How Can I Get This Collector to Stop Calling Me?

People call me to help them manage their debts. Generally, they don’t call me after sitting down and doing a cold calculation of their current liabilities, assets and income which leads them to the conclusion that a bankruptcy is their best resort, but instead they call me after reaching a breaking point with their debts. That breaking point typically follows an avalanche of phone calls, or a lawsuit being served, or a wage garnishment being executed. These are the points where people have, emotionally speaking, “had enough” and are ready to try something new to stop the stress and difficulty.

 Should have swiped to voicemail...

Should have swiped to voicemail...

Not everyone who calls needs a bankruptcy, or is even eligible to file one. Sometimes, they aren’t ready to file a bankruptcy, but just want the calls to stop, or the garnishment to stop, or a brief pause in the stresses caused by constant demands for money. How can a person make the calls stop?

In a strictly legal sense, there are very few ways to prevent the phone from ringing if you legitimately owe a debt. Creditors, especially the original creditors, have broad latitude to call and call and call until they are paid, and there is not much short of a bankruptcy that will stop them. A bankruptcy filing, by law, creates a legal protection called the Automatic Stay, which prevents a creditor from taking any action to collect a debt while the debtor is under bankruptcy protection. These actions include calls, letters, legal actions like lawsuits or garnishments, and even reporting on a credit report. It’s a very broad and powerful protection, and courts have generally harshly dealt with creditors who violate its terms.

 Not the happiest place on earth. And they're calling you.

Not the happiest place on earth. And they're calling you.

However, there are some more practical avenues to try to stop the calls short of filing a bankruptcy case (or to tide you until you can get one on file):

  • You can negotiate an agreeable payment arrangement or settlement to satisfy the creditor, which should stop the regular collection calls.

  • If the debt is being pursued by a collector, you have the right to dispute the debt in writing, which will trigger a delay in collection efforts while the debt is investigated.

  • If you have retained an attorney to represent you, you can refer calls to that attorney. This does not carry a legal prohibition on calls, but most creditors will heed the official retention of a lawyer.

  • You could turn off all phone service, move to a cave in the wilderness, and wait until the statute of limitations on the debts has run. (I’m not advocating for this, but I too have considered it on the odd Monday morning.)

In the end, there isn’t much that can be done to stop a creditor or collector acting within the law from pestering you regularly about getting paid. If they venture outside the law, there are some significant legal tools available, but those too really require the help of an attorney.

If you have reached a point where you cannot manage all the obligations you have, then speaking to an attorney about your options (including a bankruptcy) is a safe bet, and may give you some tools to get breathing space to address your problems.

Bankruptcy - Not a Time to Flash That Bling

Recently, the music artist 50 Cent, who filed a Chapter 11 bankruptcy in July 2015, was called into court to account for several social media posts in which he appeared to be in possession of a great deal of cash. The judge expressed concern that he may be failing to disclose his assets properly in his schedules, which raised worries that he was not repaying his creditors as appropriate.

 Probably not gonna get to keep this car. Sorry. Photo by Noli Perez

Probably not gonna get to keep this car. Sorry. Photo by Noli Perez

50 Cent, as noted in his pleadings on the matter, is somewhat stuck in a situation where outward displays of wealth and conspicuous consumption are part of his professional image and branding, and falling short of those standards can have a material impact on his future income. However, most judges and attorneys who work in bankruptcy don’t appear to have much sympathy to his rather unique problem. Indeed, not only is accurate disclosure of assets and debts vital to any bankruptcy case, it is very easy to increase the scrutiny on any particular case by outward expressions at odds with the nature of a bankruptcy pleading.  

Let’s say the most important part first: You are under oath when you file your bankruptcy pleadings, and lying on those pleadings is a crime that can be investigated by the FBI and prosecuted by the U.S. Department of Justice. You can go to jail, face six figure fines, and still end up liable for all your debts in the end. Not telling the truth is very bad. So be complete and honest when you are filing bankruptcy. You and your lawyer will be thankful for it.

Reasonable minds can disagree, however, on the value of a given asset, or on the reasonableness of certain living expenses. A client claiming that they do not have the needed disposable income to repay creditors will have some explaining to do if they post instagram photos of a cruise they are on during the case. Have a nice wedding ring with a value that may make it subject to administration by the Trustee? Maybe don’t wear it to your meeting of creditors, so as not to draw attention to it. Certainly don’t brag about it on Facebook. An appearance of modesty might earn a debtor some leeway.

At the same time, be realistic about the value of your assets. If you live in a half million dollar home, you likely have more than $1000 in furniture, and claiming that value will surely lead to an in-depth investigation of your assets. And if you are a rap star, explain to the judge that “it is imperative that I continue to project aspirational goals of success in order to preserve my brand and those I represent.”

Your attorney is there to defend your interests, but also to advise you on where your pitfalls may occur. If you have assets you will likely lose in a bankruptcy case, your lawyer will help you weigh the costs and benefits of one type of bankruptcy versus another, what a reasonable value is on an asset, and when it might be in your best interest to just let something go.  

Bankruptcy is, by its nature, a point of contraction in your financial life. Appearing to understand that and abide by it is very helpful in achieving the end point you want, which is a fresh start.


A Post Inspired by Dr. King

In lieu of a pithy (and likely out-of-context) quote from Dr. King today, I will note a problem that I see that relates to the struggles he spoke of:

The number of bankruptcy cases filed pro se (without an attorney) has increased as a percentage of cases filed over the last several years. One study noted that those cases were increasing at over double the rate of other cases.  In my district  at least, the vast majority of pro se filers are drawn from the poorest sections of our society, and are disproportionately African-American.

To oversimplify, bankruptcy is a very technical area of the law, and pro se filers get worse results than those with attorneys. Attorneys know the property exemption laws better than do laypeople, have working relationships with the trustees and judges that can allow options outside apparent “binary” solutions, and can simply be more efficient with the filing process, which increases the effectiveness of the court system.

So we have an issue of economic (and racial) injustice when it comes to filing bankruptcy. No one is suggesting attorneys should stop making a living to accommodate this problem, but all too often the attorneys who “serve” these communities take advantage of their clients instead of actually being part of a solution.

Bankruptcy lawyers have gotten creative in some cases trying to help these poorest clients, using a Chapter 13 with a very low payment over 36 months to allow for bankruptcy protection for clients who can’t muster filing fees and attorney fees upfront before filing. Yet these filings are attacked by oversight bodies for abuse, when in fact they may be the only way to get an honest and poor individual help.

I think there are some ways to help address the problems with getting impoverished clients legal representation:

  1. Support your local Legal Aid organization. In my district, Legal Aid provides representation to many, but their staff is already so overwhelmed that their reach doesn’t go far enough. Give them some money to help them do their jobs with a broader reach.

  2. Volunteer to take a pro bono case. Once again, our Legal Aid has a Volunteer Attorney Project, which allows bankruptcy lawyers to help in cases identified by Legal Aid as needing assistance, but unable to afford it. Younger lawyers can even use this as a path to get some litigation experience while actually doing good.

  3. Be flexible in how you structure fees. There is a minimum amount of time any bankruptcy lawyer needs to put in on a case to be ethically sound, but most of us charge a flat fee for our cases, regardless of the anticipated difficulty. Taking on a number of generally simpler cases at a lower fee might allow for a broader reach of clients. Using creative methods like a “fee only” Chapter 13 can be a good idea for the right clients.

  4. Reach out into those poorer communities to find clients. Our poorest (and often most racially diverse) communities often live in a “service desert,” without access to anyone but payday lenders, pawn shops and convenience stores. Do some work inside those neighborhoods, and let the clients come to you.

In the end, the racial justice Dr. King sought is inextricably tied to notions of economic justice and access to legal justice. I hope we can all get a little better at providing a bit of that in our practices.

What is Going On With The Monkey Selfie?

In mid-2014, an entertaining news story broke regarding copyright claims on some pictures of a Celebes crested macaque. In short, the picture (“monkey selfie”) was taken on equipment belonging to photographer David Slater, but the trigger for the actual photograph was pressed by the monkey itself (hence monkey selfie).

At the time, the argument was whether the photographer on whose equipment the photo was taken could claim copyright to the pictures when actually “authored” by an animal. According to Mr. Slater, he set up the equipment with the intent that the monkeys would take pictures, and thus should be granted copyright. The U.S. Copyright Office rejected this claim in 2014. His claim of copyright has been granted in Britain.

In all honesty, this part of the story isn’t very exciting to non-lawyers, as it quickly delves into the nature of authorship and other arcane intellectual property matters, as well as the differences in law between and among countries. But it did have cute pictures of monkeys, so it has value.  

This last fall, a dose of entertainment was added to this now very quiet story when People for the Ethical Treatment of Animals (PETA) filed a suit, ostensibly on behalf of the monkey, claiming that the monkey has copyright on the pictures, since they were the entities who took the pictures. PETA, of course, would collect and manage the money generated by the copyright claim, but otherwise are selflessly acting in the best interest of a macaque in Indonesia. The judge in the case has already stated that copyright law does not extend its protections to animals.

Other than ruining the fun for everyone not involved, the judge’s declaration about animal copyright illustrates a good point about the law: American law is intended to extend protections to humans, unless otherwise stated. There are few instances under federal law where animals are given standing to file a suit to protect their interests.

More common is protection extended to legal entities like corporations, LLCs and trusts. In fact, I would estimate that the legal trend is actually in the opposite direction, where corporations are assumed to be included unless specifically excluded. This is most recently seen in the area of campaign finance and contributions, where the Supreme Court in Citizens United essentially gave corporations absolute First Amendment rights when applied to that realm.

In both the monkey selfie matter and campaign finance, it is incumbent on Congress to establish law (or constitutional amendment) that extends or limits the protection of laws to non-human entities. I have already discussed why it is difficult to make those changes, and that is only compounded when considering a constitutional amendment, or changing a law to favor a very small (and unwealthy) constituency.

In the end, for now, the monkey selfie belongs to all of us.


It's Very Hard to Change Bankruptcy Laws

News broke this weekend about the Paris Agreement, a pact among most of the world's countries to ramp up their efforts to reduce the emissions of greenhouse gases to limit the damage of global climate change. While this is undoubtedly a good thing (preserving the earth is commendable), what struck me was bits of news like this:

“U.S. ratification would require only President Obama’s signature, not Senate approval, since the agreement was crafted in a way so it would not be a treaty requiring ratification from a Republican-controlled Senate that might be hostile to the accord.”
 I'm Just a Bill...

I'm Just a Bill...

So in short, the entire agreement had to be structured in a way that allowed for avoidance of a legislative body of one country, so the agreement might have a chance of being enforced. Skipping the myriad issues surrounding power plays among the branches (and our country’s odd policy stances on climate science), this is illustrative of a problem discussed by bankruptcy attorneys (especially consumer lawyers) on a regular basis: Why is it so hard to get the laws changed?

There are a number of changes most consumer bankruptcy attorneys would like to see: Some ability to modify primary home mortgages, an adjustment to the discharge standards for student loans, and perhaps some rollbacks on the more ineffective changes wrought by the 2005 amendments. These would, in my opinion, make bankruptcy more affordable, effective and powerful for regular people who are struggling.

 Just a Lonely Old Bill...

Just a Lonely Old Bill...

We consumer bankruptcy lawyers are not holding our breath, however. Skipping the money factor (Rule 1: Lobbying matters), just take a look at this (non-exhaustive) list of points in the United States Congress where a bill may just die before becoming law:

  • Committee - Most bills need a majority vote to get out of a congressional committee, which basically means the majority party must be in favor. Also, in the Senate, “holds” placed by Senators are generally honored.
  • “Hastert Rule” - In the House of Representatives, most bills will not be allowed a floor vote by the Speaker of the House unless it has the support of a majority of the majority (more than 50% of the Republicans, currently). This makes bipartisan bills more difficult, and has the side effect of increasing the procedural hurdles the minority will place to the passage of certain bills.
  • Cloture - In the Senate, debate on any given bill can only be stopped by a vote of ⅗ of the Senators. This has the effect of preventing a vote on almost any bill the minority (of 40 or more) don’t want passed. In order to do business at all, the Senate Majority Leader must allow certain bills to die without a final vote, which further slows the legislative process.
  • Veto - Any bill actually passed by both houses can, of course, be vetoed by the President, subject to a legislative override (which is terribly difficult to achieve).

In effect, a bill can be stalled or killed by groups of just a few Congresspersons (on committee), 28% of House members (if all Republicans, currently), 40% of Senators, or one President. Counting both houses (and subcommittees), there are at least seven different veto points on any given bill. If you add in the extremely partisan environment we see now, it is amazing that any bills get passed at all, let alone “smaller” items like amendments to bankruptcy law.

 And I'm Sitting Here on Capitol Hill

And I'm Sitting Here on Capitol Hill

This does not mean that it is worthless to try. There are serious consumer advocates in Congress, and as pressure builds over time, a small change can occur that reaps significant benefits for many. But it does mean that unless you have strong majority support (and solid lobbying), the game of legislative change is a long one.