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06

Jul 2017

Bankruptcy and Gumption

Posted by / in Weekly Posts /

Bankruptcy and Gumption

Most people come to talk to me about bankruptcy have been putting it off for years. People want to protect their “good credit” when all they are really doing is piling up bad credit. People worry that filing bankruptcy is “not how they were brought up.” They think they are better than Donald Trump, who used the bankruptcy law to get richer.

Some men, especially, are too embarrassed to ask for help.

For all those reasons, when people come to talk to me about bankruptcy, a lot of them a just exhausted.  They want to pay their lawyer bill, sign their papers and be done.

For a lot of people, it’s not that easy.

Dave Carmen

Dave Carmen came to see me June 14. He had moved to this area to take a substantial Federal job promotion. He started to work at the new job, January 3. His wife joined him and started working here in March.

He had hoped with the new job they would be able to handle their debt load; but like many people they had not allowed for the high cost of living in Northern Virginia.

I made notes on what Dave told me and we went over his budget, together. “There’s a lot of income here, but I’ll try to get you qualified on the long form.”  I needed to do more computer work, told Dave to come back Monday June 19. 

I told Dave on June 19 there was good news and bad news. The good news, was really good. We could go ahead with Chapter 7 bankruptcy in June, and eliminate more than $50,000 in card cards and finance company loans. The bad news? He would lose eligibility in July!

(Why would Dave lose income eligibility in July? Chapter 7 bankruptcy income eligibility is based on the past six months, ending a month before the papers go into the court. We needed December, when he was on his old job and his wife wasn’t working, to get our six month average down low enough. In July, December would drop out of the average and the income would just be too high. Remember he had gotten a big raise starting January.)

We had twelve days to get his Chapter 7 bankruptcy done.  Immediate next step Dave needed to identify an additional $600 a month in expenses—I told him where I thought his budget was too low, based on what I know about him and his family. I needed it by tuesday, June 27 at the latest. I had no doubt he could do it.

Tuesday June 27 came around and I hadn’t heard from Dave. Now we are into July, and it’s too late. Dave will have to pay back $54,000 that he can’t afford. Pay back $54,000 that we could have eliminated two weeks ago.

Dave had run out of gumption.  The years of battling with the creditors, the stress of moving his family and the new job, he was worn out. He needed a couple more hours of hard work to take an enormous burden off himself and his family; and he just didn’t have it in him.

The Purpose of the 2005 BAPCPA Bankruptcy Law

The 2005 BAPCPA Bankruptcy law was supported in Congress by people who claimed there was widespread fraud and abuse in the bankruptcy system. Studies in the ten years after didn’t show any of that. The statistical impact of BAPCPA is seen in the “substantial increased access costs.” Filing bankruptcy is harder and more expensive. That was probably the real purpose of the bank lobbyists who drafted the law. 

The 2005 bankruptcy law is filled with “gumption traps.” Rinky dink requirements that are designed to get you to give up.

Gumption—get back up

Gumption. In America, if life knocks you down, we get back up.

President Trump says knowing how to use the bankruptcy laws is a “tremendous thing.” (Love him or hate him, most people would agree President Trump has plenty of gumption.)

If you are in financial trouble, please come to see me—or another experienced bankruptcy lawyer—before all your gumption is gone. When you consider bankruptcy, your opening to a better life—a new start and a clear field—is right in front of you. You just need a little more effort to take control of your life, again. 

 

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22

Jun 2017

Supreme Court Knocks a Hole in the Fair Debt Collection Practices Act

Posted by / in Weekly Posts /

Supreme Court Knocks a Hole in the Fair Debt Collection Practices Act

On June 12, 2017, the Supreme Court knocked a hole in consumers’ rights under the Fair Debt Collection Practices Act.

Starting now, debt buyers, like Midland, Portfolio Recovery, and Cavalry are free of the regulations under the FDCPA.  Here’s my list of the top ten unfair and harassing tactics that are now LEGAL for debt buyers. 

  1. Call you 24 hours a day
  2. Call friends and family
  3. Call you at work after you tell them you’re not allowed to get calls at work
  4. Call you after you told them to call your lawyer.
  5. Publish your name and address
  6. Sue you in the wrong county
  7. Add fees that were not in your contract
  8. Take you to court on debts that are legally expired under the statute of limitations
  9. Threaten criminal action that can’t legally be taken
  10. Threaten to put false information on your credit report.

And more.  If you write and tell them you are disputing the debt, they are free to ignore your dispute and keep trying to collect.

What Changed?

The Fair Debt Collection Practices Act was passed in 1977. It says debt collectors are companies who collect debt owed to another. So when Midland—who you never heard of—calls you on a debt they say you owed to Citibank, are they collecting debts owed to another.  Right?

No! said a unanimous Supreme Court. Once Midland buys the debt, they are no longer collecting for another. They are collecting their own debt. 

If you, or I, or most judges, would look at the FDCPA, we’d see the financial world divided into two groups. 

The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Is Midland a creditor? They did not extend credit to you and the debt was transferred to them ”for the purpose of facilitating collection of such debt… ”  

Oh but they are! There’s that “for another” at the end of the definition of creditor. Once your debt’s been assigned or transferred to Midland, they are not collecting for another. So, they are just a creditor.

That interpretation means the second half of the definition of creditor, everything after the word “but,” never covers anybody; but oh well, said the Supremes. The Supremes agreed that debt buyers had outsmarted Congress, but that’s the way the world works. “Constant competition between constable and quarry, regulator and regulated, can come as no surprise in our changing world.”  Henson v Santander (2017).

How Soon Will Things Get Bad?

Can we expect round the clock debt buyer phone calls starting next weekend? Three things might slow them down. 

The “principal purpose” clause might still protect you. Santander, the debt buyer in the Supreme Court case, makes car loans. The Supreme Court said nobody tried to argue that the purpose of Santander was collecting debts—because they were in the business of making car loans. Is the purpose of a debt buying business the collection of debts?  We need some consumer friendly judges to say, of course. (But, Midland, Portfolio and Cavalry all say their business purpose is to help consumers resolve their debt.) Don’t know how long it will take to get some good decisions from friendly judges, but I do know it will NOT start in Virginia.

The debt buyers need to check out all fifty state laws. Some states have copied, or strengthened, the FDCPA. (California is one example.) The debt buyers will need to check each state before they get too carried away with their new freedom. (Knowing Virginia, here will be one of the first places they’ll determine they don’t have to worry about any state laws.)

Maybe Congress will help. After Richard Nixon and the Watergate scandals, Democrats in Congress were very strong and they passed the FDCPA, FCRA and other important consumer protections. Will Congress and the White House change parties in 2020? We have to wait and see. Maybe the debt buyers will take it easy until then.

Fair Debt Collection Practices Act

The Supreme Court knocked a hole in the Fair Debt Collection Practices Act.

Bankruptcy Protections Are Still There

Asking creditors to stop calling you are work, and stop calling your family, probably isn’t going to work any more. So if you don’t want everybody you know involved in your financial problems, talk to a bankruptcy lawyer—before the debt buyers start to call.          

 

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01

Apr 2017

Lowest rate of bankruptcy dismissed in Northern Virginia

Posted by / in Weekly Posts /

Robert Weed has the best rate of bankruptcy dismissed in Northern Virginia

Just finished checking on the number of my law firm bankruptcy cases dismissed the first three months of this year. (“Dismissed” means thrown out; the opposite is “discharged” which means successfully completed.)
 
We had 4 dismissals and 90 cases filed—that’s 4.4%. One other lawyer in the top ten, Robert Brandt, was at 5%. How does that compare?
 
One very busy bankruptcy lawyer around here had a dismissal rate of 40%—ten times (!) what mine was. The next busiest guy’s was “only” 24%. His cases were six times (!) more likely than mine to be thrown out. The next six of the top ten also had a 24% dismissal rate.
 
Every case is different; sometimes you want a dismissal. Past performance is no guarantee of future success. But the differences between lawyers are really big. Two lawyers of the top ten have dismissal rates of 5% and 4.4%. The next closest, Michael Sandler, is at 16%. The rest are from 20% up to 40%.
4-1-2017 2-29-15 PM

Robert Weed has the lowest rate of bankruptcy dismissed in Northern Virginia. Here’s the chart for January – March 2017.

It’s been this way for years.

I ran the same numbers back in 2012. We were at 4% back then, too. You can read more, here. 

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04

Mar 2017

Tammy Gets A Car Loan at 4.48%

Posted by / in Weekly Posts /

After Bankruptcy: Tammy Gets A Car Loan at 4.48%

The same week that her bankruptcy was discharged, Tammy got a car loan at 4.48%. 

Now I sure don’t suggest trying to buy a car the same week your bankruptcy is over. But Tammy had no choice. Three weeks before her car was totaled in a rear end accident; she needed a way to get to work.

Still, 4.48% is amazing. Here are some of the reasons Tammy was able to get it.

1. First, she shopped. The dealer tried to get her into car loans around 8% and she told them they had to do better.

2. Second, Tammy had steady income. She works in law enforcement. No danger of missing a paycheck.

3. Third, she had never been late on a car payment.

4. Fourth, she came to see my while she was still current on nearly all of her debts.

5. Fifth, she had $1500 to put down.

good credit after banbkruptcy

Tammy came to see me while her credit cards were still current. That’s why she had good credit for a car as soon as her bankruptcy was over.

Why am I telling you this? Because most people think bankruptcy is the worst thing that can happen to your credit. That’s just NOT true. Charge offs and collections are just as bad. And if your debts go out of control, those charge offs and collections will keep mounting up, every month.  

Filing bankruptcy stops all that. One time, and it’s over.

Tammy knew what most people don’t know. Putting off bankruptcy just makes it harder and harder to get back to good credit. Putting off bankruptcy does NOT protect your “good credit.” Putting off bankruptcy piles more and more bad credit that’s harder and harder to get out of.

So, look down the road. Are your credit card payments going to be impossible in the next couple months? Then come to see me NOW. Let’s file your bankruptcy BEFORE your credit is wrecked. You’ll be amazed at how soon you are back to good credit again.

Getting good credit is one of the five ways bankruptcy gives you a fresh start. Click here to see all five.

 

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18

Feb 2017

Navy Fed does the Right Thing; Wells Fargo Makes More Excuses

Posted by / in After Bankruptcy, Weekly Posts /

After Bankruptcy Mistakes: Navy Fed does the Right Thing; Wells Fargo Makes More Excuses.

Everybody makes mistakes. Banks do, too. When you file bankruptcy, the banks you owe money to don’t always do what they are supposed to do. This is a true story of Navy Fed admitting their mistake and fixing it. Wells Fargo making excuses and more excuses

After Bankruptcy, Navy Federal Hit Rob’s Credit So He couldn’t Buy a House.

Rob, not his real name, and his wife Daisy, filed Chapter 13 bankruptcy with me in summer of 2011. One of the debts that was partially paid and mostly discharged—wiped clean—was a third mortgage to Navy Federal for $39,157. The chapter 13 was paid off in July 2014. 

By the fall of 2016, Rob and Daisy are back to good credit. They sold their house to buy a new one. In fact they signed a contract to have a house built.

That’s when they find out Navy Fed is still hitting Rob’s credit. Rob’s Experian credit report shows that years three years past due on now $39,000 to Navy Fed. Rob called and complained to the credit reporting department. He was told the credit report was right. Rob called Jeremy in the Navy Fed bankrutpcy department. Jeremy said he agreed with Rob (!) but he couldn’t change credit reporting. Rob went to the branch. That did nothing.

Finally, someone at Navy Fed whispered to Rob that he should talk to his bankruptcy lawyer.

We Ask Navy Fed to Tell It to the Judge

January 6, 2017 I filed papers with the bankruptcy court. We asked the Navy Fed to come to court on February 2, and explain to the judge why they were still trying to collect a discharged debt. 

It didn’t get that far. I heard first from Jeremy, in the bankruptcy department, and then from Emily, their lawyer. Most importantly, they sent a correction over the Experian, and the other credit bureaus, too.

(Rob wondered why this problem showed up only with Experian. Each credit bureau’s computer programs are slightly different, so a small mistake might show up with one, but not the others. But, I don’t think that’s the problem here. Under the Terri White class action settlement, the credit bureaus are supposed to show your debts are discharged in bankruptcy—even if the creditor keeps reporting them as late. My best guess is that Navy made the mistake with all three credit bureaus, but only Experian let is slip past.)

February 1, 2017, we were able to confirm with each of the three credit bureaus that the Navy Fed loan was now showing “discharged in bankruptcy.” That fixed his Experian credit score, his loan was approved, and Rob and Daisey will be moving into their new house in a few weeks.

As a tangible apology, Navy Fed also agreed to make a small payment—we agreed to keep the amount secret—for Rob and Daisy’s sleepless nights and for my legal work. Although they had given Rob the run around, Navy Fed was all over it when they heard from me. So we did not squeeze them to make a big settlement.

WellsFargo_logo_standard_62

Wells Fargo takes 9 months to fix their mistake, while Veronique drives on expired tags.

Wells Fargo Won’t Let Veronique Renew the Tags on Her Car

Veronique, not her real name, filed Chapter 13 with me in April 2016. We needed to prevent the repossession sale of her car. (Veronique traveled to two or three different job locations every day. She had to have a car.)

Wells Fargo stopped the repo sale, and gave Veronique her car back, exactly like they were supposed to. But, when she went to renew her tags in June 2016, Veronique was in for a shock. Wells Fargo had taken her name of her title, so she couldn’t renew her tags.

This was no ordinary screw up

I thought this screw up could be easily fixed. After all, Wells Fargo has four million car finance customers. They know how to fix a car title. Wrong.

She updated me on June 20. Still not fixed. July my office started calling. No luck. August, Wells Fargo insisted that the title was right. Not true. September they asked for a power of attorney for us. Then they told us it had expired. How could this be? they just needed to correct her car title.

Finally, September 30 we drew up paper to take this problem in front of the bankruptcy judge. Called them again on October 3. “Can’t you get this fixed; we’re suing you because you can’t fix this lady’s car title.” Transferred all over the place. Four hours! on the phone. No results.

Wells Fargo Tell the Judge They Fixed it: Two months Before They Really Do

October 17 2016, Wells Fargo files a copy of what they claim is Veronique’s title with the bankruptcy court. I tell Veronique to take it to the DMV and see if that works. It doesn’t. “Wells Fargo invalidated this title back in April,” we’re told.

On November 8 Wells Fargo’s lawyer went in front of the Judge and told the court that Wells Fargo had done everything possible to fix Veronique’s title. The Judge believed them. (I didn’t.) 

Finally, January 18 2017, Veronique’s title as fixed. She was able to renew her tags.

It took Wells Fargo, the world’s second largest bank, with four million car loan customers, nine months to correct their mistake on Veronique’s car title. 

Wells Fargo Promises a $10,000 Settlement Payment—So Far, No Check

Wells Fargo also offered in January, to pay Veronique $10,000 for her trouble—hours on the phone, multiple pointless trips to the DMV, and driving eight months on expired tags!

We agreed to accept the $10,000. They said they’d send it as soon as we submitted her W-9. That’s been three weeks ago. Still no check. 

 

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26

Jan 2017

Holly Gets Hired after Bankruptcy and Gets a New Credit Card

Posted by / in After Bankruptcy, Weekly Posts /

Holly Gets Hired After Bankruptcy and Gets a New Company Credit Card

Holly was at the end of her rope. She’d been out of work for two years; she kept getting interviews but no offers; and she was feeding partial payments to her creditors, to try to keep them off her back. She believed she was losing job offers because of the late payments on her credit. She was doing everything possible, borrowing from family and friends, to stay close to current.

Finally, she gave up

She came to see me about bankruptcy when she finally got court papers; she assumed she’d never be able to get hired after bankruptcy in the tech field. I told her she would be fine.

After bankruptcy, the opposite of what she expected

We filed Holly’s bankruptcy case September 1; it was discharged—approved and done—December 12. On January 22, she got a job offer. She was offered Chief Technology Officer of the small business. She was excited to get hired after bankruptcy.

But still had a big concern. What would happen when she applied for a corporate Amex Card for business travel. She would be so embarrassed—might even lose her job offer—if Amex turned her down.

Check your credit score, I told her. “It’s 688,” she said, amazed. Of course she got the company card.

Everybody’s case is different.

Everybody’s case is different. Employers look for different things; and your credit score is based on very complicated and secret formulas. But I can say this. For many people, once you’ve started struggling with late payments, bankruptcy can be the quickest (and easiest) way to get your credit score back up.

Many employers are hesitant to hire someone who is struggling financially. They don’t want employees who

Easier to Get Hired After Bankruptcy

When she was dragging around bad credit, Holly got interviews but no offers. She got hired after bankruptcy—in only six weeks.

don’t sleep at night because of bills. They don’t want the sheriff bringing garnishments to the payroll office. (And maybe they don’t want people who are too dumb to take advantage of the laws in their favor.)

That’s why some people find it’s easier to get hired after bankruptcy. 

 

For most people, bankruptcy works.

Every month I see people who have put off bankruptcy for years in order to “protect their credit.” They aren’t protecting anything. Like Holly, they think they are “protecting their credit” but actually just making things worse.  

 

 

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NORTHERN VIRGINIA BANKRUPTCY LAW OFFICES