The Minnesota Guide to Chapter 13 Bankruptcy: Part 2—Benefits of Chapter 13

Part 1—Chapter 13 Basics
Part 3—How Your Plan Payment is Calculated
Part 4—The Chapter 13 Process

There are many benefits of Chapter 13 bankruptcy versus a Chapter 7. A few of them are obvious, but some are a little more hidden. Here are a few:

You get to keep your stuff

In Chapter 13, you don’t have to worry about losing your car to pay your creditors. Instead of giving up your stuff, Chapter 13 allows you to keep everything as long as you’re paying enough to your creditors.

You can stop foreclosure permanently

Both Chapter 7 and 13 bankruptcy allow you to pause the foreclosure process. In Chapter 7, however, once the bankruptcy is done the mortgage company can go right back to foreclosing. In Chapter 13, you can take mortgage arrears and spread them out over a three to five year period. As long as you can pay your mortgage arrears back over this time, you can stop the foreclosure permanently.

You can deal with tax debt, mortgage debt, and domestic support in flexible ways

Chapter 13 helps people deal with delinquent tax debt, mortgage debt, and past-due child support or alimony by allowing the filer to pay the debt over a longer period of time and get out of default immediately. Once the Chapter 13 is over, those debts will be paid in full.

It hurts your credit score less

Chapter 13 bankruptcy stays on your credit report for seven years, rather than the ten years a Chapter 7 stays on your record. Also, Chapter 13 has less negative impact while it’s on your credit report, because you’re paying part of your debt back instead of wiping it all out.

Attorney fees are more flexible

In Chapter 7, you’ll need to pay the entire attorney fee up front before filing. In Chapter 13, the majority of your attorney fee is taken out of your monthly payment. This means in a lot of cases, you pay very little before filing and the rest of your attorney fees is come out of your creditors’ pockets.

Part 1—Chapter 13 Basics
Part 3—Stopping foreclosure in Chapter 13
Part 4—The Chapter 13 Process

The Minnesota Guide to Chapter 13 Bankruptcy: Part 1—Chapter 13 Basics

Part 2—Benefits of Chapter 13
Part 3—How Your Plan Payment is Calculated
Part 4—The Chapter 13 Process

What is Chapter 13 bankruptcy?

Chapter 13 is a form of bankruptcy that is more flexible than traditional bankruptcy. We use it to protect assets, stop foreclosure, manage credit cards, deal with difficult tax debts, or restructure car loans. Because of its flexibility, Chapter 13 is a great tool in more complex cases.

How Chapter 13 Works

Chapter 13 bankruptcy is a monthly payment plan that pays only the portion of your debts that you can afford, with zero interest. Whatever isn’t paid by the end of the Chapter 13 plan is usually wiped out forever.

To determine your monthly payment amount, we figure out your “disposable income.” This is basically your take-home pay minus your living expenses. In many cases, your disposable income is close to what your monthly Chapter 13 payment will be. This amount is then paid to your creditors over a three-to-five-year period. Any remaining debt is wiped out at the end of the bankruptcy.

When should I consider Chapter 13?

• Your income is too high for Chapter 7

• You own a home but you're behind on your mortgage or facing foreclosure

• You're underwater on a second mortgage

• You’re behind on debt payments, but could catch up if you had more time

• You have valuable property that isn’t exempt

Part 2—Benefits of Chapter 13
Part 3—How Your Plan Payment is Calculated
Part 4—The Chapter 13 Process

The Minnesota Garnishment Guide: Part 1—Garnishment Basics

Part 2—How to Stop Garnishment
Part 3—Claiming Garnishment Exemptions
Part 4—Wrongful Garnishment

What is garnishment?

Debt collectors are allowed to garnish a consumer's bank account and wages to recover unpaid debts. Although the law permits garnishment before the entry of judgment, the majority of garnishment in Minnesota occurs after a court judgment has been entered. The law provides strict procedures that a collector must follow and if they mess up the process, their garnishment may be wrongful.

Bank Garnishment Basics

To initiate a bank garnishment in Minnesota, a debt collector first sends a garnishment summons to the bank. The bank is required to seize all funds in the consumer's bank account on the day they process the garnishment summons. Consumers do not get notice of the garnishment until after the funds have been seized, which unfortunately can result in bounced checks and overdraft fees.

Wage garnishment basics

A wage garnishment is initiated by first sending a notice of intent to garnish to the consumer. The debt collector must then wait 10 days before sending a garnishment summons to the consumer's employer. Upon receipt of the garnishment summons, an employer must seize 25% of the consumer's after tax earnings for each pay period until the debt is satisfied.

Part 2—How to Stop Garnishment
Part 3—Claiming Garnishment Exemptions
Part 4—Wrongful Garnishment

Ready to talk to a lawyer about garnishment?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans defend garnishments. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

The Minnesota Garnishment Guide: Part 2—How to Stop Garnishment

Part 1—Garnishment Basics
Part 3—Claiming Garnishment Exemptions
Part 4—Wrongful Garnishment

There are four ways to stop a garnishment in Minnesota: (1) claim an exemption; (2) negotiate a settlement; (3) vacate the judgment; and (4) file bankruptcy. Here’s an in-depth look at each of these options.

Option #1: If you get need-based assistance, claim an exemption

The first way to stop a garnishment in Minnesota is to claim an exemption. Exemptions are legal reasons why your paycheck or bank account are protected from garnishment. Exemption laws vary by state. In Minnesota, some common exemptions are:

• Creditors cannot take your social security or other need-based government aid from your bank account.

• If you received need-based government aid within the last 6 months, your wages cannot be garnished at all.

• In most other cases, creditors can only take 25% of your paycheck.

Important caveat: if you’re being garnished for child support, alimony, or many types of government debt (including federal student loans) the rules are different. 

WHO IS CLAIMING AN EXEMPTION THE RIGHT OPTION FOR?

Anyone who qualifies for it. If your circumstances allow, you should assert your exemption to stop the garnishment and get your money back. But remember, claiming an exemption doesn’t make the debt go away, it just means that your money is protected from garnishment for the time being.

Option #2: If you can afford it, negotiate a settlement

A second way to stop a garnishment is to negotiate a settlement with the collector. The idea here is to get the creditor to stop the garnishment in exchange for voluntary payment.

WHO IS DEBT SETTLEMENT THE RIGHT OPTION FOR?

Anyone who can afford to pay a reasonable settlement to fully resolve the debt. If you have many debts and can’t realistically afford to settle all of them, this option probably isn’t the best choice for you.

Also, keep in mind that if the creditor is garnishing your wages for, say, $250 a month, they’re not going to agree to a voluntary settlement where you pay $100 a month. Your best bet to settle when a wage garnishment is already in place is to see if the creditor will take a lump sum payment for less than the full balance. Some creditors prefer the certainty of having some money right away rather than waiting months to get paid in full through garnishment.

Option # 3: If you meet the necessary criteria, vacate the judgment.

Another way to stop a garnishment is to vacate (undo) the underlying court judgment. If you take away the judgment, you take away the right to garnish.

To vacate a judgment in Minnesota, you’ll have to convince the judge that you have a really good reason for not responding to the creditor’s lawsuit and that you have a defense to the creditor’s claim. Further, in most cases you have to vacate the judgment within a year of its entry. 

WHO IS VACATING A JUDGMENT THE RIGHT OPTION FOR?

Anyone who didn’t receive the creditor’s lawsuit or who had a really good reason for not responding to it. For a couple of reasons, though, this is a long-shot option for most people.

• First, you must provide strong evidence that you never received the creditor’s lawsuit or that you had a good reason for not responding. Just telling the judge “I never got it” or “I didn’t know I needed to respond” isn’t going to cut it. 

• Second, you have to show the court that you have a valid defense to the debt. 

• Third, while vacating a judgment stops a garnishment in the short term, the debt doesn’t go away--you just go back to the beginning of the case. 

Because of these challenges, the vast majority of people would be better off choosing one of the other three options to stop a garnishment.

Option # 4: If you have other debts, consider filing bankruptcy

The fourth way to stop a garnishment is to file bankruptcy. Bankruptcy stops garnishment immediately and may allow you to get the garnished money back. Plus, unlike claiming an exemption or vacating the judgment, bankruptcy also wipes out the debt itself in most cases.

Who is bankruptcy the right option for?

Anyone who has multiple debts. While you might be able to settle one or two accounts, chances are you’re not going to be able to settle multiple debts unless you have access to significant amounts of money.

Part 1—Garnishment Basics
Part 3—Claiming Garnishment Exemptions
Part 4—Wrongful Garnishment

Ready to talk to a lawyer about garnishment?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans defend garnishments. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

Learned your used car was previously in a flood? Everything you need to know.

Flooding due to severe storms or hurricanes often results in a large number of cars being immersed in water. The extent of the damage varies depending on whether the flood involved salt, fresh, or muddy water, as well as the length of time the vehicle was under water. What most people don’t know, however, is that many of these flood cars are cleaned up and resold on the used vehicle market.

How does a dealer get away with selling a flood car?

The only way to profitably sell a flood vehicle is to conceal its history from the buyer. A dealer can buy a flood car for less than wholesale price, clean the vehicle up, and sell it to an unsuspecting buyer as a clean vehicle at full retail price. Because of lax vehicle title laws, a substantial number of flood vehicles may even come with clean titles.

Why should I care if my car was previously in a flood?

Flood cars present significant performance and safety issues for unsuspecting buyers. For example, a vehicle's electrical and computer systems--including brake and steering systems--are often compromised by water damage. Water submersion may also cause damage to the vehicle's frame or structural components and often leads to mold growth in the car's interior. These problems may not appear for months or even years.

Second, even if the vehicle doesn’t have any physical problems, you almost certainly overpaid for it. A vehicle with a flood history will almost always be worth less than a clean vehicle. The reason is simple: most people won't buy a vehicle with an flood history, and they definitely won't pay clean retail price for it.

Another third reason is that it will be nearly impossible to trade in a flood vehicle. One of the first things a dealer does when evaluating a trade-in is pull a CarFax report. If the report shows a flood history, the dealer is sure to pass on your trade.

I think I bought a flood car, how do I know for sure?

The symptoms of a flood vehicle are pretty obvious, if you know what to look for. Here are the tell-tale signs:

• Musty or moldy smell;

• Rust or flaking metal on the vehicle's undercarriage;

• Electrical components, such as radio, speakers, windshield wipers, or door locks that don't work;

• Any signs of water damage, mud, sand, or silt.

You can also order a CarFax report, which contains information about a vehicle’s history. But keep in mind that these reports don’t always provide a complete picture and there is often a lag between when a vehicle is, say in a flood, and when that information shows up in CarFax’s database. When in doubt, have the vehicle inspected by an expert.

Is selling a flood vehicle illegal?

Not necessarily, at least in Minnesota. Generally, there are four scenarios that can give rise to legal claims under Minnesota law:

• If the vehicle title has a flood “brand” or stamp and the dealer doesn’t tell you;

• If the vehicle is not roadworthy at the time of sale due to the flood.

• If the dealer knows the vehicle has been in a flood and lies to you when you ask about it;

• If the dealer knows that the vehicle has suffered damage in excess of 70% of its cash value due to the flood and doesn’t tell you;

There is quite a bit of nuance to all of these scenarios and a detailed legal analysis is necessary to determine whether the dealer broke the law in your case.

Just learned you bought a flood vehicle?
Get a free consult with auto fraud attorney Todd Murray.

Since 2009, Todd has been helping Minnesotans combat fraudulent auto sales by used car dealers. His work has returned hundreds of thousands of dollars to his clients’ pockets and has improved the legal protections for used car buyers throughout the state. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

Branded title? No title at all? A guide to common used car title problems.

We frequently hear from used car buyers dealing with a problem with their vehicle’s title. In some cases, the buyer is surprised to learn that their title is branded as “salvage” or “flood.” In other situations, the buyer never gets the title at all. Here’s a quick guide to these unfortunate situations.

I received my title, but found out that it’s “branded.”

A branded title has a permanent notation on it that the vehicle has a serious defect. Here's a list of the title brands used by the Minnesota Department of Motor Vehicles:

• Prior Salvage. This is usually used to indicate that the vehicle has previously been declared a total loss by an insurance company, often because of a prior accident.

• Flood. The vehicle has suffered flood or water damage.

• Reconstructed. The vehicle has been altered by the removal or substitution of essential parts

• Rebuilt. The vehicle has sustained damage in excess of 80% of its cash value and the "Prior Salvage" brand doesn't apply

• Lemon Law Vehicle. This usually indicates that the vehicle has been bought back by the manufacturer under the lemon law.

Minnesota law requires that a dealer verbally tell you about the brand during the sales presentation--they aren't required to disclose it in writing. If the dealer fails to do this, they’ve broken the law. Even, probably, if they didn’t know about the title brand.

A related situation is where the previous owner’s title is clean, but your title comes back branded as “salvage.” This occasionally happens because the Minnesota DVS does its own prior accident database search and will brand your title even if the prior title was clean. This creates a grey area, legally speaking, because the title at the time of sale (the prior owner’s title) is clean. This means, probably, that the dealer doesn’t have to disclose anything to you about the vehicle’s title.

I never received a title at all

A particularly awful form of auto fraud is when the dealer sells a vehicle without being able to provide a title. This puts the buyer in a really bad spot. She can't sell the vehicle without the title and can't prove that she owns it if she is stopped by law enforcement of if she needs to get it back after being impounded.

Fortunately, every used vehicle sale by a dealer creates a warranty that the vehicle has a good title. This warranty of title arises by law--so it doesn't have to be in writing--and you don't have to prove that the dealer knew about the title problem. This warranty of title can only be excluded by specific language that gives the buyer a reason to know about the title defect. This means that an "as-is" statement isn’t sufficient to exclude the warranty of title.

In general, the warranty of title is breached if:

• The dealer fails to provide title after the sale. This must be more than just a delay by either the dealer and/or DMV in processing the buyer's new title. Most often, a dealer fails to deliver title to the buyer when the title is being held by one of the dealer's unpaid creditors.

• The vehicle is subject to an undisclosed lien. Most commonly, this is a lien from the prior owner's lender.

• The vehicle is stolen.

As with most warranty claims, the buyer must give the dealer notice of the breach of warranty of title. If the dealer fails to fix the problem after getting notice, the buyer will have legal claims for breach of the warranty of title.

What are my legal rights if I got a branded title or didn’t get a title at all?

In most of these cases, you will have legal claims against the dealer for your damages, which are usually the diminished value of the vehicle. In some cases, you may be entitled to unwind the sale altogether. In most cases, the dealer will have to pay your attorney fees and court costs if your case is successful.

Found out your title is branded? Never got a title at all?
Get a free consult with auto fraud attorney Todd Murray.

Since 2009, Todd has been helping Minnesotans combat fraudulent auto sales by used car dealers. His work has returned hundreds of thousands of dollars to his clients’ pockets and has improved the legal protections for used car buyers throughout the state. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

The Minnesota Garnishment Guide: Part 3: Garnishment Exemptions

Part 1—Garnishment Basics
Part 2—How to Stop Garnishment
Part 4—Wrongful Garnishment

Certain monies are protected, or exempt, from garnishment in Minnesota. For example, a debt collector may not keep most forms of need-based government aid. Some of the most common forms of need-based aid are social security, supplemental security income (SSI), energy assistance, and medical assistance (MA). Other types of assistance that are exempt include: Minnesota family investment program (MFIP), emergency assistance and emergency general assistance (EA & EGA), work first program, general assistance medical care (GAMC), and Minnesota supplemental assistance (MSA).

Another important garnishment exemption protects 75% of your paycheck. Minnesota law also provides that child support, unemployment benefits, disability, workers' compensation, veterans’ benefits, some insurance settlement proceeds, and many pension plans are exempt from garnishment.

In addition, while it's not technically an exemption, a debt collector can't keep money from a joint bank account that doesn't belong to the judgment debtor.

Claiming garnishment exemptions for wage garnishment

If you're facing a wage garnishment, it's important to know that a debt collector can only take 25% of your after-tax wages. And if you make only the federal minimum wage (or less) your wages are usually completely exempt from garnishment. Further, if you receive any form of need-based aid, such as those described above, your wages are totally exempt from garnishment. Minnesota law provides for this exemption if you currently receive need-based aid, or if you received any need-based aid in the last 6 months. This is an important provision for Minnesotans receiving energy assistance. Most recipients of energy assistance receive it from October through March, which make the recipient's wages exempt for the entire year if she re-enrolls in the program the following season.

To claim an exemption, it's important first to understand the garnishment process. For a wage garnishment, the debt collector must provide you with a garnishment exemption form notifying you of their intent to garnish and an exemption form 10 days before starting the wage garnishment. To claim exemptions from a wage garnishment, all you have to do is write the appropriate garnishment exemptions on the form and mail it back to the debt collector. It's critical to do this immediately, or at least within 10 days of receiving the form. You should also provide proof of your exemption, such as your benefit notice, with the exemption form.

Claiming garnishment exemptions for bank garnishment

For a bank garnishment, you won't get notice of the garnishment until 5 days after the bank freezes your money. Fill out the garnishment exemption form that the bank and debt collector mail to you, noting the appropriate exemption. You also need to provide proof that the funds that were seized by the bank arose from an exempt source. This last point is the cause of considerable confusion. It's not enough to show the debt collector that you receive exempt money, you also have to prove that the funds that were actually seized contained this exempt money. Debt collectors will refer to this as “tracing”. Sending the debt collector a copy of your bank statements that show the deposit of exempt funds, along with your benefit statements will usually accomplish the task.

If you merely mail the completed exemption form to the debt collector, and fail to provide the required tracing, the debt collector will probably object to your exemption and refuse to return your money. If this happens, you should schedule a court hearing in front of a judge to determine whether your funds are exempt. Court administration will help you set up the hearing and provide notice of the hearing to the debt collector. On the day of your hearing, be sure to bring proof of your exemption AND bank statements proving the funds seized were from an exempt source. Failure to do so could delay the court's decision or could lead to the court denying your exemption.

A word of caution

Finally, it's important to understand that claiming an exemption when you're not entitled to one could lead to the court ordering you to pay a penalty to the debt collector. Make sure any exemptions you claim are legitimate.

Part 1—Garnishment Basics
Part 2—How to Stop Garnishment
Part 4—Wrongful Garnishment

The Minnesota Garnishment Guide: Part 4—Wrongful Garnishment

Part 1—Garnishment Basics
Part 2—How to Stop Garnishment
Part 3—Claiming Garnishment Exemptions

The Fair Debt Collection Practices Act prohibits debt collectors from doing anything that is unfair, untrue, harassing, or abusive. It also forbids debt collectors from taking action that they can’t legally take. Here are some typical FDCPA violations related to garnishments:

Making false statements in the garnishment paperwork

This could include things like: (1) claiming that they have a judgment when they don’t; (2) misstating the balance due; (3) incorrectly describing possible exemptions; and (4) instructing your employer to hold money longer than allowed (in Minnesota, 180 days).

continuing to garnish when the collector knows you’re exempt

If you’ve claimed a valid garnishment exemption and given the debt collector complete proof of your exemption, it’s illegal for them to continue with the
garnishment process. This includes making you appear at an exemption hearing when the collector already has proof of your exemption.

Threatening to garnish all of your wages

In Minnesota, a debt collector can only garnish 25% of your wages. So if a collector is lying if they threaten to garnish 100% of your wages.

garnishing for a debt you’ve already paid

If you’ve already paid the debt in full, you can’t be garnished for more money. Similarly, if you’ve negotiated a payment plan to resolve a debt and you’re current on that payment plan, a debt collector can’t garnish you.

Court judgment was vacated

Most garnishments happen after a court judgment has been entered. What if the court judgment is vacated, though? If the collection judgment is wiped out, then the collector's power to conduct a garnishment is wiped out.

Improper pre-judgment garnishment

Although most Minnesota garnishments happen after a judgment has been entered, the law does allow pre-judgment garnishments in limited circumstances. The way to tell if it’s a prejudgment garnishment is to look at the case caption. If there’s a judgment, it will list the court file number and date of the judgment. If there isn’t a judgment, it will say something like “subject to Minnesota Statutes 571.71, subd. 2.”

Debt collectors occasionally mess up this process. I've seen cases where they do a pre-judgment garnishment even though the defendant has answered the lawsuit. I've also seen cases where they garnish without sending the Notice of Intent to Garnish.

You can sue for wrongful garnishment

If a debt collector violates the FDCPA through a wrongful garnishment, you can sue them and hold them accountable for their illegal conduct. You can sue even if you owe the debt. If you win the case, you get: (1) $1,000 in statutory damages; (2) any provable actual damages--such as out-of-pocket loss or emotional distress; (3) the collector has to pay your attorney fees; and (4) the collector has to pay your court costs. Most consumer rights attorneys take FDCPA cases on contingent fee arrangements, which means you don’t have to pay any attorney fees up front.

Part 1—Garnishment Basics
Part 2—How to Stop Garnishment
Part 3—Claiming Garnishment Exemptions

Ready to talk to a lawyer about garnishment?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans defend garnishments. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

How to settle your debts

Considering debt settlement to resolve a collection lawsuit or otherwise pay off your unpaid debts? Here are some guidelines to consider as you weigh your options.

Be realistic about debt settlement, especially if you have multiple debts

We’ve settled hundreds of debts over the years and have found that a typical range for settlement is between 40% and 80% of the full amount sought. Keep in mind that this range is for a lump-sum settlement that you pay all in one shot. Where you land in this range will depend on your negotiating skills, your overall financial picture, and whether you have any defenses to the debt. Despite what you may read elsewhere, settlements for pennies on the dollar are very rare, especially if the creditor is suing or garnishing you.

If you’re unable to afford a lump sum payment in the 40% to 80% range, most creditors will take smaller monthly payments over a couple of years. But in exchange for the flexibility of a low monthly payment, you’re going to have to pay the full balance or pretty close to it.

If you’re considering settling multiple debts rather than filing bankruptcy, be brutally honest with yourself. Do you really have the resources to pay 40% to 80% of all of your delinquent debts in a lump sum? Can you realistically afford monthly payments for all of your debts? If not, consider another solution.

When negotiating with your creditors, remember that it’s a process 

If you’ve done a sober analysis of your finances and decided that you can afford to settle your debts, the next step is to reach out to your creditors and begin the negotiation process. Target a realistic settlement amount and make an opening offer somewhat lower than where you hope to land. Remember that there will likely be some back and forth during the negotiations, so you want to have room to increase your offers as the negotiation proceeds. 

We’ve found the process is smoothest if you make the opening offer. A common negotiation technique is to open with approximately half of where you hope to finish at. Your goal should be to get the ball rolling and coax the creditor into making a counteroffer that is less than the full balance. You can then increase your offers slightly to nudge the creditor further down toward your target settlement. Consider sharing a little bit about your finances if you think it will help your bargaining position.

Get the agreement in writing before you make your settlement payment

Once you've reached a verbal agreement with the collector, ask them to send you confirmation of the agreement in writing. Read the agreement carefully to be sure that it actually contains the terms that you agreed to. Any reputable debt collector will be willing to confirm a payment arrangement in writing, so be wary of one who won't. Keep the settlement letter for your records in case there’s a problem later.

When the time comes to finally make the settlement payment, make sure to keep a copy of the payment. For example, if you're paying with a personal check, get a copy of the canceled check from your bank. Similarly, if you're paying with a cashier's check, make a copy of the check and send it using certified mail. Along with the settlement letter, your proof of payment may be needed in the future to prove that you settled the account.

Be sure to get the proper follow-up documents

The appropriate follow-up documents vary depending on what point in the legal process you’re at when you settle the debt:

• If you settle the debt before you get sued, the collector's written confirmation of the agreement, plus your proof of payment, should be sufficient.

• If you settle the account after you've been sued, but before a judgment is entered, the collector should send you (and the court if the case has been filed) a dismissal WITH prejudice. A dismissal with prejudice means that the claim is fully resolved and can't be brought against you again. Don't accept a dismissal without prejudice if you've settled the account in full because there's a possibility that you could get sued again for the same claim.

• If you settle the account after you've been sued and after a judgment has been entered, the collector should send you and the court a satisfaction of judgment. And if your wages were being garnished at the time you settled the account, the debt collector should quash the garnishment.

Consider the tax consequences of any settlement

Before agreeing to any settlement, make sure you understand the tax consequences of it. In general, forgiveness of debt is considered income and you must pay taxes on it. There are exceptions to this rule, so it’s worth talking to your tax preparer to see if any of the exceptions apply to your situation. Your tax preparer may also be able to estimate the amount of taxes you will have to pay if you go through with the settlement.

Many creditors will send a 1099-C form to you and the IRS stating the amount of debt forgiven. It may be possible to get the creditor to promise not to send a 1099, but not all creditors will agree to this.

make sure your credit report gets updated after the settlement

Once you’ve made the settlement payment, it’s a good idea to check your credit report to verify that it has been updated. We recommend waiting 60-90 days after making the payment because it can take a few months for credit reports to update.

We suggest using AnnualCreditReport.com. This is the only website where you can get a free report. Make sure to download the report and save it for your records.

Once you have your credit report, make sure that the account that you settled is being reported properly:

• If you’ve made all the necessary settlement payments, the account should be reported as "settled, less than full balance" or something similar.

• If there was a court judgment, make sure it is being reported as "satisfied.”

• If you’re still making settlement payments, it’s likely that the account is still reporting as delinquent. Check back when you've made all the payments to be sure it's been updated to settled status.

We often get asked whether it’s possible to negotiate a “pay for delete.” This means that in exchange for your settlement payment, the creditor agrees to delete the credit report trade-line altogether. In our experience, this is a rare outcome. There’s no harm in trying to negotiate it, but it probably doesn’t make sense to let the settlement fall apart if the creditor won’t agree to a deletion.

Want to talk to a lawyer about debt settlement?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans resolve their unpaid debts, saving his clients millions of dollars in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

Dealing with Messerli & Kramer? What you need to know.

Who is Messerli & Kramer?

Messerli & Kramer is a debt collection law firm headquartered in Plymouth, Minnesota. Their lawyers routinely appear in court throughout Minnesota and also handle debt collection cases in Wisconsin, Iowa, the Dakotas, Nebraska, Montana, Colorado, and Ohio.

Messerli does collection work for some of the largest banks, credit card companies, and debt buyers in the country. They are aggressive and very effective at recovering money for their clients.

What to do if you’re being sued by messerli & Kramer

If you’re dealing with a debt collection lawsuit from Messerli & Kramer, you typically have three options: (1) defend the case; (2) negotiate a settlement; or (3) file bankruptcy.

It’s critical to familiarize yourself with the court process. Messerli knows the court rules very well and will use your lack of familiarity to their advantage in pursuing a court judgment against you. Our free Minnesota Debt Collection Lawsuit Guide is a great place to start learning more about the process.

What to do if you’re being garnished by Messerli & Kramer

If Messerli is garnishing your bank account or wages, there are four possible ways to stop the garnishment: (1) claim an exemption; (2) negotiate a settlement; (3) vacate the judgment; or (4) file bankruptcy.

When dealing with a garnishment from Messerli & Kramer, knowledge about the process and the pros and cons of each potential solution is critical. Our free Minnesota Garnishment Guide will get your started.

Need help dealing with Messerli & Kramer?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans dealing with debt collection by Messerli & Kramer. His work has saved his clients lots of money and many sleepless nights. Todd’s clients describe him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

The Minnesota Debt Collection Lawsuit Guide: Part 1—Summons & Complaint

Part 2—The Answer
Part 3—After the Answer

What is a debt collection summons?

A debt collection summons is a notice that you’re being sued to collect a debt. The summons is accompanied by the complaint, which details the allegations the creditor is making against you. We refer to a summons and complaint, collectively, as a “lawsuit.”

What does it mean to be “served” with a summons?

“Served” is just a fancy word for “notified.” Under the court rules, the defendant must get notice of the summons and complaint. This is typically done through personal service—where the summons is given directly to the defendant. A summons and complaint can also be served by leaving it with a person of “suitable age and discretion” at the defendant’s residence. In rare circumstances, a summons and complaint can be served by mail or even by publication in a newspaper.

Why doesn’t the summons have a court file number on it?

In most states, debt collectors must file a case with the court before they can serve the summons and complaint on the defendant.

In Minnesota, however, the rules are different. Here, the summons and complaint can be served on the defendant without being filed with the court. This is called “pocket filing.” Because the case isn’t filed with the court at the time of service, it won’t have a court file number on it. And if you were to call the court and ask about the case, they would have no idea what you’re talking about.

Don’t be fooled by this. Just because the summons doesn’t have a court file number on it doesn’t mean that it isn’t valid. You still have to properly respond to the summons and complaint or you will lose the case by default.

So, what do I do with the summons?

If you’re like many people, you’re tempted to do nothing and wait until you get a court date. Unfortunately, this common thinking is a huge mistake.

In Minnesota, you must answer a summons and complaint within 21 days of the date you are served. If you don’t, the creditor will apply for a default judgment. In a default case, the court considers all of the allegations in the complaint as true and gives the creditor whatever they’re asking for. In other words, the debt collector wins automatically—not because they have a better case, but because you didn't participate. In debt collection cases, a default judgment is entered administratively by a court clerk without a court hearing. In fact, in a default, a judge will never even see the case.

A default judgment is a court ruling that you owe the creditor money. And once a creditor has a judgment, they have the power to garnish your bank account and your paycheck.  Although default judgments can occasionally be overturned, for the most part they are final.

This is why it’s so important to answer a debt collection lawsuit within the 21 days. If you don't, you no longer can raise any defenses and will probably have to either negotiate a settlement or consider bankruptcy.

Part 2—The Answer
Part 3—After the Answer

Ready to talk to a lawyer about your collection lawsuit?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans defend debt collection lawsuits. His work has saved his clients millions of dollars (and many sleepless nights). Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

Debt buyer lawsuit: What you need to know.

A debt buyer lawsuit is a collection lawsuit brought by a company that bought the debt after it went into default. It's a completely different animal than a collection lawsuit brought directly by the original creditor.

What is a debt buyer?

A debt buyer is a company that purchases delinquent debts from creditors for pennies on the dollar and then tries to collect the full amount, often making a nice profit in the process. Debt buyers have strange names like Midland Funding, Cavalry Portfolio Services, or Portfolio Recovery Associates. As with any business, they come in all shapes and sizes. Some debt buyers operate nationwide and have millions or billions of dollars in accounts. Others operate regionally and have much smaller debt portfolios. Some specialize in certain types of debt, like credit cards, second mortgages, and the like.

Here's a partial list of some of the debt buyers I've come across:

• Asset Acceptance

• Cavalry Portfolio Services

• Central Prairie Financial

• Dakota Bluff Financial, LLC

• Debt Equities, LLC

• Equable Ascent Financial, LLC

• Livingston Financial, LLC

• LVNV Funding

• Midland Funding

• Palisades Collection

• Pipestone Financial, LLC

• Portfolio Recovery Associates

• Red Rock Lake Financial, LLC

• Unifund CCR Partners

Why it's critical to answer a debt buyer lawsuit

Debt buyers are notorious for filing collection lawsuits in bulk. According to a 2009 article in the William Mitchell Law Review, debt buyers obtained 2,400 default judgments a month in Minnesota. These judgments were obtained by default because the consumer didn't show up in court. In almost all of these cases, the debt buyer didn't have to present any evidence to a judge.

This last point is crucial because debt buyers acquire accounts in bulk and often don't have the account-level documents needed to prove their claims. That's why it's so important to answer a debt buyer lawsuit to ensure that a judge reviews their evidence.

Possible defenses to a debt buyer lawsuit

One good way to defend a debt buyer lawsuit is to challenge their proof of ownership. Because they didn't extend the credit, they should be required to prove their ownership of the account and their entitlement to collect the balance. The more times a debt has been bought and sold, the less likely it is that the current debt buyer can prove each step in the chain of ownership.

Another possible defense is to dispute the debt buyer's evidence. Under the court rules, if a party wants to introduce documents (like credit card billing statements, for example) it must provide testimony about the reliability of the documents. This can be difficult for the debt buyer to do properly because they didn't create the account documents in the first place.

An additional defense to consider in a debt buyer lawsuit is the statute of limitations. The statute of limitations is the length of time that a creditor has to start a lawsuit after the account goes into default. In Minnesota, it's generally six years, although there are exceptions. It's not uncommon for a debt to be bought and sold multiple times and some debts bounce around for years before a legal action is taken. These repeatedly-sold accounts are sometimes called zombie debts (because they never die) and the statute of limitations is often a powerful defense in these cases.

There are other possible defenses that are more fact specific and will depend the particular facts and circumstances of your case. It may be wise to discuss your case with an attorney experienced in defending debt buyer lawsuits before proceeding too far to see what defenses apply to your case and how strong they are.

Learned your vehicle is salvage? Everything you need to know

One of the most serious type of auto fraud is the concealment of a vehicle's salvage history. A “salvage” vehicle means one that was declared a total loss by an insurance company, often because of a serious accident or collision. It is believed that millions of salvage vehicles are patched up and sold to unsuspecting consumers each year.

How does a dealer get away with selling a salvage vehicle?

The only way to profitably sell a salvage vehicle is to conceal its wreck history from the buyer. A dealer can buy a salvage car for less than wholesale price, make cosmetic repairs, and sell the vehicle to an unsuspecting buyer as a clean vehicle at full retail price. For example:

As long as the dealer conceals the wreck history from the buyer, trafficking in salvage vehicles can be a profitable practice for a shady used car dealer.

why should I care if i have a salvage car?

There are three main reasons.

Most importantly, it’s possible that a salvage vehicle could be unsafe to drive. A serious collision can result in frame or structural problems. Once a car's structure is compromised, it may not be possible to restore its original integrity. This can pose serious safety risks if the vehicle is ever in another accident. The damaged frame will probably not perform as the manufacturer intended it to, which can expose passengers to significant injuries or even death.

Second, even if the vehicle isn’t unsafe, you almost certainly overpaid for it. A vehicle with a salvage history will almost always be worth less than a clean vehicle. The reason is simple: most people won't buy a vehicle with an accident history, and they definitely won't pay clean retail price for it. Depending on the circumstances, a salvage history may diminish a vehicle's value by over fifty percent.

Third, you’ll never be able to trade in a salvage vehicle. One of the first things a dealer does when evaluating a trade-in is pull a CarFax report. If the report shows a salvage history, the dealer is sure to pass on your trade.

I think my vehicle is salvage. How do I know for sure?

Here are a few tips for learning whether your car was previously in an accident:

• Get a vehicle history report from Carfax. These reports have alerts if there’s an accident in the vehicle’s history.

• Request a title history from the Department of Motor Vehicles. Depending on how far the title history goes back, it may reveal a salvage history.

• Get it inspected by a body shop. Tell the body shop that you suspect that the vehicle has been in an accident and that you want them to examine it to confirm. If the inspection reveals a prior accident, ask them whether there is any structural damage or safety concerns. Also ask whether the signs of the accident would have been apparent to a knowledgeable car dealer. And be sure to get an estimate for any recommended repairs.

Selling a salvage vehicle has to be illegal, right?

Not necessarily, at least in Minnesota. Generally, there are four scenarios that can give rise to legal claims under Minnesota law:

• If the vehicle title has a salvage “brand” or stamp and the dealer doesn’t tell you;

• If the vehicle is not roadworthy at the time of sale due to a safety issue.

• If the dealer knows the vehicle has been in an accident and lies to you when you ask about it;

• If the dealer knows that the vehicle has suffered damage in excess of 70% of its cash value and doesn’t tell you;

There is quite a bit of nuance to all of these scenarios and a detailed legal analysis is necessary to determine whether the dealer broke the law in your case.

Just learned you bought a salvage vehicle?
Get a free consult with auto fraud attorney Todd Murray.

Since 2009, Todd has been helping Minnesotans combat fraudulent auto sales by used car dealers. His work has returned hundreds of thousands of dollars to his clients’ pockets and has improved the legal protections for used car buyers throughout the state. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

The Minnesota Debt Collection Lawsuit Guide: Part 2—The Answer

Part 1—The Summons & Complaint
Part 3—After the Answer

Recapping Part One: If you're served with a summons and complaint in Minnesota, you must answer within 21 days. Even if it doesn't have a court file number. Even if the court tells you there's no record of it. If you don't answer the lawsuit, the creditor will win the case automatically without a court hearing. Period.

An answer is a formal legal document that responds to each of the allegations in the creditor's complaint. A phone call or letter isn't sufficient. Here are the five steps for answering a Minnesota collection lawsuit.

Step # 1: Fill out the case caption

Start your answer by filling out the case caption. This is where the name of the county and judicial district are listed. It's also where the plaintiff and defendant's names appear. You can basically copy the caption for your answer directly from the summons. Just change the title of the document from "summons" to "answer." When you're done, it should look something like this:

Step # 2: Respond to all of the allegations in the complaint

The body of your answer is where you respond to the allegations in the complaint. There are basically three responses to an allegation: (1) admit; (2) deny; and (3) deny based on a lack of information. It's probably best for your answer to have a separate paragraph that responds to each paragraph in the complaint:

Your responses must be truthful, so if you know that the allegation is true, you have to admit for. For example, if the collection lawsuit alleges that you live in Hennepin County and you live in Hennepin County, you have to admit it. On the other hand, if the lawsuit alleges that you live in Hennepin County and you live in Ramsey County, then you must deny that allegation.

Many times, you won't know the answer to an allegation. For example, many debt buyer lawsuits allege that the debt buyer purchased the account from the original creditor. Since you weren't a party to this transaction, you have no way to know if this allegation is true or not. So it's usually best to deny the allegation based on a lack of information. You only have to admit something that you know for a fact is true.

You should also watch out for multiple allegations in a paragraph. It's possible to admit one part of an allegation and to deny another. Read each allegation carefully and be sure to respond to all of its parts and sub-parts.

Step # 3: Add your affirmative defenses

The next step is to add your defenses. These should include any reason why you don't think you owe the money or why the creditor shouldn't win the case. Here's an example:

So what defenses should you include? Keep in mind, of course, that there has to be a truthful factual basis for any defense you include in your answer. With that caveat in mind, here are four defenses that should defeat a collection lawsuit and three that won't get you anywhere:

• Good defense: Statute of limitations. The statute of limitations is the amount of time set by law for a creditor to start a lawsuit against you. In Minnesota, for example, the statute of limitations for most credit card lawsuits is six years. Other types of debt have different statutes of limitations. For example, a car loan typically has a four year statute of limitations.

  Keep in mind that the statute of limitations provides that the lawsuit has to be started within the required time. It doesn't mean that the lawsuit has to be finished within that time.

  Once you know what the statute of limitations is, you need to determine when it starts to run in your case. Generally, the statute of limitations begins to run on the first day that you are in default on your account. A quick way to figure out when your account went into default is to determine the date that you made your last regular payment. Although this won't always be a precise date that the statute of limitations began to run, it's a good estimate.

  When you know the applicable statute of limitations and the date it started in your case, the rest is just simple math. Using Minnesota's six-year statute of limitations as an example again, if you defaulted on your account on December 15, 2015, the creditor must start the lawsuit against you no later than December 15, 2021.

• Bad defense: Financial hardship. Unfortunately, the fact that you can't afford to pay is not a defense to a collection lawsuit. The issue in a collection case is whether you're legally obligated to pay, not whether you can afford to pay. That fact that you're unemployed, receive public assistance, or are otherwise "judgment proof" may mean that the debt collector will never collect any money from you. But it's not a legal defense to a collection lawsuit.

  Similarly, the fact that the debt collector refused to work out reasonable payment arrangements with you is not a valid defense. While it can be frustrating when a debt collector won't work with you, a court doesn't have the power to force a creditor to accept a settlement or payment plan.

• Good defense: Unauthorized use or fraud. Federal law provides that a cardholder is not liable for the unauthorized use of a credit card. The cardholder is not required to notify the issuer of the unauthorized charges to use this defense in a collection case. The creditor bears the burden of showing that the use of the card was authorized and the creditor probably can't meet its burden of proof by merely submitting billing statements and asserting the cardholder never objected to them.

• Bad defense: No signed contract. In credit card cases, creditors typically don't have to produce a signed contract to win the case. Instead, credit card cases are often brought under a legal doctrine called "account stated." Account stated is claim where the creditor must show that the defendant received billing statements and didn't object to them. There are defenses to this argument, particularly if the plaintiff is a debt-buyer, but the point is that a signed contract doesn't have to be produced for the creditor to win.

• Good defense: I already paid off this account. This goes without saying. If you've already paid off the account, you don't have to pay it again. In legal jargon, this defense is called accord and satisfaction.

• Bad defense: Divorce decree says my ex has to pay. Just because your divorce decree ruled that your ex is solely responsible for payment doesn't mean you can't be sued for the account too. Divorce courts don't have the power to modify contracts between you and a third-party creditor.

• Good defense: No evidence of assignment. Many collection lawsuits are brought by debt buyers. Debt buyers are companies who buy debts for pennies on the dollar and file lawsuits to collect the full balance. Because of this, it's not enough for the debt buyer to show that you owe the original creditor money. They also have to prove that they have been assigned the debt and are its current owner.

Step # 4: Sign the answer

After listing all of your affirmative defenses, you must sign your answer. When you sign, you're attesting that everything in the answer is truthful and that you're not using the answer for an improper purpose, such as to harass the other side or to commit fraud on the court. You should include your address and phone number in the signature block:

Step # 5: Mail the answer to the plaintiff’s lawyer

Once you've completed the answer, make two copies. You serve one copy of the answer by mailing it to the debt collector's lawyer. It's best fill out a sworn statement, called an affidavit of service, to prove when you served the answer. You can also just mail the answer certified with a return receipt.

Keep  the second copy of your answer for your records. You'll need to file it with the court once the creditor opens a court file.

Part 1—The Summons & Complaint
Part 3—After the Answer

Ready to talk to a lawyer about your collection lawsuit?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans defend debt collection lawsuits. His work has saved his clients millions of dollars (and many sleepless nights). Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

The Minnesota Debt Collection Lawsuit Guide: Part 3—After the Answer

Part 1—The Summons & Complaint
Part 2—The Answer

Now that you’ve served your answer to the collection lawsuit, you’re probably wondering what happens next. After all, the answer is only the beginning of the contested part of the case.

Here’s an overview of the remaining steps of the process.

Step 1 -- Initial disclosures and discovery plan

After the answer is served, the parties are required to confer about the case and develop a plan for discovery (Step 2, below). This conference, which can be by phone, is required to take place within 30 days of the original due date for the Answer. Most debt collection law firms will send a letter to set up the conference.

The parties are also required  to disclose all known witnesses and supporting documents, as well as to itemize the claimed damages and describe any insurance coverage for the claims, at this stage of the case. These are known as Rule 26 initial disclosures and must be sent to the other side within 60 days of the original due date for the Answer.

Step 2 -- Discovery

Once the discovery conference takes place , the next step in a debt collection lawsuit is discovery. If the case has not been filed with the court, there is no explicit time frame for discovery to happen and the parties are free to serve discovery whenever they wish. Once the case is filed with the court, the court will issue a deadline for discovery to be completed by.

Discovery is simply an opportunity for the parties to exchange information about the claims and defenses involved in a case. Discovery is not compulsory and a party is only required to provide information if they're properly asked. The most common forms of discovery in a debt collection case are Interrogatories, Request for Production of Documents, and Requests for Admission. Interrogatories are basically just questions that one party asks of the other. Requests for Production of Documents, as the name implies, requires that certain documents related to the case be produced. And Requests for Admission are essentially true or false questions about the claims or defenses in the case.

To request discovery, a party has to properly serve their Interrogatories, Requests for Production of Documents, or Requests for Admission. Written discovery is usually served by mailing the requests to the other side. The other party then has 30 days from the day the discovery was served to respond fully. Simply mailing a letter to the other side asking them to provide information about the case is not sufficient and doesn't trigger the other side's duty to respond.

Requests for Admission are probably the most critical part of discovery, because if they are not responded to within 30 days, they are considered admitted. Creditors write their Requests for Admission carefully so that if the consumer doesn't respond to them, they will end up admitting each element of the creditor's claims. I've seen cases where the only evidence that the creditor put in front of the judge was the consumer's failure to respond to the Requests for Admission.

Step 3 -- Filing the case with the court

In 2013, the court rules were changed to require that cases be filed with the court and brought under court supervision within one year from the date the Complaint was served. If the case isn't filed within the one-year time limit, it is automatically dismissed with prejudice and can't be re-started. The rules allow the parties to agree to extend this deadline, but there rarely is a reason for a defendant in a debt collection lawsuit to agree to extend this deadline.

To file the case, each party must file their initial pleading (ie. the Complaint or the Answer) and pay the court filing fee, which is about $300. The parties also have to file their discovery plan from Step 1 above. Once the case is filed, it will typically be assigned to a judge and the court will issue a schedule with deadlines for the case.

Step 4 -- Summary Judgment Motion

The next step in the majority of debt collection lawsuits is the creditor's summary judgment motion. This is a hearing in front of a judge where the creditor will offer all of its evidence and legal arguments and ask the judge to give them a judgment. Defending a summary judgment motion is a complicated process, but essentially it requires the consumer to file a brief with his legal arguments, any written testimony that he wishes the court to consider, and any documents that he wants the court to review. There is a hearing where the judge will ask questions of both sides. The judge then considers all of the arguments and evidence and decides whether the creditor is entitled to a judgment. If the judge rules in favor of the creditor, a judgment is entered and the case is over. If the judge rules against the creditor, then the case will proceed to trial.

Step 5 -- Mediation

In most cases, the court requires the parties to engage in mediation. Mediation involves a neutral third-party, sometimes a retired judge, that tries to help the parties resolve their differences and settle the case. The parties usually have to bear the cost of hiring a mediator, although more and more courts are offering low-cost mediation for qualifying cases and parties. The mediator can't require you to settle the case, but they can help you see the benefits of settlement and propose different settlement options.

Step 6 -- Pre-Trial and Trial

If you're fortunate enough to defeat the creditor's summary judgment motion and the parties don't settle at mediation, the next step in a debt collection lawsuit will be a trial. The judge will issue detailed instructions about the time leading up to trial. There are so many variables at this point that it's difficult to describe all the potential scenarios. If you get to this point, you would benefit greatly from discussing your case with an attorney. You have a great deal of leverage to get the case resolved if you defeat the summary judgment motion and an experienced consumer attorney can help you maximize that leverage to get the best possible outcome.

A final word -- the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act is a federal law that regulates what debt collectors can and can't do when collecting debts. The FDCPA applies even if you owe the debt. If you're involved in a debt collection lawsuit, you should to educate yourself about the FDCPA. This post is a good place to start. Basically, a debt collector can't harass you, lie to you, or use any unfair collection tactics. If a debt collector violates the FDCPA, you can sue it for up to $1,000, plus any actual damages. The debt collector also has to pay your attorney fees and costs if you win your FDCPA case. A FDCPA claim can often be brought as a counterclaim in a debt collection lawsuit, which often will give you additional leverage to get the suit resolved.

Part 1—The Summons & Complaint
Part 2—The Answer

Ready to talk to a lawyer about your collection lawsuit?
Schedule a consult with debt defense lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans defend debt collection lawsuits. His work has saved his clients millions of dollars (and many sleepless nights). Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

Learned your odometer was rolled back? Everything you need to know.

According to the National Highway Traffic Safety Administration, over 450,000 vehicles are sold every year with false odometer readings. The NHTSA says this rampant fraud costs car buyers over $1 billion dollars annually. If you just learned that you are one of these unlucky car buyers, here is everything you need to know.

How does someone roll back an odometer?

Scammers use digital equipment that plugs right into a vehicle’s internal computer system to alter the mileage. Indeed, a quick search for “odometer rollback tool” returns a bunch of “mileage correction” devices:

Why do scammers tamper with odometers?

Easy. Rolling back the odometer allows a heavily-worn car to be sold for a newer-car price. For example, a 2013 Toyota Camry might sell for about $10,000 with 100,000 miles on it. With 200,000 miles on it, though, it sells for only $7,300. An unscrupulous car dealer might see that $2,700 as easy money.

i think my car’s odometer was rolled back. How do I know for sure?

Here are a few tips for finding a rolled-back odometer, either before or after the sale.

• Get a vehicle history report from Carfax. These reports have alerts if there’s an odometer discrepancy in the vehicle’s history.

• Check the vehicle for past maintenance records. Oil change and other maintenance records always show the mileage at the time the vehicle was in the shop. Be sure to look in the glovebox and under the seats for left-behind records. You should also check the windshield and door frame for past maintenance stickers.

• Request a title history from the Department of Motor vehicles. Depending on how far the title history goes back, it may reveal odometer discrepancies.

• Inspect the wear and tear on the vehicle. Take the car to mechanic to see if they can find evidence that the car is more “used” than it appears.

WHY SHOULD I CARE IF MY vehicle’S ODOMETER was altered?

Two reasons.

First, you overpaid for the vehicle. Probably by a lot.

Second, you’ll never be able to trade the vehicle in. One of the first things a dealer does when evaluating a trade-in is pull a CarFax report. If the report shows an odometer discrepancy, the dealer is sure to pass on your trade.

Similarly, if you try to sell the vehicle to a private party, you’ll have to disclose the odometer discrepancy. No car buyer in his right mind is going to buy a vehicle with a rolled back odometer.

tampering with an odometer has to be illegal, right?

Definitely. Both federal and Minnesota law prohibit odometer tampering. The law also prohibits sellers from knowingly making a false odometer disclosure even if they weren’t the one who rolled back the odometer.

If my vehicle’s odometer was rolled back, what are my legal rights?

If you’ve been victimized by odometer fraud, the law allows you to sue the perpetrator. If you win the case, the court must award you $10,000 or three times your actual damages, whichever is greater. Further, the defendant has to pay for your attorney fees and court costs.

In addition to these civil penalties, the law provides for criminal penalties for odometer fraud.

Just learned your vehicle’s odometer was rolled back?
Get a free consult with auto fraud attorney Todd Murray.

Since 2009, Todd has been helping Minnesotans combat fraudulent auto sales by used car dealers. His work has returned hundreds of thousands of dollars to his clients’ pockets and has improved the legal protections for used car buyers throughout the state. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

How to respond to a debt collector's requests for admission

A favorite litigation tactic used by collection lawyers in a debt collection lawsuit is to serve an unsuspecting consumer with requests for admission. These are typically a series of statements that you are asked to admit or deny. In other forms of litigation, requests for admission are typically used to figure out what facts are disputed in the case. But debt collectors don't use requests for admission to learn more about what facts you dispute. In fact, they couldn’t care less about your answers and would prefer that you didn't answer them at all.

Why? Because if you don't answer the requests for admission within 30 days, every statement in them is then considered to be true. So debt collectors structure them in a way that if you don't answer, you've admitted each element of their case. And debt collectors are well-aware that the majority of people won’t answer the admissions because they don't understand the serious consequences of not doing so.

This is just another example of debt collectors using a court rule for something other than its intended purpose. I've seen debt collectors ask judges to rule in their favor based only on the consumer's failure to respond to the requests for admission. They didn't produce any billing statements, applications, terms and conditions—any evidence. And though I suspect that most judges know exactly what the debt collector is up to, their hands are tied by the court rules.

So the lesson here is to respond to every request for admission within 30 days. You only have to admit the statement if you know for a fact that it’s true. For example, if the statement asks you to admit having a credit card with a specific 16-digit account number, unless you know for sure that is your account number, you can probably deny the request. Of course, if you have copies of your billing statements with that account number on them, you'll probably have to admit that request.

Stop foreclosure now

Bankruptcy is the only way to guarantee a foreclosure is stopped immediately. All the other ways of stopping foreclosure (asking for a modification, filing a postponement with the county, etc.) don’t stop foreclosure immediately either because they take time or they rely on the lender to take action. Bankruptcy is a powerful tool because it puts things into your hands and allows you to act right away.

How to stop foreclosure immediately

Filing a Chapter 7 or a Chapter 13 bankruptcy stops foreclosure right away. Any foreclosure sale that is scheduled is not only immediately canceled as of the moment a bankruptcy petition is filed, but if the sale happens regardless of the bankruptcy, the lender is required to undo it right away.

When do you need to file bankruptcy to stop a foreclosure sale?

A foreclosure sale can be stopped as long as the bankruptcy was filed immediately before the sale took place. This means that if the sale was scheduled for 10 a.m. on a Friday, filing a bankruptcy case at 9:59 stops the foreclosure. Once the sale occurs, a later bankruptcy will no longer stop that foreclosure—there may still be reasons to file, but a mortgage cannot be brought back into good standing (without paying it off in full) once the sale happens.

How much lead time does my lawyer need to prepare my case?

We have filed bankruptcy the same day the borrower got in touch. The more lead time we have, the better, but we’re often your best option if you’re down to the wire.

What do I need to gather before I stop my foreclosure?

To stop an emergency foreclosure, we’ll need a couple of things. First, your pre-filing bankruptcy fee will need to be paid in full ($2,250-$4000, depending on the case) and in certified funds (cash, cashier’s check, money order). You’ll also need to file an online credit counseling class (this is mandatory before we file an emergency case). Other than that, what you’ll need varies case-by-case, and we can let you know when we talk.

What you need to know about the collection of old debts

If you're facing debt collection on an account that is more than a couple of years old, the first thing you should do is figure out how long the statute of limitations is. The statute of limitations is the amount of time set by law for a creditor to start a lawsuit against you. In Minnesota, for example, the statute of limitations for most debt collection lawsuits is six years. This means that the lawsuit only has to be started within six years. It doesn't mean that the lawsuit has to be finished within six years.

Once you know what the statute of limitations is, you need to determine when it starts to run in your case. Generally, the statute of limitations begins to run on the first day that you are in default on your account. A quick way to figure out when your account went into default is to determine the date that you made your last regular payment. Although this won't always be a precise date that the statute of limitations began to run, it's a good estimate.

When you know the applicable statute of limitations and the date it started in your case, the rest is just simple math. Using Minnesota's six-year statute of limitations as an example again, if you defaulted on your account on December 15, 2014, the creditor must start the lawsuit against you no later than December 15, 2020.

If the creditor doesn't start the collection lawsuit within the statute of limitations, it loses its ability to use the judicial process to collect the debt. This doesn't necessarily mean that the creditor can't call or write you to collect the debt. In Minnesota, a debt collector may collect a debt that is past the statute of limitations. But it can't threaten to sue you or sue you for an old debt that is past the statute of limitations. And if the debt is more than seven years old, it can't be reported to the credit bureaus.

If the debt collector brings a lawsuit on a debt that is past the statute of limitations, you have an absolute defense to the collection lawsuit. You need to raise this defense in your answer or it may be waived. Also, it's your burden to prove that the statute of limitations is up and you may need to gather some evidence first. But this is a powerful defense that, if proven, will result in the debt collector's case being thrown out.

In addition, many courts have held that a debt collector violates the FDCPA when it threatens to bring or brings a lawsuit for an old debt that is past the statute of limitations. When a debt collector violates the FDCPA, you have the right to sue them and the law provides that the collector has to pay you up to $1,000, plus any provable actual damages--such as emotional distress. Further, the debt collector has to pay your attorney fees and costs. So if everything goes your way, you could get the debt wiped out and get some money back from the debt collector.

A quick summary of the law on the collection of old debt

(1) In Minnesota, a debt collector can attempt to collect a debt past the statute of limitations through phone calls, letters, or similar methods. This rule may be different in other states.

(2) A debt collector in Minnesota cannot, however, threaten to sue you or sue you for a debt that is past the statute of limitations. This is also true in most other states.

(3) A debt collector cannot put a debt that is more than seven years old on your credit report. This is true everywhere. I would also take the position that a debt collector cannot even threaten to report a debt that is past the statute of limitations.

How to answer interrogatories in a debt collection lawsuit

In the past, I've written about the importance of answering a debt collection lawsuit. But answering the lawsuit is only the first step. After the debt collector receives your answer, they'll usually send you written discovery. The discovery will probably have interrogatories, requests for production of documents, and requests for admission. In Minnesota, it's critical that you respond to each of these things within 30 days of receiving them.

This post focuses on how to respond to interrogatories. Interrogatories are simply just questions about the case. Debt collectors are allowed to ask about anything that is relevant to their claims or your defenses. Do your best to answer each question. If you don't understand what the interrogatory is asking, then you may answer that you object to the interrogatory as vague or ambiguous. Your answers to each interrogatory are due within 30 days. Unlike requests for admission, it's not fatal to your case if you don't answer within this time. But you should make every effort to answer within 30 days and you should never just ignore the interrogatories.

A final word of caution: there are many forms available online that seemingly can be used to answer debt collection discovery. But before you just copy and paste from the internet, make sure you understand what the form answers mean and whether they apply to the discovery requests for your case. And be careful with objections. Unless you understand what an objection means and are relatively sure it applies to the question you've been asked, it's probably best to just answer the question.