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9/24/12
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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: [email protected]
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: [email protected] 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