Credit Card Collections

You might be wondering who are these companies that are sending collection notices on my credit card debt? I never borrowed any money from any of them. It’s a good question for a confusing situation.

Credit card companies routinely sell (or assign) debts owed to them by their customers. Unfortunately, this is entirely legal. Credit card debts can be assigned or sold to anyone. This often leads to confusion and makes it difficult for you to determine who exactly you owe. Why do credit card companies sell your debt? If you owe the money, why don’t they try to collect it themselves?

Credit card companies will, in fact, often sell your debts for a small percentage of what is actually owed. They will then write off this loss for tax purposes. Some may conclude that the debt is unrecoverable. Or they may be simply looking to balance their books. Regardless, it leaves you now owing a new, different company. This often results in problems because these companies specialize solely in collections, harassment, and lawsuits., and they are able to go after the entire balance owed on the loan. This is why you may have originally owed Capital One or Discover, but are now being sued by Midland Funding or Portfolio Recovery Associates.

So, what can be done about these collections? The good news is these debts are still eligible to be discharged through bankruptcy. Nothing about the transfer or assignment makes them immune to a bankruptcy filing. Even if they file the lawsuit against you, that too can be discharged through bankruptcy. If you don’t wish to file bankruptcy, these debts can still be negotiated on, possibly for less than the full amount. Keep in mind, these companies have already purchased the debts for less than the full amount and therefore may be motivated to take less than what the original creditor previously wanted.

These collection agencies may make it tricky to figure out who you owe and how much, but they still can be dealt with. Call us at 412-414-9366 if you are being inundated with collection notices. I am an experienced bankruptcy attorney who would be happy to discuss your situation and see if there is an option for dealing with this problem. There almost always is, so don’t despair!

ID in Post-COVID Bankruptcy

The 341 meeting of creditors is a required part of completing bankruptcy. At this meeting you must answer questions asked by a trustee assigned to your case. Occasionally, but rarely, creditors will appear at the meeting to ask you questions as well.

These meetings were previously held in-person at various locations. However, since the beginning of the COVID-19 pandemic, the meetings have occurred virtually over the phone and on Zoom. Chapter 7 bankruptcy meeting of creditors now occur over the phone, while Chapter 13 bankruptcy meeting of creditors occur via Zoom teleconferencing. In either case, your attorney will provide you with the links necessary to join the meetings.

In almost every way the meetings are conducted the same as they were when they were done in person. The trustee swears you in, you attorney enters their appearance, and the trustee asks you a series of questions. One thing that has changed is that your bankruptcy attorney must now identify you using your Social Security card and a valid state photo ID. Previously, these documents were reviewed and verified by the trustee assigned to the case. Now, you must provide these documents to your bankruptcy attorney so that he or she can verify them for the trustee.

Most trustees will accept an unredacted W-2 in lieu of your original Social Security card. State photo IDs can include drivers licenses, military IDs, and state issued IDs. Things such as membership cards with a photo are generally not excepted. They must be state issued.

Your attorney should go over all of the steps necessary to join the virtual meeting of creditors and prepare you for all the questions that will be asked. If you have any bankruptcy or credit related issues, call us at 412-414-9366. I will be happy to set up a free consultation to discuss your situation!

Property Taxes and Bankruptcy

If your home is owned outright, or you do not have an escrow account set up through your mortgage payment, you will be responsible for paying your yearly property taxes. It will be important to keep your property taxes current, as failing to pay them can lead to a lien being placed on your home.

Property taxes are secured by your home and therefore are not outright dischargeable in bankruptcy. In Chapter 7 bankruptcy, your property taxes will remain a lien on your home even if you have other debts discharged in the bankruptcy, such as credit cards and medical bills.

In Chapter 13 bankruptcy, your property taxes will need to be paid in full over the course of the Chapter 13 plan. These taxes are generally paid with interest, normally at about 10%. So, if you owe $10,000 in property taxes in the chapter 13 bankruptcy, you will need to re-pay that amount plus interest over the three to five-year plan. It will also be important to pay the yearly property taxes as they come due during the bankruptcy plan. Otherwise, you may still owe on property taxes even when you come out of a bankruptcy designed to pay off the old property taxes.

Your property taxes are not a debt that you should ignore for long. Some tax collection agencies and municipalities are aggressive about collecting, and as home values go up more and more, they have more equity in your home to go after. Unfortunately, property tax liens do not go away, and they can accumulate significant interest and penalties. These liens will remain even if you attempt to sell the house or leave it to someone in your estate after death. If you want to be able to sell or giveaway your home free and clear, you will need to make sure all property tax are current.

Contact us to set up a free consultation if you find yourself unable to catch up on your property taxes or if a tax lien has already been placed on your home. Chapter 13 bankruptcy could buy you three to five years to catch up and can stop a sheriff sale at any point before it occurs. Call us at 412-414-9366 to discuss your situation.

Tax Returns and Bankruptcy

Individuals filing bankruptcy must provide copies of their past two years of Federal income tax returns and the accompanying W-2s and 1099s. Also, they must have filed all Federal tax returns for the past four years that were due. I am often asked why this is so.

The bankruptcy trustees, in both Chapter 13 bankruptcy and Chapter 7 bankruptcy, want to review your tax returns for several reasons. First, it gives them an idea of how much money has been earned in the household the past several years. When you file a bankruptcy, you submit proof of your income via paystubs and verified statements. The trustee needs this information to determine whether or not you have sufficient funds to repay your creditors. Your tax returns provide further proof..

Tax returns may also show if you were making large amounts of money at some point in the past two years. This will not necessarily prevent you from filing bankruptcy, by any means. However, you may need to explain to the trustee why your income has dropped. It could be for a reason as simple as you lost your job or had a paycut.

The second reason that you must provide copies of your tax returns is that it is required under the Bankruptcy Code. The Bankruptcy Code requires you to have filed all Federal income taxes for the four years previous to the year of the filing of your bankruptcy case. In rare occasions the trustee may ask for older returns, but this is far from normal.

If you are not required to file tax returns, for instance because your only income is for Social Security or you have not worked during the tax year, a verified statement can be provided telling the trustee as much. You do not have to file just for the sake of filing.

The final reason it is important to provide your tax returns is so that your bankruptcy attorney can make sure to exempt any tax refund that you may receive. A potential tax refund is considered an asset and must be protected from your creditors. Early in the tax year, the trustees may hold open your case to see how large your tax refund will be. If your tax returns have been filed, we will know what your likely return will be, and we can protect it from your creditors.

Call us at 412-414-9366 if you have any bankruptcy related questions. We would be happy to set up a free consultation to discuss your situation, whether it involves a tax issue or not!

Paying Your Chapter 13 Bankruptcy

Payments are due within 30 days of filing your Chapter 13 bankruptcy, and they continue to come due every month thereafter. So, it is important to make sure that every payment reaches the Chapter 13 Trustee to be processed.

There are generally three ways to make your Chapter 13 bankruptcy payment. The most direct way is to pay the trustee directly with a cashiers check or money order. This would require you to mail in a payment every month, through the regular mail, with your case number and name in the memo line. While this method is completely acceptable, there are sometimes problems with the mail. You will need to keep track of all the payments to make sure they are all being processed. If they are mailed to the wrong location or lost, your bankruptcy will not be paid for that month, which can obviously cause problems.

The second way to make your payments is through a wage attachment on your paycheck. If you have regular pay, you are required to have a wage attachment or a bank attachment. Your bankruptcy attorney will file a motion, which will be signed by a bankruptcy judge, that is then forwarded to your payroll department. The payroll department will be required to remit your payment every month to the Chapter 13 bankruptcy trustee. This method is preferable because it is easier to track and it is automatic. You will only need to get your bankruptcy attorney your payroll contact info and they will do the rest. If you change jobs or lose your job, you will need to let your bankruptcy attorney know so that they can amend or terminate the wage attachment.

The final acceptable method for paying your Chapter 13 bankruptcy is to do a direct bank attachment. The trustee’s office accepts payments from a company called TFSBillPay. You will set up a payment by attaching your bank account using your bankruptcy case number. This allows you to know exactly when the payments are coming out and provides a clear record of all the payments that are made. The only downside to this method is that there is a fee. A wage attachment will not cost you anything. If you mail the payment directly , obviously there will be fees for both the money order and postage.

It is important that your monthly bankruptcy payments are processed and on time every month. Discuss these options with your bankruptcy attorney to determine which one is best for you. If you have any questions about bankruptcy or you are having any credit problems, call us at 412-414-9366. I will be happy to do a free consultation and let you know whether or not bankruptcy is an option for you.