According to a study by activists for low income communities, buyers of uncollected debt won one point one billion dollars in court judgments in the past few years. The report, compiled by four nonprofit organizations alleges that on a consistent basis, buyers of uncollected debt violate state law by filing bogus lawsuits against low income New Yorkers, many times without presenting any proof of their claims or serving individuals properly. Typically, the debt buyers will obtain automatic default judgments in their favor because the people that are being sued aren’t aware of the cases and thus do not appear in court for their hearings.”It is clear that the worst players heavily benefit from illegal and abusive debt collection practices,” stated the lawyer in charge of the civil practice at the Legal Aid society, one of the four non profits.

The report looked at the top twenty six debt buyers in New York City’s Civil Court from January 2006 through July 2008 and found that they filed some 457,322 lawsuits and were awarded around one point one billion dollars in judgments and settlements. While sorting through a sample comprised of 365 of the lawsuits, the report discovered that the debt buyers won almost ninety five percent of the cases, typically by getting a hold of automatic judgments because the person who was taken to court did not appear. Out of all of the lawsuits examined, only ten percent of those that were sued answered the complaint.

More than half of the people with default judgments lived in predominantly black or Latino neighborhoods, and almost all lived in low or moderate income neighborhoods. Out of the twelve zip codes with the highest amount of lawsuits, one in four families lived below the federal poverty level.

Not one person that the report looked at was represented by a lawyer. Out of all of the cases, a mere one percent of people sued by debt buyers in New York City are represented by an attorney, and once the judgments are entered, these people will be subject to wage garnishment and other types of judgment enforcement, like frozen bank accounts.

In an interesting twist, in nearly two thirds of the cases, the debt buyers were represented by one of five local law firms, and the study charges these firms with filing suits without any proof and employing process servers that neglect to properly serve people, among other dishonest practices. The report calls upon Albany to pass a bill that would stop debt buyers from filing suit without sufficient evidence. The Assembly passed the legislation last year, but surprise surprise. It died in the Senate.

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And you thought your debt collection agency was bad! A website recently made a list of bad debt collection experiences and these were among the worst of the collection. Karen Garrett, the public relations coordinator for Pittsburgh-based nonprofit Advantage Credit Counseling Service felt that she had heard it all until her agency received a call from a senior citizen late last year. She had called in tears and told Garrett that bill collectors had called her and told her that they had the police outside. If she did not pay, they were going to drag her to jail.

Debts are a civil matter, not a criminal one, and jail time is not even a retribution for failing to pay delinquent bills. “It is very important for people to know that there is no such thing as debtor’s prison” Garrett says, smiling and rolling her eyes.

If debt collectors are making illegal threats like deportation, physical violence and jail time, you always can report the harassment to the Federal Trade Commission or to your state attorney general’s office. The Federal Fair Debt Collection Practices Act restricts bad behavior by third party collection agencies. These people don’t follow the same rules as those who are directly collecting for the creditors. They are not permitted to call you at your place of employment if you ask them not to, publish or threaten to publish your debt, reveal to anyone else that you may have a debt, harass you on the phone or use profanity. The laundry list continues.

They can’t use loss of child custody, deportation, illegal punishment like jail, or physical harm. They cannot call your home before eight AM or after 9 PM or even call at all if you have requested in writing to cease contact, or if you’ve hired an attorney.

One older woman from New Jersey owed $12,000 in credit card debt after putting day to day living expenses on her card. The debt collector called and told her that they were going to take her home. She was also told that they weren’t willing to take a penny less than the $12,000 she owed, and furthermore, they wanted it now. She tried to scrape up the money herself but couldn’t. “Debt collection companies are very intelligent when it comes to doing research. They will threaten targeted assets like a home or income source. But in many states, homes are protected from debt collection,

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Layoffs and pay cuts motivated more people into looking into bankruptcy throughout the last year, and authorities allege that the situation will probably not going to improve until the unemployment issue improves. In Wisconsin, bankruptcy filings sky rocketed to 30 percent in 2009. This came on top of a 35 percent increase in the preceding year.

According to bankruptcy lawyers, not only is it layoffs and firings that are motivation to file. It’s the losses of once-regular over time pay and full time status that have left consumers unable to keep up with monthly payments that in the past were not an issue to pay.

U.S. Bankruptcy Court records shows us that there were 27,413 bankruptcy petitions filed in Wisconsin last year. More than 80% were Chapter 7 cases. Chapter 7 cases wipe out medical bills, credit card balances, and other kinds of debt. Recent Research by The Associated Press illustrated that more than 1.4 million bankruptcies were filed in 2009. That’s an increase of about 32% from 2008.

And although bankruptcy annihilates the looming debt and offers consumers a fresh financial start, people often remain unemployed and are unable to find employment to get an adequate income again.

To add to the bad news, unless the economy recovers enough for industries to start hiring again, there is not much reason to think that bankruptcies will decrease in 2010. Researchers have predict that home foreclosures will continue to pile up in 2010 because people who previously had adequate credit have lost employment and ccan’tkeep up with payments.

Bankruptcy may seem like a good option to get a fresh start, but it has a negative effect on your credit report for ten years, leaving you get a car, place of residence, or employment. Before declaring bankruptcy, it might be a good decision to talk with your creditors and see if some sort of repayment plan can be worked out.

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Don\’t pay back family members. The thing is that they can not be treated any differently than other creditors. As far as the law is concerned, relatives have the same legal status as every creditor that you owe. Therefore, relatives can not be treated differently than all of the other places. I know that stinks, but it\’s the law.

Don\’t liquidate your retirement account! They are generally exempt property under the law regardless of what chapter you file, so it\’s unnecessary to do this. Some people liquidate and still owe giant amounts of debt, and if you withdraw these funds early that means you are liable for taxes and penalties which might not be discharged in the bankruptcy.

Don\’t transfer property out of your name before you file bankruptcy. This action can be undone if a fair price isn\’t received, or if it were made with intent to defraud, delay, or hinder a creditor. Friends and relatives fall into this category too.

Don\’t use your equity line of credit to pay off your debts. Under most federal and state laws, you do have the option to claim exemption for the your home equity. That way, you can go through bankruptcy and still be able to have this equity.

So basically, if you use your equity line to pay off debt or take out a second mortgage, you will basically be converting debt that would have been discharged in bankruptcy into debt which you will still need to pay so you can keep your home.

One Do: Always tell your lawyer the truth and let them fully know all of your concerns. Courts take their rules seriously and have the ability to file criminal charges if intention fraud is committed. And even if they don\’t go that far, they can refuse to discharge a particular debt, or simply dismiss the entire case.

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Whenever it is being allowed by landlords, it’s smart to pay your rent with credit cards. Not only will you have the money to pay the credit card bill right away, you can earn cash back for using your Premium Cards that offer benefit.

The cash back isn’t the only pro. By utilizing credit cards, you put off your payment by at least 30 days. That permits you to earn interest on the money while it’s placed in your savings account. The more time you can put off making payments without getting penalized, you have a better financial position.

This is similar to how big businesses work. A large vendor for a small company has the ability to demand payment for goods immediately; a small vendor for a large company has to provide goods on the large company’s terms. This usually means that the large vendor can wait before paying; it’s better to delay payments than to let investments earn more interest of appreciation. American Express will begin to allow card holders to pay their mortgage using their credit cards, earning points along the way.

While this may work for some, it can be deadly for anybody who can’t afford their mortgage. If the full credit card bill cannot be satisfied every month, borrowers will be faced with credit interest charges on top of their mortgage interest.

Before you choose to go obtain an American Express card, remember that in order to qualify for making mortgage payments through the card, the borrower would be required to pay an enrollment fee of $395 to the lender. This fee means it will take a longer time to make rewards earned by using the cards worthwhile. It can take over a year to reap the benefits if the borrower uses American Express Blue Cash.

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