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Internet payday loans are illegal in Virginia.  They are a felony.  (In order to make payday loans in Virginia, they have to have a licensed office in Virginia.  The internet payday loans do not have offices Virginia–they are on the internet.)
Since the people behind the internet payday loans could be sent to jail in Virginia, the internet payday loan companies are careful to stay beyond the limits of Virginia law.  Some claim to be operated by Indian tribes, which cannot be regulated by state governments.   Others are in foreign countries.

When you get an internet payday loan, you are dealing with organized crime. People like "Tony Soprano." The good news is, they are digital organized crime.

Their internet payday loan websites seem friendly enough, but to understand who you are dealing with, think of the Godfather, or Tony Soprano.  When you sign up for an internet payday loan you need to understand you are dealing with organized crime.
Digital organized crime.  Because they are “digital” they will not really come around to your house and shoot your dog, the way Tony Soprano might.  They will, however, make illegal threats.
Most of those threats will be on the phone, but sometimes they come by email.  Here’s an extreme example.   It’s a threat that the consumer will be arrested for bad checks and bank fraud for not paying back the internet payday loan.  That threat is total bogus.  The people who are guilty of bank fraud are the internet payday loan companies themselves.
Even after bankruptcy, my clients sometimes still get these illegal threats–and they ask if I can get the bankruptcy judge to stop them.
Sorry, the answer is no.  Think about it this way.  The didn’t care they could get one to five years in jail just for making the internet payday loan…do you think the internet payday loan people care the bankruptcy judge will fine them?
So, what can you do?  Here’s my best advice.  Just say, “My bankruptcy lawyer told me you’d try that BS on me.” And hang up.  You may have to do it five or six times.  But when they know you have wised up, they will move on to someone else.
Is there any good news?  Sometimes, we get lucky.  Sometimes the illegal internet payday loan ends up in the hands of a legal debt collector.  Here’s one example.   Kathy, not her real name, got an internet payday loan through Pay Day Loan Yes.  Pay Day Loan Yes, on their website, does NOT have any information about where they are located.  (Godaddy says the company that owns the website had an address in Gulf Breeze, FL.  That’s the address of the UPS store which is obviously just a mail drop.)
(Pay Day Loan Yes claims that they do not make the payday loans themselves–they just arrange them.  That dodge is also illegal in Virginia.)
While Pay Day Loan Yes is operating illegally in Virginia, their debt collector, NCA appears to be a legitimate outfit.  A legitimate debt collector, collecting an illegal internet payday loan can get sued under the Fair Debt Collection Practices Act.  We plan to do that for Kathy.  (PS  I was wrong–this debt collector is a scam outfit too.  They are trying legitimate means to collect illegal debts, but when I tried to track them down, they evaporated, too.)
What’s the big lesson in all this?  Don’t give you social security number, bank account info, and phone numbers to Tony Soprano.
 
 
PS  Here’s a link to the Federal cyber crimes reporting website.  Complaining there might encourage prosecution of the worst of these internet payday loan scam collectors, if they can find them.
You can read more in this blog from my friend John Merna, a bankruptcy lawyer in Tidewater.
 

The Automatic Stay afforded to repeat (or serial) Chapter 13 filers has long been a thorn in the side of the mortgage industry, as each successive Chapter 13 filing resurrects the Automatic Stay and prevents the mortgage lender from completing their foreclosure. Bankruptcy Code Sections 362 (c)(3)&(4) were intended by Congress to limit the duration of the Automatic Stay afforded to serial filers in certain circumstances. Section 362 (c)(3) provides that if a debtor had one prior bankruptcy case dismissed in the preceding year, the Automatic Stay will terminate within 30 days after filing of the later (ie., second) case unless the debtor can convince the Court to Extend the Automatic Stay. For the Automatic Stay to be extended beyond said 30 days, the statute requires the debtor, during said time frame, to (1) file a motion to Extend the Automatic Stay, (2) have the hearing on said motion held before the Court, and (3) convince the Court that there has been a substantial change in circumstances and good reason to believe that the debtor will carry the current case through to discharge. Section 362 (c)(4) provides that if a debtor had two or more bankruptcy cases dismissed in the preceding year, the Automatic Stay does not even go into effect upon the filing of the later ( ie., third) case. For the Automatic Stay to be imposed in this situation the debtor must file a motion within 30 days of the later filing seeking to Impose the Automatic Stay and convince the Court that the latest filing is made in good faith. However, the statutory language employed by Congress to accomplish its intended goal has proven to be inapplicable to many serial filers, which is good news for debtors.
The Automatic Stay created by Section 362 (a) is probably the most important protection afforded to a debtor in bankruptcy because, immediately upon filing, it stops creditors from taking most actions against:

1. The Debtor, which would include collection letters and dunning phone calls:
2. Property of the Debtor, which would include ERISA pensions, leased property, etc.; and
3. Property of the Estate, which would include debtor’s house and most pre-petition assets.

In general, the duration of the Automatic Stay is determined by the nature of the action being taken by the creditor; specifically, is it against (1) the Debtor, (2) Property of the Debtor, or (3) Property of the Estate. The Automatic Stay continues concerning Property of the Estate, pursuant to Section 362 (c)(1), “until such property is no longer property of the estate”. The Automatic Stay continues concerning the Debtor and Property of the Debtor, pursuant to Section 362 (c)(2), “until the earliest of—(A) the time the case is closed; (B) the time the case is dismissed; or (3)…the time a discharge is granted or denied”.
In the typical first Chapter 13 filing designed to “save the house”, the Automatic Stay goes in to effect immediately upon filing, at which time the house is deemed to be Property of the Estate. Pursuant to Section 362 (c)(1), the house remains Property of the Estate until the Chapter 13 Plan is confirmed by the Court. Section 1327 (b) establishes that “confirmation of a plan vests all of the property of the estate in the debtor”. Accordingly, once the Chapter 13 Plan is confirmed, the house is deemed to be Property of the Debtor, with the Automatic Stay then remaining in effect pursuant to Section 362 (c)(2).
If a debtor’s first Chapter 13 case is dismissed and the debtor files a second Chapter 13 within one year of said dismissal, Congress intended for the provisions of Section 362 (c)(3) to come to the secured creditor’s rescue. However, if a debtor in this situation forgets to get Extend the Automatic Stay, the statute provides only that the Automatic Stay “shall terminate with respect to the debtor on the 30th day after the filing of the later case” (emphasis supplied). The majority of the cases thus far reported (and all reported cases in the Second Circuit, where we practice) have concluded that under this Code section the Automatic Stay only terminates concerning the Debtor and Property of the Debtor, but it continues concerning Property of the Estate. This is critical because prior to Plan confirmation the house remains protected by the Automatic Stay under Section 362 (c)(1) because it is Property of the Estate, and Property of the Estate is not negatively impacted by a failure to Extend the Automatic Stay. After the Chapter 13 Plan is confirmed the house does become Property of the Debtor, which is (normally) negatively impacted by such a failure, but the case law reported thus far in this Circuit makes it clear that once a Chapter 13 Plan is confirmed the Plan binds the debtor and its creditors regardless of whether the Automatic Stay was vacated (or never extended) prior to confirmation. Accordingly, the moral of the story appears to be that if you are a serial Chapter 13 filer and you forget to Extend the Automatic Stay you can still save your house provided (1) you only had one other Chapter 13 dismissed within the prior year, and (2) you get your Chapter 13 Plan confirmed before the house gets sold at a foreclosure auction sale.
It should be noted that Section 362 (c)(4) does not provide such a generous “safe harbor” for those debtors who  (1) have had two (or more) Chapter 13 cases dismissed in the prior year and (2) forget to Impose the Automatic Stay. The Automatic Stay simply never comes into play in such a case, and if the foreclosing lender successfully completes the foreclosure auction sale before their Chapter 13 Plan is confirmed, the serial filer is simply out of luck. However, even this type of serial filer is not without some hope, because if they do happen to get their Chapter 13 Plan confirmed before the foreclosure auction sale occurs, the confirmed Chapter 13 Plan will bind the mortgage holder even though the Automatic Stay was never imposed.
Sometimes Congress’ seeming inability to draft intelligible legislation can have unintended consequences which can actually benefit the debtor.
Bankruptcy lawyers with offices in Middletown, New York serving Orange, Sullivan, Ulster, Dutchess and Putnam Counties and communities including Newburgh, Port Jervis, Goshen, Monticello, Liberty, Ellenville, New Paltz, Kingston and Poughkeepsie.
This Law Firm proudly practices Bankruptcy Law, helping clients file cases under Chapters 7, 13 and 11. According to the Bankruptcy Abuse Prevention and Consumer Bankruptcy Act of 2005, we are considered to be a Debt Relief Agency.

A recent ruling by the Nebraska Bankruptcy Court underscores one of the primary differences between the treatment of divorce debts in Chapter 7 and Chapter 13 cases.  (See In re Schulz, Nebraska Adversary Case #12-04070).
On August 30, 2011, the District Court for Buffalo County, Nebraska entered a divorce decree that included a division of marital property and debts requiring Cynthia Shultz to pay her ex-husband $25,000.  One year later Ms. Schultz filed Chapter 13 bankruptcy.  Although Mr. Shultz filed an unsecured Proof of Claim for $24,104.27, he failed to object to the Chapter 13 plan which was eventually confirmed by the Court on June 5, 2012.
Following confirmation of the plan, Ms. Shultz filed an Adversary Proceeding to seek a determination that the property settlement agreement was dischargeable upon completion of the payment plan.   Both parties agreed that the $25,000 debt was property settlement and not intended for support of Mr. Shultz.  Although Mr. Shultz argued that his ex-wife had the ability to pay the debt and that the harm to him caused by a discharge of the debt would outweigh the benefit of the discharge to his ex-wife, the bankruptcy court was compelled to rule in favor of the debtor.  Since enactment of the bankruptcy reform act of 2005, bankruptcy courts no longer conduct a “balancing test” to determine if property settlement agreements are dischargeable in Chapter 13.  They just plain are discharged every time as long as a debtor successfully completes the payment plan. 

The real issue in Chapter 13 cases since 2005 is to determine whether a provision in a divorce decree is in fact a property settlement provision or a support provision. Importantly, this issue only pertains to Chapter 13 cases. 

In chapter 7 cases neither property settlement nor support obligations are dischargeable in bankruptcy.  So, the challenge of the bankruptcy attorney in Chapter 13 cases is to characterize the relevant divorce decree provision.
Courts look at several factors when determining whether a provision is a Support provision or a Property Settlement provision:

1. Labels in the Divorce Decree:  Although the bankruptcy court can look beyond the labels contained in a divorce decree to determine the true nature of a provision, labels do matter.  A thing tends to be what it says it is.
2. Income Needs of the Parties:  The bankruptcy court will look to see if the party receiving the settlement was in need of the funds to meet basic living expenses at the time the divorce decree was entered.
3. Analysis of Property Divided: The bankruptcy court will review the property divided prior to the entry of the divorce decree and will consider the nature of the property divided.  For example, the division of the sales proceeds of a yacht is probably more in the nature of a property settlement than an award of a10-year old minivan.
4. Does the obligation to pay terminate upon remarriage or the emancipation of a child?  If so the provision tends to be considered a support payment.
5. Number of Payments:  If the amount to be paid is in a lump-sum or in a few large payments, it tends to be considered property settlement.  Smaller payments spread out over a longer period of time are usually deemed support.

Divorce attorneys need to pay particular attention when the ex-spouse of their client files bankruptcy. If a chapter 7 case is filed the divorce decree is generally secure.  However, if the ex-spouse files a Chapter 13 a Red Alert should be sounded.  Important consideration must be paid to how a proof of claim is filed and the relevant deadlines to challenge confirmation of the plan and the deadline to object to the dischargeability of the divorce decree obligation. 

Marco Bellucci / Foter / CC BY

Q:  I want to file Chapter 7 bankruptcy and I should qualify because I don’t own anything, right?  The only thing I have is my car and my house.  I would pay all my bills now but I’m waiting on a lawsuit settlement that hasn’t come in yet.  –Amanda P.
A:  Ah….the old “I don’t own anything” scenario.  I hear this one a lot.  Let’s break down the question.
First, qualification for filing Chapter 7 depends largely upon your income and the result of the Chapter 7 Means Test.  The amount of debt you have and the amount of property you have are not factors in determining your eligibility to get into a Chapter 7, however, they may be factors in determining whether you want to file Chapter 7.
Next, if you truly don’t own anything, you would not be following up that statement with “the only thing I have is..”.  Owning a house or a car doesn’t automatically disqualify you from filing a Chapter 7, however, you must disclose these things to your attorney even if you don’t think they are worth a lot.  The attorney can make the determination whether anything you own, big or small, would be an asset and whether that asset can be protected in a Chapter 7.
Finally, some things that you don’t think are assets must be disclosed as assets on your bankruptcy petition.  Things like lawsuit proceeds you may receive in the future, money someone owes you or inheritances can be considered assets that may need to be disclosed.
Remember, just because you tell your attorney about something you have, that doesn’t mean you would lose that in a Chapter 7, however, not disclosing it could mean the attorney would not do what is necessary to protect the property.