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Dayton, Ohio Bankruptcy Attorneys - Cope Law Offices

Dayton Bankruptcy Attorney Personalized Debt Relief Solutions If you are overwhelmed by debt, you may feel as though no one can help you. However, there is help available, and the sooner you take advantage of it, the sooner you will find debt relief solutions. Speaking with a knowledgeable bankruptcy attorney is an easy first step …

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Should I use my retirement savings to pay down debts in Ohio?

Should You Use Your Retirement Savings to Pay Off Debt?

When you’re in a financial bind, it can be tempting to think about all of the assets you have and how you can use them to support you in the short term. This is especially true if you’re receiving harassing phone calls from creditors.

Making the Creditor Calls Stop: Should I Use My Retirement Funds?

Perhaps a creditor has convinced you that getting started on a payment plan can allow you to get back on track, and desperate to stop the phone calls, you consider pulling some funds out of your retirement account in order to make that first payment.

You might come across the idea of using your retirement accounts and borrowing against them in order to pay off debts innocently, but you need to realize all the potential implications of moving forward with this. This can be really tempting when you’re facing a financial struggle and it feels like you have no options.

Exemptions in Bankruptcy

If you’re in a financial bind, you might be thinking that you’ll have to give everything up if you eventually file bankruptcy. It is true that if you do have assets and you decide to file bankruptcy, some of these may be used to pay off creditors. What’s important for you to research ahead of time, however, are whether you can use any exemptions. It is not true that the bankruptcy trustee can take everything you own out from under you in order to pay down creditors. Although certain pieces of property are accessible through the bankruptcy court, both federal and state laws may protect certain items or accounts, including your retirement accounts.

Retirement accounts are almost always exempt in a personal bankruptcy case. This means you can file a case, discharge debt, and emerge on the other side with your retirement intact.

What Happens to My Retirement Funds in Bankruptcy?

Years spent building up your retirement savings, however, can easily fall apart if you attempt to cash out of a retirement account. This option can be even more tempting if you have recently lost your job and you have the option of rolling over your IRA to a new job or pulling the funds out. Bear in mind that there are also potential tax consequences of withdrawing the money from an IRA so you should always speak to your accountant first before doing this. You should weigh down how much you might be able to earn by keeping the money invested in an IRA against the cost associated with carrying credit card debt.

Reasons to Leave Your Retirement Funds Untouched

Taking money out of your retirement fund in order to pay down debt can also lead to other negative consequences. For example, if you pull the funds out of your retirement fund in order to get a creditor off your back, this seems like it addresses the issue in the short term but it can actually cause more problems down the road.

For example, if you are in so much debt that you are unable to get on top of the matter or if you withdraw so much out of your retirement account that you are facing tax penalties or other fees, you may find yourself worse off than you were before.

Another major benefit of leaving the funds inside your retirement account is that these funds are almost always protected in the form of bankruptcy exemptions. This means that even if you ultimately do need to file bankruptcy, your retirement funds will stay intact, giving you peace of mind that you will have access to those funds in the future even if you have to give up other assets in the discharge process. As you can see, there are significant costs associated with using your retirement funds in order to pay down debts.

It is generally not a good idea.

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Can I get a Repossessed Car Back by Filing Bankruptcy?

Ford F150(mst7022)

Creditors must turn over property to the debtor as quickly as possible after learning that the debtor has filed for bankruptcy.

In re Makowski, __ B.R. __ (Bankr. D. Alaska 2013)

Cope Law Offices are located in Southern Ohio, but nonetheless, we thought this recent case out of Alaska would be of interest to our clients.

The automatic stay is “one of the most fundamental protections afforded a bankruptcy debtor.” In re Makowski, __ B.R. __ (Bankr. D. Alaska 2013). The automatic stay prohibits creditors from repossessing or foreclosing on the debtor’s property and stops all actions against the debtor in other courts. It gives the debtor time to organize his finances without creditors’ threats looming over him. Not only are creditors forbidden from taking possession of a debtor’s property, but they may be required to return property they have already taken repossessed.

Nathan’s Ford F150 Repossessed

Nathan purchased a Ford F150 pickup to travel to and from work, but times were hard and money was short. The Greater Nevada Credit Union held Nathan’s loan, which had an outstanding balance of almost $33,000. When Nathan defaulted on his payments, Greater Nevada repossessed his truck. He borrowed a vehicle to travel to and from work and filed for bankruptcy a week later.

Nathan’s Attorney Files Suit

The same day Nathan filed for bankruptcy, his attorney faxed a letter to both Greater Nevada and the tow yard where Nathan’s truck was held to inform them of the bankruptcy and request that they return the truck. After deliberating for a weekend, Greater Nevada informed Nathan that it would not return his vehicle. In response, Nathan’s attorney filed suit against the credit union for violating the automatic stay. The day after that, Greater Nevada returned the truck.

11 U.S.C.A. § 542(a)

When a debtor files for bankruptcy, any entity “in possession, custody, or control” of property of the debtor must deliver the property in question to the trustee. 11 U.S.C.A. § 542(a). According to the court, “the automatic stay prohibits both actions taken to obtain possession of property of the estate [and] actions that exercise control over the property of the estate.” Mikowski, __ B.R. at 2. A creditor may take a reasonable amount of time to seek legal counsel before turning over the property, but refusal to turn over property of the bankruptcy estate is a violation of the automatic stay. Id.

Despite the repossession, Nathan’s truck was property of his bankruptcy estate. He took ownership when he purchased it and then he used it as security for a loan. As soon as Greater Nevada learned of Nathan’s bankruptcy and consulted with its legal counsel, it should have returned the truck. When Greater Nevada told Nathan it wouldn’t return his vehicle, the credit union “exercised control over property of the estate.” Id. at 4. By refusing to return the truck, Greater Nevada violated the automatic stay.

Nathan’s Truck Was Returned

While Greater Nevada did eventually return Nathan’s truck, it still violated the automatic stay by threatening to withhold it. The automatic stay is one of the most important aspects of bankruptcy and the court takes it seriously. When you file for bankruptcy, you’re putting all creditors’ claims on hold. Any payments to creditors must be made through the bankruptcy estate by the bankruptcy trustee – they can no longer take matters into their own hand. Bankruptcy is meant to protect you as you reorganize your finances. It stands between you and your creditors.

Image from Flickr user mst7022

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How Does the Automatic Stay Work in Consumer Bankruptcy?

How Does the Automatic Stay Work in Bankruptcy?

What is an Automatic Stay?

If you are contemplating bankruptcy, then you probably have a lot of creditors after you. The constant pressure and hounding of creditors to collect can be troubling. However, the bankruptcy laws do provide some relief in the form of the “automatic stay.” Once a case has been filed, the automatic stay prevents your creditors form suing you to recover debts, and also prevents many other forms of collection attempts. The idea is to give the debtor, and the bankruptcy court, the opportunity to sift through the the assets of the bankruptcy estate. For example, once you file for bankruptcy, your mortgage lender cannot foreclose on your home, your auto lender cannot repossess your car, and your wages cannot be garnished. This protection lasts for the duration of your bankruptcy case unless your lender successfully motions the court to have it lifted.

Note, however, that there are some situations where the automatic stay does not apply, and, therefore, you will not be protected from actions by your creditors.

See also: The automatic stay and corporations

When does the Automatic Stay Begin?

In most cases, the automatic stay takes effect as soon as you file for bankruptcy, and it applies in both Chapter 7 and Chapter 13 bankruptcy cases. Because this stay is “automatic,” you do not have to take any action to request a stay other than filing for bankruptcy. Thus, as soon as you have filed, all of those annoying collection phone calls and letter must stop. Moreover, for the time being, your property is safe and cannot be taken by your creditors.

How Long Does the Automatic Stay Last?

The automatic stay lasts until the end of your bankruptcy case, unless your creditors are able to convince the court to “lift” the stay. The stay may be lifted, and therefore its protections removed, in a variety of situations. For example, if you have filed for Chapter 13 bankruptcy, but have not followed your repayment plan, then the court may lift the stay.

What Does the Automatic Stay Protect Me From?

The automatic stay prohibits all debt collection attempts while your bankruptcy case is pending, including:

  • Lawsuits: The automatic stay prevents your creditors from bringing a lawsuit to collect on your debts. The protection against lawsuits prevents new suits from being brought, as well as old suits from being continued. Thus, if you already have a lawsuit against you by a creditor, filing for bankruptcy may prevent that lawsuit from continuing during your bankruptcy.
  • Foreclosure: The automatic stay prevents your home form being foreclosed on during the bankruptcy proceedings. Hence, you will be able to remain in your home during the bankruptcy.
  • Collections Attempts: Most collections attempts by your creditors must cease with an automatic stay. Thus, you will stop being harassed by letters and phone calls.
  • Wage Garnishments: A wage garnishment is where your employer is required to withhold a portion of your pay, and send it to your creditors. However, the automatic stay prevents your wages from being garnished during bankruptcy.
  • Liens:  A lien on your property means than a person has an interest in the value of that property until a debt has been repaid. Actions to enforce an existing lien, or to obtain a new lien against your property must be halted once bankruptcy has been filed.

When Does the Automatic Stay Not Apply?

There are some situations in which the automatic stay is unavailable to you. The following examples are common situations in which the automatic stay does not apply, or may be limited in some way:

  • Multiple Bankruptcy Filings: If you have filed for bankruptcy within the last year, and your case was dismissed, then the automatic stay only lasts for 30 days. If you have had more than one bankruptcy case dismissed in the past year, then the automatic stay does NOT apply.
  • If you previously filed for Chapter 7 bankruptcy, yet the court has determined that you are ineligible for Chapter 7, and then you file for Chapter 13 bankruptcy, then the automatic stay does NOT apply.
  • Child Support: The automatic stay does NOT prevent actions brought against you to collect unpaid child support.
  • Taxes: The automatic stay does NOT prevent the IRS from coming after you for unpaid taxes during bankruptcy.

When the automatic stay applies, and the level of protections that it offers can be complicated to figure out. If you are considering filing for bankruptcy, and you wish to know more about how to best protect your things from creditors, you should consult with an experienced attorney.

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Can Debt Collectors Harass and Call Me in Ohio? What Are My Rights?

Debt Collector Laws OHIt’s dinner time and the phone is ringing…again.

You told the jerks to stop calling but it didn’t do a bit of good. Your phone is ringing off the hook. The kids want to know what’s up. Even your Mom is receiving calls. Stress levels are rising, and fast.

Is this legal? Can debt collectors ruin your life over a past due credit  card bill?

The answer is no, debt collector harassment is not legal. Whether you’re in Ohio or another state, there are laws in place to prevent bill collectors from taking things too far, but you’ll need to pay attention to the rules if you hope to win the war. I’ve assembled a cheat sheet of sorts below that lays out the rules for fighting back against the debt collection machine.

The Fair Debt Collection Practices Act (FDCPA)

The FDCPA is a federal law that governs the behavior of the debt collection industry by preventing and punishing behavior that rises to the level of harassment. Its protections are powerful. However, before we delve into the particulars, I should mention that the FDCPA only applies to debt collectors pursuing consumer debts, it does not apply to the original creditor.

What does this mean?

It means that if the party you originally borrowed money from is harassing you, you won’t have recourse under the FDCPA. In order to trigger federal protection, your debt must have been sold to a third party debt collector. A common scenario in the debt world unfolds something like this: you borrow money on a credit card or some other unsecured loan. You fall behind on payments. The creditor send letters and tries to collect, but gives up after 6 months or so. They “write off” your debt, meaning they no longer count on it as a performing asset. To recoup some of their investment, they sell the debt to a debt collector. The debt collector either pays a small fraction of the loan for the rights to collect the whole note, or take a percentage of what they collect if they can get some money out of you.

Now you see why they’re so eager to get cash out of you. Their business is getting “hopeless” past due accounts to pay up. With that background out of the way, we can now get into the details of what exactly the FDCPA prevents bill collectors from doing.

– Debt collectors are prohibited from making false or misleading statements to collect a debt. The 11th Circuit Court of Appeals has recently ruled that there is no such thing as a harmless debt collection lie.

– Debt collectors cannot communicate about a debt at an unusual time or place. This means no calling early in the morning (before 8am) or late at night (after 9pm).

– Once a debt collector knows you are represented by an attorney, they must communicate with your attorney, not with you. Similarly, debt collectors can only communicate with a third party, like a friend or relative, if necessary to ascertain your location. If they already know how to contact you, then communicating with a third party is a violation of the FDCPA.

– Debt Collectors are prohibited from making threats while collecting a debt. This is a big one as debt collectors are often abusive, especially over the phone.

You’ve Identified a Violation, Now What?

Well, for starters make sure it’s well documented. Remember that you’ll be required to prove the FDCPA violation in court. Some states, like New York, only require the consent of one party before recording a phone call. In these situations, you can legally record a threatening debt collector and offer it as evidence.

In other cases, such as when a debt collector is illegally communicating with a third party, your fax machine will be your best friend. Let’s say you’ve told a debt collector to stop calling, but they ignore you. Hiring an attorney to handle the matter will only trigger FDCPA protection if it’s communicated in writing. In other words, if a debt collector is harassing you, make sure you can prove that the behavior took place, you asked repeatedly for it to stop and you did so in writing.

Once you’ve assembled evidence of an FDCPA violation, contact a lawyer, this is where the fun begins.

Penalties For Violating the FDCPA

In addition to attorney’s fees, the FDCPA allows debtors to collect actual and statutory damages from debt collectors who violate its terms. As a practical matter, actual damages are likely to be limited. Aside from emotional distress, debt collectors who behave poorly are mostly a nuisance, they rarely cause economic damage. In recognition of this, Congress allows for $1,000 of statutory damages each time a bill collector violates the FDCPA. This means that if you can prove that a debt collector violated the FDCPA, you’ll be entitled to $1,000 and your attorney will be able to recover her expenses as well. All in all, not a bad way to teach those pesky debt collectors a lesson huh?

Other Considerations: Statute of Limitations and Filing for Bankruptcy

Be aware that the time limit within which a claim for damages under the FDCPA must be brought is one year. Regardless of the evidence you assemble, after the statute has run, you will not be able to file suit.

Another thing to keep in mind is bankruptcy. While bankruptcy is a last resort for most folks, it offers powerful protections against debt collectors and collection lawsuits. Once a bankruptcy case is filed, a court ordered injunction called the automatic stay goes into effect which prevents all creditors from contacting you for any reason. The automatic stay protects against collection calls, lawsuits, foreclosure, garnishment and any other type of collection activity a creditor can possibly throw at you.

See also: How Does the Automatic Stay Work in Consumer Bankruptcy?