Credit Card Lawsuits, Part III: Should I Respond?

Briefly reviewing what I have discussed earlier regarding credit card lawsuits...

You have been served with a credit card lawsuit by the sheriff. From that day, you have 20 days to respond, and the court will automatically grant you 10 more days when those 20 days expire. Your response needs to be a formal answer to the complaint filed in the relevant court. The answer must exert a defense and be in the proper form.

All of this raises the next important question... should you actually respond?

Just because you can respond doesn't mean that you should go through the time and effort, or pay an attorney to do so.

If the debt is not your debt, or if it was procured without your knowledge through fraud, you most certainly should respond. A consumer protection attorney should have no problem getting the complaint dismissed. Failing to respond could lead to a judgment being entered against you despite your innocence. A judgment could destroy your credit.

If you have not made a payment on the underlying debt or used the credit in question in 4 or more years, you should consult and an experienced lawyer to see if you can raise a statue of limitation defense (NOTE: this is an affirmative defense, meaning you must respond to the complaint and raise the defense or you will lose!). You may also want to respond if you suspect the creditor no longer possesses the original documentation for the loan, or if it was not transferred properly. These provide effective defenses to the complaint filed against you, and give a good shot at succeeding in court. It will be worth your money to hire an attorney.

However, if none of these circumstances apply, and you suspect the underlying debt is valid, you may decide to NOT respond. Not responding to a legal action is normally not a very good idea. But, it may not be necessary if you are filing (or preparing to file) a bankruptcy.

The bankruptcy automatic stay will stop any credit card lawsuit in its tracks. Filing a bankruptcy prevents creditors from filing a suit against you, proceeding with a suit already filed, or executing on a suit that has already become a judgment. So, if responding to the complaint is not possible, or feasible, or likely to succeed, you should be considering filing bankruptcy to enjoy the protections it offers.

Finally, an experienced consumer protection or bankruptcy attorney may be able to help you negotiate a settlement to stop the lawsuit from proceeding. A settlement agreement will stop the creditor from proceeding with the lawsuit as long as you are paying on the debt. Both options of bankruptcy and debt settlement will be discussed in a later post.

Whether or not to respond to a credit card lawsuit hinges on a couple factors discussed above... whether you have a reasonable chance to succeed, and whether bankruptcy or a negotiated settlement are legitimate options. Contact us and speak to an experienced Pittsburgh bankruptcy lawyer to learn your options and defend your rights.

I'll next discuss what happens when you do not respond to a credit card lawsuit and a default judgment is entered against you.

The Timeline on a Chapter 7 Bankruptcy

My Pittsburgh bankruptcy clients are often very interested in knowing the normal timeline in a Chapter 7 bankruptcy, and understandably so. The process often determines when they can go on with life as normal.

The timeline begins when the bankruptcy is filed. However, the bankruptcy cannot be filed until several important steps are completed.

First, the petition must be completed and electronically filed. As your attorney, I will need to list all of your assets and liabilities, complete all of the schedules and the means test, submit your income and expenses, and disclose other bankruptcy relevant material. I will also need the information required by the court and the trustees, including paystubs, tax returns, proof of retirement and insurance accounts, and all income and asset information about a debtor-owned business.

Once all of this information is provided, I will also need time to organize it and include it in your bankruptcy petition. The faster you provide it, the faster the timeline starts.

Second, the debtor will need to complete an approved credit counseling course. This can be ordered at my office, and completed over the phone or the internet. It normally takes between 1 to 2 hours to complete. The bankruptcy petition cannot be filed until 24 hours after the course is completed.

Third, I will need to be paid in full before I can file. I will be happy to set up a payment plan, and very often do so for clients. However, if I am not paid in full, my legal fees could be discharged in the bankruptcy (not a business model that works very well to keep me in business!). But, payment plans often work out fine for clients. I time the last payment to coincide with completing the bankruptcy petition, so I am able to file as soon as possible.

Once the bankruptcy is actually filed, you will receive a case number, and roughly 6-to-8 weeks later, you will be notified by the court of a Meeting of Creditors date (the details of which are discussed elsewhere on this blog in greater detail). This will be the only official appearance you will be required to make. This appearance is mandatory, but it is not something that should cause stress or consternation. 

You will also be required to complete a second course online or over the phone. This is known as a financial management course. Once again, it is easy to do, and it takes 1 to 2 hours. You have until 60 days after the first scheduled meeting of creditors to complete the course, and it can be completed any time after your case is filed. (NOTE: if you don't complete it on time, your case will be dismissed... so get it done!)

After the meeting of creditors is completed, your case will remain open for 60 days, giving your creditors or the United States Trustee the opportunity to object to the discharge. This occurs very rarely. However, during this time, your Chapter 7 bankruptcy technically remains open. You should not use any credit during this time, take out any loans, or transfer any property. Your attorney will advise you in great detail as to what you should and shouldn't do during this time.

When the 60 day period ends, your Chapter 7 bankruptcy will officially be discharged. The bankruptcy Court will mail you a notice of discharge, which you should keep for your records. At this point, you can take any financial action that you like. The Chapter 7 bankruptcy timeline comes to a close.

In summary, once your Chapter 7 bankruptcy is prepared and filed it will normally be about 3 1/2 months before your case is officially discharged, but as little as 6 weeks until everything you are required to do is completed. Contact us today to set up a free consultation and see if you qualify for a Chapter 7 bankruptcy.

Summertime and Debt Problems

Memorial Day has passed, and summer is officially here. As a Pittsburgh bankruptcy attorney, I have always found there is a noticeable dip in people calling to consult about filing bankruptcy in the height of summer (and Christmas, as well). It makes sense in a lot of ways. It's a time to enjoy the outdoors (those days are certainly limited in Pittsburgh and Western Pennsylvania!) and it is the time most families use to take a vacation. It's not a natural time to think about debt.

However, there are several circumstances when you should probably put off thoughts of BBQs and the beach, even just for a couple hours to consider your options in a free consultation.

1. Creditor lawsuit- if a creditor has sued you, you might be facing a default judgment and resulting lien on your property. This includes liens on bank accounts, which could lead to direct deposit paychecks being lost to your creditor. Chapter 7 and Chapter 13 bankruptcy can wipe out these lawsuits and liens. Filing a bankruptcy is something you should consider immediately if you are facing a lawsuit. My office can inform you if any lawsuits are pending.
2. Increase in income- if your income is due to increase in the near future, you may want to consult a Pittsburgh bankruptcy attorney immediately. The increase in income could push you from a Chapter 7 to Chapter 13 bankruptcy, which means you will need to repay some or all of your creditors. It could also increase the amount of money that must be repaid in a Chapter 13 bankruptcy. Commissions and bonuses also count as "income" for bankruptcy purposes, so if you get these annually in summer, now is the time to act in filing bankruptcy. Timing is always important in bankruptcy, and it shouldn't be dictated by the weather.
3. Filing a bankruptcy takes time- Setting up a payment plan, collecting all the documents needed to file, and completing the required courses takes some time and effort. It's normally a process that takes weeks, even months in complicated cases. The sooner you start, the sooner you can be finished, and the process won't bleed into important things (like Steelers season)
4. Stop harassing calls and letters- nothing can dampen a nice summer faster than a string of harassing phone calls and letters from a creditor. Chapter 7 and Chapter 13 bankruptcy can stop this contact through the "automatic stay", which occurs immediately upon filing. Once a bankruptcy is filed, your creditors are forbidden by the bankruptcy automatic stay from contacting you in any way. Enjoy your summer in peace and quiet.
5. The pluses of bankruptcy outweigh the negatives- While summer may not seem like the ideal time to file bankruptcy, it really not that hard to do. It's a lot easier to enjoy your summer when your mind is free and clear from concerns about debt. If you can do something affordable, that doesn't take too much effort on your part, and it removes perhaps your greatest, most pressing concern... why wait until Fall?

I am an experienced Pittsburgh bankruptcy attorney who can help you consider all your options, bankruptcy or otherwise. Summer is actually a great time to give yourself a new financial start. Contact us today to set up a free consultation.

How Long Do I Need to Wait to File Another Chapter 7 Bankruptcy?

An occasional issue for someone looking to obtain debt relief through bankruptcy is a previous bankruptcy filing. Debtors are not limited to filing one bankruptcy in their lifetime, but there is a mandatory waiting period between Chapter 7 bankruptcy filings.

Section 727(a)(8) of the United States Bankruptcy Code prohibits a discharge in a bankruptcy case if, "the debtor has been granted a discharge under this section... in a case commenced within 8 years before the date of the filing of the petition."

To make a couple points clear... first, the "discharge" is an extremely important part of any bankruptcy case. The discharge is what actually dismisses your debt. Without a discharge, a debt can still be collected on, and you can still be sued by a creditor. Sometimes, it is known going into a bankruptcy that a certain debt will not be discharged, for instance a student loan obligation or some tax debts. However, a bankruptcy in which ZERO debts are discharged is pretty much worthless. A Chapter 7 bankruptcy that does not discharge your credit card debt, personal loans, or medical bills serves no purpose.

So, since section 727(a)(8) prohibits a bankruptcy discharge for cases filed within 8 years, there is no reason to actually file such a Chapter 7 bankruptcy. You could technically file the second Chapter 7, but there would be no resulting discharge.

A second major point to make clear is how the 8 year period is calculated.  727(a)(8) speaks of a previous case "commenced" within 8 years. "Commenced" is just another way of saying "started", and a case is started when the petition is filed. So, to get a discharge in a Chapter 7 (the whole point of a bankruptcy!) you must wait 8 years and a day from the date you filed your previous Chapter 7. It doesn't matter when it was discharged, only filed. If you are seeking bankruptcy relief, and have previously filed a Chapter 7, make sure you inform your attorney of the previous filing date.

If you need to file bankruptcy, but it is less than 8 years since your previous Chapter 7, you may need to consider a Chapter 13 bankruptcy, or take other actions to stabilize your finances. Your situation isn't hopeless, and often times a plan can be formulated to hold off your creditors.  Contact us to examine your options.

What to Bring to Your Bankruptcy Meeting of Creditors

The bankruptcy Meeting of Creditors, for both Chapter 7 bankruptcy and Chapter 13 bankruptcy, is largely a formality. The hard work in preparing and filing a bankruptcy petition is mostly complete. However, this does not mean you should show up unprepared. If certain information is not brought to the meeting, your case could be delayed, and even dismissed (in rare cases!)

The two most important things you need to bring in EVERY bankruptcy case is a valid, government-issued photo ID (normally, this will be your drivers license) and your Social Security card. You must bring BOTH. Otherwise, the Trustee will refuse to conduct your Meeting of Creditors, which will need to be rescheduled. This information is used by the Trustee to verify your identity.

If you cannot find your Social Security card (I know mine has been lost for periods of time!) you will need to bring an original document showing your complete Social Security number, with none of the numbers obscured or redacted. An original Social Security payment statement (with all of your Social Security numbers visible) will also be accepted if you are retired.

If you absolutely cannot find your Social Security card, and you do not have a pay stub or any other original proof, you will need to visit the Social Security office downtown and order a new card. They will give you a receipt with you Social Security number on it... this will be sufficient for the Meeting of Creditors.

A valid government-issued photo ID is also necessary. For most people, this will be their drivers license. A military ID card would also suffice. Something like a Costco card will NOT (remember, it needs to be government-issued). Non-drivers can still be issued a state ID card (they look just like normal drivers licenses), and this may be necessary if you have no other government-issued IDs.

A brief list of things that would be helpful to bring, but are not mandatory, include:

• your most recent pay stubs
• proof of payment to the Trustee (Chapter 13 bankruptcy cases only)
• any documents or paperwork your attorney requested you to forward before the Meeting
• your completed Certificate of Financial Management

Prepare to be at least a half-hour early so your attorney can review your petition with you one last time, and review the questions normally asked at the Meeting. If you bring your government-issued photo ID, your Social Security card, and the above-listed material, your bankruptcy Meeting of Creditors will likely be a breeze!