Q: What are my legal rights?
I owe $10,000, which represents a remaining balance due to my divorce attorney. I have been paying this balance overtime at $50 a month for the past 10 yrs interest free to a law firm that filed for “N.J.S.A. 2a:19-1 Assignments For Benefit Of Creditors” a year ago. I had a verbal agreement with my attorney regarding the payment plan. In addition, I had no idea that the firm filed a year ago and the assignee was accepting and cashing my payments. It appears that the firm did a full liquidation and is no longer in business. All of the attorneys are now working for other law firms. The assignee has sent me a letter looking to settle the balance in full at a discount of $9,000.
Am I now obligated to pay this balance to the assignee? If so, do I pay it in full, a portion of it (75%, 50%, 25%...) or can I simple not pay it at all since the firm is no longer in business?
A: NO! You are still obligated to pay it. However, depending on your overall financial and debt situation, you should consult with an experienced Bankruptcy attorney to determine if Bankruptcy of any type is right for you or not. Do not let geographic restrictions get in the way of retaining the best attorney. Pick the best attorney you can find and remember one rule: a good attorney is generally never cheap, and a cheap attorney is generally never good so don't choose based on price.
A: You should check their bankruptcy petition and see whether they listed your debt to them as an asset. They should have also listed you In the notice provision. If they didn’t list you, that could be bankruptcy fraud an you might not have to pay. On another front, you could contact the new “creditor” and see if you can settle it for a lump sum payment of .25 to .30 on the dollar. That might be the quickest and cheapest resolution for you.
A: You are obligated to pay, but they will take a bigger discount than that. Ask to pay half.
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