Bankruptcy Law Blog
A good analysis from Reuters re the Stockton bankruptcy filing in Sacramento, Ca: http://bit.ly/M1qmdp. Of particular importance are the facts that Stockton’s credit rating went down prior to bankruptcy which increased its borrowing costs. Yet the California mandate that cities negotiate with creditors prior to filing Chapter 9 helped Stockton and may mean the difference between passing and failing.
California Attorney General Kamala Harris has introduced a homeowner’s bill of rights in the assembly – 7 bills when read together center on foreclosure treatment of individuals. See the discussion in Mortgage Daily News.
Further, Mrs. Harris which would create a combination judicial and non-judicial foreclosure process. Currently, lenders may foreclose either judicially or non-judicially. They are rewarded for using the non-judicial process by a shorter foreclosure process. A judicial foreclosure process takes longer but allows the lender to recover a deficiency, much like car loans. SB 1470 would delay the foreclosure process without allowing a deficiency judgment.
A Bankruptcy Court in Illinois (In re Krieger, Bk C.D. Ill) has approved the discharge of student loans by a paralegal who was without prospects for future employment, homeless, had no income and was living on food stamps. Normally, student loans cannot be discharged under Bankruptcy Code Section 523(a)(8) unless discharging such debts would impose an undue hardship on debtor. As the economic downturn continues and long term unemployment persists, debtors will increasingly be able to show little to no prospects of future employment in order to be able to discharge student loan debt.
In a study by Marketdata Enterprises, Inc., debt collectors have become more aggressive, using profanity, threatening, and insulting people. Their behavior is attributed to a poor economy, high gas prices, and competition among debt collectors. But debtors are fighting back as the number of complaints is increasing. The Fair Debt Collection Act specifies what actions a debt collector can take in order to collect the debt.
What can a Debt Collector properly do under law?
Debt collectors may contact you by telephone between the hours of 8:00am and 9:00pm (local time) for the purpose of demanding payment of debts that you owe. They must identify themselves as debt collectors and notify you in every communication that they are debt collectors and that any information you give them will be used to collect a debt. Debt collectors may call your friends, co-workers, and neighbors to obtain information to reach you.
What Debt Collectors may not do?
Debt collectors may not use profane or abusive language when communicating with you. Debt collectors may not misrepresent the debt owed or use deception in collecting the debt. They may not misrepresent that they are law enforcement officials. They may not attempt to collect more than the debt owed under contract. Debt collectors may not contact you at your place of employment after being advised that it is unacceptable or prohibited by your employer.
What can you do?
You may notify the debt collector that he or she may not contact you at work. You may also request to verify the debt. Communications to a debt collector should be in writing. You may try to negotiate with the debt collector assuming that you can afford to pay the debt.