Dubiln Packard

Collection Defense

Are collectors after you?

You can protect your assets while you reorganize your finances.
Your rights are clear under the law. Let the law protect you while you restructure debt and take control of your situation.

by

About Credit Card Debt

Most credit card debt is unsecured, with the exception of cards issued against a line of credit on a house or other asset. Millions of consumers are carrying more consumer debt than they can afford, making minimum payments or carrying balances at high interest rates. Even when this is not the case, a change in circumstances such as loss of employment or medical emergency can result in late payments, lowered credit scores, and a snowballing cycle of spiraling debt and default.

Consolidation of credit card debt onto a lower-interest card can be helpful. Many consumers have taken advantage of home equity credit lines or second mortgages to consolidate credit card debt, converting unsecured debt to secured debt – and increasing risk to their home in the process. If a borrower is in difficulty, adding unpaid credit to their mortgage balance may offer temporary relief and lower payments, but it’s likely that the unsecured debt will increase again, with the now-higher mortgage obligation decreasing available income to repay it.

In the event of financial calamity, unsecured debt should receive a lower priority for repayment than taxes, home, car or student loans. It may be possible to negotiate a lower interest rate with your lender, or if you’ve gone into default, credit card companies will offer settlement on a reduced balance. The difference between the settlement and the balance may be declared as a payment to you by the credit card company via a 1099, giving you a potential tax liability.

Credit card debt settlement companies charge huge fees to negotiate settlements with credit card companies, often without successfully settling the debts. If you’d like to try to settle a debt, direct negotiation with your lender is often the best option. If your circumstances are serious enough, consult with a qualified attorney to find out if a bankruptcy filing is your best option. If this is the case, your attorney will advise you to stop paying all unsecured debt and have it managed in the bankruptcy proceeding. Your debt may be wiped completely in a Chapter 7 bankruptcy filing, or partially repaid in a Chapter 13 plan that allows you to restructure your finances.

 

by

About Personal Loans

Personal loans are unsecured debt. Often given by family members or friends, the borrower may feel a particular obligation to the lender and wish to make a particular effort to repay the loan.

In cases of financial difficulty – and a bankruptcy filing – the court insists on equal treatment of creditors. If a personal loan is paid back just prior to a Chapter 7 bankruptcy filing, the court may attempt to recover the repaid funds from the family member or friend, claiming them for the pool from which all creditors are repaid in bankruptcy. A borrower taking such an action may subject himself to higher payments in his Chapter 13 payment plan and otherwise less favorable treatment from the court.

If you’ve taken a personal loan, don’t repay it if you anticipate you might need to do a bankruptcy filing, unless you’re making equal payments to your other creditors.

The court requires that all debts, including personal debts, be disclosed. This is for the protection of the borrower as well as all of his creditors. In a bankruptcy, the court’s responsibility is to distribute liquidated assets evenly among the creditors without special favor. If a personal debt is not declared in a bankruptcy, the borrower may sue to recover afterwards, claiming it was not covered in the bankruptcy settlement, and may obtain a judgment for the full amount.

The borrower may wish to repay personal loans that have been discharged in bankruptcy. He has the option to do so after bankruptcy is completed.

 

by

About Student Loans

Everybody wants to send their kids through college, but the economic collapse of 2007 has left most families unable to pay for it out of savings or home equity. Student loan debt in the US has quintupled since 1999 with growth exploding since 2005. In a difficult employment environment, individuals may also seek trade or occupational certification from a school in response to advertisements promising employment, and take out student loans in order to do so.

Common perception has been that student loan debt is inescapable because it’s Government-backed. By law, student loan lenders have avenues of recourse not available in other types of debt, including the seizure of Federal tax refunds, Social Security benefits, Social Security Disability benefits and wage garnishment for as long as the debtor is alive. The 20-year statute of limitations on other debt doesn’t apply to Federally-backed Student Loans.

There are avenues of recourse for the borrower in financial difficulty, however. Student loans can be extended, restructured, forgiven, cancelled, or discharged in certain limited circumstances. As with any other kind of debt, taking action sooner is better, offering more options. A qualified attorney can help in the process, which involves dealing with the US Department of Education Ombudsman and/or your lender. A qualified attorney familiar with the options and your circumstances can guide you toward a resolution you can afford, even if you’ve gone into default on the debt.

Deferment is a postponement of payment obligation that can be granted if the borrower is enrolled in school, unemployed, in the military or Peace Corps, or suffering economic hardship, and is not more than 270 days behind in loan payments. Interest will not accrue during a deferment.

Forbearance is another form of postponement that can occur in the event of financial difficulty, health problems, personal problems, or if the payments are more than 20 percent of monthly income. Interest does accrue in forbearance.

Cancellation can occur if the school attended closes during the course of study, if you become employed as a teacher or some other public service jobs, or if your school misrepresented your likelihood of employment and you don’t have a diploma or GED.

Discharge can occur in a bankruptcy filing, although, usually, courts will not discharge student loan debt unless certain specific conditions are met. Ask your attorney about the Brunner test. If you’ve shown good faith in attempting to repay, your poverty is likely to persist, and you just can’t afford it, you might meet the test for discharge. If the loan is from an occupational or trade school and fraudulent claims were made by the school or lender, discharge will be considered.

 

by

About Payday Loans

In a word, DON’T take them, if you haven’t already.

Payday loans are a form of financial cancer, primarily invading economically disadvantaged areas.

With interest due over a 2-week period of 30 percent or more, the annualized rate is upwards of 800 percent, not including fees. A loan from a friend, or an advance on your paycheck, or a cash advance on your credit card are all vastly preferable to taking out a payday loan.

Many low-income borrowers fall into a vicious cycle of taking an additional payday loan to pay off the previous one, coming to rely on these loans as their source of income. This is a toxic pattern, soon leaving the borrower completely unable to repay. Many lenders will ask for a post-dated check as collateral on the loan, and threaten the borrower with criminal prosecution and jail for having written the bad check in the event of default or bankruptcy.

Payday loans are unsecured debt and can be wiped in a Chapter 7 filing, or restructured and mostly wiped in a Chapter 13 filing. Lenders may attempt to challenge the discharge of the loan, claiming the borrower never had intent to repay. Courts may find that the original loan in a series of payday rollover loans was earlier than the 90-day limit preceding bankruptcy required by law to wipe a debt in a bankruptcy settlement.

If you have taken a payday loan, it’s a good idea to wait until 90 days after the due date on the last of them to file for bankruptcy.

Payday lenders are often unscrupulous and predatory in their sales and collection practices.

If you’re in trouble with a payday lender, or fallen into the vicious circle of payday rollovers, Todd Murphy Law can help.

by

Secured vs Unsecured Debt

The two basic types of loans are “secured debt” and “unsecured debt.”

Secured debt is a loan underwritten by an asset used as collateral. These loans include mortgages, car loans, and some kinds of consumer loans for durable items such as TVs or furniture.

Unsecured debt includes credit cards and bank lines of credit,

After foreclosure or repossession, that portion of the loan balance unpaid by the proceeds known as a “deficiency” is another form of unsecured debt. It’s the portion of collateralized debt remaining after the underlying asset has been sold. Assets such as cars and other durable consumer goods decline rapidly in value after purchase. In the event they’re repossessed and sold, the proceeds of the sale are usually not enough to cover the balance on the loan, creating the deficiency, for which the borrower will be held responsible.

A deficiency can be discharged in a bankruptcy filing, if it’s created before the filing.

Real Estate can appreciate in value. Historically, it has, at an average rate of 5%/year over the last 100 years – but it can enter periods of decline, as it did precipitously from 2006 to 2011, leaving millions of homeowners “underwater,” owing more on their property than the property can be sold for in today’s market.

Although mortgages are considered secured debt, it is possible a foreclosure sale may bring less than the outstanding balance on a mortgage, creating a deficiency –for which the buyer can be held responsible under certain circumstances. Read more about deficiencies here.

Todd Murphy Law are experienced at restructuring, managing, and in some cases discharging debt.