First, many debt companies use most of the money you send to them to pay their own fees. Yes, bankruptcy attorneys also collect fees but, there is a marked difference in the fees attorneys collect and the fees debt companies collect. For instance, bankruptcy attorneys must have their fees approved by the bankruptcy court. This is not true of debt companies, and more often than not, debt company fees surpass attorney’s fees. In fact, I don’t think I’ve ever met a client whose debt management fees were lower than my attorney’s fees.

Secondly, you do not know who will be managing your account and working on your case at the debt company. It is very unlikely that anyone employed at the debt company is an attorney. In fact, it is very likely that the company does not even employ any licensed professionals at all. (Naturally, when clients are told this they feel very deceived.)

Third, debt companies cannot force your creditors to participate. You may not know this, but your creditors are not bound to follow the recommendations or demands set forth by your debt management company. For one thing, your creditors may still sue you even though you are attempting to pay them through your debt company. Actually, this is what leads many of my clients to file bankruptcy in the first place– they have been sued by one of their creditors despite paying a debt company to manage their debts! In contrast, when you file bankruptcy creditors are required to follow the bankruptcy rules and cannot take legal action against you without court permission.

Next, it is often the case that the debt company you have hired is only paying one debt at a time. These companies frequently try to pay off one card before paying off the others. Sadly, clients don’t realize that most creditors are unwilling to wait 2 or 3 years for your debt company to start paying them. However, once you file bankruptcy your creditors are not allowed to take any legal action against you without court permission. This is definitely not true with debt management.

For more information about debt management and credit counseling scams, please visit the Texas Attorney General’s website:

https://www.oag.state.tx.us/consumer/consolidation.shtml

This website provides information about what to avoid and what to do if you have already been scammed by a debt company.

All New Year’s resolutions are hard to keep; but I think resolving to organize your finances is the most difficult resolution of all.

For one thing, your finances may be affected by things beyond your control (like the loss of a job). Secondly, your finances are often a family issue: It is not easy to discuss financial problems with your spouse or tell your children you will be cutting back.

Remember, the first step is always the most difficult step in any resolution. You may not feel as though you’ve done enough to improve your finances, but keep in mind that seeking professional help is huge.

The best part of my job is helping people feel more financially stable. Sometimes, filing bankruptcy may help you keep your resolution and have a better financial year. If bankruptcy is not your best option, then I may be able to offer alternative advice during your free consultation.

If your debts have become unmanageable and you want a fresh start this year, call us and set up an appointment so that we can go over your options.

1. Filing bankruptcy is embarrassing and people will gossip.
I can sympathize with this worry because it is always hard to admit when we need help. When you file bankruptcy, you are asking the federal government to help you take control of your finances; and this can be difficult for some people. When clients tell me they are concerned about what other people will think, I remind them that everyone struggles financially at some point. When bad things happen, like the loss of a job or an illness, it is not easy to recover. Although bankruptcy is public record, it is more than likely that your friends and neighbors will not find out about your filing unless you tell them. You must also remember that you are your own worst critic. If you are considering bankruptcy it is likely that you can empathize with others who are struggling to pay bills. I also suspect that you do not judge others as harshly as you judge yourself: I doubt you would ridicule another person facing the same issues you are facing. When you hit tough times, it is important to remember to be as kind to yourself as you are to other people.

2. My home will be foreclosed and my family will not have a place to live.
If your home is set for foreclosure but has not yet foreclosed, there are options to help you stay in the house or get out from under a mortgage that has become too expensive. We will talk about these options during your appointment.

3. I won’t be able to pay my bills after I file bankruptcy.
Many people worry that they won’t be able to turn their finances around even with the help of a bankruptcy. We will evaluate this possibility during your appointment. Sometimes bankruptcy is not your best option. Sometimes we will need a more creative solution to help you keep your property and get rid of other debts. Most often, when a client suspects that a bankruptcy will help them get back on track, they are right! We will discuss different options and scenarios during your appointment.

4. Collectors will continue to harass me even after I file.
Typically, creditors are not allowed to contact you to try and collect on a pre-bankruptcy debt. Creditors are required by law to stop contacting you and contact your attorney.

5. Bankruptcy judges and their staff will lecture me or try and embarrass me.
Bankruptcy Judges and their staff are not judgmental. They understand that people fall on hard times and they treat those who have filed for bankruptcy with the utmost respect.

6. I won’t understand the process.
Typically, a new client attends 3 appointments before filing. Each appointment lasts approximately 1 hour and each is designed to address your questions and concerns. We take great care in making sure that all of your concerns and questions are addressed to your satisfaction. As always, if you have other questions you can set additional appointments or contact us by phone or email.

7. After I file bankruptcy, I might fall behind on my bills all over again.
When you are struggling financially every additional financial obligation (like an unexpected root canal) is a burden. Usually we can help you get back on track even though you are already in a bankruptcy. There are ways to modify your bankruptcy plan to address temporary shortfalls in income.

8. Creditors will treat me poorly.
Most of the time, your creditors will be large companies. Large companies typically have bankruptcy departments and these people are used to seeing bankruptcies all day. To them, bankruptcy is just a minor financial event.

9. I will never be able to rebuild my credit if I file bankruptcy.
This is simply not true. It is true that rebuilding your credit could take a few years. It has been our experience that our clients are able to reestablish their credit rather quickly once they have completed the bankruptcy process.

If you would like to discuss your circumstances with our office, please do not hesitate to call us at: 214-696-9601 or email us at: billy@billydpricepc.com

Many of our clients seek bankruptcy relief because they have fallen behind on a mortgage obligation. Sometimes, these clients are struggling with other bills as well; but hesitate to seek bankruptcy relief because they are hoping to work something out with their mortgage companies.

Even without the Legislative Task Force, it is widely known that mortgage companies can be difficult to deal with. Foreclosure clients have told me that their home is set for foreclosure on Tuesday, but the mortgage company is refusing to accept or deny their home loan modification request until the next Friday. In the meantime, the mortgage company is continuing with the foreclosure proceedings!

There are times that this scenario will forces individuals to file bankruptcy. They cannot let their home foreclosure while the mortgage company is waiting to evaluate the loan modification request. When this happens, clients have several questions: 1) Will the bankruptcy stop the foreclosure; 2) Will the mortgage company accept my payments after my case is filed; and 3) Can I get a loan modification after I file bankruptcy. I want to address each of these questions individually.

Will Filing Bankruptcy Stop The Foreclosure Proceedings?

Yes. When you file bankruptcy, your creditors are not allowed to take adverse action against you without permission from the Bankruptcy Court. This is because the bankruptcy process creates an automatic stay. In other words, your creditors are prevented, or “stayed” from taking your property unless the Court allows it.

Will The Mortgage Company Accept My Payments After My Bankruptcy Case Is Filed?

Yes. Often, mortgage companies stop accepting mortgage payments from a debtor once the note has been accelerated. After the case has been filed, your Chapter 13 Plan will repay the mortgage payments you have missed and you will continue to make your regular mortgage payments as usual. The mortgage company will not be allowed to return your mortgage payments if you have made all payments after the date of your bankruptcy filing.

Can I Get A Loan Modification After I File Bankruptcy?

Yes. You can apply for a loan modification after you have filed bankruptcy. In some ways, the procedure is the same as if the bankruptcy had not taken place. Just as before, it is at the mortgage company’s discretion whether to grant the loan modification. But if the loan modification is approved, we will need to get approval from the Bankruptcy Court and the Chapter 13 Trustee because your plan may need to be adjusted.

A Chapter 13 bankruptcy would roll the amount owed to the IRS into a Chapter 13 plan that would be paid back over the duration of the chapter 13. As long as the IRS has not taken out a lien, the IRS debt re paid through the Chapter 13 plan is paid back with no interest and not penalties accruing after the Chapter 13 case is filed.

The Consumer Protection Division of the Texas Attorney General’s Office closed the debt elimination company, Bankopp.com. According to an article written by Gregg Abbott, Bankopp.com targeted hurricane victims by giving seminars where Bankop.com promised to eliminate 100% of consumer debts within a few months.

Bankopp.com owner David Jason West, asked each consumer to pay $5,000 to participate in the program. Mr. West promised to begin repayment of each consumer’s debts once he collected $100 million. Not surprisingly, Mr. West deposited these funds into a foreign bank account.

Bankopp.com is not the only debt relief agency under attack by the Attorney General’s Office. The AG’s Office sued the Dallas based company, Debt Relief USA. After Debt Relief USA filed bankruptcy, the Attorney General’s Office filed a claim to refund fees paid by past and present Debt Relief USA customers.

How can a consumer debtor choose a legitimate debt relief agency? Mr. Abbot tells consumers, “Do not trust a debt settlement company that ‘guarantees’ fast results and assures you that your credit will not be negatively affected by using their services. It will ultimately be the creditor’s decision if they wish to accept an offer made on your behalf, including the renegotiated amount owed and the timeline in which it must be paid.”
Many consumer debtors do not realize that creditors are not bound to the debt management terms. Nor do these clients fully understand that creditors may still attempt to collect the debt and report negative remarks on the client’s credit report. Ultimately, these clients must seek my help because debt management could not reduce or eliminate their debts effectively; and unfortunately, these clients may have paid the debt management agencies more than it costs to file bankruptcy.

Although society gives bankruptcy a negative reputation, it is usually more helpful than debt management. First, creditors are bound to follow the bankruptcy rules; and second, the Bankruptcy Court determines how much an attorney can charge in a Chapter 13 case. Yes, a bankruptcy can remain on your credit report for 7 to 10 years just as debt management can be reported. However, when a client files bankruptcy, creditors cannot attempt to collect debts protected by the automatic stay while a client is in the case, nor can a creditor attempt to collect discharged debts when the bankruptcy is over.

Because of the special bankruptcy rules, bankruptcy is usually a better option than debt management. Please visit the Texas Attorney General’s website for more information about debt management.

I recently had a woman visit my office who was in her 50′s.  Her husband had just lost his job, and he was having difficulty finding another job.  They were in financial distress.  She was really struggling, wondering if she should get a second job to pay her bills or if there was another solution.

Bankruptcy was mentioned as a possible option for her, but she had difficulty pursuing it, primarily because of the moral or social dilemma it posed.  She and her husband had always paid their bills on time before he lost his job. They were a responsible, well-intentioned couple who just fell into a tough spot.

She came to me with many fears and concerns about bankruptcy.  Would her bankruptcy go on a public record that could easily be accessed?  Could a future employer find out and not hire her because of it?  How much of a social stigma would be present?

I patiently answered all of her questions and provided the information she needed to make more of an informed decision.  I told her that most employers do not even seek out that information ever from their employee prospects.  I calmed her fears about the social stigma that she perceived by reminding her of many public figures, including Thomas Jefferson, Harry Truman, Henry Ford, Walt Disney, Larry King, Burt Reynolds, and Donald Trump who have all filed for bankruptcy.

She decided to go home and think about things more fully.

After three days, she called back.  She had talked it over with her husband, and they decided to file.  They now had the right mindset – free from fear or worry – to move forward with bankruptcy.

I have several people contact me regularly who struggle similarly with the issue of whether or not to file bankruptcy.  Their concerns are common.  Many feel that it is not morally “right.”  They had been adverse to debt beforehand and do not like to carry the guilt of not repaying their debtors.  They have been told by friends and neighbors, and even the media that because the laws have changed, a Chapter 7 bankruptcy is no longer available to them.  Some come to me and wonder whether credit counseling is better than bankruptcy.  Basically, because bankruptcy can be a very emotional decision, they have a hard time holding onto the fundamental information that would bring clarity to their situation.

With each client, I have found that once I am able to sit down and talk to them, addressing each issue and offering more information, they are able to move forward with a new, educated perspective.

I tell them that bankruptcy has been set up as a tool for people who are stuck between a rock and a hard place.  It offers protection from further financial demise and an opportunity for a fresh start and new slate, in a sense.  We live in a unique country that encourages risk, and so have these measures like bankruptcy to cushion losses when they get to a point that are uncontrollable.  I share that yes, laws have changed.  Now there is a “means test,” and if they pass, they can still qualify for a Chapter 7.  And laws might continue to change, due to a new presidency, and offer a climate that is even more acceptable towards bankruptcy.

I also let them know that it is more damaging to their credit to pursue credit counseling.  Filing for bankruptcy discharges their debts and allows individuals to start over within four months.  Every month that they do not make payments, it reflects negatively on their credit score.  I also share that many credit counseling agencies have been indicted, serving time in prison because they did not distribute collected money to creditors.

Basically, from my experience, if a person falls within the right requirements, once they become educated about bankruptcy, it becomes a clear and even hopeful option for people who are feeling overwhelmed by debt.  The “right mindset” about bankruptcy is essentially one that is fully informed, free from social stigmas, and prepared for a fresh start.

If you need to find an apartment and have a fairly recent bankruptcy, it isn’t the end of the world. Most places will work with you, provided you can offer a few basic things when you sign a new lease.

A cosigner

Many people tend to shy away from looking for a cosigner, but it’s unfortunately the one thing you can produce during the application process that will get you approved quickly.

If you have a recent bankruptcy, a family member or someone close to you with good credit will be of tremendous help. It may be difficult to ask someone close to you for help, but if you are both clear about the risks involved and a plan for prompt rent payment, you may be able to convince the complex to remove your cosigner after you pay rent on time for a while.

Proof of employment

In all likelihood, this isn’t just a suggestion it’s a requirement. If you have a bankruptcy on file, you’ll need to show a leasing agent proof of income.

To demonstrate this, bring paystubs with you to your appointment. A letter stating the length of time you’ve worked at your job and any other important financial details may help if they come from your boss or your company’s HR. Make sure there is contact information on the letter, so the leasing agent can verify its contents.

The right attire

A simple statement can go a long way. If you have concerns about your financial background when trying to sign a new lease, dress professionally for your consultation. The way you are perceived by leasing agents or complex staff may have a lot to do with whether or not your rental application is accepted. It’s worth it to dress up for a few hours if doing so could make a little difference.

Honesty

Many potential renters lie on their rental applications about a bankruptcy, employment situation, or bad financial situation. Leasing agents will most likely check your background and run your credit before allowing you to move into an apartment complex, so hiding a bankruptcy won’t do you any good, In fact, hiding anything about yourself that a leasing agent could find out makes you seem disingenuous, and could naturally hurt your chances of getting into an apartment.

Bring references

A solid list of reliable people whom you have rented from or who have lived with you before will help build trust with you and your leasing agent, regardless of the length of that history. Be honest about the time you’ve spent in rentals and with whom, and bring a sheet with numbers of people who have rented to you before and can verify that you pay on time. The longer your history, the more positive the outcome will be.

If you’ve filed for bankruptcy and are looking to get into an apartment, don’t despair there are plenty of people have made a move after a bankruptcy, and you can too.

Do I want to buy a house?

Do I need to buy a car?

Do I have kids that need help for college?

• What is the annual fee? Annual fees can range from $35 to $120 and more.  You don’t need to settle for and pay a high annual fee.
• Are there other fees? These can be called setup fees, processing fees, program fees or one-time fees, and are not indicative of a good card.
• What is the interest rate? Rates can vary greatly, and you want the best possible rate.  Make sure the rate you are quoted is not just a promotional rate.   READ THE FINE PRINT.
• Is it reported to the credit bureau? You want your chosen credit card to work for you.  You want a good payment history reported to all three credit bureaus.  One note — if the card is secured, you do not want this fact reported, as it will do little or nothing to help your credit.  It is possible to find secured cards that are not reported as secured.  Some banks do, some don’t, you need to ask.

Here is an example of a how good a deal can be found with a credit union.  Check out this one: GTE Federal Credit Union.

This credit union was originally open for GTE employees, but now offers membership through your employer, or a family member, or a low-cost program called CU Savers.  It offers a secured card with:

• No annual fee
• Low fixed rate of 14.9%
• Minimum $500 pledge amount
• No finance charge if you pay your balance in full within the 25-day grace period (excluding cash advances and convenience checks)
Another example of a good card is an Orchard Bank secured credit card. The fee structure is a little different, but the annual fee is waived the first year.
• Reports to all three major credit bureaus
• Earns interest on your deposit
• Your choice of due dates
• $35 annual fee waived the first year
• 7.9% to 15.99% interest rate
• $200 minimum deposit

Don’t apply for several cards at once; this could end up hurting your credit.  You only need to carry one or two credit cards.  Once you are approved for a card, charge ONLY what you can afford to pay off each month. Regular, on-time payments are critical to rebuilding and establishing good credit.

]]> http://billypricelaw.com/blog/2011/03/rebuild-your-credit-start-with-these-cards/feed/ 0 http://billypricelaw.com/blog/2011/03/pre-bankruptcy-pitfalls/ http://billypricelaw.com/blog/2011/03/pre-bankruptcy-pitfalls/#comments Tue, 08 Mar 2011 02:52:10 +0000 admin http://billypricelaw.com/blog/?p=24 Continue reading →]]>

Because of the complexity of bankruptcy laws and the nuances involved, it is essential that you hire a skilled attorney to assist you in the process.

We have found that our clients have common concerns and questions before the filing of their case. Below are some examples:

How do I manage a bank account and loan from the same credit union?

If you have a bank account at a credit union and you have an unsecured loan or credit card with that credit union, draw down the balance of that checking account to $50.00 before filing. Because most credit unions cross-collateralize their loans to your checking account, they can take money out of your checking account to satisfy the unsecured debt you have with them. Open up a checking account at another bank that you don’t have a loan with before you file and have all of your direct deposits go to this account. Make sure that this has been accomplished before you file.

Can I transfer my non-exempt assets to a family member before I file?

Unfortunately, the answer is no. When you file for a bankruptcy, you have to disclose all transfers made within 4 years previous to filing the bankruptcy. If you have transferred assets to a family member within this time, the trustee can get this asset back. It also could raise the issue of bad faith. If it is determined by the Court that your case was filed in bad faith, your discharge can be denied, and you will prohibited from ever getting a discharge on the debts that you had before you filed for bankruptcy. So, it is just not worth the risk.

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When considering filing for Bankruptcy, how can I know if I qualify or which Chapter to file?

Since the Bankruptcy Code was amended on October 17, 2005, you cannot file for a Chapter 7 Bankruptcy unless your income is less than the National average for your household size or after deducting all expenses as governed by the IRS guidelines, you have less than $100.00 per month to pay towards your unsecured debt.

So with this test in mind, it is essential to determine if you qualify now, or if will you qualify in the near future. This is where an experienced Bankruptcy Attorney’s services are so vital. If your case is filed and the presumption arises, then you can be asked by the US Trustee to either convert your case to a Chapter 13 and paya percentage to your unsecured creditors, or you run the risk that your case will be dismissed, without obtaining a discharge!

Can I exempt any assets?

Another valuable service that an experienced bankruptcy attorney can perform for you is a determination of whether all of your assets are exempt. When you file for bankruptcy in the State of Texas, you get to keep all of your exempt assets. Your non-exempt assets are turned over to the Chapter 7 Trustee, and he or she turns these assets to cash and distributes these funds to your unsecured creditors pro-rata.

Case Study:

A few years ago I was attending a meeting of creditors for my client. We arrived early, and we sat in on another meeting of creditors. The Chapter 7 trustee was asking this debtor about their assets, and then the trustee asked about the debtor’s trust. The trustee asked the debtor if he could control the distributions of the trust. The debtor said, yes. At this point the Trustee correctly determined that since this was not a spendthrift trust, it was a non-exempt asset.

Everyone in the room could see the look of astonishment and dread on the Debtor’s Attorney’s face. It was clear that this Attorney did not know that this Trust was a non-exempt asset. The trustee informed the debtor that he would have to turn over this trust to him and that he would distribute these proceeds to the debtor’s unsecured creditors.

The debtor then told the trustee that the trust was his only source of income. After the meeting, in the next room, you could hear a very heated argument between the debtor and his lawyer. I am sure at this point the debtor asked his lawyer if he could just dismiss his case. The answer is no. You cannot voluntarily dismiss a Chapter 7 case without permission from the Court. And, here is the bad news for this debtor: the Judge is not likely to allow a dismissal of a Chapter 7 Bankruptcy case unless the Trustee agrees. And, the Trustee cannot agree to dismissal if there are non-exempt assets to distribute and fulfill their duty as a Trustee.

There are young, inexperienced attorneys out there who offer you a cheap price on filing your bankruptcy. But aren’t peace of mind and the knowledge that your case is being handled by an experienced, qualified Bankruptcy Attorney worth a little bit extra?

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