Anyone Can Have a Bad Day at the Office

I just got off the phone from a client that had a Motion to Dismiss filed by her Chapter 13 Trustee, for not paying her chapter 13 plan payments.

She lost her job, and has started drawing unemployment. And she was very worried about having her Chapter 13 case dismissed!

When this happens, of course consult your attorney. In some cases, if it’s doubtful that you will be re-employed soon, it may be a good strategy to let your case be dismissed, and consider filing a new case later, when you are employed again.

But in many cases, it’s best to at least pay the Trustee partial payments, to show that you are trying. In this lady’s case, she thinks she can catch up the payments with her tax refund. And with this Chapter 13 Trustee that we have, I also called his office just to bring them up to date, and they said that if the debtor will pay at least partial payments to show good intent, they will recommend that the dismissal motion at least be continued to a later date, to let her finish catching up her payments with her tax refund.

Or, if that doesn’t work out, when the debtor gets re-employed, we could file a Motion to Modify Plan, to propose a change to the Chapter 13 plan to catch up the payments. The only problem with that is, it sometimes results in having to increase the amount of the payments, and many debtors don’t want that.

Yet another option if you are served with a Chapter 13 Trustee Motion to Dismiss is to convert your case to Chapter 7. But if you do that, and you were using the Chapter 13 plan to catch up a house, and the payments are not caught up yet, you could lose the house. There is no “plan” in Chapter 7 to catch up house payments, like there is in Chapter 13.

The same with a vehicle, or anything else that you were paying through your Chapter 13; if you convert your case to Chapter 7, you could lose the property. Or for other reasons, you may not want to convert to Chapter 7, ask your attorney.

A final way of dealing with a Chapter 13 trustee motion to dismiss is to ask for a hardship discharge, but it has the same effect as filing Chapter 7; it doesn’t help you keep property. And in our “neck of the woods” here in Houston, the Chapter 13 Trustees often resist motions for hardship discharge, and we end up having to have  a contested hearing, where you must give testimony to the judge who could deny your application for hardship discharge.

Anyway, I hope this has helped you. If you have received a Trustee Motion to Dismiss, by all means consult your attorney, and do so soon. I have a lot more information available on my main website at www.jthomasblack.com.

We ask the CRA’s to re-investigate each of the creditors’ reports that were listed in the bankruptcy, to be sure they are reporting accurately. If they were discharged in bankruptcy, the balance due should be listed as zero, and there should be a notation that the account was “discharged in bankruptcy.”  This is a derogatory item on your credit report, but at least it shows a zero balance. If you don’t do this “re-investigation” or dispute process, it’s possible that the creditors will continue to report a balance due (or just not report anything new), which makes it look like you charged up debt after the bankruptcy, and didn’t pay it. That is worse.

And once it shows discharged in bankruptcy, the item must be removed in 7 years. Not only that, the older that item becomes, the less it hurts your credit score. Not sure how to dispute items on your credit reports? You can go to the web address http://www.myfaircredit.com/s/correcting-your-credit, it tells you exactly how to do it.

Most of the time, it works quite well. If a bankruptcy client pays their bills on time after filing bankruptcy, and uses credit responsibly, their credit scores can recover into the mid 600′s after one year after bankruptcy, and possibly to 700 or so after two years.

We do the credit clean-up for clients, because even though we tell them how to do it, after bankruptcy many of them just either: (1) don’t get around to it; or (2) are just too overwhelmed by going through the bankruptcy, it is just not the most important thing to them at that time. Then when they decide they have to finance a new car, or buy a house, they decide to fix their credit, but unfortunately it can take a long time to work on your credit to get it right.

If you review your credit reports once a year, you can stay on top of the situation. By law, you can obtain free credit reports once per year from https://www.annualcreditreport.com. Review the reports, and follow the instructions to dispute any inaccurate information. Not sure how to raise your credit score? You can purchase your credit scores (they are not free, like your credit reports) at www.myfico.com, and also learn what you need to do to raise your score, and what it holding you back.

If you were turned down for credit, you should receive an “adverse action notice” or similar notice, which may also include your credit score, at no charge to you. Federal law was changed to require this starting in 2011. If you want more information about this, go to http://www.scoreinfo.org.

It takes time to get your credit back, once you have had problems with it, including bankruptcy. Whatever you do, to get your credit score headed in the right direction, make a budget and live on what you make. If you can help it, don’t default on medical bills, cell phones, or other items. But of course you must prioritize your bills, so never put those types of bills ahead of truly important things like housing, transportation, and other necessities of life for your family. There are more important things than a good credit score.

2011 Super Lawyer J. Thomas Black

News Flash: Consumer Bankruptcy Super Lawyer J. Thomas Black

Mr. Black has been chosen as a 2011 Super Lawyer by Super Lawyers magazine in the area of Consumer Bankruptcy. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement.

The selection process is multi-phased and includes independent research, peer nominations and peer evaluations. The final published list represents no more than 5 percent of the lawyers in the state.

You can review his listing at www.superlawyers.com, or visit Mr. Black’s main website at www.jthomasblack.com.

Remember the TV jingle, “Countrywide Is On Your Side” or the other slogans about how great Countrywide was? I liked the one, “NOBODY can do what COUNTRYWIDE CAN!”

Well, it turns out that it was about the truth, but not in a good way. Recently Countrywide (now part of Bank of America) has had to fork over $108 Million in refunds to consumers that it allegedly cheated through fraudulent practices. If you were a customer of Countrywide from 2005 through mid-2008, you may be entitled to a refund.

“It’s astonishing that a single company could be responsible for overcharging more than 450,000 homeowners,” FTC Chairman Jon Leibowitz said. “Countrywide’s unconscionable behavior harmed American consumers on a massive scale and we are proud to be getting every single dollar back to hundreds of thousands of struggling consumers who can least afford to lose the money.”

The FTC’s June 2010 settlement order required Countrywide, which is now owned by Bank of America, to pay $108 million to be used for refunds and barred the company from taking advantage of borrowers who have fallen behind on their payments. The refunds are being distributed to consumers whose loans were serviced by Countrywide between January 1, 2005, and July 1, 2008, and who were subject to the company’s allegedly unlawful practices.

According to the FTC, homeowners who were in default on their loans were charged excessive fees for services such as property inspections, lawn mowing, and other services meant to protect the lender’s interest in the property. Rather than simply hire third-party vendors to perform the services, Countrywide used subsidiaries to hire the vendors. The subsidiaries allegedly marked up the price of the services charged by the vendors – often by 100 percent or more – and Countrywide then charged the homeowners the marked-up fees. The FTC complaint alleges that the company’s strategy was to increase profits from default-related service fees in bad economic times.

Also, in servicing loans for borrowers trying to save their homes in Chapter 13 bankruptcy proceedings, the FTC alleged that Countrywide made false or unsupported claims to borrowers about amounts owed or the status of their loans, and added fees and escrow charges to their mortgage accounts without notice.

Some People Need to Consider Short Sale or Walkaway From Underwater House

Here at my law office in west Houston, we help a lot of people save their homes by filing Chapter 13 bankruptcy. We can stop a foreclosure from taking place, and then set up a plan whereby the client pays a chapter 13 trustee, who pays their regular payments to the mortgage company and also an extra amount to catch them up over a long period of time, usually 5 years. The plan payments are deducted from my clients’ paychecks. For the cases that I handled in 2005 (the last full year for which I have numbers), 66% of my clients that filed a Chapter 13, completed the case and received a discharge (or converted to chapter 7 and received a discharge).

But not all of my clients can afford their house. Particularly during the “real estate boom” if you want to call it that, mortgage lenders were lending money to people to buy more house than the people could afford. In some cases, people were buying houses, when they should not have been allowed to buy any house. Either they just didn’t have the income to do so, or they were just not responsible enough to be ready for home ownership.

Or in other cases, people bought a house that they could afford at the time, but something happened. Perhaps they were in the real estate business, or some other business that has become depressed, and they just cannot now afford to keep the house. Or they became ill, disable, or divorced, or their business failed, the reasons are infinite, but some people can just no longer afford a house, if they ever could.

Anyway, for some of our clients, we counsel them that in their particular case, it is not worth it, and to give it up. If you can’t sell your house in the usual way because it is “underwater,” i.e. you owe more than it is worth, it may be possible to do a “short sale” whereby you sell the house for the best price you can, and negotiate with the mortgage company to accept that amount in full satisfaction of the debt. You will probably need help doing that, many real estate professionals can help you with that.

For other people, just walking away from the house and letting it foreclose can be the best thing.  There is even a website devoted just to that, www.youwalkaway.com, that seems to have good information about it. There is a calculator on the site where you can see how much money you can save (or lose) by giving up the house. And I hate to counsel people to break their contract, their promise that they made when they signed the mortgage to buy their house.

But in some cases, there is just no way. I had an older lady that had just bought a house before she retired (does that make a lot of sense?). In her case, some family members were going to stay with her and help her pay the mortgage. Well they had a falling out, and the family members left. So here she is, with a total of only $2600 per month or so in retirement income, and the house payment alone is $2000 per month! But a house is not just a payment, there are taxes, insurance, maintenance, mowing the lawn, etc., etc. And as we get older, it is harder to keep a house up.

Anyway, we finally talked her into letting the house go, and moving into a subsidized rent apartment, that is set up for senior citizens. She is much happier, has friends and activities, and her stress level is way down. She has much more disposable income each month, and can actually afford to eat a good diet, buy clothes and have recreational activities.

So while I encourage clients to try to save their house if is practicable, income some cases it just doesn’t make sense. If it doesn’t in you case, make the decision and let the bank have the place. Of course talk to an experienced consumer lawyer or consumer bankruptcy lawyer first, to be sure you know what consequences that you face if you give it up. My clients are typically already in bankruptcy, so they will face little or no further consequences by walking away. If you live in the Houston Texas area or surrounding counties, contact my law office at 713-772-8037 or online at www.jthomasblack.com.

When he died only a year later, the struggle over his many millions started a legal tug or war that has lasted over a decade. And finally resulting in a U.S. Court case that has the potential to change the course of American bankruptcy jurisprudence.

Who would have thought it would be Anna Nicole, to cause such a momentous change in the jurisdiction of U.S. Bankruptcy Courts? Anna Nicole was let’s say, a very exciting woman. Check out her biography here: http://www.allydirectory.com/Biographies/anna-nicole-smith-biography/

In a U.S. Supreme Court decision handed down Thursday, the Court considerably reduced bankruptcy courts’ powers to hear certain disputes, mainly state court and/or “common law” disputes. But this happens a lot in bankruptcy courts, the judges have to rule on disputes between parties that are not based solely on bankruptcy law.

It’s too early to tell how far-reaching this opinion will be, or if Congress will step in and pass legislation to fix the problem. In the meanwhile, it is really shaking up the bankruptcy courts, and many many trees will be cut down to publish all the articles, law reviews, books, etc. that will be written about the Stern v Marshall decision. Interested in reading the decision? Grab a cup of coffee, or maybe a couple pots of coffee and pack a lunch, and go to: http://www.supremecourt.gov/opinions/10pdf/10-179.pdf

In fact, he said he had just refinanced his truck, the one that we reaffirmed in the bankruptcy, at a 4.3% interest rate. He said the banker offered to do it, and he told the banker that he must not have looked at his credit score. The banker looked at his credit score, and it was 680, not too shabby for someone less than a year after a bankruptcy case.

I’m sure it helps that we do a “credit clean-up” for clients at no additional charge after their bankruptcy. We write to the major credit bureaus and ask them to “reinvestigate” or update their records, to properly show that the discharged debts have a zero balance, and show that they were discharged in bankruptcy.

And so long as the client does their part, by paying any reaffirmed or new debts on time, it is not unusual for a client to have a credit score in the mid-600′s after one year, and 700+ after two years.

Now if you are one of those people who are always paying their debts late, or if you default on cell phone contracts or medical bills or something else AFTER the bankruptcy, then your credit will go right straight down again, and all bets or off.

But if you find yourself having to file bankruptcy, and you can keep your bills paid on time on a “going forward” basis, you can rebuild your credit rather quickly. And that’s good news, if you’re looking to buy something on credit, or try to refinance something, like my former client refinanced his truck.

Associate Attorney Alexander Higginbotham

Mr. Black expanded his law office this past month by adding an associate attorney, C. Alexander “Alex” Higginbotham. Alex is a graduate of Stephen F. Austin State University, and he obtained his Juris Doctor law degree from Oklahoma City University School of Law in 2007. He is licensed to practice law in the State of Texas, and he is also admitted to all four federal district courts in Texas. Alex is also bilingual English/ Spanish.

Alex has had experience in consumer bankruptcy law, family law, and wills and trusts. If you have a legal issue in any of these areas, by all means call and make an appointment to visit with Alex. There is no charge for your first consultation.

Of course Mr. Black remains available to help clients with consumer bankruptcy law, debt and I.R.S. defense, and related matters.

Now that we have Alex, we have expanded our consultation hours. You can obtain a complimentary consultation with either Alex or Mr. Black Monday through Friday, and Saturday mornings by appointment. To make an appointment, go to www.jthomasblack.com and click on the red button that says “Click Here To Schedule Appointment.”

Cherry Blossoms in all their glory at NACBA Bankruptcy Lawyer Convention

Mr. Black attended the convention of the National Association of Consumer Bankruptcy Attorneys (NACBA) in Washington, D.C. in April. He is NACBA State Chairman for Texas (Southern District).

In connection with the convention, NACBA held its annual Lobby Day, and Mr. Black and almost 200 other NACBA members went to Capitol Hill and spoke to Congressmen and their staff about bankruptcy and foreclosure issues.

The convention was a big success, with over 800 total members attending. The convention provided an opportunity for consumer bankruptcy lawyers from around the country to get together, listen to seminars, and compare notes and gab. And yes, see the sites.

The cherry blossoms were in bloom when we were in Washington, and my they were glorious.

Tools of Trade for Bankruptcy Lawyer - Bankruptcy Lawbooks

It’s ironic isn’t it, that some of these debt settlement companies, that claim that they can keep you out of bankruptcy, end up filing for bankruptcy themselves? According to the Texas Attorney Generals’ office, the Office of the Attorney General filed a lawsuit against the now bankrupt Debt Relief USA, a Dallas-area debt settlement company, on August 29, 2009.

Debt Relief USA has been out of business since 2009. A settlement has been proposed to the bankruptcy court that will refund over $4 million to consumers who had a balance in their savings account with Debt Relief USA. But most consumers will still lose money on the dea. For information about the refund process, refer to the Frequently Asked Questions section of the Attorney General’s website. The nationwide toll-free number to call is (800) 806-2092.

Folks, beware of signing up with these debt settlement or debt negotiation companies. First of all, many of them are operating illegally in the State of Texas. That’s a bad sign! If they don’t care if they are operating illegally, they won’t care whether or not they steal your money. Or overcharge you. Or just vanish, as I have seen some of them do.

As I explain in an article on my main website about debt settlement companies at http://jthomasblack.com/sk_links-php/is-your-debt-settlement-company-legal, these companies often operate without registering with the State of Texas as they are required to do, they don’t comply with the legal requirements, they don’t post a bond to protect you, and they often charge far too much for their services.

However, there are some legitimate companies that have registered with the state and do comply with the law. A list of those services that are registered is on the web site of the Texas Consumer Credit Commissioner at http://www.occc.state.tx.us/pages/Debt_Management.html. Click on “List of Debt Management Services Providers” to see if your service is listed, and you can find those that are properly registered.

Or, if you have serious debt problems, or are facing a repossession, foreclosure, or IRS problems, you may want to consider consulting an attorney that is experienced in these matters. Attorneys are fiduciaries, which means that they are required to explain all of your options to you and act in your best interest. It may be best to know all of your options, including the options that you have to file Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code.