I admit that I have a stick in my craw. In May 2008, Massachusetts (a non-judicial foreclosure state) imposed a 90 day cooling off period to give time for defaulting home loan borrowers to work with their lenders. This summer, that period of time got extended to 150 days. Now, there are calls for a “foreclosure moratorium” in Massachusetts. I am not a fan of what I think is this inevitability, but before y’all think I’ve really fallen off my rocker, let me give you my perspective, and why I think we need to not just think about the moratorium – but for who and for how long.
Posts Tagged ‘Consumer Protection’
Loan Modification Scams
Friday, February 19th, 2010
As more and more people try anything to avoid losing their homes, more and more people are getting scammed.
Here are two links with important information for homeowners contemplating modifications:
This from The Christian Science Monitor:
TransUnion, a credit reporting company, released its own numbers on Tuesday. At the end of the fourth quarter last year, it said, 6.89 percent of all US mortgage payments were at least 60 days past due. That was an all-time high.
Enter unscrupulous loan-modification companies. They advertise on late night-television or radio shows and sound as if they are linked to the Obama program.
“Many of them have the word ‘hope’ in their phone number,” says Jonathan Mintz, commissioner of the Consumer Affairs Department in New York. “But it’s a false hope.”
And here’s a link mentioned in the same article that describes, among other things, 6 Facts You Should Know About Loan Modification Scams.
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CareOne: What’s Behind Those Commercials?
Thursday, February 18th, 2010
As I was watching the news the other night, I saw this commercial for CareOne Credit. The name rang in my head – and then it hit me: I had recently read about them in a case while doing some research Since the judge’s observations in that case and his comments were stuck in my head – and since I am seeing these commercials more and more - I thought I would share them here.
The Case
In late 2006, Debra Wood was struggling with debt – and after apparently seeing an ad, she contacted CareOne Credit Counseling. When she contacted CareOne, she was referred to Consumer Law Associates, LLC (CLA). CLA then gave her documents to start her into a debt management plan – which would be administered by Ruther and Associates, LLC (RA). They describe themselves as a “national law firm dedicated to consumer debt reduction.” As the facts of this case unfold, you’ll see what that description is inaccurate – at best.
Another Good Reason to Stay Close to Home
Wednesday, May 20th, 2009
One of the best things about summer is the local produce you’re likely to find not just in the supermarket, but on road side stands. While I admit I’m a bit biased, when I was a kid, there was no better place to get tomatoes and sweet corn than the small farms on Aquidneck Island. That’s probably going to tick-off the good folks in Little Compton, but hey, I know what I know. I am sure that I can find a place online that would ship them to me, but it’s not the same as pulling over to the side of the road, smelling the air, and reaching into your pocket for a few bills to get some good stuff. Law firms advertise online, as do credit counselors and so-called debt settlement and consolidation firms…and there are hundreds if not thousands of companies and firms offering assistance to people struggling with debt. Is it a good idea for Massachusetts consumers stay “local” when they are looking for resources to help them deal with their debt? This very question came up today when I was talking with a prospective client.
For a variety of reasons, the family is in a lot of debt and exploring options. There’s bankruptcy (and I can help them with that), and there’s credit counseling (which I can offer a recommendation). There’s also debt consolidation and debt settlement, but ironically, there do not seem to be too many local companies that offer such services. Perhaps it is because those services are usually little more than a scam. Perhaps it’ because it’s been tried
The clients were considering the “Consumer Law Group, PA” located in Florida. I like Florida – I have not been there in years – but it’s a pleasant place to be. And while I like oranges, I don’t feel the need to go to Florida to get them.
Fortunately, the client did some research on this outfit on their own. They learned that the “Consumer Law Group, PA” had only been around since November 2007. They found websites where people had some very unfavorable things to say. More than one person, actually. They also learned that in less than two years period, they earned an exceptionally low BBB rating. That was their wake up call. It dawned on them: “why are we not dealing with a local business who can help us?”
While this is arguably yet another reason to stay clear from any outfit claiming to offer debt consolidation or debt settlement services (which again, are a scam), I think it is also important to consider going with someone local. It doesn’t matter if it is an attorney, a credit counselor or a lender who may be trying to help you refinance…. why go with an out of state outfit state? After all, we are talking about your money, your life, your family and your future.
For those reasons, it’s important to get good help from someone who knows what they are doing. And frankly, if these issues are important enough for you and your family, then you should be able to look that professional square in the eye. That’s hard to do when they are a few states away.
A Holiday Shopping Tip (or Warning)
Wednesday, November 26th, 2008
With Black Friday soon upon us, and the holiday shopping season, I want to get a message out to those folks who are struggling. Perhaps there are folks who know they are going to lose their jobs after the New Year. Perhaps there are folks who have been using credit to get by and now see a bankruptcy petition on the horizon. Perhaps these folks are figuring that they will have one last holiday with really great gifts courtesy of their credit card companies. If you’re reading this, and you’re thinking “wow, he’s totally speaking to me (or about my friend or relative)!” please keep reading.
One thing many consumers do not know is that when you buy “large-ticket” item, it may also come with it a security interest. In other words, that purchase may be a gift, but it may also be collateral. The lender (the store, or the bank that finances the store’s credit cards or credit lines) assumes a security interest. This is something to think about as you’re eyeing that appliance or jewelry. Will it prevent you from filing bankruptcy? Probably not. Will it complicate things? It just might. You may have to pay the debt even if you file bankruptcy or you may have to surrender the collateral. Or you might hear from the creditor months or years after the bankruptcy is over.
Last minute purchases can also get you into hot water. Using a credit card when you have no intention of paying the debt back can be considered fraud. Debts incurred through fraud cannot be discharged. In addition, such actions could be considered bad faith, and might lead to a dismissal or a denial of discharge, depending on the circumstances. What does any of this mean? The short answer is more attorney fees, more anxiety and the possibility that the bankruptcy case will not go as smooth as it otherwise could.
If you’re contemplating bankruptcy, don’t use credit cards for holiday shopping. Speak with an attorney. The last thing any debtor needs is to make a tough situation even worse.
Honesty Goes A Long Way
Monday, July 21st, 2008
Today I received a call from a prospective client who was upset with their current bankruptcy attorney. They claimed that their current attorney was not giving them accurate advice, specifically, that the attorney had informed them that information pertaining to a non-filing spouse’s income and expenses was not needed to prepare a bankruptcy filing. That’s generally not the case, but in this instance, the parties had only been married for a short period. But when I started asking some other basic questions, what I got in return was whole a lot of bull.
The caller told me that the husband and wife resided together for about a year prior to the wedding. I told the caller that based on that, I would be required to consider the non-filing spouse’s income not only for the schedules (income and expenses), but also for the means test (actually, it’s the Bankruptcy Code that requires it). But as soon as the information was disclosed, the caller started back-peddling.
Inaccurate Schedules Lead to Discharge Denial
Wednesday, July 2nd, 2008
There is any number of ways that a debtor can get a discharge denied, and certainly, I have blogged about them here. One of the big ones is the most obvious: lying. I came across a recent case out of the Southern District of New York that should serve as a warning to all debtors – and especially to those debtors who think they can file bankruptcy without an experienced bankruptcy attorney. This pro se debtor was a former attorney (his license was suspended). There’s nothing in the record that suggests he was experienced in bankruptcy…but he still should have known better.
The case was filed in August 2006. In his original schedules, the debtor listed his monthly net income as $2,144 and expenses of $2,427. Among the expenses was $500 per month in support for “additional dependants not living” with the debtor. He also did not indicate that he had any student loan obligations, and wrote “0” in the box that specifically asks if the debtor has student loans.
A few days after filing the petition, the debtor amended his schedules showing an increase in his monthly expenses. In this amendment, he claimed that his expenses had increased, and identified a monthly domestic support obligation of $600 (and he identified the creditor to whom he owed the child support). He also stated he spent $20 per month on recreation.
Only 9 days latter, the debtor amended his schedules to identify a new creditor: a phone company who had an unsecured non-priority claim of $190.
In March 2007, the schedules were amended again. This time, the debtor added additional creditors and showed that his income was $2,840 and his expenses were $2,829. His recreation expenses were now $140 per month.
Game Over: Chapter 13 Debtor Sent Packing to State Court
Thursday, June 26th, 2008
A chapter 13 can be dismissed for lots of reasons: there is no money to fund a plan, the plan cannot be confirmed, or (as I discussed yesterday) tax returns have not been filed. A chapter 13 may also be dismissed for another important reason: the case was not filed in good faith. A North Carolina debtor learned just that.
Debtor filed a chapter 13 after she was sued in state court for race, religious and sex discrimination by a former employee. She listed the employee’s claim for $1.00. She also listed no other creditors. The employee sought dismissal for a variety of reasons, all grounded in what she argued was the debtor’s bad faith.
Underestimating the employee’s claim was not the only problem with the debtor’s schedules. The debtor also neglected to include the thousands of dollars she later admitted to owing the attorney who represented her in state court. So her schedules were not accurate and complete. Strike one.
The debtor filed the case two weeks before the state court case was to go to trial. While that fact alone is not determinative, it is an appropriate consideration in determining good faith. Foul ball/Ball one.
It appeared from the facts that the debtor’s only purpose in filing the case was to frustrate the state court action. The debtor and her husband owned real estate (that had no mortgages or liens) worth close to $500,000 and further, they had no debt. Since she only listed one creditor, it appeared that the only reason why she filed was to defeat the state court discrimination case. Strike two.
Perhaps the most glaring fact working against the debtor was the fact that she had no income. She was not employed and didn’t yet qualify for Social Security benefits. The only household income is that from her non-debtor husband’s Social Security. There was also a savings account solely in his name. She never bothered to submit evidence demonstrating that there would be a stream of payments from the husband to her to fund a chapter 13 plan. Strike three.
Chapter 13 is for honest debtors, and this debtor is far from honest. The court agreed, and dismissed the chapter 13. Now the debtor will be left to fight her one creditor claim in state court. Her bankruptcy game is over.
In re Tippett, Bankr.E.D.N.C. 08-00542-8 JRL, May 8, 2008.
Where Did It All Go?
Thursday, June 19th, 2008
Keeping good financial records is always a good idea and if you’re filing bankruptcy, having good records on hand will help your case go smoothly. As married debtors in the Western District of Pennsylvania recently learned, not having them can lead to a denial of the Chapter 7 discharge.
The debtor, who was described as a “vintage automobile enthusiast who restored such vehicles and sold them to third parties,” was also the sole shareholder and president of a start-up company. The company borrowed (and he and his wife personally guaranteed) about $1.4 million. To obtain the loans, the debtor and his wife prepared financial statements.
According to the financial statements prepared in 2003 (which were signed with the acknowledgment that false statements could lead to criminal prosecution), the debtors stated that they had personal assets that totaled $2,185,000 and that their liabilities totaled only $328,000. The assets include a homestead worth $550,000, household goods and furnishings that were worth $75,000 and automobiles and automobile parts that totaled $750,000. The business failed and closed its doors before it ever started operating.
By the time the debtors filed bankruptcy, they had already lost their home in foreclosure. But according to their schedules, their assets had diminished to about $32,000 while their liabilities totaled about $1.5 million. Their household goods, which were worth $75,000 were now worth only $3,026. The automobiles, which were declared on the financial statements as being worth $300,000, were now worth only $3,140. The auto parts, which were previously disclosed as being worth $450,000 were now worth only $3,200. The schedules and statements also showed other discrepancies and raised other questions, but they are too numerous to list here. Needless to say, the US Trustee and some creditors had one very important question they wanted answered.
Barney Frank: Please Read This
I have a bone to pick with Barney Frank. Yesterday, a new multi-million dollar loan program was rolled out by HUD. Sharing in the local announcements were local Congressmen and other elected officials.
According to a Boston Herald report:
Boston.com reported the program a little differently, but in substance, it’s the same.
That smells a bit like “hope.” So I’m afraid the sound of this program ruffles my feathers a bit. But what compels me to write is this quote, which also appeared in the same Boston Herald report:
Really?
I’m going on record: Mr. Frank, I’m no anarchist I find this program offensive. So today, I write this blog to you.
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Tags: Bankruptcy, Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, Chapter 13, Commentary, Consumer Protection, foreclosure, Homes, homesteads and real estate, In the News, Mortgages and Foreclosures, Yep. We're in trouble.
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