The Truth About Bankruptcy …
Collections calls and reasons for bankruptcy are two things that unfortunately go together when you’re facing a financial crisis and find no alternative but to declare bankruptcy. The Fair Debt Collection Practices Act was created for the protection of consumers. When you’re facing money problems due to illness, job loss, or death in your family, the last thing you should have to be concerned about is collections calls from some harassing bill collector. Sadly for many consumers, unethical collections agents are a fact of life, and millions of people aren’t aware enough of the federal laws to know what their options are when dealing with these people. Quite often the third party collections companies hired by creditors to collect debts use illegal methods of debt collection on a regular basis.
Under the FDCPA, very specific regulations define how, when, and to whom collections calls may be made by third parties. These companies are routinely hired by original creditors, or assigned delinquent accounts by the companies. The difference is that when companies are hired, they buy delinquent accounts from the original creditor that the debt is to be paid to. If they’re assigned they get a percentage of the debt settlement. The Fair Debt Collection Practices Act states that collections calls may not be made under any circumstances, prior to 8 am or after 9 pm, to the time zone you reside in. they may not call you at work if your employer has a policy against personal calls at work, or if you simply don’t want to be interrupted at work. They also can’t call you at anytime that you consider to be inconvenient.
Another issue in regard to collection calls, is that in many cases the calls are harassing or threatening. This is not only illegal under the Fair debt Collection Practices Act, but also under harassment and stalking laws. As far as collection calls, third party collections agents may not call anyone in an attempt to get information about a debt you owe or allegedly owe, other than your spouse or parent if you’re a minor. The law regarding collection calls also applies in bankruptcy cases.
There are several different types of bankruptcy. each form of bankruptcy has different rules applied to it, and if this is something you’re contemplating due to a severe financial situation, be sure to consult a bankruptcy attorney who is a specialist in these matters and can advise you about the best course of action to take. Bankruptcy refers to the financial state of a person or business unable to pay debts owed to creditors. In the case of a business in financial trouble, a creditor can file what’s known as an involuntary bankruptcy against the company in an attempt to recover money owed to them, or they may restructure the company to regain back their funds. Most often, the bankruptcy proceedings are initiated by the business owing the debts.
Two of the most common forms of bankruptcy are Chapter 7 and Chapter 11. Chapter 7 is for the average person who can’t pay the debts they owe. You may qualify for chapter 7 if your gross income each month is less than the state’s Median level, your level of expenses shows that you’d have no income left every month after paying your debts, or in some cases, you have special circumstances. Depending upon the laws of the state you reside in, you may be able to keep some of your assets including your home and car, but would have to continue to make payments on them and must not default. In some cases, retirement accounts are also exempt.
Chapter 11 bankruptcy is most often used by businesses, simply because it’s a very complex process and the cost involved is very high. Chapter 11 allows for the restructuring of a business entity and reorganizing all their finances so that they may remain operational. It’s a lengthy process, and can take up to 120 days or longer. The main difference between chapter 7 and chapter 11 is that with a Chapter 7 bankruptcy, the business would have to liquidate all of its assets and close down. The main consideration with both types o bankruptcy is that all collection activity must cease immediately upon the filing, and this includes all collections calls.
So, the main differences between the two types of bankruptcy are that Chapter 7 is often known as liquidation bankruptcy, because in this case, the individual or business has gone past the point at which they could reorganize their assets and repay their debts. All of the assets that aren’t considered to be exempt must be sold to satisfy the debts owed to their creditors. The creditor may collect their debts from the individual or business according to the way in which they were first loaned. These debts are referred to as absolute priority. A trustee is chosen to be in charge of the proceedings and to ensure that the debts are paid off according to the law. All secured debt is sold to pay the debts owed to the creditors.
By contrast, Chapter 11 is sometimes referred to as rehabilitation bankruptcy. It’s a much more complex process and takes a much longer time to be resolved. However, this type of bankruptcy does allow the business to restructure, and get its debts reorganized so that it’s able to begin operating as a healthy business once more. After a business has filed for Chapter 11, if it’s successful, they can continue operations as before. If for any reason the process isn’t successful, they file for Chapter 7 and liquidate all of their assets.
Although many attorneys don’t recommend bankruptcy as an option, sometimes it’s the only choice. Discuss your financial situation with an attorney who specializes in debt related cases and bankruptcy to find out the most beneficial option for your individual case. If when you’ve filed for bankruptcy, you continue to receive collections calls from a third party debt collector, they’re in violation of the Federal Debt Collection Practices Act and could be held liable in civil court. Every violation of the FDCPA that’s held up in court could result in a fine of up to $1,000 paid to the debtor for each violation.
Thus far you’ve learned about the debt collection process. Through that you began to understand collection agencies and debt collectors, and how the operate. Next you learned about your rights under the law, and how to stop collection calls through debt validation requests, cease and desist letters, and finally bankruptcy. All of these strategies while good, are defensive in nature.
Sometimes, enough is enough. You just have to stand up for yourself and make an example of the jerks! When you are at that point, it’s time to go on the offensive and sue the bastards!
Next Page: How to Sue Collection Agencies and Bill Collectors for Violating Your Rights!