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When I first began working in the consumer bankruptcy field, co-signed loans were a common problem that I saw often.  Then credit standards loosened and I rarely saw clients who were co-signers or who had co-signed loans.Now the personally guaranteed co-signed loan is making a comeback.   I can state without reservation that in both a personal and a business context, agreeing to co-sign a loan for someone with poor credit is never a good idea.In the current market, standards for consumer credit are tight and securing credit approval can be a challenging feat for someone with mediocre or poor credit.   Because of the tightening credit market and increased regulation by the federal government on lenders, people who may have been approved in years past are now needing others to co-sign in order to take out a loan.If you are someone with good credit, consider this a warning to think twice before serving as a cosigner.  When close friends or loved ones approach you, understand that as much as you may want to help them, serving as cosigner for someone with poor credit can directly affect your credit, make you vulnerable to a lawsuit, and ruin your financial well-being.You would be surprised by how many clients I have represented who found themselves filing for bankruptcy – not because of their own debt, but because their co-signee failed to make their payments.  Realize, when you agree to serve as a co-signer, essentially you are taking personal responsibility for the primary borrower to make payments.  If he or she fails to do so, you are liable for the debt if the borrower defaults.If your friend or relative files for bankruptcy and gets the debt discharged in his bankruptcy case, you may find that the creditor will look to you for full or partial repayment.Needless to say, finding yourself personally liable for a friend or relative’s debt makes for broken friendships and strained family relations.Ultimately the decision to co-sign on a loan is yours.  If you are even considering it, make sure you fully understand the consequences and repercussions that can affect your credit and financial situation should the primary borrower default.The post Co-Signed Loans: An Old Problem that is Making a Comeback appeared first on theBKBlog.

If you’ve been in debt for awhile, you’ve gotten a letter or phone call from a debt buyer.
The companies purchase uncollectible debts from credit card companies, banks and student loan lenders in the hopes that they’ll be able to convince you to pay them a few bucks.
They pay so little for the account that even a steep settlement is considered a profitable victory.
But what of the collection letter that shows up out of nowhere, demanding payment for a debt you’ve never heard of?
Welcome to the world of zombie debt. Though it’s as scary as the shuffling, brain-eating, undead there are ways to defend a lawsuit brought against you by a zombie debt collector.
Here are the simple rules I follow for my clients.
Demand Proof
If you got a collection letter from a company you’ve never heard of, you need to make sure they’ve got a right to payment.
Under the Fair Debt Collection Practices Act, you’ve got the right to demand validation of the debt. That means the collection agency should provide you with:

• the name of the original creditor;
• the amount claimed to be due;
• a copy of the agreement between you and the original creditor; and
• proof that the current creditor, if different from the original one, has the right to payment.

Send a letter to the debt collector, keep a copy, and refuse to pay them a dime unless and until they provide you with proof of the debt.
Make Sure They Can Collect
There’s a limit to the amount of time a creditor can take to demand payment. In New York, that’s six years. In California, that’s four years.
Make sure to verify the date of last payment, and do the math. If it’s too late to collect, they can’t force you to pay.
If You’re Sued
Just because a creditor or debt collector sues you, that doesn’t mean they win.
You get a limited amount of time to file an Answer to a Complaint. If you don’t, they win.
Call a lawyer or, if you can’t afford one, go down to the courthouse and tell the clerk you need to file an Answer. Most courts have forms that people can use to do it on their own.
Make the debt collector prove the case, including ownership of the debt and the amount due. Admit nothing – that’s their job.
Above all else, remember that you can’t win the case if you don’t fight it.
Image credit:  Eric.Parker
What To Do When You’re Sued On A Zombie Debt was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.

Sometimes after a client files bankruptcy, a creditor who had an unsecured debt files a lien with a judgment obtained before the bankruptcy was filed.

The lien is likely invalid and can be removed.  Most likely, the creditor did not have knowledge of the bankruptcy when the abstract judgment was recorded.  By contacting the creditor or their lawyer directly they will voluntarily remove the lien.  

If the creditor refuses, an adversary proceeding in the bankruptcy court can be filed to remove the lien and possibly seek monetary damages for a violation of the fair debt collection acts.  Because of the time and cost, hopefully this will not be necessary. 

But you should review all of the facts with an attorney and then take steps to get it removed as soon as possible.  

Ken Jorgensen, California Attorney
www.fresnobankruptcylawgroup.com

  Photo credit: http://www.flickr.com/photos/jaxxon/    

Rapper DMX, aka Earl Simmons, 42, filed for Chapter 11 bankruptcy protection recently just days after leaving a South Carolina jail.  The filing took place in the rapper’s native state of New York in Manhattan.  According to his representative the filing will assist in reorganizing his finances to enable him to perform oversees this fall. [...]