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Required by law, the first request that a trustee for a Chapter 7 or a Chapter 13 bankruptcy makes of a debtor is to see his driver's license and social security card in order to establish the identity of the debtor. The trustee is fulfilling his obligation to identify the debtor by seeing an original driver's license, because it has a picture of the debtor and then matches the social security number against the name on the card and then compares the same against the bankruptcy paperwork. There are, of course, other forms of identification that will work just as well such as a military identification card. What will not work is a copy of any of the items mentioned, they must be originals.
If a debtor does not have these items with him/her, at least in El Paso TX, is that, in a Chapter 13 bankruptcy case, the meeting is continued to a later date, which means you have to take another day off of work and in the case of the Chapter 7 bankruptcy you must bring the originals by the Trustee's office within several days after your 341 Meeting, not as bad as having the meeting continued, but still inconvenient. This may seem petty, still copies vs. originals will delay your bankruptcy moving forward.
Oh my God, today I spoke with a woman who was considering bankruptcy as a way to get out from under her credit card debt. She like most people would rather pay off her debts than file for bankruptcy especially when you can wrap your arms around your debt total. I applaud your ethics and values. Sometimes, based on how much you owe in credit card debt it could take years and years and years to pay off especially due to mounting interest rates. Some of these debt relief storefronts are no better in helping you than the exorbitant interest rates charged by the credit card companies. Getting back to this woman I spoke to today, her debts today were approximately $6,000. The company she was (at least I hope it's in the past now) considering working with was going to charge her on top of her monthly payment towards her credit card debt - a service charge of $300 per month during the lifetime of the payment schedule. She was told that it would take approximately 24 months. What is wrong with this picture? A $6,000 debt without additional interest charges would cost this woman more than $13,000. People do the math!! I know how it feels to have bills you can't pay and to have creditors breathing down your neck. I know how badly that can make you feel and so you think anyone that will work with you is a blessing. NOT................ Read, read, read the fine print........... You're not buying a car ............. you're paying off debts. DO THE MATH.
If you choose to handle your credit card debt through a debt relief agency seek out a non- profit agency. Or consider filing bankruptcy, Chapter 7 where you erase entirely your credit card debt as well as all unsecured debts if you qualify.
In an average bankruptcy case, regardless of the chapter (7,13) filed, student loans are not dischargeable. In the Western District of Texas, payments on student loans may not be included in a Chapter 13 Plan unless such plan proposes to pay the unsecured creditors 100% of their claims. Instead, student loans are deferred until after the Chapter 13 plan has been completed. All the while interest is accruing on these loans.
There are possibilities that present opportunities to discharge student loans, as set forth below:
1. The opportunity to discharge a student loan is to determine whether or not the loan made is actually a student loan. The provisions of the bankruptcy code dealing with student loans are very specific, although very broad as to what constitutes a student loan that is non-dischargeable. Therefore, each loan must be examined to determine whether or not the loan is of a type that falls within the definition of the statute. If it does not, then the loan is dischargeable like any other unsecured claim.
2. The opportunity to discharge a student loan is set forth in the statute and reads in part "unless accepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents, for..." The burden of proof a debtor must overcome is very high but not impossible. What constitutes "undue hardship" is in fact driven and therefore is dependent on the facts in each case.
3. A potential opportunity that is presented is more complex and deals with the situation where a loan was made but the educational institution failed to furnish that which was promised at the time the loan was made. An example of this type of situation is where an educational institution failed before the institution furnished or completed the course(s) and the student was unable to transfer all or any portion of the credits that would have been received to a second institution. Whether or not this type of situation would allow the loans to be discharged would in all probability depend on the relationship between the financial institution making the loan and the educational facility.
All of the above is complicated by a case decided by the Supreme Court commonly referred to as "Seminole". The case limits the Bankruptcy Court's jurisdiction to decide certain issues if they only involve States rights. Therefore, if the student loan referred to is made by a state institution and does not involve any federal institutions, the court may not have the power to hear and determine any of the above.
I want to make it clear that I have nothing against "Debt Relief Agencies". Under the right circumstances they perform a service that avoids bankruptcy for many people. Some of these companies are honest, charge reasonable fees and have a staff that is well trained. A good example is the YWCA here in El Paso, Texas. Over the past six months it appears that the number of companies that offer debt relief by making deals with your creditors has increased substantially. You see their ads on TV, hear their ads on the radio and read their ads in the newspaper. Unfortunately many of these companies charge large up-front fees and provide no meaningful service to their customers. The bankruptcy judge has expressed deep concern over these companies and has said that there has been at least one indictment and conviction in San Antonio, Texas. He has asked the bankruptcy bar (lawyers) and the Office of the United States Trustee to gather as much information as possible with the idea in mind of turning the information over to the Department of Justice for prosecution. However, as with most things in life, you must protect yourself. Before hiring a debt relief company ask for references and check them out carefully. Beware of any company that wants large up-front fees (read the fine print) before they will do anything on your behalf. Most importantly, remember if it sounds too good to be true - it usual is.
Lots of people seeking help from a bankruptcy lawyer to file a Chapte 7 (eliminate unsecured creditors) or a chapter 13, have one or more payday loans. Payday loans are difficult to deal with for both the client and the bankruptcy lawyer. The companies that offer these loans seem to know every trick in the book to continue receiving payments, as well as avoiding having their addresses known so they cannot be notified of a bankruptcy filing. The only way to prevent such a lender from collecting on their loan is to close the bank account upon which the lender collects its funds. Merely having a zeo balance does not seem to work, inasmuch as many people have accounts that have overdraft protection or at the least, will incur a charge for every returned check. Closing their bank accounts presents a few challenges to many clients for reasons such as automatic withdrawals for monthly payments and/or direct deposits of checks. If you are going to stop these folks from collecting, you must promptly close your account and open a new account at a different bank.
Have you ever wondered why doctors and lawyers ‘practice' their profession? I have. Today you have to be lucky to find a doctor that focuses on ‘healing' and an attorney that focuses on ‘selfless problem solving'. It has been my experience that the word ‘practice' gives professionals the freedom to make choices that may not best serve our needs. It's important to sift through the rhetoric and do your homework.
I 'm Sidney Diamond wife and I can often be his worst critic. He leaves his clothes everywhere, almost never closes a cabinet door and is constantly misplacing his keys. He's also brilliant and has more integrity than anyone I know.
Case in Point: I sat in on a free initial consultation with a potential client this week. The gentleman was devastated about his state of affairs and at his wits end. He started his business over 10 years ago, incorporated his business and now due to the economy his industry came to a screeching halt. I was impressed by how prepared he was for this meeting. He wanted to know if he should consider filing a business Chapter 7 or a Small Business Chapter 13. He had corporation papers, his lease, credit card statements, tax information; he knew the answers to all the questions asked and had all the documents that Sidney asked for. He had several years left on his lease (which he did not personally guarantee), credit card debt and bank loans (which he did not guarantee). Basically his business was in debt for almost $100,000 and the business had no assets to protect.
Sidney recommended closing the business and walking away. Bankruptcy was not recommended in his situation. It was amazing to see the relief on his face. His reality is still scary, he worries how he'll continue to feed his family, pay his mortgage and find employment. Lucky for him he found sound legal advice.
There are always people ready to take advantage of other people in desperate situations and the current home foreclosure situation is no different. A whole cottage industry has sprung up made up of predators prepared to charge large fees for helping someone avoid foreclosure through a loan modification.
The vast majority of these people simply take a person's money and perform no service whatsoever. I am sure that there must be a few people who actually attempt to do what they have been hired to accomplish and I am sure that on occasion a loan actually gets modified.
The truth is there is no reason to pay anyone for this type of help. There are non-profit companies all across the country that has qualified people ready to lend a hand for no charge of any kind. In short, there are no fees or other charges for obtaining their help.
The U.S. Department of Housing and Urban Development ("HUD") offers a variety of services and assistance in avoiding foreclosure through a variety of resources, both new and old. Trying to understand these programs by going directly to HUD is difficult and confusing. This agency actually understands the problem and has come up with a solution that really works. On one of their web pages the following statement is made by HUD:
"Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services...."
Finding a reliable free agency is now easy; just go to http://www.hud.gov/offices/hsg/sfh/hcc/fc/. Find the pull down menu on the page which allows you to pick your state. That selection then takes you to a web page that allows you to narrow your search by city; with several other choices such as your preferred language.
I am located in El Paso, Texas. I went through the search instructions and came up with four (4) agencies. Much to my delight I was familiar with all four. I have referred clients to each. I can vouch for each agency having highly trained, qualified and very courteous people to address a full range of problems. While they do not always succeed, one can rest assured that they have made a maximum effort to help.
There has been a great deal of publicity about money being infused into banks and financial institutions by the government. A significant portion of that infusion is supposed to be used to modify existing mortgages that are in default or are on the verge of foreclosure. In addition, there has been a great deal made by various government or semi-government agencies about their assistance in loan modifications and/or accelerating the process.
There has been a great deal of hype regarding loan modifications; to enable people to keep their homes, as well as, getting the banking system stable and profitable so that new loans can be made. After a number of months the banks and other financial institutions have announced a return to profitability.Yet according to the media, based upon various statistical data, foreclosures continue to increase. Perhaps what is most important is what is not being said, discussed, published or announced either by the government or the financial institutions. How many loan modifications have been made and/or are in process? What terms and conditions, if any, are being offered to people who are behind in their mortgage payments? It would seem to me that these financial institutions would be making one press release after another (creating goodwill and improved public relations) about how they are helping people out of difficult if not impossible situations. The silence in this area has become deafening.
I am a small bankruptcy lawyer whose practice is practice is primarily in El Paso, Texas and the surrounding area. My only real knowledge is based on: what is happening to my clients who are trying, or have tried to modify their mortgages; what I have observed in the bankruptcy court with other cases; what the discussions have been over coffee and the water cooler with other local bankruptcy lawyers. Sad to say, based upon all of the foregoing there have been very, very few loan modifications actually being accomplished.
The best advice I can give a person seeking a loan modification, in a general sense, since each person's situation is unique, is to avoid the new companies that have sprung up offering to assist with a loan modification for a fee. Go directly to the lender. Insist on their terms be reduced to writing. Give yourself plenty of time to seek an alternative if the proposed modification does not work, and finally the alternative of seeking relief under Chapter 13.
This is not to be taken as legal advice and is given only as information. Only a consultation with your attorney with facts specific to your circumstances can be relied upon as legal advice.
There are a number of things a person should not do when considering bankruptcy or when bankruptcy is a solution but one you wish to avoid. The bill collectors are hounding you with a barrage of telephone calls, in many cases they are breaking the law by calling your relatives, your employer, calling you very early in the morning, after 9pm or when you are at work and/or threatening to do all kinds of awful things if you do not pay up. It is understandable that all you can think about is getting them off of your back, at least for a little while. So what do you do? You promise to make them a payment(s) in the future; knowing there is no way you'll have the money to pay them, short of a miracle. In some cases people go so far as to sign a new agreement with their creditor.
You then seek the protection of the Bankruptcy Court and the creditor screams foul and seeks to have the debt you owe not be forgiven. Why? You made a promise to pay and did not keep your promise and because you made the promise the creditor did not take any action to collect on the debt. If a creditor can show you're promising to pay in the future delayed action to collect the money it was owed, you may well be denied forgiveness of that debt.
Do not make a creditor a promise or enter into an agreement with a creditor if there is any chance that you can not make the payments. The best thing to do is make no promises of any kind. If you are being hounded by creditors use the rights given to you under the Fair Debt Collection Practices Act,( which I have written about before) and write your creditors letters telling them to stop calling you, etc. Remember empty promises can hurt.
Parties in control of Congress change, politicians that control the parties change, but it appears regardless of which party has the upper hand, the one thing that never changes is the people behind the scenes controlling the show. The bankruptcy bill that would give some protection back to the consumer is now stalled in the Senate, on the other hand, provisions that give businesses additional rights in bankruptcy, especially against the average guy trying to hang on to his job and support his family, is quietly moving through Congress and will probably end up being approved. There is also another law that received a great deal of publicity, when it passed Congress, dealing with the abusive tactics used by banks and other companies issuing credit cards. There is now a new proposed law that has been introduced in Congress that would push back the time that the law goes into effect by several years.
After you read this, I hope you are as angry as I am and you contact your representatives.
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