Avoiding Identity Theft—What You Can Do

February 1st, 2012

Identity—it’s more than your name, it’s life as you know it

Someone uses your credit card to charge a Caribbean vacation. Or accesses your bank account and drains it of funds. Or uses your ID while committing a crime. Identity theft refers to a broad range of crimes, including misuse of your financial information, name, Social Security Number and reputation. Unfortunately, it may take months, even years, to repair your financial situation and reestablish your good credit rating.

Steps you should take to avoid identity theft:

  • Check balances and transactions on your checking account and credit card accounts every day. Watch for any unexplained transaction, even as small as a penny.
  • Watch your credit report. You are entitled to a free annual report from each of the major credit reporting companies: Experian, Equifax and TransUnion. Stagger your requests so you get a report every four months. You can call 1-877-322-8228, mail a request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281, or visit annualcreditreport.com to get started. Avoid copycat websites that try to get you to sign up for “free” reports—and trial memberships that will cost you money.
  • When choosing passwords for online accounts, avoid information that could be researched, such as your mother’s maiden name or the last four digits of your social security number. Use a unique number for each site. One way to do this without losing track of everything is to begin with a sequence of random numbers. For each website, change that pattern in a certain way, such as inserting the first or last character in the URL into the password. Do not keep a written copy of passwords near your computer or in your wallet.
  • If a driver’s license, passport, employee ID, credit card or other agency issued card or document is lost or stolen, immediately notify the organization that issued the document to have it canceled and arrange for a replacement.

Watch for these signs you may be a victim of identity theft:

  • You aren’t receiving bills you normally would receive. This might be a sign your mail has been hijacked and is being sent to another address.
  • Your credit report shows an account you didn’t open.
  • Your checking account or credit card account shows a tiny transaction—this may be a “ping” or test transaction before the thief empties the account.
  • You receive a credit card in the mail—even though you didn’t open an account.
  • You are denied credit or charged a high interest rate when you previously had a good credit rating.
  • You open an email that appeared to be from your financial institution or credit card company, and then realized you were “phished”—tricked into giving personal information such as a Social Security Number.
  • You received a notice that a company you do business with has had a security breach and your data may be involved.
  • You receive a call from a debt collector about a purchase you didn’t make.
  • A company denies your application for credit, insurance or employment and states it is related to your credit report.

If there are errors on your credit report or you are a victim of identity theft or credit card fraud, you will need to track each party involved—debt collectors, credit card companies, banks, credit reporting agencies—to see that the records are corrected. This can be a long, difficult and painful process. You may want to enlist the help of a financial attorney to regain your financial standing as quickly as possible.

Contact an experienced attorney at Bailey & Galyen to discuss your options after identity theft or credit fraud.  Contact us at 800-215-9089 to arrange a no-cost, no-obligation consultation.


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Protect Yourself Against Unscrupulous Debt Collectors

January 31st, 2012

Federal Trade Commission reports rise in complaints

Are you being harassed for unpaid bills? You may have gotten behind in your payments, or the bills may not even be yours! Under the Fair Debt Collection Practices Act (FDCPA), you have the right to protect yourself against debt collectors who use abusive, unfair or deceptive practices. Reports of illegal debt collection actions are growing. In fact, the Federal Trade Commission’s 2011 report noted an amazing 76 percent increase in complaints of debt collectors using false threats of arrest or property seizure, and a 66 percent increase in complaints of their use or threat of violence.

The first step in protecting yourself against unscrupulous debt collectors is to know your rights under federal law.

You may want to talk with the debt collector once to be sure the debt involved is yours or to discuss a way to resolve it, but you can refuse contact. If you inform the collector you are represented by a bankruptcy attorney or other counsel, the collector must contact your lawyer rather than you. Whether you have a lawyer or not, you may state in writing that you do not want to be contacted again. Send the letter by certified mail so you can prove the collection agency received the notice. Other than notifying you of an action such as a lawsuit, the collection agency is prohibited from contacting you again. Insist the collection agency send you a description of the debt, and your rights, in writing.

It is illegal for a debt collector make harassing phone calls, including calling repeatedly or continuously, to call you before 8 am or after 9 pm, or to call you at work, if you have told them you are not allowed to take calls there. The debt collector may talk to you, your spouse and your attorney about your debt. Other forms of illegal harassment include threats, swearing, obscenities, repeated calls and publishing your name (except to a credit reporting agency). A debt collector may not misrepresent the amount or status of your debt, or the collector’s identity or employer, including any implication the collector is a government agent. The collector may not talk to neighbors, relatives or others about your debt, but may ask them (once) for your address, home phone and place of employment. The debt collector must honor your wish not to be contacted at inconvenient times and a statement that you are not allowed to take calls at work. You must be given written notice of a lawsuit.

You do not have to deal with the debt collector, but it will then be wise to hire an attorney. Provide your lawyer’s contact information and you should not be contacted again. Complaints of illegal debt collection tactics should be filed with the Federal Trade Commission.

If you would like to obtain additional information about Texas bankruptcy, explore your options, learn about the bankruptcy process or discuss your particular situation with an experienced Texas Bankruptcy Attorney, please contact Bailey & Galyen today.

 


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Three Reasons to File for Bankruptcy

November 8th, 2011

By Gene Sollows, JD
Bailey & Galyen
Your Neighborhood Law Firm

The reasons people decide, after months and years of struggle, to file for bankruptcy are individual and unique. But for most people, it’s situational – an unexpected job loss, medical problem, or divorce has created financial chaos and an inability to pay debts. While the facts in your case are somewhat unique to you, the truth is that everyone who files a bankruptcy does so for one (or more) of the following three reasons:

Reason Number One: Only Bankruptcy Gets All of Your Creditors off Your Back Right Now

Until you downloaded this information, Creditors have outmaneuvered you, putting you right where they wanted. Creditors use bill collectors and attorneys (often paid on commission) to use all means at their disposal – legal or otherwise – to get their pound of flesh from you. This takes many forms:

• Threatening Phone Calls – to your home, work, neighbors, and relatives
• Threatening Letters
• In-person collection visits to your home
• Offers of “settlement” where they get into your bank account
• Repossession of cars and other personal property
• Lawsuits, judgments, and collections on judgments with garnishments and levies
• Foreclosure of your home and other real estate

Their only goal is to get your money. They are utterly uninterested in your personal situation (no matter how dire) and will do whatever it takes to get you to pay. They know something you don’t – that your money is a limited resource, and that they are in competition with other creditors for that resource. They think, if we don’t get their money now, someone else will. Creditors therefore have no qualms about upsetting you personally or ruining your life to collect the money owed them. And creditors don’t care if you don’t have the resources to hire an attorney to defend against their tactics. They don’t care about your sleepless nights and feelings of guilt or embarrassment.

But here’s the good news: a bankruptcy filing automatically stays (stops) all creditor collection activity – even lawsuits, repossessions, and foreclosures – immediately.

The automatic stay is powerful and only available in federal bankruptcy court. It goes into effective immediately, nationwide, and lasts for the duration of the case unless otherwise ordered by the court – a financial force field around you, your family, and your assets.

Reason Number Two: Bankruptcy Can Give You a Fresh Start

One of the biggest reasons non-bankruptcy options fail (such as debt settlement, credit counseling, and debt consolidation) is simply the lack of a “finish line.” For many people in debt, there is simply no end in sight. Whether your income is reduced or your expenses are stretching you to the breaking point, ask yourself: are you trapped in debt you can never repay? When is this nightmare going to end?

Debt is a burden. Its effects on your mental (and physical!) health as well as your personal relationships (with spouse, family, and friends) are well-established. Wanting relief from this burden is a natural, normal, and a positive reaction to a bad situation. This is why we have had bankruptcy laws in the United States since the founding of our nation – because we believe, as a country, that people are entitled to a second chance. Bankruptcy can help good people resolve bad situations.

If you are reading this, you have probably tried all other options to resolve your debts. Let’s go over traditional non-bankruptcy options and explain their shortcomings.

• Debt Settlement – requires a lump sum of money to settle for a portion of the total debt. To obtain this lump sum, you may have to save up – while the interest grows and lawsuits and other collection efforts ramp up against you. Debt settlement companies routinely charge $5,000.00 or more to negotiate your debts and require their fee up front. For most of our clients, the truth is harsh – if you had the money to pay your debts, you wouldn’t be reading this. And creditors won’t wait around for you to save up enough money to pay them a fraction of their debt.
• Debt Consolidation – this essentially refinances your debt into one payment with (ideally) a lower interest rate. This option assumes that (a) you have the credit and collateral (bank deposits, land, etc.) to get the loan and (b) you can afford a payment at the lower rate. If you had good credit and the ability to borrow your way out of your debt problem, you wouldn’t be reading this. For many of our clients, the problem isn’t just the interest rate, it’s the sheer size of their debts compared to their ability to pay.
• Credit Counseling – while credit counseling is effective for borrowers with a small amount of credit card debt, it simply does not work if you have a significant ($10,000.00 or more, typically) in credit card debt or if you have other debts. Credit counseling cannot resolve your medical bills, non-credit card balances (broken cell phone contracts, apartment leases, old repossessions, etc.), and of course debts owed for taxes, student loans, and child support. Simply put, in most situations credit counseling only works for folks with a small amount of credit card debt.

Bankruptcy will, in the vast majority of cases, give you a fresh start through the discharge – a court order that forever eliminates most debts. Wouldn’t it be nice to be permanently rid of your creditors so that you can rebuild your life and take care of your family?

Bankruptcy can permanently eliminate credit cards, medical bills, personal loans, debts from broken leases and contracts, repossession and foreclosure deficiencies, and many other kinds of debt. While some debts (notably IRS obligations, student loans, and child support) are generally not dischargeable, there are available bankruptcy options to deal with these debts as well – most notably, to set up a payment arrangement without any future interest or penalties.

Reason Number Three: Bankruptcy Can Help You Keep your Assets

Sometimes, creditors want more than your money – they want your house, your car, and your bank account. Depending on the type of debt involved, outside of bankruptcy this is unfortunately a fact of life. What can creditors do to your property?

• Foreclosure – In Texas, if you are in default, home lenders have the power to take your home from you after a fairly short period of time – without a court order. Certain other creditors (such as taxing authorities), after filing a lawsuit, may be able to foreclose your home as well.
• Repossession – Your car creditor can generally repossess your vehicle at any time you are in default – without a court order. Once repossessed, they can then sell it as soon as seven days later.
• Garnishment & Levy – While garnishment of wages in Texas is generally prohibited (other than for child support and taxes), after getting a judgment creditors can garnish bank accounts and other financial assets and seize personal property assets to be auctioned off to pay the debt.
• Abstract of Judgment – even if creditors can’t reach your assets presently, after a court order a judgment can be abstracted in the county records, impairing the legal title to your home and other real property. This means, as a practical matter, that it will be difficult to buy, sell, or refinance a home or other real property until the judgment is resolved.

Bankruptcy not only stops these collection activities– it protects your most important property, too. If you are eligible, Texas law allows you to protect your homestead, a vehicle for each driving-age member of your household, clothing, furniture, jewelry, household goods, retirement accounts, life insurance policies, and even family pets. And while these assets are also generally exempt outside of bankruptcy, only bankruptcy stops the collection activities against your property and allows you to discharge the underlying debts forever so that you will not face a garnishment of your bank accounts or have to deal with a judgment lien years down the road.

In bankruptcy, as long as you continue to make your regular installment payments on your home and car, those assets cannot be foreclosed or repossessed. And even if you are behind on these payments, a payment plan can be established in bankruptcy to catch you up and keep your property.

The next step – give us a call for a free consultation with a licensed attorney. Relief is literally one phone call away!

Get Creditors Off Your Back

Get a Fresh Start

Keep your Assets


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Abuse of the Homeowner

November 8th, 2011

By Antonio Martinez Jr.

In this article I explore how the mortgage industry abuses the homeowners before and then after a bankruptcy case is filed. Our homes are supposed to be our castles, yet if we are not careful, the mortgage companies can quickly dethrone us.

During these rough economic times, many of us can find ourselves facing financial difficulties at some point. It could be that there were unexpected medical bills, a business downturn or a loss of income. Sometimes, the mortgage “momentarily” takes a backseat to the emergencies in our life.

What we have seen practiced by some mortgage servicers is that, when a homeowner gets behind in payments, the servicer begins two processes aimed at protecting its interest in the property. On one hand, it may offer the owner an opportunity to refinance/restructure the note, and on the other hand, it may initiate foreclosure proceedings.

The difficulty for the homeowner is to understand that the loan servicer could be executing both processes in parallel. This confusion is due to misrepresentations or misunderstandings occurring during the frantic phone calls between the homeowner and the different service personnel in the servicer’s customer service department. The difficulty is made worse when the homeowner does not seek legal advice early in the process for a myriad of reasons, often involving pride in being able to handle one’s own problems.

Fortunate few, however, at some point before the foreclosure make themselves get legal advice that can save their homes. For others who try to work it out on their own, they sometimes learn after the fact that their homes were foreclosed on during the time that they were sending in the piles and piles of the paperwork required for refinancing, paperwork that the mortgage company conveniently loses.

Consulting with a bankruptcy attorney early in the process when a homeowner gets into financial distress can be beneficial more often than not. Bankruptcy attorneys can quickly develop insights into your situation and can plan actions to take so that an orderly bankruptcy process is undertaken. Most people do not like the stigma of filing for bankruptcy; however, those who truly consider all options will be more likely to come up with a better plan for getting a fresh start in life while keeping their home.

Review your cash flow situation months ahead if possible. However, if you foresee a negative cash flow situation, consider talking to a bankruptcy attorney prior to using up your savings and other resources that you and your family may need to meet your basic needs. The consultation is free and there may be other options. Until you sit down with an experienced attorney, you will not know if bankruptcy can help. Come see us.


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“Can I Keep My Stuff?”

August 30th, 2011

“Can I keep my stuff?” is one of the most common questions asked by a bankruptcy client of Bailey & Galyen, and for the overwhelming majority of our clients, the answer is yes … you can keep your stuff after a bankruptcy.

Assuming you have lived in Texas at least two years before the filing of a bankruptcy, you can choose between the Texas and Federal “exemptions” – laws that allow you to protect and keep property through a bankruptcy.  The choice of exemptions is an important legal decision that will be based on kind of property you own and its value, and at Bailey & Galyen our job is to maximize your exemptions.  Both exemption paths have a few things in common:

•    Homesteads are exempt from your ordinary creditors.  Mortgages, taxes, and certain other debts remain on your home.
•    Most vehicles are exempt from your ordinary creditors, but like houses are subject to valid debts from any vehicle finance company.
•    Retirement assets (such as 401ks, IRAs, pensions, teachers’ retirement, etc.) are exempt from your creditors.
•    Most if not all of your personal property assets are also exempt from ordinary creditors (unless they have a “purchase money” lien on them like a car loan), such as furniture, clothing, jewelry, tools of the trade, pets, and household goods.

There are important limits on exemptions, and here at Bailey & Galyen our job is to apply the law to your specific situation so you know what your options are.  Even if you own property of a kind that is normally not exempt, there may be bankruptcy options available to you that allow you to keep non-exempt property.

On a related note, you can also keep certain debts.  Depending on the chapter of bankruptcy selected and your payment status with the creditor, you are generally able to keep debts on necessary property, such as your homestead and vehicle.  “Reaffirming” these debts in a chapter 7 bankruptcy allows those debts to survive the bankruptcy so that you can keep the collateral (house or car) and hopefully rebuild your credit by continuing to pay those particular creditors.


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Texas: ‘Miracle’ or Myth?

August 30th, 2011

What does it mean to be a middle class wage-earner and consumer in Texas?

For too many families, it means a struggle to make ends meet. Texans want safe, stable jobs with decent wages and reasonable benefits that allow them to raise a family, own a home, and save for a comfortable retirement.  Much has been made lately about job growth in Texas. Unfortunately, for middle class Texans, the so-called “Texas Miracle” has been more myth than reality. So, how does Texas stack up to the rest of the nation on key quality of life indicators?

So, how about those jobs?  Texas has the highest rate of workers paid at or below the federal minimum wage and our median hourly wage is 10% lower than the national average.  We are dead last in the percent of Texans with health insurance and are near the bottom in the percent of workers with employer-based health insurance.

As for workplace safety, nine Texans die on the job every week, making Texas the deadliest state to work in, according to data from the Bureau of Labor Statistics.  We also have the highest rate of workplace fatalities among the 10 biggest states.  Also, with a quarter of workers without workers’ compensation coverage, we are last in workers’ compensation coverage, lagging far behind the rest of the country.

And home ownership?  Texas ranks near the bottom in the rate of home ownership, a fact that is exacerbated by our high rates of personal bankruptcy, low personal credit scores, and high rates of foreclosure and subprime mortgages.  Plus, with the highest home insurance rates in the nation, more of our money is going to pad insurance company profits.

Finally, what about that comfortable retirement?  It isn’t so comfortable.  Texas ranks near the bottom in median household net worth and in the “nest egg index” which looks at personal savings and investing behavior.  Also, nearly half of middle income Texans report having less than $5,000 in total savings – over a quarter have less than $1,000.

This stark reality is compounded by a lax regulatory climate that typically favors industry over individuals and a broken civil justice system that is too often closed to consumers, patients, and workers who face needless injury and financial devastation. That’s right.  If you are hurt on the job, ripped off by your insurance company, or have your savings wiped out by Wall Street shenanigans, you likely won’t be able to have your day in court.

Not quite the picture of middle class bliss that many politicians and spinmeisters would have us believe.

Texas Watch | 815 Brazos Street, Suite 603 | Austin, TX 78701

Work (512) 381-1111 | Fax (512) 381-1115 | texaswatch@texaswatch.org


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Chevy Cruze: Top Selling Car Thanks to Bankruptcy! By Jim Ince

July 27th, 2011

Many who read the headline of this article might question the premise of a bankruptcy leading to the hottest selling car in the world.  It would be a stretch if this was a fictional story.  The amazing thing about this article is that it is absolutely true.

First of all, the Chevy Cruze is one of the hottest selling cars in any domestic car line.  There are a lot of reasons.  It is apparently a well-built car and it gets great gas mileage.  The Cruze has sold over 700,000 units either under that name or the Daewoo or Holden names.  The Cruze grew out of a former good seller, the Cobalt.  The Cruze sales have tripled those of the best sales year for the Cobalt.  The Cruze is overtaking even imports.  More importantly for the future of GMC, the vast majority of Cruze buyers are purchasing the first Chevrolet they have ever owned.  Not only is it a very popular car, it has better gas mileage than any gasoline powered car including the hybrids.  Further, it is loaded with many safety features often found only on the more expensive imports.

How does bankruptcy lead to such a success?  Prior to the bankruptcy of GMAC, the company was bogged down with lines of cars which had quit selling many years ago.  They did not have the resources to develop new lines of automobiles or the flexibility to re-tool plants because so much of the monthly income was devoted to servicing too much debt.  If ¾ of the income is debt service, then there is nothing left for investment by the time a company that size pays payroll and buys current materials.

GMAC filed what many call a pre-packaged bankruptcy.  Realistically, it is not all that different than the type many individuals file.  All pre-packaged meant is that the outcome of the case was fairly certain.  A good consumer bankruptcy practitioner can predict how a case will be resolved.  Just as in the GMAC bankruptcy, there are no guarantees but with the expertise of the law firm, results are somewhat predictable.

GMAC stripped off millions of dollars in Debt.  They were able to take that freed-up capital and by the tooling and pay the engineers to come up with a radically different design for an automobile.  That one car has led them to the profitability which had eluded them for all of these years.

Individuals often have a very similar result.  It is not uncommon to have a client who has devoted 30 to 40% of their income to paying past debt.  They have had to clean out savings and not buy the things needed to fix up the residence.  By filing bankruptcy, the 30 to 40% of the income which was going for debt now can go for those capital improvements.

It is not uncommon for a client to let our firm know that, post bankruptcy, they are able to actually visualize a retirement or send a child to college.  Prior to the filing of the case, they really believed they would have to work their entire lives just to get a chance to catch up.  In reality, had they continued in the cycle they were in, the credit card debts would not have reduced in their lifetime.  Most people are paying the minimums and can only maintain the level they are currently paying.  You may be in the same situation, but you will not really know until you meet with a qualified bankruptcy attorney.  Come visit with one of our attorneys and see what we may be able to do with your crushing debt.

 


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A Cruel Retirement, Part One: Medical Crises

July 8th, 2011

by James K. Ince

Retirement is supposed to be a great time of our lives. Everything is paid for, the kids are grown and you are ready to travel. Unfortunately, this image is more ideal than real. The truth is that retirement for many people is difficult. Whether this fact impacts you or an elderly loved one, it is important to understand that the dynamics of filing for bankruptcy are very different when we are older.

A recent article in a London publication documented that there has been a dramatic shift in England of the number of elderly people who have financial troubles. Bankruptcy attorneys are seeing a similar shift in the United States and, particularly, in Texas. There are so many causes of this problem that it is hard to focus on any one reason.

Part of the problem is health care. We tend to have more health problems in our later years. While insurance sometimes pays a majority of these costs, even the deductible can be devastating to someone on a fixed income. I have found that many people really do not have a feel for how difficult it is to live on a fixed income. Yet, those same people often live check to check themselves. Imagine living on an income that does not adjust for rapid inflation. Even gasoline costs have increased. And medical creditors are among the most vicious creditors of all. They do not take “no” for an answer. The days when you could pay just $10 a month to a medical creditor are gone. Hospitals often turn people over to a collection agency soon after their hospital visit, and the phone calls begin immediately. Elderly people are often not able to withstand the intense pressure of collection professionals, who will ask questions such as, “don’t you believe in paying your bills?”

People in their later years are very proud. They have worked all of their lives, paid all of their bills and done quite well for themselves. Suddenly, they are faced not only with little income but with little or no prospects for generating enough income to be able to dig themselves out of a hole. When a bill collector begins the harassment, it is not simply an annoyance for most people in their mature years. People who have always been able to write a check and make that payment suddenly have their honor and their worth challenged.

Even if an elderly person can get past the simple embarrassment and emotional end of being harassed by a medical bill collector, a real fear is that more such creditors may be on the way. The sad truth is that when both spouses are suffering from health issues, there is no escape. The fear that you may not be able to get treatment for your spouse if you do not pay current medical bill is one most of us can relate to. We would do anything for our loved ones. Don’t forget, bill collectors know this and use it extensively when dealing with those who have medical debt. Such collectors often suggest helpful hints for paying the medical debt — all you have to do is pull out that credit card that has had a zero balance for years and pay the bill. When you do that, the calls will stop, the bill is gone and you can feel good about yourself again. An instant solution. Unfortunately, far too many people succumb to that suggestion.

If you or a loved one is facing a medical debt situation, consider talking to a bankruptcy attorney PRIOR to depleting the resources that may be needed to sustain your years of retirement. The consultation is free and there may be other options. However, until you sit down with an experienced attorney, you will not know if bankruptcy can help.


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Vehicles in Bankruptcy

July 8th, 2011

by Gene Sollows

We all love our cars and, more importantly, we need our cars. A common question for those considering bankruptcy is can I keep my car, and if I have a payment, how do I pay for it?

The answer depends on several factors.

In a Chapter 7 liquidation case, cars used for personal and household purposes are exempt from the claims of creditors — you can keep them. This exemption is usually limited to one vehicle per driving-age member of the household. Keeping the vehicle is subject to any valid financing agreements, however — there are no free cars in bankruptcy! If you choose to keep the vehicle and have a car note, you can reaffirm (retain) the debt and it will survive the bankruptcy, and you will be bound to the original terms of the note.

In a Chapter 13 case, cars are also exempt as in Chapter 7. However, a Chapter 13 payment plan can be used to pay the car note under different terms than under the original contract. If you have owned a vehicle for 910 days (two and a half years), then you can pay the value of the vehicle through your bankruptcy rather than the amount of the debt. Due to the depreciation of cars, this can be a substantial savings. In most cases we can also alter the interest rate paid to the creditor, another source of savings. Lastly, the payment itself can be stretched over a 60-month term. You can see how in Chapter 13, we can essentially “refinance” the car note to reduce your payment — and at the end of the case, you get clear title to the vehicle!

It should be pointed out that, in either type of bankruptcy, if you would like to be free from your car note, you can surrender the vehicle to the creditor and discharge (eliminate) the debt.

Lastly, note that motorcycles “count” as vehicles in all respects. If you have two driving-age members in your household and own two cars and a motorcycle, the motorcycle would typically not be an exempt asset and the creditors would be entitled to the net value of the motorcycle.

As in all legal matters, it is important that you get legal advice specific to your situation. Give us a call at your convenience to set up a free appointment to discuss your legal situation.


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