Bankruptcy Law, Debt Collection

Understanding the Fair Debt Collection Practices Act (FDCPA) 

Facing debt collection is stressful and there are laws in place to protect consumers.  Debt collectors can be persistent, even to the point of becoming harassing and threatening at times. However, it is vital that consumers facing collections actions realize that they do, in fact, have rights, and these rights fall largely under the Fair Debt Collection Practices Act (FDCPA). 

The FDCPA was signed into law in 1978. The law designates what type of behavior is acceptable by debt collectors and what type is considered abusive and unethical.  The law was created to curb tactics that had largely gotten out of control by companies engaging in debt collection.  

The FDCPA is federal law intended to protect consumers against actions by third-party debt collectors that have become harassing, abusive, and threatening. Collectors who are found to have violated the FDCPA can face severe penalties for violating the law. 

This law specifically deals with third-party debt collectors and not necessarily the original creditors on the debt. By the time a debt has been sold to collections, the lender or creditor has already exhausted his or her options at contacting the consumer to see what the amount has not been paid. In order to receive some type of payment on the amount owed, many lenders will hire the services of a third-party debt collection agency to take over efforts to contact the consumer.  

Many times, debt collectors will not receive payment from the lender until they are successful in getting payment from the consumer. When a consumer receives a communication from a debt collector, it is usually recommended that he or she obtain information to validate the debt, which can include the amount owed and the name of the original creditor, as well as information on how the debt can be disputed. Collectors are legally required to provide this information within 30 days when it is requested by the consumer. 

Debt collectors have earned the reputation of being aggressive when communicating with consumers. Many times, they will use any type of techniques possible to convince the consumer to pay, including scaring him or her into believing that his or her property will be repossessed if the person fails to pay or alluding to the fact that legal action will result in the event payment is not made.  Invoking fear in the mind of consumes is a common tactic used by collectors, although in an unethical manner. The FDCPA prohibits collectors from making statements such as these if they do not have the legal authority to do so.  

Collectors will also be persistent in calling continually throughout the day, trying to wear the consumer down into making payment. However, the FDCPA provides specific rules on when collectors can call and when calls are off limits.  

The FDCPA also prohibits debt collectors from providing information to third parties connected to the consumer regarding the debt collection action, other than to inquire as to how to reach the consumer. If a collector is calling the individual to the point where it becomes harassing, he or she has the right to demand the communication cease per the rules of the FDCPA. If the communication continues at that point, the consumer can resort to legal action for damages caused by the harassment under the FDCPA.     

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Bankruptcy Law, Credit Card Debt, Debt Collection

Important Tips to Know about Credit Card Debt Forgiveness

Credit card debt plagues so many today. Even with the economic stimulus relief, some consumers are having to utilize credit cards to make ends meet. Escaping the load of credit card debt can seem like an impossible feat. Whenever someone offers a way out or credit card debt forgiveness, it can be easy to jump to accept the offer. The problem is credit card debt forgiveness can be more complicated than simply having the debt forgiven.   

Not All Debt Forgiveness Strategies Are Equal  

Credit card debt is forgiven usually from two strategies, namely debt settlement or bankruptcy. Many consumers try a third strategy, which involves ignoring the amount owed until the statute of limitations has passed for collecting on the debt.  However, the damage that can result to the consumer’s credit score as a result of this failed strategy make it often not worth the wait.  

Patience Is Required  

Debt settlement is not an immediate process. The debt settlement process involves working and negotiating with the creditor or collection agency, if the debt collection process has gotten to this point. The longer the consumer waits to work with the creditor, the harder his or her credit will be hit, especially if the account moves from delinquent status to “in default” or “collections.” It can take several months or even longer to work with the creditor or collection agency on negotiating the settled amount. For this reason, many consumers choose to hire a debt relief company, so long as the company is reputable and does not require the consumer to charge fees upfront. 

Credit Score Damage 

Both credit card debt settlement and bankruptcy will affect the consumer’s credit score. By the time the consumer has gotten to the point of settling or forgiving the debt, however, the damage has already been done. Missing payments, having accounts go into default, and being on the receiving end of a collections case will also hurt the consumer’s credit score, just as much if not worse than bankruptcy or debt settlement.  

The consumer’s credit score can rebound with good financial habits after the matter is finalized. Eventually, the bankruptcy case or debt settlement will fall off the person’s credit report, too. Debt settlement will stay on the consumer’s credit history for seven years while bankruptcy cases will stay for ten years.  

Legal Assistance May Be Needed 

Many consumers do not feel equipped to handle the negotiation process alone, especially if they decide to pursue bankruptcy. Whether it be a Chapter 7 or Chapter 13 case, an experienced Miami bankruptcy attorney can guide the consumer as to the wisest choice for him or her.

Alternative Methods

If the consumer does not want to pursue debt settlement or bankruptcy, other methods can be used to pay down the debt, including the snowball and avalanche methods.  Both accomplish the same goal of eventually paying down the debt through prioritizing certain debts over others.  The snowball method focuses on paying off the consumer’s smallest balance first before paying down the one with the next smallest balance until all credit cards are paid in full. Alternatively, the avalanche method starts with paying off the credit card with the highest interest rate first and continuing this trend with other cards until all are paid in full.   

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Bankruptcy Law, Debt Collection

Can a Debt Collector Try To Collect on Debts Discharged in Bankruptcy?

A bankruptcy discharge gives a person a fresh financial start, freeing him or her from the stress of collection calls and aggressive debt collection practices. However, the fact that a debt has been discharged successfully in a bankruptcy case does not necessarily mean debt collectors will still not try and attempt to pursue collection of the debt. What happens in these situations?  

Under the U.S. Bankruptcy Code, a discharge is a permanent court order that prohibits creditors from pursuing any type of collection on discharged debts. These prohibited actions include filing legal cases to collect on the debt, as well as communications with the consumer via personal contacts, letters, and phone calls. Essentially, the discharge in a Chapter 7 or Chapter 13 bankruptcy case relieves the filer from any personal responsibility to pay off the debt.  

Not all consumer debts are dischargeable in a bankruptcy caseCertain debts are prohibited as a matter of public policy from being discharged, including government-backed student loans, child support, alimony, tax debt, and any debts incurred because of improper or illegal behavior.  Creditors for these debts can continue collecting on them even after the bankruptcy case is finalized.  

Once the bankruptcy discharge is granted, any creditors on debts that were a part of the final order are notified by the court that the debts owed to them have officially been discharged and that they will be in contempt of court if the creditor continues to collect on them. Even if, for some reason, a creditor is left out of the notice and never receives the paperwork from the court, he or she is still bound by the discharge order.  

Some debt collectors can be persistent and may continue to contact the consumer. Other creditors may argue they are not bound by the court’s order even though they are, making false claims in hopes they will fool the consumer. 

If this happens, it is best to report the debt collector to the bankruptcy court.  Depending on the communications, the collector could face sanctions from the court for violating the discharge order. These sanctions could involve payment of damages to the consumer, as well as attorney fees.   

Please click here to read more. 

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Debt Collection

Venmo’s Debt Collection Practices Under Investigation by the CFPB

Popular digital money-transfer service, Venmo, is finding itself at the center of a Consumer Financial Protection Bureau (CFPB) investigation. The company that is owned and operated by PayPal Holdings, Inc. received a “Civil Investigative Demand” from CFPB with respect to Venmo’s debt collection processes and unauthorized fund transfers.  

Venmo has been the subject of a series of investigative articles by The Wall Street Journal in both 2019 and 2020 with respect to their aggressive debt-collection tactics. It reported that Venmo made threats to users who overdraw their accounts. These threats were also made to users who were the victims of scams. Even during the difficult financial times brought on by the COVID-19 pandemic, the company has reportedly continued its aggressive collection  practices.

Venmo remains one of the more popular digital money-transferring services. In 2020, Venmo’s user base jumped 32 percent to approximately 70 million active accounts. It is estimated that roughly $47 billion was transferred via Venmo’s platform in the fourth quarter of 2020, which is a 60 percent increase from the previous year. The company anticipates they will generate somewhere around $900 million in revenue in 2021. 

Venmo transfers and transactions are instantaneous through the Venmo app. However, actual transfer of money from the sender’s bank account can take between one to two days. Many times, Venmo will front the payment to the fund recipient, allowing him or her to transfer money to other Venmo users on the app or pay a small fee to transfer the money to their bank accounts.   

Unfortunately, like many online platforms out there, scams do exist. A Venmo user may send money through the app to a scammer who immediately withdraws it, never to be heard from again. If this situation occurs, or if the sender’s bank stops the transaction before it is settled, Venmo will be out the money. It is not uncommon for a Venmo user to be carrying a negative balance in these types of situations or carrying a negative balance in general. The company has not disclosed just how many Venmo users have a negative balance, but it has been reported that over $270 million in negative customers balances exist where Venmo does not expect to be repaid. According to securities filings from PayPal, the company writes off these losses from negative balances in the month that they move past the 120 days past due mark. 

PayPal received the CFPB’s request on January 21, just one day after President Biden was inaugurated as the country’s 46th president. The CFPB is expected to return to stricter consumer protections under the new administration after four years of more lenient consumer protection policies during the Trump administration.     

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

 

Debt Collection

Debt Collectors Will Soon Be Reaching Consumers via Text and Social Media

Debt collectors will soon have another way to reach consumers. The Consumer Financial Protection Bureau (CFPB) released a ruling outlining how collectors will soon be able to reach consumers via text messaging and social media The federal government has cleared the way for collection agencies to send unlimited texts, emails and even instant messages on social media platforms. 

Debt collectors will be required to include instructions on how to opt out of these messages within the text of the communication. The CFPB will also limit collectors to calling consumers to seven calls per week per debt.  

Credit Card Debt, Debt Collection

Debt Does Expire- Here’s Why You Shouldn’t Wait for the Clock to Run Out

At some point, consumer debt is so old that it is no longer legally collectible. At this point, the debt is said to be past the statute of limitations, meaning no creditor or debt collector can take the consumer to court to collect on the debt. However, even though creditors cannot collect on debt past a certain time period, it does not mean this is the best strategy for consumers to seek in cancellation of this debt.  

Every state has a set of laws that govern how long a party has to pursue a legal cause of action. After the timeline has passed, the individual can no longer file a lawsuit. For debt collection, the statute of limitation hinges on the type of debt. In Florida, the statute of limitations for debts involving written contracts, such as personal loans, is five years. The statute of limitations is four years for debts that stem from oral contracts or revolving accounts, the most common of these being credit card debt. After that point, the creditor is not able to legally collect on the debt. 

Debt Collection

State and Federal Agencies Teaming Up to Combat Illegal Debt Collection

Debt collection is a profitable business in the U.S., but not all debt collectors follow legitimate, legal collection practices. According to officials from the Federal Trade Commission (FTC)most consumer complaints made annually involve illegal debt collection practices, which is why they have made recent efforts to crack down on these types of tactics. 

In response, the FTC has launched a multi-agency campaign called “Operation Corrupt Collector.” This crackdown campaign focuses on educating consumers on how to identify illegal debt-collection practices, as well as enforcement against debt collectors who are found to be breaking the law.  

Debt Collection

Can a Creditor Come After Money that is Gifted?

The law allows for a certain amount of money to be gifted to individuals with no tax consequences on an annual basis. For the 2020 tax year, the gift tax exclusion amount is $15,000. Many aging parents take advantage of this exclusion to reduce their probate estate and avoid tax penalties by gifting up to this amount to their adult children annually. However, if the adult child they are gifting this money to has his or her own financial struggles and is being pursued for creditors, that money could be fair game. 

The problem is that this money is not protected if the receiving party is being pursued by a creditor for an outstanding debt. If the debt is valid and still legally collectible, money that is gifted to the consumer is reachable for purposes of satisfying what is owed.   

Debt Collection

How to Avoid Resetting the Clock on Old Debt

Once a debt is past a certain age, collecting on that debt through legal channels is barred under Florida’s statute of limitation laws. However, if the person owing the debt is not careful, the debt can be reset, making the amount owed legally collectible once more. Knowing what to do to prevent that from happening is important for this reason.

Understanding the Statute of Limitations

Every state has a set of laws that governs how long a person or entity has to bring a legal claim on any given issue, including debt collection. If a claim is brought after that period has passed, the claim will likely be barred. When it comes to debt collection, this timeline is five years from the date the debt began for written contracts, including personal loans. If the debt is one with a revolving account, including credit card debt, the statute of limitations is four years.