Archive for December, 2011

Tips to a Former Small Business Owner, Now Trying to Settle Remaining Debts

Friday, December 30th, 2011

Question:
I had a small construction business that went under a couple of years ago when housing took a nose dive.  Some business debts remain and I am getting calls from a manager of one of my suppliers, who wants me to settle up on a $2500 account, but I have nothing to pay them. They are now threatening to sue me for the debt.  Any suggestions? Should I call the manager?

My response:
If you can borrow the funds from family and friends to settle the entire debt for less than the full balance due, then that is a good reason to negotiate with the manager.  I would not propose that you simply borrow the full amount from your friends and family, so that you would owe the same amount of debt to them. When your pockets are empty, that is the time to negotiate with your creditors to settle for much less than the full amount, such that you reduce your debts to something that you can pay off quickly to your friends, when things turn around for you.

In settling any debts, be sure that you have written confirmation that the amount you are paying will settle the full balance.  It is not unusual for a debtor to believe that they have negotiated a very good settlement, then learn later that the money paid was applied merely as a credit towards the balance, and the creditor still demands payment on the rest (or files a debt collection lawsuit) or has assigned the unpaid balance to a debt collection agency.

I have posted on Avvo.com three legal guides on how to negotiate a debt, including specific information on the documentation that should be prepared to ensure that the debt is considered fully satisfied by both sides.  Link to Avvo.

Robert Stempler
www.StopCollectionLawsuits.com

Protection of Homeowner Equity for Declared Homesteads from Debt Collection Judgments

Thursday, December 1st, 2011

Question:
I tried to represent myself against a professional debt collection law firm on a debt that I thought would be easy to defeat at trial, when I could tell my side of the story. A few days ago, the court allowed a summary judgment against me on the debt, plus interest and attorney’s fees.  There is no trial anymore, the case is over.  Is there anything that I can do to protect my home, which has about $50,000 in equity, based on current market values?

My response:
Sorry to hear about the court ruling against you and awarding a judgment for all the items sought in the complaint by the debt collection law firm.  Most debt collection cases are decided without trial.  See my prior blog on this at this blog link.

Protecting the equity in your home from a money judgment (other than for child or spousal support) is pretty easy.  A homestead declaration is available online for FREE at Los Angeles County Government’s web site.  Form Link Declaration Otherwise, you can get one at the local law library or many mailbox stores with legal forms.  Prepare the form and take it to a notary public who will notarize your signature on the form, then you must record the original with the county recorder or county clerk’s office. Record the declaration as soon as possible, preferably before the debt collection law firm records its judgment in your county of residence.

The homestead declaration will protect the equity in your home, up to the statutory amounts.  For example, a single individual may keep up to $75,000 in homeowner’s equity.  Low income families can protect even more equity.  The funds must be applied towards another home, with a homestead declaration, purchased within six months of the sale of the former home.

There are other advantages to having the homestead declaration recorded. For instance, if the creditor attempts to sell the property of the judgment debtor, when a homestead declaration has been recorded, the court must presume that the homestead exemption applies.

I have other blog postings and a legal guide on Avvo.com to help you deal with other aspects of a money judgment, such as wage garnishment. Wage Garnishment Legal Guide. Please do this immediately, as it may only be a few days before the debt collection lawfirm records the abstract of judgment in your county.

Robert Stempler
www.StopCollectionLawsuits.com