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.