Will I go to jail for a car debt?

Someone who fell behind on their car payments recently contacted me because car creditors were threatening to get an arrest warrant. This is a scam. Sometimes, debt collectors resort to deceptive practices to get someone to pay monies owed. In the United States, we do not have debtor’s prison.  Unless your debt is to the IRS, you don’t have to fear jail time.   Other threats I have heard include:

1.    “We will contact your employer and order them to take the money right out of your check.” The only way a creditor can access your paycheck is through a court order.  This is a time consuming process for the creditor and would require that the creditor would file a law suit against you first.

2.    “We will ruin your family members’ credit.” Unless the debt is also in another person’s name, the creditors cannot attack a family members’ credit.

In the end of the day, do you owe a debt? Yes. 

Can they ruin your credit? Yes, if you let them. 

Contact an experienced debt settlement attorney to work out a payment arrangement that works for you and protect your rights, your income and your peace of mind.

To schedule a FREE CONSULTATION with the Law Offices of Brandon Rosenbloom, call us at 678-609-8724 or contact us online.

What is Small Claims Court?

Previously I have blogged about being sued by a creditor who is attempting to recover debt you owe (i.e. past due credit card debt). But where does that lawsuit get filed and ruled upon? For the most part, these cases are filed in Small Claims Court, also known as Magistrate Courts. Small Claims courts are specially designated courts whose only jurisdiction is to hear civil disputes between private parties, valued at less than $15,000.

Examples of cases heard in Small Claims Court are landlord-tenant disputes (including eviction proceedings), disputes between merchants and customers as well as other financial disputes between two parties. The benefits of using this type of court to the plaintiff are the low cost of filing ($45-55) and usually a speedier resolution than a higher civil court.

As with most other courts, in Small Claims Court, both parties are given the opportunity to present their side of the issue and it is ruled upon by the judge. There are no jury trials in small claims court.  If the plaintiff wins, they are given a judgment that will allow them to start the process of collecting the debt from the defendant.  The post-judgment collections process could still be long and difficult, but it has to start with a judgment in favor of the plaintiff.

Generally the plaintiffs in these cases are businesses and are represented by lawyers. Defendants are generally the debtors (people who owe debt).   While to many people, it may seem unnecessary to hire a lawyer for something called "Small Claims" Court, it is a wise idea. This court follows the same rules and standards as any other court including evidentiary rules, which are guidelines of what types of evidence are admissible and cross examinations.  As such, it is highly recommended you seek experienced counsel before filing an answer or reporting to court for your hearing.

To schedule a FREE CONSULTATION with the Law Offices of Brandon Rosenbloom, call us at 678-609-8724 or contact us online today.

Racism or a numbers game?

A recent Huffington Post article has reported that debt collectors are more aggressively going after African American debtors than their white counterparts. The article sites research that the African American community, which was hit harder by the recession than any other racial group, is more likely to have credit issues and past due credit accounts.  Therefore, third party debt collectors seem to be focusing more on the African American community.

So is it racism or profiling or just a numbers game? According to ACA International, a trade association of third-party debt collectors, debt collectors are color blind, and are only interested in the numbers.  Of course they’re going to say that – they’re defending themselves.  But in reality, how would a debt collector look at a list of names and phone numbers and identify someone’s race?  

Whether there’s racism or not, debt collectors are notorious for their ruthlessness and aggressive tactics. Before you are forced to agree to any type of settlement or payment plan, contact an experienced debt settlement attorney to make sure your rights and your credit are protected.

What happens if a creditor sues me?

Debt is a tricky thing – as easy as it is to rack it up, getting out of it can prove to be an uphill battle. At some point, once the nasty collection letters and phone calls have not been successful, the creditor’s next step is to file a law suit in civil court to get their money back.  

If this happens to you, here’s what to expect. A summons will be sent to you from the court indicating that you have been sued and you will have 30-45 days to respond to the summons. You will have to answer the summons by either explaining why you’re running behind, writing an explanation as to why you don’t owe the debt, or stating that the debt amount is not correct. If you don’t answer the summons by the time it’s due, the court will automatically judge in favor of the creditor, which is called a default judgment.

A default judgment basically says that since you didn’t respond to the court summons, you are in effect admitting to responsibility for the debt and the creditor can now go after your assets to get their money. They can get a court order to liquidate your bank account or garnish your wages until the debt is satisfied.

If you do answer the summons, you’ll likely be scheduled for a court date. Generally on this day, the judge will order you and the creditor to meet with a mediator to work out an agreement to satisfy the debt. If you are financially able to work something out, that’s ideal. Otherwise, if you are unable or unwilling to work out a deal with the creditor, the case goes forward and unless you can prove otherwise, you’ll be liable for the debt, plus whatever court fees and legal fees are included.

But there are alternatives to going through the court process. Creditors will likely be willing to work with you even after the collection letters and phone calls haven’t worked. You should hire an experienced debt settlement attorney to work out a settlement that could help you avoid a judgment on your credit record and costly court and legal fee.

To schedule a FREE CONSULTATION with the Law Offices of Brandon Rosenbloom, call us at 678-609-8724 or contact us online today.

How can I settle my tax debt?

As we get closer to the end of the year, tax season approaches. Whether you are a 1099 contractor, received a big bonus, didn’t have enough taken out of your paycheck for taxes, or had some sort of windfall, a big tax bill can be a nightmare. In this economy, more and more people are forced to make desperate decisions like cashing out a 401k early to keep up with bills after being laid off, or for unforeseen medical expenses, home repairs or other emergencies. For the most part, tax debt is non-dischargeable debt, meaning a bankruptcy would not be an option.

For some, a payment plan with the IRS for the next few years might be a decent option, if, for example, they are working full time and bouncing back from whatever financial crisis that caused them to have a big tax bill. If it seems that the tax bill is something you’ll never catch up with, there is another option that a lot of people don’t know about – it’s called an Offer In Compromise.

An Offer In Compromise (OIC) is just what it sounds like.  You can make an offer to the IRS to settle your debt just like you can for credit cards and other unsecured debts. It can be a long, drawn out process. Even just being able to talk to an IRS representative can be daunting. 

As with anything dealing with the government, this is a form intensive process. You have to come up with a reasonable offer and make an initial good faith (non-refundable) down payment to the IRS. Along with that payment, there is an application process, where you’ll need to justify why the IRS should accept less than the debt. 

This can take a while and not everyone will qualify for this type of relief.  Recently, I settled an OIC case for a client and the process took over six months, which was on the fast side. The IRS even states that this could be even an 18 month long process. During this application period, you will still have to pay your tax debt down (usually by surrendering your future tax refunds).  If successful, however, you could walk away without having to pay a large percentage of your tax debt.

An experienced debt settlement or tax attorney can walk you through the process, fill out the forms and help you figure out if an Offer In Compromise might be a good option. 

To schedule a FREE CONSULTATION with the Law Offices of Brandon Rosenbloom, call us at 678-609-8724 or contact us online today.

Black Friday

It’s Thanksgiving night, the turkey has been carved, the mashed potatoes slathered with gravy, and the pumpkin pies sit cooling on the counter. But the actual hardcore planning taking place is not what other treats and side dishes to prepare, but a plan of attack later that night or early Friday morning for Black Friday sales. 

For as long as I can remember, members of my Dad’s side of the family banded together in small groups, with ads strewn around and talks of gathering provisions and timetables for each “must have” sale item.

According to a recent article in the Huffington Post, 1 in 4 holiday shoppers will participate in Black Friday sales and most will spend between $250-$1,500 during these sales, mostly on credit cards. According to the article, Black Friday Shoppers are 12% more likely to carry a balance of at least $3,000 on their credit cards.

During my time as a consumer bankruptcy attorney, credit card debt was a leading contributor for clients to come see me. Overspending on credit cards, coupled with life changes such as lay-offs, medical issues and other unanticipated problems led people to consider options to get out of the debt liability.

In 2005, the Federal Bankruptcy Code had a major overhaul, one point of which was to stop people from running up credit card debts with the intent to eliminate debts. Credit card companies now have the power to object to Chapter 7 and Chapter 13 filings if they can prove that the debtor ran up the credit card just prior to filing, which can lead to those debts not being discharged in your bankruptcy.

To avoid this credit debt bomb this holiday seasons-

• Use debit cards and cash when possible
• Set a realistic budget to pay off high credit card debts as quickly as possible
• Stay away from store credit cards and short term 0% credit card offers.  That 6-15 months goes quicker than you might think, and then you are stuck with high balances and high interest rates.

But, if you do run into high credit card debts that you know realistically that you will not be able to pay back over time then look towards debt settlement options. An experienced debt settlement attorney can negotiate with the credit card companies to lower your rates, lower your balance or settle for pennies on the dollar. 

To schedule a FREE CONSULTATION with the Law Offices of Brandon Rosenbloom, call us at 678-609-8724 or contact us online today.

Happy Holidays and be careful of the crazy Black Friday crowds.