I’d like to share this guest post by Sergei Lemberg, a Stamford, Connecticut, attorney and consumer advocate. Sergei is best known for helping his clients get fair and just treatment from debt collectors and for protecting the rights of his clients under the Lemon Law. Here’s Sergei’s take on debt collection and how you can get relief from hounding by collectors.

Debt collection calls usually make people mad, frustrated, and sometimes even hopeless. Debt collection agencies are known for socking it to people when they’re down, and will use any number of tactics to take advantage of vulnerabilities in an attempt to get people to pay.

Most people don’t know that there is a very strict federal law that regulates what collectors can and cannot do when they’re attempting to collect a debt. It’s called the Fair Debt Collection Practices Act. If a debt collection agency violates the FDCPA, it can be sued in federal court. You, as a consumer, can receive up to $1,000, any actual damages, and payment of your attorney fees.

But how do you know when a debt collector crosses the line?

Here are the top five transgressions that our firm typically sees:

1. Embarrassing you. Embarrassment can take a number of forms, but the FDCPA is very clear that shaming you is against the law. For example, it’s illegal for a debt collector to send you a postcard in the mail, or an envelope with writing on the outside that indicates the letter is an attempt to collect a debt. Similarly, an agency can’t publish your name or tell others that you owe money.

2. Sending fake documentation. Debt collection agencies often send mailings that look as though they’re official court or government documents. This is against the law. This is a favorite tactic because unsuspecting consumers often respond to what they perceive as official mail.

3. Calling you at all hours of the day and night. The FDCPA says a debt collector can’t call you early in the morning, late at night, or at work – unless you’ve indicated that you’d like to be called at those times. In addition, debt collection agencies can’t repeatedly call and hang up, or call to the point of harassment.

4. Charging you more than you owe. Third party debt collectors will often try to get every penny they can, and will try to tack on a “collection fee” or extra interest charge. This is illegal.

5. Misusing postdated checks. In an attempt to make the harassment stop, consumers will often send a debt collection agency a series of postdated checks. All too often, the collector will deposit those checks early, leading the consumer into even more hot water as he or she racks up bank overdraft charges. The FDCPA prohibits this practice, and requires that debt collectors send you written notice of their intent to deposit your check.

Difficult to believe that people in business – even the business of collecting debts – try to get away with these tactics. Unfortunately, if you don’t know your legal rights, that’s just what they’ll do: Get away with it.

Check out Sergei’s Web site, StopCollector.com, for more information about your rights if you’re in debt.

Thanks for reading and let me know if you have any questions,

Matt

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Matt Hughson

New York Bankruptcy Lawyer

Ziff Law Firm, LLP
303 William St., Elmira, NY 14901
Tel: (607) 733-8866
Fax: (607) 732-6062
Toll Free: 1-800-943-3529
Email: mhughson@zifflaw.com
Web: http://www.zifflaw.com

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In a previous blog post, “Bankruptcy Basics: What is Chapter 7 Bankruptcy and How Does It Work?” I began to explain the details of filing bankruptcy according to Chapter 7 of the federal Bankruptcy Code. This type of filing, Chapter 7, has compelling advantages to offer debtors, including a resolution to ongoing debt claims if certain criteria are met. “Means testing” is part of the process of establishing eligibility, and I am going to explain what it is.

Do you have the ‘means’ to pay off debt?

Means testing is a method of determining a person’s eligibility to maintain a Chapter 7 case.

A person whose annualized current monthly income from all sources exceeds the median annual income, as reported by the U.S. Census Bureau, for the person’s state and family size, must show that he or she is not able to pay a minimum of $100 per month for 60 months to his or her unsecured creditors from his or her disposable monthly income.

Let me restate that in overly simplistic terms: In order to be eligible to maintain a Chapter 7 case, you must show that you cannot spare $100 a month to pay off debt.

Of course the specifics are very important. As I mentioned, your income level, family circumstances, place of residence are all analyzed and play a part in determining eligibility.

Disposable monthly income is a person’s current monthly income from all sources, minus PERMITTED current monthly expenses.

What happens if you don’t meet the benchmark? The Chapter 7 case of a person whose disposable monthly income is such that he or she is deemed to be able to pay $100 per month or more to unsecured creditors for 60 months will be dismissed or converted to Chapter 13 (unless special circumstances exist, a state of affairs I will explain in other FAQ posts).

How is means testing conducted?

Every person who files a Chapter 7 case must file a document called the Statement of Current Monthly Income and Means Test Calculation.

This document, when completed and filed, is a record of a person’s current monthly income and the current monthly expenses that he or she is allowed to claim. A person may also be questioned about income and expenses at a meeting with creditors.

From these sources, a debtor’s current monthly disposable income is calculated. This figure is then used to determine the amount of the monthly payment that the person can afford to make to his or her unsecured creditors. If the amount of this monthly payment is above a certain figure (usually $100), the person will almost always be disqualified from maintaining a Chapter 7 case.

What happens if means testing finds that you are ineligible to file for Chapter 7? If you file, but do not meet the criteria, you are said to have “abused” the Chapter 7 laws. In my next blog post, I will explain the term presumption of abuse and what it means for those who file for Chapter 7 but do not meet the conditions.

Thanks for reading and let me know if you have any questions,
Matt
___________________________________

Matt Hughson

New York Bankruptcy Lawyer

Ziff Law Firm, LLP
303 William St., Elmira, NY 14901
Tel: (607) 733-8866
Fax: (607) 732-6062
Toll Free: 1-800-943-3529
Email: mhughson@zifflaw.com
Web: http://www.zifflaw.com

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