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    Can I File Chapter 7?

    Can I file bankruptcy to avoid paying a judgement, if I make enough income to get a loan and pay the debt? The judgement would be the ONLY debt included in the bankruptcy. I have no assets that can be seized, but I have a good income. Would I even qualify for bankruptcy? I'm a little concerned a bankruptcy trustee will see my income vs bills and just tell me I can't file (is that possible)? The judgement has followed me for a long time. I have avoided and or ignored it for years. I'd like it to go away. My options are to pay it off with a loan, or file bankruptcy. I had a free, quick consultation with a bankruptcy attorney. He asked what my income was and if I had a dependent(s) living under my roof (I have 2 dependents). I don't make a lot of money, but I'm not struggling and could easily afford a loan. Based only on my income and dependents, he said I can file. However, if I put my bills and income on a spreadsheet, it's obvious I can afford a loan. I suppose if I can easily afford a loan, I should just go ahead and pay the debt. However, it annoys me to no end the money the debt collector will make. I'm sure they bought the debt for pennies on the dollar years ago. They have had expenses associated with chasing me, but I'm sure they'll make a big profit margin.

    #2
    Welcome to BKForum.

    Deciding between debt consolidation (taking a loan to payoff the debt), debt management through negotiation, or bankruptcy is a touch set of decisions. You simply have to run each scenario on paper. From what I personally know and from anecdotal evidence, nearly every junk debt buyer (collection agency) would usually negotiate a settlement even with terms. If they already have a judgment, then they can ride that for 10-20 years so a settlement is likely much more difficult to obtain at this point.

    If you put your bills and income on a spreadsheet and could afford a long term loan, it is pretty likely that you don't qualify for a Chapter 7. Debtors who show disposable monthly income (DMI) greater than about $250/month would be pushed into a Chapter 13. That's much different than a Chapter 7 and it could be 3-5 years before you emerge from the Chapter 13.

    (Do you have dependents who are not your children? That gets into another entire area of just what you could use as dependents, household size, on a bankruptcy means test. Bankruptcy doesn't merely just look to what is on your tax return. The bankruptcy court looks to a legal obligation (e.g. marriage, child support, children), or strong familial needs, to determine dependency.)

    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.

    Comment


      #3
      Thank you for your response.

      I believe I'll settle at this point, based on your comments.

      Comment


        #4
        I just accepted the settlement offer from the attorney's office (they have a collection entity). The settled for about 80% of the original amount. They're mailing me what sounds like a tax form. I assume I'm paying income tax on the difference between original judgement and settled amount?

        Comment


          #5
          Originally posted by Fargo87 View Post
          I just accepted the settlement offer from the attorney's office (they have a collection entity). The settled for about 80% of the original amount. They're mailing me what sounds like a tax form. I assume I'm paying income tax on the difference between original judgement and settled amount?
          Yup, pretty good bet you're going to get a 1099-C for the 20% difference.
          Latent car nut.

          Comment


            #6
            Originally posted by Fargo87 View Post
            I just accepted the settlement offer from the attorney's office (they have a collection entity). The settled for about 80% of the original amount. They're mailing me what sounds like a tax form. I assume I'm paying income tax on the difference between original judgement and settled amount?
            Yes. You will pay taxes on the amount forgiven (the 20%).

            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            I am not an attorney. Any advice provided is not legal advice.

            Comment


              #7
              You can also be taken to court and try to beat them. Or take them to court if they are abusing their collection practices.

              Comment


                #8
                Originally posted by bornfree2 View Post
                You can also be taken to court and try to beat them. Or take them to court if they are abusing their collection practices.
                This has already been reduced to a judgment. The creditor, now, has the upper hand and can perform all remedies afforded by the state judgment creditor laws. That could include garnishment, levy, and foreclosure.

                If you take them to court, after a judgment, you'd likely be facing even more fees since your loss would likely trigger the so-called collection fees clause in the underlying contract.

                As such, I don't know what you're saying by taking the judgment creditor to court. This has already been reduced to a money judgment in the creditor's favor. FDCPA claims may be time barred (one year) from any alleged violation. You could end up costing yourself more by causing post-judgment collection costs for which the judgment creditor may seek to collect.
                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog

                I am not an attorney. Any advice provided is not legal advice.

                Comment


                  #9
                  Originally posted by justbroke View Post
                  This has already been reduced to a judgment. The creditor, now, has the upper hand and can perform all remedies afforded by the state judgment creditor laws. That could include garnishment, levy, and foreclosure.

                  If you take them to court, after a judgment, you'd likely be facing even more fees since your loss would likely trigger the so-called collection fees clause in the underlying contract.

                  As such, I don't know what you're saying by taking the judgment creditor to court. This has already been reduced to a money judgment in the creditor's favor. FDCPA claims may be time barred (one year) from any alleged violation. You could end up costing yourself more by causing post-judgment collection costs for which the judgment creditor may seek to collect.
                  Junk Buyer debt usually has not much evidence to provide so they loose in trial. By counter suing them in federal court, they stand a change to win BIG. I have seen winning cases in RECAP where debtors sue back. They ask for $50,000 in personal damages and then the stimulated fines per violations. Since these junk buyer places are call centers, its very easy to catch (and collect judgments) them in violation.

                  Of course such a strategy requires 'courage' since its outside of most people's comfortzone. But you can find winning cases so its clearly possible .

                  Turn the tables and sue back. Its amerikkkaaa

                  Comment


                    #10
                    BANG! What was that noise? Oh, nothing to worry about, just bornfree2 shooting hisself in the foot once again.
                    Latent car nut.

                    Comment


                      #11
                      Originally posted by bornfree2 View Post
                      Junk Buyer debt usually has not much evidence to provide so they loose in trial. By counter suing them in federal court, they stand a change to win BIG.
                      This isn't a junk debt buyer. This is a creditor that has a judgment. The issue has already been reduced to a judgment. No one even mentioned that it was a junk debt buyer. Even so, again, this has been reduced to a judgment and has been so for years.

                      Things seemingly missed from the original poster's original post: a.) this is already reduced to a judgment, b.) this judgment has followed them for some time (it's an old judgment from "years" ago), and c.) if it's more than a year the chance for appeal and any other defenses are gone.

                      First, a debtor would need to have a valid claim. Then the debtor would need to meet any temporal (or jurisdictional) issues with their appeal, claim, or counterclaim. And, finally, the debtor would almost always lose despite anecdotal evidence of the few wins. In this particular case, the original poster's case, I don't think there is anything they can do now that a court has a.) reduced it to a money judgment, b.) the debtor ignored it for years, and c.) since it's greater than a year, any maneuvering by the debtor is time-barred.

                      A judgment creditor has many ways to legally collect on their claim including, garnishment, levy, and foreclosure (depending on the State non-bankruptcy options). They can collect for 10-20 years. This is no longer a collection account. This is a money judgment upon which the creditor is allowed to collect.

                      If I were any creditor and had a money judgment, and recorded as a lien, I would fight as "res" anything you would bring especially after the bar date for bringing any such appeal or counterclaim. I would also ask for my fees since this is "res" and the debtor should not be re litigating the issue.

                      (The maneuvering you suggest may work a.) for a junk debt buyer (but not for the original creditor), b.) during the original lawsuit as a counterclaim or countersuit, c.) there is actually a valid claim, and d.) before the bar date (statute of limitations) for bringing any claim under any federal law.)
                      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                      Status: (Auto) Discharged and Closed! 5/10
                      Visit My BKForum Blog: justbroke's Blog

                      I am not an attorney. Any advice provided is not legal advice.

                      Comment


                        #12
                        Originally posted by justbroke View Post
                        This isn't a junk debt buyer. This is a creditor that has a judgment. The issue has already been reduced to a judgment. No one even mentioned that it was a junk debt buyer. Even so, again, this has been reduced to a judgment and has been so for years.

                        Things seemingly missed from the original poster's original post: a.) this is already reduced to a judgment, b.) this judgment has followed them for some time (it's an old judgment from "years" ago), and c.) if it's more than a year the chance for appeal and any other defenses are gone.

                        First, a debtor would need to have a valid claim. Then the debtor would need to meet any temporal (or jurisdictional) issues with their appeal, claim, or counterclaim. And, finally, the debtor would almost always lose despite anecdotal evidence of the few wins. In this particular case, the original poster's case, I don't think there is anything they can do now that a court has a.) reduced it to a money judgment, b.) the debtor ignored it for years, and c.) since it's greater than a year, any maneuvering by the debtor is time-barred.

                        A judgment creditor has many ways to legally collect on their claim including, garnishment, levy, and foreclosure (depending on the State non-bankruptcy options). They can collect for 10-20 years. This is no longer a collection account. This is a money judgment upon which the creditor is allowed to collect.

                        If I were any creditor and had a money judgment, and recorded as a lien, I would fight as "res" anything you would bring especially after the bar date for bringing any such appeal or counterclaim. I would also ask for my fees since this is "res" and the debtor should not be re litigating the issue.

                        (The maneuvering you suggest may work a.) for a junk debt buyer (but not for the original creditor), b.) during the original lawsuit as a counterclaim or countersuit, c.) there is actually a valid claim, and d.) before the bar date (statute of limitations) for bringing any claim under any federal law.)
                        We both dont know the actual specifics of OP. Original creditor or not, the strategy is valid and legal and well within the rights for debtor to consider. It just takes gumption, time, and willingness to try to win. Worst case BK can be filed. Best case you win and discharge it yourself.

                        Original creditors typically sue on 'open book' or 'account stated'. They have he burden to prove the amount owed. 90% of theses collection cases are not challenged, so the creditors typically use 'boiler plate' filings. By taking note of how the have litigated in past cases, how others have appealed, and how to properly organize oneself for discovery, the odds of beating a original creditor increase greatly. The longer one litigates the case, fights back to invalidate so called 'evidence' from the record, the more likely the creditor will fold (dismiss) due to not worth the ROI or because they will loose at trial.

                        It is actually quite difficult and expensive to prove the exact amount of a debt owed. A statement does not 'prove it'.

                        Comment


                          #13
                          I suggest you read Henson v. Santander Consumer USA, Inc, if we were to consider this as a junk debt buyer (post judgment). Henson went to the Supreme Court in 2017 and answered the question "Is a company that regularly attempts to collect debts it purchased after the debts had fallen into default is a “debt collector” subject to the Fair Debt Collection Practices Act?" Surprisingly, even to me, the SCOTUS affirmed the fourth district's ruling affirming the lower court. The answer was NO.

                          I think what you suggest would be better suited for a credit section of BKForum discussing general collection practices. This is specific case is done. It's been reduced to a judgment. It has been more than a year. This thread is about a post-judgment creditor who has been attempting to collect for more than a year and is in the area related to pre-discharge. The debtor, in this thread, has already stated that this is old and they already agreed to a settlement. I think they were asking whether they should borrow in order to satisfy the judgment, or file bankruptcy to possibly discharge the indebtedness.
                          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                          Status: (Auto) Discharged and Closed! 5/10
                          Visit My BKForum Blog: justbroke's Blog

                          I am not an attorney. Any advice provided is not legal advice.

                          Comment


                            #14
                            Originally posted by justbroke View Post
                            I suggest you read Henson v. Santander Consumer USA, Inc, if we were to consider this as a junk debt buyer (post judgment). Henson went to the Supreme Court in 2017 and answered the question "Is a company that regularly attempts to collect debts it purchased after the debts had fallen into default is a “debt collector” subject to the Fair Debt Collection Practices Act?" Surprisingly, even to me, the SCOTUS affirmed the fourth district's ruling affirming the lower court. The answer was NO.

                            I think what you suggest would be better suited for a credit section of BKForum discussing general collection practices. This is specific case is done. It's been reduced to a judgment. It has been more than a year. This thread is about a post-judgment creditor who has been attempting to collect for more than a year and is in the area related to pre-discharge. The debtor, in this thread, has already stated that this is old and they already agreed to a settlement. I think they were asking whether they should borrow in order to satisfy the judgment, or file bankruptcy to possibly discharge the indebtedness.
                            Yes im aware of the' defense' debt buyers use to try to do an end run around restrictions placed on their very-clearly-debt-collection-practices by trying to use a 'rose by any other name is not a rose'. Ive seen that defense in my research and its been easily refuted. Otherwise there would be no winning cases because that ridiculous argument would nullify and make them untouchable. They are not. They are regular people hiding behind a corporate person that goes out and extorts money from others.

                            Second point is the judgement in no way makes the debt valid. It is just an award. The debtor (not OP here in this hypothetical) if used a general denial, still denies the debt. Suing the collector is not relitigating any specific debt - because the defendant claimed to deny it and plaintiff did not prove it. Rather suing collector is suing their abusive and unfair practices in ALLEGING a debt then collecting judgement on it. Thats the real issue to litigate - the fraud.

                            I agree this isnt the proper thread. Motion to bifurcate.

                            Comment


                              #15
                              Originally posted by justbroke View Post
                              The debtor, in this thread, has already stated that this is old and they already agreed to a settlement. I think they were asking whether they should borrow in order to satisfy the judgment, or file bankruptcy to possibly discharge the indebtedness.
                              And the answer would, of course, be to do whatever will cost the least amount of money. Declare bankruptcy to get rid of a $2k debt? Probably not a good idea. Declare bankruptcy to get rid of a $5k debt? Still not a good idea, unless the debt is an extreme hardship. Declare bankruptcy to get rid of a $20k debt? Probably a good idea, because most people would stand to lose far less than that in bankruptcy. Borrowing money to pay off a debt would only make sense if the debt is small, and the proposed loan could be comfortably afforded. If not, that is what bankruptcy is for.

                              Comment

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