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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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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.


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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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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Jan 2017

Short sale tax forgiveness has expired

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Short sale tax forgiveness has expired.

If your house is “under water” you need to read this.

The general rule of tax law is that debt forgiveness is income—if I lend you $1,000 and then say you don’t have to pay me back, you’ve made $1,000. And you’re subject to tax on that.

That matters in a big way when there’s a short sale. You could be taxed for the amount the sale is “short.” That tax was repealed for the duration of the housing crisis.—2007-2016. But that repeal is now expired.

So if you need to unload a property that’s “under water,” from a tax viewpoint bankruptcy is lots better. (There’s no debt forgiveness tax on debts wiped out by law in a bankruptcy.)

If you owe $340,000 on your house and get approved for a short sale at $300,000, you’ll get a $40,000 1099-c at the end of the year. And owe something like $15,000 in taxes.

If you file bankruptcy and give up the house in the bankruptcy, no tax.


Starting in 2017, you can get hit with the debt forgiveness tax on a short sale. You’ll get a 1099-C on the amount the short sale is “short.” And the IRS will expect you to pay taxes on that.

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Jan 2017

Trump, Republicans and Student Loans: Don’t Follow Obama’s HAMP

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Looking Back on HAMP and Forward on Student Loan Relief

Congress should soon take a look at fastest growing category of consumer debt—student loans. During the 2016 Presidential election, Donald Trump added his voice to the Democratic law makers, led by Senator Elizabeth Warren, calling for student loan relief. President Trump was elected on the promise of quick action for hard working Americans. Here’s why student loan relief is a good place for the Republican Congress to start. And why it’s important that Republican student loan relief avoid the mistakes the Obama Administration made with HAMP. 

Student Loan Debt is a Job Killer

Student loan relief is one way President Trump and the Republican Congress can deliver on their promise of faster economic growth.  Forty three million Americans have student loans. One third of those, fourteen million Americans, have student loans greater than $25,000.00.

The Republican case for student loan relief

Fourteen million Americans have more than $25,000 in student loans. That holds down economic growth for all of us.

One cause of the slow recovery from the recession—which was a major factor in Hillary Clinton’s defeat—is student loan debt. This article from Business Insider explains. Student loans are “having a crippling effect on economic activity, says Barbara O’Neill, a specialist in financial resource management for Rutgers University.”

Here’s one example of how that works. A debt free college graduate can expect to save enough money to be a home owner five years after graduation. With $28,950.00 it takes ten years. And 13 years for people with $50,000.00 in student loans. That’s fewer jobs in construction and in manufacturing household appliances and furniture. It puts off the age when young people get married and start a family. And it makes it harder for young families to start college savings for the next generation. 

So What Does Student Loan Relief Have to Do With HAMP?

January 1 2017 marks the end of President Obama’s Home Affordable Modification Program (HAMP). The Obama Administration hoped that HAMP would help three to four million people save their homes. It reached far less than half of that. My own clients, like the people in this news article, reported constant frustration in applying for the program and lost paperwork the banks. However, the banks “will continue to receive billions in incentive payments for helping borrowers who signed up for HAMP for seven years.” 

No wonder commentators have said that HAMP was designed to help the bankers, not the home owners.

HAMP was a Political Disaster

HAMP failed the Obama Administration as badly as it failed the home owners. As early as January 2010, the New York Times warned President Obama that the lack of “serious relief for homeowners” was damaging the Democratic party politically. Voters watched while “the federal government rescued banks, financial firms and auto companies, but they themselves feel adrift, still awaiting the kind of decisive leadership on jobs and housing — in terms of both style and substance — that Mr. Obama promised in 2008.”

The Administration failed to heed the warnings of its media supporters. The political damage caused by HAMP continued the present.

The decision to protect banks over homeowners was debilitating. A tide of cynicism swept out Democrats in the last…elections, with voters more skeptical than ever that government can solve problems, or take the people’s side over the financiers. Two-thirds of voters in exit polls found the economy to be rigged for the wealthy.

“The consequence of these decisions was the disillusionment of his base in believing that political action is going to work,” says Damon Silvers. “They weakened the Obama presidency in ways he could never recover from.”

That prediction that the Obama presidency would never recover from the damage caused by the HAMP Program was written February 2015. It was born out by the collapse of the Obama coalition and the defeat of Hillary Clinton in 2016.

No Bureaucratic Program Please!

Republicans could have predicted that HAMP would fail. In fact, they did, as early as 2011.

“To many struggling Americans seeking permanent mortgage relief, HAMP offered little more than false hope. More homeowners have been kicked out of the program than have received permanent relief,” Rep. Darrell Issa, the California Republican who chairs the House Oversight Committee, said in a statement.

HAMP was a complex government program. As Republicans are quick to point out, complex government programs often don’t work as promised. You can look at this 255 page instruction manual, written by Fannie Mae, and see why: bureaucracy “in action.”

Rather than a new program, there’s a simple change in the law that will work wonders. Less than twenty years ago (before 1998), hard pressed consumers could discharge their student loans in bankruptcy, as long as the student loan had been in payment status for seven years.

Before 1976, student loans were dischargable in bankruptcy the same as any other debt. The special status of student loans is a recent change in the law.  It can easily be corrected.

What’s Wrong With Just Expanding the Obama Public Service Loan Forgiveness

Congress authorized, and the Obama Administration implemented, a program for forgiveness of Federal student loans for people working in “public service” who make 120 monthly payments (10 years worth). Rep. Karen Barr (D-CA-37) introduced a bill, HR 5487, that would remove the “public service”requirement—making student loan relief possible for people working in the private sector.

(The “pubic service” requirement essentially discriminates in favor of government employees, who are probably not underpaid. But expanding a failing program is not the best way to do that.) 

Like the HAMP program, the PSFL is set up by Federal regulations which the private loan servicer is required to follow in dealing with the consumer. Little wonder that only a tiny fraction of those eligible have signed up. (Only 295,000 people, according to one estimate, out of 43 million student loan debtors, one quarter of whom may be eligible for PSLF.  A participation rate of 2%.) 

Like its bigger cousin HAMP, PSFL has become the subject of litigation in court, for unfair rulings on what is and isn’t “public service.”

None of the websites describing this program give credit to George Bush, who signed it into law.  Nor are any of the handful of people who might be finishing the ten year commitment likely to remember him. 

The promise of student loan relief ten years down the road does nothing to provide economic growth now. As long as that student loan debt sits on a consumer’s credit report, it weighs down the consumer’s debt to income ratio, making it harder for that consumer to buy a home, start a family and save for the future.

For those who need it, Bankruptcy Provides Student Loan Relief Now

In 2005, Congress enacted more stringent tests to discourage unnecessary bankruptcy filings. Bankruptcy filings are at a historic low, with only 30 people per 1000 filing bankruptcy annually. Restoring the pre-1998 legal status of student loans in bankruptcy, Congress can provide immediate student loan relief to borrowers who need it—with safeguards already in place to prevent abuse. Economic activity will increase, as more young families are able to buy homes.

This approach implements the commitment of the Trump Administration to change with immediate impact and no bureaucracy. 

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Dec 2016

Can I Cancel My Homeowner Insurance—I’m Moving Out

Posted by / in Weekly Posts /

Can I Cancel the Homeowners Insurance—I’m Moving Out

Are you giving up your house as part of your bankruptcy? If you are, can you cancel the homeowners insurance?

I say, No. You homeowners insurance does two big things. First, it would pay to rebuild your house after a fire. If you’re giving the house back to the bank, maybe you don’t care about that. (Maybe you do.) Second, it protects you against liability for accidents on your property. That’s still important. In fact, if you are moving out it might be even more important.

kid slipping. So don't cancel the homeowners insurance

Your homeowners insurance protects you from liability for accidents on your property. So don’t cancel the homeowners insurance.

Until there’s an actual foreclosure, the property owner—that’s you—can be liable for accidents caused by unsafe conditions on the property. Most obviously something like dangerous ice on your sidewalk. But maybe an abandoned refrigerator. All those dangers are small, but they can add up.

Isn’t the bank the owner once I move out?

No, the bank does not become the owner until there is an actual foreclosure. If you’ve stopped paying and filed bankruptcy, that can be as little as three months, but usually four or five and sometimes much longer.  I explain a little more about that, here. 

So if you are asking me is it safe to cancel the homeowners insurance, when you move out, my answer is, No.


A real example: Rainstorm and falling tree.

Dan and Stephanie filed Chapter 7 bankruptcy with me in the Spring of 2016.  A year later, the bank still had not foreclosed on a small rental property they had in Ohio.  The next month, a tree from their property, during an unusual storm, fell on their neighbors’ house and car.  Now the neighbors can look to their insurance to get the house and car fixed. But that insurance company will want to show that it wasn’t just an accident—that Dan and Stephanie are responsible for not taking proper care of the trees. That’s why it’s even more important, if the property is vacant, to keep up the insurance. 

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