Your jail ticket. That's right. It is not a meal ticket. In the debt collection process, the debtors can be jailed for failing to attend state court collection proceedings. Sometimes it is, emotionally speaking, very difficult for debtors to actively open the mails and learn about their financial circumstances. Creditors often make threats or sound threatening; over time such threats become psychologically crushing, and our capacity to deny and avoid kicks in. Creditors cannot threathen criminal action. This is, not only a violation of the federal Fair Debt Collections Practices Act, but in Virginia it amounts to extortion under Sec. 18.2-59 of the Virginia Code. So if a creditor threatens you, tell them to back off.
On the other hand, there is one limited instance in which creditors may have debtors jailed. If a debtor is served with court papers, she ignores the service of such documents at her peril. First, a creditor may seek judgment against the debtor for a debt owing. If th debtor had contacted the creditor's attorney and admitted the debt, he may avoid attorneys' fees. Or sometimes a creditor will exaggerate its claim for prinicipal, interest or late fees; the debtor's active review coupled with his minimum level of participation at court may limit the amount of any judgment rendered against him. Second, once a judgment is taken, the creditor may begin enforcement of the judgment. In legal parlance, this is known as "execution" of the judgment. An execution can result in a levy by the sheriff on the debtor's personal belongings and automobiles. It can result in a garnishment of wages or bank accounts. As part of the execution process, the judgment creditor may also bring a debtor interrogatory (Virginia) or proceeding in aid of execution of judgment (Maryland). Debtors ARE FORWARNED the debtor interrogatory is the most effective weapon in the creditor's arsenal. The debtor can go to jail as a result of such a proceeding.
The Debtor Interrogatory is a proceeding actually started by Queen Elizabeth I of England as a part of the "Star Chamber." That should tell you something. If the debtor fails to appear at the proceeding, the court in which the proceeding is pending may issue a bench warrant for his/her arrest. If the debtor appears, but fails to bring documents requested or to answer questions about his estate, the court may give the debtor a free night's stay at the county hotel. The court can also compel the debtor to sign over property to the sheriff. If the debtor fails to comply, you guessed it, the bailiff (the Court's bodyguard) will escort the debtor to the jail. Also the debtor can be compelled to assign over her interest in bank accounts, patents, accounts receivable and a host of personal property (tangible or intangible). The creditor can also compel the debtor to grant the sheriff a deed to real property located outside of the Commonwealth of Virginia. The debtor interrogatory is a very powerful weapon. Thank goodness most creditors fail to utilize the proceeding to its fullest extent.
Basically, we advise clients, especially if they are anxious by nature, to contact our bankruptcy department and to file bankruptcy petitions before judgments are entered against them. That way the debtors avoid those nasty state court judgment execution proceedings.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Friday, August 13, 2010
Wednesday, July 14, 2010
INCOME FOR BANKRUPTCY PURPOSES
When facing financial troubles, many people turn to family members or close friends for financial assistance. While these gifts or loans may be necessary in order to live, these contributions are considered as income for the purposes of filing bankruptcy. Regular or frequent contribution from anyone paid to a debtor qualifies as income. The Bankruptcy Code treats any money received in the six months prior to filing for bankruptcy as income. 11 U.S.C. § 101(10A). This includes any household expenses that are paid for by anyone other than the person filing for bankruptcy. 11 U.S.C. § 101(10A). For example, the car payments your brother made on your behalf is considered income for the purposes of filing bankruptcy. You should inform your attorney of any income you receive whether it is in the form of a gift, payment from your employer or a contribution to your household expenses, when discussing whether you qualify to file for bankruptcy.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Saturday, June 12, 2010
LIBERATING AMERICA, ONE DEBTOR AT A TIME
Have you ever wondered why we as a nation are in an economic downturn. You may think that it has something to do with Lehman Brothers going bankrupt. Sure that was the straw that broke the camel's back; on the other hand, the underlying cause is revealed by a branch of economics known as “macro economics,” which was founded during the Great Depression. Macro economics studies broad, underlying trends, such as trade balances, monetary supply, demand for goods and services, demographics, etc. What do the macro economists tell us? Well, the news is not good. The total indebtedness of America is at an all-time high. The current total indebtedness, public and private, dwarfs the nation’s total indebtedness in 1929, just before the Black Tuesday stock market crash. The consequence of all of these debts is that our unalienable rights of “life, liberty and the pursuit of happiness” are constrained by our obligations to pay creditors.
We need to eliminate our crippling debts. Some may have the income to pay off their debts or have the ability to refinance them at cheaper rates for longer periods of time. Others will need to default and declare bankruptcy. Either way, we need to soberly face our individual situations. We all fear change. We all deny our “issues.” We avoid sadness, confrontation, etc. But we can be free once we recognize our psychology and then take action. We can start over. We can take control of our lives. We can walk upright into a new day. We are our own best jailers, and the shackles of high interest, late fees and creditor harassment can end as soon as we decide to take control of our lives. Let’s free ourselves and in doing so let’s free America.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
We need to eliminate our crippling debts. Some may have the income to pay off their debts or have the ability to refinance them at cheaper rates for longer periods of time. Others will need to default and declare bankruptcy. Either way, we need to soberly face our individual situations. We all fear change. We all deny our “issues.” We avoid sadness, confrontation, etc. But we can be free once we recognize our psychology and then take action. We can start over. We can take control of our lives. We can walk upright into a new day. We are our own best jailers, and the shackles of high interest, late fees and creditor harassment can end as soon as we decide to take control of our lives. Let’s free ourselves and in doing so let’s free America.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Friday, June 11, 2010
SET-OFFS: LOOK AT THE FINE PRINT
Sometimes what you don’t know will kill you. In this posting we discuss set-offs. Most consumers don’t know that a creditor has the right to net out any debt(s) it owes the debtor against the debt that the debtor owes the creditor. This makes logical sense. Let’s adjust the obligations of the parties so that only the "real," net, number is at issue. Most people understand this concept.
However, most debtors do not know that a checking or savings account is a debt that the bank owes them. An account actually creates a contract between the depositor (debtor) and the bank (creditor). In the account relationship the parties are reversed. The debtor becomes a creditor of the bank for the amount on deposit, and the bank becomes a debtor for that amount. You may ask, “well so, what do I care?” Well, if one has an account at a bank and a loan at the same bank, for a mortgage, credit card, or installment loan, etc., the bank can set-off its banking account obligation to the debtor against the debtor’s obligation to pay back the loan.
Under Section 553 of the Bankruptcy Code, if the set-off is made by the bank within 90 days of the filing of the bankruptcy petition, the set-off may be set aside if it puts the bank in a preferred position over the debtor’s other unsecured creditors. While the bank has the right of set-off after the bankruptcy is filed, it is subject to the provisions of the automatic stay under Section 362, and it cannot exercise its right of set-off except by leave of court.
Basically, the debtor should never maintain his operating funds in an account with a bank, which is also the debtor’s lending institution. No one in the past told the debtor this, but the reason a lender usually gave the debtor around 1/4th of a point off his loan interest for also maintaining an operating account with the lender is so that in a pinch the lender could exercise its right of setoff against the operating account. It’s all in the fine print in the debtor’s banking account agreement.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
However, most debtors do not know that a checking or savings account is a debt that the bank owes them. An account actually creates a contract between the depositor (debtor) and the bank (creditor). In the account relationship the parties are reversed. The debtor becomes a creditor of the bank for the amount on deposit, and the bank becomes a debtor for that amount. You may ask, “well so, what do I care?” Well, if one has an account at a bank and a loan at the same bank, for a mortgage, credit card, or installment loan, etc., the bank can set-off its banking account obligation to the debtor against the debtor’s obligation to pay back the loan.
Under Section 553 of the Bankruptcy Code, if the set-off is made by the bank within 90 days of the filing of the bankruptcy petition, the set-off may be set aside if it puts the bank in a preferred position over the debtor’s other unsecured creditors. While the bank has the right of set-off after the bankruptcy is filed, it is subject to the provisions of the automatic stay under Section 362, and it cannot exercise its right of set-off except by leave of court.
Basically, the debtor should never maintain his operating funds in an account with a bank, which is also the debtor’s lending institution. No one in the past told the debtor this, but the reason a lender usually gave the debtor around 1/4th of a point off his loan interest for also maintaining an operating account with the lender is so that in a pinch the lender could exercise its right of setoff against the operating account. It’s all in the fine print in the debtor’s banking account agreement.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Tuesday, March 2, 2010
STUDENT LOANS--DIDN'T YOUR PROFESSORS HAVE A PLAN FOR YOU!!
Time and Time again, I see clients with an enormous amount of student loan debt. Many times the debt is in excess of 5 figures. Unfortunately, student loan debt is not dischargeable in bankruptcy, and it is not a priority unsecured debt like taxes or domestic support obligations. Yes, there is a hardship exception to discharge student loan debt, but the case law indicates that such a discharge applies in very limited circumstances. For instance, if the debtor has a permanent disability, then the student loan debt would be dischargable.
I think we, the American citizenry, ought to lobby Congress and change the law. When students borrowed all of this money, no one undertook to underwrite the student loans to determine whether they made economic sense. The situation is particularly acute in the current economy because many graduates are unemployed , underemployed or have not received the salaries they anticipated. And forbearing or deferring the student loans is not a solution since many loans have negative amortization features. Also student loan interest is tax deductible, and one cannot take the deduction if he/she is not paying the loan.
ONE SOLUTION: on an experimental basis, we are taking a few Chapter 13 cases in which we are characterizing the student loans as long-term debt. Some courts have allowed student loans characterized as long-term debt to be paid in the ordinary course while credit card debt and other unsecured debts are given a lower priority. When such plans are confirmed, the debtor is able to devote more of his/her income to pay-off the student loans sooner.
We'll keep you posted whether the local bankruptcy courts approve the characterization of student loans as long-term debt with a higher priority.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
I think we, the American citizenry, ought to lobby Congress and change the law. When students borrowed all of this money, no one undertook to underwrite the student loans to determine whether they made economic sense. The situation is particularly acute in the current economy because many graduates are unemployed , underemployed or have not received the salaries they anticipated. And forbearing or deferring the student loans is not a solution since many loans have negative amortization features. Also student loan interest is tax deductible, and one cannot take the deduction if he/she is not paying the loan.
ONE SOLUTION: on an experimental basis, we are taking a few Chapter 13 cases in which we are characterizing the student loans as long-term debt. Some courts have allowed student loans characterized as long-term debt to be paid in the ordinary course while credit card debt and other unsecured debts are given a lower priority. When such plans are confirmed, the debtor is able to devote more of his/her income to pay-off the student loans sooner.
We'll keep you posted whether the local bankruptcy courts approve the characterization of student loans as long-term debt with a higher priority.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Wednesday, February 17, 2010
DIVORCE AND BANKRUPTCY
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Divorce is one of the leading causes of bankruptcy filings. In today’s economy, not only are courts dissolving marriages, they are dividing assets, distributing debts, and awarding support obligations between the divorcing couple. The orders that a court enters with regard to the distribution of assets and liabilities have a profound impact on the bankruptcies subsequently filed by divorced individuals.
For example, both parties may be jointly liable for a car loan. In the course of a divorce proceeding, the court may order that the husband be responsible for the entire car loan, or for a particular portion of that loan. How the court words its order can determine whether the husband subsequently filing for bankruptcy can actually discharge that loan or the deficiency resulting from repossession.
If the court orders the husband to pay the car payment to the wife as part of a domestic support obligation, the husband would not be able to discharge that debt in his subsequent bankruptcy because domestic support obligations are not dischargeable in bankruptcy. However, if the Court orders that the husband be solely liable to the automobile financing company for the loan, then the husband would be able to discharge that debt in a subsequent bankruptcy.
Consequently, divorcing couples need to retain divorce attorneys who have knowledge of bankruptcy law as it relates to the distribution of debts and to awards of domestic support obligations. At Pesner Kawamoto Conway, PLC our attorneys are experienced in both bankruptcy law and in domestic relations law; and we provide comprehensive advice and guidance to divorcing parties who may need to subsequently seek the protection of the bankruptcy court
Deborah Winstead
Divorce is one of the leading causes of bankruptcy filings. In today’s economy, not only are courts dissolving marriages, they are dividing assets, distributing debts, and awarding support obligations between the divorcing couple. The orders that a court enters with regard to the distribution of assets and liabilities have a profound impact on the bankruptcies subsequently filed by divorced individuals.
For example, both parties may be jointly liable for a car loan. In the course of a divorce proceeding, the court may order that the husband be responsible for the entire car loan, or for a particular portion of that loan. How the court words its order can determine whether the husband subsequently filing for bankruptcy can actually discharge that loan or the deficiency resulting from repossession.
If the court orders the husband to pay the car payment to the wife as part of a domestic support obligation, the husband would not be able to discharge that debt in his subsequent bankruptcy because domestic support obligations are not dischargeable in bankruptcy. However, if the Court orders that the husband be solely liable to the automobile financing company for the loan, then the husband would be able to discharge that debt in a subsequent bankruptcy.
Consequently, divorcing couples need to retain divorce attorneys who have knowledge of bankruptcy law as it relates to the distribution of debts and to awards of domestic support obligations. At Pesner Kawamoto Conway, PLC our attorneys are experienced in both bankruptcy law and in domestic relations law; and we provide comprehensive advice and guidance to divorcing parties who may need to subsequently seek the protection of the bankruptcy court
Deborah Winstead
Wednesday, February 10, 2010
BANKRUPTCY IS SANCTIONED BY THE OLD TESTAMENT---LEVITICUS, CH. 25
Infrequently, a client will consult with me in a mixed emotional state. On the one hand, the client has been humilitated by his creditors, being subject to numerous harassing phone calls, written demands and judgments. Yet at the same, the client suffers from extreme shame that he or she is about to file for bankruptcy and seek forgiveness of his/her debts. Many of these clients have stated that they feel bankruptcy is immoral.
Logically, insolvency frequently results from tragic life events that no one can foresee or which are foreseeable but extremely unlucky. Moreover, for those instances in which the insolvency results from reckless financial behavior one can rationalize the bankruptcy relief sought because insolvency generally results from a lender too willing to lend or too willing to exercise power over another and a borrower too nearsighted to contemplate the consequences. Although I personally tend to be persuaded by reason, I recognize that many are influenced by their religious upbringing. For the latter, I refer them to Leviticus, Chapter 25 in which the Bible states:
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Logically, insolvency frequently results from tragic life events that no one can foresee or which are foreseeable but extremely unlucky. Moreover, for those instances in which the insolvency results from reckless financial behavior one can rationalize the bankruptcy relief sought because insolvency generally results from a lender too willing to lend or too willing to exercise power over another and a borrower too nearsighted to contemplate the consequences. Although I personally tend to be persuaded by reason, I recognize that many are influenced by their religious upbringing. For the latter, I refer them to Leviticus, Chapter 25 in which the Bible states:
And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof; it shall be a jubilee unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family. . . . Ye shall not oppress one another . . . And if thy brother be waxen poor, and fallen in decay with thee; then thou shall relieve him: yea, though he be, a stranger, or a sojouner; that he may live with thee. Thou shalt not give him thy money upon usury, not lend him thy victuals for increase. . . . And if thy brother that dwelleth by thee be waxen poor, and be sold unto thee; thou shall not compel him to serve as bondservant. But as an hired servant, and as a sojourner he shall be with thee, and shall serve thee unto the year of jubilee; and then shall he depart from thee, both he and his children with him, and shall return unto his own family, and unto the possession of his fathers shall he return. For they are my servants, which I brought forth out of the land of Egypt: they shall not be sold as bondsmen. Thou shall not rule over him with rigour; but shalt fear thy God.Again, psychologically, I feel that many consulting with me have the shoe on the wrong foot. It is immoral to enslave or oppress. It is not immoral to flee oppression.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Tuesday, February 9, 2010
HOW BANKRUPTCY WILL AFFECT MY LIFE
It is among the most pressing question that clients have when they first consider filing for bankruptcy, and the fears often far exceed the realities. Bankruptcy carries with it a stigma that lingers even as the nation and the economy faces its most difficult struggles since the 1930's, but it has been and remains a legal and necessary part of a vital economy that has saved countless families and even some of the largest corporate organizations in the world.
Bankruptcy is not a decision to be made lightly, but understanding both how it can impact and improve your life should be a vital part of the decision. At the law offices of Pesner Kawamoto Conway, PLC, in McLean, Virginia, our attorneys have been helping individuals and businesses come to informed and personalized decisions about bankruptcy for decades.
An End and a New Beginning
For many clients the decision about whether to file a Chapter 7 or Chapter 13 bankruptcy comes down to a measure between what life is like now and what it will be like under the protection that bankruptcy affords. We hear clients describe their current situation in a lot of different ways, such as:
• Constant pressure from creditors and collections agents
• A fear of every phone call and every knock at the door
• Helplessness in the face of massive debt, out-of-control interest rates or foreclosure
• Sleepless nights spent thinking about money and harassment from creditors
• Fights with spouses about the weakening state of family finances
• A direct result of a divorce or other change in family status
Bankruptcy isn't a fix to all problems, but for many families it's the restart or opportunity to catch up that they most need. With a process that is far less complicated than many people expect, bankruptcy can have immediate impact, including:
• An immediate end to creditor harassment
• The opportunity to build a payment plan that matches your ability to pay
• Exemptions that may allow you to keep your home and key assets while eliminating other debt
• A sense of taking back control of your finances and life
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Bankruptcy is not a decision to be made lightly, but understanding both how it can impact and improve your life should be a vital part of the decision. At the law offices of Pesner Kawamoto Conway, PLC, in McLean, Virginia, our attorneys have been helping individuals and businesses come to informed and personalized decisions about bankruptcy for decades.
An End and a New Beginning
For many clients the decision about whether to file a Chapter 7 or Chapter 13 bankruptcy comes down to a measure between what life is like now and what it will be like under the protection that bankruptcy affords. We hear clients describe their current situation in a lot of different ways, such as:
• Constant pressure from creditors and collections agents
• A fear of every phone call and every knock at the door
• Helplessness in the face of massive debt, out-of-control interest rates or foreclosure
• Sleepless nights spent thinking about money and harassment from creditors
• Fights with spouses about the weakening state of family finances
• A direct result of a divorce or other change in family status
Bankruptcy isn't a fix to all problems, but for many families it's the restart or opportunity to catch up that they most need. With a process that is far less complicated than many people expect, bankruptcy can have immediate impact, including:
• An immediate end to creditor harassment
• The opportunity to build a payment plan that matches your ability to pay
• Exemptions that may allow you to keep your home and key assets while eliminating other debt
• A sense of taking back control of your finances and life
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
PROCESS OF BANKRUPTCY
Many of our clients imagine bankruptcy as a long and drawn out process full of judgments and embarrassing arguments with creditors. The reality is significantly different, and among the most common statements we hear from our former clients is: that was it?
We understand that the decision to file for bankruptcy is a serious one that can have both immediate relief and long term consequences. It is not something we ever recommend clients do because it is quick or easy, but because it is the right thing, but it is also important to realize that there is often a smooth process that we can put you on so that within only a few months you are back on the course toward a better financial future.
In Virginia and Maryland, contact the attorneys at the law office of Pesner Kawamoto Conway, PLC, for reliable, personalized and confidential bankruptcy counsel.
An Established and Reasonable Process
In very simple and general terms, here is the sort of process you can often expect when filing for Chapter 7 or Chapter 13 bankruptcy:
• 3 to 5 days after filing notice is sent out to creditors
• Creditors are no longer permitted to seek collections against debt — any harassment ends
• A trustee is appointed
• 45 days after the filing of the Petition there is a creditors meeting with the Trustee to verify your petition, which may last as little as 15 minutes
• Usually within 90 days of filing the petition, the bankruptcy court discharges your debt or in the case of a Chapter 13, approves your plan.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
We understand that the decision to file for bankruptcy is a serious one that can have both immediate relief and long term consequences. It is not something we ever recommend clients do because it is quick or easy, but because it is the right thing, but it is also important to realize that there is often a smooth process that we can put you on so that within only a few months you are back on the course toward a better financial future.
In Virginia and Maryland, contact the attorneys at the law office of Pesner Kawamoto Conway, PLC, for reliable, personalized and confidential bankruptcy counsel.
An Established and Reasonable Process
In very simple and general terms, here is the sort of process you can often expect when filing for Chapter 7 or Chapter 13 bankruptcy:
• 3 to 5 days after filing notice is sent out to creditors
• Creditors are no longer permitted to seek collections against debt — any harassment ends
• A trustee is appointed
• 45 days after the filing of the Petition there is a creditors meeting with the Trustee to verify your petition, which may last as little as 15 minutes
• Usually within 90 days of filing the petition, the bankruptcy court discharges your debt or in the case of a Chapter 13, approves your plan.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
BANKRUPTCY FOLLOWING DIVORCE
There are a lot of situations that can lead an individual to a financial decision involving bankruptcy: excessive debt, foreclosure, being laid-off from work or a major medical expense. One of the more common causes of serious financial stress which is not often talked about is a dramatic change in family status. For many clients an expensive and painful divorce is a major contributor to bankruptcy. At the law offices of Pesner Kawamoto Conway, PLC, our lawyers have significant experience working with Virginia and Maryland clients who are facing financial hardship because of a divorce. We can work with you to explore the options available and understand your rights, by putting decades of combined experience and a commitment to client service behind your case.
The Financial Strain of Separating a Household
A divorce may be unavoidable, but so too are the expenses and costs associated with ending a marriage. Particularly if you were part of a two income marriage, the financial strains that can follow as a result of a divorce can be significant, and if you are expected to contribute financially for support or take on the debts of your former spouse, then you may have to consider more dramatic financial remedies.
Our attorneys work with clients who are facing a range of financial challenges, including those who have separated from a former spouse. We offer experienced and client focused solutions designed to help you repair and rebuild.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
The Financial Strain of Separating a Household
A divorce may be unavoidable, but so too are the expenses and costs associated with ending a marriage. Particularly if you were part of a two income marriage, the financial strains that can follow as a result of a divorce can be significant, and if you are expected to contribute financially for support or take on the debts of your former spouse, then you may have to consider more dramatic financial remedies.
Our attorneys work with clients who are facing a range of financial challenges, including those who have separated from a former spouse. We offer experienced and client focused solutions designed to help you repair and rebuild.
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
ENDING CREDITOR HARASSMENT
Collections agencies employ a range of tactics to collect on outstanding debts, not all of them ethical, not all of them legal. For many families and businesses facing difficult times, creditor harassment is a constant source of significant stress. The fact that some people have to make a choice between paying down a debt and buying groceries or fixing the car doesn't help to stem the tide of calls. It can get to the point that people feel frustrated and even helpless to stop a financial situation sliding out of control. At Working with clients in Virginia and Maryland, we are dedicated to providing experienced, effective and client focused solutions.
A Pathway to Rebuilding Your Financial Life
It can be embarrassing to have the phone ringing every night with one collector or another demanding money you don't have or leaving threatening messages. We see clients from all walks of life, of all professions and who all, for a variety of reasons, have come to be overwhelmed by unsecured debt, loans or bills.
If you do decide to pursue a bankruptcy, our lawyers can take immediate action to end collections calls and creditor harassment from:
• Credit card companies
• Collections agencies
• Hospitals
• Mortgage lenders
• Foreclosure attorneys
• Banks and personal loans
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
A Pathway to Rebuilding Your Financial Life
It can be embarrassing to have the phone ringing every night with one collector or another demanding money you don't have or leaving threatening messages. We see clients from all walks of life, of all professions and who all, for a variety of reasons, have come to be overwhelmed by unsecured debt, loans or bills.
If you do decide to pursue a bankruptcy, our lawyers can take immediate action to end collections calls and creditor harassment from:
• Credit card companies
• Collections agencies
• Hospitals
• Mortgage lenders
• Foreclosure attorneys
• Banks and personal loans
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Monday, February 8, 2010
STRATEGIC DEFAULT AND HOMEOWNERSHIP
Yesterday, I listened to "Meet the Press." The guests were Dr. Alan Greenspan and Former Treasury Secretary Henry Paulson. The commentator asked these former government officials if they were concerned that so many homeowners are "unwater" on their home mortgages, especially when the fair market value of the home is less than 75% of the mortgage amount. In unison the two said that most homeowners will continue to pay their mortgages out of shame or emotional attachment to their homes. These bank representatives believed that the homeowner reluctance to default was a good thing. They are merely interested in lender solvency and profitability.
I, personally, was appalled. It makes much more sense for homeowners in financial trouble to deed their homes back to their lenders than to live in unaffordable dwellings for many years. The opportunity costs imposed by staying in unaffordable mortgages for the homeowners are just too high. Homeowners may have to forego better jobs in other regions of the country. They may forego adequately saving for their children's educations. They may defer medical procedures that would prolong their lives or increase their happiness. They may forego living comfortably and should consider renting instead. Usually the dwelling next door has the same floor plan and may rent for half the current mortgage payment.
All too often debtors consider how their actions may affect "society" or their credit ratings. Instead of looking out for themselves, debtors may assume that the values espoused by elites are right for them. They aren't. Debtors should pause to think how lenders have affected them. In days of yore, debtors actually had usury laws to protect them from high interest rates. Laws clamped down on risky lending and kept capital located closer to home. One did not need a 1-800 number to speak to his bank. In my parents' generation (children of the Great Depression) borrowing for anything was discouraged. They paid in cash. Now I receive in the mail daily credit card offers. In the aughts, Lenders somehow made us feel that older generational habits of thrift were antiquated and that we were "Americans" and did not have to delay the gratification of our desires. The loan officers, afterall, did the numbers and said we could afford it. It has now all come home to roost
My frustration is that the bankers and media do not acknowledge in personal terms the harm that their lending practices have caused. Everyone wants Toyota to fix its cars. No one disputes that a manufacturer should fix its defective accelerators or brakes. Shouldn't lenders do more to fix their defective loans? How about writing off some principal?
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
I, personally, was appalled. It makes much more sense for homeowners in financial trouble to deed their homes back to their lenders than to live in unaffordable dwellings for many years. The opportunity costs imposed by staying in unaffordable mortgages for the homeowners are just too high. Homeowners may have to forego better jobs in other regions of the country. They may forego adequately saving for their children's educations. They may defer medical procedures that would prolong their lives or increase their happiness. They may forego living comfortably and should consider renting instead. Usually the dwelling next door has the same floor plan and may rent for half the current mortgage payment.
All too often debtors consider how their actions may affect "society" or their credit ratings. Instead of looking out for themselves, debtors may assume that the values espoused by elites are right for them. They aren't. Debtors should pause to think how lenders have affected them. In days of yore, debtors actually had usury laws to protect them from high interest rates. Laws clamped down on risky lending and kept capital located closer to home. One did not need a 1-800 number to speak to his bank. In my parents' generation (children of the Great Depression) borrowing for anything was discouraged. They paid in cash. Now I receive in the mail daily credit card offers. In the aughts, Lenders somehow made us feel that older generational habits of thrift were antiquated and that we were "Americans" and did not have to delay the gratification of our desires. The loan officers, afterall, did the numbers and said we could afford it. It has now all come home to roost
My frustration is that the bankers and media do not acknowledge in personal terms the harm that their lending practices have caused. Everyone wants Toyota to fix its cars. No one disputes that a manufacturer should fix its defective accelerators or brakes. Shouldn't lenders do more to fix their defective loans? How about writing off some principal?
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
RE-SCHEDULING CREDITORS' MEETINGS--- HARDER THAN YOU THINK
Clients often want to reschedule the creditors' meeting. The date and time of the meeting are established by the United States Trustees Office, without regard to the debtor's schedule. Since the creditors' meeting date is the start of a number of other deadlines--exceptions to discharge, the filing of proofs of claims and the objections to exemptions--the United States Trustees Office discourages changes. One literally has to get a doctor's excuse or a note from the employer stating the debtor will be unavailable to attend the meeting. Even if you attend the re-scheduled date, all creditors must receive a notice of the re-scheduled date and strict compliance is required. Basically, we will not attempt to re-schedule your date unless the required documentation is in hand. This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Martin Conway
Martin Conway
Friday, February 5, 2010
LIVING TRUSTS AND CREDITORS/BANKRUPTCY
Recently, I went to a financial planner. The planner, who had a referral network with several estate planning attorneys, informed me that a living trust would give me added protection from my creditors. Being a friendly listener, I did not correct the planner assisting me. While it may be true that in a few states a living trust will protect your assets from your creditors, this is usually not the case. When you settle your own trust and have powers over the trust to revoke it at any time or change the beneficiaries, etc., it is known as a settlor trust. In Virginia, such a trust will not protect your assets from your creditors, and property in such a trust becomes part of the bankrupcty estate upon settlor's filing for bankruptcy. Again, you should consult with an estate planning attorney familiar with creditors' rights before embarking on an asset protection strategy that does not provide the expected protection.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
Martin Conway
This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
FOR FREDDIE MAC A SHORT SALE IS AS DETRIMENTAL AS BANKRUPTCY
Frequently, clients have asked me in the past whether a short sale was as detrimental to their credit history as a bankruptcy. I have always told them that it was. A foreclosure is worse. Recently, I decided to prove what I knew by intuition. Here are the Freddie Mac Guidelines for "Caution Mortgages", which was produced in April 2009. Freddie Mac and its sister Fannie Mae control 95% of the mortgage market. Freddie says a borrower must have re-established his/her credit history for 48 months after a short sale, deed-in-lieu or Chapter 7 bankruptcy. A borrower must have a rehabilitated credit history for 60 months following a foreclosure. Finally, for those clients who seek to resolve their debts through a non-bankruptcy process, Freddie still requires the borrower to have a clean credit history for 48 months. Basically a Chapter 7 bankruptcy may be the way to go.
Martin Conway
This blog is not intended to render legal services to the reader. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
This blog is not intended to render legal services to the reader. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
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