October 21, 2019

Interim Bankruptcy Rules Published for Public Comment

On February 19, 2020, the Small Business Reorganization Act of 2019, P.L. 116-54 (SBRA) will go into effect – long before the normal three-year rules amendment process runs its course. As a temporary measure, the Advisory Committee on Bankruptcy Rules has drafted interim bankruptcy rules and amendments to the official bankruptcy forms to address the new law that are now available for public comment through Nov. 13, 2019.

The proposed amendments and instructions on how to submit comments are posted on uscourts.gov.

When an advisory committee recommends an amendment to its rules or forms, it must obtain the approval of the Judicial Conference Committee on Rules of Practice and Procedure to publish the proposed amendment for public comment. During the comment period, the public is encouraged to submit written comments and may also request to testify at public hearings on the proposed amendment.

There are two rules packages out for review.

August 19 Package

On June 25, 2019, the Judicial Conference Committee on Rules of Practice and Procedure (Standing Committee) approved publication of proposed amendments to the following:

  • Appellate Rules 3, 6, 42, and Forms 1 and 2;
  • Bankruptcy Rules 2005, 3007, 7007.1, and 9036; and
  • Civil Rule 7.1.

The comment period is open from August 19, 2019 to February 19, 2020. Read the text of the proposed amendments and supporting materials:

Preliminary Draft of Proposed Amendments to the Federal Rules of Appellate, Bankruptcy, and Civil Procedure (pdf)

Public Hearings on the August 19 Package

Members of the public who wish to present testimony may appear at public hearings on the proposed amendments.

How to Submit or Review Comments on the Proposed Amendments to the Federal Rules & Forms (August 19 Package)

Written comments are welcome on each proposed amendment. The advisory committees will review all timely comments, which are made part of the official record and are available to the public. The comment period closes on February 19, 2020.

Comments and supporting files must be submitted electronically using the regulations.gov portal. After choosing the appropriate link below, click the “Submit a Comment” link. This will display the comment on the web form. You can then enter your submitter information and attach your comment as a file (up to 10MB), or type your comment directly on the web form. When you have finished attaching or typing your comment, click the “Preview Comment” link to review. Once you are satisfied with your comment, click the “Submit” button to send your comment to the relevant advisory committee. Upon completion, you will receive a tracking number for your submission.

Detailed instructions on how to submit a comment are given in the Regulations.gov FAQs.

October 16 Package

On February 19, 2020, the Small Business Reorganization Act of 2019, P.L. 116-54 (SBRA) will go into effect – long before the normal three-year rules amendment process runs its course. As a temporary measure, the Advisory Committee on Bankruptcy Rules has drafted Interim Bankruptcy Rules that can be adopted by courts as local rules or by general order when the SBRA goes into effect. The Advisory Committee has also drafted amendments to the Official forms to address the SBRA. The Standing Committee now seeks comment on the proposed SBRA rules and forms for a short four-week period prior to making final recommendations.

  • Interim Bankruptcy Rules 1007(b), 1007(h), 1020, 2009, 2012(a), 2015, 3010(b), 3011, and 3016.
  • Official Forms 101, 201, 309E, 309F, 314, 315, 425A, and new Official Forms 309E2, and 309F2

The comment period is open from October 16, 2019 to November 13, 2019. Because of the short publication period for the Interim Rules and related Official Forms, there will be no public hearings.

Read the text of the proposed amendments and supporting materials:

Preliminary Draft of Proposed Amendments to the Federal Rules of Bankruptcy Procedure – Interim Bankruptcy Rules and Official Forms (pdf)

How to Submit or Review Comments on the Interim Bankruptcy Rules & Forms (October 16 Package)

Written comments are welcome on each proposed amendment. The Advisory Committee on Bankruptcy Rules will review all timely comments, which are made part of the official record and are available to the public. The comment period closes on November 13, 2019.

Comments and supporting files must be submitted electronically using the regulations.gov portal. After choosing the appropriate link below, click the “Submit a Comment” link. This will display the comment on the web form. You can then enter your submitter information and attach your comment as a file (up to 10MB), or type your comment directly on the web form. When you have finished attaching or typing your comment, click the “Preview Comment” link to review. Once you are satisfied with your comment, click the “Submit” button to send your comment to the relevant advisory committee. Upon completion, you will receive a tracking number for your submission.

Detailed instructions on how to submit a comment are given in the Regulations.gov FAQs.

SOURCE

National Women Road Warrior Day

September 19th is National Women Road Warrior Day which was created to celebrate and honor the nation’s traveling businesswomen. I practice Connecticut-Statewide and travel almost daily for court appearances and client meetings, as well as business networking and continuing education. Just yesterday I was up in Hartford for a Bankruptcy Hearing and tomorrow I will be in Bridgeport for a Divorce Trial. My main office is in Milford but thanks to Ruane Attorneys At Law, LLC I have satellite offices in Wethersfield, Shelton, etc. I can also “meet” clients via Skype and FaceTime.  #workfromanywhere #gooutandmakeithappen 

Shut out to all the other traveling business women and “Lincoln Lawyers” out there!

History of Labor Day

Labor Day 2019

On September 2, 2019, the U.S. Department of Labor celebrates and honors the greatest worker in the world – the American worker. Labor Day 2019 is the 125th anniversary of Labor Day being celebrated as a national holiday.

Labor Day: What it Means

Labor Day, the first Monday in September, is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.

Labor Day Legislation

The first governmental recognition came through municipal ordinances passed in 1885 and 1886. From these, a movement developed to secure state legislation. The first state bill was introduced into the New York legislature, but the first to become law was passed by Oregon on February 21, 1887. During 1887, four more states – Colorado, Massachusetts, New Jersey, and New York – created the Labor Day holiday by legislative enactment. By the end of the decade Connecticut, Nebraska, and Pennsylvania had followed suit. By 1894, 23 more states had adopted the holiday, and on June 28, 1894, Congress passed an act making the first Monday in September of each year a legal holiday in the District of Columbia and the territories.

Founder of Labor Day

More than a century after the first Labor Day observance, there is still some doubt as to who first proposed the holiday for workers.

Some records show that Peter J. McGuire, general secretary of the Brotherhood of Carpenters and Joiners and a co-founder of the American Federation of Labor, was first in suggesting a day to honor those “who from rude nature have delved and carved all the grandeur we behold.”

But Peter McGuire’s place in Labor Day history has not gone unchallenged. Many believe that Matthew Maguire, a machinist, not Peter McGuire, founded the holiday. Recent research seems to support the contention that Matthew Maguire, later the secretary of Local 344 of the International Association of Machinists in Paterson, N.J., proposed the holiday in 1882 while serving as secretary of the Central Labor Union in New York. What is clear is that the Central Labor Union adopted a Labor Day proposal and appointed a committee to plan a demonstration and picnic.

The First Labor Day

The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union. The Central Labor Union held its second Labor Day holiday just a year later, on September 5, 1883.

By 1894, 23 more states had adopted the holiday, and on June 28, 1894, President Grover Cleveland signed a law making the first Monday in September of each year a national holiday.

A Nationwide Holiday

Women's Auxiliary Typographical Union

The form that the observance and celebration of Labor Day should take was outlined in the first proposal of the holiday — a street parade to exhibit to the public “the strength and esprit de corps of the trade and labor organizations” of the community, followed by a festival for the recreation and amusement of the workers and their families. This became the pattern for the celebrations of Labor Day. Speeches by prominent men and women were introduced later, as more emphasis was placed upon the economic and civic significance of the holiday. Still later, by a resolution of the American Federation of Labor convention of 1909, the Sunday preceding Labor Day was adopted as Labor Sunday and dedicated to the spiritual and educational aspects of the labor movement.

The character of the Labor Day celebration has changed in recent years, especially in large industrial centers where mass displays and huge parades have proved a problem. This change, however, is more a shift in emphasis and medium of expression. Labor Day addresses by leading union officials, industrialists, educators, clerics, and government officials are given wide coverage in newspapers, radio, and television.

The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pays tribute on Labor Day to the creator of so much of the nation’s strength, freedom, and leadership – the American worker.

SOURCE: U.S. Department of Labor

We are always here for you. Even on holidays. Contact us any time 24/7/365: CONTACT

The F Word

No.  Not that F Word.

The word I am talking about is Forgiveness.

In particular, Debt Forgiveness.

Let go...or be dragged. -Zen Proverb

Let go…or be dragged.
-Zen Proverb

This can be achieved through Bankruptcy or Bankruptcy Alternatives.

I talk a lot about Bankruptcy, but it’s not for everyone.

So, what are the alternatives? Here are the top three:

  • Repayment with Workouts

(aka Debt Negotiation)

  • Debt Management with Strict Budgeting

(read our budgeting blog here)

  • Claims under the Fair Debt Collection Practices Act

Don’t let your debt drag you down.

Let it go.

For more information, contact me here.

Sincerely,

Theresa Rose DeGray

Attorney at Law

PS: Debt Forgiveness may result in tax consequences; whereas Bankruptcy does not.

Budget Is Not A Four Letter Word

Guest Post: Budget Is Not A Four Letter Word by Jeremy Edmonds of Strength In Numbers

Ewww.  That word just stirs up images of restriction, control, and a lack of any fun at all.  Contrary to popular belief budget is not a four letter word.  That four letter word I mean? DIET.  Now diet itself has gotten a bad rap anyway as its literal meaning is “the kinds of food that a person eats”.  A budget is the same thing.  It’s just a plan for what your money is consuming.  Even if you want to say it’s restriction there is a key word to note… “a special course of food to which one restricts oneself”.  Again the same is true with a budget.  It can merely be a certain restriction you put on yourself.

Jeremy Edmonds of Strength In Numbers: Financial Coaching

Jeremy Edmonds of
Strength In Numbers: Financial Coaching

Before we go any further I wanted to break down this false perception.  You need to realize one thing:  A budget is merely a fence.  You made it.  You control it.  You can even disregard it and bust it down if you want… at your own risk.  Without one you will wander all over and even off your property.  Make no mistake you are in control.  The real rub comes when you try to live inside that fence.  That is the true challenge.  More on that at the end.

But right now let’s talk some practical steps for how to build that fence.

1. Know thy income

My buddy, Zig Ziglar, always said “If you aim at nothing you’ll hit it every time.”  Oh how right he is.  You need to know your income.  What day do you get paid?  How often?  Etc.  Here’s some basic guidelines:

  • Don’t budget overtime or bonuses. You can’t depend on them no matter how long you’ve been doing OT. Use this income as extra toward your goals not your monthly budget.
  • Know the dates of each pay day.
  • Know your pay frequency and don’t incorporate irregular pay.
  • Weekly? Budget on 4 checks a month. Use those 5 check months to throw the “extra” check at your larger goals.
  • Every 2 weeks? Budget on 2 checks a month. Use the 3 check months to throw the “extra” check at your larger goals.
  • Twice a month or monthly? You have the smoothest options. Count yourself blessed. You are in the minority.

2. Give every dollar a name.

Have $4K/mth in income?  Give every penny a name.  No cheating.  No rounding.  That “extra” in your account is a license to subconsciously spend it.  GIVE IT A NAME.  Some tips:

  • Don’t depend on the past. Past spending can be helpful to make an educated decision about the future but it is not a budget. It’s an expense report.
  • Be proactive not reactive. If you drive your car looking in the rear view the whole time you are going to crash. Think long term.
  • Brainstorm the random and irregular stuff. Get a property tax bill every year for your house and car? Split those numbers in 12 and budget monthly for them. Never know when you’re going to need a car repair? Better set aside some money regularly for it and stop depending on your credit card.
  • Be rigid. If you set the number (ex. $600/mth for Groceries) LIVE BY IT. Don’t try to work the numbers. Don’t rob Peter to pay Paul. This is 20% math and 80% behavior. Discipline is also not a four letter word.
  • Be flexible. Budgeting is a living organism. It’s going to take at least 3-4 months to get it working smoothly. You need time to see trends and even if you are the best budgeter in the whole wide world… gas prices will change! Roll with the punches.

3. Assign those dollars to your pay

So you’ve defined your income and your expenses.  Now you need to line them up.  Here’s some rules:

Give each pay day its date. Make sure you account for holidays.

  • Start assigning bills first. Ex. Get paid on the 1st and 15th and the cable bill is due on the 10th? Make sure to use your pay day on the 1st to cover that bill. Bill due dates lumpy? Call each company and see if you can get the due date adjusted to even them out through the month.
  • Make sure to give yourself a 2-3 day buffer with paying bills. Sometimes the difference between when you pay it and when it clears their system can be what causes you to overdraft.
  • Assign the rest of your income across each payday to the remaining budget categories that are not bills (ex. Car Gas).
  • DON’T BUDGET MORE INCOME THAN YOU HAVE. Remember, if your outgo exceeds your income your upkeep will be your downfall. If you have more expenses than you do income follow the tips in the next step…

4. Irregular income

So maybe you feel none of the above applies to you because you don’t have a steady paycheck.  Maybe you are 100% commission based or self-employed.  The above still applies to you with some tweaks.  Here’s some tips:

  • After step 2 rearrange the order of your budget (not the amounts) and prioritize it. Your top 4 should be what I call the 4 walls of your household: Food, shelter, clothing, and transportation. These are essentials. Shelter includes utilities but not non-essential ones (ex. cable). Food isn’t eating out, clothing isn’t Gucci, transportation has 4 wheels and an engine. Again, it’s priorities.
  • Draw a line where the income stops and everything below does not get funded or paid. Don’t pay your credit card and not your mortgage. If they don’t get paid this month so be it. You need to provide for your family first. Don’t give into their pressure and know your rights under the Fair Debt Collection Practices Act.
  • Save for the lean times. Having a budget allows you to know what your regular expenses are (including those irregular things you need to be putting aside for that we discussed in step 2). If those expenses are $4K/mth and you get a $6K income month save the other $2K for the month you only get $2K!
  1. Get help.

Now you’ve got some better clarity on how to construct a solid budget (the fence) but there’s still the most important part of the picture; doing it (learning to live inside the fence).  That is a whole other newsletter.   Here are a couple options to help you going forward:

  • www.mymoneywellness.com is a self-directed, self-paced program to help you build the fence and learn to live inside it. It’s $99/yr but you can get 10% off if you sign up with the code: JECTPP10.
  • Live in CT or know someone who does that could use help? Attend one of my 90 minute workshops being facilitated this fall for Adult Education in the following towns: Cheshire, Meriden, Wallingford, Hamden, and Milford.
  • I’m available for one-on-one coaching (or one-on-two if you are a married couple) and I give a free Skype consultation to everyone. Call me at 860-880-0232 or write me at info@strengthinnumberscoaching.com and I’ll be happy to serve you!

I hope you came away today with a new perspective on budgeting and some solid tips you can use to shore up your financial foundation.  Now go do something.  Take control.  You can do it!

SCRA: Servicemembers’ Civil Relief Act

The Servicemembers’ Civil Relief Act applies in bankruptcy cases. It provides protection to members of the military against the entry of default judgments and gives the court the ability to stay proceedings against military debtors.

Background

The Servicemembers’ Civil Relief Act (“SCRA”) is found at 50 U.S.C. app. §§ 501 et seq. The purpose of the SCRA is strengthen and expedite national defense by giving servicemembers certain protections in civil actions. By providing for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect servicemembers during their military service, the SCRA enables servicemembers to focus their energy on the defense of the United States. Among other things, the SCRA allows for forbearance and reduced interest on certain obligations incurred prior to military service, and it restricts default judgments against servicemembers and rental evictions of servicemembers and all their dependents. The SCRA applies to all members of the United States military on active duty, and to U.S. citizens serving in the military of United States allies in the prosecution of a war or military action. The provisions of the SCRA generally end when a servicemember is discharged from active duty or within 90 days of discharge, or when the servicemember dies. Portions of the SCRA also apply to reservists and inductees who have received orders but not yet reported to active duty or induction into the military service.

General Provisions

There are three primary areas of coverage under the SCRA: (1) protection against the entry of default judgments; (2) stay of proceedings where the servicemember has notice of the proceeding; and (3) stay or vacation of execution of judgments, attachments and garnishments. 50 U.S.C. app. §§ 521, 522 and 524.

Protection Against Default Judgements

Section 521 of the SCRA establishes certain procedures that must be followed in all civil proceedings in order to protect servicemember defendants against the entry of default judgements. These procedures are outlined below:

  • If a defendant is in default for failure to appear in the action filed by the plaintiff, the plaintiff must file an affidavit (1) with the court before a default judgment may be entered. The affidavit must state whether the defendant is in the military, or that the plaintiff was unable to determine whether the defendant is in the military.
  • If, based on the filed affidavits, the court cannot determine whether the defendant is in the military, it may condition entry of judgment against the defendant upon the plaintiff’s filing of a bond. The bond would indemnify the defendant against any loss or damage incurred because of the judgment if the judgment is later set aside in whole or in part.
  • The court may not order entry of judgment against the defendant if the defendant is in the military until after the court appoints an attorney to represent the defendant.
  • If requested by counsel for a servicemember defendant, or upon the court’s own motion, the court will grant a stay of proceedings for no less than 90 days if it determines that (1) there may be a defense and the defense cannot be presented without the defendant’s presence; or (2) after due diligence the defendant’s attorney has not been able to contact the defendant or otherwise determine if a meritorious defense exists.
  • The court may, in its discretion, make further orders or enter further judgments to protect the rights of the defendant under the SCRA.
  • If a judgment is entered against the defendant while he or she is in military service or within 60 days of discharge from military service, and the defendant was prejudiced in making his or her defense because of his or her military service, the judgment may, upon application by the defendant, be opened by the court and the defendant may then provide a defense. Before the judgment may be opened, however, the defendant must show that he or she has a meritorious or legal defense to some or all of the action.

    Stay of Proceedings Where Servicemember Has Notice

    Outside the default context, and at any time before final judgement in a civil action, a person covered by the SCRA who has received notice of a proceeding may ask the court to stay the proceeding. 50 U.S.C. app. § 522. The court may also order a stay on its own motion. Id. The court will grant the servicemember’s stay application and will stay the proceeding for at least 90 days if the application includes: (1) a letter or other communication setting forth facts demonstrating that the individual’s current military duty requirements materially affect the servicemember’s ability to appear along with a date when the servicemember will be able to appear; and (2) a letter or other communication from the servicemember’s commanding officer stating that the servicemember’s current military duty prevents his or her appearance and that military leave is not authorized for the servicemember at the time of the letter. The court has discretion to grant additional stays upon further application.

    Stay or Vacation of Execution of Judgements, Attachments and Garnishments

    In addition to the court’s ability to regulate default judgments and stay proceedings, the court may on its own motion and must upon application: (1) stay the execution of any judgment or order entered against a servicemember; and (2) vacate or stay any attachment or garnishment of the servicemember’s property or assets, whether before or after judgment if it finds that the servicemember’s ability to comply with the judgment or garnishment is materially affected by military service. 50 U.S.C. app. § 524. The stay of execution may be ordered for any part of the servicemember’s military service plus 90 days after discharge from the service. The court may also order the servicemember to make installment payments during any stay ordered.

    Additional Protections

    Several additional rights are available under the SCRA. For example, when an action for compliance with a contract is stayed under the SCRA, contractual penalties do not accrue during the period of the stay. 50 U.S.C. app. § 523. The SCRA also provides in most instances that a landlord cannot evict a servicemember or dependants from a primary residence without a court order. In an eviction proceeding, the court may also adjust the lease obligations to protect the interests of the parties. 50 U.S.C. app. § 531. If the court stay the eviction proceeding, it may provide equitable relief to the landlord by ordering garnishment of a portion of the servicemember’s pay. Id. Under the SCRA a servicemember may terminate residential and automotive leases if he or she is transferred after the lease is made. 50 U.S.C. app. § 535. A court may also extend some of the protections afforded a servicemember under the SCRA to persons co-liable or secondarily liable on the servicemember’s obligation. 50 U.S.C. app. § 513.

Applicability to Bankruptcy Proceedings

The language of the SCRA states that it is generally applicable in any action or proceeding commenced in any court. 50 U.S.C. app. §§ 521, 522 and 524. Therefore, absent contravening language with respect to bankruptcy proceedings, the SCRA applies to all actions or proceedings before a bankruptcy court.

The applicability of the SCRA in bankruptcy proceedings is also evident in the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure. For example, the advisory committee note to Federal Rule for default judgments, Fed. R. Civ. P. 55(b), states that it is directly affected by the SCRA. (2) Under Fed. R. Bankr. P. 7055 and 9014 of the Federal Rules of Bankruptcy Procedure, Fed. R. Civ. P. 55 is applicable in bankruptcy adversary proceedings and contested matters. Thus, the default judgment protections of the SCRA clearly apply in bankruptcy cases.

The bankruptcy court clerk’s office is aware of the requirement that the plaintiff must provide an affidavit stating whether the defendant is in the military before default may be entered against the defendant. Bankruptcy Procedural Forms B260, B261A, and B261B, and their accompanying instructions, provide additional guidance concerning the applicability of the SCRA to default judgments and related procedural requirements.

SOURCE: SCRA. Servicemembers’ Civil Relief, Federal Courts Bankruptcy Basics Page

Proof of Claim 101

A proof of claim is a written notice that the creditor – individual or business that the debtor owes – is asserting his/her or its right to obtain a pay out from the bankruptcy estate. This written statement is used as a formal way of notifying the court, the debtor and other affected parties that the creditor is planning on taking action. In general, an unsecured creditor is required to file a proof of claim if they want to get paid in Chapter 7 and Chapter 13 bankruptcy cases. Without filing a proof of claim, the unsecured creditor can lose the right to assert a claim against the debtor.

There are different types of creditors in the eyes of law. The term “secured creditor” is used to describe a creditor who has acquired a lien on the debtor’s property. This lien can have been acquired either with or without the debtor’s consent. An example of a lien acquired with the debtor’s consent is a home mortgage; an example of a lien acquired without the debtor’s consent – or involuntarily – is a tax lien. The term “unsecured creditor” is used to describe a creditor who has not acquired a lien on the debtor’s property. Therefore, an unsecured creditor hasn’t secured repayment of the debt owed to him/her or it.

Proof of Claim 101 | Bankruptcy in CT

There are deadlines regarding when a proof of claim must be filed by in Chapter 7 and Chapter 13 bankruptcy proceedings. Typically, the notice of bankruptcy filing sent to the creditor contains the deadline to file a proof of claim. Non-governmental creditors have 90 days after the initial meeting of creditors to file a proof of claim. Government entities have 180 days after the order for relief to file a proof of claim.

The contents of a proof of claim have to adhere to Official Form 10. This form includes:

  • Debtor’s name
  • Case number
  • Creditor’s name and address
  • Amount of claim (as of the date the case was filed)
  • Basis of claim
  • Type of claim
  • Any supporting documents attached, and
  • Creditor’s original signature.

A proof of claim can be objected to if it contains an error or misrepresents the situation in some way. Part III of the Federal Rules of Bankruptcy Procedure, Rules 3001-3022, contain rules on filing a proof of claim and objecting to a proof of claim.

The District of Connecticut also has some Local Bankruptcy Rules. Local Bankruptcy Rule 3002-1 states that, in a Chapter 13 bankruptcy case, the filing creditor must send a copy of the proof of claim to the trustee when he or she files the original claim.

For more information about proofs of claim, or inquiries about other areas of bankruptcy law, please click here.

Lost your wallet? Here’s what to do!

With vacation season in full swing, it’s easier than ever to lose track of a wallet in a winding airport security line, or on a crowded, sunbaked beach. Rather than spiraling into a panic about your wallet taking a vacation of its own, here are some steps to take right away.

Report the loss immediately. If your wallet contains a credit, debit, or ATM card, contact your card issuer right away to let them know what happened. Many companies have 24-hour, toll-free numbers to call in these situations.

Acting fast limits your liability for charges you didn’t authorize if your card is lost or stolen. Your protection against unauthorized charges depends on the type of card — and when you report the loss. Learn more about how to limit your losses.

Double-check your card statement. If you see charges or withdrawals on your statement that you don’t recognize, report them to your card issuer immediately.

Follow up. Send a letter to your card issuer to confirm that you reported the problem, and request a return receipt for your records. Include your account number, and two important points: the date and time you realized your card was missing, and when you reported it to them.

Check your insurance policies. Some homeowner’s and renter’s insurance policies may cover your potential losses from a stolen credit, debit or ATM card. If you learn that this is not the case, check to see if you can change your policy to include this type of coverage.

Protect your cards in the future. Carry the minimum — only the cards you absolutely need — and don’t bring along any sources of sensitive information, like PINs and Social Security cards. Keep a copy of the phone numbers of each of your card issuers so you can report a loss right away.

SOURCE: Theresa Rodriguez, Consumer Education Intern, FTC

AUTOMATIC STAY: BANKRUPTCY IMMEDIATELY STOPS COLLECTIONS

Upon filing for Bankruptcy an “Automatic Stay” goes into effect immediately and stops creditors from all collection activity. That means, the moment a Bankruptcy is filed, it automatically stops:

  • All Harassment
  • Utility Shut-Offs
  • Foreclosures
  • Evictions
  • Repossessions
  • Wage Garnishments
  • Tax Levies

Bankruptcy will give you the time to breathe and regroup.  If you are facing these, or any other hardships, call Attorney Theresa Rose DeGray for a free and confidential consultation at 203-713-8877.

Secured Debt vs. Unsecured Debt

When it comes to debt there are two main types, secured and unsecured. In Chapter 7 and Chapter 13 bankruptcy knowing the difference between both is very important so you can implement a proper plan. Even if you aren’t filing bankruptcy it is still good to know what the differences are between the debts.

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First, what is secured debt? Secured debt is when something of value is used as collateral for a loan. If you fall behind on your loan payments the lender has the right to place a lien on what you used as collateral. This means they have the right to take ownership of it. Usually the lender will liquidate the asset and use that money to pay off what is due. However, if the selling price isn’t enough to pay off the debt completely the lender may then attempt to collect the difference from you, which is called a “deficiency.”

Examples of secured debt:

  • Mortgages – The loan is attached to the home and the home is the asset. If payments aren’t made the bank may take the home, known as a foreclosure
  • Car loans – The loan is attached to the car and if payments are not made the bank has the right to repossession
  • Auto loans and cash loans secured by a car title or other property
  • Boat loans
  • Furniture

So what do you do? You can obtain legal protection from creditors by filing bankruptcy. When you file Chapter 7 you have to decide if you will retain or surrender the property. You can only discharge secured debt if you surrender the property used as collateral. If you want to keep the property, you must continue making the payments. When you file Chapter 13 Bankruptcy it’s common that you will create a payment plan to make up the payments over a certain period of time while staying current on your regular monthly payments. For example, if you have a foreclosure on your house, filling a Chapter 13 bankruptcy will stop the foreclosure and implement a plan whereby you pay back the debt in increments until it is complete. To make the plan work you need to demonstrate that you will have enough income in the future to support the payment plan. If there were no legal proceedings or lawsuits brought against you before you file, filing bankruptcy sets forth a law that prevents the lender from bringing any lawsuits or legal proceedings, such as a foreclosure, against you. Additionally, you can sometimes use Chapter 13 bankruptcy to reduce debt to the replacement value of the property securing it, then pay off that debt through a plan. Therefore you are only paying what the asset is actually worth.

Next, what is unsecured debt? Unsecured debt is not tied to collateral and doesn’t result in repossession of the asset if you fall behind on payments. There is still an agreement to repay the lender but there is no asset. Therefore the debt isn’t attached to something that the lender can just take back. Instead lenders may take other actions in order to get you to pay. These actions may include the lender hiring a collection agency or taking you to court in order to get you to pay.

Examples of unsecured debt:

  • Credit card bills
  • Medical bills
  • Personal loans
  • Utility bills
  • Pay day loans

How can bankruptcy help unsecured debt? Once you file bankruptcy collection actions will be suspended and you may be allowed to temporarily or permanently avoid paying any debts. These debts may be eliminated or a plan can be formulated so you can repay creditors while remaining under the protection of bankruptcy. Under chapter 7 bankruptcy some debts may be completely discharged while others mat not. If some debts aren’t discharged there may be a plan created to help pay it back over a period of time. Filing bankruptcy sets forth a law which generates an automatic stay on the debt. This means the creditors or debt collectors cannot push for the collection of debt. Once you file bankruptcy the creditors can’t harass you to pay the debt. Filing bankruptcy prevents that and buys you time to negotiate a plan to pay back the debt you owe.

Overall, bankruptcy is a powerful tool for debtors and a lot can be done to help out if you are facing financial hardships. Debt is a serious issue and knowing the differences between the kids of debt and what can be done about each is very important. If you have any questions don’t hesitate to contact Attorney Theresa DeGray at 203-713-8877.

This firm is a debt relief agency. We help people file for bankruptcy relief amongst other things, under the Bankruptcy Code.