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Five Ways to Recognize Debt Collection ScamsPeople who are in debt can be more susceptible to debt collection scams. When you are worried about debt collectors, a threatening phone call or letter seems believable. At the very least, you do not think you can ignore it. Some scams involve debt collection agencies using illegal practices, while others are from people who are merely posing as a collection agency. How do you know whether an alleged debt collector is trying to scam you? An attorney can tell you, but there are also several warning signs that you can look for:

  1. You Do Not Recognize the Debt: While you may not know every outstanding debt you owe off the top of your head, you probably have a good idea of the creditors that you have done business with. You should be skeptical if you do not recognize the name of the creditor or the amount of money that the collector claims you owe. Take time to check your credit report or other records to confirm whether the debt is real.
  2. The Collector Is Asking for Basic Information: The creditor or collection agency should already have your basic information on file, such as your address, date of birth, and the number of any account related to the debt. If the person you are talking to is asking for this information, they may be fishing for your personal information in order to commit identity theft.
  3. The Collector Threatens to Have You Arrested: Creditors do not have the authority to demand your arrest if you do not pay your debts. At most, they can take civil action by filing a lawsuit against you. It is illegal for creditors to lie by claiming that they can bring a criminal action against you. Someone who threatens you with arrest is likely a scam artist who is trying to make you panic.
  4. The Collector Is Pressuring You to Pay Immediately: A scam artist does not want to give you time to think about what they are asking for because you will likely realize that it is a scam. Instead, they will offer an easy way for you to send them money, such as a wire transfer or online portal. These payment methods may be untraceable, making it difficult for authorities to track down the person or entity that stole your money.
  5. You Cannot Find Information About the Collection Agency: You should be immediately suspicious if the person you are talking to refuses to give you the name of the debt collection agency or contact information. Even if they do give that information, you can search on the internet to see whether this agency is a legitimate company.

If you are being harassed in this manner, it’s probably a good time to consider bankruptcy. 

Contact a Frisco Bankruptcy Attorney

When you are considering filing for bankruptcy, you should not pay any debt collectors without consulting your attorney. A Denton County bankruptcy lawyer at The Page Law Firm may be able to help you discharge that debt instead of paying it. Schedule a free consultation by calling 214-618-2101.

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How Self-Employment Affects Filing for BankruptcyWith the recent changes in the economy and business hiring practices, an increasing number of workers are self-employed, either by choice or out of necessity. Self-employment can be working as an independent contractor for a business or being the sole proprietor of your own business. When faced with overwhelming debt, self-employed workers have the right to file for bankruptcy like anyone else. However, steps such as verifying their income can be more complicated.

Income Verification

Calculating your monthly income is an important step when filing for bankruptcy because it can determine whether you file under Chapter 7 or Chapter 13 bankruptcy. The Chapter 7 bankruptcy means test uses your current monthly income over the past six months prior to the filing of your case to decide whether you qualify for Chapter 7. In Chapter 13 bankruptcy, your income will determine how much you will repay your unsecured creditors (i.e. credit cards, medical bills, signature loans). Verifying your monthly income is more complicated if you are self-employed because your income may come from various sources and may be inconsistent depending on how regularly you receive work. Self-employed workers can verify their monthly income by presenting:

  • Check stubs;
  • Invoices;
  • Contracts;
  • Bank statements;
  • Tax returns; and
  • Signed statements from the party that paid them.

Many self-employed workers are able to qualify for Chapter 7 bankruptcy because they have less disposable income.

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What to Ask When Considering Whether to Reaffirm Your Mortgage After BankruptcyThere are many secured loans that you could decide to reaffirm after completing Chapter 7 bankruptcy, but your home mortgage may be the most consequential one. Discharging your mortgage does not remove the mortgage company’s lien on your home. The mortgage company can foreclose on your home if you do not continue to make regular mortgage payments. While it is possible to continue making payments without reaffirming the mortgage, a reaffirmation agreement creates personal liability on the loan. It is important to note that reaffirming a mortgage is not the best option for every bankruptcy case. Because the Bankruptcy Code does not require a reaffirmation for real property (your home) unlike personal property (your car), there are several questions you should ask yourself before making that decision:

  1. Will I Be Able to Keep Up With the Payments?: Reaffirming your mortgage means you will again have personal liability for the loan. However, you may have some advantages that did not exist before your bankruptcy. Discharging debts after bankruptcy may allow you to put more of your income towards your mortgage. You should calculate your monthly budget before you reaffirm any debts.
  2. Was My Mortgage the Primary Reason I Filed for Bankruptcy?: The great thing about discharge is that it frees you from a debt obligation, even though in some instances that means you cannot keep the property. Reaffirming your mortgage may undo one of the primary benefits of bankruptcy. You should also consider the value of the property and the equity you have in it. You may be better off letting your mortgage company foreclose on your home if your mortgage is underwater--meaning that you owe more on the mortgage than the property is worth.
  3. What Are My Other Housing Options?: You obviously have to live somewhere else if you allow the mortgage company to foreclose on your home. Do you have another place in mind where you can move? Will it accommodate yourself and your family? How much will the new home cost? You need to answer all of these questions before surrendering your home.
  4. What Would Happen If I Defaulted on the Mortgage?: The mortgage company will most likely foreclose on your home if you start to miss payments again. If you have signed a reaffirmation agreement,  the mortgage company can hold you liable if you owed more on the mortgage than what the mortgage company received by selling the property.

Contact a Frisco, Texas, Bankruptcy Lawyer

You can plan ahead during your bankruptcy for whether you want to reaffirm your mortgage. A Denton County bankruptcy attorney at The Page Law Firm can discuss the advantages and disadvantages of reaffirmation. Schedule a free consultation by calling 214-618-2101. 

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Pros and Cons of Reaffirming a Car Loan After BankruptcyWe recently discussed whether you should continue to lease a vehicle when you are filing for bankruptcy. You are more likely to have to decide whether you will reaffirm your car loan. In a Chapter 7 bankruptcy case, you can surrender (give back your car) and discharge remaining debts at the end of your case. With a reaffirmation agreement, you keep the vehicle in exchange for continuing to make loan payments. However, you should carefully consider the consequences before you enter such an agreement.

Why You May Want to Reaffirm

Texas bankruptcy law has a generous motor vehicle exemption that can prevent a Chapter 7 bankruptcy trustee from selling your vehicle. You are allowed to exempt the full value of one vehicle per member of your household with a driver’s license. You can also exempt a vehicle if an unlicensed member of your household relies on someone else using a vehicle to transport him or her. However, if you do reaffirm, a bankruptcy exemption does not prevent a lender from repossessing your vehicle after bankruptcy if you are behind on your loan payments. A lender may offer you a chance to reaffirm the loan because it would prefer you to continue paying back the loan. A reaffirmation agreement can be advantageous to you because:

  • You will keep the vehicle;
  • You may be able to negotiate more favorable terms for the loan; and
  • Paying the loan can help rebuild your credit rating after bankruptcy. 

Why You May Not Want to Reaffirm

You filed for bankruptcy in order to relieve yourself from debts. By reaffirming your loan, you are renewing your debt obligation and leaving yourself vulnerable if you cannot keep up with your payments:

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Federal Employees Expected to Continue Bankruptcy Payments Despite ShutdownThe federal government shutdown is nearing a month, and federal employees have started to miss paychecks. Losing your job income can put a strain on anyone’s budget, but people with a Chapter 13 bankruptcy repayment plan feel under particular pressure. Filers agree to court orders to make regular payments to their creditors, and the payment amounts are based in part on their regular income. When a federal employee going through Chapter 13 bankruptcy stops receiving pay, he or she may not have the money available to make the scheduled payments. 

Missing Bankruptcy Payments

A Chapter 13 bankruptcy trustee receives your payments and distributes them to your creditors. The trustee can file a motion to dismiss your case if you repeatedly miss payments, which would require you to:

  • Fulfill your missed payments;
  • Motion to modify your payment plan; or
  • Allow the dismissal and attempt to refile for bankruptcy.

During the previous government shutdown in 2013, some bankruptcy trustees were willing to delay a motion for dismissal when a federal government employee missed a payment. However, this government shutdown has already lasted for longer than any other on record, and it is unclear when a resolution will be reached. We do not know how patient trustees will be if bankruptcy filers are forced to continue to miss payments.

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National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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