Archive for October, 2012

Alternatives to Bankruptcy: Litigation–Why Would I Want To Get Sued?

Monday, October 15th, 2012

article by Adrian Lapas, Eastern North Carolina Bankruptcy Attorney

As I stated in my prior post, there are ways besides bankruptcy that you can deal with your debts is to let your creditors sue you. Hunh? Why on earth would anyone want to get sued? A legitimate question and my answer is not one given lightly nor does it apply in all situations.

In order to make this option of dealing with your debts feasible, you will most likely need a lawyer well-versed in defending debt collection suits. Preferably, this lawyer is also well-versed in claims under the Fair Debt Collections Practices Act and applicable state debt collection law. Generally, I am talking about lawsuits against you for old credit card accounts but this type of strategy can sometimes apply to other collection accounts.

So, when would allowing a creditor to sue you make sense? It would be helpful to delve into how collections are handled nowadays.

The bad debt buyer will purchase this portfolio of debt for pennies on the dollar. By that, if a debtor owed an alleged credit card account balance of $5,000.00, the bad debt buyer may purchase the account for 3 cents on the dollar or $150.00.

The documentation that the debt buyer receives from the original creditor on the account is usually bare-boned—that is, name, address, and other rudimentary information. The debt buyer will then sue you and try to collect the full amount of the alleged debt. This is big business and some bad debt buyers purchase portfolios of credit card accounts for hundreds of millions of dollars (still at 3¢ on the dollar).

In this type of situation, the bad debt buyer is counting on you, the debtor, not responding or taking any action on the lawsuit. In fact, if you do respond, particularly with a lawyer, often the debt buyer will file a dismissal because they know they cannot prove the debt in court.

A lawyer well-versed in these debt buyer lawsuits often can win in court or, at least, negotiate a settlement where the debt buyer will dismiss their case with prejudice (which means it can’t be filed again) and that the trade lines are deleted from your credit report. Sometimes, the debt buyer will even pay your lawyer’s fees.

If you have a significant amount of debt and you get sued by a bad debt buyer, it may make more sense just to seek bankruptcy protection and get rid of all your debts. An experienced bankruptcy lawyer, particularly one who is versed in consumer protection statutes, can help you make a decision as to whether the “litigation” strategy or bankruptcy strategy is the best one to deal with your financial situation.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:
or call (727) 254-1704.

Filing For Bankruptcy Without A Lawyer – Scams Abound In Los Angeles

Monday, October 1st, 2012
article by Jay Fleischman, New York Bankruptcy Lawyer

Well over 45% of the Chapter 7 bankruptcy cases in Los Angeles are filed without a lawyer. When it comes to Chapter 13 filings, that number is far higher – in spite of the fact that nearly every single Chapter 13 bankruptcy case filed without a lawyer is thrown out of court.

What gives?

It seems as if many people don’t know the difference between the services a lawyer can provide as opposed to those offered by non-attorney bankruptcy petition preparers.

Maybe it’s the promise of a lower cost than attorneys charge. Or a sense of trust and authority vested in non-lawyers by community groups. Regardless, when it comes to filing for bankruptcy without a lawyer there are a host of things you’re not going to get.

Section 110 of the U.S. Bankruptcy Code explicitly limits the conduct of bankruptcy petition preparers in their assistance of people who file for bankruptcy.

Non-Lawyers Can’t Give Legal Advice

Section 110(e) expressly forbids bankruptcy petition preparers from offering legal advice. That includes discussing with you whether filing for bankruptcy is a good solution for your problems, which type of bankruptcy to file, which debts will get wiped out, and whether you’ll lose property if you file for bankruptcy.

If you consider the entire range of things the bankruptcy petition preparer can’t do, it becomes pretty clear that there’s not much they can do. In fact, the law pretty much turns these folks into nothing more than typists.

Prohibition Against Giving Legal Advice Goes Beyond Bankruptcy Law

“[S]tate law is properly considered in determining whether the unauthorized practice of law has occurred in a bankruptcy court,” according to In re Boettcher, a 2001 decision of the U.S. Bankruptcy Court in the Northern District of California. Under California law, you’re not allowed to practice law in California unless you’re admitted to practice. Period.

If you’re not admitted to practice law in California, offering legal advice – whether or not rendered in the course of litigation – is a big, fat no-no.

Why’s that important? Because it’s been held by the U.S. Bankruptcy Court for the Central District of California that choosing your bankruptcy exemptions is considered the unauthorized practice of law. In fact, the 9th Circuit Bankruptcy Appellate Panel found that a non attorney engaged in the unauthorized practice of law by “interview[ing] and solicit[ing] information from the debtor with regard to his financial status” and “assist[ing] the debtor in preparation of the bankruptcy schedules.”

Non-Lawyers Who Help You File For Bankruptcy Are Typists – That’s All

According to a 1998 case out of the U.S. Bankruptcy Court for the Southern District of California, “[T]he services of bankruptcy petition preparers are strictly limited to typing bankruptcy forms.”

They can’t do anything more than type ouf your bankruptcy forms. If you’re a well-seasoned consumer bankruptcy attorney with an intimate knowledge of the U.S. Bankruptcy Code and state exemptions, that’s all you need. But for anyone else, using a typist for your bankruptcy preparation is nothing short of insanity.

Non-Lawyers Are Doing More Than Permitted – And Doing Harm

In the past month or so I’ve reviewed well over 300 bankruptcy cases filed without lawyers. Most contain proper exemptions, are professionally compiled using commercial software such as that used by consumer bankruptcy lawyers. People who file for bankruptcy are getting advice, and only sometimes is it correct.

From what I’ve been told by people who’ve gone through the process without a lawyer, many times they are charged 2-3 times the amount experienced attorneys are asking for full representation.

Finally, the non-lawyer is required to disclose their assistance in connection with the bankruptcy filing. I think I’ve seen 5 or 6 such disclosures filed in all of the cases I have reviewed.

Don’t get Hooked………in other words, consumers are getting screwed and scammed in droves.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:
or call (727) 254-1704.