Mike Cardoza, Author at Northern California Bankruptcy Lawyer

Debt Collector Threats: Which Ones Are Real?

“What debt collector threats should people be afraid of?” was the question my friend bankruptcy attorney Cathy Moran asked.

To which I replied, “Afraid of? Pretty much none of them!”

Because they’re mostly all empty threats.

You’re not going to jail,
Can you be jailed for not paying your debts?
They are not going to come get you,
Your credit is not about to be ruined, and
Who cares if your “account is being referred to the attorneys for review?”

Trust me, I’m actually a former debt collection attorney! None of those threats, even if they happened, changes anything in your tussle with a debt collector.

The three threats with teeth

There are only three things you really need to heed.

ONE: There’s a court judgment against you or your spouse and they just proved to you that they found out where you work and are threatening to garnish your wages.

TWO: There’s a lien against your property by an HOA or a mortgage lender and they are threatening to foreclose on your home.

THREE: You’re late on your car payment and they’re threatening to repossess it.

That’s it. (And even those three things aren’t too big of a problem, because the lender wants to make a deal without doing ANY of those things). Watch for our next post on what to do if threatened with any of these genuine threats.

Turning the tables

The rest of it, well, that’s just opportunity.

An opportunity to either block your phone from illegal scammers OR an opportunity to teach these purveyors of empty threats a quality lesson by getting some free legal advice about filing a lawsuit that could eliminate your debt and entitle you to compensation!

The debt collector who may be worthy of a lawsuit sends you real letters or dials you from a number that’s connected to a real company, or at least calls and says they’re from a real company. (Just because they’re from a “real company” doesn’t mean they won’t tell you lies, call your work, tell your family about your debt, or otherwise do illegal things.)

The criminal scammer never tells you who she is or who she represents. She just gets really crazy (like YOU’RE the crazy one for not paying her RIGHT NOW) and then wants your debit card ASAP. (Notice that the criminals don’t want credit cards because you could reverse the charges). Because they’re a scammer, rather than just a sleaze, you’ll never find them to sue them for breaking the laws on fair debt collection.

So, the simple rule is this – If you can find out who the “real company” is that’s harassing you, reach out and get free help.

If they’re just scary vague threats with no address, just block those calls and let them drift away from your mind forever.

Wage garnishment survival guide

A close look at the weapons of a debt collector

When debt collectors call after bankruptcy

Collecting from the debt collectors

Spot Credit Report Errors After Your Bankruptcy & Fix Them

By Mike Cardoza

Your debts have been discharged in Bankruptcy. Congratulations!

But if those debts still appear on your credit report, you haven’t gotten all the debt relief you are entitled to.

Your credit report is the public face of your finances. It’s the thing that lenders, landlords, and life insurance companies look at to figure out whether or not you’re a customer who gets the best prices on financial products – or not.

How discharged debts appear on your credit report

If your debts are legally gone, how do they remain on your credit report? Your former creditor just doesn’t bother to update the report.

Some of them, and I kid you not, some of them will be so out of it (despite all the notices from the Bankruptcy Court – and maybe even you) that they will keep automatically pulling your credit report every month (damaging your score) just like you still had an open account with them!

Everyone thinks it won’t happen to them, but it does. It happens to thousands and thousands of people every year – many of whom become my clients.

Your credit report after bankruptcy

So, that’s the BAD news.

The GOOD news is that it’s relatively easy to figure out what your credit report should look like after your bankruptcy discharge.

First: You’ve got to know that there’s a significant risk of this happening and care enough to GET YOUR CREDIT REPORTS from all three bureaus .

You can use www.annualcreditreport.com or call each of them and buy one report – don’t pay for the score – for about $9 and have it mailed to your house.

Do this no less than 90 days from your date of discharge, but no more than 180 days from the date of discharge. (Free guidance is available on how to do this.)

Six biggest post-bankruptcy errors

The foundation of credit reporting law is that you’re entitled to an accurate credit report AND if you have to sue to get yours fixed, the law makes the credit reporting agency pay your attorney’s fees.

Each of these problems fails the legal standard.

1. Discharged Debts not Labeled as Discharged in Bankruptcy and not listing a Balance Due of $0.00.

Every debt that was discharged in bankruptcy, which is going to be just about everything except for debts you “reaffirmed” and student loans, needs to be noted in your credit report as “Discharged in Bankruptcy” (or words to that effect), have a Balance Due of $0.

When/if this doesn’t happen – you’re going to be surprised. You’re going to think it’s you – that maybe you misunderstood the credit report or how bankruptcy worked. You didn’t, and you don’t – creditors get this wrong all the time.

2. Repeated “Hard Pull” Credit Inquiries by Your Former Creditor.

Once your debt is discharged in bankruptcy, your debtor-creditor relationship with Big Bad Bank and whomever else is over!

Done.

They’ve got no legal right anymore to be pulling your credit every month and bringing down your score. But they do it!

Why?

They just forget to stop. They forget to turn off the credit score pulling robot. Find this error by checking your “Hard Inquiries” and looking for your ex-creditors pulling your credit score after your bankruptcy discharge.

3. Charge-offs Reported After the Filing of Bankruptcy or After the Bankruptcy Discharge

When an account is listed as “Charged Off” on your credit report, that’s negative.

There are a number of circumstances when a creditor can charge off an account but they MAY NOT do so after you’ve filed for Bankruptcy or after you’ve received your Bankruptcy Discharge.

Why do I include this here? Because it happens, and it’s illegal.

4. Formerly Secured Creditors Still Reporting that You Owe Them Money

This one is particularly common following Chapter 13 bankruptcy. Suppose you had a car that you voluntarily surrendered to the lender. It’s worth $20K and you owed $50K. That $30K is now unsecured debt and it gets paid (or not) in accordance with the plan. When your Chapter 13 is done and discharged, you do NOT owe that money. BUT, those creditors will often report to the credit bureaus that you do.

Not legal.

This same thing also happens with Second (and Third) Mortgage and HELOC lenders – they get “lien stripped” in a Chapter 13 plan and no longer have any right to the property that used to secure their loan. Their debt becomes unsecured and gets satisfied (usually) in accordance with the plan.

At the end they’re owed $0 and must report that to the credit bureaus after the Chapter 13 discharge. Many of them, for whatever reason, have a hard time doing this right – and it massively affects the fresh start you are supposed to get from bankruptcy!

5. Spouse is Reported as Having Filed for Bankruptcy When They Did Not

If one spouse files for bankruptcy and the other doesn’t, it’s OK that their joint debts are listed as “included in Bankruptcy” on the non-filing spouse’s credit report.

What is NOT OK, is reporting that the non-filing spouse actually filed for Bankruptcy. This will turn up in the “Public Records” section of the non-filing spouse and/or in the non-filing spouse’s separate accounts being listed as “included in bankruptcy.”

6. Reaffirmed Accounts Misreported

Reaffirmation happens when you could discharge an account in bankruptcy, but for some reason, you choose not to.

Those accounts should be listed as “Reaffirmed” and NOT as discharged in bankruptcy.

Here’s what else: for accounts that are partially reaffirmed, there must be a new account opened with a new account number and that reaffirmed portion must be reported as reaffirmed on your credit report – and the non-reaffirmed portion of the account must be reported as discharged in bankruptcy with the $0.00 balance due.

Get your credit report fixed

So, what to do next?

You’ve gotten your reports and check them for these errors (good on you!) and you’ve found one or more of them (kind of a bummer). No worries, get free help drafting written disputes to your creditors and the bureaus and set your problem up to get fixed as soon as possible!

If it takes a lawsuit to fix it, remember, the law requires that the Credit Bureaus pay the costs and attorney’s fees for that (which I why I personally take these cases on contingency).

You’ve done the work of going through bankruptcy – make sure you get the Fresh Start that you deserve!

More on life after bankruptcy

Who to pay after bankruptcy

What debts survive bankruptcy

Credit scores improve after bankruptcy

Your Tax Refund In The Crosshairs In Debt Collecting Season

By Mike Cardoza

Who knew that there was a season for debt collecting? My friend and colleague attorney Mike Cardoza does. See what he says.

The beginning of the year through about the end of March is the big season for debt collection!

Why? Because collectors are pretty sure that you have some money in your pocket – right now – in the form of your IRS income tax refund.

Collectors want your tax refund

At the beginning of every year, debt collection companies work like the devil to attempt to calculate exactly when the IRS will issue those refund checks so that they can time their collection efforts for that perfect moment after you’ve gotten your refund, but before you spend it.

Since the IRS is close-lipped about its refund operations, debt collectors closely track when you’ll get your check by using other reliable sources of data, like Walmart’s report of how many IRS refund checks were cashed nationwide in the prior week. I’m not kidding about this stuff.

So, from now through the end of March, you’re going to get more phone calls and debt collection notices. You’ll even get offers to settle old debts for dimes on the dollar.

Should you settle with debt collector

A settlement could be a good deal for you – but be careful. I recommend that you don’t make any partial payments – particularly on debts that are getting old.

Any payment on a debt restarts the statute of limitations.

That gives the debt collector a brand new bunch of years to SUE you to collect it.

If a debt that’s been delinquent for more than 7 years ago, by law it can’t appear on your credit report. So you have to ask yourself, “who cares?”

Old debts may still be legally enforceable, even if they can’t be reported on your credit

Same thing goes for debts (in California) that are older than 4 years since delinquency – they can’t get a judgment against you anymore to collect it (unless you make a partial payment), so, “so what?’ (Remember, that paying an old debt WILL NOT remove it from your credit report).

Even though it’s debt collection season, collectors still have to follow the rules – and if they don’t, they may be liable for violating the law. Their missteps could wipe out your debt and entitle you to compensation.

What’s the best use of tax refund

Cathy: So now you know that you are in the debt collector’s cross hairs since they expect you to have a tax refund to “share” with them. What should you do?

Ask yourself the following:

Is my tax refund earmarked in my budget for some necessary expense? Lots of my clients use tax refunds to pay property taxes or essential bills.
Will settling this debt solve my debt problems or is this just one of many delinquent bills? Maybe the tax refund should fund a bankruptcy.

In the bigger picture, is your tax refund better spent funding your retirement savings? You do plan on a long, comfortable old age, don’t you? More on whether to pay debts or fund retirement.

Don’t get bitten making a “good faith” payment on old debt

Who to pay when you can’t pay everyone

Disarming the debt collector

How You Can Collect From The Debt Collectors

By Mike Cardoza

I team up with consumer lawyer Mike Cardoza to identify your rights against debt collectors and then to preserve those claims through bankruptcy.

The longer you resisted filing bankruptcy, the more likely that you’ve endured harassing encounters with debt collectors.

And the more encounters you have with debt collectors, the more likely that you’ve been a victim of prohibited debt collection tactics.

Debt collector misbehavior may entitle you to collect from them. Really.

Debt collection law is strict – there are simply things a collector can’t do. If they do them, you’re entitled to sue just like any other personal injury case, and perhaps be compensated (and have your attorneys’ fees paid , too).

In fact, many of my clients struggling to pay their bills have more than one case – it’s just that common.

Most frequent collector violations

Here’s a list of the most frequent violations –they’re not all obvious.

Take notes if any of these have happened to you, or, if you just get a weird feeling about the way a collection is being handled.

Calling repeatedly. This is the most frequent complaint about debt collectors. Once a debt collector’s calls reach the point of becoming annoying or feeling like harassment, you may have a claim against them. There is no set number of “legal” calls, so keep a record of calls you get—including the time, date, and length of call—to present later as evidence of harassment.
Threatening serious consequences. Next on the FTC’s complaint list is debt collectors threatening you with a lawsuit, criminal charge, wage garnishment, or any other serious consequence. Most collection agencies do not have the authority to take these actions and are barred from threatening them.
Not sending a written notice of debt. A debt collector must send you a written notice verifying the debt within five days of contacting you. Often when they do not, it is because they do not have the information about the debt that they are legally required to have.
Revealing debt to a third party. While debt collectors can call your friends and neighbors to try to locate you, they cannot reveal anything about the debt to those third parties. If they do, you can sue them.
Calling you at work. If you have told a debt collector not to call you at work and they continue to do so, you can take legal action against them.
Using profanity. No matter how much you owe or how long you have owed it, a debt collector cannot verbally abuse you or use profanity or obscene language, even once. If you are mistreated over the phone by a debt collector, put a stop to it immediately.
Failing to verify disputed debt. If you do not think you owe the debt you are being called about, you can dispute it in writing. Once you do this, the debt collector must stop contacting you until they can verify the debt.
Calling too early in the morning or too late at night. Collectors cannot call you before 8 a.m. or after 9 p.m. If they do this, you can sue them for harassment.
Ignoring requests to stop contact. You have the right to request that a collector stop contacting you, even if you do owe the debt, and they must comply. You must submit the request in writing.
Threatening violence. Believe it or not, some debt collectors stoop low enough to actually threaten violence against consumers. Unfortunately, this sometimes works. A consumer is so frightened they agree to pay the debt, whether they actually owe it or not. No threat of any kind of violence is allowed by law, and you can take legal action to stop it.
Failing to identify themselves as debt collectors – each and EVERY time they contact you in any way.

If you’ve experienced any of these things , save those letters and make notes about those phone calls! Then get a lawyer specializing in this field to review your case – most of whom will do that for free.

Who is a debt collector?

First off, to know if consumer laws on debt collection protect you, you need to know just who is a debt collector in the law.

A “debt collector” is a person or a company whose main purpose is the collection of delinquent debts.

Companies like Credence Resource Management, I.C. System, Resurgent Capital Services – all of those (and hundreds of others) are traditional debt collection agencies. The original lender contracts with these companies to collect a debt, and, the collection company gets to keep a portion of what it gets as its fee.

Another type of “debt collector” is the debt buying company. Debt buyers pay pennies on the dollar for accounts owed to an original lender and then try to collect the full balance, either on their own or by using a debt collection agency. The bigger players in this space include companies like Midland Credit Management, LVNV Funding, and Portfolio Recovery Associates.

AND, in California, the original lender is ALSO a debt collector under the Rosenthal Act. That’s right.

They don’t have to tell you that they’re a debt collector or verify your disputed debt, but they can’t do any of the other things listed above or they may be liable in a lawsuit as well!

Preserving your right to sue

If you elect to file bankruptcy to deal with all of your debts, you need to take care that you don’t lose your rights under consumer laws.

Any claims that you have for violation of debt collection laws where your interaction with the collector occurred before you filed bankruptcy are assets of your bankruptcy estate. That means, in theory, that any recovery you might get is subject to the claims of your other creditors.

But all is not lost, because bankruptcy trustees seldom pursue consumer claims. The usual trustee thinking is that the claim is uncertain and requires the active cooperation and involvement of the debtor. That complicates things for a trustee. So they often simply walk away from any debt collection claims.

Don’t think that just by keeping quiet about your claims you can avoid having to share with the bankruptcy trustee. Attorneys defending debt collectors love to get your case tossed out of court when you failed to disclose it to the bankruptcy court.

The rule is simple: List it or lose it.

Turn the tables on debt collectors when they overstep and get them to pay you.

Mike on the Equifax breach

Your unfiled legal claims in bankruptcy

Secret alternative to bankruptcy

Protect Yourself From The Equifax Breach In 4 Steps

By Mike Cardoza

I started picking the brain of my friend attorney Mike Cardoza about all of the personal credit information stolen from Equifax when we met last month at the NCLC Consumer Rights Litigation Conference.

Mike’s the guy to ask since he describes his practice as suing credit bureaus in order to fix clients’ faulty credit reports.

Instead of making notes, I got Mike to tell us all what a seasoned consumer lawyer recommends.

With the Equifax data breach of 2017, consumers – people like you and me – are more at risk than ever.

Did you know, for example that the credit bureaus DON’T use all nine digits of a person’s social security number in order to verify the accuracy of the information they’re adding to your file?!

And that’s the tip of the iceberg.

Here are the four steps that I recommend you take immediately to protect yourself from false and damaging information being included in YOUR credit report:

1. DON’T go to the Equifax web site

Why? Just after the breach was announced (which was a full 30 days after senior executives knew about it and sold some of their personal stock in the company), Equifax told everyone to go its website and get free protection.

Well, guess what? That free protection included a mandatory arbitration clause buried in those terms and conditions you had to click in order to get it.

That meant that you and everyone who went to the site gave them an agreement never to sue them – just like a “get out of jail free” card! (Shocking, I know).

After the outrage, Equifax claimed to have removed that arbitration clause, but still, going to Equifax isn’t going to help if it turns out you have a problem.

2. DON’T bother getting a “credit freeze”

A credit freeze doesn’t stop thieves from making changes to your existing accounts.

It doesn’t stop the credit card offers from being blasted out into your (or your neighbor’s) mailbox, and it makes everyday life (like getting a discount by opening a store credit card, upgrading your cell phone plan, or adjusting your utilities or cable service) a major pain in the keister!

3. DO: Monitor your credit reports (and score) in real-time for free for unusual activity

I like to use Credit Karma – you have to give personal information, they only show 2 of the 3 bureaus, and they make money by pitching you sponsored credit card offers – because it’s accurate and instantaneous.

Get the app and let it send you notifications on your phone.

4. DO: Get your full credit report

Once a year, get your report from all 3 major bureaus in paper and delivered to your house – for free. If you haven’t done that in the past 12 months, do it now.

Why? Because those paper credit scores are way more detailed than anything you get online, AND they can be used as evidence of identity theft or in court in the event you need to dispute something on there that doesn’t belong to you!

If you’d like, I’ll send you some instructions by email (for free, of course) about exactly

how to get those reports,
exactly what to look for when you get them, and
what to do about it if you find something in there that is wrong.

Just click on “The Ultimate Credit Clean Up Machine” image below to give me your email and get the info.

The Federal Trade Commission estimates that 21% (that’s 1 in 5) of Americans has a mistake on their credit report – and it could be one that’s costing you real money!

Don’t suffer not knowing – just pull that band-aid off and see if your credit could possibly be any better than it already is. You kind of owe it to yourself (and your family).

The three threats with teeth

Turning the tables

More

How discharged debts appear on your credit report

Your credit report after bankruptcy

Six biggest post-bankruptcy errors

Get your credit report fixed

More on life after bankruptcy

Collectors want your tax refund

Should you settle with debt collector

What’s the best use of tax refund

More

Most frequent collector violations

Who is a debt collector?

Preserving your right to sue

More

1. DON’T go to the Equifax web site

2. DON’T bother getting a “credit freeze”

3. DO: Monitor your credit reports (and score) in real-time for free for unusual activity

4. DO: Get your full credit report

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