A proof of claim is filed by a creditor after a Chapter 13 bankruptcy case is filed.  Its essentially the way for a creditor to raise their hand and say, you owe me money, please pay me my share.

Most of the time, the creditor has a legitimate proof of claim and your plan must be adjusted accordingly (more on that in another post), but occasionally a creditor will file a proof of claim that defies logic.

I have a current case where several bogus proofs of claim have been filed.

The most egregious claim filed was by a debt buyer (more on that in another post).  This company probably purchased a portfolio of debt accounts for a penny on the dollar, and if this claim was any indication of the quality of the accounts, probably less.

This creditor filed a proof of claim for $8800 on a debt that was charged off in 1996.  Just to give you some context, in 1996, President Clinton hadn’t started his second term yet, The Spice Girls had the number one single on the radio (which was released primarily on cassette tapes I might add), gasoline cost 73 cents a gallon and the New York Yankees were world series champions (some things just don’t change).

This creditor did not provide any supporting documents either.  It is likely that this creditor saw that my client was filing a 100% plan and they were just throwing it up against the wall and seeing if it stuck.

Unfortunately for the creditor, the wall they hit was me.  The first thing I do in this situation is contact the creditor who has filed the bogus or deficient (a nice way of saying bogus) claim and ask them for supporting documents.  If they don’t have it, I request that they withdraw the claim.

This particular creditor only had a voice mail box, so I left a message that they would provide supporting documents or I would file an objection to their claim.

Well I didn’t hear back and I filed an objection to their claim.  Surprise, surprise, the creditor withdrew their claim rather than fight in court.

That is what you want.  Anyone can fill out bankruptcy documents, but you want a lawyer who isn’t going to roll over and just let a creditor steal from you, which is what this creditor wanted to do.

I saved my client $8800, or almost $150 per month in her Chapter 13 plan.  That is $150 that can go to pay for clothes for her daughter, gas for her car, or even a night out.  Most importantly its $150 that she isn’t paying to a thief every month.

You don’t just want to hire a paper pusher, you want to hire a fighter.  You want to higher a lawyer that gets his kicks from pushing back at debt collectors when they push you.  You don’t just want someone in your corner, you want someone who is going to get in the ring and flatten the creditor that is trying to do you wrong.

If you are in danger of losing your home and don’t want to go it alone, call me at 484-661-2891 to set up a free, no obligation consultation.

The first thing that you need to know is that most credit card cases in Pennsylvania are being heard in front of magistrates.  Pennsylvania magistrates  have such a wide variety of cases that they cannot possibly become experts in everything.  Because of this, even the best defense against credit card cases may not work, also, the best case against them can fail.  The magistrate judge will try his or her hardest to get these right, because no judge likes to be reversed on appeal, and for the most part, the Pennsylvania magistrates really do care about their positions and how they carry out their duties.  That being said, you may not get the correct outcome at the magistrate level, and you may be forced to appeal, which will cost you more money!

The second thing that you should know is that a credit card statement on its own is not enough to prove a debt.

The third thing you should know is that you have the right to question evidence the plaintiff puts forward to prove the debt.  The problem is that when you are defending yourself and you question the plaintiff’s evidence, the opposing side may ask the question did you make these charges, or is this your debt.  You have every right to decline after the question, but the magistrate is human and that may make you look liable further debt than you actually are.

Lets suppose for a moment that you all are representing yourself against Discover card.  Discover card has hauled you in front of your local magistrate because you owe them $5000 and haven’t made a payment in twelve months.  Now let’s just say this information is accurate, and you have actually made the charges, you owe the debt, and you just can’t pay it.  In a court you are under oath, you can’t lie and say you didn’t make the charges, so that puts you in a difficult position if you want to question Discover card’s lawyer about his evidence.

This is how it usually goes when a credit card company’s attorney present evidence in court.  The attorney is going to come up to the bench and show the court 6 to 10 months worth of statements from your credit card.  He will show where you did not make payments. They are going to point out that after a certain month the credit card company stopped charging over limit fees, or did something else to make it look like they were being altruistic and giving you a chance to catch up.  Then they’re going to pull out a credit card agreement.  It’s going to be the most recent version of a document that essentially says we (Discover Card) have all the rights and you have none.  If the attorney is good, they will have highlighted the portions most damning to your case and handed directly to the judge. Finally, some attorneys like to do a little bit of legal theater, and they will pull out a credit card slip.  The credit card slip will not be yours, it will be the attorney’s.  They will tell a hokey story about how they got pastrami on rye at the deli (that’s the story I used) and how they used their credit card.  Then they will show at the bottom how it says that the cardholder agrees to the terms and conditions of the credit card agreement and agree to repay the amount charged.  The attorney will discuss tacking with the attorney, and tacking essentially means that signing that little piece of paper means that you agree to be most recent credit card agreement.  Then if the attorney is smart, he or she will rest their case, and let the hapless defendant defend himself.

This is where it gets sticky for a person who defends himself. If you’re defending yourself, you may have every reason to attack the plaintiff’s evidence, but if you risk opening yourself up to questioning if you do.  The question is: When are you acting as lawyer and when are you acting as defendant and witness.  This is how a person who defends himself gets in trouble.  The judge or magistrate will say: “do you have any questions for opposing counsel?”  the first time you ask a question you’re cooked.  If you ask, “Do you have assigned credit card agreement from me?”, the attorney may respond no it was done electronically but you did take the card right?  You’re under oath, you can’t say no.  You might ask the other lawyer “Do you have any signed credit card slips from me?” Discover Card’s lawyer will probably say “No, but you did use the card to charge right?” Again you are not allowed to lie.

The bottom line is you’re not allowed to lie.  You can say, “I’m questioning the plaintiff’s evidence, not testifying”, but that seems evasive and even though the magistrate is required to allow you to defend yourself without testifying, the magistrate is a human being and he is likely to assume that your refusal to answer means you did charge on your credit card.  Unless you’re Frank Abigail or Will Hunting ( and remember they took Will Hunting off to jail before he was bailed out by the professor), you’re probably not be able pull this off.

A judgment from a credit card company can wind up being a lien against your home in Pennsylvania, I see it everyday, so a credit card lawsuit is not a joke.  If you don’t want to go the route of bankruptcy, you need to get a lawyer to defend you.  When I defend a client against a credit card company, I can usually pick them apart, because they come unprepared.

The credit card companies lawyer usually only shows up with a couple of statements and maybe the the credit card agreement.  The agreement is rarely signed.  I’m not give away my strategy for defending these cases on-line, that comes from years of defending this type of case, and it’s also something that fits my personality in a way that I can pull off where another attorney may not able to.  I couldn’t pull a Johnny Cochrane and put a glove on my client’s hand and “Say if it does not fit then you must acquit,” but I sure can poke holes in a credit card company’s lawyer in a way that only credit card company insider can, because that’s exactly what I was, one of the top debt collectors in the country and someone with intimate knowledge of the credit card industry.

So if you’re going to defend yourself, for the love of all that is good  get a lawyer.  Don’t defend yourself, because you will probably lose, and lose badly.  While lawyer be expensive, a lien against your house is much much more expensive.  If you find yourself being sued by a credit card company and you want someone who will go toe to toe with the credit card company’s attorney, call me at 484-661-2891, or e-mail me at jim@padebt911.com, and we give the credit card company a dose of their own medicine, together.

I’m generally not known for being able to give coping tactics on financial trauma, but there is one thing I know for certain, knowledge is power and the more you understand about your financial situation, the less uneasy you will be about it.  If after this article you still find yourself in need of some more help (there is nothing wrong with that, everyone needs to talk to someone at one point or another), check out my friend James Valeri’s web-site Jim Valeri, Counselor for more ways to cope with debt stress.

The focus of this article will be aimed towards the employed person or the person who works for themselves. My best suggestion to the person who finds himself unemployed is to treat his or her job search is a full time job. It’s cliché, but it works, and I’ve never been unemployed more than six weeks when I made looking for a job a full-time job.

For whatever reason, people find themselves under financial burden, and while a lot of the times these injuries were self-inflicted, the point here is not to assign blame, but to find simple, no-nonsense solutions to our financial problems.

Knowledge is power, so the first thing that you need to know, is exactly how much money are you bringing home from your job. Most people know that, but there are some people who get direct deposit and it’s to the point where they don’t even know what they make, that’s a bad position to be in.

Once you know how much you bring in each pay period, I want you to look at your 2008 tax return. Did you get a large tax return this year? If you did, that wasn’t the government’s benevolence, that was paying you back for overpaying your taxes during calendar year 2008. I routinely see people in my office who have $5000 – $6000 tax returns. If you’re getting a $6000 tax return, you essentially want the government $500 per month interest free for a year. That’s your money, don’t lend it to someone for free, especially an organization that spends $900 on a toilet seat.

If you’re overpaying significantly in taxes and getting a large tax refund every year, go see your HR person and have your holdings adjusted so that you’re getting more of your money each month when the government is getting less. Sometimes that simple move will get someone out of financial dire straits on their own.

If you all $1500 on your Discover card, and you’re struggling to find a way to pay, you fixed your tax withholding, you’ll have more money to pay that debt off, and the sooner you pay that debt off the less likely you will be to fall even further behind on your Discover card.

The next suggestion I have is to make a list of everything you spend money on for a week. That might seem silly but I did that in January, and I learned that I spent $30 at Starbucks, $18 at Joey Vento’s Gino’s Cheesteak’s, $120 at Merchant’s Square Mall, and almost $50 on various fast food (we have lots of health food in Philly). That was almost $200 a week on crap.

Rather than spend $30 at Starbucks, I bought an iced tea brewer for $25.  My iced tea costs around six dollars per month and it’s much healthier too.  I’m not going to say that I completely kicked the Starbucks habit, but it’s not a once a day thing anymore. I didn’t give up Gino’s completely either, but it’s become a once a month treat rather than a three times a week deal, and I didn’t give up fast food totally either, but the sandwiches I make are just about as good as what McDonald’s can come up with and for a fraction of the price.

I confess that the $120 I spent At Merchant Square Mall was just crap, I haven’t completely kicked that habit either, but definitely more aware of when I spend money at that place and now have the good sense not to go in just to say hello.

I’ve been able to lower the amount of money spent on crap per week from $200 to around $50, and the $150 savings per week is going towards paying my car off that much faster, and when this is paid off I’m going to knock out another car loan, I have a strategy for that as well, but that’ll be a subject of another post on another day.

The bottom line is most people would come see me don’t really need bankruptcy, they needed their financial house in order, the best way to do this is to figure out how much you make, how much you spend, and prioritize to determine whether you really do need the help of a bankruptcy lawyer were just a little bit of self control, because I assure you if you do not take control of your financial situation you will need my help and it will be sooner rather than later.

If you need help coping with your debt struggles and you don’t know where to turn to, please check out Jim Valeri’s site Jim Valeri, Counselor, and then when you are ready to get on the road to financial recovery, email me at jim@padebt911.com or call me at 484-661-2891 to schedule your free, no-obligation consultation.

The first thing that you need to know about magistrates is that they don’t have to be attorneys, but often they are.

The second thing you need to know about magistrates is that the credit card companies representative is probably just as nervous as you are, because these courts are unpredictable, a little bit like the Wild West.

What makes these courts so unpredictable are the judges.  Frankly, the magistrate system in Pennsylvania is broken because the wide variety of cases that these judges have to hear it sure is that no magistrate is likely to be an expert on any given field.  This is not the bankruptcy court where a bankruptcy judge will be an expert in the field because all they do is bankruptcy.

The best way to defend a credit card case is to make sure you don’t go in front of the magistrate.  Don’t let your debt problems get that far.

I’ve seen instances where an unsecured creditor has gone in front of a magistrate, gotten a judgment, got a lien on the debtor’s home, and made it difficult to get a mortgage modification and frustrate the bankruptcy case as well.

This is ridiculous.  Discover card should not be able to make itself a secured creditor simply by getting a judgment, and as a consumer it’s your responsibility to make sure that it doesn’t happen.

So I’ve been summoned to the magistrate, how do I avoid actually going to the hearing?  You could pay your debt, but if you could pay your debt you probably wouldn’t have made your creditor chase you for a year or more.  So my suggestion is if you are unable to immediately file bankruptcy protection is to discuss a settlement with that credit card company.

Once a case has been filed, the creditor is not likely to be as generous as they were prior to the filing of the case, because they have expended money in bringing the case and they are going to want to be reimbursed for that.  Generally speaking, creditors are excepting 80% percent of the balance or $200 per month on the full balance until the debt is paid in full.

It may seem sneaky or even dishonest, but I would find out from the creditor how long they would wait to except the first payment. Alternatively, you can tell the creditor that you’re planning to seek bankruptcy protection, and therefore they are unlikely to receive any money.  At least one creditor, Capital One, it has been known to cancel hearings based on that alone because they don’t want to pay the attorney who will have to appear for them when they are not likely to recover anything.

I’ve told you before him to tell you again, credit card companies have lawyers an army of working on their behalf, you really should get one too.  Chances are you don’t have just one credit card, but several credit cards in this situation, and its only time before they all come knocking.

If you’re ready to fight back against the credit card companies underhanded tactics, call me at 484-661-2891 or e-mail me at jim@padebt911.com to schedule your free, no obligation, consultation.

Recently I had a potential client in my office who in seven months had racked up $14,000 in credit card debt.  I have seen people pile debt up quickly before, but $14,000 in seven months is quite a feat.

Before I make recommendations to any client, there are some questions I ask to try to figure out what the root of their money problem is.  The last thing I want to do is recommend bankruptcy to someone who is just going to go back down the road that leads to debt problems.

I was going through my client’s credit card bills and one location kept coming up, AAA Veterinary Associates (name changed).  Upon further questioning, I learned that my client had bought a daschund for $900 from a local pet store and the dog had spine problems.  One surgery lead to another, and before she knew it, she had spent $12,000 on medical bills for the dog.

There was no way I was going to file a Chapter 7 case for this woman until I knew that the problem was resolved.  Medical problems with pets are among the most heart-wrenching there are, because every human has a line of what they cannot or will not pay for Fido or Sparky to be made well, and we always feel dirty when we decide it is better to put our pet to sleep rather than continue to pour our hard earned dollars into their medical issues.  It is doubly hard when it is a child’s pet, as this dog was.

I had to deliver some bad news.  I told my potential client that bankruptcy would not solve her problem unless she stopped the financial bleeding, and in her case the financial bleeding was this dog.  She had to be reasonably sure the dog wasn’t going to require much more medical care or she would need to put the dog up for adoption, or worse, put the dog to sleep.

Needless to say this wasn’t what she wanted to hear.  I got a little bit of the “shoot the messenger” effect, but that is OK, I can take it.  I have tried to keep touch with her, but she isn’t returning calls or emails.  I certainly hope that she resolves her money pet issue before she files for bankruptcy, even if she doesn’t file with me, because right now I will not file a case for her.

This is an extreme example of what a sick pet can do.  I have heard of pet insurance, and frankly I’m skeptical of it, because dogs and cats tend to live about 12 years, how is a company going to insure it?  I’m afraid I can’t advise you on that, but I do know that if you are in tough financial shape or your job is not on sure footing, now is not the time to get a pet, no matter how much your child or significant other wants one.

The average cost of keeping a dog in according to the 2005-2006 APPMA National Pet Owners Survey was $1,571.  That is not a large amount of money, but the trouble is that is an average.  Ear surgery can cost $800.  Spine surgery can cost $1500, and that is on the low end.  Bladder surgery can cost $1000.

If these costs keep adding up, you will have yourself in a money pet.

I don’t know if I can make it any clearer, if you are in a bad financial state, now is not the time to get a pet.

Most people don’t want to find themselves in my office discussing bankruptcy, but this economy has caused a lot of people who never thought it could happen to them to find out that it can happen to them.  Let’s be sure Fido isn’t leading you into my office on a leash known as a money pet.

The second question the trustee will ask you for 341 meeting of creditors is: “Are you personally familiar with the information contained in the petition, schedules and related documents?”

Essentially, the trustee is asking you if you are aware of the information that is in your chapter 7 or 13 bankruptcy filing.  Before a bankruptcy cases is filed, you should read each and every page of the filing and be certain of the information in it.  If you have reviewed each and every page of the bankruptcy petition and understand it, the answer to this question is yes.

The trustee will then ask: “To your knowledge is the information contained in the petition, schedules, statements, and related documents correct?”  This is the opportunity to bring up changes that have occurred in your filing and errors that have been detected after filing.

If your attorney is smart your he or she will have identified the errors or things that need to be updated and will let the trustee know about them prior to the meeting.  This notification will be made either with amended documents or by telling the trustee prior to going on the record about the corrections that need to be made.  If the trustee has any questions about the changes that need to be made, they can also be resolved prior to going on the record.

If you wait until this question is asked to notify the trustee of errors, it may annoy him or her and the hearing may not go as smoothly.  The trustee is not supposed to hold a grudge and they usually don’t, but keep in mind the trustee hears 45 to 50 of these meetings per day, three or four days a week.  I couldn’t do that, it would be monotonous!  The trustee really wants the meeting to go smoothly with no abnormalities.  if you have notified the trustee of the amendments that need to be made to your Chapter 7 or 13 bankruptcy petition, the trustee is then able to say: “Prior to going on the record, cousel has notified me that the following amendments need to be made to the bankruptcy filing…”

Finally the trustee will ask are there any errors or omissions that you need to bring to my attention at this time.  This is the same question that was just asked but in a different format, however it is one last opportunity for you to notify the trustee of an error rather than force the trustee to ferret out.

Surprisingly this is a question that clients get wrong on a regular basis. Most of the nightmare cases I hear about are cases where the client says no I am not.  Most of the time the client reason for saying this is because they did not write the documents themselves so they don’t know what is in them, but if you go through the bankruptcy petition with your attorney prior to filing then you will be familiar with what is in it.

A lot of bankruptcy law is paperwork, paperwork that must be done in a specific way to comply with court rules, and if you were to attempt this paperwork yourself you would probably find it very difficult.  Any attorney worth their salt will explain what each document in the bankruptcy filing is so that you understand completely what you are doing before the case is filed.  If your attorney has done this and you can confidently answer yes, you are personally familiar with the information contained in the petition, schedules, statements, and related documents.  Furthermore you will also be able answer that there are not any errors or omissions to bring to my attention at this time.

Getting through this question is key to a successful 341 meeting of creditors and once again it’s all about preparation.  If you are experiencing financial hardship and you think that you may need the help of a bankruptcy attorney who will prepare you for success, please call me at 484-661-2891 or e-mail me at jim@padebt911.com to schedule a free, no obligation consultation regarding your specific situation.

The first question you will be asked after stating your name for the record and showing your drivers license and Social Security card is: “Did you sign the petition, schedules, statements, and related documents and is the signature your own?”

Essentially, the trustee is asking you did you read the documents and is this your signature.  They will ask your attorney to show you the signature on the third page of the bankruptcy filing.  The answer to this question is yes.  Your attorney should have gone over these documents with you before you sign them, answered any questions that you had, and if they didn’t witness the document being signed, they should have at least had the signed pages in their possession before they filed the case.

I have never once had a client answer no.  I had one say once that he wasn’t sure the trustee treated him like an idiot for the rest of the meeting.  Most people sign their name and the signature changes a little bit but you should at least be able recognize their own handwriting.  Your attorney should give you a copy of the bankruptcy filing on the day that you sign it, so you should have your own copy at the 341 meeting and there should be no doubt that that your signature is on it.

The next part of this question is more important.  “Did you read the petition, schedules, statements, and related documents before you signed them?”  The trustee is basically asking did your attorney go over the documents with you.  There are some trustees that like to single out attorneys that have moved into the electronic age and don’t acquire their clients to drive to their office in order to sign documents by saying: “Did you meet with your attorney at his or her office. “  This will put the attorney in the awkward position of explaining that he runs a modern office and can do things like electronically because we have things called computers and the internet now.  That isn’t your problem but it’s something you should be aware of in case we run to one of these curmudgeons at 341 meeting.

The reality is that you better be sure what you are signing on what you are doing before your Chapter 13 or Chapter 7 bankruptcy attorney files your case.  You also better make sure that the information in these documents are correct.  While it’s true that you have hired your attorney to guide you through the bankruptcy process, and your attorney will do the lion’s share of the work, only you will know the personal data that should go on these documents and it’s your responsibility to make sure that it is correct.

I have never had a client say that they did not understand what they were signing.  I like to think that’s because I’m good at explaining what each document means and because I go through page by page line by line and require my client to initial the lower right-hand corner of each page of the bankruptcy filing before the cases filed

If you find yourself at the point where you’re ready to file your case and you’re speaking to your attorney and you’re going over the documents and you don’t understand something it is up to you to bring it up.  Ask your attorney to question and keep asking until you have a satisfactory answer, remember your attorney is there to make sure your bankruptcy goes smoothly, and if it requires a little extra time at the beginning of the case to avoid problems as the case proceeds, you should both appreciate it.  If your attorney doesn’t appreciate this you may want toconsider getting other representation before you file the case.

Normally this question takes 30 seconds or less and is one of the easier questions to deal with, but I can see where an unprepared attorney or unprepared client could make this question one with hair-raising.

The whole theme of this site is better results because of better preparation. It starts right here with question number one of the 341 meeting.