So what happens next? You call them, they say they have your money and you owe the debt and to pay up because they are just going to collect it anyway? Not a chance. Get a lawyer. Do it yourself. Whatever is preferable to you, you need to understand that as cliche as it sounds for a lawyer to say this…YOU HAVE RIGHTS. They can’t just freeze your account without serving you properly in New York City. And guess what? Many of these firms don’t have the documentation at times to back up collecting the actual debt itself. It’s not as if Citibank can call Pressler and Pressler and say “Hey Jeanine Lopez (fictitious name) owes us $2,000. Go collect” It doesnt work that way. Debt collection is heavily regulated, even though in my opinion, most debt collectors do not follow the rules. Having said that, you need to realize that before you listen to the things they tell you, or the rights they claim to have, you have ways of fighting back. You can request something called validation of a debt, which they are required to provide you. You can file an Order to Show Cause with the Court. You can negotiate the sum due. Just make sure you take a step back, speak to someone, and then decide before losing your hard earned money.

http://www.msnbc.msn.com/id/38130515/ns/business-consumer_news/

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So you didnt get served but they’re suing you…now what?

Well, this Queens Bankruptcy Attorney would tell you NEVER to call them and leave it at that.  You think a phone call is proof of anything but you having a phone?  Its not.  And don’t send in random letter either (notarized doesnt it make it the end all be all either).  If you’re getting sued by any of these debt collection firms and you don’t think you were ever served with papers then it’s your job to go into court and “answer” the complaint against you, or hire a lawyer (hi!) to do that for you.  New York law has explicit requirements as to how you can be served in these actions.  Believe me, you’re not alone in thinking this suit came out of nowhere.  Thousands upon thousands of people across Queens, and all of New York say that they were never served with any papers but now there are judgments against them.  If they can’t prove they served you, they would have to restart the case all over again, or, in some instances, they could have the suits completely dismissed altogether.

So the lesson of the day is not simply to fight back against these firms by sending certified mailings, but its instead to have proper representation in court and make them prove their case before they start freezing your bank accounts and taking your salary and having it be a complete surprise to you.  The worst thing you can do is nothing at all.

Here is what I mean as an example.  If youre someone who makes about $40,000 a year in gross wages (before tax) and you have approximately $20,000 in debt or more, chances are you will NEVER pay off this debt.  If you havent missed a payment, you’re like paying the minimum on many of these cards since it would be implausible that youd be paying the entire amount of the balance and living on 40k a year BEFORE taxes.  If you’re keeping a balance, youre likely paying a rate of anywhere from 10-20%.  If you’ve missed a payment, that percentage likely went up to 30%.  If you do the math, there simply is no way at all that you could possibly make a dent in this debt while continuing to support yourself.  I understand that there are just so many emotions involved in something like this.  Fear, shame, embarrassment.  In any case, you need to realize that when you made these purchases that you had every intent to pay them back (I imagine).  And many of my clients who have finally come to grips with the fact that they need to file have contacted the creditors, but they are simply unwilling to compromise to payment plans that you can afford.

Also, when you settle a debt, you can be taxed on the amount you save as regular income.  So if you settle a 10k debt with a creditor for 5k, you may be responsible for taxes on the 5k you saved as ordinary income.

Look at the end of the day this area of law has more to do with your emotions than anything legal.  We are able to get the vast majority of people through a Chapter 7 case in Staten Island, Brooklyn, Manhattan or anywhere in New York with little or no problem.  But this issue is an emotional one.  Once you come to grips with the fact that there is no way you could possibly pay back this amount of debt you have, the decision can become a much clearer one for you.

On a personal note, I’d like to wish all of our readers and clients a very Merry Christmas, a very happy healthy New Year and Happy Holidays. Our business has grown and grown thanks to your support. And we’re able to do what we love to do, helping consumers, because you continue to show us the confidence you have in us to treat you the way you deserve to be treated. All the best to all of you in the new year. May it be stress free and collection call free!

Lets say you have $100,000 in credit card debt and your assets fall above the exemptions allowed under Bankruptcy law.  For instance lets say you have a rare book collection worth $10,000 .  The Bankruptcy exemptions under New York Law will likely only protect a portion of the value of those books, so they likely will have to be sold and proceeds used to pay off the creditors.  However, for about $10,000, you get rid of $100,000 worth of debt.  That means no more restraints on your bank account or garnishing wages.  It should be looked at as a relief.  Now, again, many people do not have assets or assets whose value goes above the amount allowed under the Bankruptcy Code.  But if you’re one of the few who do, realize that you cant get rid of your debt AND not give up valuable property.  However, for a fraction of the cost of the actual amount of debt, you’ll be able to start fresh again.

1. DO NOT simply contact the debt collection firm to find out exactly why the account was frozen.  Doing this causes unneccesary delay as many of these firms will not go into details with you as to why your account was frozen.  Instead they will simply try and strong arm you into making payments.

2. DO go straight to civil court.  You can let the clerk at the civil court know what happened and they will be able to access the corresponding court case behind the “freeze.”

3. DO speak to an attorney about the freeze.

There are many things an attorney can do to unfreeze your account almost immediately.  The jist is that your account was likely frozen because you didnt “show up” to a court date when a lawsuit was filed against you, and therefore a default judgment was entered against you.  Now many of you will say “But I wasn’t ever served!”  You’re not alone.  Many of the clients that come into my office have the same issue.  Some of these firms use “sewer service” whereby they simply serve any address they can find that corresponds with your name on a credit report.  They then go forward with the court proceeding even though you werent properly served.   Under New York Law, they cant do that.  The problem is the first time you found out about this was when you suddenly realized your bank account was frozen.

Also, about 80-90% of the time my clients have absolutely no idea that they owed any debt, much less the debt the lawsuit claims is owed.  This usually centers around the fact that if/when the client defaulted on the payment, that debt racked up a ton of interest and was sold between several collection agencies and companies.  An attorney will be able to minimize or even eliminate most of the interest, and many times a large amount of the principal (remember that past performance is no indication or guarantee of future results).

At the end of the day the most important piece of advice I would tell you is to immediately take steps to unfreeze this account, even if you are going to try and go at this alone.  There is no reason to simply pay what the collection law firm tells you to pay.  There is always room to negotiate or even try and dismiss the entire claim.

Here is the deal:  The sheer volume of work these firms have precludes them from doing a thorough analysis (solely in my opinion) on a persons current address or residencd, and whether the debt is owed.  They are dealing with literally thousands of these cases and therefore you get caught somewhere in the middle.

As cliche as it sounds the most important thing to know is you can in fact fight back and get what you need.  There are multiple ways where we can help you unfreeze your accounts, get the garnishments to stop, or even settle these cases if in fact there is a valid debt.

I am well aware of the fact that some of these so called debts may have occurred 5, 6 or even 7 years ago and you have no idea what the debt is for, or the company who is suing you.  Thats because these creditors sell debt to one another quite often.  So the Citibank Visa debt you owe may actually now belong to LVNV Funding LLC or Midland Funding or a number of others.  There are many ways to decipher this.

But here is my advice on what you should NOT do.  Don’t call these law firms and look to settle right away.  The statute of limitations on these debts is 6 years from default, and you calling them to “settle” will restart that whole clock all over again.  Many of these debts may not even be collectable in the first place.  Moreover, don’t rely on these places to send you written confirmation of anything.  In other words, if they want you to pay, and you think the debt is legitimate, dont send a dollar in until they send you written proof of the amount of settlement, the terms, and also language stating that they will notify the three credit bureaus of the settlement.  DO NOT GO INTO A PANIC WHEN YOU GET THESE.  Thats the worst thing you can do.  There are tons of ways to fight back but you need to remember to have a calm head about you when you do.

Lawyers on the other hand are different.  When one speaks to an attorney(put your attorney jokes away please), one can describe the clients situation and work out a payment arrangement that is suitable for both parties.  Or, in the alternative, the attorney may legitimately say “my client wont let me settle for that”, which I can then tell you, the client, before you, the client, pay another few hundred dollars towards a balance thar doesnt seem to be decreasing.

The other advantage of hiring an attorney to deal with these firms is when your account is frozen at the bank.  While you ponder why a collection law firm froze your account and call the law firm who froze it, all they can tell you in return is that they “served” you sometime ago with a summons and complaint.  But they probably didn’t do it correclty.  Want to know why?  Because sometimes they use sewer-service.  Which means they look at your credit report, find an address, and “serve” it and then when you don’t come to court because you havent lived in your address in the Bronx since you were 8, they get a judgment against you and start freezing your bank accounts.  Your likely to call them and complain and tell them that you havent lived there for years, but they, in turn, likely dont care, and once again tell you that they need money to unfreeze your account (which is kind of silly because you can’t really get money when they have frozen the account where your money is.)  What an attorney can do in that case is to go to court and explain to a judge why the “notice” portion of the action is deficient, and hopefully unfreeze your bank account.  From there, he can either move to dismiss the case, agree with the other side to dismiss the case (happens more than you think because these firms have thousands of cases) or settle on an agreeable amount between all parties.

The process is horrendous, and you’ll likely be dealing with some debt from 5 years ago that you don’t even remember, but many of these firms will stop at nothing.  Your best bet, in my opinion, is to speak to an attorney about your rights and the QUICKEST way to get this debt taken care of.  Wasting months negotating with these firms usually will not help you out in the  end.