| Serving bankruptcy clients throughout Northern New Mexico including Santa Fe, Los Alamos, Taos, Raton, Espanola, and Las Vegas | Thursday, 22 November 2018 - 5:21 |
The First Judicial District Court covers cases filed in Santa Fe, Los Alamos and Rio Arriba Counties. The Court’s Access to Justice Committee is putting on a free legal fair tomorrow focusing on debt issues. Please come if you have questions, and please tell people who might be interested.
From time to time, a Guest Blogger shares voice at the New Mexico Bankruptcy Law Blog. Today, we welcome Deborah M. DeMack. Deborah is a former Assistant Attorney General in the Consumer Protection Division of the New Mexico Attorney General’s Office. A solo practitioner now in private practice in Santa Fe, NM, Ms. DeMack practices consumer law, debt collection defense, and consumer bankruptcy. She can be reached at 505.471.3302. Her website is: www.ddemacklaw.com.
This post discusses points 3 – 5. The first 2 things to know were discussed last week, here.
3. Not All Debt Collectors Are Treated The Same Under The Law. Both federal and state law treat different debt collectors differently when it comes to collecting debts. Generally speaking, original creditors trying to collect monies owed to them are not subject to many of the laws regulating debt collection activities.
However, debt collection laws, both federal and state, do apply to third-party debt collectors. Thus, for example, under the federal law known as the Fair Debt Collection Practices Act (“FDCPA”), a debt collector cannot use obscene or profane language to abuse the person from whom the debt collector is trying to collect monies. The FDCPA contains many protections for consumers against the abuses of debt collectors, but only third-party debt collectors. Further, under the FDCPA, junk debt buyers and their attorneys are considered to be “debt collectors,” therefore, the restrictions of the FDCPA apply.
4. New Mexico Law Requires Collection Agencies to Have a License. Under state law known as the “Collection Agency Regulatory Act” or “CARA,” third-party debt collectors fall within the definition of a “collection agency,” therefore, they must have a collection agency license in order to collect on a debt. If the debt collector doesn’t have a license to collect debts when it should, any attempt to collect on a debt is unlawful under CARA, and is considered a fourth-degree felony.
However, as written, the definition of a “collection agency” under New Mexico law is not precisely the same as a “debt collector” under the federal law, the FDCPA. While many junk debt buyers are third-party debt collectors and thus, most likely fall within the definition of a “collection agency”– in which case, they do need a license in order to collect on a debt from a New Mexico resident — it’s not always crystal clear. It will depend on the facts and circumstances.
5. The Lawyer Suing on Behalf of a Debt Collector Must be Licensed to Practice Law in the State of New Mexico — And The Lawsuit Must be Brought in a New Mexico Court. The overwhelming majority of junk debt buyers and third-party debt collectors are out-of-state entities. Many debt collectors hire out-of-state law firms who do not have attorneys licensed to practice law in the State of New Mexico.
However, in order to sue you on a debt in a New Mexico court, the lawyer representing the junk debt buyer or debt collector must be licensed to practice law in the State of New Mexico. If the lawyer whose name appears at the bottom of the lawsuit is not licensed to practice law in New Mexico, he or she cannot represent the debt collector in New Mexico courts.
Generally speaking, if you are a New Mexico resident, you must be sued in a New Mexico court of law (unless you have knowingly waived that right and consented to be sued elsewhere). Many out-of-state debt collectors and junk debt buyers bring debt collection lawsuits against New Mexico consumers in other state courts. With some exceptions, other courts in other states do not have jurisdiction over you or the lawsuit. Therefore, if you are a NM resident but you are being sued in an out-of-state court or by an attorney who is not licensed to practice law in the State of New Mexico, you may have a legal defense to the lawsuit. Consult with an attorney if you have questions about any lawsuit.
Links to earlier guest posts by Ms. DeMack are:
Debt Collection Abuse and the FDCPA
How May a Debt Collector Contact You?
What Acts or Practices are Prohibited by the FDCPA?
How Do You Stop a Debt Collector from Contacting You?
The 30 Day Validation (Verification) Notice
Other Types of Illegal Debt Collection Acts
From time to time, a Guest Blogger shares voice at the New Mexico Bankruptcy Law Blog. Today, we welcome Deborah M. DeMack. Deborah is a former Assistant Attorney General in the Consumer Protection Division of the New Mexico Attorney General’s Office. A solo practitioner now in private practice in Santa Fe, NM, Ms. DeMack practices consumer law, debt collection defense, and consumer bankruptcy. She can be reached at 505.471.3302. Her website is: www.ddemacklaw.com.
This post covers the first 2 things to know; the remaining points will be in a post next Tuesday.
5 THINGS EVERY CONSUMER NEEDS TO KNOW ABOUT
DEBT COLLECTION LAWSUITS IN NEW MEXICO
1. How Old Is the Debt? If the debt is old enough, it may be past the legal statute of limitations, meaning, the debt is legally unenforceable in a court of law. But that won’t necessarily stop debt collectors from trying to collect on a debt, even if it is YEARS past the statute of limitations.
In New Mexico, the statute of limitations for open accounts and revolving lines of credit such as credit card accounts is four years.* So if it’s been more than 4 years since you last paid on a credit card account, it’s possible that the debt is past the statute of limitations. Therefore, legally speaking, the debt is unenforceable.
However, this does not mean that a debt collector won’t file a lawsuit in an attempt to collect on a debt. Read more »
This post is part two in a two-part series by Brooke McDonald on how the current economy creates a climate more conducive to bankruptcy for middle class families and senior citizens, lessening the traditional stigma of bankruptcy as limited to young people or caused by careless spending. Part one examined how and why typical bankruptcy filers have shifted to embody a more everyday profile.
For Americans sagging under the burden of debt-induced bankruptcy in 2013, the journey out of the shadow of debt likely seems impossible. With average salaries dropping, higher taxes, and the average costs of college, homes, and healthcare skyrocketing, a person already entrenched in debt may feel hopeless. According to one survey by Bankrate, 24 percent of all Americans have more credit card debt than money in the bank.
But even middle class individuals sinking in the mire of debt can get out. There is a way up and out. Read more »
This post is part one in a two-part series by Brooke McDonald on how the current economy creates a climate more conducive to bankruptcy for middle class families and senior citizens, lessening the traditional stigma of bankruptcy as limited to young people or caused by careless spending. Part two will look at how middle class families have overcome tremendous financial obstacles and survived bankruptcy despite the odds against them.
Who is the “typical” bankruptcy filer? Is it the young married couple with a credit card problem and expensive habits? Or maybe it’s the slot-happy, single adult who vacations in the Caribbean every year and never took a personal finance class – or the entrepreneur who risks everything for the sake of a business idea but has no idea how to actually run a business.
Once upon a time, reckless spending and budgeting issues did lie at the root of many American bankruptcies – and they still do. Certainly, these issues haven’t gone away. But the image of the irresponsible, reckless spender as 2013’s typical bankruptcy filer is more pure stereotype than anything – and it’s simply not true. Real stories and statistics regarding the majority of bankruptcy filers show that bankruptcy is increasingly hitting normal middle class families who are trying to stay afloat as housing, education, and health care become increasingly more expensive. Read more »
This just in from the US Bankruptcy Court:
Continuing the Court’s efforts to better serve the public, we will “go live” with a new, improved web site on Thursday, January 31st at 7:00 p.m. No need to change your bookmarks – the web site’s address will stay the same, http://nmb.uscourts.gov/.
The new site uses the national judiciary template as a foundation, which means the site takes advantage of consistent design standards and capabilities. We believe users will find the new site to be streamlined and easier to navigate. Can’t find something you are looking for? Use the search and help features as you adjust to the new look and feel.
Although we expect a smooth transition to the new site, we appreciate your patience in advance as we iron out any issues that may arise. If you have any questions, comments, or suggestions when the site goes live later this week, please contact the CM/ECF help desk at 505-348-2480 or via email at ecfhelp@nmcourt.fed.us. We hope you like our new web site!
Today, we welcome Frank P. Pipitone. Frank is a consumer defense attorney located in Garden City, New York. His practice is focused on consumer credit issues including debt settlement, foreclosure solutions and personal bankruptcy. He is a firm believer in the rehabilitative power of bankruptcy.
RANDOM MUSINGS FROM THE “341”
By Frank P. Pipitone
No, “341” does not refer to the discontinued Oakland area code. “341” refers to the 341 Meeting of Creditors, named after the applicable section in the Bankruptcy Code.
For the purposes of this article and in the interest of speaking like a normal person, we will simply refer to this as the “Bankruptcy Hearing.”
This hearing is typically held within one month of the filing of the bankruptcy petition. A normal bankruptcy hearing involves the court appointed trustee examining the debtor.
The purpose of the examination is to determine if there are non-exempt assets available to pay creditors, if the information in the bankruptcy petition is accurate and/or to discover possible fraudulent activity.
For lawyers who have attended hundreds of these hearings, they become almost mundane. For the debtor, they can be intimidating and stressful. That is why I love seeing the relief on my clients’ faces upon completion of the hearing. Read more »
Concerning bankruptcy filings today, the Albuquerque Journal reported recently that:
“Consumers headed into U.S. Bankruptcy Court last year with substantially fewer assets and less debt than in 2010, a possible sign of the toll that the struggling economy has taken on some families, according to a just-released federal report.”
I think that’s a fair conclusion. Many people I speak to have been paring down, and paring down for some time, struggling to pay debt in order to avoid a bankruptcy, including spending retirement savings that otherwise could be protected in a bankruptcy. Their homes have often also dropped substantially in value. They now have fewer assets, and while the debt is less (because some has been pared down), the gap between income and expenses continues to be too great. Bankruptcy remains a good tool for many of them, and that’s a good thing. If they had considered it sooner, though, they might have saved such valuable assets as retirement savings, and that’s a pity.
Student loan debt and student loan default is one of the most serious problems facing the country’s long term recovery and health, and it is increasingly in the news. I’ll post frequently about this topic.
For today — a recent New York Time’s article reports:
In all, nearly one in every six borrowers with a loan balance is in default. The amount of defaulted loans — $76 billion — is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities, according to a survey of state education officials.
In an attempt to recover money on the defaulted loans, the Education Department paid more than $1.4 billion last fiscal year to collection agencies and other groups to hunt down defaulters.
Further, as stated there:
There is no statute of limitations on collecting federally guaranteed student loans, unlike credit cards and mortgages, and Congress has made it difficult for borrowers to wipe out the debt through bankruptcy. Only a small fraction of defaulters even tries.
And:
The average default amount was $17,005 in the 2011 fiscal year. Borrowers who attended profit-making colleges — about 11 percent of all students — account for nearly half of defaults, while dropouts were four times as likely as graduates to default. A loan is declared in default by the Department of Education when it is delinquent for 360 days.
You have a child, or niece, nephew or know your friend’s child — and you want the world for that child, including a good education. The rules of this new world are different, and those caring for children and their higher education can help first by understanding better what the current reality is.
For more on this topic, see this guest post, What happens to your kids’ education and educational loans if you are in bankruptcy? By Victoria Maydanik, San Jose bankruptcy attorney in California, and owner of Maydanik Law Firm.
Today, is a guest post — I’ll add my comments to it tomorrow.
What happens to your kids’ education and educational loans if you are in bankruptcy?
By Victoria Maydanik, San Jose bankruptcy attorney in California, and owner of Maydanik Law Firm.
Many recent graduates of colleges and professional schools are not able to find good jobs – or any jobs at all. However, these young men and women are not the only ones suffering from the lack of employment. Often, their parents have paid considerable amounts of money for their education – and are not yet done paying. Many had signed or co-signed student loans for thousands of dollars.
Some parents feel taking out the debt was worth it in the long run. Some, sadly, feel it was a waste of resources, and their kids cannot or will not find worthy jobs in this economy. What’s common across the board is that more parents than ever before feel the pressure and the burden of student debt and mounting interest, and more are not able to keep up with the payments. Many lost their jobs or investments, and may have been forced into early retirement or had their hours cut. The lenders may or may not defer the payments or offer a better payment plan, and the loans may be referred to collection agencies.
So what happens if you file bankruptcy while you are still liable for your student loans, or your kids’ student loans?
The bad news is that student loans are almost never dischargeable in bankruptcy. Also, they can continue to accrue interest while you are in bankruptcy.
The good news is that the lender’s collection activities against you have to be put on hold while your bankruptcy case is active. If you are in a five-year Chapter 13 plan, the lenders cannot be trying to collect the payments for the student loans from you during these five years. Also, if you are making any payments to general unsecured creditors (such as your credit cards) through your bankruptcy, the student loans will also get at least partially repaid.
If your adult children are still in school and you want to pay for their ongoing tuition or school supplies, you should be able to do it while you are in bankruptcy. However, you may not necessarily get credit for these expenses – or at least for the full amount of these expenses – when the bankruptcy trustee calculates how much disposable income you have available to repay your creditors. The trustee may say that the creditors should not have to sponsor your adult kids’ education – and if you want to pay for your kids’ college tuition, that’s up to you if you cut your other expenses, so that the creditors still get a fair payment.
It makes a big difference what your particular trustee’s stance is on this issue, and how much credit he would give you for these school expenses. Hopefully, your bankruptcy attorney has seen similar cases and would be able to give you a good idea of what to expect before the case is even filed.
If your minor children are still in school, it’s easier to show why paying for their schooling is necessary and reasonable. If they have any special needs that require additional expenses, be sure to make it clear. However, if what you pay for their education seems excessive (for example, you are paying for an expensive private school) and your budget is otherwise not too tight, the trustee may decide that you should be paying more to creditors.
Bankruptcy does help ease many financial burdens. It helps lift the burden of student loans, as well – although in most cases, only temporarily. If you have any ongoing or projected school expenses, your local bankruptcy attorney would explain how the trustees in your area treat them, and what effect these expenses would have on your petition. Armed with this knowledge, you would be in a better position to decide beforehand how much you are willing and able to invest in your kids’ education during the case.
The laws may be changing to provide better ways to battle and manage the student loan crisis. Many organizations, for example, National Association of Consumer Bankruptcy Attorneys, highlight the harsh realities faced by many student loan debtors, and fight for a meaningful and positive change in student loan regulations.
Victoria Maydanik is a consumer bankruptcy attorney who has successfully represented hundreds of Bay Area residents in their bankruptcy cases. She is the owner of Maydanik Law Firm with offices in San Jose and Milpitas, California.
Victoria received her Juris Doctor degree from Santa Clara University School of Law in 2007. She has a Bachelor of Science degree in biochemistry and cell biology from University of California, San Diego, and prior to practicing law, she was a scientist researching new cutting-edge cardiovascular and asthma treatments.
Victoria sees parallels between practices of science and law. She enjoys working with people and being able to help them, and she enjoys analyzing each situation with mathematical precision and meticulous attitude.
