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.”

Median Incomes Drop – Judges Require New Checklist

Effective November 1st there are new median income numbers for prescribed by the US Trustee’s office. The only state I have looked at is Minnesota. I don’t know if median incomes rose anywhere else, but here they seem to have dropped significantly. I am now in the process of reviewing the cases I am working on to see if these new numbers will create a problem.

There are a few cases I was hoping to file before the end of this month. For most if not all of them there is still something I need my client to provide, such as a counseling certificate, before the case can be filed. I will be trying to contact all of those clients to emphasize how important it is to not delay. Even if you can get by with the new numbers, the cases will certainly look better if we can use the old pre-November median income table. I have already posted the new median numbers on my Chapter 7 page.

I mentioned in my last post that the judges of the district were unhappy with many of the younger new lawyers who are filing bankruptcies but making all sorts of mistakes. They are also displeased to learn that many clients feel abandoned by their lawyers after the case is filed. The judges and the clerk of court are getting calls from debtors who can’t seem to get their lawyers on the phone. In other cases the clients have never actually met with the person who is supposed to be their lawyer, but have only worked with other staff in that lawyer’s office. To try to remedy some of this the judges have provided a new checklist – one for Chapter 7 cases and one for Chapter 13 cases. It lists what the lawyer is supposed to be responsible for and what the debtors are responsible for. Each list runs about five pages. A copy of both lists can be found on my site under a link labeled “responsibility forms.” I guess I don’t mind the forms, although they do create more work. I just wish they weren’t needed.

Two Days at the Bankruptcy Institute

Just spent all day today and all day yesterday at the Minnesota Continuing Legal Education’s Bankruptcy Institute. For me the best part was this afternoon, a presentation about the preparation and amendment of Chapter 13 plans.

It was also just good to reconnect with some of my fellow bankruptcy lawyers. Things are getting really complicated out there. Some of the judges and trustees were expressing frustration with a number of younger and inexperienced recent law school graduates who have not been acclimated to the level of professionalism that’s required. Apparently there is some concern that clients are being abandoned by their lawyers.

To try to combat this the judges of the district are about to order a new procedure – from my point of view just another form that must be completed before filing. This one is going to be a long list of duties and responsibilities – one list for the lawyer and the other for the client. It’s going to be food for conversation to say the least.

I’ll have more to say about the new form once I have actually started working with it.

More later.

Fall Colors on the Road to St. Cloud

I had a hearing (meeting of creditors) in St. Cloud this past Thursday. I go there fairly regularly, because that’s where the initial bankruptcy hearings are for residents of Wright County – and quite a few of my clients are from Wright County. I’m really not that far from the Wright County border. Particularly since the most recent straightening of Highway 12, getting here from places like Delano, Montrose and Waverly isn’t that hard.

That hearing was fairly early in the morning, and I got to look at the fall colors along I-94 in the early morning sun. I think the low angle of the sun in back of me as I headed northwest contributed to the drama. If those colors weren’t at their peak, it had to be about as close as I’ll ever see. Every time I came around a curve to a fresh view of reds and oranges, I was thankful that I had an excuse to be making that drive.

The hearings in St. Cloud are at the Red Cross Building on St. Germain St. It does not at all look like a court house. In fact I would say it’s a strange place to be having hearings like that. I had my camera in the car and I was thinking of taking some pictures of the place for my web site. By the time I was done with the hearing, however, I had forgotten about taking pictures. I was concentrating on the case to the point that I didn’t remember anything about the picture idea until I was half way back.

The drive southeast from St. Cloud allows one to contemplate the railroad which runs parallel to the freeway. Burlington Northern Santa Fe I think. Until a few years ago there were the remnants of some sort of railroad-related telephone or telegraph lines along that railroad. Every now and then as one drove along an old pole could be seen in the trees or bushes along the railroad with a few wires draped over it and hanging to the ground. Those seem to have all been removed now, because I don’t see them anymore. One time I spent a few minutes on Google trying to see if anyone had posted anything about the history of those old poles and wires, but I found nothing.

As a kid I remember that all railroads had lots of telegraph or telephone wires running alongside. It was explained to me, I no longer remember by who, that those were private railroad communication lines so they could keep track of where the trains were and keep them from running into each other. Obviously they’ve found a better way to communicate and don’t need the wires anymore. I’m curious about it, but I can’t seem to find a write up on this topic anywhere. If anybody knows of a good place to look for such info, please let me know.

Well, that was a good ramble. More later.

Real Clients and Fake Clients, Real Friends and Fake Friends

Earlier this week I was meeting with a client who was in the process of hiring me to represent her in the Chapter 7 bankruptcy process. As we were both signing the retainer agreement, I explained as I usually do at that point that now I was her lawyer. This means she has my permission to use my name if she needs to in the event that creditors manage to reach her by telephone.

These days most of my clients are pretty good at avoiding the calls from creditors by just watching their caller ID. It’s not unusual to be receiving between twenty to fifty calls a day from bill collectors by the time someone finally decides to come see me. I’ve carried on before about how people tend to wait too long and most should have come in sooner. Some of the creditor calls are hard to avoid, however, because they are tricky and disguise their caller ID. One who called me recently had a caller ID that said “Swiss Miss.”

So I tell my clients when they hire me that when one of those creditors gets though on the phone for whatever reason, my advice is to say something like this: “I’ve hired a lawyer to represent me in Chapter 7 bankruptcy. He’s instructed me to not speak with you, to not say anything, except that his name is David Kelly and his number is 952-544-6356. If you have questions you should call him. Goodbye.”

Once they hear this and confirm that it’s true – by calling me – many of the creditors will stop calling. As far as I know there is no legal requirement that they do so until we actually file the case, but as a practical matter they know that they might as well focus their energy elsewhere.

When I went over this with the client who I referred to above, she made a remark to the effect that she wasn’t necessarily very happy about being able to say I was her lawyer. She wished she had not needed to hire me. I replied that, if this was any comfort, there seemed to be quite a few people out there who were happy to claim I was their lawyer even though they had never met me.

Yes that’s right, I have real clients like the woman who just hired me, and I also have fake clients. Besides the calls from creditors to confirm that I’ve been hired by my real clients, I am also receiving calls from creditors who have been given my name by people I have never heard of. There tend to be about two calls a week like that. I guess they must think I’m good if they want to take my name in vain like that.

So I said to my new client that I had real clients and fake clients, and at least she was a real client. To that she replied, “well I have real friends and fake friends.”

I thought my new client’s remark was quite profound. At least it seemed profound to me. I asked her permission to quote her here, anonymously of course.

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