Consumer bankruptcies are filed under Chapters 7 and 13 of the US Bankruptcy Code. A chapter 7 bankruptcy is also commonly called a “fresh start” bankruptcy, due to the availability of a “discharge” of the scheduled debt. However, a discharge of debt under chapter 7 is only available once every eight (8) years, and there is a “means test” to ensure that the debtor’s income and expenses are within allowable limits. As a chapter 7 bankruptcy may require the “liquidation,” or sale, of the debtor’s non-exempt property, it is important to determine whether there are valuable assets that could be lost as part of a bankruptcy filing.
The purpose of a chapter 13 bankruptcy is to create a re-payment plan for all or a portion of the debt. These plans are based on the type, or “priority” of debt involved, and the income of the debtor that is available for re-payment. The inability to re-pay the debt under Chapter 13 may result in the dismissal of the case, or an involuntary conversion to chapter 7, where assets of the debtor may be put at risk of loss.
Complaints against these companies generally relate to the fee amounts and the inability of these companies to represent the debtor’s interests once a lawsuit has been filed. Even though many of these companies are operating under the banner of some attorney or law firm, there is generally no legal representation afforded to the debtor in the event that a creditor chooses not to negotiate with the debt consolidation company and files a lawsuit instead.
The failure to pay consumer debt is usually unintentional and due to some unforeseen event that has caused the debtor to re-prioritize financial obligations. The debts that are usually the last to get paid are unsecured debts that are unrelated to essential goods or services. Carlisle Law Firm assesses each case by looking at the debt objectively and practically. The value of a debt collector’s claim is not determined solely by the actual amount owed. They must consider the amount that is likely to be collected, the unreimbursed costs of collection, and the time to be spent in collection.
Another important factor affecting the settlement of consumer debt is the debt collector’s exposure to liability for violations of consumer protection laws, and the possibility of other sanctions that may be imposed through litigation. This risk assessment, and the value of potential consumer claims, can heavily influence the process of negotiating a debt settlement. Our counsel and advice on settlement is aided by years of experience with thousands of consumer collection claims.