Another option is to collect the debt yourself.  As long as you are collecting a debt that is owed to you personally and you are doing things yourself, using your own name, you are not bound by the rules of the FDCPA.  However, even if you don’t need to follow all of the rules, you might want to consider reading over the FDCPA rules on what can and can’t be done to collect a debt or you might find yourself in front of the judge on a harassment charge.

You might be able to get a court order to tell a third party that they need to give you some money that would normally be given to the debtor.  This process is called a ‘garnishment’ and there are rules about how much of the debtor’s funds may be given to you.

The most common type of garnishment is when a debtor garnishes the wages of the debtor and a portion of the debtor’s wages are paid to the creditor instead.  There are rules about garnishment of wages and limits on how much of a person’s wages can be withheld.

You might also be able to garnish the funds in the debtor’s bank account.   Again, there are special rules about what can be garnished.

You may also be able to force the debtor to give you some of his or her personal property to satisfy the debt.  This process is started by filing ‘Debtor’s Interrogatories’ which is a process in which the debtor needs to appear and tell you about the assets he or she owns, where those assets are located, and how much each of those assets are worth.  Sometimes these are ‘big’ assets like a house or a car, and sometimes these are smaller assets like a TV or a watch or a ring.

Once you know what assets are available, you can ask the court to have the sheriff seize and sell the assets and give you the money from the sale.

Or, you might be able to put a lien on the asset which means that if the asset is ever sold, you will be paid before the debtor receives his money from the sale.  Of course, this works best for assets like a home or a car where you have the ability to record your lien and where the record is reviewed before the sale is completed.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Someone owes me money, how do I get it? Part 2 – the Trial

Saturday, April 7th, 2012

We have all seen TV shows and movies where there is a trial with the Judge, the attorneys, the jury and the court reporter.  In Virginia, the only required people are the Judge, the person bringing the charges and the person answering the charges.  If the case is being heard in the District Court there is not even a place for a jury to sit, and the parties are often standing right in front of the Judge.

In a criminal trial, the person bringing the charges is either the prosecutor or the police officer.  In other words, the ‘state’.  In a civil trial, the person bringing the charges is called a ‘plaintiff’ and if somebody owes you money, you would be the ‘plaintiff’.

The person who is answering the charges is called the ‘defendant’ whether it is a criminal or civil case.  In our example, that would be the person who owes you the money.

The Judge is the person who makes the decision, and he or she makes that decision based on the facts of the case as they are presented at the trial, and how those facts fit into the existing laws.

In the case of the Warrant in Debt that was discussed in Part 1, you have probably already presented the ‘Bill of Particulars’ which tells the defendant why you think they owe you money, and the defendant has probably already provided the ‘Grounds of Defense’ which tells you why they think they don’t owe you the money.  These documents give the Judge the outline of the case, but you still need to provide evidence so the Judge can make a decision.

The evidence can be documents, things, or testimony of people that have knowledge of the facts of the case.  There are special rules which control what evidence can be admitted for the Judge to review.

Even if you are not an attorney, you are going to be bound by the rules of evidence when you are in a trial.  This is another reason why it is sometimes helpful to have an attorney instead of representing yourself.  The main things to remember are that the evidence needs to be relevant and truthful.

If the evidence is testimony of a person, that person will need to raise his or her right hand and swear or affirm that the testimony they will give is the truth.  If the person gives untruthful testimony while under oath, they can be found guilty of perjury, which is a criminal offense all by itself.

Oral testimony is usually given as a series of questions and answers.  Remember that there is no arguing!  If you think the person is not telling the truth, you can ask another question or ask the same question in a different manner, but you cannot get into a shouting match like you did when you were a kid.

Also, remember that a person can only provide evidence about what he or she saw, heard, or said themselves.  They cannot testify that ‘Susie told me…’ because that is called ‘hearsay’ and the judge can’t use that as evidence when making the decision.

If the evidence is a ‘thing’ you will need to first prove that the ‘thing’ is what you say it is before it can be introduced.  This is called ‘laying the foundation’.  For example, if I wanted to introduce a copy of the contract, I would first ask ‘I’m showing you a document.  Is this the contract that was signed by you and the defendant’?

Each side gets a chance to put forth their evidence and then the Judge will allow each side to make a statement about why they think they should win.  Then the Judge makes the decision.

In Virginia, you have 10 days in which to appeal any decision by a District Court Judge.   If either side notes an appeal, the whole trial will be done over again in the Circuit Court before a different Judge.  You don’t need to present exactly the same evidence at the appeal trial, but a lot of the evidence will be the same.  You might also change your tactic a little based on what the other side did in the District Court trial.

In our example, if the Judge decides that the person does owe you the money, and there was no appeal, you will now have a ‘judgment’.  You won!  But the judgment is really just a piece of paper saying that the other person owes you some money.  You can’t usually take this piece of paper to the gas station or the grocery store to buy things.  Actually getting the money can take some additional steps.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.