- Six major federal credit laws affect creditors’ ability to collect on your debts.
- These credit laws can affect your ability to mitigate your debt.
- Three federal agencies govern creditors’ ability to collect on your debts.
Sorry to disappoint you, but I’m afraid there’s no legal way to prevent creditors from collecting your money; you are both legally and morally liable for your debts. But there are legal ways to mitigate your losses such as Bankruptcy protection under Chapter 7, the Wage Earner Thought filed under Bankruptcy, Chapter 13, and other methods. In the previous article,How to Get Credit I discussed how your ability to receive credit is governed by opinion the credit laws that apply to the credit application approval process. In this article, I would like to discuss some of the laws that govern your creditor’s ability to collect money on the debt owed. The last article in the series, How to Terminate Creditors From Reporting Your Credit, or Not at will discuss the laws that apply to your creditor’s ability to report your credit behavior.
Federal laws that govern your creditor’s ability to accept money on the debt include the following:
1.) The Fair Debt Collection Practices Act of 1978 amends The Consumer Credit Protection Act of 1967, under Title VIII. It states detailed provisions of what does and does not constitute harassment, when collecting on a debt. “Harassment” is not in the search for of the beholder, whether that be the debtor or the creditor. This act doesn’t void the legal agreement of indebtedness, and it does give the creditor a proper to collect on the debt. Contact the Federal Trade Commission in Washington D.C., a federal government agency, which regulates this act, for more information.
2.) The Federal Communications Act of 1934 regulates the telephone airwaves. For more information, see my article on The Federal Communications Act of 1934, entitled How to Stop Collection Calls, or Not.
3.) The Bankruptcy Reform Act of 1979 provides debtors with a financial fresh start by discharging debtors of debt liability. Under Chapter 7, the act does not absolve, or release, the debtor completely from the debt. The creditors receive a proportional share of the debtor’s assets distributed by the courts. The court can also dismiss your bankruptcy claim, if the judge finds that you have enough assets and income to pay back your creditors in full. Chapter 13 enables you to pay back existing debts under court supervision over an extended time period. Secured interest and property exemptions registered under The Homestead Act of 1862 are usually protected assets, under The Bankruptcy Reform Act of 1979. See your attorney, for more information. The Bankruptcy Reform Act of 1979, as it applies to creditors, means that once a debtor gives the creditor information on how to get bear of his attorney, by supplying the creditor with his attorney’s name, his attorney’s telephone number, and the attorney’s area, then all collection and legal procedures must stop. This does not mean that the debtor can use this as a stall tactic. Never retaining the attorney by neglecting to pay the retainer fee will not cause the collection procedures to stop.1
4.) Like The Bankruptcy Reform Act of 1979, the freshly updated Bankruptcy Reform Act signed into law on April 20th, 2005, also provides debtors with a financial fresh start by discharging or releasing, debtors of debt liability. Unlike the 1979 act, The Bankruptcy Reform Act of 2005 requires mandatory credit counseling approved by the courts, and establishes a means test. A means test measures your means, such as income, and assets, against your liabilities, which include types and amount of debts, which is considered in the repayment of your total debt. It also requires domestic support payments be given first priority, and extends the range of debts that are non-dischargeable, debts required to be paid off under the law. It also extends the length of time from 7 to 8 years required to wait until another Chapter 7 bankruptcy filing.2 This act is a very complicated new allotment of legislation. Be sure to consult a helpful attorney for more information before proceeding to file bankruptcy.
5.) The Wage Earner Understanding is a way of dealing with creditors by filing Chapter 13 bankruptcy. Your creditors appear in court and work out a court sponsored plan of repayment. You must be a wage earner to qualify. Many times creditors fail to appear and the courts wipe out the debt. It is reported as “wiped out,” on the debtor’s credit record under WEP, The Wage Earner Plan. As in other bankruptcy cases, property such as your home registered under the Homestead Act of 1862 is usually protected. To be protected, you must register your home before you begin any type of bankruptcy or WEP proceedings.
6.) Title III of The Consumer Protection Act places limits on garnishments. Garnishments are legal attachments by the courts that retract money directly out of your paycheck in order to pay your creditors. These garnishment limits are designed to leave the debtor enough money to live on. However, these restrictions do not apply to bankruptcy court orders, debts due to Federal and Status taxes, child support, or alimony payments. This law prohibits an employer from discharging, or firing, an employee subjected to garnishment for any one indebtedness. This refers to a single debt regardless of the number of levies, or number of times the same creditor garnishes your paycheck for that one debt. The employer may be prosecuted criminally, imprisoned, and/or fined for the offense of discharging an employee subjected to garnishment for any one indebtedness. 1
The enforcement of federal credit laws falls under The Federal Trade Commission, the FTC, which governs finance charge disputes, Truth-In-Lending disputes, and misleading sales statement disputes. The enforcement of federal credit laws also falls under The Federal Communications Commission, which governs collection calls, and the U.S. Department of Labor, Wage and Hour Division, which oversees garnishments.
More information on federal laws can be obtained by contacting The Federal Information Center at 1-800-688-9889. More information on state laws can be obtained by contacting your local state government information center.1
For the introduction, to this series, see article entitled, How to Understand Credit Laws.
ENDNOTES:
1 Credit Operations Manual, Jewelers Financial Services, Inc. Zale Corporation.
2 “Bankruptcy Reform Act-Brief Summary of Important Changes,” © 2005 by Compact Library Publishers, website www.ws5.com/bankruptcy.
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Filed under Corporation Chapter 7 Bankruptcy by on Jan 28th, 2012. Comment. 
We are facing one of the bleakest economic states in history. Unemployment is at an all time high and the values of homes are eroding away along with the value of retirement accounts such as 401ks. This recession is really taking its toll. The gargantuan three automobile manufacturers are on the brink of pain. It would appear that they will be forced to file for bankruptcy protection if they are not successful with their pleas on Capitol Hill for bailout help.
What exactly will happen if they are faced to file for bankruptcy protection? Bankruptcy is a process where an organization has to file for protection from its creditors because it is not able to meet its obligations. This helps to protect the organization from legal action initiated from its creditors that it could not pay.
First of all there are two options that a corporation can take when it decides to file a petition for bankruptcy. It can resolve to file for chapter 7 or chapter 11. If a corporation files for a chapter 7 bankruptcy it would have to immediately stop operations and then it would also have to liquidate all of the assets that it has on hand. During the next step in the bankruptcy filing the Corporation must label over ownership to a bankruptcy attorney, who is then responsible for stopping all of the operations within the corporation, and then selling all of the assets and disbursing the proceeds among the creditors. Secured creditors or those who have some type of security get paid first before the unsecured creditors.
The other type of bankruptcy petition is the chapter 11, which is the type that the big three, Ford, GM, and Chrysler would file, if it came to that. During a chapter 11 bankruptcy any corporation is able to continue doing business as usual and, at the same time, obtain some relief either full or partial from its creditors while it attempts to reorganize or restructure. The corporation is given the opportunity to restructure its debt with creditors and if the plan is approved by the bankruptcy court and their creditors approve then the plan can go forth, which means it is once again binding to the corporation.
However if the corporation cannot approach up with a plan that satisfies all of its creditors then the most likely step would be chapter 7 bankruptcy. If a corporation files for bankruptcy relief the bankruptcy court will step in so that the corporation does not have to honor all of its legally binding contracts such as labor agreements, leases, and contracts in relation to operations at least not immediately.
If a corporations does file for bankruptcy protection it plays havoc with the organizations stock reducing the value of it substantially.
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Filed under Corporation Chapter 7 Bankruptcy by on Jan 27th, 2012. Comment.
Looking for great buys at on linens and similar household supplies? Try Linens ‘n Things. But act soon. The company, a victim of the credit crunch, is throwing in the towel and liquidating its stores.
Closing sales began Friday, Oct.17, at the retailer’s remaining 371 stores in 48 states, announced Hilco Merchant Resources, one of the investors that bought the company. Over $1 billion of home furnishings will be sold at discounts up to 30 percent, Hilco announced in its press release.
In addition to the usual, bed, bath and kitchen stuff, shoppers can wait on themselves to store fixtures, furniture and equipment. Plus, the sale comes at a perfect holiday shopping time, Michael Keefe, president and CEO of Hilco Merchant Resources, pointed out in a press release.
The store closing sale is being conducted by a joint venture group comprised of Hilco, Gordon Brothers Group, Hudson Capital, SB Capital Group LLC, Enormous American Group LLC and Tiger/Nassi Group.
Many of its stores were already liquidating their merchandise and some have already shut down. All sales are final, of course. You can bag a store locator at lnt.com.
The company is also shutting down its 40 Canadian stores.
Linens ‘n Things, headquartered in Clifton, N.J., was one of the largest home furnishings retailers, with 17,500 employees and 589 stores in 47 states and seven Canadian provinces, according to Reuters.
The liquidation could pressure competitors like Bed Bath & Beyond to cut prices this holiday shopping season. On the other hand, retail survivors will benefit over the long haul.
Linens ‘n Things was already struggling due to lower consumer discretionary spending.
With home sales map down and unemployment rising, fewer people were buying home furnishings. It filed for Chapter 11 bankruptcy this May and then closed 120 stores.
The company had agreed to a preliminary “stalking horse” whisper from a group of investors. A stalking horse bid is the first offer on a bankrupt company’s assets from a buyer chosen by the company, Reuters reported. Its stores headed to liquidation after no other bidders stepped forward.
“Consumers will find large values on everything in the store,” Keefe stated. “Many items will be discounted like never before. This sale comes at a perfect time for everyone to enjoy large savings on many of their holiday gift purchases. Consumers who arrive at the start of the sale will certainly have the best selection of products from which to determine. We don’t expect this sale to last very long.”
But the Fayetteville Observer in North Carolina reported on Oct. 16 that at least some bargain hunters were disappointed by sale prices at the local store.
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Filed under Corporation Chapter 7 Bankruptcy by on Jan 25th, 2012. Comment.
Looking for great buys at on linens and similar household supplies? Try Linens ‘n Things. But act soon. The company, a victim of the credit crunch, is throwing in the towel and liquidating its stores.
Closing sales began Friday, Oct.17, at the retailer’s remaining 371 stores in 48 states, announced Hilco Merchant Resources, one of the investors that bought the company. Over $1 billion of home furnishings will be sold at discounts up to 30 percent, Hilco announced in its press release.
In addition to the usual, bed, bath and kitchen stuff, shoppers can help themselves to store fixtures, furniture and equipment. Plus, the sale comes at a perfect holiday shopping time, Michael Keefe, president and CEO of Hilco Merchant Resources, pointed out in a press release.
The store closing sale is being conducted by a joint venture group comprised of Hilco, Gordon Brothers Group, Hudson Capital, SB Capital Group LLC, Great American Group LLC and Tiger/Nassi Group.
Many of its stores were already liquidating their merchandise and some have already shut down. All sales are final, of course. You can find a store locator at lnt.com.
The company is also shutting down its 40 Canadian stores.
Linens ‘n Things, headquartered in Clifton, N.J., was one of the largest home furnishings retailers, with 17,500 employees and 589 stores in 47 states and seven Canadian provinces, according to Reuters.
The liquidation could pressure competitors like Bed Bath & Beyond to cut prices this holiday shopping season. On the other hand, retail survivors will benefit over the long haul.
Linens ‘n Things was already struggling due to lower consumer discretionary spending.
With home sales way down and unemployment rising, fewer people were buying home furnishings. It filed for Chapter 11 bankruptcy this May and then closed 120 stores.
The company had agreed to a preliminary “stalking horse” bid from a group of investors. A stalking horse bid is the first offer on a bankrupt company’s assets from a buyer chosen by the company, Reuters reported. Its stores headed to liquidation after no other bidders stepped forward.
“Consumers will find colossal values on everything in the store,” Keefe stated. “Many items will be discounted like never before. This sale comes at a perfect time for everyone to enjoy large savings on many of their holiday gift purchases. Consumers who arrive at the start of the sale will certainly have the best selection of products from which to choose. We don’t expect this sale to last very long.”
But the Fayetteville Observer in North Carolina reported on Oct. 16 that at least some bargain hunters were disappointed by sale prices at the local store.
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Filed under Corporation Chapter 7 Bankruptcy by on Dec 17th, 2011. Comment.
For many, Donald Trump is the ultimate symbol of American capitalism. He is also an integral fragment of American pop culture with his highly successful television reality series “The Apprentice” and his tagline “You’re fired!”
Most Trump fans, however, don’t know about his company’s three bankruptcy filings over the past fifteen years along with his two amazing comebacks. However, while Trump has publicly estimated his proper wealth in the billions, his critics have claimed a distinguished smaller derive worth. They further charge that his business success is nothing more than shameless self-promotion along with marketing smoke and mirrors.
In truth, Donald Trump is not only a master of self-promotion; he’s also a master of self-protection. It was Trump’s business corporation that declared bankruptcy three times while his personal fortune remained comparatively unscathed.
Trump before the Bankruptcies
In 1982 Donald Trump made his first appearance on Forbes Magazine’s 82 Wealthiest Families list. At that time, Donald’s personal fortune was closely tied with his family’s wealth with only a few exceptions. The Trump family fortune began with father Fred Trump, a major builder of decidedly unglamorous low-cost New York City apartment developments.
During the 80s, Trump built three casino hotels in Atlantic City: The Trump Plaza Hotel and Casino (opened in 1984), The Trump Marina Hotel Casino (opened in 1985) and The Trump Taj Mahal (opened 1990). In 1988 Donald Trump purchased the 19-story Manhattan landmark Plaza Hotel for over $400 million.
In 1985 Trump made his first appearance on Forbes Magazine’s 400 Wealthiest People list for his personal wealth. In 1987 his semi-autobiographical “Trump: The Art of the Deal” became a bestseller and made him a household name. He remained on the Forbes list until 1990.
Bankruptcy in 1991-2
Time Magazine had compared Trump’s first bankruptcy proceedings in 1991 to the fable of “the Emperor’s New Clothes.” His Art of the Deal had crashed and he had to give up his holdings in Manhattan’s Grand Hyatt Hotel, Atlantic City’s Regency Hotel and several other holdings.
In 1992 bankruptcy proceedings gave the Plaza Hotel’s creditors, including Citibank, a 49% stake in the hotel. The court also stripped Trump of all day-to-day hotel operation management functions except for marketing, which would soon become Donald Trump’s strongest suit. Trump, however, kept his three Atlantic City casino hotels.
In 1996 Trump returned to the Forbes 400 list. He chronicled his return to prosperity in another bestselling book, “Trump: The Art of the Comeback.”
Bankruptcy in 2004
In 2003 Trump’s television series, “The Apprentice”, became the highest rated network television show, further embellishing Donald Trump’s public image as the embodiment of American business success.
In 2004 Trump’s company filed for Chapter 11 bankruptcy, which allowed the company to be reorganized. Trump took the company public and shareholders bought the stock, garnering additional funds to renovate his Atlantic City hotel casinos to “keep them competitive.”
Bankruptcy in 2009
In February 2009, Trump Entertainment Resorts filed for Chapter 11 bankruptcy again. This time Trump had stepped down as the company’s CEO before the filing. He walked out after his company’s bondholders refused his offer to buy the company and take it private.
According to Trump, his corporation’s casino holdings are “less than 2%” of his net worth. Remarkable of his income relies on true estate developers licensing the Trump name, another example of “The Donald’s” marketing mastery.
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Filed under Corporation Chapter 7 Bankruptcy by on Dec 5th, 2011. Comment.