I hear it from clients who meet with me for the first time, who have already had a chance to talk to me on the phone, and have already taken the time to start pulling together some important information and documents I need to assess their situation. And usually, I see a look in their eye. Something that reminds me that even though I am a fairly nice guy, some people find it painful to have to sit across the table from me. (more…)
Archive for the ‘Bankruptcy’ Category
Saving the Home: Thinking Beyond “Delay and Pray”
Saturday, January 30th, 2010
The foreclosure numbers don’t lie. According to ForeclosuresMass.com, a total of 478 new foreclosures were filed this week (ending January 29, 2010). Approximately 56 homes slipped into foreclosure every day for the last 60 days. The economy is far from a turn around.
HAMP is not really working – at least in not any meaningful way. Homeowners can expect a “delay and pray” modification or an “extend and pretend.” Taking arrears and putting on the tail end of the note, “delay” (which is a nice way of saying a “balloon” payment), means that for it to be paid off, the value of the property will have to increase (hence, the term “pray”). What seems more accurate is “extend and pretend.” You can extend the terms, such as turning a 30 year note into a 40 year note. Of course, the “pretend” comes into play when you want to “pretend” you want to live in the property, “pretend” that the economy and the housing market will turn around so that you still won’t have to come to the closing table with a checkbook in hand.
HAMP is not the only option available to homeowners trying to avoid foreclosure. There’s HARP, there are short sales and there is the possibility of keeping the home under bankruptcy court protection (either in chapter 13 or 11). While bankruptcy should be one of the last options, I am always surprised at people who quickly dismiss it altogether – especially when it’s the best option available.
Consider this scenario:
The State of Our Union
Wednesday, January 27th, 2010
Tonight, like many Americans, I’m going to be watching the State of the Union speech. While I have many concerns as a citizen, as a bankruptcy and insolvency professional my concerns continue to be on the economy, and the government’s efforts in moving the country through the current economic mess it is in.
I’m not sensing any real effort from the White House, Capital Hill or even Beacon Hill in giving any meaningful solutions to distressed homeowners. Perhaps better said, all I am hearing is double-speak and mish-mash emanating from our elected officials who talk about programs like HAMP, while at the same time, skirt around the statistics that suggest that the program is an abysmal failure. Remember, Obama says HAMP is for “responsible homeowners” but we don’t really know how the term “responsible homeowner” is actually defined. And in no uncertain terms, what I am hearing from my clients, and what I am hearing from my colleagues all fuels my sense that things are not getting better, and Washington appears impotent to do anything about it.
Since tonight is the State of the Union speech, I’m going to hold off – for now – from telling my readers what my view of where things are and where I think things may be going. I do have some idea of what I think we need to do to make things better. And in the coming days, I’ll be sharing what I and McLeod Law Offices is going to do for our clients…and why. But first, tonight I will listen to what our President has to say.
And I’ll also be tweeting – so be sure and follow me on Twitter.
Facing Bankruptcy with Nagging Regret
Wednesday, January 20th, 2010
I recently met with a bankruptcy client who had a lot of credit card debt, almost no equity in their home, and were unable to meet their obligations.
After getting some information, and assessing their situation, I learned that they had lived in their home for almost 25 years, but in the last 12 years had refinanced their home 3 times. The client told me that in no uncertain terms he would not be contemplating bankruptcy if he was able to refinance their home to pay the credit card debt.
Clearly, that wasn’t going to happen.
But then I started thinking, how does someone who has lived in a home for 25 years in the same home have almost no equity to show for it?
Relearning How To Buy Stuff
Tuesday, January 19th, 2010
When I meet with a debtor who has expressed a desire to file bankruptcy, once of the first things I start discussing is their use of credit. Many times, their use of credit also turns to their relationship with credit. If you’re going to file bankruptcy, you need to stop using credit cards. That seems like a bit of a no-brainer. But recently, I had a conversation that went something like this:
“You cannot use credit cards any more,” I told my client. “You need to start operating on a cash basis.”
I saw my client thinking about this, and then after a momentary pause, I heard this reply:
“But how will I buy food?”
The Stuff You Find on Craig’s List
Monday, January 4th, 2010
Sometimes, clients will share with me news bytes and other tit bits that I often share with clients. But today, a job-seeking client shared with me a post they found on Craig’s List that was both funny – and a bit troubling.
Means Test Not Required in Converted Case
Monday, December 7th, 2009
If you file chapter 7, you need to complete Form 22A, the Statement of Current Monthly Income and Means Test Calculation. But if you file a chapter 13, and then convert the case to chapter 7 are you still obligated to file the Means Test form? A Massachusetts Bankruptcy Judge has ruled on this important issue (In re Guarin, 09-42294 JBR).
Under Water, Walking Away & My Two Cents
Tuesday, December 1st, 2009
Over the holiday weekend, there were a number of press reports about a discussion paper, Under Water and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis. Reportedly Brent T. White, an Associate Professor at the University of Arizona’s James E. Rogers College of Law advocates that homeowners who are underwater (meaning, the outstanding mortgage balance[s] is more than the value of the home…is now, or in some cases, will ever be) should simply walk away from their obligations and not look back without feeling a bit of guilt. Obviously this all got my attention, but before I took to this here blog and declared “You Have Got to be Kidding Me!” (which at first glance seemed like the most expedient way to address it), I opted to read the discussion paper (rather than just the abstract). Before you click the link below, pour yourself a fresh cup of tea.
Here’s my take:
Those People
I was recently chatting with an old friend who was sharing with me her recent trials and tribulations. She is on unemployment – has been for a while - and trying to sell her house. Her house is not priced to sell – but priced in line with what other houses in her neighborhood are going for… and are also not selling. She has also made some regrettable financial and life decisions that have lead her to the place she now finds herself in. It’s not a judgment – it’s more of an observation. Some of what she’s experiencing was avoidable. Some of it – like the unemployment, wasn’t. She asked me for my advice.
As I started offering some suggestions (among them, dropping the price on the house), I could tell she was getting upset. She then took a deep breath and said “you know, I’m not like those people you represent. Those people in bankruptcy.”
There was this period of awkward silence – I don’t think it was particularly long – but it was long enough for me to think something more serious than “really, Blanche. Really?” but not as dramatic as “oh. my. gawd!”‘
“Those people,” I said – and I could feel my eyes widening.
Being good friends, we could tell that we both hit a nerve in each other and we silently retreated to our respective corners. I did not have it in me to say what I wanted to say then.
I do now.
(more…)
Tags: Commentary, debt, Economy, Homes
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