Alabama Creditors Rights Lawyers

Articles Tagged with: Alabama Creditors Rights Lawyers

How to Deal With an Automatic Stay When Your Debtor Files for Bankruptcy

For the average consumer, bankruptcy is a great tool, but for the business owner and debt collector, it can be a source of much frustration. Every time a person files for bankruptcy, the smaller creditors, such as material vendors, shop owners, service providers, and even healthcare providers, get the short end of the stick. No matter which type of bankruptcy a person files for, the bankruptcy trustee will distribute funds in order of priority. Typically, smaller creditors are at the bottom of the totem pole, and most never see a penny of what is owed to them. This is in large part thanks to the automatic stay.

What is an Automatic Stay?

An automatic stay is the foundation upon which all bankruptcy law rests. In-depth information regarding this can be found in 11 U.S.C.A. § 362. In short, however, the stay is an injunction tool that is used to stop any act of collection, enforcement, or perfection of a debt owed by the filer. It is effective as soon as the petition is filed with the bankruptcy court.

Once a stay is in place, all creditors must cease debt collection efforts, including any contact with the debtor via phone or email. Once the petition is filed, all of the debtor’s property and assets will be placed within a bankruptcy estate, which will then be handled by a trustee. The trustee will value the assets and then liquidate and distribute all non-exempt assets to creditors in order of priority, as mentioned above. If the debtor filed for Chapter 13 or Chapter 11, you must submit a proof of claim to the court outlining the debt owed to you to ensure that you are a part of the debtor’s payment plan. Bear in mind, however, that just because your proof of claim is accepted does not mean that you will receive all or any of what is owed to you.

Is There a Way Around an Automatic Stay?

Any violations of an automatic stay are taken very seriously and can leave creditors liable for damages, including attorney fees, court costs, and punitive damages. For this reason, it is important that you take notice of bankruptcy filings seriously and that you stop your debt collection efforts immediately.

If you discover or hear of an active bankruptcy, you can file a motion of relief from the stay. While any creditor has the right to do this, it is highly unlikely that the bankruptcy court judges will approve the motion unless you are a secured creditor, and even then the chances of approval are slim.

The best chance you have at recovering anything that is owed to you is waiting until the proceedings have ended. Once the trustee has distributed the property, abandoned property that wasn’t worth much value, and the debtor has been discharged, you can recover secured property that once belonged to you. However, you cannot seek repayment from the debtor.

Work With a Knowledgeable Creditors’ Rights Attorney

You may not be able to recover all that is owed to you once a debtor files for bankruptcy, but by working with a skilled creditors’ rights lawyer, you can maximize your recovery through a repayment plan or reorganization. Our lawyers will negotiate on your behalf to ensure that your debt takes the highest priority and that the trustee ensures that you receive as much repayment as possible. Contact Cloud Willis & Ellis today to get started.

Resource:

usbankruptcycode.org/chapter-3/subchapter-iv-administrative-powers/section-362-automatic-stay/

4 Ways to Mitigate the Number of Outstanding Accounts at Your Healthcare Practice

According to data collected from a 2016 Athenahealth study, 93.8 percent of patient balances that were $35 and under were paid within a year of treatment, but 66.7 percent of balances over $200 were never paid. The lead researchers analyzed 5.4 million visits, 3.1 million patient interactions, and 51,000 healthcare providers. The bottom line: healthcare practices need to tighten their collection practices.

If you are having a hard time collecting on outstanding patient balances, our team here at Cloud Willis & Ellis understands your frustration, but we also want you to know that you are not alone. Expense aside (because, let us face it, medical care is expensive), there are several reasons your patients are not paying. A few of those reasons may have to do with your debt collection practices. If you are tired of treating patients for free, call our creditors’ rights attorney to discuss your legal options today. In the meantime, keep the four tips shared here today in mind.

Train Front Office Personnel to Think Like Retailers

When you walk into a grocery store, clothing boutique, coffee shop, or any other place of business, you do not expect to pick up a product and walk out without paying. On the one hand, you are trained not to do that. On the other, someone, such as a retail associate or manager, will stop you, as it is their job to make sure that you pay. Train your office personnel to think like retail associates. Have them collect on outstanding balances at the time of service, and if they do not, hold them accountable.

Offer Payment Options

Again, think like a retailer. A lot of your patients probably are probably more inclined to put a couple hundred dollar item on credit than they are to pay for it in full, and not because they want to hoard their cash, but simply because they have other financial obligations to take care of. Medical bills are necessary but expensive, and a lot of people simply cannot afford them. Make it easier for your patients to pay their debts by offering flexible payment options. A person is likely to be more inclined to pay a $50 monthly bill for six months than to make a $300 payment in full at a single visit.

Make Payment Easy

According to the same Athenahealth study mentioned above, practices can increase their collections at the time of service by 40 percent by allowing patients to pay through online patient portals and PayPal. The study found that even just handing a tablet over to the customer that details their account balance at the time of service also increases the number of payments made. Researchers believe this is because it takes away the “shame” element of having an outstanding balance.

Beef Up Your Contracts

Finally, you can avoid payment headache altogether by making it clear in your patient-doctor contracts that you expect payment at the time of service, or partial payment upfront and the remainder of the payment within x amount of days. Include consequences of non-payment in the contract as well, such as termination of the doctor-patient agreement. Humans are more inclined to respond to consequences and to keep up their end of a bargain if they think that failure to do so could have negative repercussions.

Consult With a Creditors’ Rights Attorney

Owning a healthcare practice undoubtedly comes with its fair share of advantages, disadvantages, and conundrums. For instance, on the one hand you want to uphold your duty to care for a patient, but on the other, how many times can you provide services to a person who refuses to pay? A skilled creditors’ rights attorney at Cloud Willis & Ellis can help you cover each possible scenario and implement solutions to mitigate each. Though it may take some time, you may be able to reduce the number of outstanding debts in your practice and start generating the income you deserve.

Resource:

healthcaredive.com/news/outstanding-medical-bills-collection-rcm/443500/

Terms to Negotiate Before You Lend Money to a Potential Borrower

Lending money is an inherently risky business, and even if you do your due diligence and look into the creditworthiness of a borrower, there is still room for surprise—and in the lending business, surprises are almost never good. For this reason, you should take measures to protect yourself from default borrowers by drafting a loan contract that has provisions that detail what to do in the event of default and other situations.

At Cloud Willis & Ellis, our creditors’ rights attorneys can advise you on what terms to include in your lender/borrower agreements and on what you can do to protect yourself in the event of default. Protect yourself, and contact our lawyers today to get started.

Key Terms to Negotiate For

It goes without saying that borrowers and lenders do not always see eye to eye. Okay, let us revise that to “rarely ever.” If you hope to stay in business, you need to offer fair terms. However, “fair” does not have to mean “lenient.” If you make it too easy for customers to default, you may still end up going out of business…and find yourself in significant financial trouble. You need to find the happy/medium, which may mean going through several rounds of negotiations with your borrowers. Those several rounds will be worth it, however, when you are able to sign a contract that protects your best interests and still makes the customer happy.

Some key terms to negotiate for include:

Events of Default

Typically, borrowers are given a grace period in which they are afforded the opportunity to cure a default. During this grace period, it is common courtesy for creditors to leave them be; if the default extends beyond the grace period, the nonpayment becomes an “event of default,” and this is when creditors typically enact aggressive debt collection procedures. Once an event of default occurs, the lender’s contractual rights will kick in. This is why it is important to specify what, exactly, your rights should be in your contract.

It is important to specify what your rights are and when they should kick in, as, depending on the wording of your lender/borrower agreement, an event of default may arise either as soon as the default occurs or when it continues. The former is more favorable to lenders, because it gives them the opportunity to pursue payment as soon as there is a default. The latter is favorable to borrowers, as it gives them the opportunity to remedy a default over a certain period of time. Only after that specified period of time has lapsed is the creditor allowed to pursue collection actions. If possible, you should push for the former approach.

Specify Undertakings

Undertakings refer to actions borrowers are and are not allowed to take during the terms of the loan. The purpose of specifying undertakings is to minimize the risk for default for lenders. Many borrowers are not willing to borrow money from a lender whose contracts contain undertakings, so you need to be careful about what types of undertakings you specify and how you negotiate for them.

Fees and Other Expenses

It is important to be transparent about what types of fees and expenses you intend to charge for lending money in the first place. This is meant to protect both you and the borrower. Moreover, it can allow you to pass expenses on to the borrower that would otherwise go to you. Again, you want to be careful with how you word this section in your contract, as poor wording can deter potential borrowers.

Conditions Precedent

Conditions precedent gives lenders the right to advance the principal only once certain conditions have been met. Think, for instance, in terms of secured credit cards. Individuals with poor credit can sign up for a secured credit card only if they provide proof of employment and pay a deposit. Individuals with good credit, on the other hand, do not have to jump through such hoops and can get a line of credit simply by providing their credit scores. Determine what conditions you want potential borrowers of varying score ranges to meet and include those in your contract.

Retain the Help of an Experienced Creditors’ Rights Attorney

U.S. laws are generally in favor of borrowers, which is why it is more important than ever to establish your rights as a creditor before you lend out any money. If you want to ensure that you are paid back all or a portion of the money owed to you in the event of a default, work with an experienced creditors’ rights attorney about the provisions you need to include in your lender/borrower agreement. Contact the law offices of Cloud Willis & Ellis today to get started.

Can I Collect Money Owed to Me by a Bankrupt Customer?

While most people do not declare bankruptcy out of spite toward creditors, it can feel like that when you are on the other end of bankruptcy—the “owed money” end. As a business owner, you rely on customers to pay you on time and in full, so when one does not, you do what is necessary to collect the debt, which is call them, send out notices of past due payments, and send their invoice to collections. Though these measures are extremely reasonable to take when someone owes you money, they are illegal when that person files for bankruptcy.

The Automatic Stay

Once a debtor files for bankruptcy, an order for relief is automatically put in place. This order protects the debtor from any further attempts at debt collection, in accordance with the Bankruptcy Code, § 362. This section of the code does provide for some exceptions, though. For instance, recent repeat filers are not protected by the stay, and nor are some types of debt. However, it is rare for a stay not to apply to all of a debtor’s creditors, so if you believe that the stay should not apply to you, talk with a creditors’ rights attorney before you follow through with any further debt collection actions. If you unwittingly violate an order for relief, the consequences can be costly, and you may end up losing far more money than what you are owed.

Your Debt Collection Options

The first step, of course, is to cease all debt collection efforts. This includes dismissing any pending lawsuits that you have against the debtor. Once you have done that, consult with a knowledgeable creditors’ rights lawyer about your options.

Unfortunately, if the debtor has filed for Chapter 7, your options are few, if any, as in almost all Chapter 7 cases, most debts go unpaid. This is because a debtor likely owed money on his or her home and any other assets of value, which will be sold to repay the mortgage lender and other high priority lenders. That being said, you do have the right to appear at the 341 meeting, which is a meeting held between the debtor and creditors. At the meeting, creditors are given the chance to question the debtor, though that rarely ever happens.

The meeting is conducted by a bankruptcy trustee who is assigned to the case. It is the trustee’s job to verify the accuracy of all the information presented in the bankruptcy file, which he or she does during the meeting. Trustees generally do not like to be interrupted by creditors conducting an interrogation, as that is not the point of the meeting. The only type of interruption the trusty would welcome is one that includes information regarding hidden assets or an undisclosed source of income. If you do have information regarding a home that the debtor did not list, or if you know for a fact that the debtor makes more than he or she put in the application, show up to the meeting armed with proof.

If you believe that the debt owed to you qualifies as exempt, you need to present the issue in bankruptcy court. Non-dischargeable debts include ones that are related to domestic support obligation, wrongful death or personal injury settlements, willful and malicious injury awards, or fraud. Except for debts related to support obligations or death or personal injury, you will need to present your case in front of a board, who will review the evidence and make a determination regarding dischargeability.

Your Options in a Chapter 13

If a debtor files for Chapter 13 instead of Chapter 7, your odds of getting paid increase, but depending on the nature of the debt, they may not increase by much. In a Chapter 13, a debtor’s obligations are reorganized, and he or she sets up a repayment plan that will make it easier for them to repay debts owed over an extended period of time. Typically the term of a Chapter 13 is five years.

Once an obligor files for a Chapter 13, all creditors will receive a copy of the proposed repayment plan. The plan will outline which creditors will receive what. Unfortunately, only a fraction of what is owed will ever be paid on unsecured debts. In order to receive any payment, you will have to provide a Proof of Claim form to verify the existence of a debt. Though you have the option to oppose the plan, you should only do so if you have a valid reason to. Otherwise, you risk wasting the bankruptcy court’s time, which may hurt your case in the long run.

Consult With an Experienced Mobile Creditors’ Rights Attorney

At Cloud Willis & Ellis, we understand that you may be feeling frustrated with a debtor who has filed for bankruptcy, and while that is completely natural, you need to refrain from taking any drastic debt collection measures. If you believe that the debt owed to you is non-dischargeable, or if you want to oppose the bankruptcy for any reason, consult with a creditors’ rights lawyer before you do anything. If you violate any of the debtor’s rights, you may lose more than you set out to gain.

Resource:

law.cornell.edu/uscode/text/11/362

Are You Sabotaging Your Own Efforts? The Right and Wrong Ways to Collect on Past Due Accounts

When it comes to collecting past due payments from clients, you may find yourself walking on eggshells. Are you allowed to contact them about scheduling a payment? Are monthly notices too much? Are you being too aggressive or not aggressive enough? Unfortunately, many service providers find themselves faced with these types of questions on an almost daily basis, as it is not uncommon for customers to “forget” to pay for services rendered, or to ignore statements entirely. More unfortunate is that if these service providers do not walk on eggshells, they may find themselves in huge trouble for violating fair debt collection practices.

If you have a customer who has failed to pay an outstanding balance despite your friendly notices, you may be feeling fed up and ready to take drastic measures. However, do not do anything until you fully comprehend debt collection laws, as making the wrong move could have dire consequences for your business. If you are not sure what is legal and what is not, consult with one of our creditors’ rights attorney at Cloud Willis & Ellis regarding your rights.

Understand Debtor Rights

Debt collectors are notorious for using pushy, pervasive, and downright harassing means to collect money owed to clients, which is why debt collection generates the most consumer complaints of any other regulated activity in the U.S. When debt collection practices got so out of hand, federal and state governments stepped in to crack down on collectors and put an end to illegal debt collection practices, hence the Fair Debt Collection Practices Act (FDCPA).

The FDCPA, which officially became law in 1977, protects consumers by making it illegal for debt collectors to use “any means necessary to collect.” From threats of taking consumers to jail to threats of taking consumers’ homes, many debt collectors are not above scaring consumers into paying for debts they cannot afford. Though the FDCPA does not completely stop creditors from employing illegal measures, it does significantly reduce the number of unfair and deceptive trade practices.

The FDCPA generally applies to companies that are in the business of debt collection on behalf of clients. However, that does not mean that innocent businesses that have outstanding client invoices cannot get in trouble over unfair practices.

Deceptive and Unfair Practices That Can Land You in Hot Water

Even if you are simply collecting past due payments on your own company’s behalf, you can still get in trouble for violating the FDCPA. For instance, if you attempt to deceive a customer by using a name other than your business’s name for collecting outstanding balances, you automatically subject yourself to the rules of the FDCPA. One example of a company doing this would be the owner sending out a collection letter with XYZ Collections on the letterhead, instead of the company’s real name, which may be XYZ Construction.

Another tactic that may trigger the FDCPA is using a third party for “dunning” management, which is the process of “methodically communicating with customers to ensure collections of accounts receivables.” The act of outsourcing the management of unpaid invoices is essentially the same as sending invoices to collections, at least in the government’s eyes.

Some other tactics you may use that could cast you in a negative light include:

Adding fees or interest to the invoice that were not agreed to by the customer;
Calling the customer at unreasonable hours;
Confiscating customer property even though you do not have the authority to do so;
Lying about how much the debtor owes to scare them into making a “partial payment”;
Pretending to represent the government or to be a lawyer to intimidate the debtor;
Purposely delaying the posting of payment to the client’s account so that it accrues more interest; or
Making false threats of any kind, which may include saying that you will have the debtor arrested, or that you will report the debt to the credit bureaus.

If you find yourself using any of these tactics or even thinking about using any of these tactics, take a step back and reach out to an attorney. As a business owner, it can be so easy to take desperate measures to finally get paid, and although that is understandable, it can end up hurting you in the long run.

Talk to an Experienced Attorney About Your Rights

There are several laws out there protecting debtor rights, and even more attorneys who are in the business of ensuring that those rights are enforced. That leaves many business owners feeling vulnerable and at a loss as to what to do when they want to get paid. At Cloud Willis & Ellis, our lawyers make it our business to ensure that creditors and business owners get paid, and that they are just compensated for their troubles. If you have had a hard time collecting on delinquent accounts, schedule a consultation with our creditors’ rights attorneys today.

Resource:

ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

Recent Posts