Bankruptcy to Obtain a Stay?

Greetings. I have enjoyed reading these forums. I joined recently so I could ask about my situation:

A year ago I was severely behind in car payments and the credit union talked me into a voluntary reposession. I stupidly did this, and they sold the car (at "sale" not at auction) for 30% of what I know it to be worth.

They came after me to collect but I responded with smart-arse letter to the bank prez and debt collector, trying to be tough. Now, they have filed suit against me for 10k (8000 for the vehicle, 1500 for sig loan I had also).

Sure, I don't mind paying something, but I really want to get my nickel's worth in regard to learning how the process works, and also to fight this collector, who has been sued in california superior court (I found a court record online where this lawyer has a different debt-collecting agency and has been sued).

So my lawyer friend, upon hearing the details of the case, and learning that a photocopied facsimilie of the contract was inlcuded as evidence in the pleading says, "This is what we call a slam dunk case. They'll come after you like child support." ...His advice is for me to file bankruptcy and obtain a stay so that at least I can protect my assets, which I will admit are not many. I learned my lesson about credit and am very frugal now. I have a couple other credit card debts but nothing serious like this.

So any advice would be appreciated. I was served (by sheriff) about 1.5 weeks ago and if my lawyer friend is right, I should respond with proof of bankruptcy filing in order to save my assets. He says If I go into court with anything from this site, the judge will call it "philosophy" and order me to pay the creditor on the spot.

Thanks to all for the knowledge shared here.

[2tim215]

A couple of things for you to consider regarding filing bankruptcy:

1) Under the new law, you won't be able to get away "scott free" (I believe that you will probably have to pay a minimum of 25-30% and they can garnish wages to get it).

2) Your credit will be ruined for up to 10 years.

3) Yes, you would get a stay, but if you file and go through with the bankruptcy, and you intend to use this to give you the oportunity to get rid of assets, then you will be subject to being criminally charged for fraudulent transfers of assets from 90 days up to one year from your filing date). This I believe is up to a $1000.00 fine and even one year jail time. In addition, the could deny your discharge meaning that this would open you up to lawsuits by the creditor(s) after your bankruptcy is denied. In addition, your fraudlent discharge would be used against you in any of these lawsuits which would probably not go over too well with the judge in your case.

What I would suggest is that you do move/get rid of your assets (as quickly as possible) before they get any judgments against you. You need to become "judgment proof". There is a lot of great information on this forum which can help you with that and I think are a lot of experts here which may be able to help as well.

As far as bankruptcy goes, that should be a last resort in my opinion. Why your attorney suggested that for you, he may know more about your situation than I do.

Perhaps he wants you file (which would in fact stay any actions they currently have against you) and then withdraw before it's finalized. I suppose this could put you in a much better negotiating position should you want to try and work something out as I believe you've indicated. Maybe that's his strategy. I don't know.

Here's a very good link on Bankruptcy for you to look at which should answer most of your questions, particularly regarding the new law.
http://www.doney.net/

I would highly recommend you study this link which flowcharts the entire bankruptcy process, paying special attention the links which explain the various laws involved:
http://www.doney.net/timeline.htm

Perhaps others here can share some additional ideas with you. Best of luck.

2tim215
1 Timothy 2:15 (KJV) Study to show thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth.

Originally Posted by 2tim215

Perhaps he wants you file (which would in fact stay any actions they currently have against you) and then withdraw before it's finalized. I suppose this could put you in a much better negotiating position should you want to try and work something out as I believe you've indicated. Maybe that's his strategy. I don't know.

Yes, he mentioned this to me. Naturally I am undecided. Thank you very much for your links and advice. I will read them and reply here.

Yes, he said I should establish an LLC. I imagine I'll be paying fees in all of this (b'ruptcy file, LLC) equal to a 50% settlement of the debt in question (10k), a percentage of which I do actually "owe" them, assuming I accept my place in the US credit state. It's hard to fight this stuff. I am tempted to just fall on my knees and beg them to let me pay 40% of it via reasonable payments, and maybe I could also find a way to get interest reduced?

Is an auto loan also used as a promissary note as with mortgages? The credit union did present me a check for the amount (which I signed) before it was deposited in the bank acount. I am now seeing there is a three-fold profit when they perform this transaction on me. I did not realize that my signature actually created the credit which bought the vehicle (which I returned to them in perfect condition).

Ah, I think I'll beg and make my fight in court some other day. I am reading experiences from people here and it sounds like the ju-jitsu of the courts requires much more study. Fortunately I do have lawyer friends whose brains I can pick. They say "you're screwed. All this business about not being a citizen and all that is nonsense and will get you in deeper."

Thanks again.

[2tim215]

See responses inline:

Originally Posted by littlepeople

... Yes, he said I should establish an LLC. I imagine I'll be paying fees in all of this (b'ruptcy file, LLC) equal to a 50% settlement of the debt in question (10k), a percentage of which I do actually "owe" them, assuming I accept my place in the US credit state. It's hard to fight this stuff. I am tempted to just fall on my knees and beg them to let me pay 40% of it via reasonable payments, and maybe I could also find a way to get interest reduced?

You could file your own bankruptcy for a lot less than you would pay a bankruptcy attorney to do it for you. This might be o.k. if you are intending to withdraw at some point (wouldn't recommend it if you were really going to go through with it).

Not sure how much it would cost for you to put together an LLC. Usually it is pretty expensive. If you have a home, I recommend that you you immediately put it into a homestead if you haven't. Keep in mind that a lot of these asset protection schemes will not necessarily work if you already have a judgement against you. They only work if you do it prior to a judgment. The creditors will come after them if they find out about them and when you're in court, they will ask you about them and if you lie, you potentially can be purgering youself. They will not even protect you in bankruptcy (any judgments existing prior to your filing) they will be able to come after (that is, assets that were unprotected prior to them obtaining a judgment against you). You should verify what I'm saying with your attorney friends.

Is an auto loan also used as a promissary note as with mortgages? The credit union did present me a check for the amount (which I signed) before it was deposited in the bank acount. I am now seeing there is a three-fold profit when they perform this transaction on me. I did not realize that my signature actually created the credit which bought the vehicle (which I returned to them in perfect condition).

Regarding your auto loan, the difference in this loan, versus others (unless you have a mortgage) is that it is a secured loan. The fact that they forced you to sell it and you no longer have possession of it nullifies that fact and therefore, it is now just like any other loan you have, there is no security on it, i.e., they cannot take it from you again since you no longer have it, although can sue your for what you owe on it, and then these other measures which you are considering should apply in this instance as well.

Ah, I think I'll beg and make my fight in court some other day. I am reading experiences from people here and it sounds like the ju-jitsu of the courts requires much more study. Fortunately I do have lawyer friends whose brains I can pick. They say "you're screwed. All this business about not being a citizen and all that is nonsense and will get you in deeper."

Regarding going to court, Bankruptcy is going to court and is an even bigger court (Federal vs Superior or State). Regarding some of the the strategies you will find on this forum, you're right in a sense. I would not take these approaches unless I was willing to bear down hard and study all this stuff and be prepared to take on the system and spend a whole lot of time doing research and writing letters and motions to a lot of people and of course spending considerable amount of time in the courts going up against lawyers and judges against a deck which is highly stacked against you.

The last piece of advice I would give you is to weigh everything very carefully before making a decision on what you are going to do. Get all the information you can (places like here and as you say pick the brains of all your attorney friends) put everything together and see what you come up with so that you can make the best decision possilbe and don't be hasty in coming to that decision. One thing I found personally is that it;s alwways better to make the right decisions during the course of dealing with matters as it will make things easier for you in the long run. Either way, it is is going to be a tough battle and I wish you the best.
Thanks again.

2tim215

2 Timothy 2:15 (KJV) Study to show thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth.

I am wondering if they can and will take money from Paypal also? Are there laws guarding this?

The served package also included a notice that I could submit for "arbitration". I wonder if that will get me a better deal? For example, assuming I agree to make payments toward the debt, in a monthly fashion, as specified in the original car loan? Aren't there ways to force the interest rate reduced or negated? I would be willing to agree to some sort of credit counseling but all of those companies seem so distrustful. Is there a way to find a trustworthy one? Thanks again. I truly appreciate your help.

[charlesa6]

Originally Posted by littlepeople

I would be willing to agree to some sort of credit counseling but all of those companies seem so distrustful. Is there a way to find a trustworthy one? Thanks again. I truly appreciate your help.

You have to search, check their success rate, and disclaimer info. You can negotiate with lender by yourself they want to be paid, and they can settle for less or cut the interest half or less depend on your effort.

[masterduke]

I have heard of people filing for bankruptcy then withdrawing several times as it "buys" them time to regroup. . This would be only a diversion and some judge/trustee could get fussed up as well. Making yourself judgement "proof" means living a life of cash n' carry and those stupid judgements can last for 10 years. Its a long road unless you just moved to someplace like Costa Rica and surfed for the next ten years. Being far from the wolpoff's of the U.S. actually doesn't sound half bad. Back to reality, the law library is a good place to start. Also with your attorney buds helping to train you in procedure and practice you could tangle the debt attorneys up. Thats what consumer advocate attorneys are good at doing. The clock is ticking and thats where it gets tuff, emotions make it hard to stay focused. I wish you well in your battle against these scumbags!

[2tim215]

Originally Posted by littlepeople

I am wondering if they can and will take money from Paypal also? Are there laws guarding this?
I doubt they can take your money in Paypal. This may actually a good place to hide it. Unless you told them about it, I doubt they would find out.
The served package also included a notice that I could submit for "arbitration".
Arbitration is not for negotiation. It is like court without going to court. The way it works is that you and the creditor each submit your evidence to the arbiter and he makes a decision which typically is binding (unappealable). More than likely they will make you use the arbiter of their choice who will judge in their favor 99% of the time. Irregardless, this will not help with negotiation as it's merely used to decide who's right and who's wrong without having to go into court. The loser will have to pay arbitration fees, legal attorney fees and interest which will be accruing while this is all going on. If anything, Mediation might make more sense. However, you would have to pay a mediator and you would also have to get them agree to it and I doubt very seriously if they would.
I wonder if that will get me a better deal?
No.
For example, assuming I agree to make payments toward the debt, in a monthly fashion, as specified in the original car loan? Aren't there ways to force the interest rate reduced or negated?
You could try asking them to give you a new loan and they might do it but why would you want to take a loan on a car you don't have any more and No, you cannot "force" them to give you a reduced interest rate.
I would be willing to agree to some sort of credit counseling but all of those companies seem so distrustful. Is there a way to find a trustworthy one?
You might look into what's termed as Debt Negotiators. They are not the same as Credit Counselers which are bogus. There used to be a few that were pretty decent but that was before the change in the Bankruptcy laws last October took place. The biggest thing you used to have as a negotiating chip was the threat of Bankruptcy but that no longer exists I'm afraid (not at least to the extent it used to). This is what the Negotiators used to be able to use to get you the best deal (the banks figured that it was better to get something than nothing if you filed Chapter 7). This is no longer the case. I haven't really studied too thoroughly the new law but you should be able to find all the information you need in the links that I sent to you..

It probably would have been best for you to send out the request for Verification and Validation (these letters exist here on the forum) but because you say you've alaready been sued, and you've already spoken to them, it's probably too late. Maybe you can somehow, but I don't have the knowledge to tell you how to do it. One other thing you might ask your lawyer friend, based on the strategy you outlined in your initial post (filing bankruptcy), you could tell them that you are willing to accept their arbitration offer. This too, would buy you some time to execute some of your other strategies, and even might put you in a better position to negotiate with them . As a strategy (and I'm not recommending you do this) you could submit to the arbitration and if you wanted to, somewhere in the middle of arbitration you could file for bankruptcy, depending on what your situation was and whether or not the negotiations were getting anywhere to your satisfaction. If you were not satisfied with the negotiations during the arbitration cycle, you could then file the bankruptcy which not only would stay the arbitration, but actually might shut it down. At some point later (after you've filed and you would probably have a couple of months to do this) you could resume neogtiations with them if you like and just might get a more favorable outcome this time. As stated by charlesa6, you can negotiate yourself, or perhaps you can get your lawyer friend to do the negotiations for you (unless you're an extremely good negotiator yourself), most lawyers do pretty well, (especially when dealing with other lawyers). Discuss with him and see what he suggests. This unfortunately, is the best I have to offer you. I hope this helps.

Be blessed,

2tim215

2 Timothy 2:15 (KJV) Study to show thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth.

[masterduke]

Can you make requests "out of time" regarding the VOD? Although the slimeballs will have some photocopy of some jibberish and the judge will accept that as "proof". Erwin Rommel School Of Banking dvd has some interesting subject matter related to this stuff.

Thanks to all the suggestions here, I am reading as much as possible.

One thing I thought I'd share however, PayPal/EBay is being 'asked' by the IRS to open their books.

http://www.rte.ie/business/2006/0413/ebay.html

US government wants PayPal records
April 13, 2006 08:46

The US government has ordered online auctioneer eBay's payment service PayPal to turn over records that could expose foreign accounts where tax cheats have hidden money, PayPal said last night.

The US Internal Revenue Service wants the company to reveal the details of accounts linked to banks or credit cards in 35 countries. A summons issued by US District Court Judge James Ware in San Jose ordered PayPal to hand over records dating back to 1999, when the Internet money-transfer service was launched.