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Debt Collection and Bankruptcy

Many people are forced into filing a bankruptcy case due to the pressures and collection methods of debt collectors. For some, there are other solutions that can be pursued prior to filing the bankruptcy case. Of primary importance to most is to get the collectors to stop calling you at home and work. In order to do this, the client must write a Cease and Desist letter to the collector. The general format of the Cease and Desist letter is as follows:

Re:

CEASE & DESIST - Your name here
REQUEST FOR VALIDATION
ACCT.NO: Debt Collection Acct. No.

Dear Sir or Madam:

THIS LETTER IS TO INFORM (NAME OF DEBT COLLECTION COMPANY) THAT YOU MUST CEASE AND DESIST ANY FURTHER CALLS FOR COLLECTION. THE DEBT IS DISPUTED. IF ANY FURTHER COLLECTION ACTIVITY OCCURS, I, (YOUR NAME HERE) WILL PURSUE MY REMEDIES UNDER THE FAIR DEBT COLLECTION PRACTICES ACT AND YOUR COMPANY WILL BE REPORTED TO THE FTC. IN ADDITION, PLEASE SEND CONFIRMATION, IN WRITING, OF THE DEBT YOU ARE COLLECTING ON, AND WHAT CREDITOR YOU ARE COLLECTING FOR, AS I AM DISPUTING THIS DEBT.

SINCERELY,

While a letter of this sort should stop the collection calls, the Creditor can still contact you in writing, and sue you. When aggressive collections begin, the debtor should always ask that the debt be validated. When requested, the Creditor is required to send a "Notice of Validation" within 30 days of the receiving the request.

One central question that should always be explored is whether the debt is time barred. A debt is time barred when the relevant statute of limitations for collection has passed. For contracts, in the state of California, the statute of limitations is four years. The time begins to run from the date of the breach or the failure to pay. If a payment is made, the four year statute starts over. Creditors sometimes sue on breach of contract, common counts, or open book account. These causes of action each have a four year statute of limitations for collection. Creditors may choose to bring a lawsuit anyway. If you are sued on a debt that you believe to be time barred, you must defend on the basis of the statute of limitations, or the defense may be waived. If a complaint is filed against you, the solution is to file an answer or file a demurrer to the complaint.

If uncertain how to proceed, you should contact a lawyer, and see if you can pay for someone to draft the answer or demurrer on your behalf.

Debt collectors often purchase debt for pennies on the dollar. Your credit report may show a "charge off." This does not mean that the debt is gone, it just means that the collection agent working on that debt is no longer going to be the agent for collection. As time passes, another agent will begin the collection process. The older the debt, the less it cost for the particular creditor to acquire the debt. What this means is that the debt may be ripe for settlement. Because the Creditor has paid only a fraction of the face amount of the debt to acquire it, they are willing to settle for a fraction of the debt as well. Settlement can be pursued for credit card debts, medical debts, and debts from asset repossession.

When deciding what to do, a person's credit score should be considered. If the credit score is down in the doldrums, then the filing of a bankruptcy case may be smart. The decision depends upon how many defaulted accounts there are, and whether or not a defense can be mounted to these accounts individually. It is smart to know your rights, to educate your self regarding what is allowed by debt collectors (https://www.privacyrights.org/debt-collection-practices-hardball-tactics-going-too-far), and to know that bankruptcy is a financial tool used by the most savvy business people in America. See This: http://www.cnn.com/2008/LIVING/personal/11/19/mf.successful.people.survived.bankruptcy/index.html

Evans Law in the Media

"We're having great results using the rule," said Brette Evans, a San Jose bankruptcy lawyer. In one recent case, a small-business owner was able to hang on to her home by setting aside a $240,000 second mortgage, she said.

mercurynews.com | View Article

Silicon Valley | Mercury News.com
NACBA National Association of Consumer Bankruptcy Attorneys ARAG US Legal Services | Providing Legal Benefit Plans Yelp The State Bar Of California

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