Navy Federal Credit Union Harasses Military Customers

In January 2008, my colleague Jay S. Fleischman wrote an article about a bankruptcy judge in New York that fined Navy Federal Credit Union ("NFCU") over $13,000 for continuing to contact a debtor in violation of the U.S. Bankruptcy Code. I will soon have the opportunity to take legal action on behalf of a client who is currently on active duty in the Navy that has been similarly harassed by NFCU.

Under the California Rosenthal Fair Debt Collection Practices Act, creditors cannot legally contact consumer debtors that are represented by an attorney. Despite several phone calls from my office and written confirmation that we represented the debtor, the contact continued. NFCU is accused of (1) using profanity with my client; (2) threatening to call my client’s commanding officer about the debt; (3) threatening to garnish my client’s wages while he is on active duty and when a judgment did not exist; and (4) telling my client that he was a "disgrace" to the military.

Even after I filed the bankruptcy, NFCU continued to contact my client. So far, NFCU has sent my client 3 letters since we filed his bankruptcy petition. Each letter acknowledges notice of the bankruptcy filing and threatens to continue reporting negative information on my client's credit report, all in violation of the bankruptcy automatic stay. The continued contact with my client is also violates the California Rosenthal Act because my client has legal representation. I will be filing a motion for sanctions against NFCU in the very near future.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Evictions and Bankruptcy

Question: I lost my house to foreclosure and I am facing eviction. Will bankruptcy help me?

Answer: Filing for bankruptcy creates a court order called the automatic stay that stops most collection actions, including eviction lawsuits. However, filing bankruptcy will only protect you for a short period of time and the bankruptcy reform laws passed in 2005 make it easier for landlords to proceed with evictions.

If the landlord already has a judgment of possession against you, the automatic stay will not help you. Landlord can complete the eviction process and have you removed from the property.

If the landlord does not yet have a judgment of possession, the automatic stay might give you an extra few days or even weeks. However, the landlord can ask the bankruptcy court for relief from the automatic stay to complete the eviction. Unless you have substantial legal arguments under state law to stop the eviction, the court will probably agree to lift the stay.

The bottom line: bankruptcy may help you delay an eviction, but you should try to avoid having both a bankruptcy and an eviction lawsuit on your credit rating.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

American Dream, Economic Nightmare

Nationwide, people are having a harder time making ends meet. Record foreclosures, lost jobs and rising prices have many San Diego families fearing they may lose everything.

In a special two-part report, Ed Lenderman examines the crisis.

For more information:

Nova Debt: (619) 296-4700 or (800) 772-4557

Carl H. Starrett, San Diego Bankruptcy Attorney: (619) 448-2129

Better Business Bureau: (858) 637-6199

Part One:

Part Two:

Short Sales Revisited

In July 2007, I wrote an article discussing shorts sales as an alternative to bankruptcy. Since then, there have been some changes in the law that make short sales a bit less risky from a tax stand point. But are short sales really the answer?

Causes of mortgage defaults may include poor money management, overextended financial obligations, loss of income, divorce, long term illness, poor financial management by others or even apathy toward financial obligations. But is a short sale really the answer? A short sale might help you with one aspect your financial struggles, but what about your credit card bills, over due taxes or medical bills? You might be able to get even more benefit by filing for bankruptcy.

We might be able to help. Let us take a look at your global financial picture to see what the best option is for you. Fill out our online questionnaire for a free consultation: http://www.chs-law.com/interviewform.html

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.