Harassment by mail and phone; some that stops after filing bankruptcy and some that might not

During my first meeting with a new potential client, it’s not unusual for that person’s cell phone to be ringing repeatedly. Usually it’s call after call from bill collectors or collection agencies. Once we get a bankruptcy case filed, most such calls will slow down and then finally stop within a few days. This is because of what is technically called the “automatic stay” – a court order issued as soon as a bankruptcy case is filed which tells all the creditors to leave the debtor alone and to stop all collection efforts. I tell my clients to let me know if a creditor doesn’t seem to have gotten the word about the bankruptcy. It might be that there’s a creditor that wasn’t listed and that needs to be added to the creditor list.

Lately, however, I’ve been hearing from my clients about harassment which they are receiving from sources other than bill collectors. For one thing, there are disreputable credit counseling services which are sending out advertising disguised to look like letters from a bill collector. A client faxed me one not long ago, and it had me fooled. It certainly looked like something from a creditor to me. In fact it looked like a notice that the creditor had scheduled an arbitration hearing. I thought it needed immediate attention, so I called the number on the “Debt Mediation Notice.” I told them about the bankruptcy and asked them which creditor they represented. To my surprise they told me that they were a debt settlement service and they didn’t represent anybody. They weren’t trying to collect a debt. They wanted to help my client settle his debts, which obviously was not possible since a bankruptcy had already been filed.

So now when you go in debt apparently one can expect to be harassed not only by creditors, but by businesses that market their services to those who are in financial distress. I find such marketing to be a despicable practice, particularly when it is misleading. Since I saw that “Debt Mediation Notice,” I have been wondering how such organizations would get information on who is in financial trouble. I believe that this afternoon I may have received some insight on that.

I have just received two emails from an outfit that is offering to send out junk mail on my behalf which would be addressed to “homeowners in your area that are 60 or 90 days late on their mortgage payment and/or with late credit card debt balances of $20,000 or more.” They don’t say where they are getting the mailing list for that, but my best guess would be that there must be a credit reporting agency which is selling that information. If that’s legal, somebody ought to pass a law making it illegal.

Filing a bankruptcy only stops the stuff coming in from creditors and bill collectors. Other materials intended for the financially distressed are not affected. Another thing that’s not affected is junk mail from agencies that do the post-bankruptcy-filing counseling. Before filing a case I usually have my client signed up for the required counseling program, but this doesn’t stop aggressive and misleading mail advertising those counseling agencies. Some of the materials contain statements to the effect that the bankruptcy will be dismissed if the counseling is not completed. There may be some truth in that, but the counseling doesn’t have to be done with the outfits that are mailing out that sort of thing. I’ve had some clients get pretty upset upon receiving some of these materials, particularly elderly clients who aren’t used to how misleading some things can be.

So I have deleted those emails which offered to do a mass mailing for me to people who are in financial trouble. I would suggest that if you receive anything like that from one of my fellow lawyers, definitely don’t call that person. Run the other way.

Bankruptcy court NOT shutting down -at least not for now

I’ve been concerned all week over what to expect with the anticipated federal government shut down. The bankruptcy court is federal, so this shut down could affect me and my clients in a very direct way.

I went on line and tried to research it a bit around noon today. I found announcements that the Nevada bankruptcy courts were going to stay open, along with a statement from one of the bankruptcy judges in another state – Colorado if I recall correctly – stating that they would not be closing. In an interview a lawyer from New York said that they were going to try to keep essential services concerning life and property going, and the bankruptcy court would be in that category.

Then a few minutes ago the Minnesota bankruptcy court sent out the following email:

“In the event that a lapse in appropriations – sometimes referred to as a “government shutdown” – occurs on April 9, 2011, the United States Bankruptcy Court, District of Minnesota will remain open for business as usual, and hearings, trials and 341 meetings will be held without interruption. Applications, hearings and other matters may be scheduled with the Court as usual. Public access to the Court, in person and through the Court’s electronic filing system, CM/ECF, will not be affected.

If a lapse in appropriations continues after April 22, 2011, the Court will continue to conduct hearings and trial. As to continuation of services in the Clerk’s office, notice will be posted on the Court’s website at www.mnb.uscourts.gov.”

At least now I can tell my clients who are scheduled for hearing next week that we are still on and nothing has changed. I’m still a bit anxious about a few cases I was planning on filing toward the end of the month, however, for obvious reasons.

Warning: Extreme Danger

I keep getting these phone calls. Yesterday morning was the second time this week. They come in from several sources which are outside Minnesota, and perhaps outside the US. Friday morning’s call sounded like a guy from India. They start by asking if I am still accepting new cases, which of course is a yes. Then they say they have clients in Minnesota who need my help. After carrying on and trying to white wash what they are really up to for a few more minutes, it always turns out that they have some sort of an on line bankruptcy generating factory. They want to put my name on their work and have me file it for them here in the Minnesota district of the federal bankruptcy court.

In other words these are entirely on line bankruptcy filing services which never meet face to face with their clients. I strongly suspect that they never even speak with them on the phone either, but that they rely entirely on fill in the blanks forms submitted by their “clients.” I use forms too, but I can’t remember a client who understood all the questions; and I consider the forms to be just the starting point in what is going to be an intense and face-to-face process.

Bankruptcy is a process regulated by federal law. This should not be taken to mean, however, that it is exactly the same and entirely uniform all over the US. There are tremendous variations in what law applies and in how the laws are interpreted from state to state, and there are even variations with the states. There are subtle differences, for example, between how things are done in Minneapolis as compared to how it goes in St. Paul. You don’t want to be relying on someone who is not from here and hasn’t even been here.

In my opinion they are trying to automate a process that cannot be automated, trying to use a one-size-fits-all approach in a profession that requires an extraordinary amount of individual attention, and these people are extremely dangerous.

I told them that I cannot get involved in something like that, I do all my own work, and no I’m not interested.

That guy who called will keep on until he finds somebody who will take him up on his proposal. RUN THE OTHER WAY. FAST AS YOU CAN.

Best Minnesota Bankruptcy Attorney?????

I just got off the phone with a guy who claimed that he found me by typing “best minnesota bankruptcy attorney” into google.

I just tried it. Sure enough, my web site comes up first – at least in the organic results. I’m not counting the paid advertisements, just the regular search result listing.

I have no idea how this would happen. Some sort of a fluke I would suppose. I do my own web site, but I have made no effort to promote the word “best” as any kind of a key word. I might mention somewhere on the site that I use software called “Best Case.”

So that’s my curiousity of the day. I’m sure that result won’t continue for long. More later.

To the Guy I was supposed to call back around 12:30 PM Today

Your phone is disconnected. I tried to return your call at 12:30 pm today as I said I would; but between the time you called me around 10 am today and the time I tried to return the call, you apparently were disconnected.

Please try to call me again when you can. I know they say that the recession is behind us, but the fact your phone got disconnected today would seem to indicate that it is not over for you.

While not on the same level of magnitude, this reminds me of the time – not that long ago – that a repo guy towed my client’s car away from the parking lot in front of my office.

More later.

Loan Modifications, Meteorites and the StarTribune

Not long ago I was meeting with a client who was pursuing the mortgage modification process through the federal progam known as HAMP. We were close to filing a bankruptcy; and my client expressed concern that if the modification came through, the lower house payment would mess up the budget numbers we were about the file with the bankruptcy court.

I don’t ever mean to be rude. I certainly hate to discourage people. Sometimes I need to apoligize to my clients for the things I say. Sometimes I even try to apologize in advance, because the nature of what I need to say could be offensive – not to mention that my sense of humor is really backwards too.

BUT – without any advance apology – I told this particular client that I believed the chances of getting the mortgage modification were about the same as the chances of being hit by a meteorite.

I don’t claim to be an expert on mortgages or finance. I don’t provide legal advice on that subject. It’s enough trouble for me to keep track of the bankruptcy laws. A large number of my clients, however, have tried on their own to do these mortgage modifications. My estimate of his chances of success were based only on what I have seen others go through, not on any direct knowledge or expertise. Almost nobody I have known has ever been successful. Two clients, maybe three, have actually succeeded.

I was reminded of my talk with that client when I read the headline story about mortgage modifications in yesterday’s Sunday StarTribune. They had a front page story that continued in a full page layout on one of the inside pages. The reporter described multiple incidents where the lender encouraged borrowers by temporarily lowering payments, only to announce a year or so later that the modification was denied. Suddenly all the formerly reduced payments became due and payable immediately. Foreclosure often followed.

I have spent more time than I should have just now trying to put a link to that StarTribune story into this blog entry. I guess it can’t be done, because that article is designated as “premium content.” Its only available to subscribers. I could carry on at length just about that, but I better shut up now.

A Fresh Start for the New Year

I always keep an eye on the traffic to my web site. As the holidays approached last month, I could see that the traffic was dropping off significantly. On the Monday after Christmas, however, there was a sharp spike upward. Traffic stayed high all that week and then jumped even higher following the New Years weekend. The Tuesday after New Years Day was the highest traffic day I have had for months.

These traffic statistics plus the incoming phone calls and emails confirm that a lot of people are considering using the bankruptcy process to make a new start for the new year. That’s exactly what the bankruptcy laws were originally designed to do. Instead of putting you in debtor prison or turning you into a completely homeless person, you get to clear the slate of the old debts and start fresh – if you qualify.

The original version of the United States Constitution, the one they read this week on the floor of the House of Representatives, included the power to create a nationwide bankruptcy system. This is not a new idea. The founding fathers recognized bankruptcy as a thing of value, and wanted it to uniform for the whole country instead of being different in each state. When I was first out of law school back in the 1970s the process was extremely simple. A bankruptcy petition was less than 15 pages of material. There were few restrictions on who could file. The primary concern was whether there would be a lot of assets that could not be claimed as exempt. Since then every few years additional red tape and limitations have been added. Finally in 2005 there was a massive rewrite of the law which was so severe that we were wondering if the whole process may finally have been killed.

Well, if the intent was to completely remove bankruptcy as an option, it didn’t work. The American Bankruptcy Institute reports that bankruptcy filings jumped by 9% in 2010. Last week the Wall Street Journal carried a detailed article about the increase in filings. The article includes a graph showing bankruptcy filings between 2000 and 2010. On the graph one can see the spike in 2005 right before the effective date of the 2005 law, followed by a dramatic drop in filings, followed by a steady increase. When I saw news releases last summer stating that the first half of 2010 had broken some sort of a record for bankruptcy fillings, I commented that I didn’t think it could possibly have exceeded 2005. This graph shows I was right. Nevertheless, it is quite clear that filings are back up to pre-2005 levels.

So if you are considering such a fresh start, you certainly are not alone. I’d sure be glad to talk it over with you. I can do a screening over the phone which you give you a pretty good idea of what you qualify for. I don’t charge for those phone calls. If you just can’t seem to get ahead, you might want to look into it.

Get your bankruptcy for $187.00!

While checking how my website was being ranked on Google, I noticed an ad for an outfit that said it would prepare and file your bankruptcy for $187. Well, that would be a heck of a deal. It certainly piqued my curiosity.

So I went and took a look at their site. For one thing, I was wondering who the lawyer was who was doing this. I quickly found that the site provides no way of figuring out who is running the company or whether there is a lawyer involved at all. There is no address and no phone number provided. No names of any real person.

So I tired a Google search. I typed in who is and the name of the web site at Google. The first item on the list was the web site itself. The second item listed was a page at ripoffreport.com about these guys.

You can see for yourself what they have to say. You do yourself a disservice if you use price as your only criteria.

Stopping Garnishment by filing a Bankruptcy

A lot of people have had their bank accounts garnished this week. My phone has been buzzing about it. I think the law firm of Messerli and Kramer must have been cleaning up their garnishment backlog over this past weekend or something.

So now I am having to explain that I can’t just create a bankruptcy filing to stop the garnishment inside of a few hours or even a few days. To be sure I am getting it right, I need somewhere around six weeks, maybe more, to put one of these bankruptcy cases together. A bankruptcy petition is a document that usually exceeds 50 pages. There are hundreds and hundreds of questions to be answered. The penalty for not answering correctly can include criminal felony charges. It just is not the sort of thing that should be slapped together in a rush.

There is a procedure for an emergency filing. It involves filing part of the bankruptcy petition, and then being allowed 14 days to get the rest done. I have done this in the past prior to the passage of the 2005 “reform” legislation, but since then I have been of the opinion that it’s too hazardous. It’s best to let them garnish away and get the bankruptcy done properly.

The filing of a bankruptcy does stop garnishment – immediately upon the filing of the case. It’s really nice that way. But if you may be vulnerable to a garnishment, don’t let it go. Get to a competent bankruptcy lawyer and get started now.

No, I’m not associated with "Legal Helpers"

I got a fax yesterday from someone who said he had been given my name by an outfit called “Legal Helpers.” He said they were not attorneys and that they were helping him prepare his own bankruptcy without an attorney. He seemed to think that somehow I was associated with them. Please let the record reflect that I am not.

I have nothing to do with them. In addition I want to say that anyone trying to file their own bankruptcy without a lawyer is taking a very serious risk. To anyone who is trying to do that: please don’t rely on anything I have posted on my web site or anywhere else. Nothing written or provided by me is intended for do-it-yourself use, and trying to use my material that way could lead you to disaster. My web pages are nothing but a few general comments, not intended to be any sort of an exhaustive treatise.

Lincoln said it: “He who represents himself has a fool for a lawyer.”