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I would like to thank all my fellow Arizona attorneys who gave me wonderful reviews over the last 10 years. The end result was that I received AV Preeminent 10 year anniversary award.
For those who are not aware of the rating system for attorneys. AV Preeminent is the “Highest Possible Peer Review Rating in Legal Ability and Ethical Standards”. This recognition comes from Martindale-Hubbell.
WHAT ARE MARTINDALE-HUBBELL PEER REVIEW RATINGS?
“The Martindale-Hubbell Peer Review Ratings™ are an objective indicator of a lawyer’s high ethical standards and professional ability, generated from evaluations of lawyers by other members of the bar and the judiciary in the United States and Canada. The first review to establish a lawyer’s rating usually occurs three years after his/her first admission to the bar.
Martindale-Hubbell facilitates Peer Review Ratings surveys of lawyers across multiple jurisdictions and geographic locations, in similar areas of practice as the lawyer being rated. Reviewers are asked to assess their colleagues’ general ethical standards and legal ability in a specific area of practice.”
What this means is that Arizona lawyers have acknowledged my expertise in the areas of bankruptcy and real estate law and my commitment to ethical standards. I am extremely flattered by this recognition.
The post Diane Drain Receives AV 10 Year Preeminent Award appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
I would like to thank all my fellow Arizona attorneys who gave me wonderful reviews over the last 10 years. The end result was that I received AV Preeminent 10 year anniversary award.
For those who are not aware of the rating system for attorneys. AV Preeminent is the “Highest Possible Peer Review Rating in Legal Ability and Ethical Standards”. This recognition comes from Martindale-Hubbell.
WHAT ARE MARTINDALE-HUBBELL PEER REVIEW RATINGS?
“The Martindale-Hubbell Peer Review Ratings™ are an objective indicator of a lawyer’s high ethical standards and professional ability, generated from evaluations of lawyers by other members of the bar and the judiciary in the United States and Canada. The first review to establish a lawyer’s rating usually occurs three years after his/her first admission to the bar.
Martindale-Hubbell facilitates Peer Review Ratings surveys of lawyers across multiple jurisdictions and geographic locations, in similar areas of practice as the lawyer being rated. Reviewers are asked to assess their colleagues’ general ethical standards and legal ability in a specific area of practice.”
What this means is that Arizona lawyers have acknowledged my expertise in the areas of bankruptcy and real estate law and my commitment to ethical standards. I am extremely flattered by this recognition.
The post Diane Drain Receives AV 10 Year Preeminent Award appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
To be in the credit counseling business you have to be a nonprofit. Credit card companies will frequently refuse to set up repayment plans with for-profit debt counselors. Mandatory bankruptcy credit counseling courses may only be sponsored by nonprofits. And the common perception is that “real” credit counselors should be nonprofit agencies.
There are historical reasons for these perceptions. At one time credit counseling was sponsored by donations from banks and community grants. Small community agencies offered face-to-face counseling that went beyond the financial issues as counselors delved into the personal issues that caused financial distress. Counselors acted as social workers who taught basic budgeting concepts and sought to redeem the wayward debtor.
Jane McNamara, GreenPath CEO. Earned $590,883 in 2010
The reality of today’s credit counseling industry are much different. Personal credit counseling is a thing of the past.
Oh sure, they still go through the motions. A budget worksheet may be prepared and handouts about saving money, cutting coupons, establishing savings accounts, etc, are shared, but that is just the window dressing. No real face-to-face counseling occurs.
In fact, the majority of people who are in Debt Management Plans (DMP) have never met their credit counselor in person. The “counseling” they receive is a 30 minute phone call or an online chat.
Credit counseling agencies are primarily funded by enrolling clients into Debt Management Plans. They charge clients a flat dollar amount each month to manage the plan (typically $25 to $50 per month) and they also keep a percentage of the amounts paid through the plan, what the industry calls Fair Share. The more clients enrolled in the payment plan the higher the income of the agency. It is not uncommon for credit counselors to be paid bonuses based on the number of DPMs they sell.
Ivan Hand, CEO of Money Management International. Earned $889,870 in 2010
Managing a credit counseling agency turns out to be a very profitable occupation. According to a report published by professor Robert D. Manning, in 2010 the CEO of Money Management International, Ivan Hand, earned a hefty $889,870 while GreenPath Debt Solutions‘ CEO, Jane McNamara, earned $590,883. The average income of the CEOs of the top 10 credit counseling agencies in 2010 was $456,116.
Over the past 30 years a real change has taken place in the credit counseling industry. Newer credit counseling agencies have entered the market with a business model based on setting up a conglomerate of for-profit companies that connect to the nonprofit agency. The basic idea is that they sign up new clients in the nonprofit company and then farm out the work to a network of for-profit affiliates. The services are advertised as being offered by a nonprofit, so it is difficult for consumers to figure out the real nonprofits from the phony nonprofits.
Congressional hearings on this new trend in credit counseling were conducted in 2004. (See Profiteering in a Non-Profit Industry; Abusive Practices in credit Counseling.) Despite the attention the industry received and despite an IRS crackdown that stripped nonprofit tax status to several agencies, the trend has continued and intensified. The agencies lawyered up and fought back, and it appears that the IRS has basically surrendered the issue except in the worst cases. Many agencies continue to operate as “telemarketing sweatshops” that are designed to set up payment plans while providing little to no financial education.
To make matters worse, debt settlement companies also incorporate themselves as nonprofit debt counselors. These agencies are very appealing to customers since the monthly payment in these programs are often half the cost of a traditional debt management plan. The problem is, consumers fail to understand that true nature of these agencies and that no payment is made to their creditors until a debt is settled. Our firm routinely meets clients enrolled in these debt settlement programs who are being sued because the creditor refused the offered settlement or, more likely, no settlement was even offered because not enough money was saved up in the settlement escrow account. Consumers are confused since everyone is calling themselves a nonprofit and they are unable to distinguish the true nature of the agency.
What the credit counseling industry lacks is a system of independent audits conducted by outside accounting firms, something similar to what publicly traded companies provide. Search as I have, there is not a single independent and trustworthy source of information comparing the effectiveness and cost of competing credit counseling agencies. The only bright light in this industry is the Transparency Report provided by Cambridge Credit Counseling. To my knowledge, Cambridge is the only agency that publicly publishes information on the success rate of their programs.
An industry that refuses to be accountable cannot be trusted. It is time for credit counselors to submit to public audits and to be measured and compared by a uniform set of standards.
Have you ever opened your credit card statement only to find that despite last month’s payment, your unpaid balance has actually increased because of credit card interest, penalties or fees?As a practicing consumer bankruptcy attorney in Atlanta, Georgia for over 25 years, I know that out of control credit card debt can force people in to Chapter 7 or Chapter 13 bankruptcy. In many cases credit card debt that was manageable becomes unmanageable because of common mistakes made by individuals in how they handle their credit card debt.If you can avoid these mistakes you may be able to avoid the stress and financial distress caused by excessive credit card debt.How Credit Card Debt and Credit Card Interest can Get Out of ControlThe first step towards controlling your credit card debt involves your spending. This may seem obvious but many of my bankruptcy clients fail to recognize this reality. If you find yourself carrying a balance (rather than paying off your debt in full at the end of the month) you need o change your usage habits. If you carry a balance you will end up paying unnecessary and expensive credit card interest.Your credit card is not a substitute for cash – instead your credit cards represent a high interest loan with a 20 days repayment term. Interest on unpaid balances will eat you alive. Most cards obligate you to pay an 18 to 20% annual interest rate on balances carried more than 20 days. To give you some perspective, your interest rate on mortgage debt will end up in the 3 to 4% per year range, and the annual percentage rate on your car note will generally be 5 to 6% per year.As a rule, if you make only the minimum payment, your balance will stay the same, or actually increase month to month indefinitely. And if you are 1 day late, you will likely get hit with a penalty (often $35 or more) plus your interest rate may be increased to 28% or higher.Banks earn huge profits from consumers who consistently maintain monthly balances while making minimum payments and occasionally missing a payment deadline. I have represented numerous clients over the years whose $20,000 balances never changed despite hundreds or even thousands of dollars of payments over years and years.Credit cards can be a convenience – you can avoid the risks associated with carrying cash. But if you do not pay your balance in full each month, that convenience becomes an expensive, high interest short term loan that can cost you thousands of dollars.Step One – Stop Using Your Credit Cards and Create a BudgetThe rule of thumb I offer to my clients is simple: if you find yourself carrying a balance for more than 2 months, stop using your credit cards. If you do not have enough money in your budget to pay your bills without accessing short term credit (i.e., your credit cards), cut out all unnecessary expenses and/or get a part time job. Step one is to stop the bleeding by balancing your household budget.If your budget does not balance, everything should be on the table – and this includes cutting out or reducing expenses such as:
- restaurants
- entertainment (movies, premium cable channel)
- expensive cell phone plans
- magazine and newspaper subscriptions
- reducing your insurance coverage to get a cheaper premium
- electricity and gas by changing your thermostat and taking shorter showers
Use coupons when shopping at the grocery store and buy cheaper food itemsIf those steps don’t get you back into balance, then look at trading your car or even moving to cheaper housing. Yes, I am serious!If you have not done so, allocate an hour to create a household budget. I prepare budgets in bankruptcy cases and many of my clients are shocked at how much they spend each month.You and your family need to recognize that an out of balance budget is a huge red flag. And “Murphy’s Law” tends to mean that emergency car repair or leaky roof will appear just when you have the least amount of cash.After 25+ years of bankruptcy practice, I can tell you that if you do not get control of your budget sooner than later, the bankruptcy court will force you to make changes and often changes that you do not want. Here is a good resource for budgeting.Step Two – Attack Your Credit Card BalancesAs you work towards making your household budget balance, you will also need to attack your credit card balances. A cheap and easy tactic I use myself involves going online and creating an automatic minimum payment draft from your checking account on or before your payment due date.As we have seen, minimum payments won’t help pay down your balance but that minimum payment will avoid late payment fees and penalty interest rates.You can also use your bank’s notification features to send you alerts, reminding you that your payment due date is coming up in a certain number of days. I have these alerts emailed and texted to me so I will not forget.I also set up electronic payments from my checking account – this will allow you to pay on your balance at the last minute and avoid the risk of late payments or excess interest caused by slow mail.Next, create a plan for yourself to eliminate your credit card debt. You can approach this in different ways. Consumer advocate Dave Ramsey has developed a debt snowball plan which advocates paying off your smallest debts first and working up to the bigger ones. Dave argues that the psychological boost of seeing a debt eliminated will encourage you to sustain your efforts.Alternatively you can start by paying down the highest interest rate debts first and working backwards from there.However you decide to proceed, the key here is to balance your budget, find a way to generate extra money and chip away at your debt.What About Credit Counselors?My experience has been that private debt consolidation companies often cause more trouble than they are worth. Many of these companies run radio and TV ads touting their non-profit status (which means nothing) and promising reduced balances and favorable payment terms.Many of these companies have been sued by attorneys general in various states for a variety of reasons and many customers end up paying a lot of money they don’t have for very little result.Clearpoint (formerly CredAbility or Consumer Credit Counseling) is an exception – this company and others certified by the National Federation for Credit Counseling have helped consumers (including some of my clients) with legitimate, reasonably priced credit counseling services.While I do recommend ClearPoint, you should understand that this company is funded by credit card companies, banks and other consumer lenders. As such, ClearPoint plans are designed to help you pay your credit card debts in full, or mostly in full, with savings arising from (temporary) interest rate reductions and penalty waivers. Further, some consumer creditors will not participate in a ClearPoint plan.Credit Card Debt SettlementIn many circumstances you can eliminate interest, penalties and fees by settling your credit card debt for less than 100% on the dollar. Generally you will need access to a lump sum of cash and the amount of your discount will depend on how far behind you are and your employment status and asset picture.MindsetIn addition to the financial considerations, you can help yourself avoid penalty interest rates, fees and credit card interest by approaching this problem with the right mindset. Creditor representatives (collection agents) are trained to use emotions against you. Representatives will suggest that because you have not paid on time that you are dishonest, or that you are at the mercy of the lender.You should treat your credit card interest and debt issues as a business problem. This means that you should not be afraid to ask the lender’s representative to waive fees and penalties or to reduce interest rates. Remember – they want something from you – your money and they need to cooperate with you.Do not be afraid to pick up your phone and talk to a bankruptcy attorney about your bankruptcy options. You may discover that Chapter 7 or Chapter 13 may not work at all for you – which is important to know when you formulate your plan. You may also benefit from a lawyer’s perspective – for example, I sometimes speak to potential clients who owe $10,000 to $15,000 and I generally advise these people that bankruptcy does not make sense.On the other hand, if Chapter 7 would clearly work to wipe out tens of thousands of dollars of debt, that alternative would be helpful to have in your back pocket when negotiating with a credit card company.Big PictureThe big picture here is that just because a credit card company wants to charge you fees, penalty interest rates or to increase your interest rates there is no reason why you should simply accept their desires as your reality. You have leverage and that leverage arises from your knowledge of the options available to you.If I can be of help to you in better understanding those options, I invite you to call me at 770-393-4985, or to email me using the form on this page.The post How to Avoid Credit Card Interest, Penalties and Fees appeared first on theBKBlog.
Have you ever opened your credit card statement only to find that despite last month’s payment, your unpaid balance has actually increased because of credit card interest, penalties or fees?As a practicing consumer bankruptcy attorney in Atlanta, Georgia for over 25 years, I know that out of control credit card debt can force people in to Chapter 7 or Chapter 13 bankruptcy. In many cases credit card debt that was manageable becomes unmanageable because of common mistakes made by individuals in how they handle their credit card debt.If you can avoid these mistakes you may be able to avoid the stress and financial distress caused by excessive credit card debt.How Credit Card Debt and Credit Card Interest can Get Out of ControlThe first step towards controlling your credit card debt involves your spending. This may seem obvious but many of my bankruptcy clients fail to recognize this reality. If you find yourself carrying a balance (rather than paying off your debt in full at the end of the month) you need o change your usage habits. If you carry a balance you will end up paying unnecessary and expensive credit card interest.Your credit card is not a substitute for cash – instead your credit cards represent a high interest loan with a 20 days repayment term. Interest on unpaid balances will eat you alive. Most cards obligate you to pay an 18 to 20% annual interest rate on balances carried more than 20 days. To give you some perspective, your interest rate on mortgage debt will end up in the 3 to 4% per year range, and the annual percentage rate on your car note will generally be 5 to 6% per year.As a rule, if you make only the minimum payment, your balance will stay the same, or actually increase month to month indefinitely. And if you are 1 day late, you will likely get hit with a penalty (often $35 or more) plus your interest rate may be increased to 28% or higher.Banks earn huge profits from consumers who consistently maintain monthly balances while making minimum payments and occasionally missing a payment deadline. I have represented numerous clients over the years whose $20,000 balances never changed despite hundreds or even thousands of dollars of payments over years and years.Credit cards can be a convenience – you can avoid the risks associated with carrying cash. But if you do not pay your balance in full each month, that convenience becomes an expensive, high interest short term loan that can cost you thousands of dollars.Step One – Stop Using Your Credit Cards and Create a BudgetThe rule of thumb I offer to my clients is simple: if you find yourself carrying a balance for more than 2 months, stop using your credit cards. If you do not have enough money in your budget to pay your bills without accessing short term credit (i.e., your credit cards), cut out all unnecessary expenses and/or get a part time job. Step one is to stop the bleeding by balancing your household budget.If your budget does not balance, everything should be on the table – and this includes cutting out or reducing expenses such as:
- restaurants
- entertainment (movies, premium cable channel)
- expensive cell phone plans
- magazine and newspaper subscriptions
- reducing your insurance coverage to get a cheaper premium
- electricity and gas by changing your thermostat and taking shorter showers
Use coupons when shopping at the grocery store and buy cheaper food itemsIf those steps don’t get you back into balance, then look at trading your car or even moving to cheaper housing. Yes, I am serious!If you have not done so, allocate an hour to create a household budget. I prepare budgets in bankruptcy cases and many of my clients are shocked at how much they spend each month.You and your family need to recognize that an out of balance budget is a huge red flag. And “Murphy’s Law” tends to mean that emergency car repair or leaky roof will appear just when you have the least amount of cash.After 25+ years of bankruptcy practice, I can tell you that if you do not get control of your budget sooner than later, the bankruptcy court will force you to make changes and often changes that you do not want. Here is a good resource for budgeting.Step Two – Attack Your Credit Card BalancesAs you work towards making your household budget balance, you will also need to attack your credit card balances. A cheap and easy tactic I use myself involves going online and creating an automatic minimum payment draft from your checking account on or before your payment due date.As we have seen, minimum payments won’t help pay down your balance but that minimum payment will avoid late payment fees and penalty interest rates.You can also use your bank’s notification features to send you alerts, reminding you that your payment due date is coming up in a certain number of days. I have these alerts emailed and texted to me so I will not forget.I also set up electronic payments from my checking account – this will allow you to pay on your balance at the last minute and avoid the risk of late payments or excess interest caused by slow mail.Next, create a plan for yourself to eliminate your credit card debt. You can approach this in different ways. Consumer advocate Dave Ramsey has developed a debt snowball plan which advocates paying off your smallest debts first and working up to the bigger ones. Dave argues that the psychological boost of seeing a debt eliminated will encourage you to sustain your efforts.Alternatively you can start by paying down the highest interest rate debts first and working backwards from there.However you decide to proceed, the key here is to balance your budget, find a way to generate extra money and chip away at your debt.What About Credit Counselors?My experience has been that private debt consolidation companies often cause more trouble than they are worth. Many of these companies run radio and TV ads touting their non-profit status (which means nothing) and promising reduced balances and favorable payment terms.Many of these companies have been sued by attorneys general in various states for a variety of reasons and many customers end up paying a lot of money they don’t have for very little result.Clearpoint (formerly CredAbility or Consumer Credit Counseling) is an exception – this company and others certified by the National Federation for Credit Counseling have helped consumers (including some of my clients) with legitimate, reasonably priced credit counseling services.While I do recommend ClearPoint, you should understand that this company is funded by credit card companies, banks and other consumer lenders. As such, ClearPoint plans are designed to help you pay your credit card debts in full, or mostly in full, with savings arising from (temporary) interest rate reductions and penalty waivers. Further, some consumer creditors will not participate in a ClearPoint plan.Credit Card Debt SettlementIn many circumstances you can eliminate interest, penalties and fees by settling your credit card debt for less than 100% on the dollar. Generally you will need access to a lump sum of cash and the amount of your discount will depend on how far behind you are and your employment status and asset picture.MindsetIn addition to the financial considerations, you can help yourself avoid penalty interest rates, fees and credit card interest by approaching this problem with the right mindset. Creditor representatives (collection agents) are trained to use emotions against you. Representatives will suggest that because you have not paid on time that you are dishonest, or that you are at the mercy of the lender.You should treat your credit card interest and debt issues as a business problem. This means that you should not be afraid to ask the lender’s representative to waive fees and penalties or to reduce interest rates. Remember – they want something from you – your money and they need to cooperate with you.Do not be afraid to pick up your phone and talk to a bankruptcy attorney about your bankruptcy options. You may discover that Chapter 7 or Chapter 13 may not work at all for you – which is important to know when you formulate your plan. You may also benefit from a lawyer’s perspective – for example, I sometimes speak to potential clients who owe $10,000 to $15,000 and I generally advise these people that bankruptcy does not make sense.On the other hand, if Chapter 7 would clearly work to wipe out tens of thousands of dollars of debt, that alternative would be helpful to have in your back pocket when negotiating with a credit card company.Big PictureThe big picture here is that just because a credit card company wants to charge you fees, penalty interest rates or to increase your interest rates there is no reason why you should simply accept their desires as your reality. You have leverage and that leverage arises from your knowledge of the options available to you.If I can be of help to you in better understanding those options, I invite you to call me at 770-393-4985, or to email me using the form on this page.The post How to Avoid Credit Card Interest, Penalties and Fees appeared first on theBKBlog.
Let’s talk about the morality of being in – and being unable to get out of – debt.
There’s no clause in a credit card contract that speaks to morality or ethics. There are bad people who have credit cards and pay them on time.
There are also good people who can’t make their payments on time.
This is, after all, a business deal. There’s a contract, and everyone agrees to be bound by whatever it says.
If you pay back the money according to the terms of the agreement then the lender makes a profit. You, in turn, get the benefit of being able to use the money for awhile.
Still, my clients can’t shake the feeling that bankruptcy is somehow dishonest. After all, don’t good people pay their bills?
When you take a closer look at the Bible it’s easier to see that bankruptcy is acceptable
What Does the Bible Say About Bankruptcy?
Most bankruptcy lawyers can rattle off a bunch of verses about how the Bible looks at bankruptcy.
Deuteronomy 15:1-2 talks about the Lord’s Release, and how every seven years each creditor shall release what he has lent to his neighbor. In Luke 7:42, the Bible says, “When they were unable to repay, he graciously forgave them both. So which of them will love him more?”
And Romans 13:8 says, “Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.”
Bankruptcy, in other words, isn’t terrible when viewed in a vacuum. Nobody is a sinner because they walk into bankruptcy court.
Still, the question remains – aren’t people told to pay their debts?
The Bible Doesn’t Like Debt
The Bible makes it clear that there is no such thing as good debt and bad debt – it’s all bad debt.
Proverbs 22:7 says, “The rich rules over the poor, And the borrower becomes the lender’s slave.” It continues in Proverbs 22:26-27 by telling us, “Do not be among those who give pledges, Among those who become guarantors for debts. If you have nothing with which to pay, Why should he take your bed from under you?”
To help you stay out of debt, 1 Corinthians 16:2 instructs you to put away money for a rainy say. “On the first day of every week each one of you is to put aside and save, as he may prosper, so that no collections be made when I come,” it says.
If You Go Into Debt, Be Honest
We teach our children from an early age that honesty is the best policy. Don’t lie, don’t cheat, and don’t steal. The Bible reinforces those moral absolutes.
Psalms 37:21 makes clear that wicked people incur debt with no intention of paying it back. And Ecclesiastes 5:5 says, “Better you should not vow, than vow and not pay.”
But both of these sentiments speak to someone who makes a promise and then willingly breaks it. As in the modern world, the Bible is clear that bad people make promises with no intention of keeping them.
As in our day-to-day lives, it isn’t the failure to live up to an obligation that causes the problem. It’s the deceit involved in having no intention to do so at the outset.
But what about someone who can’t pay debts because of circumstances beyond his or her control?
If You Can’t Pay, The Bible Encourages Mercy
When you want to pay your debts but aren’t able to do so, the Bible instructs your creditors to show mercy.
Beyond the Lord’s release, the Bible is clear that forgiveness is the right thing to do. Matthew 18:27 talks about the master who forgave his slave’s debt when he could not repay. Luke 7:41-42 tells of the moneylender who forgave two debtors unable to make payments.
These stories show that the Bible encourages creditors to show forgiveness.
Creditors Also Bear Responsibility
People hire me to file for bankruptcy when creditors refuse to work with them. Rather than lower payments or interest, creditors add fees and send them to collection.
Isn’t it wrong to charge 19.99% interest on a credit card?
Leviticus 25:35-37says, “If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit.”
And Exodus 22:25 directs, “If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.”
Deuteronomy 23:19-20 says, “You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest.”
People who are in the business of lending money need to make money, and charging interest is how they do it. But there’s a difference between a reasonable rate of return and what you see on the typical credit card agreement.
It’s All About Honesty and Fair Dealing
I’ve spent 20 years working with people who were over their heads in debt. They come to me because they have no reasonable way of paying it off.
My religious clients turn to me for financial guidance. When I suggest bankruptcy, they talk about morality and whether bankruptcy is dishonest.
Here’s what I tell them.
There’s a moral obligation to repay debts when you can, and to only incur debt you intend to repay.
People who lend money also have a moral obligation, and that is to be fair.
But banks aren’t people, and the credit card agreements aren’t fair. The lenders stack the deck against you by charging high interest rates and fees. They make it worse by refusing to work with you when you need help.
The system is good for profits, but not moral or ethical.
Bankruptcy is the law’s attempt to balance the scales and make the system fair. The law can’t legislate morality, but it does the next best thing by enforcing fairness.
Filing for bankruptcy isn’t easy, and it’s not always quick. Sometimes you lose a little money, a little property, or a great credit score for a few months.
But make no mistake – there’s nothing immoral, sinful, wicked, or evil about filing for bankruptcy.
The post The Bible on Debt and The Morality of Bankruptcy appeared first on Shaev & Fleischman P.C..
Let’s talk about the morality of being in - and being unable to get out of - debt. There's no clause in a credit card contract that speaks to morality or ethics. There are bad people who have credit cards and pay them on time. There are also good people who can’t make their payments on Read the article
The post The Bible on Debt and The Morality of Bankruptcy appeared first on Shaev & Fleischman P.C..
As I noted in an earlier post, the paperwork the forms that Oregon and Washington debtors have used to file bankruptcy since the 1980s will be replaced by a new longer set of forms on December 1, 2015. Many critics have noted that the new form, at least at first blush, appear to be more user friendly while soliciting much more in the way of detail. The fear is that debtors who are foolhardy enough to file on their own will leave themselves exposed as they inadvertently report more than they should without advice of counsel.
Other critics have cited the confusion that will likely be produced as courts struggle to wade through reams of information provided by self filers relying on the new forms. Other critics have questioned how the new forms will make bankruptcy easier for anyone, in as much as the average length of a bankruptcy petition will soon become over twenty pages longer than it is today.
One thing the new bankruptcy will provide to the courts is more meaningful data regarding bankruptcy trends. For example it would be extremely difficult today for any bankruptcy court to do any meaningful analysis regarding the percentage of Chapter 13 Bankruptcy filings that were initiated due to student loan debt, or tax debt or mortgage arrears. The new forms should provide more detailed information to the bankruptcy court about the bankruptcy customer. Is this a good thing?
Many of us who practice in the bankruptcy courts are probably a little paranoid about who will receive the filing data other than the courts. Whether this paranoia may in fact be well founded is not for me to say. I will say that if you are in the midst of getting your bankruptcy paperwork put together for filing, you will probably have an easier time filing prior to December 1, 2016 than after. Please contact our offices immediately if the prospect of filing bankruptcy with the new forms raises any concerns for you at all. We would be happy to help.
The original post is titled New Bankruptcy Forms Under Attack , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .
This week, we continue our series on frequently asked questions regarding bankruptcy. For this post, we are taking a look at the filing process. Many questions arise during the Walworth County bankruptcy filing process. You’ll find answers to the most common questions below.
Frequently Asked Questions Regarding Filing a Walworth County Bankruptcy
Q: What Does an “Automatic Stay” Mean?
A: “Automatic Stay” means that creditors listed in the bankruptcy petition must stop all attempts to collect on the debt. This includes lawsuits, liens, phone calls, mailings, wage garnishments, etc.
Q: Does Filing a Walworth County Bankruptcy Stop Bill Collectors From Calling?
A: Yes. The automatic stay prevents bill collectors from calling you, or any other action that is an attempt to collect on the debt.
Q: How Soon After Filing a Walworth County Bankruptcy Will Creditors Stop Calling?
A: Once your Walworth County bankruptcy petition is filed, the Clerk of Court mails a notice to all the creditors contained in the bankruptcy petition. This could take anywhere from days to a couple weeks. Once the creditor is aware of the bankruptcy filing, they must stop all collection efforts. This means creditors have to stop calling you if you inform them about the bankruptcy petition and give them your case number.
Q: Will Filing a Walworth County Bankruptcy Stop Eviction?
A: “Whether or not the automatic stay is applicable to eviction proceedings depends upon the facts of the case. The following exceptions to the automatic stay are relevant to landlords of residential property: Exception #1: If eviction action was started before the filing of bankruptcy and was due to failure to pay rent. Exception # 2: If the eviction action is due to behavior that endangers the property (such as illegal drug use, etc).” – The United States Bankruptcy Court Eastern District of Wisconsin
Q: What Property Can I Keep After Filing a Walworth County Bankruptcy?
A: In a Chapter 7 Bankruptcy, the debtor can keep all the property which is exempt from the claims of creditors. We suggest you download our free Chapter 7 Bankruptcy Guide to learn more.
Q: Will I Lose My Home or Vehicle If I File a Walworth County Bankruptcy?
A: Most individuals or couples who file a Chapter 7 Bankruptcy get to keep their home and vehicle. However, there are always exceptions. Read more about keeping your vehicle here: Bankruptcy – Will I Lose My Car or Truck? Read more about keeping your home here: Can I Keep My Home If I File Bankruptcy?
Q: Will I Lose Future Income or Property If I File a Walworth County Bankruptcy?
A: “No. Many people believe that they cannot own anything for a long time after filing for bankruptcy. This is not true. A debtor can keep exempt property and anything obtained after filing. The major exception is if the debtor becomes entitled to receive an inheritance, a property settlement, or life insurance benefits within 180 days (6 months) after filing a bankruptcy. That money or property may have to be turned over to the trustee for payment to the creditors.” – The United States Bankruptcy Court Eastern District of Wisconsin
Q: What is Credit Counseling?
A: Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, individual debtors must undergo credit counseling before filing for bankruptcy. In order to receive a bankruptcy discharge, an individual debtor who files for bankruptcy must complete an instructional course in personal financial management after filing for bankruptcy. Wynn at Law, LLC will provide you with specific instructions to complete these necessities. Both courses can be performed online during your free time.
Q: What Is The Effect of a Walworth County Bankruptcy Filing on a Co-Signer?
A: In a Chapter 7 bankruptcy, if someone has co-signed a loan and the other debtor files bankruptcy, the co-signer will be responsible for the debt. The co-signer will not be responsible for the debt if they file for bankruptcy protection as well. If the debtor files a chapter 13 petition and agrees to pay the debt in full with the co-signer, the co-signer cannot be pursued for the debt as long as the debtor remains in Chapter 13 and continues to make payments.
Q: If I’m Married, Can I File a Walworth County Bankruptcy Alone?
A: Yes. Be advised there are many details of filing alone that need to be brought to your attention. Learn more here: “I’m Married. Can I File Bankruptcy Alone?”
Q: Will My Utility Services Be Affected by a Walworth County Bankruptcy?
A: Public utility companies cannot refuse you service or cut off your service if you file bankruptcy. However, they can require a deposit for future service. If you feel you cannot afford the security deposit required, you can seek an Order from the Court to reduce the amount of the deposit.
Q: Will I Have to Go to Court?
A: Usually, a debtor only needs to attend the 341 meeting of creditors which is often not held in a courtroom. Occasionally, a debtor may need to appear in court, but only if a motion has been filed, an adversary action takes place, or if you choose to dispute a debt. You will receive Notice of Hearing if you need to appear in Court.
Q: Do I Need to List All Creditors When Filling a Walworth County Bankruptcy?
A: Yes. Under Bankruptcy Rule 1007(a), you must list ALL creditors. You are not permitted to omit any creditors.
Q: Can I Erase Student Loans by Filing a Walworth County Bankruptcy?
A: “Generally, student loans are not discharged in bankruptcy. You will remain responsible for these debts. Privately funded and government-funded or guaranteed loans are treated the same under the Bankruptcy Abuse and Prevention and Consumer Protection Act of 2005.” – The United States Bankruptcy Court Eastern District of Wisconsin
Schedule a Consultation With Our Walworth County Bankruptcy Attorney
If you have questions regarding a Walworth County bankruptcy, please contact Wynn at Law, LLC. Our Walworth County bankruptcy attorney can answer all your questions during your free, initial consultation. Our Walworth County bankruptcy attorney can be reach by phone at 262-725-0175 or by email via our website’s contact page. Wynn at Law, LLC has bankruptcy offices located in Delavan, Lake Geneva, Muskego, and Salem, Wisconsin.
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By Michelle Higgins
After renting a one-bedroom for seven years, Catherine and Peter Bertazzoni had saved enough for a down payment and were ready to buy their first apartment together. They knew it would be a challenge to find a move-in-ready two-bedroom on the Upper West Side within their $1.5 million budget, but with a baby on the way, they needed more space.
It wasn’t until they made their first offer, about $1.3 million for a two-bedroom one-bath listed for $1.25 million, that they realized just what they were up against.
“We came in at what we thought was significantly above ask and ended up sixth out of 11 bids,” said Mrs. Bertazzoni, 31, a tax manager at an asset management company. “It was a real wake-up call.”
Buying your first home in New York City is a daunting task. The median price for a Manhattan apartment recently reached nearly $1 million, with reports from major brokerage firms placing the price at $999,000 and $998,000, sums that would buy a mansion in many parts of the country. Competition is fierce, and bidding wars are practically the norm for anything that is halfway decent. Not to mention the level of scrutiny buyers must endure if they want to live in one of the city’s co-op apartments, which make up roughly 75 percent of Manhattan’s nonrental housing stock.
Mrs. Bertazzoni, along with her husband, Peter, 36, who also works in finance, visited nearly 40 apartments and lost two bidding wars during their intensive four-month search. “We learned quickly that there really are a lot of all-cash offers out there, and it made it important that we, as buyers who needed to finance, have our financials in order and be ready to move quickly,” she said.
In May they made an offer on a two-bedroom, two-bath listed for $1.395 million. When they closed in August, it was just in time. The paint had barely dried before their son, Oscar, came home from the hospital.
“It is extraordinarily challenging,” Mrs. Bertazzoni said of buying in New York. “You might not hit everything on your wish list, but in the end it can work out even for a first-timer.”
Here are some of the steps you need to take to buy an apartment in New York.
SAVE, SAVE, SAVE
Buyers should plan to put at least 20 percent down in order to be taken seriously. That’s right, for a $500,000 apartment, you’ll need a down payment of $100,000, and that does not include closing costs.
Be prepared for other charges large and small. Among the larger is the 1 percent surcharge on sales of $1 million or more in New York City, known as the mansion tax. Among the smaller incursions on your wallet: the co-op lien search fee (roughly $300), the board package fee ($500 to $2,000), the appraisal ($300 to $1,500), the condo municipal search ($350 to $500) and so on. Brokerage firms including Douglas Elliman and Town Residential offer a laundry list of estimated closing costs on their websites.
CLEAN UP YOUR CREDIT
Unless you are sitting on a substantial nest egg or are being financed by a benevolent relative, you will need a loan to afford your first place in New York City. Banks use credit scores, also known as FICO scores, to evaluate the potential risk of lending to individuals. The higher the number, which runs from 300 points to 850 points, the better your credit score.
Knowing your score well in advance will give you time to clean up any mistakes, like tax liens that were paid off many years ago or parking tickets that should have been expunged, said Peggy Dahan, an associate broker with Siderow Residential Group. “Sometimes it takes months to clear it up, and by then the seller has sold your dream apartment and we are back to Square One.”
Knowing your score will also give you time to boost your number by paying down credit card debt if your balances are on the high side. The three major credit-reporting bureaus, Equifax, Experian and TransUnion, generate their own FICO scores based on the data they collect. To find out where you stand, go to annualcreditreport.com, which offers a free report annually.
GET PREAPPROVED
Not to be confused with a prequalification, which is essentially a crude calculation of how much of a loan you might qualify for, a preapproval is a written estimate from the lender stating how much you will likely be able to borrow based on an initial review of your credit and financial information. The application often requires submitting pay stubs, bank statements, tax returns and other financial documents. Most lenders charge nothing for the application, since they are hoping to win your business, but you may be socked for around $100 to cover the cost of a credit check.
Why not wait until you’ve actually found a place to get a preapproval letter for a mortgage? Because it will help you determine how much you can afford. (You will also need it when you’re ready to submit an offer to provide assurance to the seller that you will be able to secure financing.) Preapproval letters typically expire between 90 and 120 days, but can be quickly updated with a phone call to the lender.
START SEARCHING
Once you have a sense of your budget, you can start searching for an apartment in earnest. Websites and apps from nytimes.com/realestate, StreetEasy and Trulia eliminate some of the work by automating the search. The sites will email you new listings that meet your requirements, save them and notify you when there are open houses or price changes. You can type in an address in StreetEasy to find out what else is for sale in a given building and how much apartments sold for previously.
CO-OP VS. CONDO
Apartments come mainly in two forms in New York City — co-op and condo. In a co-op, short for cooperative housing, you are buying shares in a corporation that will give you a proprietary lease in the building.
When you a buy a condo, you own the unit outright. In both cases, buyers will be asked to submit financial information including net worth, liquid assets, annual income and other financial documents. Co-ops tend to subject potential shareholders to more rigorous scrutiny, often requiring reams of personal as well as financial information.
“They’re going to undress you and you have to really reveal yourself,” is how Robert Dankner, the president of Prime Manhattan Residential, explains the excruciating process to first-time buyers. “It’s the price of entry and a rite of passage to buying in a co-op in Manhattan.” A co-op can turn down a sale for any reason it pleases as long as it does not discriminate illegally.
Co-op financial requirements can prove difficult for first-time buyers. Some co-ops don’t allow financing; others require buyers to show they have a year’s worth of mortgage and maintenance fees in the bank.
“Who can do that, really, as a normal person, while paying rent?” said George Sholley, a 29-year-old executive producer at a New York advertising agency. In the end, he opted for a condo.
“I had been trying to buy a place since 2012,” he said, noting that he was outbid three times by buyers with more cash on hand. Earlier this year, with the help of his agent, Scott Sobol, a salesman at Compass, Mr. Sholley bought a studio for $670,000 in a condominium conversion in Hell’s Kitchen. “It was a bit more expensive than I was hoping,” he said, but compared with the co-ops he had tried to buy, “it was a smoother process over all.”
HIT THE STREETS
It’s helpful to visit a range of open houses in order to narrow your preferences, including how far you really want to be from the subway when it snows, how out of breath you are on the third flight of a sixth-floor walk-up, and what is meant by loft, railroad flat, Junior Four and so forth. Neighbors may have information on individual buildings and neighborhood goings-on.
And open houses can also be a good way to meet real estate agents with whom you might consider working. If you like a particular building, a broker who does a lot of business there might be able to alert you to an apartment coming on the market. The doorman may be able to guide you to an agent in the know or to the soon-to-be-available apartment.
ASSEMBLE YOUR TEAM
Look for an agent and a real estate lawyer who have established track records working with buyers in your situation, and who will get back to you promptly.
“There’s not much of a barrier to entry to becoming a real estate agent,” said Jessica Cohen, an associate broker with Douglas Elliman who frequently works with entry-level buyers. “You want to feel like you’re working with someone who has done this countless times and isn’t learning the process on you while you’re on this emotional roller coaster.”
If you are gravitating toward co-ops, for instance, you want a broker who has put together many a co-op board package, and a lawyer who understands the accounting methods used by co-ops and can mine the minutes of its board meetings for red flags.
Ultimately you want an agent who can help you come up with a sound offer based on market analysis and who will put together a well-rounded application package on your behalf. “Your broker is there to market you,” Ms. Cohen said. “You have to sell yourself as a candidate to get the apartment. It’s almost ironic.”
Keep in mind that your agent’s commission, typically 5 or 6 percent split with the seller’s agent, will ultimately come out of the sale proceeds. Lawyer fees range from $1,500 to $5,000.
KILL YOUR DARLINGS
Know that during your search you will fall in love, have your heart broken and, if you are lucky, end up with the plain one with the nice personality, not the gorgeous but temperamental one.
Jacob Mondry, a 27-year-old musician, fell for the first place he saw when he started looking for a Brooklyn apartment last year.
“I was smitten,” he said, describing the exposed brick, tin ceilings and other charming details of a place in Gowanus. “I really thought I wanted this kind of romantic apartment.”
But the neighborhood lacked a residential ambience, and the attraction faded after his agent, Robert Dowling, an associate broker at Halstead Property, pointed out the additional investment that would be required to replace water-damaged floorboards and to make necessary updates. In hindsight, Mr. Mondry said, “I was happy to surrender that darling.”
Ultimately he bought a place in Park Slope, Brooklyn, a three-bedroom walk-up now shared with a roommate, for just under $1 million. While the apartment may not be as stunning as the first place he saw, “it’s quiet and charming and close to the park.”
BID EARLY, BUT NOT TOO EARLY
The amount of time that listings spent on the market in Manhattan fell 20 percent to a record low of 73 days in the third quarter of this year, according to a report prepared for Douglas Elliman by the appraiser Jonathan J. Miller.
Being the first to make a solid offer can give you a leg up.
For instance, if a subsequent offer comes in at a higher price, the seller may give you a chance to match it. But don’t bid before the first open house.
“Brokers will almost always let other agents and buyers know when they have offers in, and it will be a part of the agent’s pitch at an open house when speaking with prospective buyers,” said Ari Harkov, an associate real estate broker at Halstead.
With that in mind, Mr. Harkov recommends buyers wait until the Monday following the open house to submit their offers. “This can help keep the bidding process a bit calmer,” he said, as the listing agent won’t be able to flash your offer to every buyer who comes through the door at the open house.Set a price limit so you know when it’s time to walk away if a bidding war ensues.
BE THOROUGH
Prospective buyers can research the history of a property, including construction projects, violations and complaints with the New York City Department of Buildings website by plugging in the address. PropertyShark offers one free property report that pulls similar data and more from public records, including information on assessments, flood maps, crime statistics and the names of neighbors.
After the first free report, you can sign up for a monthly subscription ranging from $39.95 to $79.95 a month, depending on the number of reports and the kind of data requested.
It’s also important to scrutinize the building’s finances.
Shawn Cassidy, an area sales manager with Wells Fargo Home Mortgage in New York, points out that few banks are willing to lend if the management company still owns a majority of the apartments, as there is a risk that the sponsor could default. And it’s a good idea to hire a home inspector, especially if you are buying in a small building, where building maintenance and repair is the responsibility of a handful of owners.
“Let’s say there are three apartments in a townhouse. Each co-op shareholder would bear a third of the cost of addressing any issues,” said Aaron Shmulewitz, a real estate lawyer. “The potential economic risk is larger.”
After putting in more than a dozen offers on various apartments without success, Megan and Michael Bartolomeo were becoming desperate. So when their offer of $702,000 was accepted for a duplex basement apartment with a big backyard in South Park Slope, Brooklyn, they were ready to move in the next day.
“It was on the same street we lived on and had an awesome backyard,” said Mr. Bartolomeo, 34, a television editor. “We were like, ‘We love this place.’ ”
But for due diligence, they decided to pay $1,200 to hire an inspector who was recommended by their broker, Porter Hovey, a saleswoman at Halstead. “He came down,” Mr. Bartolomeo said, “took one look at the basement and said, ‘When was the flood?’ ”
It turned out that poor drainage was causing problems when it rained, and an incorrectly installed sewage pump seemed like a disaster waiting to happen, Mr. Bartolomeo said. “If we hadn’t used him, we wouldn’t have known.”
Shortly after, they made an offer of $729,000 on a two-bedroom walk-up in a prewar building nearby. They closed three months later.
BE PREPARED FOR DISAPPOINTMENT
Repeat: Heartbreak is part of the game.
“I tell my clients not to fall in love with a place,” said Bo Poulsen, a salesman at Town Residential. “It’s a heartbreaking experience when you go into a ‘best and final’ and you don’t get it. So you have to distance yourself from the property until the contract is signed.”
Keep in mind that even if the seller has verbally accepted your offer, sellers can still entertain and accept other offers. Even after the contract is signed, a co-op board could decide to turn down a sale.
For all these reasons, Victoria Hagman, the broker-owner of the Realty Collective in Brooklyn, always tells first-timers: “The buying process is a marathon, not a sprint.”
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