Debtor’s Rights Explained: Insights From the Law Offices of Wenarsky and Goldstein, LLC

Learn about debtor’s rights with the Law Offices of Wenarsky and Goldstein, LLC. Protect yourself from unfair debt collection with our comprehensive guide.

What Are Debtor’s Rights?

Owing debt can be a burden, especially when you’re facing financial difficulties. In such circumstances, creditors (those you owe) might take several steps against you to recover the debt owed. However, even though you might be indebted, you still have rights that the creditor must not breach in their debt recovery efforts.

Understanding the extent of your rights as a debtor is crucial to avoiding or preventing creditor harassment and maintaining peace of mind while you work on a permanent solution to fix your financial situation.

Our skilled bankruptcy attorney at the Law Offices of Wenarsky and Goldstein, LLC can help you understand your debt relief options and protect your rights as you work to overcome your financial troubles. 

Below, we highlight some of the most important rights you have as a debtor to inspire you to seek legal protection and confront your situation with confidence, especially if you’re dealing with creditor harassment. Please read on to learn more.

Your Rights as a Debtor

Right to Privacy

Your debt is a private affair between you and the debtor and is not a subject for public consumption. So if, for example, a creditor or debt collection agency calls you on the phone regarding the debt, they must confirm your identity before discussing anything else.

You are also entitled to verify their identity and the debt without any consequence.

The Right to Seek Protection From Creditor Harassment

Sometimes creditors and debt collection agencies can go overboard with their collection efforts, perhaps because they feel entitled to recover debts by any means.

Some creditors or debt collectors use threats, obscene or abusive language, calling at odd hours or at the debtor’s workplace, or making false or misleading statements about the debtor to bully a debtor into repayment.

In addition to being ineffective, such acts are illegal. So, if you’ve been receiving threatening calls or face harassment from your creditors, you can take legal action against them to stop the harassment. If they wish to recover the loan, they must do it right.

Right to Information About a Debt

You have the right to question a debt or seek clarification about any detail you’re unsure about. 

It could be that you think the debt amount is wrong, or the debt is not yours and you suspect identity theft, or you’ve already paid the debt. Whatever your reason, you can ask for confirmation and documentation from the creditor or debt collector to help you understand the nature of the debt you supposedly owe.

The Right to Redeem Property After Foreclosure or Repossession

When you take a loan and use your asset as security or collateral, the creditor or loan company can foreclose on or repossess (seize )the collateral and use it to offset the debt if you fail to comply with the repayment plan. 

Foreclosure and repossession are legally permitted, but they are governed by strict conditions and rules. For example, one of the rules of foreclosure in New Jersey requires creditors to give debtors a written foreclosure notice before initiating foreclosure proceedings. The debtor also has a chance to redeem the property during the foreclosure proceedings, after the foreclosure order, and for a few days after the property is auctioned.

Similarly, after a property such as a car is repossessed, the debtor is allowed time to redeem the seized property. A creditor cannot interfere with this right as long as they get their money back.

The Right to Defend Against Creditor Lawsuits

A creditor seeking to recover a debt may initiate a debt collection lawsuit against you.

You have a right to defend yourself during the lawsuit. Whether or not your defense will succeed is an entirely different matter and depends on the facts of your case, the applicable law, and your lawyer.

The Right to Seek Legal or Professional Assistance

When you have problems paying your debt, you may feel pressured to agree to something or make a hasty decision when a debt collector or creditor contacts you. As a rule, before agreeing to any arrangement, you have the right to consult a professional such as a financial advisor or attorney. That way, you are certain that the decisions you make will be in your best interests.

These rights listed above do not exist in isolation but are based on federal and state laws, such as the Fair Debt Collection Practices Act (FDCPA) and the New Jersey Fair Foreclosure Act. Anyone who breaches your rights as a debtor breaks the law and can be made to answer for their actions in a court of law.

Understanding the extent of your rights under these laws is therefore important as a first step to protecting them.

How Bankruptcy Can Help Protect Your Rights as a Debtor

Bankruptcy is a legal process that allows indebted individuals or businesses to eliminate or repay their debts under the supervision of the federal bankruptcy court. 

Often misunderstood, this legal remedy can be a beacon of hope, offering respite to individuals struggling to keep afloat amid financial turmoil. 

There are several types of bankruptcy, but the most common, especially for individuals, are 

  • Chapter 7 Bankruptcy: This involves the liquidation of the debtor’s assets by the appointed bankruptcy trustee. The proceeds from the property after sale will be used to pay what the debtor owes. Any unpaid debt left at the end of the process will be discharged (subject to a few exceptions) which means that the debtor would no longer need to pay them.
  • Chapter 13 Bankruptcy: This type of bankruptcy allows debtors who earn regular incomes to restructure their debts and repay them over 3-5 years following the terms of a court-approved repayment plan.

Each type of bankruptcy has its pros, cons, and eligibility requirements. But regardless of which type you choose or qualify for, filing a bankruptcy petition can help you protect your rights as a debtor while offering you a path to comprehensive debt relief:

  • Once you file a bankruptcy petition, an automatic stay against all debt collection activities against you is activated. This includes repossession, foreclosure actions, wage garnishment, phone calls, letters, or anything else geared toward debt recovery. A creditor who continues to harass you once you file the petition runs the risk of legal sanctions since they’d be acting contrary to the authority of the bankruptcy court.
    Although the automatic stay is not always permanent, it can buy you some time to plan and strategize while it remains active.
  • During bankruptcy proceedings, creditors must be notified so they can lay all their cards on the table. That way, it is easy to challenge or obtain comprehensive information about your debts.
  • You are allowed to have legal counsel and representation throughout the bankruptcy process. Having a lawyer to represent you can help insulate you from your creditors since they would spearhead the proceedings on your behalf and deal with any official correspondence from the bankruptcy court or any other party.

Essentially, filing bankruptcy offers you a twofold benefit: the possibility of debt relief and a fresh start, and you get space to breathe while you try to reorganize your finances. However, the process can be complex and difficult to navigate without legal guidance.

At the Law Offices of Wenarsky and Goldstein LLC, we understand your challenges and are prepared to guide you through the legal maze of bankruptcy.

As attorneys, we recognize the myriad choices one faces when considering bankruptcy. With our knowledge and legal experience, we can help protect your rights as a debtor (including those specified under the Fair Debt Collection Practices Act) and ensure you’re equipped to make informed decisions about your case. 

Contact Our Bankruptcy Lawyer at the Law Offices of Wenarsky and Goldstein, LLC

Even though you may be dealing with overwhelming debts, you still have several rights that creditors and debt collectors must respect while they seek to recover the debt. Bankruptcy can help you protect those rights and set the stage for a more financially stable future.

Our empathetic and dedicated bankruptcy team at the Law Offices of Wenarsky and Goldstein, LLC can help you understand your options between the different types of bankruptcy and provide you with clear, actionable counsel and strategies to safeguard your rights as a debtor and navigate the bankruptcy process. 

Contact us today to schedule a consultation. Let us help you understand your rights and options for lasting debt relief.

Call the Law Office of Wenarsky & Goldstein

At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.