It might come as a surprise to some, but errors on credit reports are remarkably common. In fact, it’s estimated that at least 10% of all credit reports contain errors of one kind or another, with the potential side effect of having a demonstrable impact on your financial standing through your FICO score.
Here are some of the more typical problems you might find on your credit report
If you have a common name (e.g. Jim Brown), you might find your name has been misspelled. Your telephone number, address or social security number might also be incorrect. More troubling are errors where you might be named as the sole owner of a particular account/debt, when you’re actually just an authorized user or co-signer of that debt. These are all errors you need to remedy as soon as possible.
Other People’s Debts
Identity theft is a growing problem in the United States and elsewhere in the world. It involves somebody stealing some of your personal information to create a fake identity with. They then use this alternate identity to run up debt in your name, often to the tune of tens of thousands of dollars. Resolving this type of error will require the help of law enforcement, and the credit reporting bureaus too.
Because we live in a society where being burdened with debt is considered to be the norm, it’s quite possible that you have a debt listed on your credit report in the name of an ex-spouse or partner. You might have co-signed for this debt in the past, but you need to make sure your ex is still paying their part of it, otherwise your FICO score will suffer.
A Preferred Creditor lawsuit is the very last thing most businesses want, but they’re also not something you can predict. They’re bad news for a couple of reasons, but the main one being that one of your debtors has just filed for bankruptcy, which means you’ll need to find a way to offset that bad debt.
Preference claims are a legal way of ensuring that no one creditor is given preferred treatment over another during any bankruptcy filing. There is the potential for all payments made to your business by a specific debtor to be reimbursed to them, becoming part of their bankruptcy estate in the process.
There are two timeframes to consider here. If a debtor paid money to what is termed an insider (family, friend or associates), payments over the period of the 12 months prior to them filing for bankruptcy can be recalled into the bankruptcy estate. An outside (business the debtor purchased from) must adhere to a preference period of 90 days before their debtor became insolvent.
The court-appointed trustee can, and will, request that money paid to your business is returned to the debtor. The logic behind this is that this money can then be used to pay all creditors an equal amount of money, instead of one single creditor having their entire bill paid, hence the term ‘Preference Claims’.
Defense Against Such Claims
You have a number of defense options, thanks to the Bankruptcy Abuse Prevention and Consumer Protection Act, 2005, to defend your business revenue from a lawsuit of this type.
The court system of the United States provides more than adequate protection for people or businesses who find themselves in financial distress. Fortunately as a creditor you also have rights when it comes to claiming money owed to you. In even better news the process for actually reclaiming what’s owed to you is remarkably straightforward, and all thanks to sections 501 and 502 of the U.S. Bankruptcy Code.
There are a number of considerations to take into account first, and these are in relation to the type of debt owed to you. Firstly if it’s a secured debt then you generally will not have to pursue your debtor by filing a ‘Proof of Claim’. If, however, the debt is unsecured then it makes sense to file a ‘Proof of Claim’ at your earliest possible opportunity. You should file a claim of this type if there’s any doubt in your mind as so whether or not the debt owed to you is secured or unsecured.
Another important point to note is whether or not you can reclaim any money or assets even if you do file a ‘Proof of Claim’. If your client is filing for Chapter 7 then there’s a very good chance they’ll have most, if not all, of their debt discharged. It will be difficult for you to benefit from a Chapter 7 filing. However, a Chapter 13 filing by your debtor leaves you with an opportunity to recoup at least some of your losses.
In a clear-cut personal injury case you are able to clearly identify that a business was responsible for your injury e.g. a slip and fall accident, or a car accident. There are a number of situations where you might not be able to clearly prove that the other party was negligent, so you may be wondering if you have any legal recourse in a situation like this.
There are, in fact, two different ways of pursuing a personal injury claim even if you can’t prove negligence. The first of these is called ‘Strict Liability’ and the second is referred to as ‘Intentional Wrongs’, or an ‘Intentional Tort’.
If we take the example of a person who is injured during an automobile accident, but cannot prove that the other person was negligent because the owner of the car wasn’t driving at the time of the accident. In this situation strict liability will be with the defendant because they allowed another person to drive their car, with the implicit understanding that they would avoid causing an accident.
This type of liability also applies when you have suffered an injury by using a faulty product. Although you would ideally be able to prove that the manufacturer was negligent, strict liability means you can pursue a claim because the product or service was supplied in such a way that it could potentially cause risk or harm to a plaintiff.
There are two basic choices available to a business if and when it decides to declare bankruptcy. Chapter 7 and 11 are when a business has hit a financial wall, and can no longer stay operational. In filings of this type there is no exit process because the company will cease trading immediately, and investors stand very little chance of recovering their money.
Chapter 11 filing provides a business with an opportunity to restructure itself once it has reorganized its debts, and other aspects of its operation. A Chapter 11 bankruptcy petition also allows the business to continue trading, so that it can generate enough revenue to repay its creditors, and investors.
During the initial stages of a Chapter 11 bankruptcy investors, and other interested parties, should expect the stock value to drop to junk levels for a prolonged period of time. The reason for this is that most investors will bail out, so that creates a run on the company’s stock i.e. the more investors that dump stock, the more this encourages other investors to take the same steps. The difference here is that because the stock would be delisted as part of the Chapter 11 filing, so the only people trading in these stocks would be doing so “over the counter”.
Chapter 11 bankruptcy filings are complex, and take a significant amount of work to process successfully, resulting in many businesses avoiding them unless they have no other choice. Only companies that have a real interest in staying afloat would even consider this type of bankruptcy petition.
There’s a lot of stress involved in the decision to declare bankruptcy. In fact, it may have taken you several weeks, or months, to arrive at the decision to petition the courts for bankruptcy case, so you won’t have focused too much on what comes afterwards.
It is, however, very important to understand a basic timetable for what takes place after you’ve submitted your filing.
The court assigns a unique number to your bankruptcy case, which can be quoted to creditors if they’re looking for payment. This is a clear indication for them that you are petitioning to have your debts discharged.
A court-appointed trustee will then be assigned to your case. The trustee’s job is to ask you questions about your existing debts, ensuring that you’re being honest with the courts. Any garnishing of your wages will stop once your attorney sends copies of your filings to the relevant parties. All lawsuits against you will also stop at this point – part of the automatic stay on proceedings that your filing entitles you to.
Somewhere between 4 and 6 weeks after your filing, you will be invited to appear at a court meeting with your creditors. This is often referred to as a ‘341 meeting’, and might seem a bit daunting. But the truth is that very few creditors actually attend these meetings.
Did you know there are provisions within the Bankruptcy Code which allow your trustee to claim certain assets of yours even after you’ve filed for bankruptcy? This can mean that an inheritance, a tax refund, vacation pay, or anything else of value can be claimed by your trustee as part of your “bankruptcy estate” and used to repay your creditors. All of this is made possible by Section 552 of the Bankruptcy Code which allows trustees to acquire certain of your personal assets or income because they become “after acquired interest”, or simply that they were a dormant part of your financial estate which later generated a profit.
When you file for Chapter 7 most of your estate (personal property) is generally considered to be exempt because you are petitioning to have some or all of your debts discharged by the courts. This means that any assets you acquire after filing for Chapter 7 cannot be claimed by your trustee to repay your debts. It’s very rare for anyone filing for Chapter 7 to have a trustee pursue them for assets considered to be after acquired interest. Just make sure to get professional legal advice, based on your asset portfolio, before choosing which type of bankruptcy filing you pursue.
When a loved one passes away your thoughts will initially be occupied with taking care of their funeral, and then the mourning process begins. Once your life begins to return to normal you then need to focus on your financial status, and in particular the financial affairs of your deceased spouse, and whether or not you’re liable for any of their debt.
Your legal liability to repay any of your spouse’s debt will depend entirely on which state you reside in. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin or Alaska you will be responsible for those debts because these are “community property” states. A basic definition of community property in relation to debt is that you enjoyed the shared income and assets with your spouse while they were still alive, so you must share their debt burden if they pass away before that debt is repaid.
So, the money, assets and income you enjoyed while both partners were alive is matched by the necessity to repay that debt regardless of who actually signed up for it, but only in community property states. The flip side of this that you cannot be pursued for any debts incurred by your spouse before you were legally married.
In the event that there is very little community property (i.e. assets) remaining after the passing of your spouse you would also have little, if no, liability to repay those debts because you lack the means to do so. The creditors can only demand repayment if you have the financial means to pay off any outstanding debts. Creditors can, however, conduct an asset search to uncover such assets as could be used to repay the money owed to them, so if you attempt to hide any community property they can discover it by doing this.
Most personal injury cases can be settled without involving a courtroom appearance by either party. In certain situations insurance companies can prove to be extremely difficult to deal with, so your attorney might suggest bringing a court case against them. If this does happen then you will be expected to give your version of events from the witness stand.
We’d like to share some important tips with you that can be the difference between the outright success and total failure of your personal injury claim.
Avoid Social Media
We have lost count of how many plaintiffs we’ve seen destroy their own personal injury cases by posting content on social media platforms that argue against the fact they’re injured. Defense attorneys now understand that Facebook, Instagram and Twitter are a goldmine of information in personal injury cases, especially if you’re posting pictures of yourself performing physical activities you’re claiming are impossible due to your injuries. Avoid all social media activity until the successful conclusion of your personal injury claim.
It’s a good idea to take an honest look at your personal finances before you take any steps towards regaining ownership of your car. After all your car was repossessed because you were unable to maintain the payments on it, so unless your personal circumstances have changed dramatically you might need to reconsider any attempt on your part of getting back your repossessed vehicle.
If, however, you are confident that you will no longer default on your car loan there are steps you can take to get your car back, but you will need to act quickly.
Chapter 7 Bankruptcy
Although filing for Chapter 7 is usually used to discharge most of your outstanding financial liabilities, it can also be used to stop the lender reselling your vehicle once it’s been repossessed. The reason this happens is that filing for Chapter 7 bankruptcy means that an automatic stay is put on the activities of your creditors, preventing them from pursuing any further collection actions against you, and this also includes being able to sell your car.