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Beware Cut Rate Bankruptcy Advice

Wednesday, May 16th, 2012

Our elders always told us, “You get what you pay for,” but as we get older we learn that this advice isn’t always true. Sometimes you get more than you bargain for, and sometimes less. So how can you know if you are getting the best bankruptcy legal services for your money? The answer is actually simpler than you think. Below is a discussion of three little pigs attorneys who charged three different bankruptcy rates: the expensive rate, the market rate, and the discount rate.

The Expensive Bankruptcy Attorney

A consumer bankruptcy attorney who charges higher fees is telling you an important detail about his or her legal services. The expensive attorney does not need your business. The expensive attorney is often very experienced in consumer bankruptcy cases, but has committed his or her time to some other type of work. This is often true of bankruptcy attorneys who work for creditors, like banks and credit card companies. Sometimes Chapter 7 bankruptcy trustees represent bankruptcy clients, but most of their time is spent on trustee work. Sometimes bankruptcy is just a “side business” that the attorney can “take or leave.” Obviously the expensive attorney’s main focus is on something other than representing you.

The Discount Bankruptcy Attorney

The discount bankruptcy attorney needs your business either because he or she has started a new bankruptcy practice or because business is slow. A new bankruptcy practitioner is obviously a dangerous gamble. This attorney does not have the experience with the bankruptcy code, the local rules, the bankruptcy court judges and trustees, or the local creditors to reach the best outcome for the bankruptcy client. Practicing in the bankruptcy profession is not just a matter of knowing “what to do,” but the best result often depends on knowing “how to do it.” New bankruptcy attorneys simply do not know the “how to” of the bankruptcy practice.

A slow bankruptcy practice should also be a warning sign. Ask yourself, “Why is this firm offering a discount rate?” Is this attorney not getting referrals from other attorneys? No recommendations from previous clients? Why not? There may be reasons for the discount rate that could affect your case.

The Market Rate Bankruptcy Attorney

Successful consumer bankruptcy attorneys know what their competitors charge and will not over charge or under charge their clients. The market rate bankruptcy attorney knows the value of his or her services, and will confidently represent you in bankruptcy court. Most bankruptcy fees are simple and the process at a market rate attorney’s office is very efficient. This attorney can quickly identify issues with your case, recommend a course of action, and will zealously represent you. The market rate bankruptcy attorney has open lines of communication with the bankruptcy trustees and creditors, and can work quickly to achieve the best possible result.

Just like Goldilocks discovered, market rate bankruptcy services is just right! Your best option is an experienced bankruptcy attorney that charges a fair price.

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What Is a ‘Debt Relief Agency’?

Monday, May 14th, 2012

Ideally the process of completing a Las Vegas bankruptcy would go as smoothly as possible. Debtors would choose their lawyers, gather the appropriate information, sign the petition and file it. Unfortunately, Congress doesn’t see it that way, and when it amended the bankruptcy code in 2005, it created additional hurdles for you and your Las Vegas bankruptcy lawyer to overcome on your way to your discharge. One of them is requiring lawyers to tell debtors that they are “debt relief agencies.” What does this mean?

According to the bankruptcy code, a “debt relief agency” is, “any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer.” In other words, it’s your lawyer. An “assisted person” is “any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $150,000,” or your typical debtor who is looking to file a Chapter 7 or Chapter 13 bankruptcy and not a business owner.

Why is this important? The bankruptcy code now contains three new sections (526-528) that in practice frustrate the formation of an attorney-client relationship regarding bankruptcy services. “Debt relief agencies” are required to market their services according to particular guidelines, and they must provide “assisted persons”—i.e. you—with warnings and notices, as though debtors are buying tobacco products. All this paperwork can be confusing, but that’s partly the point.

If you need help handling your debt matters, don’t sweat these legalistic details. They’re designed to discourage you from seeking the protection you deserve. Instead, ask your bankruptcy attorney to explain everything carefully, and proceed from there.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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What Happens If Your Co-Signer Files Bankruptcy?

Sunday, May 13th, 2012

Many bankruptcy questions are complicated and the right answer depends on the facts of the individual’s case. One challenging issue that frequently arises is how a debtor’s bankruptcy filing will impact a co-signer. Below is some general information on bankruptcy and co-signers:

Basics

A co-signed debt generally makes each signer 100% responsible. If a default occurs, the creditor can legally collect from one or all of the co-signers until the debt is paid.

The Automatic Stay

When a debtor files bankruptcy, the bankruptcy court automatically issues an injunction against all creditors prohibiting any collection attempts. This stay only applies to the debtor, personally, and does not stop the creditor from collecting from property or from other people. However, if the debtor has filed a Chapter 13 bankruptcy case, the automatic stay extends to co-signers and stops collection action (e.g. lawsuits, telephone harassment, repossession, etc.) against them as well. This protection does not apply to Chapter 7 cases.

The Bankruptcy Discharge

A bankruptcy discharge does not “erase” a debt, it makes the debt legally unenforceable against the debtor. The creditor is unable to collect from the discharged debtor, but can proceed to collect 100% of the debt from the remaining non-discharged signers. Co-signers are prohibited from suing the debtor on a discharged debt.

Secured Property

When a co-signed debt is secured by collateral, whether the property is protected by the bankruptcy court depends on whether the property is “owned” by the debtor and whether he or she intends to keep it. If the property is in the hands of the non-bankrupt co-signer, like a vehicle, the property is not protected by a Chapter 7 or Chapter 13 bankruptcy. Additionally, if the debtor abandons and surrenders interest in the property, the bankruptcy protection is extinguished and the creditor may legally repossess.

Other Issues

  • A creditor could consider a bankruptcy filing a breach of contract on a co-signed debt and place the debt in default status. Whether this is permitted depends on state law.
  • Some co-signed debts may not be discharged during the debtor’s bankruptcy. Common examples are student loans and taxes. Consult your attorney for more information on non-dischargeable debts.
  • The debtor’s bankruptcy could affect the co-signer’s credit rating, especially if payments are not made.

Protecting the co-signer’s interests during a bankruptcy case can be tricky business. If your co-signer has filed bankruptcy, speak with an experienced bankruptcy attorney and discuss your legal rights. Your bankruptcy attorney can help you understand the bankruptcy process and how it will affect you.

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5 Ways to Save Money and Keep Yourself Out of Bankruptcy

Sunday, May 13th, 2012

Most people who consider filing a Chapter 7 Las Vegas bankruptcy already have debt problems that require a professional’s help. However, there are ways people can cut costs here and there that can really add up. Here are five examples:

(1)  Buying brand name products when generics will do. Brand name literally sells just that: a name. If you’re trying to curtail excessive spending, switching to a generic equivalent can save quite a bit of cash. The best situation in which to do this is where Americans spend most for brand: prescription drugs. Generic drugs are identical to their branded equivalents, which is why drug companies spend so much on advertising now—they don’t want consumers to realize they have alternatives.

(2)  Eating out too much. Restaurant spending can quickly cut into your budget, especially because eating out is such a relief from cooking all the time. That said, even taking leftovers home is more expensive than staying in.

(3)  Not changing vices and bad habits. It’s hard to quit smoking, but the cost of tobacco adds little benefit and increases the likelihood of reducing your long term health. Frequent alcohol consumption is also a bad habit because it can lower your inhibitions to make you want to drink (and sometimes smoke) more. Gambling is also a money suck, and not just slots and high stakes poker. It’s the small stuff that gets you, especially lotteries, which state governments use to supplement their revenues. The odds of winning the lottery are so terrible, the tickets are worthless.

(4)  Overpaying for insurance. Many people pay high premiums to insure themselves from situations in which they won’t file a claim. Avoid buying policies with low deductibles. They might make you feel more secure, but if you won’t report an accident involving slightly higher amounts of damage, the premium was wasted.

(5)  Paying for unneeded services. One of the problems with the 21st century is the large number of services for people to subscribe to. Cell phones come with confusing plans, unlimited texting options for people who don’t text, and Internet access for those who might not use it. Curbing these options will save you money on your monthly bill. Another service to get rid of is cable television, now that the Internet streams many good shows for less and occasionally for free.

Saving money doesn’t always help, and when a family member loses a job or suffers an illness, getting your finances in order can be a daunting process. Consulting with a financial planner, tax planner, or a Las Vegas bankruptcy lawyer can help you get a handle on your changed circumstances.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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Options For Secured Property In Chapter 7 Bankruptcy

Friday, May 11th, 2012

During your Chapter 7 bankruptcy, you may hear the trustee or your own attorney say, “Secured property must be paid for or returned.” If you have a debt that is secured by a lien on property, you must make arrangements to pay the creditor or surrender the property. That is the general rule, but its not always the case.

A lien is a interest given to a creditor that secures future payment of a debt. If you fail to make your payments as agreed, the collateral pledged as security for the loan can be repossessed (or foreclosed in the case of a home loan). A lien will generally survive a Chapter 7 bankruptcy case, hence the “pay or return” statement. For instance, you cannot discharge a loan secured by a car and keep the car. You have three options concerning secured debts on Chapter 7 bankruptcy:

Reaffirmation – if you want to keep the secured property and continue paying the loan, you can reaffirm the debt and continue the relationship with the creditor. The debt and lien survive the bankruptcy by mutual agreement between the debtor and creditor.

Redemption – secured property can be redeemed for its fair market value during Chapter 7 bankruptcy. Redemption does not apply to home mortgages.

Surrender – If you cannot afford to keep and continue paying on a secured item, you can surrender the property back to the creditor and “walk away” owing nothing.

A fourth option, called “ride through,” may be available under certain circumstances. “Ride through” occurs when the debtor discharges the debt, but the creditor is unable to enforce its lien because of a lack of breach of contract or some other state law impediment. Finally, if you have pledged household property that you own to secure payment of a personal loan, you may be able to strip off the lien and keep your property.

Your bankruptcy attorney will evaluate your secured property and recommend a course of action. While each case is different, the Chapter 7 debtor generally keeps all of his or her property. The bankruptcy laws are flexible to discharge burdensome debt and allow you to keep your home and family vehicles. Speak with an experienced attorney concerning the specifics of your case.

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Bankruptcy Is Not Absolute

Thursday, May 10th, 2012

The bankruptcy discharge is one of the most broad and powerful provisions in U.S. law. Discharged debts cannot ever be collected from the debtor. However, there are limits to the bankruptcy discharge and it is only meant to help honest debtors. The federal bankruptcy code excepts certain “bad actor” debts from discharge, like criminal fines, debts from willful and malicious conduct, debts from drunk driving, etc.

The case of Nicolai v. Larsen, decided recently by the 7th circuit Court of Appeals, is an excellent example of how the bankruptcy code may limit the discharge when the debtor is dishonest. In this case Larsen was awarded $3.4 million by a Wisconsin court as a result of injuries Nicolai caused while attempting to murder his wife. Nicolai tried to discharge this debt during bankruptcy. The 7th Circuit Court of Appeals found that the debt was based on Nicolai’s bad acts of battery, false imprisonment and intentional infliction of emotional distress. Under section 523(a)(6)of the bankruptcy code, debts arising from “willful and malicious injury by the debtor to another entity or to the property of another entity” are not dischargeable, the 7th Circuit denied Nicolai his request to discharge the $3.4 million debt. The court said:

“We imagine that all courts would agree that a willful and malicious injury, precluding discharge in bankruptcy of the debt created by the injury, is one that the injurer inflicted knowing he had no legal justification and either desiring to inflict the injury or knowing it was highly likely to result from his act. To allow him to shirk liability by discharging his judgment debt in those circumstances would undermine the deterrent efficacy of tort law without serving any policy that might be thought to inform bankruptcy law property of another entity.”

The bankruptcy code does not automatically except a debt for “willful and malicious injury” from the order of discharge. Instead, a creditor has a duty to affirmatively object to the discharge of the debt. If the creditor fails to file a timely objection, the debt is included in the discharge and the creditor may not collect from the debtor.

If you have caused a willful injury to another person and need financial help, speak with an experienced bankruptcy attorney. Your attorney can explain your legal rights and discuss your bankruptcy options. The bankruptcy code is flexible to permit repayment, discharge, or time to restructure your finances.

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Options For Secured Property In Chapter 7 Bankruptcy

Monday, May 7th, 2012

During your Chapter 7 bankruptcy, you may hear the trustee or your own attorney say, “Secured property must be paid for or returned.” If you have a debt that is secured by a lien on property, you must make arrangements to pay the creditor or surrender the property. That is the general rule, but its not always the case.

A lien is a interest given to a creditor that secures future payment of a debt. If you fail to make your payments as agreed, the collateral pledged as security for the loan can be repossessed (or foreclosed in the case of a home loan). A lien will generally survive a Chapter 7 bankruptcy case, hence the “pay or return” statement. For instance, you cannot discharge a loan secured by a car and keep the car. You have three options concerning secured debts on Chapter 7 bankruptcy:

Reaffirmation – if you want to keep the secured property and continue paying the loan, you can reaffirm the debt and continue the relationship with the creditor. The debt and lien survive the bankruptcy by mutual agreement between the debtor and creditor.

Redemption – secured property can be redeemed for its fair market value during Chapter 7 bankruptcy. Redemption does not apply to home mortgages.

Surrender – If you cannot afford to keep and continue paying on a secured item, you can surrender the property back to the creditor and “walk away” owing nothing.

A fourth option, called “ride through,” may be available under certain circumstances. “Ride through” occurs when the debtor discharges the debt, but the creditor is unable to enforce its lien because of a lack of breach of contract or some other state law impediment. Finally, if you have pledged household property that you own to secure payment of a personal loan, you may be able to strip off the lien and keep your property.

Your bankruptcy attorney will evaluate your secured property and recommend a course of action. While each case is different, the Chapter 7 debtor generally keeps all of his or her property. The bankruptcy laws are flexible to discharge burdensome debt and allow you to keep your home and family vehicles. Speak with an experienced attorney concerning the specifics of your case.

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Discharging Credit Cards Through Chapter 7 Bankruptcy

Thursday, May 3rd, 2012

A Chapter 7 bankruptcy case can discharge many financial obligations, including credit card debts. A Chapter 7 discharge means that the credit card company is permanently prohibited from trying to collect from you.  The debt is unenforceable against you, and you are not required to pay income taxes on the discharged debt.

Credit cards are classified as “unsecured debts,” the lowest category of debts during bankruptcy. Other common unsecured debts are medical bills and signature loans. The payment of an unsecured debt is not guaranteed by a pledge of property (e.g. a car loan).  Consequently, when an unsecured debt is discharged in a Chapter 7 bankruptcy, the creditor typically receives nothing.

Discharging a credit card debt in a Chapter 7 bankruptcy case comes down to one simple rule: was the debt incurred honestly? The Chapter 7 bankruptcy laws favor discharging credit card debt and giving the honest debtor a fresh start. However, the law balances the scale by withholding the discharge when the debtor is less than honest.

First, a credit card that is not listed in your Chapter 7 bankruptcy case is often excluded from your discharge. This is especially true if you continue to use the card during or after filing bankruptcy. The additional charges made after filing bankruptcy cannot be discharged, and becomes good evidence of an intent to conceal the credit card from the court and the bankruptcy filing from the creditor.

Second, if you go on a spending spree with our credit card immediately before filing bankruptcy, those charges are presumed non-dischargeable. This rule includes “luxury purchases” of more than $600 made within 90 days of the bankruptcy, as well as charges made on your card that you have no intention of repaying. The best advice is to stop using your credit card before you file bankruptcy.

Third, if you take cash advances totalling $875 within 70 days prior to filing bankruptcy, the debt is presumed non-dischargeable.

Fourth, a false statement to the credit card company on your application could be used to deny discharge of the debt. While credit card companies seldom use this tactic, if there is plain evidence of fraud (e.g. your yearly income was $20,000, but you claimed it was $200,000), the credit card company may file an adversarial action during your case and seek to deny your discharge.

Discharging credit card debt is usually a simple matter in a Chapter 7 bankruptcy case. It is very important to answer your attorney’s questions honestly and fully in order to receive the best advice. Your attorney can often avoid problems when they are revealed in advance, and can get you the relief you need.

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Who Files For Bankruptcy?

Monday, April 30th, 2012

Financial difficulty crosses all socio-economic lines. Its not just “poor” people that file for bankruptcy relief, sometimes “rich” people file also. Recently former NFL player Warren Sapp filed Chapter 7 bankruptcy in South Florida. Despite earning an estimated $40 million during his career, and a monthly income in excess of $100,000, he now seeks protection from more than $6 million in debts.

Each year celebrities and athletes file bankruptcy, but rarely does a federal judge need the protection of the federal bankruptcy laws. The Wall Street Journal has reported that Judge Otis Wright II of California’s Central District has filed for Chapter 7 bankruptcy. Chapter 7 is an “erase-your-debts-and-start-fresh” bankruptcy. Creditors during a Chapter 7 bankruptcy generally receive little or nothing through the liquidation of the debtor’s assets.

Judge Wright’s bankruptcy petition and schedules show that he has assets of $833,426 and liabilities of $895,292, including more than $70,000 in credit card debt. Federal judges make about $174,000 per year. The Chapter 7 bankruptcy trustee plans to put Wright’s California home in Los Angeles County on the market to pay his creditors. The asking price is about $1.2 million with a debt of about $800,000.

Prior to filing bankruptcy Judge Wright and his wife drained his retirement funds to creditors. While his efforts to try and pay creditors were admirable, retirement funds are generally protected during bankruptcy. Your bankruptcy attorney will often advise against cashing out retirement funds to pay debts that may be paid or discharged during the bankruptcy case.

Bankruptcy is a federal legal process to reorganize your finances and free you from oppressive debt. The bankruptcy laws are flexible to help those who need a fresh start – despite fame or fortune. If you need this type of help, speak with an experienced bankruptcy attorney.

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4-Point Primer for Las Vegas Residents on How Mass Joinder Foreclosure Lawsuit Scams Work

Sunday, April 29th, 2012

Normally when someone owns a distressed property, he or she consults with a Las Vegas bankruptcy lawyer to discuss possible solutions. Not everyone does, however, and some people hope the problem will solve itself, or worse, fall for a scam. Recently, the New York Times reported on a new type of scam that targets distressed property owners: “mass joinder foreclosure lawsuits.” A mass joinder is a type of class action lawsuit, and in the case of foreclosure, it involves a group of homeowners joining together to sue lenders to obtain mass loan modifications or stop foreclosures. Here’s how they work.

(1)  A firm—not an actual law firm—sends out solicitations via direct mailings to homeowners whose mortgages are underwater, in default, or approaching foreclosure.

(2)  The firm offers the benefits of participating in a mass joinder lawsuit: reduction in interest rates, principal reductions, halt foreclosures, obtain money damages, and even handing them title to their properties free and clear of their mortgage obligations.

(3)  Unlike a class action lawsuit, a mass joinder requires the plaintiffs to pay in advance of joining. In mortgage situations they ask for up to $10,000 up front to pay legal fees. The firm then does nothing, merely accepting the money without providing a service.

(4)  According to the Federal Trade Commission (FTC) [http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt082.shtm], mass joinder lawsuit firms sometimes have only one attorney on its payroll. This attorney does not look over any “client’s” mortgage, and often is not licensed to practice law in the plaintiff’s state, which is a violation of FTC rules. In some circumstances, homeowners discuss their cases with an unqualified sales representative who gives out inaccurate information and makes deceptive claims about their expertise.

Homeowners who are underwater or facing foreclosure are in a precarious situation, but there’s no good in handing over your money to people who contacted you by mail and made sweeping claims about the results they can obtain for you. An experienced Las Vegas bankruptcy attorney is a far better option to being defrauded.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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