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.

Kenneth Besser wrote Collections 101: A Training Manual for Entry Level Debt Collectors.

The Fair Debt Collections Practice Act specifically makes harassing a debot a violation.

Section 806(5) says that harassing a debtor is causing a phone to ring repeatedly with the intent to annoy, abuse, or harass any person at the called number.  That doesn’t mean that they are only allowed to call once per day, it just means they can’t harass you.

That is why I was shocked to read in Section 9.14 of Besser’s book about calling back a person who hangs up on you.  When I worked for the debt collectors, and the debt collection agency I worked with was one of the worst, we never called back.

This is taken directly from Section 9.14:  “Following a hang-up, some collectors make an immediate callback to make sure that the call was not terminated accidentally.  If a reconnection is made, the collector may wish to inquire about the reason for the disconnection by saying something to the effect of , ‘I’m very sorry, Mister/Miss ______, but we seemed to be cut off before we were done.”

It is 2009, most phones don’t cut out, unless they are cell phones, and I will write more about that later.

Besser continues: “If the debtor begins to state that he or she hung up on purpose, then a collector may politely, but firmly reply by saying, ‘If you found our previous conversation not to your liking, then, please accept my apology.’

OK, so far, so good, I wouldn’t have called them back but…

Besser continues: “‘Nonetheless, hanging up will not make this matter go away.’”

Actually maybe it might.

To me, if a debtor says they intended to hang up, the conversation should be over.  The parting shot, also known as the last word, is harassment and as such it is a violation of the FDCPA.

So how can I be sure?

I can’t, but I’m sure if I have it on tape and I file a complaint that debt is going to go away at the very least.  One of my favorite lines (that I stole from a national debt expert) with debt collection agencies is “I’d love to own a collection agency, do you want to keep it up.”

Are debt collectors driving you nuts?  Do you think they are crossing the line?  Call me at 484-661-2891 or email me at jim@padebt911.com and we can discuss your debt problems and dealing with debt collectors for no charge, which is certainly less than that check by phone the debt collector is offering you.

I contend that the debt collector threatens to sue you, and they are employee of the debt collection agency and not the creditor or the person who owns the debt at that time, that they are violating the Fair Debt Collection Practices Act (FDCPA) because they cannot possibly be certain that the creditor is in fact going to sue the debtor.  Threatening to file a lawsuit against a debtor if you have no intent to do so is a violation of the FDCPA.

Debt collection agencies have caught on to this, and while some are doing the right thing and instructing their collectors not to threaten legal action, others are allowing their collectors to say “If you don’t pay this today I’m going to send it to legal”, or “If we don’t get a payment today your account will be referred to the legal department”.

I think I can make a very good argument in court that if the debt collection agency itself doesn’t have lawyer on staff, they have no right to threaten to send your account to the legal department.  Think about it for a minute, telling someone your intentions to send them to the legal department implies that you are going to sue them, and that would be a threat.  If the collection agency doesn’t have an attorney working for them and there is no legal department, they had no intention of sending you to the legal department, and therefore they were threatening you with legal action that they could not take and they are violating the FDCPA.

I’m not sure if that argument would hold water in court, but I think it would.  Collection agencies are not in any hurry to find out either.

The bottom line is this, if a debt collection agency is threatening to sue you, you have a reasonable argument that they’re threatening you with legal action that they don’t intend to take.

This is just one of any number of the FDCPA violations that collection agencies routinely use as a collection tactic.  A letter from a good FDCPA attorney will make a collection agency shake in their shoes.

Think about what’s on the line for the collection agency.  If they go into court, they have to pay a lawyer to defend them, and if they are found liable for violating FDCPA they not only have to pay a fine but the debtor’s attorney’s fees.  If they’re found violating FDCPA, the fair Trade Commission will be monitoring the more, as will a lot of other gladhanding agencies in the US Federal Government.  I’m not a person who likes Federal intervention, but we don’t have debtor’s prisons country for a reason.

Don’t let yourself a imprisoned by a rogue debt collector.  If you have debt problems and you’re in over your head, or you have a debt collection agency calling you that just doesn’t get it, call me at 484-661-2891 or e-mail me at jim@padebt911.com and we can discuss your options together. How long should the collection agency be allowed to threaten to send you the legal before you send them to your own legal department?

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.

Maybe you’ve heard it, it has something that sounds like gospel music playing in the background and the song has a lot to references to freedom.  I’m not against freedom, but it’s clear that they were targeting a demographic, and that demographic is African-American people, particularly women

I market to a specific demographic too, so there is nothing inherently wrong in targeting your audience to make sure your message reaches the right group of people who need your services, but this is more nefarious.

African-American women are being targeted by this company because they believe they are an easy mark for an inferior product at a lower price.  This debt settlement company’s product is inferior because they are not lawyers, in fact you will probably learn that their employees are in as much debt, if not more, than you are.

I have heard the Spanish language version of this ad.  This ad has Latin music playing in the background, so what?  As stated earlier, there is nothing wrong with demographic marketing.

What is wrong is the reason behind this target.  This company preys on these people because they are unlikely to fight back.  The Spanish speaking customer who is wronged will call in and suddenly they will not be able to find a Spanish speaking employee on site (by the way, I just hired my first bi-lingual employee today, his name is Manuel, and he will be converting this site into Spanish over the next few weeks).  Spanish speakers have less access to the courts because of the language barrier and if there is an immigration issue hanging over their head, they do not want to be noticed.  One immigration lawyer told me this company can market to Hispanics because “if they screw up and the customer tries to sue, they will get them deported!”

I suspect this company is targeting African-American women for similar reasons.  Most African-American women who go to a debt settlement company do not have extra money to hire a lawyer to chase this company if they fail to deliver.

I might be completely off-base.  There may not be any bad intention on this company’s part, but I’m pretty good at smelling a rat, and non-lawyer debt settlement is a lousy product.

If you are ready to resolve your debt problems and are ready to talk to a lawyer who will show you the respect you deserve, call me at 484-661-2891 or email me at jim@padebt911.com, and you can experience freedom from debt too.

It was doomed to happen.  In 2005, houses routinely fetched $250,000 to $300,000 yet the median salary in the Lehigh Valley was around $36,000.  Given the miserable performance of this economy, it’s unlikely that the average salary has gone up much since then.

The housing boom here was out of control, no doubt about it.  A lot of people were relocating from New York City and its suburbs to the Lehigh Valley for its lower taxes and lower cost of living, but because these folks who were used to paying $600,000 or more for a house didn’t think twice about paying $300,000 for a house that just 10 years ago might have gone for $130,000.

To make a long story short, the New York contingent artificially inflated the sale price of homes.  The New Yorkers are not totally to blame for this however, interest rates were kept artificially low by the Bush administration and borrowing money was never cheaper.  Another factor that went into this was the rampant fraud and the fact that you could have zero proof of income, no down payment, and qualify for one of these variable rate mortgages.  If Bernie Madoff had come up with this, they would’ve given him the chair.

So that brings us to today.  The same houses that were selling for $300,000 are now down in the $180,000 range, and I think they’re probably still too high.

A client came to my office on Friday.  He is a single man with a three bedroom 2 1/2 bathroom house in Allentown.  He hadn’t made a mortgage payment in a year, but now he was back to work in able to make his payments again, kind of.

My clients mortgage payment was $1105 per month.  He had a second mortgage of $242 per month.  His weekly take-home pay was somewhere in the neighborhood of $500.  If you’ve done the math you can probably see where this is going.

To make a Chapter 13 plan work for my client, he would have needed to pay a minimum of $300 per month and probably more to the Chapter 13 trustee.  With take home pay of $2166, my client would have expended close to $1900 per month just to stay in his home.

Clearly Chapter 13 bankruptcy wasn’t going to work for this man, however he had a 401(k) with about $100,00o in it.  He asked me if he should take a withdrawal from it to pay the past the past due on his house to stay in his home.  Looking at a situation, I had to tell him no.

Here’s why, he was going to dip into his retirement, something the Chapter 13 trustee cannot touch and very few creditors can go after, to save a house that he owed $30,000 more on than it was worth, and moreover, a home that he really did not need.

What was a bachelor doing a three bedroom two and half bathroom house?  He had never been married, his girlfriend lives in another apartment, so really he has a house way too large for his needs.   Now if he were financially able to keep the home, I wouldn’t care, because generally speaking real estate is one of the best investments out there, especially now, but this man was going to struggle to pay his mortgage even after taking a loan out of his retirement.

The bottom line is this, I could have taken the man’s money and filed a Chapter 13 bankruptcy for him, and it might have even worked. Chapter 13 bankruptcy is not for everybody, neither is mortgage modification, you may feel bad or a responsible for letting your house be foreclosed on, but the banks were just as irresponsible in their lending.  The banks went to the government and got a bailout.  No one asked your opinion when they took your tax dollars to bail these people out, nor did they offer you one (and its not coming either).

Sometimes it’s best to let the banks foreclose on the property, I know it hurts, but rather than spend $1400 per month on a home too large for him, my client is going to find an apartment in the $600-$700 range which will work for his budget and will allow him to regroup financially.

Once a foreclosure is over and my client has resettled, I advised him it was in his best interest to file Chapter 7 bankruptcy.  My client racked up nearly $30,000 in credit card debt trying to save his home. If he made the minimum payments, it would take in 35 years or more to pay his credit cards off.  Furthermore, some of the credit cards had been charged off and sent to collection and some of these agencies have become sue-happy lately.

Again chapter 7 bankruptcy is considered by some to be irresponsible, but the reality is these banks were irresponsible lending money to people who couldn’t possibly pay it back.  We don’t have debtor’s prison in the United States for reason, don’t allow yourself to be put in a debtor’s prison without bars.

Hopefully my client will take the next logical step and follow through filing Chapter 7 bankruptcy as we discussed at the meeting.  If you are unsure about your situation and want to know whether or not it makes sense to even just try to stay in your house, call 484-661-2891 for your free no obligation consultation.  You can also e-mail me at Jim@padebt911.com.  All contacts are kept strictly confidential.

The call came in around 6:15 PM, and a man who claimed to be from Visa/Mastercard called saying he could lower the interest rate on my credit card to 6.9%. I still have one credit card left, and like I said I was curious, so I decided to chase the rabbit and find out what the story is.

He first asked if I had a credit card with a high balance but that I was at least $1000 under my credit limit. He said those were the parameters to make sure he could help me. I said yes.

So then he asked what the credit card number was. Normally my smarter side would kick in and I wouldn’t give this information out, so I grabbed a pen and paper and wrote down a sixteen digit number that started with a “4″ and gave it to him. I wrote this number down so I could keep the ruse going. If this guy was going to hang himself, I would need to give him some rope.

At that point, I asked for his name, and he replied “Ronney Archer.” He then asked for my expiration date, which I made up as well.

He then asked for the seven digits on the back of the credit card. I made up some more numbers, making sure the fourth number was a “0″ in order to fit within Visa’s parameters. I asked him for a phone number and he gave me a phone number that wound up being a phone line for a motel registration company.

Finally, if I wasn’t sure this was a scam, Ronney asked for the phone number for customer service and put me on hold. (I know Citibank’s phone number from memory because I deal with them so often) He told me he was checking with another department to lower my rate by I know darn well that he was calling to check the space on my card.

He came off hold and asked me if he had the right credit card number and repeated it to me. I told him he was one number off. He then asked for my social security number. I gave him a bogus number ending in “0666″ and he put me back on hold.

A few minutes later, he got back on the phone and he asked if he had the right credit card number again. I changed one more number and he asked me if he could have my phone number in case we got disconnected. I decided to do what I call the U.S. test and I gave him the number 215-867-5309. Any American over age 30 would remember that phone number from the annoying 80s song and call bull, but this guy did not.

All told, I spent 20 minutes on the phone with this crook and hopefully I cost him some money.

There is fraud out there, everywhere, and if you are not careful, you could get taken. Never give out personal information over the phone to someone claiming they will help you. Your bank has your card number and expiration date, they also have your social security number, no one calling from your bank should ever ask for this information.

If you are ready to get real help from a real live lawyer who specializes in helping people with their debt problems, then call me at 484-661-2891 or email me at jim@padebt911.com to set up a free consultation.

Two of the highest rate filers are Discover Card and Capital One, with Discover Card probably outstripping Capital One at a rate of 5 to 1.

I’m not sure why they’re doing this.  In Pennsylvania, credit card companies are not able to garnish wages, however they are able to garnish bank accounts.  In my experience the average person being hauled into court for credit card debt doesn’t have more than a couple hundred dollars in a bank account at any given time, so I don’t really understand why these credit card companies are going to the expense of getting a judgment.

It can’t be to have priority in a bankruptcy proceeding because at the end of the day they still unsecured creditors in a Chapter 7 bankruptcy and are probably not going to get anything.  They can’t garnish wages because as mentioned above they are not allowed to.  So why are credit card companies now suing in the Magistrate and Court of Common Pleas courts the state of Pennsylvania?

I think it’s about intimidation.  The average consumer doesn’t know that a credit card company cannot garnish wages.  The average consumer doesn’t know the credit card company can garnish a bank account.  The average consumer who has a charged off a credit card probably has other credit card debts and other debts pressuring  them, and it might be that the credit card company wants to be the first on their list to be paid.

It probably isn’t worth the day you will lose taking off from work to fight this suit.  You need a competent attorney to defend your rights, and you need one quickly.  If you owe Capital One, Discover or some other renegade credit card company$4000 and they get a judgment, and then they somehow grab it from your checking account in a garnishment, that money is gone forever.

The most important the thing about dealing with your debt problem is being in control.  It’s a roller coaster ride up and down from 0 to 150 mph in a second.  Scary eh?  What’s scarier is that you’re at the control of this roller coaster.  You can either let go a handle and let things fall the way they may, which will almost always result in your creditors taking advantage of you, or you can choose to control the situation yourself.

Before some rogue credit card company gets a judgment against you and pulls the last money you had saved out of your emergency fund, to pay for months of late fees finance charges inflated attorneys fees, you should contact an attorney who will help defend your rights.  Yes the credit card companies have rights, and they are not shy about defending them, but you have rights too, and you probably don’t have the time to defend them while you try to make it through to the end of this week.  The credit card companies have an army of attorneys to defend their rights, don’t you owe it to yourself and your family to take advantage of at least a free consultation?

When you are ready to defend yourself against rogue credit card companies, out-of-control debt collectors, and all the other financial creatures that go bump in the night, contact me at 484-661-2891 or e-mail me at Jim at padebt@911.com for your free no obligation consultation.