Category Archives: Foreclosure

With No Money, How Do I Pay My Attorney to File My Bankruptcy?

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How do I Pay My Attorney for My Bankruptcy?

By, Ginger Kelly, Esq.  April 10, 2018

The other day, a personal friend asked me (for a friend), whether or not they should she use their tax return tax refund to pay down their credit card bills or to replace the old and leaking roof on their home.  Their roof needed repairing badly.  Their credit card debt was very old and the payments were more than they could afford.  Even though I can’t make that final decision for this friend’s friend (or any of my clients), I can advise most folks of their legal options.  When people need to make a choice between a roof over their head or paying credit card bills, one good option available to most everyone is a fresh start.

In many or most situations, bankruptcy can give an individual or a couple, the fresh start they need. If you are in a position where you need to make important decisions like what to pay and what not to pay, like a roof on your home or to repair the vehicle you need to get to work, talk to a good bankruptcy attorney.  Most give free first consultations, like our office. Bankruptcy might be an option for you, or maybe not.  A person hasn’t lost but an hour of their time discussing their options with a good attorney.  Talking to a professional about options for taking care of debt, sometimes gives the clarity you need to make the right decisions for your future.

A client visited me the other day to discuss her situation. Apparently, she had debt exceeding any amount she could pay.  It wasn’t much debt, but it was a lot for her and that is important. Her earnings were barely more than the poverty level.  So while we had a nice hot cup of coffee, we talked about all of her options.  It was a nice pleasant, casual conversation.  I discovered that my client earned too much money to qualify for a free bankruptcy, through legal aid. She was sad and asked me what can be done.

Because her bankruptcy was not complex, I agreed to lower my fee. I gave her my best  fee option. Still, she was worried. Where would she find the money to pay the attorney fee? I asked her if she was getting a tax refund. She said yes, but it wasn’t enough. She was sickened with the idea of paying creditors all of her disposable income for years to come.

All of a sudden, she had an idea. She said, rather than trying to negotiate and pay down her credit card debt, using all of her disposable income, she said she could ask her uncle for the money. She said that she was thinking of asking him for a gift to help her pay down her loans anyway. Why not ask him for the same gift to pay her attorney’s fees?  Good idea! Sometimes asking relatives to help is a better option than worrying about how to pay overwhelming debt. I’ve had several clients in this kind of situation.

Once, a couple was in the same situation. The wife lost her job due to illness and then one thing led to another. They became deeply indebted, mostly to unsecured creditors (credit card companies). The best option for them was to file for bankruptcy. We talked a little bit and I gave them my best rate.  They were thankful, but without the extra cash, they didn’t know how to pay the legal fees. This was a problem for them.  However, determination overcomes lots of obstacles.

This couple scraped and saved and paid a little along. One spouse sold a baseball card collection and some tools.  The other sold some furniture they no longer needed. They used Craigslist and Facebook Yard Sale to sell a few more things.  They sent checks, one by one, to our office. Sometimes the check was small, sometimes large. We placed all of these funds into our client’s trust account, on hold for them until they finished paying. It didn’t take long. Within about four months, this couple paid all their fees, including the filing fee. This couple couldn’t have been happier.  I was so happy to help them in this way.

Once a person is determined to make a bad situation better, magic happens. There are more options for paying lawyer’s fees than these. Options are only limited by a person’s motivation, determination and imagination. Typically, I ask clients whether or not they have a tax refund coming to them.  This is a very good option for covering fees and things.  Then, I suggest asking friends or relatives for a gift.  At our office we have many ways of making your bankruptcy affordable, sometimes even free or at a reduced rate. Ask us how and perhaps we can help to make your fresh start,more affordable.  It may be easier than you think.

The Law Offices of Ginger B. Kelly is now accepting clients in the Sturbridge, Southbridge, Dudley, Webster, Oxford, Charlton, Auburn, Spencer, Brookfield, Warren and all of the Worcester County Area. We can explore whether or not bankruptcy is the easy way out or not.  We have a comfortable place to talk and a free pot of coffee waiting for you.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, http://www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We cannot stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2018 by Ginger B. Kelly, Esq., all rights reserved.

 

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Defending Debt Collections in Court: 6 Amazing Ways to Score Big Time

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Defending Debt Collections in Court: 6 Amazing Ways to Score Big Time

By Attorney Ginger Kelly
October 5, 2017

The New York Times ran a story in 2012 about the outpouring of credit card debt lawsuits being filed. They compared this widespread outbreak to the “robo-signing” fiasco which plagued the mortgage industry in years past. Now it seems the debt collection industry has taken up “robo-lawsuits” and are filing thousands of lawsuits a day all across America, including Massachusetts and Rhode Island. Lawsuits are being filed with the expectation that 99% of all defendants will not answer. In 2017, this is still a big problem.

Lots of people people being taken to court by debt collectors and lenders, many of them don’t owe a dime.  This is the new trend, plaguing thousands upon thousands of consumers in America today.

The biggest problem with these debt collection lawsuits is that about 90% of them are flawed. Debt collectors cannot prove that they are the ones owed the money.  They cannot prove how much money is owed, if any.  This is where consumers must take charge. Knowledge is power. Knowing things the debt collectors wish you didn’t know will often place you in the driver’s seat when it comes to Debt Collection law suits.

1. Start at the Beginning, Answer the Lawsuit.

If a debt collector files a lawsuit against you to collect a debt, you will receive a summons (typically in the mail). Many people ignore these types of summons, because they look like ordinary mail. Within the summons is a complaint. The complaint has a date to respond and instructions on how to file an answer.  Take note of the instructions and, if you like, look for a form to respond to the complaint.  In Massachusetts, Mass.gov has forms that can help you in small claims or in district court.  These forms can be easily filled out. You must remember to respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers. This will preserve your rights in court. It’s simple and doing maintains your right to challenge the debt in court.

Even if you owe this debt, a two-sentence response denying liability to the lawsuit filed in court will suffice. When you do this, chances are your law suit will likely lead to a negotiated settlement. This will save you money in the long run, because most of the time the debt amount is inaccurate. The number one mistake people make when they are sued is failing to respond to the notice in the complaint.

In your answer, you can simply Admit, Deny or express Lack of Knowledge to each statement made by the plaintiff debt collector. Of course you don’t admit to any statement unless you know it’s 100% true, so be honest. Don’t guess. If you don’t know whether or not, for example, the account number listed is your credit card number, or the debt amount is actually the amount of money owed, deny the claim. The same is true for all the allegations. If you do not understand what the plaintiff is saying, you should say, Lack of Knowledge. Lack of Knowledge simply means you don’t know whether that statement is true or not. Then, take your answer to the clerk of court and file it. Mail a copy to the other side. Ask the clerk the proper procedure for making copies and mailing.  Better yet, don’t bother taking chances or taking the day off from work to file papers with the clerk, talk to your lawyer and bring in the big guns to fight this for you. Pay your attorney to hassle with the paperwork.

Even if you don’t have an attorney, don’t be shy or embarrassed. Filing an answer doesn’t mean you want to avoid paying your debts. It only means you are a smart consumer. It means that you want the debt collector to do his job and prove their allegations against you. In any business transaction, it is always best to be sure that you actually owe the correct amount before paying it. The same applies to debt collection law suits. This is why you file a simple answer.

2. Find Out Who, Exactly, Owns the Right to Take You to Court

The collection agency must prove they have the right to collect this debt, if you ask them. This is their job. Make them work. All collection agencies have a duty to provide good evidence of a transfer of the signed credit card agreement, but only if you ask. If you don’t ask, they have no duty. So, if you ask and the other side does not produce paperwork, you you don’t understand it, ask the magistrate or the judge to dismiss the case.  When the plaintiff does not have the “chain of custody” paperwork giving them the right to collect this debt from you, they lose.

It’s rather enjoyable when a judge or magistrate takes a good look at the chain of custody paperwork many debt collectors provide. Some of them shake their head. Then, they dismiss the case. It’s that simple.

Mass Legal Help is a great website that gives examples of how to answer and challenge a debt collections law suit in a simple and complete manner.

3. Make the Debt Collector Prove the Amount Owed, Why Not?

This is a good one. In most debt collection law suits, there are so many charges upon charges, and fees no one understands, it’s not funny. Make the debt collection agency prove the amount owed by simply asking them to provide the original signed agreement and a balance on the account from zero to the present. If they can’t prove what you owe, the judge will not be able to make a ruling and will dismiss the case.  If they hand you a huge stack of paper, don’t feel threatened.  Either ask for them to show you what the papers mean, or ask for a continuance so you can examine the documents.

I talk a little bit more about this in my article, Debt Collection and 7 Deadly Sins. Take a quick look at point 3. Greed. This may help you.

4. Use the Statute of Limitations, Like a Boss

State law provides that debt collectors have a maximum amount of years they can legally sue you for debt they think you owe. This is different than collections.

A debt collector can bill you forever, but a debt collector cannot sue you in court to collect beyond the statute of limitations period. But again, a person needs to use this as a defense in court for it to be effective. When that statute of limitations period expires, the debt collector will lose if you defend using the statute of limitations. Use this as a defense and get your lawsuit dismissed. If it applies, it works!

Currently, the statute of limitations for almost any type of consumer debt in Massachusetts is six (6) years (MGL Chapter 260 Sec. 2)  In Rhode Island, it’s different.  Under Title 9, in Rhode Island, the statute of limitations for contracts and open accounts (credit cards), is ten (10) Years.  (RIGL 9-1-13(a))

In legal terms, a debt that has exceeded the statute of limitations is also called a “time barred” debt. When, exactly, the statute begins (or begins to toll), is different for different debt and for different state laws.  For credit card debt, typically the statute begins to toll from the date you made your last payment. You can find more info on Time barred debt defenses in Massachusetts in the online Mass law library.

There may be other legal arguments about the statute of limitations, like the conflict of laws and the significant relationships test. But essentially, the statute of limitations for most debt in Massachusetts is six years from the date of the debtor’s last transaction, or payment, on the account. Ask your attorney, if you have any questions and want to know if this statute applies in your case.

5. Sue the Debt Collector, Big Time

If a debt collector has violated any part of the Fair Debt Collection Practices Act (FDCPA), you may be able to sue them and could get a money damage award.  Consumers can successfully sue for violations of the debt collections practices act and are entitled to statutory damages of $1,000, plus punitive and economic damages.

This is where debt collection law suits can be actually quite enjoyable, for me anyway.  For you, maybe not so much.  As a lawyer, this is what I’ve been trained to do.

There’s nothing wrong with finding violations. Holding debt collectors to the higher standard they are called to perform is the right thing to do. Holding their feet to the fire, so to speak, is what’s best for consumers. This is why it’s not a bad idea to hire a lawyer to file a well-drafted answer to the complaint and attend court with you.

6. Explore Bankruptcy, the Fresh Start Option

If the debt you have is more than you can manage or the debt you are being sued for is large, it may make good sense to talk to an attorney. A good bankruptcy attorney will help you discover whether or not filing for bankruptcy is an option for you.

Filing for bankruptcy will keep you protected by the automatic stay, which will halt any and all debt collection efforts being made against you. If you are thinking about filing bankruptcy, talk to an attorney quickly. Don’t wait until the day before you are supposed to be in court. Lawyers can’t typically file bankruptcy paperwork the next day. That’s not how bankruptcies work. Bankruptcies are very paper-work intensive and tedious. To find out more read Bankruptcy, the Easy Way Out, Really? 

While it is possible to successfully defend a debt collection lawsuit, it’s often very difficult and emotionally charged. If the debt collection agency is successful in court, they can get a judgment entered against you. This, in turn, would allow the collection agency to garnish your wages or even go after your bank accounts or place liens on your home, vehicles or other property.

I tell all my clients that debt collection law suits are like traffic tickets. It never pays to ignore them. Reply to the summons. Go to court. What do you have to lose? But better than just “winging-it,” speak to a good bankruptcy and debtor defense lawyer first. Some law offices like ours, offer a free first consultation. When you hire a good debtor defense lawyer to help, there are virtually a hundred or more different defenses that can be used to protect you against garnishments and attachments.

Currently, we are taking defendant clients for debt collection law suits. Our first consultation is free. I’m always happy to meet new clients and am willing to work around your schedule. Exploring your best options with an experienced attorney can’t get much easier. This is only one way we are transforming the way people do business with lawyers.

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ABOUT ME: Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture. To find out more, visit, www.attorneykelly.com or call us at (508) 784-1444.

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NOTICE: This is an Advertisement. This post is not legal advice. Consult your attorney. Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet. Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other. We can not stress enough, if you need personal legal advice, always see your attorney. Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice. Seek legal advice and representation from your own personal attorney.

Copyright © 2017 by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, credit card debt, Debt, Debt Collection, Financial, Foreclosure, Hiring Counsel, Law, Lawsuits, Legal, Massachusetts, Massachusetts law, practical stuff, Rhode Island, Student Loan Debt, Trending, Uncategorized

Tricky Short Sale Deficiency Judgments

Short Sale KeysTricky Short Sale Deficiency Judgments

By Attorney Ginger Kelly

Agreeing to a short sale may seem like the best way to avoid foreclosure in many situations, but what happens to the money owed, after the short sale?

Quite often homeowners think short sales are the perfect solution to a difficult situation, the silver bullet, so to speak. The bank agrees to accept a sale price for less than the mortgage amount and presto, foreclosure averted!  But the problem with this is, a year or so after a short sale is completed, the mortgage lender can (and often will) seek a deficiency judgment against the former homeowner.

What is a Short Sale?

A short sale is when you sell your home for less than the total debt balance remaining on the mortgage. The sale price is “short” of the full debt amount. The short sale process involves the mortgage lender agreeing to accept the sale proceeds and release the lien on the property and then, the proceeds of the sale pay off a portion of the mortgage balance. Short sales are one way for borrowers to avoid foreclosure.

What is a Deficiency Judgment?

A deficiency is when a foreclosure sale doesn’t produce enough funds to pay the mortgage debt in full. The amount of the deficiency is the difference between the amount of the mortgage debt and the foreclosure sale price. A deficiency judgment is a judgment that the lender may obtain from a Judge, giving the lender the right to collect the deficiency from the borrower.

In a short sale situation, for example, if a homeowner sells their home in a short sale for $200,000, and the amount owed on the mortgage was $250,000, then $50,000 would be the deficiency amount. The lender could get a judgment from a Court Judge for the amount left owing and then some. This includes not only the $50,000 deficiency, but interest, other costs and sometimes attorney’s fees.

Deficiency Judgments in Massachusetts and Why are They So “Tricky?” 

Massachusetts is one of those states where a lender is permitted to seek a personal judgment against a borrower after a short sale to recover the deficiency amount. The tricky part comes in when, in general, once the lender gets a deficiency judgment against a borrower, the lender may collect this amount by using things such as a wage garnishment, bank account levy or by placing liens on titled property, like automobiles and motorcycles.

In Massachusetts, after a short sale, the lender can choose to do one of the following two things about the deficiency:

  1. The lender may choose to forgive the deficiency amount and issue to the borrower a Form 1099-C (Cancellation of Debt), which reports the deficiency as taxable income to the IRS. If this happens, the borrower (former homeowner) will have to pay taxes on the additional income this brings in the year they receive the 1099-C.  For most people, who were struggling to pay their mortgage, this causes tremendous hardship.
  2. The lender may choose not to forgive that part of the debt that has not been covered by the sales price and keep the right to file a court action to obtain a deficiency judgment.

If you are a homeowner and are thinking about negotiating a short sale with your mortgage lender in Massachusetts, it is very important to negotiate with your lender before you agree to a sale, to have the deficiency forgiven.

How Can I Avoid a Deficiency Judgment Following a Short Sale?

There are at least four ways to avoid having to pay back the deficiency.

  1. Negotiate a Waiver of the Lender’s Right to Seek a Deficiency Judgment

When a homeowner finds it necessary to sell their home in a short sale, it is important to try to negotiate with the mortgage lender and ask them to approve not only the short sale, but to a waiver of the right to seek a deficiency judgment. If your lender agrees, this provision must be included in the short sale agreement.  That means, always get the waiver in writing.  The short sale agreement must expressly state that the transaction is in full satisfaction of the debt and/or that the lender waives its right to the deficiency.

  1. Make a Settlement Offer

The second option homeowners have is, if the mortgage lender does not agree to waive the deficiency, the homeowner can offer to settle the deficiency for a smaller amount. Many lenders agree to accept a smaller amount because collecting a deficiency is expensive and typically takes a long period of time.  It’s easier for lenders to accept a reduced lump sum, rather than going through the expensive and lengthy legal process to try to collect.  A homeowner can also negotiate to repay the reduced deficiency debt in installments, over time.

  1. Hope the Lender Won’t Sue for the Deficiency

If the homeowner was not successful in negotiating a waiver of deficiency or a reduced deficiency payment plan, the mortgage lender will likely call and send collection letters stating that the deficiency amount is owed. Collection letters typically come from a lawyer’s office or a collection agency.  However, without taking the homeowner (borrower) to court and getting an actual deficiency judgment, the lender cannot levy any bank accounts, garnish wages, or place judgment liens on other property the borrower may own.

To get a deficiency judgment, the lender must file an expensive lawsuit. Many borrowers, who are forced to complete a short sale of their homes to avoid a foreclosure, are judgment proof.  This means that they don’t have much money, wages or other property (assets) that a creditor can take to pay off the judgment. If a borrower can’t afford to pay the deficiency, there is a possibility that a mortgage lender won’t even bother filing a lawsuit against them.

  1. Declare Bankruptcy

The other possibility is to file for bankruptcy to eliminate the debt.  A Chapter 7 bankruptcy would totally discharge the deficiency relieving the borrower of the entire debt. A Chapter 13 bankruptcy will require a payment plan for 3 or 5 years to pay a portion of the total amount owed. Bankruptcy may also be the most pro-active way to alleviate the tax problem before the lender issues a 1099-C.  Income taxes are not typically discharged in Bankruptcy unless they are very old and a borrower can’t retroactively discharge a recent 1099-C tax debt.

On the other hand, if taxes or the deficiency are all the borrower owes, bankruptcy may not be the best option.  However, Bankruptcy may be something to consider when the borrower is facing a lot of debt they can’t pay, or when a borrower needs to eliminate the possibility facing a tax burden they simply can not afford to pay in the future.  To find out more about whether or not Bankruptcy is really the easy way out, click here.

September 14, 2017

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, visit us at Ginger B. Kelly on Facebook or feel free to call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2017, by Ginger B. Kelly, Esq., all rights reserved.

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Filed under Bankruptcy, Chapter 7, Debt, Debt Collection, Deficiency Debt, Financial, Financial Planning, Foreclosure, Law, Lawsuits, Legal, Massachusetts, Massachusetts law, Mortgages, practical stuff, Short Sale, Uncategorized