Archive for March, 2009

My Take on The Subprime Debacle: In Black and White

I recently spoke on a panel at a Northeastern University Law School Symposium with my colleague, Susan Grossberg (and a big hat-tip and “thank you” to the staff of the Northeastern University Law Journal being such wonderful hosts).  An interesting perspective came up on the panel (by someone other than Susan).  I call it “interesting” because it’s a way of describing not only how narrow it was, but in my opinion, how wrong.  The issue: who is really affected by the subprime debacle?  The issue arose through another participant with a legal services background.  The speaker believes that those most affected by the subprime mess are those minority groups who were targeted by lenders: African Americans and Hispanics in low income neighborhoods.

Before I continue, have some familiarity with my perspective.  My first law job was in law school clerking for an immigration firm.  I learned I didn’t like immigration law.  My second job was as an intern the Massachusetts Commission Against Discrimination in Springfield.  I focused on housing and public accommodations discrimination claims.  I liked the job a lot.

After I left Hartford and came back to Massachusetts to hang up a shingle, my practice focused on, among other things, civil rights.  When I hung my shingle, much of my work was claimant-side ERISA litigation on behalf of health care providers.  I was litigating health care treatment and compensation issues when Hillary Clinton was First Lady.  Since then, I have litigated employment discrimination cases at MCAD and in court.  My point is this: I’m not blind to the civil rights struggles faced by individuals in protected classes: whether it be the right to be left alone in the work place, the right to rollerskate while wearing a religious head scarf, or the right to medical treatment.

Yes, minority groups were targeted by lenders and their agents, and yes, it is unfair.  But the people that come into my office are not all minorities, nor are they people who have low-income zip codes.  People from all over are facing the real prospect of losing their homes.  People from all over are facing a difficult reality: their life as they know it, is changing…and they are discovering that they really have only so much control over it.  These people come from all walks of life.  All neighborhoods.  All towns.  All economic backgrounds.

Thus, I believe that it is myopic to suggest that the subprime mess affects only minority groups, or to even imply that minority groups should receive some sort of special consideration in formulating an appropriate legislative or regulatory response.  The subprime mess affects us all, and if anyone reading this disagrees with me, then you’re simply not looking hard enough at what’s really going on out there.

I fear that in the months and even years ahead, we may hear more and more from those who believe that the subprime mess falls on the shoulders of one or two groups of people.  I believe that attempting to limit the impact of the subprime fallout on one or two groups only divides us even more.  The country’s economic mess is not about race, nor was it born out of any racial divide.  To explore this crisis – and give it the attention it deserves (which means to not only put band-aids on it, but also to make meaningful decisions that will give us some reasonable assurance that history will not repeat itself) – means to discuss and debate the important, complex and difficult issues that fed it.  And they are important.  They are complex and they are difficult….for all of us.

For the students and guests who saw me bang a table in response to my hearing such tripe, I’ve got the last word here: do not let the important discussions of how we got into this mess, and perhaps more importantly how we can get out of this mess be tainted by the inflammatory (and completely inaccurate) premise that the economy of this country is going to hell-in-a-hand-basket because the subprime crisis is just the result of a failed race-based lending policy.  At the risk of stealing the thunder from Attorney General Holder’s recent proclamations: that tactic reeks of cowardice.

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Victims of Foreclosure

I’ve written about it here before, and it’s worth repeating: the economy and the looming foreclosure crisis is affecting not only families. Pets are also feeling the effects.

From today’s Boston Herald:

The first wave of foreclosure-related pet surrenders arrived on [Boston's Animal Rescue League's] South End doorstep early last year, but soon after owners began just kicking pets out of the house, or driving away from foreclosed homes and leaving them behind.

If you’re facing financial difficulty, I implore you: please do not abandon your pet to fend for itself.  They will not be better off if left behind.  They will not be better off if dropped off at the side of the road.  Call a local shelter and get help with adoption.

And please, if you can help the Animal Rescue League, please do.

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Was I Too Harsh on David Coleman?

A few people have spoken to me about it.  And I have had some time to reflect.  My comments about David Coleman and his outfit, Mortgage finders of New England, were not kind.  I believe I referred to him as “the lowest of the low.”  In that article, I discussed what he did, and why the Bankruptcy Court fined him and issued an injunction against him.  But courts issue fines every day and I don’t refer to the parties as the “lowest of the low.”  So after some reflection, I thought it best to discuss why I stand by those statements.

Coleman – and others like him – scour public records to look for people in foreclosure.  There is nothing wrong with that – provided you’re doing it for a good reason.  There are some bankruptcy lawyers that do it, along with real estate brokers and others who offer their services to people who they think need it.  But Coleman offers nothing.

Coleman leads his “clients” to believe that he is a lawyer and that he is capable of properly preparing a chapter 13 petition to stop a foreclosure.  He then agrees to meet his “clients” at the courthouse – where the “clients” sign the petition and give him cash.  Then, the petition is filed.  The foreclosure is stopped….if only for the time being.

But Coleman does not counsel the “client.”  He does not develop a strategy.  He does not guide them through the rocky and ever changing legal terrain that is chapter 13.  He does nothing more.   The cases are dismissed, and the foreclosures in many cases, will likely occur.  He has provided no benefit at all.  He has done nothing other than take money and buy a small amount of time.

So why does this irk me?

Because people who are facing foreclosure need help.  Because if their name is in the legal ad section of the newspaper and they have not already consulted with an attorney, or developed some sort of game plan, we can and should assume that either there is no game plan to put together, or maybe more likely the case, they are so scared and embarrassed at the very idea of losing their home, that it seems more appropriate to do nothing, since doing something is an acknowledgment that something is terribly, terribly wrong.  In other words and perhaps more simply stated: they are vulnerable.

And Coleman takes advantage of it.  He files the case.  It gets docketd.  It will get assigned to a judge and a trustee.  Clerks will review it.  Orders to Update will issue, directly the debtor to file other required documents.  Those documents will likely never be filed.  The case will be dismissed perhaps within a few days, or a few weeks or a few months.  The foreclosure was stopped.  It was stalled.

What also bothers me is that Coleman ignored court orders directing him to comply with those Bankruptcy Code provisions that require him, as a “petition preparer” to disclose his status (as well as for him to do other things that petition preparers are required to do).   From all of this, I infer that Mr. Coleman and his outfit have no problem offering “help” to people, but ultimately providing none – and doing so only after taking their money.  I also infer that Mr. Coleman doesn’t care what the law says or has any respect for our courts.

I am in the business of helping people.  Debtor or creditor, that’s what I do.  Bankruptcy law is tough enough on debtors.  Being in deep in debt and feeling utterly powerless and alone is hard enough.  But being preyed upon by someone who knows nothing, who offers nothing, and who takes everything is simply unconscionable.  And it is for those reasons that I believe that my comments about David Coleman, Mortgage Finders of New England, and every other low-life who thinks they can get away with it, are entirely jusitified.

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Bankruptcy Court Shuts Down Predator

When people are in foreclosure, they can fall victim to a host of scammers and scams.  Unfortunately, by the time many of these folks are scammed, they are worse-off than they were before they stumbled into foreclosure.  So when I come across a scammer who preys on people who need real help, you’ll read about here.  Here’s the story behind David Coleman and his bogus outfit: Mortgage Finders of New England.

In April 2008, a Virginia couple contacted Coleman’s firm about an upcoming foreclosure on investment property in Newbury, MA.  Coleman told the couple he could help them by filing a bankruptcy petition on their behalf.  He also told the couple that he was experienced in filing bankruptcy cases, although at no time did he mention that he wasn’t a lawyer and that by law, he could not give legal advice.  Only after the case was filed did the couple learn for the first time that Coleman wasn’t a lawyer at all.

Coleman waited for the debtor (the wife only) in the lobby of the Tip O’Neill building where he collected a $1,000 cash “fee” and had her sign a skeletal bankruptcy petition he prepared.  But he did not properly complete the portion of the petition acknowledging that he was a petition preparer.  In fact, in an effort to presumably fly below the radar and to keep his scam going, he left it blank.  The case was dismissed on May 5, 2008 because no other documents were filed.

On May 21, 2008, a New Bedford woman was contacted by Coleman after he obtained information about a looming foreclosure from a local paper.  Coleman told the woman that he could stop the foreclosure and it would cost $1,000 cash to retain his services.  The next day, he met the woman in the lobby of the Tip O’Neill building where he collected his $1,000 cash fee, filed a chapter 13 petition, but did nothing more.  When the clerk asked Coleman if he was representing the woman, he said he was only assisting her.  It was at that time that the woman learned that Coleman wasn’t a lawyer.  The woman’s friend demanded that he return the money, but Coleman refused.

On May 6, 2008, a Roxbury man filed a chapter 13 case after being contacted by Coleman, who learned of a foreclosure in the local paper.   Again, he met the man for the first time in the lobby of the Tip O’Neill building in Boston and collected the $1,000 case.  Again, the filing was deficient.  And in this case was dismissed because required documents were not filed.  Again, the forms were not completed correctly.  Again, the people were not properly advised.

There are many more cases.  There are many more violations.  There are many more victims.

Who is he?

David Coleman is a predator.  He operated Mortgage Finders of New England at 70 Worcester Street in Methuen.  He’s not a lawyer.  He has no formal education.  He has no training with regard to the bankruptcy process or how to properly and fully prepare bankruptcy documents.  Yet despite this, he contacts distressed homeowners, convinces them that he can help them, takes their money (and I’m willing to bet, money they cannot afford to lose), files a bare bones petition and does nothing more.  Since April 2008, when he started this operation, he has collected money and prepared bankruptcy documents for over thirty people.

He advertises in the Verizon Yellow Pages and by distributing cards and flyers.  He makes calls to people, using “411″ to get a homeowner’s name after getting personal information from a foreclosure notice or other public record.  He tells his victims to meet him in at the Bankruptcy Court in Worcester or Boston.  He downloads forms on line, completes them in his own handwriting, and files them.  He doesn’t tell his victims that he is not an attorney and that he may not give legal advice.  He does not disclose to the court that he is a petition preparer.  He does not even give copies of the documents he files to his victims.  And then he does nothing more – ultimately letting their cases fail because other necessary documents are never filed.

He holds himself out as a bankruptcy expert.  Folks, David Coleman is no expert.

And it gets worse.

In July 2008, US Bankruptcy Judge Hillman issued an injunction requiring that Coleman comply with the Code and properly disclose on cases that he is a petition preparer as defined by Section 110 and his fees.  Even with this order, Coleman continued this unlawful and illegal scam.  He continued to file documents without disclosing who he was and what he was doing.  He continued to rip people off.  He continued to hurt people.

In an order dated February 18, 2009, the US Bankruptcy Court issued an order finding that Coleman had violated Section 110(b)(1) of the Code.  He was fined a total of $34,500 for violation of the code, and among other things was ordered to disgorge (return) the fees he unlawfully received.

It was also found that he was engaging in the illegal practice of law, and therefore, he has been barred as “(1) acting as a bankruptcy petitioner; (2) soliciting, assisting, advising, providing legal guidance, advice, assistant or consultation of any king to any person in connection with the filing or prosecution of any bankruptcy case or any document in any bankruptcy case, whether for a fee or for free” in Massachusetts.  The order includes not only Coleman but also includes “any person or entity acting in concert with him.”

When it comes to helping people keep their homes out of foreclosure, Coleman serves no legitimate purpose.  He preys on people who are probably feeling as if they are at the lowest point in their lives.  What people facing foreclosure need is sound counsel given by people who are trained in and who study the law and know what they are doing.  That’s not Coleman, and it never was.  He’s only taking money and selling false hope.  He’s the lowest of the low.

If you’re facing foreclosure, talk to an attorney.  Don’t be scammed by Coleman, or anyone else.

Read the Court decision here:  US v. Coleman, 08-04132 (2/18/2009).

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Northeastern Unversity Law Journal Symposium

The Northeastern University Law Journal has announced it Spring Symposium: “Shelter from the Storm: Advocacy in the Subprime Fallout.”  Over a series of panels, leading academics, practitioners, and policy makers will discuss the current legal context and offer prospective solutions to the housing crisis.

The symposium will take place on Friday, March 20, 2009, from 9:00 AM to 4:00 PM, in Dockser Hall Room 240, 65 Forsyth Street, Boston, MA.

I will be presenting on the third and final panel: “Looking Forward: Legislative and Regulatory Responses to the Subprime Crisis.”

This program is open to the public.

Click here for more information

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Sometimes Lawyers Need a Good Laugh

As the economy continues its descent, bankruptcy attorneys are forced to respond to increasingly difficult legal and factual issues.   Chapter 13 case law is evolving…and at times, I feel like it’s a moving target.  What Congress said they were going to do last week, is not (as we have learned) not what they may do this week.  With all that’s going on, it can be tough to find time to do the simple things: like laugh.  So I was pleased as punch to come across Bankruptcy Bill.

Fortunately, Bankruptcy Bill is not another piece of legislation I need to mire through, but rather is a cartoon character  created by Gideon Kendall and Steven Horowitz.  But the website has not only Bill and his hilarious adventures through the world of bankruptcy, but also Haiku specifically tailored to the issues we bankruptcy attorneys have to face – very often.  Here’s a sample:

Commencement of case

Served all creditors but

Surely I missed one.

How many of my colleagues have awoken in a cold sweat in the middle of the night uttering those words? How many of my colleagues have had that concern at least once?  I’m willing to bet all.

Steven tells me that he would like to write more about the issues consumer practioners face…so if you have any ideas, I encourage you to share them with him.  And please put Bankruptcy Bill in your favorites and tell your colleagues (you will also find Bankruptcy Bill on Facebook and Linked In).  There are few sites that have content specifically designed to tickle the funny bone of bankruptcy attorneys.  And during these interesting times, a tickle now and then may be just the thing we need.

[Thanks to Bankruptcy Bill for posting the McLeod Law Blog's RSS Feed.]

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Knowledge is Power, Sort of

I find that many people who are thinking about it will want to investigate some facts about bankruptcy, and get some information about the process before they pick up the phone and speak with me.  And certainly, there’s much information and content on this website – and it’s here for just that reason.  But every lay person needs to maintain some perspective when researching, reviewing and digesting information about bankruptcy and the bankruptcy process.  Today, I had a conversation with a client that reminded me to remind you to keep that perspective.

The most important thing to remember is that research should not replace speaking with counsel and getting a full and fair opinion.  Nothing on this site is designed to be legal advice.  As a matter of fact, you’re unlikely to find anything that amounts to legal advice on the internet.

What you will find is information.  But sometimes, that information can lead to overload – and overload and can lead to confusion.  And today I encountered confusion.

I spoke with a client on the phone who “had done a lot of research” about bankruptcy.  He knew and understood terms like the “Means Test” and “Discharge.”  But he did not quite understand how the Means Test worked – or that the Means Test applied in not just Chapter 7, but that a different version of the form (with entirely different consequences) applied in Chapter 13.

He asked what most might think is a rather straightforward question: “In a Chapter 13, how will they determine how much I can afford to pay back?”  The problem with this seemingly straightforward question is that there is no straightforward answer.  There are many variables, including whether you are over the state’s median income, whether you have payments on secured debt and the status of the case law at the time (and because it is ever-evolving, I tend to view the case law as a moving target).  The other problem is that I cannot answer the question in a phone call or a short initial consult meeting.  It requires information, documents, and an assessment of all of the factors at the time of the filing.

The client is already frustrated, and I can understand why.  Struggling to make ends meet, the client is trying to determine what more will be expected of him and his family in the bankruptcy process.  Yet, there is no easy answer I (or for that matter anyone else) can provide.  At least not an honest one.  The fact I could not provide a quick answer only fed that frustration.

I would not think of going to WedMD to learn how to perform a medical procedure on myself.  I don’t call my dentist to explain why my mouth hurts (which is a good thing, because as I recently learned, it wasn’t what I thought it was).  So with that said, please know  I do not recommend using this site, or any others as a substitute for sitting down with a bankruptcy attorney and giving them all of the information they require.  Then, armed with the facts and sound legal counsel, you can then make the best decision to protect your family from the oppressive debt you find yourself struggling with.  After all, that is why you’re calling me.  And that is why you’re researching bankruptcy information on the internet.

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