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2012 NCLC Consumer Rights Litigation

Conference: Who do I Pay First?  

Prioritizing Debts of Survivors of Domestic Violence By

Katie VonDeLinde, MSW, LCSW Adjunct Faculty

Washington University, St. Louis, MO Email: kvondelinde@gmail.com

Phone: (314) 775.9517  

This  project  was  supported  by  Grant  No.  2011-­‐TA-­‐AX-­‐K058  awarded  by  the  Office  on  Violence  Against  Women,  U.S.  Department  of  JusPce.  The  opinions,  findings,  conclusions,  and  recommendaPons  expressed  in  this  presentaPon  are  those  of  the  authors  and  do  not  necessarily  reflect  the  views  of  the  Department  of  JusPce,  Office  on  Violence  Against  Women.  

Determining  Debts  

•  Asking  the  “right”  quesPons  well  •  Listening  with  open  mind  

– Be  aware  of  your  own  $  triggers  •  Consumer  rights  screening  tool  for  DomesPc  Violence  Advocates  and  Lawyers  – h]p://www.nclc.org/images/pdf/domesPc_violence/consumer-­‐rights-­‐screening-­‐tool.pdf    

 

Safety  Infuses  Every  QuesPon  

•  How  has  your  (former)  partner  impacted  your  debt?  

•  How  do  you  think  your  (former)  partner  will  react  if…  

•  What  has  worked  in  the  past?  •  What  ideas/strategies  do  you  want  to  use  now?  

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Determining  Debt:  Client  Values  

•  Change  is  hard;  met  with  ambivalence  •  Telling  clients  how  to  “do  it”  is  ineffecPve  •  We  must  understand  client  values  in  order  to  create  plans  that  will  work  – Value  sorts  (see  worksheet)  – MoPvaPon  interviewing  –  Important  in  the  context  of  IPV  

Using  Tools  •  Debt  calculators  

– h]p://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp    

•  Debt  worksheets  – h]p://paydowndebt.unl.edu/worksheet.html  – h]p://www.smartaboutmoney.org/LinkClick.aspx?filePcket=q%2FW9OI7a%2FJk%3D&tabid=560    

CreaPng  a  plan  

•  Need  to  also  understand  client’s  income  •  How  is  the  client  paying  current  bills?    How  does  this  impact  paying  off  debt?  

•  Cost  of  living  plan  •  Debt  acPon  plan  

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PrioriPzing  debt:  What  clients  need  to  know  

2012 NCLC Consumer Rights Litigation Conference

   Prioritizing Debts of Survivors of Domestic Violence

By Fred Corbit

Senior Attorney, King County Office Northwest Justice Project

401 Second Avenue South, Suite 407 Seattle, WA 98104

Email: FredC@nwjustice.org Phone: (206) 464-1519, Ext. 270

The  NCLC  has  published  an  excellent  guide  Ptled  “Consumer  Rights  for  DomesPc  Violence  Survivors.”    The  guide  has  16  rules  about  how  domesPc  violence  survivors  should  prioriPze  their  debts.    Following  this  slide  are  the  16  rules  together    with  Corbit’s  caveats  and  three  bonus  rules.  

 

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Number  1:  Always  pay  family  necessiPes  first.    

Corbit’s  caveat:      Is  paying  a  condiPon  precedent  to  gevng  an  essenPal  good  or  service?    Remember,  a  bill  for  an  essenPal  medical  service  that  was  already  provided  is  sPll  just  a  bill.    

 

Number  2:  Pay  housing  related  bills  next.    

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Corbit’s  caveat:  Foreclosures  take  Pme,  not  all  houses  are  worth  saving,  and  there  are  worse  things  than  foreclosure.          

 

Number  3:    Pay  the  minimum  amount  required  to  keep  essenPal  uPlity  service.    

Corbit’s  caveat:  Here  is  one  area  that  charity  help  is  frequently  available.      

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Number  4:      Pay  car  loans  or  leases  next  if  the  car  is  a  necessity.    

Corbit’s  caveat  Americans  love  cars,  but  they  are  expensive.  Is  a  car  really  needed?    Are  there  any  lower  cost  alternaPves?    

Number  5:    Child  support  debts  must  be  paid  if  the  survivor  owes  them.    

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Corbit’s  caveat:    A  survivor  of  domesPc  violence  may  have  nothing  with  which  to  pay  child  support.    

Number  6:  Income  tax  debts  are  also  high  priority.    

Corbit’s  caveat:  Even  if  a  survivor  can’t  pay  the  tax,  the  survivor  should  file  a  return.    A  survivor  can’t  discharge  a  tax  debt  in  bankruptcy  unless  she/he  has  filed  a  return.    

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Number  7:    Loans  without  collateral  are  of  low  priority.    

Corbit’s  caveat:    There  are  no  longer  debtors’  prisons.    

Number  8:  Loans  with  only  household  goods  as  collateral  are  also  of  low  priority.    

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Corbit’s  caveat:  The  creditor  doesn’t  really  want  a  used  couch,  and  even  if  it  does,  a  person  does  not  have  to  allow  a  creditor  into  their  home.  

 

Number  9:      A  debt  should  not  be  moved  up  in  priority  because  the  creditor  threatens  suit.  

Corbit’s  caveat:  Even  if  the  debtor’s  threat  is  real,  it  takes  Pme  to  get  a  judgment.  

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Number  10:  Do  not  pay  when  there  are  good  legal  defense  to  repayment.    

Corbit’s  caveat:  Don’t  let  a  default  be  taken.    Creditors  go  awer  low  hanging  fruit  and  a  good  defense  makes    a  creditor  think  twice  before  spending  money  to  pursue  a  claim.  

 

Number  11:  Court  judgments  move  up  in  priority,  but  owen  less  than  one  would  think.    

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15  U.S.C.  §  1673      

Corbit’s  caveat:    In  every  state  there  are  exempPons  that  provide  some  protecPon  of  a  debtor’s  earnings  and  assets.    Many  survivors  of  domesPc  violence  are  judgment  proof.  

Number  12:  Student  loans  are  medium-­‐priority  debts.      

Corbit’s  caveat:  There  are  special  collecPon  tools,  but  there  are  also  hardship  programs.  

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Number  13:  Debt-­‐collecPon  efforts  should  never  move  up  a  debt’s  priority.    

             

Corbit’s  caveat:  CollecPon  agents  have  been  known  to  lie.    

Number  14:  Threats  to  ruin  one’s  credit  record  should  never  move  up  a  debt’s  priority.    

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Corbit’s  caveat:  Macy’s  will  sPll  take  cash  for  a  sweater.      

 

Number  15:  Co-­‐signed  debts  should  be  treated  like  one’s  other  debts.  

 

Corbit’s  caveat:  The  banks  don’t  care  that  the  other  spouse  was  awarded  the  obligaPon.    

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Number  16:  Refinancing  is  rarely  the  answer.    

Corbit’s  caveat:  Don’t  pledge  exempt  assets  for  unsecured  debts.  

Bonus  rule  number  1:  Creditors  with  access  to  accounts  should  be  forced  to  lose  their  priority.    For  example,  close  bank  accounts  that  a  payday  lender  has  access  to.    

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Bonus  rule  number  2:  Only  the  highest  priority  creditors  should  be  paid  with  assets  from  a  rePrement  account.    RePrement  assets  are  generally  exempt  from  creditor  claims.  

   

Bonus  rule  number  3:  Bankruptcy  is  a  tool  that  good  people  can  use  to  get  a  fresh  start.        

Puvng  it  all  together…  

Client  values/prioriPes  

Debt  prioriPzaPon  educaPon  

Safety  

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What  can  non-­‐lawyer  advocates  do?  

•  Co-­‐create  cost  of  living  plan  – Fluid  document  

•  Co-­‐create  debt  acPon  plan  – Celebrate    – Understand  long-­‐range  financial  goals  – Make  plans  for  money  awer  debt  is  paid  

 

What  can  non-­‐lawyer  advocates  do,  cont.  

•  Help  contact  creditors  to  seek  informaPon  •  Help  organize  informaPon  •  Assist  making  calls  to  negoPate  minimum  payments,  reducing  fees,  pay  off  amount  (for  old  debt)  

•  Connect  to  resources  

You  need  to  contact  a  lawyer  if…  

•  Your  client  is  being  sued  •  You’re  concerned  that  the  creditor  is  doing  something  illegal  

•  Debt  collectors  are  illegally  harassing  the  client  

•  Your  client  wants  to  pursue  bankruptcy    

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QuesPons?      

Thank  you!    

Fred  Corbit  and  KaPe  VonDeLinde