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Growing up on Cape Cod, Memorial Day was looked upon with both anticipation and a sense of dread. Anticipation for a busy summer tourist season, and the dread of summer traffic. But the start of the tourist season is not the only thing happening down the Cape.
According to a report in today's Cape Cod Times, the area is leading the state in foreclosures.
Tomorrow we leave New Orleans and head back to Boston. This will be the last New Orleans entry here. When we arrived in the Big Easy, we started our journey by seeing the breeched levee and the heart-wrenching damage in the surrounding neighborhoods. Since then, we have had a chance to meet with and talk to many City residents from various walks of life who shared their thoughts, their feelings and their hopes for the future. Since then, there has been an election, and on some level a shift in the energy here that would take me years of living here and researching to report it appropriately. And since then, the National Oceanic and Atmospheric Administration issued its predictions for the upcoming hurricane season.
The bankruptcy conference provided a great opportunity to catch up on trends in the law, as well as meet up with colleagues from other states who share our common goal of helping financially distressed people get through the bankruptcy process and get on with their lives. But being in New Orleans provided an exceptional opportunity to meet with many people who have been through the unimaginable. They told us their stories. Now let me try and re-tell them to you.
The People of New Orleans
There was Jason, who told us how happy he was to have a construction job but noted that “…it’s a good time to be a construction worker but if you were a lawyer before the storm, you’re probably cleaning houses now.” I then told him I’m a lawyer. When Jason’s not working, he’s helping out his mom with her house. She’s still living in a FEMA trailer on what was once her front lawn.
There was the cab driver over the weekend who told us how he and his family drove a caravan of 6 cars to Memphis to ride out the storm. They have slowly returned to the city as housing and jobs have opened up. “This is home,” he said “but rebuilding is going to take a long, long time.”
There was the gentleman we overheard at the voo-doo shop (hey…when in Rome) who was expressing concern to a friend that “the entire nation is watching this election and judging us on what we do.”
There was Todd who told us how he was looking for an apartment, but rents were jumping through the roof because there is not enough housing on the market. Some of the places he saw did not even have appliances. He would have to supply his own. Another didn’t even have countertops. “Am I supposed to have a skillet on the kitchen floor?” he told us with a wry grin. “Who wants eggs?” I swear the man will be on “Last Comic Standing.”
There was the woman on Bourbon Street who, when asked about who she wanted to win the mayoral election, said “I don’t care…I just want to work and make a living.” There was a man who replied that he hoped Landrieu would win because “at least he couldn’t make things worse…”
Last night I overheard someone tell a friend that they saw some furniture that would look great in their new apartment but they thought twice about buying it. “What if I have to evacuate again?”
More than one person told us how bad the hurricanes were, but it was “just winds.” Hell was unleashed when the levees broke. That’s a perspective that is not really covered in the media we watch and read every day up here in the Northeast.
On the looming hurricane season, Steve expressed concerned over a “mass exodus” if another big storm hits. But in looking forward to the looming hurricane season, he hopes for “one good season of nothing.”
There was Kate on Royal Street who told us how happy she was her insurance company finally called her. Yesterday. “The hurricane season starts in about 10 days and I still have a leaky roof.” She also mentioned she’s had a hard time getting exterminators to spray for termites who are apparently dining on her home. They are finally coming over on the 22nd. Of June.
She also told us that this was a "weird time." The election did not help. She was not against Nagin, but she believed that a change in leadership might assure people that the future could be different. Now, she sits on the eve of another and a possibly more destructive hurricane season. She will watch, wait and decide after the hurricane season whether it’s really worth staying.
“The French Quarter is such as mess,” she told us. Trash is a problem, and we are told always was. Apparently, it’s worse than before: “….There’s just no money right now to clean it up.” But she assured us, she doesn’t want to leave. She loves this City.
You’ll hear folks asking you to come to New Orleans and support the tourist industry here. I echo that sentiment. But I also urge future visitors to meet and talk to the locals. Ask them where they were during the storm and after the floods started. Ask them where they fled – or if they fled. Ask them what they lost. Ask them how they are changed. Ask them how the City they love and call home changed forever.
Ask your waiter, your cab driver, your bartender. Ask the bellman, or the shopkeeper. Ask the person outside his or her home who is sweeping the sidewalk. Ask them. They’ll tell you. They want to tell you. They want you to know. I guarantee that you’ll hear things you have not heard or read anywhere.
Life throws us things. Sometimes, we get what we ask for. Other times, it just happens.
Coming from Boston, where a rather large part of my city is built on landfill and wood-pilings, you’re not going to convince me that the City of New Orleans asked for this. And you’re not going to convince me it should not be rebuilt.
I believe almost everyone is entitled to start over and get a fresh start. Like many of the people I represent, the people of New Orleans are working towards that fresh start and wake up each day hoping to be closer to where they were “pre-K.” There are many challenges ahead; many more than I can possibly describe. But I’ve seen many bill-boards, as well as t-shirts and bumper stickers being sold that help keep this important message alive. Some read: “Make Levees, not War” and “New Orleans: Proud to call it Home.” But there is one that will stick with me:
“Recover. Rebuild. Re-New Orleans.”
Enough said.
To my colleagues who wonder why I wasn’t able to always hook up with them and head out to music clubs: now you know why. I was busy.
To the people of this amazingly strong, resolved and soulful City: thanks for the southern hospitality.
We’ll see y’all again soon.
I’ve been spending the last two days walking in the New Orleans humidity back and forth from my hotel (the Riverside Hilton) to the hotel where the conference is (the Marriott). I did not pack the right shoes and my feet are killing me. Today’s conference ended early so fortunately, I have the afternoon to roam around, rather than focus on dischargeability issues and means test applications.
But I am afraid this evening, I may be shuttling back and forth between the hotels more than I have in the past two days. Today, New Orleans votes for a mayor. Incumbant Ray Nagin’s post election party is at the Marriott. His challenger's, Lt. Gov. Mitch Landrieu's is at the Hilton. The media trucks are lining up as if they were following a sensational trial. This election, as it turns out seems to be a trial for the City of New Orleans. Tonight, the City renders its verdict. The drama however, has only just begun.
The Anger
I asked my cab driver if he blamed Nagin for everything that happened after the hurricane’s hit. He was silent, and he grimaced. I did not get an answer as quickly as I hoped, so I asked “you do [blame him], don’t you?”
His reply: “It is unfair to blame someone for something that was beyond anyone’s control…but...”. And he silently shook his head, looked out the window, and then quickly changed the subject by pointing out a landmark to us. I did not press the issue further.
There are as many t-shirt stores on Bourbon Street as there are Starbucks in Manhattan. Some of the shirts are what you’d expect. But there are still stores who are selling the “Willy Wonka” shirts with Nagin portraying the fictional candy maker, and referencing the "chocolate" flavor of the city comments that left many people scratching their heads. There are others that say “New Orleans: chocolate on the outside, nutty on the inside.” While anyone with a sense of humor – and who is not from here – can find some hilarity in the shirts, it is clear to me that these shirts have emerged from a place where Nagin is not particularly liked.
What Should Really Make New Orleans Angry
Today’s Times-Picayune’s headline reads "Historic Vote" with photographs of both candidates. Nagin appears casual as he greets constituents in a Whole Foods Market, and a more formal dressed Landrieu, who looks like a cross between Michael Chiklis and Cal Ripkin, is shaking someone’s hand. Yet next to this headline story, is another story.
This week, Mayor Nagin announced that the city would have to pay more to obtain the necessary $150 million line of credit it desperately needs. The original estimates were in the $300,000 range. Now, it appears that because of the City’s “poor credit rating”, the banks want a whopping $3.75 million in up front fees: an increase of over 1,000%. And instead of a 4% interest rate, they want 6%.
This struck me for two reasons: the first, is that the placement of the article on election day makes it painfully obvious who the Times-Picayune endorses (a fact which is confirmed on the bottom fold of the front page and under the article, rather than the editorial page); and the second, it is a reminder of how asinine the banking and credit industry is.
It’s going to cost a cash-strapped and struggling city more to get on its feet because – well... it is cash-strapped and struggling. And who ever wins the election tonight will not only have to lead the City through its rebuilding and its renewal, he’ll have to deal with this financial quandary, while at the same time doing everything possible to avoid having to file Chapter 9 (this bankruptcy chapter is available to municipalities), which would not only be a devastating blow to the City’s image, but I have no doubt would be felt by City residents worse than a kick to the groin.
What is seemingly happening to New Orleans happens to regular Americans every day. Miss a utility bill payment and a default rate can kick-in on other credit card payments making debt more difficult to pay off. I cannot begin to tell you the number of clients I have represented in bankruptcy who have told me that they tried everything to pay off their debts, but their rates kept going up – and up – and up. The last thing they wanted, and indeed, the last thing they needed was to have to seek bankruptcy protection.
When one looks at the damage in the city one can only imagine the struggle these folks have had to endure these past nine months. This City wants and needs to move forward. It must continue to look ahead to rebuilding, and to a renewed New Orleans. That lenders, among them Chase, may be making this process even more difficult is utterly shameful.
I am on a lunch break and am passing along this link to a USA Today article that further goes into the economic impact New Orleans is feeling. This article however, takes it from the perspective of one of the areas beloved attractions: the local aquarium.
This morning there was a lovely breeze off the river. We met up with other NACBA comrades at the Café DuMonde. After an iced coffee we spent the afternoon walking through the French Quarter. The Quarter was affected by the flood, but not on the level of devastation in Jefferson. But in the French Quarter there is an energy that is alive, and at the same time folks are working through some hard times.
After snapping shots and seeing sites, we eventually decided it was time to rest and hydrate ourselves. Or as many people in the French Quarter do, get a drink. We found this little bar that obviously had been recently rehabbed. All of the fixtures were new, and there was still a faint smell of fresh paint in the air. As we were standing outside perusing the menu, the barkeep invited us in. We were the only ones there.
As a matter of fact, we were the only ones on this particular street at 2:00 in the afternoon.
We went in, and sat and were handed a one page menu that was limited in its selections. So limited that it was unappealing. The barkeep apologized, and told us she did not have a cook. The food menu consisted of only items that she herself could prepare while working the bar. We gracefully declined, and told her we were looking for something more.
At that point, she appeared upset. I did not infer that she was upset with us per se, but just upset that what could have been a lunch fare was leaving. I smiled, apologized again, and made my exit.
One of my colleagues expressed surprise at the reaction we received in the bar. After all, was it really a big deal? A legitimate question.
But then I remembered my afternoon ride with my cab driver. How he told us that people were coming to open their business again, but were finding it difficult because of the lack of employees. I imagined that while this barkeep – or her employer if she herself was not the owner – had to pay for the paint, the stools, the new plantings, and the new inventory. Being a lawyer, I know that insurance only covers so much....and that assumes it even covers anything. I imagined what she saw walking out the door was not only a lunch fare, but something that might have – if for just that small moment – give her optimism about the future. The people of New Orleans have a resolve to rebuild. 
As I see how focused they remain, I have to wonder if even I could manage such strength after losing everything. But even in that drive to move forward, there can be dark moments.
On our way back, I saw very simple writing on the side of the wall. In other cities it might be considered ugly graffiti. But where it was today, on the side of a building on Bourbon Street, it seemed more of a command. To disobey this command is not an option for the people I meet.
The 2006 NACBA Conference could not be in a more better – and a more important place than New Orleans. We have arrived, and the journey has begun.
It has been more than 9 months since Katrina and then later Rita unleashed their wrath on the Crescent City and its neighboring communities. The water has receded. In that time, there has been rebuilding. The Superdome is under repair in anticipation for the Saints return in September. Hotels and Casinos are open. Tourists are slowly coming back. But what has lingered is devastation the likes I have never seen in my life.
Our journey began when we got off the plane. The airport was eerily quiet for what should be a busy metropolitan destination. It was about 5pm, and shops were closing. Our cab driver told us that he waited three hours for a fare – and that was typical. There are more cab drivers at the Louis Armstrong Airport than there are people to take into town.
We asked the driver to take us to our hotel – but we asked him to first take us to see damage. He cheerfully agreed, and said it would only cost $20 more. It would be money well spent.
He took us through Jefferson in a neighborhood near Lake Pontchartrain. We saw house after house after house, empty and destroyed. Some houses had FEMA trailers in the front yard where the homeowners lived, or in some cases, the contractors. But most of the houses were empty, and not being worked on.
Along the side of the road, one will see signs advertising for construction jobs, and for construction projects. I saw a sign advertising for bankruptcy services, and a sign that read “Cable Still Out? We Can Get You a Dish in 48 Hours!” Then next thing I saw after that was a FEMA Trailer with a dish. Its size was so disproportionate to the size of the trailer, it reminded me of the rack of ribs on Fred Flinstone’s car.
One of the striking things to see is the “water line.” On houses, walls and other buildings, one can see a dirty horizontal line where the water rose. To see this water line on houses as you drive along 6 city-sized blocks is devastatingly breathtaking. To see that it is clearly over the head of a 6 foot tall man like me is bone-chilling.
Our driver told us that he and his wife fled to Houston just before the storm. He came back. She refuses to. He has two kids in college and he needs to work. He told us that many people have come back to work. Business owners have come back to try and rebuild their lives but have trouble finding employees. Employees came back, but have trouble finding housing. With the shortage of housing, rents are increasing. And while we were heading towards the hotel, the traffic up the highway heading to Baton Rouge was quite heavy. Many have chosen to remain upground and they now call it home.
While stuck in traffic, our driver pointed out three hospitals that were still closed. Three hospitals. “People do not want to live in town if there are not enough hospitals,” he said.
A few minutes ago, I overheard the bartender in the lounge telling a friend that she has good days and bad days. Some days she wants to cry, and others she knows she has to persevere. She spoke of a greeting card a relative from up north gave her. It has a photograph of a seashell, and the inscription read: “Seashells are a beautiful reminder of something that is no longer with us.” To a very large extent, the houses we saw are seashells of what had to have been a bustling and thriving neighborhood.
We start our conference tomorrow night, and we go all day on Friday and Saturday, and conclude on Sunday. There is a lot for us to discuss, and with the new law a little over 6 months old, a lot to learn.
But in addition to that, I am fortunate to be in a city that is going through its own rebirth. 
From what I gather from the news, and from my driver, it’s not an all together painless process. To an extent, bankruptcy is a rebirth. It can be a path to redemption. While a good bankruptcy lawyer will try his or her best to reduce the stress associated with bankruptcy, it is not a painless process. But it is a way of getting a second chance. The people of New Orleans are working day and night to get that second chance.
This week I am off to join my colleagues at the annual conference of the National Association of Consumer Bankruptcy Attorneys. This year the convention is in New Orleans.
This will be my third NACBA convention. While I am looking forward to catching up with people I only see once a year or so (and comparing receding hairlines and expanding waistlines....for some), I sort of know what to expect.
This year, I am heading down a day early (and staying an extra day) in hopes of making my way out of downtown, and into the neighborhoods that have been hit. I know what I read in the media and we all know what happened last fall when the two storms destroyed so many lives. Yet despite that, I am really not sure what I can expect.
But I will report it here.
While the economic issues faced by the survivors are very unique, they are not all that dissimilar from those who find themselves adversely affected by something they had no control of. For the people of New Orleans, it was the hurricane season of 2005. For others across the country, from Boston to Bozeman, it might be a death in the family, an accident, an illness or a plant shut down. All of those events can lead an individual or a family down a road of economic hardship. All of those events can leave one feeling like the universe has just pummeled them. Yet despite that, New Orleans is rebuilding.
So stay tuned. I have every reason to believe the New Orleans conference will be something worth reading about.
Fannie Mae announced that it is extending the foreclosure moratorium to homeowners in the Gulf who were hard hit by Hurricanes Katrina and Rita to August 31, 2006.
More good news on a dreary day: Today Massachusetts Attorney General Tom Reilly announced that his office is investigating “several individuals and businesses who allegedly target homeowners by offering to ‘rescue’ them from foreclosures, but instead trick them into deeding over their property.” He urges homeowners who think they have been victims of a foreclosure “rescue” scam to call the Consumer Hotline at 617.727.8400.
His office also issued a consumer advisory warning homeowners not to fall victim to mortgage foreclosure scams.
"Families in Massachusetts are being squeezed on all sides - from soaring gas prices to utility and health care costs." AG Reilly said. "Now as foreclosure rates are going up, we're hearing complaints about companies taking advantage of people who are trying to save their homes. Consumers need to be careful. I urge homeowners facing foreclosure to talk with licensed professionals, including lawyers and real estate professionals, before entering into any agreement or arrangement involving their home."
The Northeast is getting record rainfall, and I think most people are just hoping for a little sunshine...and for some of us, warm, dry socks. While rainy days and Mondays might get folks down, there is good news coming out of Washington:
The Internal Revenue Service has canceled the tax-exempt status for some of the nation's largest educational credit counseling services after audits revealed they exist mainly to prey on debt-ridden customers, Commissioner Mark Everson said Monday.
The National Association of Consumer Bankruptcy Attorneys announced today that along with the Connecticut Bar Association, it has filed suit challenging the debt relief agency provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Those provisions require attorneys go give notices to prospective clients who seek bankruptcy advice even if they information is something they don’t agree with, or even think is false. It also requires attorneys to identify themselves as “Debt Relief Agencies.”
Boston Mayor Thomas Menino has announced that city officials have scheduled meetings with Ameriquest to “discuss lending practices in Boston.” The foreclosure rate continues to climb. Folks in Boston neighborhoods are already burdened by “creative mortgages” in a climate where interest rates are inching their way up. And Ameriquest is shelling out more than $325 million to settle claims stemming from its predatory lending practices.
It’s too little, too late for both parties.
Unfortunately, it is also too little and too late for many Boston homeowners.
Tonight's 60 Minutes highlights Sallie Mae, a once government and now private entity that administers student loans.
Among the people interviewed in the segment is the founder of this site: Student Loan Justice. Harvard bankruptcy professor Elizabeth Warren is also interviewed
Remember, there's no relief and there is no fresh start for the vast majority of people burdened by student loans. It's easier to discharge almost all other debt, than it is to discharge a student loan.
The Federal Trade Commission announced this week that Lighthouse Credi Foundation, Inc. along with co-Defendants will pay more than $2.4 million to settlle charges stemming from a complaint filed by the FTC in the US District Court for the Middle District of Florida.
According to the FTC’s complaint, defendant Integrated Credit Solutions, Inc. solicited consumers for Lighthouse’s debt management plans by leaving prerecorded messages on home answering machines stating that the consumer had been approved through “a certified non-profit nationwide program” to consolidate credit card debt before the next billing cycle at interest rates “as low as 1.5%.” People who responded to the messages were told that the program included counseling on how to manage finances, and that a monthly administrative fee was tax-deductible because Lighthouse was a nonprofit organization. Consumers agreed to pay large fees to enroll in debt management plans based on these representations, the complaint alleges.
In today's Hartford Courant, Washington Post columnist Michelle Singletary comments on the amendments to the FDCPA to exempt "check-diversion" companies now under consideration in the Senate:
Every consumer ought to be paying attention to this legislation because if it passes (it's already been approved by the House and is now being considered by the Senate), it will erode our consumer rights - not our right to bounce checks, but our right to be treated fairly when we do make a mistake.
See the May 3 blog entry for additional informaton on this legislation.
USA Today is reporting today:
A private debt-collection firm tapped by the IRS to seek repayment from Americans who owe back taxes has been tangled in legal controversy, including a bribery scheme involving a collection contract in Texas and a federal investigation of another collection deal in Louisiana.
An interesting development indeed.
The Senate Banking, Housing and Urban Affairs Committee is considering legislation that will exempt from the Fair Debt Collection Practices Act the for-profit companies who collect on bad checks. The House passed similar legislation last year. According to a report in today's Baltimore Sun, the legislation is supported by the National District Attorneys Association, as well as prosecutors who go after people who write bad checks.
But consider this: the Sun report noted that a 35-year old contract specialist with the Justice Department bounced a $21 check at the grocery store. The bounce was an accident - changes were made to the check writer's savings account, and the overdraft protection did not kick in when it should have. When she noticed the check did not clear, she contacted the grocer.
But she said it was too late. A letter from a check-diversion company - but appearing to be from the district attorney's office- threatened to criminally prosecute her if she didn't pay about $181 and take a financial management class, she said. Afraid, [the check writer] said, she paid the fee rather than fight it."There is no reason to feel threatened and afraid in that way and intimidated," [she] said yesterday.
Who hasn't bounced a check by accident? There are lots of reasons: you forget to write down a debit card purchase, or you forget to carry the two. Not everyone is committing fraud, and not everyone gets a criminal charge filed against them.
It would appear that once again, Congress is trying to address a small problem with a big change in the law....much like it did when it passed the Bankruptcy Abuse and Consumer Protection Act in 2005 to address what it perceived was widespread fraud in the system.
I sure am glad it's an election year.
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