Go ahead and file bankruptcy! What are you waiting for? Those debts don’t get any better with age!

Debts are not like wine.  They get much worse with age.  All sorts of fees, penalties, attorney costs, and other costs get added to them including interest.  The total amount owed can double or even triple in size.  As time goes on even more and more money is owed to these creditors.

The creditors will not go away either.  This is something that I continually warn my clients about.  They will continue to sell you debt and increase it as it goes.  Debt collection is one of the biggest industries in this country because it is so profitable.  It is also the one that is complained about the most to government agencies because of alleged abusive practices.

Collection agents are not nice people as you may have experiences first hand.  They don’t care what you problems or limitations are.  You may be on your death-bed or so disabled that you are completely unable to work.  When you tell the collectors that they will not care in the least and they will just demand that you pay them unreasonably high payments.  They will tell you to go borrow the money.  They have told disabled clients of mine just to pay immediately or they will sue them.

If one agency gives up on you then they will sell it to another and another.  They will never go away and always come after you.  They will ring you phone hundreds of times a day.  They will fill your mailbox with bills.

Eventually they will sue you in court.  You probably will not go to court or answer (most people don’t) and they will get a default judgment against you.  Now they can collect anytime they want.  They can lien homes, garnish wages, take your bank accounts or even get you into court for a debtor’s exam.  All of these things are bad, unpleasant and to be avoided.

Bankruptcy can end all this nonsense though and it is the only way I know to get out of these debts short of paying these people.  If you don’t have the money then paying is out of the question and that only leaves bankruptcy.  It may be time to admit this fact and begin to look into filing.  Bankruptcy will stop all collection efforts and stop these collectors from calling or suing or garnishing or liening or taking any other action to collect your debt.  (See here for additional reasons for why you should file for bankruptcy).

After your discharge you no longer owe the debt.  It’s a wonderful happy feeling on that day.  So think about it, call a bankruptcy attorney, and begin considering the real possibility of escaping your debts before they drown you.

Please visit my website for more blogs and really good bankruptcy information at www.farquharlaw.com or www.freshstartsandiego.com.   Or call my office for a free consultation at (619) 702-5015.  For my e-book, 13 things you should do to prepare for bankruptcy, e-mail me at farquharesq@yahoo.com.

Harrisburg Pennsylvania files for bankruptcy. Is it the first of many cities to do so?

Harrisburg Pennsylvania, the state’s capital city, filed for chapter 9 municipal bankruptcy today.  According to an article in the Wall Street Journal the city council rejected a state backed plan which would have amounted to a state takeover of the city’s financial system.  apparently many on the city council preferred bankruptcy to surrendering sovereignty to the state.  Apparently the city council rejected the plan also because it would include selling and/or leasing many of the city’s assets.  This too would amount to a turn over of sovereignty to others outside the city and loss of control over the city.

I wrote in a previous blog that I believe it’s much better for a city to file for a chapter 9 municipal bankruptcy and keep its assets than to sell them.  Better to get rid of debt and keep the city’s assets intact for the people of the city.  Usually it is pensions of city workers that are the problem and they need to be re-negotiated after a bankruptcy.  The article points out though that there is also a problem with debt holders who demand payments and concessions that the city can’t make.  Bankruptcy, or the threat of it, can cause these obligations to be re-written down to a level that the city can afford and it can keep its assets to boot.

So I believe the city did the right thing by filing bankruptcy.  According to the article 48 cities have chosen to file for bankruptcy since 1980 and I believe that there will be many more during this recession.  Many cities, like my city of San Diego, have over-promised pension benefits to city employees because of the unfortunate and wrong practice of public service unions being able to collectively bargain.  This allows city unions to lobby officials for extraordinary benefits and the officials grant them because they get votes in return.  The taxpayer is then on the hook to pay.  Bankruptcy can break these contracts ans save the city’s budget from being busted, and the taxpayers from being over-taxed, and city assets from being sold off.

The city officials who voted for bankruptcy stated that not only they were forced by bondholders into the bankruptcy but they also could not raise taxes.  If they were forced to raise taxes to the extent necessary to pay this debt then the city would essentially be abandoned its people who could not afford the taxes.   Harrisburg already has a poverty rate of 29% so its citizens could ill afford to pay these taxes.

The city also has many government buildings in it and these buildings pay a reduced property tax rate which adds to the city’s problems.  In addition there is a $310 million trash incinerator that was meant to produce clean energy but now no one can pay for.  The city has the responsibility for the debt for the incinerator and the city can’t pay.  It sounds like another green energy debacle to me.

Many others are fighting the bankruptcy decision and the residents are divided.  It’s unclear whether the city is insolvent too.  But according to a USA Today article they listed $458 million in creditors and claims.  Many of these were related to legal actions that were filed against the city because of the incinerator.

It sounds to me that Harrisburg, like a lot of other US cities, is in exactly the same position that many of my clients are in.  They are broke, exhausted, tapped out, underemployed, and teetering on the brink of disaster.  It only takes one incident to throw them over the financial edge into bankruptcy.  One more bad (trash incinerator) deal will force them to file bankruptcy or default on their debts or lose control of their lives.

I therefore support the move as I believe in bankruptcy.  It can be a vehicle to wipe away debt and allow a city or a person to get a fresh start.

For more information please visit my website at: www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  If you or someone you know may need to file bankruptcy please get my FREE E-BOOK “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at farquharesq@yahoo.com.

“Occupy Chicago” wants to forgive student loans. Your student loan bailout should be through bankruptcy!

The “Occupy Wall Street” movement has created many spinoff movements all over the country like the one here in San Diego.  After hearing criticism for their lack of coherent demands, the “Occupy Chicago” chapter came out with a list of demands on Monday.  Among other things, like taxing the wealthy and attacking Wall Street, they want student loans forgiven.  I argued in a blog that I posted Sunday on the Occupy San Diego movement that student loans should be dischargeable in bankruptcy.

In the face of the bailouts that Wall Street firms and banks received more and more people are asking “where is our bailout”?  Regular people have a tremendous amount of debt which they cannot afford and they believe that justice demands that they need some consideration from government.  It is true that almost 50% of people pay no income taxes but should we bailout the 99% with massive wealth transfers?

I say no.   Most people in this country will not go for that.  I have argued for years on my blog that a bailout plan already exists for the 99% of us that are neither rich nor giant corporations.  It’s called bankruptcy and bankruptcy allows you to legally walk away from your debts and have them discharged so you no longer owe them.  You can then get a fresh start debt free and keep what money you earn from employment.  Everyone can avail themselves of bankruptcy.  You don’t have to be a privileged person or corporation to get it.  In fact if you make too much money you will be means tested out of a chapter 7.

So bankruptcy is available for regular people but there is a problem.  Student loans cannot be included in bankruptcy.  Student loans currently are not dischargeable in bankruptcy.   They do therefore indeed last forever or until you allege “undue hardship” which is very hard to prove.  If these student loans were to be included in the lists of debts that people could discharge in bankruptcy then regular people would not be saddled with them forever.  They could escape them and move on in life with their student loans forgiven.

This could be done so much more easily and fairly in the context of bankruptcy than through some government blanket forgiveness.  Bankruptcy has been around for hundreds of years and the systems are in place to handle forgiveness of debt through the filing of bankruptcy.  There are trustees and judges to oversee each individual to make sure that the people asking for forgiveness really can’t afford to pay these debts back because the have neither the income or assets to do so.

In bankruptcy there are even proscribed exemptions that allow each person to keep a certain amount of property.  For most of the 99% this would amount to people keeping all of their property because most people don’t have more than these allowed exemption amounts.

This solution will also be so much more palatable to the American public.  It allows the forgiveness of the student loan debt but within the confines of the bankruptcy system.  Each individual would have to file for bankruptcy to get his student loan debt forgiveness.  He would then be examined by a Trustee and he would face a judge if fraud or other problems came up.   His income and expenses would be looked at to determine that he could not pay his debts with his current income and thus he is formally bankrupt. Those who could afford to pay the loans would then have to do so in some form but many many student loan debtors would be able to escape these loans if they were dischargeable in bankruptcy.  Bankruptcy is no blanket gift.

And it would be fair.  Many people with student loans cannot afford to pay these loans and they have very little hope of paying them back.  They are under employed or more likely unemployed and they cannot afford their living expenses let alone these student loans that have not even landed them a job.  It is simply not fair that a person who used their credit cards to excess can discharge those debts but the person trying to get an education and a job can never escape them even if they have no money and no job.

But many people will say that if we make student loans dischargeable in bankruptcy then student loans will be harder to get.   Maybe that is a good thing and people won’t borrow money for degrees that won’t lead to a job.  But I also believe that as credit cards are still obtainable by most people today and they are dischargeable in bankruptcy.  Bankruptcy has not stopped that industry and dischargeable student loans will not stop lenders from lending money for these loans either.

It also should not matter whether the loans are government or private.  If  they are private then the loans should be treated like credit cards and if government loans are owed then forgiveness of these loans is only fair in light of the bailouts given by the government to the financial industry.  Whether government or private though the effect is the same on people.  They can’t afford to pay them back in many cases.  (Remember also that IRS tax debt is dischargeable after only 3 years and the IRS still continues to operate).

And for further fairness you could make student loans dischargeable after a period of time say 10 or even 20 years.  If the student has not paid them back by that time then they are certainly having a problem and they probably can’t pay them back.  It is only fair to allow people to escape them in time.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.   For further information please visit my website at www.farquharlaw.com or www.freshsatartsandiego.com.   Or call my office for a free consultation at (619) 702-5015.  If you or someone you know are considering bankruptcy then get my Free e-book “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPCTY FILING” by e-mailing me at farquharesq@yahoo.com.

Possible foreclosure settlement with the banks! $20 billion to be set aside by banks to fund mortgage modifications!

According to Fox Business there is a potential agreement to reach a settlement between the banks and the Department of Justice over the banks’ use of improper mortgage practices and robosigning.  There are numerous types of improper mortgage practices and robosigning was the practice whereby the banks signed batches of mortgages without reading them.  Bank of America and Chase are the banks that are announcing the settlement which is good because they are two of the largest banks.  I did not see Wells Fargo listed in the potential settlement agreement.

The settlement would contain $20 billion in a “monetary relief fund” that presumably would be set aside to use for mortgage modifications..  This would hopefully allow people who had previously been turned down for a modification in the past to now get a modification.  Also part of the deal is an overhaul of the entire mortgage system by putting in sweeping new guidelines that would fundamentally change the industry like the Tobacco settlement changed that industry in 1998.

None of the banks nor the justice department is commenting on the deal and there are several sticking points.  The banks want immunity from lawsuits if they do this overhaul and set aside $20 billion.  Several states have problems with giving the banks immunity.  California has already apparently said that it won’t and it has backed out of the settlement.  Arizona and Nevada are separately suing Bank of America and New York state has its reservations too.

There are numerous class action lawsuits filed against the banks which the banks want to get dismissed as part of the settlement.  Also its unclear what the requirements will be to receive one of these settlement mortgages/modifications.  The administration has a bad history of running these programs.  The article points out that the Emergency Homeowners’ Loan Program (EHLP) was just shut down as it was badly administered, had too high income requirements, and failed to help nearly the number of people who it was designed for.

It’s hard to say what will come out of this.  If $20 billion is set aside then there will be a pool of money to lend to people or to fund modifications that were previously denied.  That would be a good thing.  But if this program is as poorly run as EHLP then people may have trouble accessing it.

It would be a good thing though if there were new standards for determining what was required for a modification.  My clients would universally all tell the same horror story of what happened when they applied to get a bank to modify their loan.   They would send the same documents to the bank over and over again and each time they called they would speak to a new person at the bank.  No one at the banks knew what was going on or what was needed to process the application.  They would eventually give up or they would be denied because they suddenly made too little money.  Sometimes they would be paying the new modified rate for a year when they were denied.

This is a system that is broken beyond repair and which needs some standards and some predictability.  Why can’t there be set rules governing mortgages and mortgage modifications?  Why can’t those rules be written so that people can understand the rules and know what is required of them?  Why can’t they have some assurance that if they follow these rules or comply with these requirements they will get their mortgage or their loan modification?  It’s not rocket science and it the mortgage industry should not be an enigma wrapped in a riddle surrounded by a mystery as Winston Churchill said.

So I look forward to more straight forward standards and lets hope that something good comes out of this settlement so more people can modify their mortgages and keep their homes.  In the mean time I always advise my clients that if they have a lot of other credit card type debt then they should file for personal bankruptcy.  This will eliminate these payments and free up income so they can qualify for a modification.  It will certainly help their debt to income ratio.

I will give more updates in the future if and when this settlement is reached.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.  For more information please visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  If you or someone you know is considering bankruptcy then get my FREE E-BOOK “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” bt e-mailing me at; farquharesq@yahoo.com.

Did you receive a notice of garnishment of your wages? Bankruptcy can stop it and get some of your money back that has already been taken!

Many of my clients come to me with wage garnishments already in place or they have received notice that one is about to begin.  A wage garnishment is when a creditor can reach out to your employer and seize part of your paycheck for some debt you owe.  These creditors are limited to taking no more than 25% of your take-home pay.  This amount can be large though and can make the difference in whether you can afford to pay your bills or not.

Before creditors can get this garnishment in California they must go to court and get a judgment and then file for the wage garnishment with your employer.  Once they get it the garnishment will continue until the debt is paid in full which can be some time if the debt is large.

Some of my clients have a $20,000 or $30,000 credit card debt or vehicle deficiency debt that is being garnished from their wages.  Most of these people can’t afford to pay their ongoing bills with their current income and a 20% pay cut makes their situation impossible.

It is best to catch this before the garnishment hits your paycheck but the good news is that bankruptcy can stop this immediately from happening.  If we catch the garnishment before it starts that is best.  But if we do not we can still stop it and wipe out the underlying debt.  We can even get back some or all of your money garnished if we file within 90 days of the garnishment beginning.  We will send a request to the creditor that they return the money and most will return it if a bankruptcy case has been filed.

So don’t despair if you receive a garnishment notice.  It is not the end of the world.  A wage garnishment can be stopped and the money can usually be returned.  You just need to call a bankruptcy attorney, let the attorney analyze your case, and file the bankruptcy.  And don’t worry about whether you owe the money or not and don’t worry about not paying it back.  It’s your federal right to file for bankruptcy and get a fresh start with your debts discharged so contact an attorney today and begin the process to return your income to you.

I am a bankruptcy lawyer practicing bankruptcy law in San Diego, CA.  For more information please visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

If you are considering bankruptcy and want to receive the Free e-book; “13 Things You Should Do To Prepare For Filing Bankruptcy” then please e-mail me at: farquharesq@yahoo.com.

“Occupy San Diego” has begun! But if you want a bailout like the banks then try bankruptcy. (But let’s add student loans to the list of dischargeable debts)

The “Occupy San Diego” movement is currently in full swing in our city.  Protestors have marched through San Diego and occupied a park in downtown.  It remains unclear just what they are protesting though.  Some in the movement say it’s “corporate greed”.  According to an article in Sign on San Diego the protestors are not just angry about corporate greed but they also object to the money flowing into the political system from the financial industry and the banks.  According to the “Occupy San Diego” website those in the movement say they are for “social and economic justice” and they are protesting “global financial corruption” and the financial influence that has infiltrated everything and led to the current economic crisis.

On the “Occupy San Diego” website they also have a list of items they recommend people bring to the protest, along with their tents, much like the lists for camping trips.  They tell you where the bathrooms are and whether the are 24 hour or not.  They talk about first aid, entertainment, as well as security.  Mostly they seem to be ready to stay and occupy these parks in San Diego for a long time as they prepare their list of demands.

Apparently the movement is being advertised and spread rapidly by social media and it is gaining steam.  Where it goes and when it ends is anyone’s guess.  I must admit that this thing is somewhat fascinating as I can’t remember another movement like this even though I don’t necessarily agree with some of the premises like the anti-capitalist, pro-government emphasis.  I personally prefer small government libertarian ideas that emphasize personal freedom.  But the movement is certainly interesting and I intend to drive by and maybe mingle as I work downtown.

We who practice bankruptcy law though do believe in our cause too.  We believe that we bring freedom from the terrible burdens of debt to average people who are 99%ers.  We regulary help free people from this debt but we also bring equality too.  We bankruptcy attorneys can take you down the same road as one of these corporations that regularly file for bankruptcy and shed their debt.  Any one individual person (or couple) can file and be just like a corporation.

We in bankruptcy believe he average person’s bailout is a bankruptcy.  What is a bailout after all except a forgiveness of your debt?  You don’t have to wait for the government to give you something that only big financial institutions have.  The 99% already have the power to get their debts forgiven.  You can get your debts forgiven tomorrow.  The legal framework already has been in place for hundreds of years. Average people just have to avail themselves of the bankruptcy process.

And if you are unemployed and have no income to pay those debts then bankruptcy makes even more sense.  Imagine waking up tomorrow debt free.  How would that feel?  You could get your bailout just like big financial corporations did if you file for bankruptcy.  It’s a wonderful thing for sure.

It is also true that many people around the country have massive student loans left over from their education. Many people had to borrow heavily to originally fund their education so they could get a job.  Many of those people cannot get a job now in this economy and they have no money to pay those loans back.

It is also true that these debts are not currently dischargeable in bankruptcy.  In fact Obama’s latest spending bill would allow private collectors for these loans robocall your cell phone to harass you into paying these loans.  He is making the situation therefore worse by allowing these companies to go after you for debts which you probably cannot pay.

If this movement wants to put in a demand that these debts should be dischargeable in bankruptcy then the movement would gain the support of mostly all those who work in bankruptcy because we believe that these debts should be dischargeable.  There is no reason why students should be saddled with these debts forever but someone who over-used their credit cards can get rid of those debts.

A stipulation could be put in the new law that the student loan debt would not be dischargeable until they are 10 or even 20 years old.  This would give collectors time to collect these debts and if they can’t collect in this time then they would have to forgo collection if the person filed bankruptcy.  I believe that it’s fair to say that f the collectors can’t collect within 10 or 20 years then the debtor probably will not ever be able to pay.  Those debts are probably uncollectable and debtors should be freed from having to pay them the way financial institutions have been given infusions of cash so they can continue to operate their businesses.

How about including that demand that in this protest?  If this happens then more people will obtain financial freedom and greater parity with corporations.  Student loans can be onerous for people who have no way to pay them in this economy.  How about a student loan bailout?  Make these loans dischargeable in bankruptcy and that is all you would have to do.

As for the protest I will continue to watch with great interest as I want to see where it goes and how it ends up.  Will these people ever go home?  Will hey set up tent cities?  Will violence occur or will they be peaceful?  Will police make arrests?  How many will join those already there?  Then where will they all go?  Will they shut down operations in this city?  What will happen nationwide?

I will continue to follow and blog about this movement.

I am a bankruptcy attorney practicing bankruptcy law in San Diego, CA.  For more information please visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis! 

If you or someone you know is considering bankruptcy then get my FREE E-BOOK; “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at farquharesq@yahoo.com.

Will my landlord be notified of my bankruptcy and can he evict me if I file?

(See my blog with an update to landlord notification and bankruptcy here: http://bit.ly/IAaaQc .)

No!  Your landlord will probably not even know that you filed and if he did you are protected by law.  A landlord cannot legally evict a tenant for filing bankruptcy.  If you file bankruptcy and then try to move in a landlord can keep you out only if he has a policy that every prospective tenant has to follow where he will not rent to bankruptcy filers.  But if you are already in your rental unit and you then file bankruptcy then you are protected by law and the landlord cannot evict you for filing.

Probably though he will never even find out that you filed for bankruptcy.  It is only if you have a unexpired lease for any amount of time that he would be notified of your filing.  If you are month to month then your landlord won’t be notified.  But if the landlord somehow finds out about your bankruptcy or he is notified directly because of an ongoing lease he still cannot evict you.   If your landlord tries to evict you after a bankruptcy and because of the bankruptcy then you can fight the eviction in California.  I believe other states have similar defenses to unlawful evictions.

Remember that you have a federal legal right to file for bankruptcy.  No landlord can challenge that or take it away or discriminate against you for exercising your legal federal right to get a fresh start with our debts!  If the landlord is smart he will see that you can now pay rent more easily as you will have discharged your credit card, medical, deficiency balance, and other debts in the bankruptcy which will free up more income to pay for rent and your other necessities.  You may get a landlord that does not care or even is happy that you filed.

But either way don’t be intimidated by a landlord who threatens an eviction.  You can fight the eviction and win if the reason he is evicting you is because you filed for bankruptcy.

I am a San Diego bankruptcy attorney.  For more information please visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  If you are considering bankruptcy then get my Free e-book; “13 Things You Should D to Prepare For Filing Bankruptcy” by e-mailing me at farquharesq@yahoo.com.

Where can I get my credit report and how much will it cost?

Good news!  It’s free!  But don’t go anywhere that say “free credit report” and expect a free report with no strings attached.  The proper place to go is annualcreditreport.com.  This is the site that the credit reporting agencies were forced to set up by law so that you as a citizen can get your own credit report free of charge.

This is a great idea I believe as this information is crucial to you and determines how much you will pay for credit.  You have a right to see this information about yourself without paying a fee for it and you cannot suffer any change in your credit score for looking up our own credit.  This is important because when you attempt to get credit your score is lowered every time a creditor checks your score.  Those who passed this law wanted to make sure that this did not happen to people checking their own scores.

On annualcreditreport.com you will get to choose which credit reporting agency you want to go to.  The three agencies are Equifax, Experian, and Transunion.  You get one report from each agency each year.  You could therefore check your credit for free every four months from one of these agencies.  Checking the credit will show you if you have any mistakes on your credit.  You will not be able to see your credit score for free but you will see which creditors are listed and what the amount of the debts are to see if there are any mistakes.

This is especially important after a bankruptcy to see if these debts are being reported correctly as “discharged in bankruptcy”.  If you did not do a bankruptcy then you still would want to check the accuracy of the information listed there.  If you find any mistakes then you can challenge them with the credit reporting agencies.  Just go to their sites and the will have phone numbers, addresses, and e-mail for you to send the challenges.

Don’t be afraid to do this as this information is extremely important to you.  Most credit reports have inaccuracies on them so go ahead and check and correct them.

I am a bankruptcy attorney in San Diego, CA.  Please visit my websites at www.farquharlaw.com and www.freshstartsandiego.com. .  If you are considering bankruptcy then get my Free e-book; “13 Things You Should Do T o Prepare For Your Bankruptcy Filing” by e-mailing me at farquharesq@yahoo.com.

How to re-build your credit score after bankruptcy! New strategy!

I heard a program on the radio the other day that was talking about how to improve your credit score in general so I listened.  The announcer said some of the things that I have been telling my clients with some differences.

First of all he said that you must have credit cards.  Many of my clients say that they will never use credit cards again after the bankruptcy and that is absolutely wrong.  You must have credit and use credit if you are ever to improve your credit score.  Your credit score is determined by the three credit scoring agencies who look at your financial activities for the month to determine if your score should go up or down.  These three reporting/scoring agencies are Equifax, Transunion, and Experian.

It is important to remember that you must get over the aversion you have to credit cards after a bankruptcy.  You must begin to use them wisely so they can help you and build your credit score instead of tear it down. Don’t be afraid to use them and use them wisely.  They will help you rebuild your credit score.  Don’t allow emotion to enter the equation.  You can use them to your advantage if your smart and diligent.

I was telling people to have two credit cards and this announcer said to use at least three credit cards to improve your score but we both agreed that having both credit cards and using them regularly were essential to get a maximum credit score.

He said that he paid bills with his cards and that he had around five cards each used to pay a different bill.  One was for the cable bill, one for the utility bill, one for the water bill, and others for other bills.  He would pay the bills with the cards and then pay the credit card balance in full each month.  I believe that this is a good idea.  You will therefore carry no balances and pay no interest on your credit cards.  You will though be using the credit cards to rebuild your credit score.

This kind of activity is apparently what the credit reporting agencies are looking for.  It does you no good to have cards sitting there unused.  You need to show activity and a payoff each month to slowly but steadily build your score.  And remember that multiple cards (excess of three) will build the score the fastest.

The last thing is to keep your balances low.  Never exceed 30% of the available credit on your card.  So if you have a $500 limit only charge$150 and if it’s a $1000 limit then only use $300.  Traditionally people have advised not to exceed 50% of your available credit but now 30% seems to be the better number so I’m sticking with that.

After a bankruptcy you will be deluged with credit card offers so if you file one then be prepared to use these to build your credit score.

I am a bankruptcy lawyer practicing bankruptcy law in San Diego CA.  For more information please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call may office to speak to an attorney for free about bankruptcy or any other debt related issue at (619) 702-5015.  If you or someone you know are considering bankruptcy then get my Free e-book; “13 Things You Should Do To Prepare For Your Bankruptcy Filing” by e-mailing me at farquharesq@yahoo.com.

Has a creditor threatened you with jail if you don’t pay them? FDCPA says this is illegal!

Has a creditor threatened you with jail for non-payment of a monetary debt?  This is most probably illegal according to the Fair Debt Collection Practices Act (FDCPA).  Collectors often harass and threaten debtors with all sorts of things that they have no right to threaten.  They will often threaten jailing you if you don’t pay today!  A person just contacted me with this problem and the client was threatened by a creditor to have police show up at their work and arrest them if they did not pay today!  And this creditor did not even file a lawsuit yet!

This is clearly illegal!  With no lawsuit filed there is no judgment and with no judgment no legal right to collect on this debt.  This creditor would have to first obtain this judgment which would give them the right to collect but in California there is no going to jail for owing strictly monetary debts.  And to threaten that police will show up at someone’s work and arrest them when they cannot is a violation of FDCPA section 807(4).

In that section it clearly states that an implication that non-payment will result in arrest or imprisonment unless that action is legal and intended by the party is a violation of this law.  In my client’s case there is no arresting or jailing someone for owning monetary debts so this threat was a violation of the law.  If my client could prove it then we could win damages against this collector.  I told this person to tell the collector that they were recording the call next time and see how fast he hangs up.

Section 807(5) restates this and says that any threat to take any action that is not legal or intended is a violation of the FDCPA.  So this collector violated this section too.  My question is can we get this guy to say this clearly into the microphone so we can replay it for the judge?

So don’t take any crap off of these creditors.  I hate to hear these stories and I answer these e-mails immediately.  We live in a great country where we pride ourselves in our freedom but if these collectors can violate the law with impunity then it threatens all of us.

In a previous blog I discussed how these collectors by far receive the greatest number of complaints to the Federal Trade Commission.  They routinely harass, threaten, bother and annoy people and they are now routinely violating the law I believe.  So know your rights and don’t allow them to bamboozle you.

I am an attorney who practices bankruptcy law in California.  For more information please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com .  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis! 

If you or someone you know needs to file bankruptcy please get my FREE E-BOOK; 13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at: farquharesq@yahoo.com.