Richardson Law Legal Blog

Posted By Steven J. Richardson on May 18, 2010

In this bad economy, more and more creditors are selling off their old debt to entities called “factors,” who then sue to collect.  The creditor wins because they get paid money they might not have ever received, while the factor wins because they buy the debt at a discount, then go after the debtor for the full amount. However, there are flaws in this plan that can help out a beleaguered debtor.

First of all, as I mentioned before, this situation usually arises where there is old debt.  If it is too old, the debtor wins under the Statute of Limitations.  The time to bring suit in New Jersey on the breach of the terms of a “note” (of which a credit card is a form of note or financing) is six (6) years, while a contract strictly for the sale of goods is four (4). Therefore, if enough time has passed, the creditor may not be able to collect at all. What I recommend to clients is that if you get a demand letter from a creditor you do not recognize, respond in writing within thirty (30) days of receipt demanding a verification of debt.  Under the Federal Fair Debt Collection Practices Act, the factor is required to identify the original creditor.  Then check to see if that creditor is still listed on any of your three credit reports (Experian, Transunion, or Equifax).  If it is not, it may be too old to report, and thus too old to sue for collection.  At the very least, if that creditor should sue you, you should file an answering pleading and assert a statute of limitations defense.  If you are correct about the timing, the claim could be barred by the court!

The second flaw is one that is rooted in the reality that although the factor now stands in the legal shoes of the creditor, it still isn’t the creditor. In other words, they may have a legal right to bring suit for collection, but they may not have the ability to prove their case if you force them to try it before a judge. Factors usually forward the claim to an attorney for suit, knowing that in the vast majority of cases, the debtors do not file an answer, and they will win by default, and without ever having to go to court.   But what happens if you file an answer denying that you owe them anything (or at least the balance they are claiming is due)?  Many times, the factor will not produce a witness at trial, either because they are out of state, the balance is too small to warrant it, or for any number of reasons.  No witness, no case!  Even if they do produce a witness, that person will probably not have the requisite personal knowledge to testify as to the facts necessary to prove their case or lay  a proper foundation for the documents necessary to get into evidence (i.e. seen by the judge).  I recommend to clients in this situation to file an answer (asserting the statute of limitations, if appropriate) and then show up at trial, demanding to talk to their witness.  In other words, call their bluff!  In all likelihood, they may either back down entirely, or agree to a token settlement.  Either way, it is worth your effort.

Just debts should be paid, but that doesn’t mean that you shouldn’t stand up for your rights.  Sometimes, the “little guy” can win!

Category: Collection, Library | No Comments »
Tags: Collection, old debt, statute of limitations

Posted By Steven J. Richardson on May 13, 2010

One of the intimidating parts of a chapter 13 bankruptcy is the plan of repayment, which can be anywhere from three (3) to five (5) years long, depending on your circumstances.  People fear that they are locking in to something now that they might not be able to afford in a year or two due to a job loss, disability, increase in expenses, and the like.  However, oftentimes there is a solution that will keep you on track to your fresh start.  An interesting post on this topic is available on the Bankruptcy Law Network.

If you run into a situation where you can no longer afford your plan payment, you need to contact your attorney right away to see if he or she can make the necessary corrections to keep you moving forward.

Category: Bankruptcy, FAQ | No Comments »
Tags: Bankruptcy, payment plan

Posted By Steven J. Richardson on May 10, 2010

There is no question that most Americans want to avoid filing bankruptcy at all cost.  Although “the B-word” has lost most of its stigma, and some consider filing it casually (some doing it more than once), the vast majority will do anything else first (and some of those options can have some long term consequences).  The irony of this is that bankruptcy is often the best thing for them.  Therefore, I want to offer some warning signs to consider, so that you do not wait until it is too late.  If any of this sounds like you, call a bankruptcy lawyer!

1. Are you living within your means? This may seem like a dumb question, but think about it.  Do you have the income every month to cover your basic economic needs, like food, clothing, and shelter?  Are you spending money you don’t have on non-essentials, thus creating payments on credit card debts that are interfering with your ability to buy groceries?  95% of Americans do not have a household budget.  Do you?    If not, download this form and fill it out.  Take the total expenses and deduct it from your net monthly income.  If you come up with a negative number (or money left over insufficient to make the minimum payments on your credit cards), you are living beyond your means and need to curtail spending as soon as possible.  Tighten your belt to produce the money needed to pay down the debt, not just put it off for another month.  If you can’t do that, call a bankruptcy lawyer!
2. Are you taking money from other sources to shore up your budget? Do you use a debit card, but figure that overdraft protection will catch a shortfall?  This is nothing more than taking out another loan and is another way of putting off the inevitable.  The same is true of borrowing against your pension.  This is always a bad idea and jeopardizes your future.  Don’t do it; call a bankruptcy lawyer.
3. Have you stopped answering the phone or opening the mail? This is another symptom of people in financial difficulty, because it means the bills aren’t being paid, and you are hiding from your debt.  This can’t go on forever and is, in essence, an attempt to hide from the problem.  Call a bankruptcy lawyer.

In essence, don’t wait until the water is up to your chin to learn how to swim.  Seeing these signs early on may allow you to avoid bankruptcy, but ignoring them may make it an inevitability.

Category: Bankruptcy, Library | No Comments »
Tags: Bankruptcy

Posted By Steven J. Richardson on May 5, 2010

In New Jersey, as in other states, drunk driving is taken  very seriously.  If your license is suspended for a DWI, and you drive anyway, to say that you are in big trouble is an understatement.  The normal penalties for driving while suspended are enhanced under N.J.S.A. 39:3-40(f), and include:

1. An additional fine of $500 (base fine ranges from $500 to $1000)
2. An additional license suspension of 1 to 2 years (the base suspension is 0-180 days)
3. 10-90 days in jail.

It is this last one, obviously, that causes the most concern.   Many sections of the New Jersey Motor Vehicle Code call for jail time, but most municipal judges are loathe to throw a driver into the county jail for some of them.  Many times they are amenable to work release, time served on weekends only, or a special program called the Sheriff’s Labor Assistance Program (more commonly knows as SLAP).  This is a program allowable by statute (N.J.S.A. 2B:19-5) that can be set up in a county by its sheriff’s department.  It is defined in that statute as being “a work program,established by the county under the direction of the sheriff or other authorized county officer, which rigorously supervises offenders providing physical labor as an alternative to incarceration.”  However, a recent ruling by a municipal court judge may reflect a change in this attitude.

At the end of last month,  a decision from the Municipal Court of Byram Township (Sussex County) was approved for publication by the Committee on Opinion. In the case of State v. White Judge Richard Bowe, ruled that the SLAP program is not available to a defendant who has been sentenced to jail time for driving on the revoked list when the underlying reason for the suspension was for a drunk driving conviction. Rather, only a jail term is permissible under the revoked-list statute.  Although it is extremely rare for a municipal court opinion to be approved for publication, this one was, which makes it of some note.  In addition, the holding in White marks the second time that an opinion written by Judge Bowe has been approved for publication.

Although the decision of this judge is not binding on any other traffic court judge, the fact that the ruling was considered significant enough to publish could indicate how courts in the future may view applications to SLAP as a jail alternative in these types of cases.  This is yet another reason for drivers in New Jersey not to drive if they are under an active suspension for DWI: the judge may sentence you to jail, and he’ll mean it.

Category: News, Traffic Court | No Comments »
Tags: Driving While Suspended, SLAP

Posted By Steven J. Richardson on April 23, 2010

There is no doubt that we are in a mortgage foreclosure crisis in this country, which is certainly being felt in New Jersey.  The courts, therefore, have set up a mediation system in an effort to try and keep people in their homes, and provide several resources for the prevention of same, including the answers to Frequently Asked Questions (FAQs) on mediation and foreclosure.   Bear in mind that this program is for a foreclosure on a principal residence; not an investment property or vacation home.

If you have been served with a foreclosure complaint, or are even on the eve of a sheriff’s sale, you can still request a mediation.  Certainly the sooner you do it the better, as the hearings usually take place about 45 days after the homeowner’s request.  If you are up against a sheriff sale, you are entitled to two (2) two week adjournments in order to gain time.  After that, you must appear in front of a judge in your county to request an emergency stay.  These stays are automatically given if there is a pending mediation, so be sure to request it first and get confirmation of receipt from the state.

Once the mediation request is processed, then a hearing is scheduled to be held in your county courthouse.  If the date scheduled presents a problem, then it can be rescheduled, according to the court’s set procedures.  The mortgage company comes to the table and, with the help of the mediator, tries to work out a settlement.  You should be aware, though, that this program is not a “silver bullet.”  Roughly a third of all mediations do not result in a settlement.  Another 25% result in the homeowner still leaving his or her home.  Many more result in provisional deals that are subject to the federal HAMP program.

Forms are available from a state web site that will help you with the process, along with a self-help guide from New Jersey Legal Services.  The point is, should you receive that foreclosure complaint, there are options available to you.  Even if mediation does not help, there is always the possibility of a chapter 13 bankruptcy.  Don’t give up; fight to save your home!

Category: Foreclosure, Library | No Comments »
Tags: Foreclosure, mediation