Call to cancel your appointment. Help someone else stop the nasty bill collectors!

People are literally lining up to see me. In 2008 anybody could get in to see me within a week, but now it’s about twice that long.

This is, however, the second morning in a row where I have had a no-show appointment. I noticed not long ago that the Veteran’s Administration – when notifying someone of an appointment at one of their medical facilities – includes a few words about how they would appreciate it if those unable to show up would call in and either cancel or reschedule. They make a point that those who don’t call to cancel or reschedule are denying a fellow veteran of the opportunity to use that time for their appointment. The saying goes something like this: Help your fellow veteran – cancel or reschedule if you can’t get here.

I doubt that the person who failed to show up this morning has thought this through. He is not only messing up my schedule, but also denying an opportunity to the person I could have scheduled in this time slot. I have people begging to get in to see me. If I knew that the person scheduled for this morning wasn’t coming, I’d be meeting with someone else right now. At least two callers yesterday wanted to meet with me this morning. Best I could do was set up appointments for week after next.

Trouble over what to bring to the bankruptcy hearing.

I call it a “hearing.” The official name for the event which takes place about a month after filing a bankruptcy is “First Meeting of Creditors.” Since creditors hardly ever come, I have always thought this was a misleading name. It usually takes place at a federal courthouse in a room which looks very much like a courtroom. My clients are sworn in and questioned. If that isn’t a “hearing,” I don’t know what is.

There are certain things that a debtor is required to bring to this event. They include a picture ID, social security card, most recent pay check and bank statements covering the date the case was filed. It any of these items is missing, there is a big problem. Until the items are produced and given to the bankruptcy trustee, the whole process is held up.

Although I explain this as clearly as I can, both in direct conversation and in email, I seem to be having an increase in the percentage of clients who show up at the hearing without everything they need. One common problem is that my clients will assume that if a bank account has a negative balance, a low balance, or no activity for a long time, the trustee won’t want a statement for that account. I have recently started adding to what I used to tell my clients a whole extra spiel about these bank statements.

The trustee doesn’t care if the account has been there five years with only five dollars in it and no deposits or withdrawals. The trustee doesn’t care if the bank has quit sending statements and cut off on line access – which they sometimes do after a bankruptcy is filed when it’s a case where that bank is one of the creditors. If it’s any kind of bank account at all, and it was open on the day the case was filed, you have to have a statement for that account at the hearing, and that statement has to include the date of filing.

I am starting to tell my clients that if there is no other way to get a statement, please actually go to the bank in question and have them print you one. Even the banks that won’t send a statement, and who have cut off on line access, will still give you a statement if you go to the bank in person.

So that’s my rant for today.

Tucson till Tuesday

I’ll be out of town between Thursday November 5th and Monday November 9th, and will be back in the office on Tuesday morning, November 10th. I’ll be attending a weekend seminar in Tucson, AZ put on by the National Association of Consumer Bankruptcy Attorneys. They provide information that I can’t get anywhere else, and every once and a while I have to take a few days to soak it up as best I can. This time I will be doing a fairly intensive course that will be mostly about Chapter 13.

I have a pretty bad cold and I hope to get over it once I get to the desert climate. The high temperature in Tucson on Thursday is supposed to be 92.

Businesses and Personal Bankruptcy

I keep saying bankruptcy is like pregnancy. You can’t be a little bankrupt. When you file a bankruptcy, you are in it 100%. It is all-encompassing.

I just got off the phone – again – from a conversation with someone who wants to do a personal bankruptcy but who is the owner or part owner of a small business. Over and over again I hear from people who seem to think that because their bankruptcy is personal, it will have absolutely nothing to do with their business. They want their business to stay in a separate compartment and be unaffected and untouched.

First thing I usually mention is that the business is an asset and has to be listed along with all the other assets that the debtor has. A value has to be placed on the business, and then we have to figure out if it can be claimed as exempt. If it can’t be claimed as exempt, and if we are talking a Chapter 7 bankruptcy, then the business will become property of the bankruptcy trustee – or it will have to be bought back from the trustee if the debtor wants to keep it. As a practical matter, most of the small businesses I hear about are virtually worthless, so that claiming them as exempt is not much of a problem – but it is a question that has to be dealt with.

Second thing I bring up is that we will probably be required to list the business name among the names used by the debtor; and once that is done, it is very likely that the bankruptcy filing will be picked up by the Star Tribune and published in their Monday business section. Typical question at this point: “What if I just transfer the business to my boyfriend?” My answer is that then we would have to disclose the transfer, which could possibly be reversed as fraudulent; and the “doing business as” would be changed to “formerly doing business as” and it still gets published in the Star Tribune.

And if you have a business partner, the “doing business as” business name can get listed in the Star Tribune even though your partner is not filing any bankruptcy. Partners in that position tend to be irate to say the least.

This is not the only circumstance, but one of many, where the bankruptcy process does involve a some pain. Those considering bankruptcy should not expect that there will be absolutely no inconvenience.

"Avoid Bankruptcy" add on the radio this morning

The radio add starts out with a dramatization of a phone call where a job applicant is being asked about a bankruptcy by a prospective employer. Then the announcer cuts in and starts talking about avoiding bankruptcy by going to whoever was sponsoring the add. This angered me because I have never had a client complain to me about receiving such a call; and I hear lots of complaints about lots of things.

The bankruptcy statute has provisions prohibiting discrimination by employers because a person has filed a bankruptcy. My understanding of those provisions is that they prevent a current employer from changing employment status because of a bankruptcy filing. It is also my understanding, however, that they do not prevent a future employer from taking the filing into account. So at least in theory, a call like the one in the add is possible. I just don’t know anyone who it has ever happened to.

I do know people who have spent great amounts of cash on various debt management or debt consolidation schemes, only to ultimately wind up in my office doing a bankruptcy. When I am asked about where to go for credit or debt management counseling, I always say to avoid any outfit that you hear advertising on the radio, TV or other media. The best places to go are the nonprofit organizations such as Lutheran Social Services or Family Means. There are lots of crooked or questionable debt counseling operations. It is possible that they could do a lot of good, but great care should be taken in selecting such a service. If I were you I would avoid any service which does not have an office in Minnesota.

Just ventilating here. I think the add is way inappropriate.

Mortgage Modification Amendment Defeated in Senate

I just received an email from NACBA – National Association of Consumer Bankruptcy Lawyers. They say that the mortgage modification in Chapter 13 Bankruptcy amendment which NACBA was trying to get passed was defeated today in the Senate. The amendment in question was to be part of the Helping Families Save Their Homes Act.

I think that means it’s totally dead for this session of Congress. Had it passed, I was going to have to find a class or seminar to attend to learn what all the bill contained as finally passed. NACBA has it’s convention in Chicago at the end of this month, and I would have had to be sure that I got there. As it is, I can probably wait till next year without missing anything essential.

Recession Sing Along

While you are waiting to come down with the swine flu, you might want to have a good laugh. The funniest thing I’ve seen in a long time is a recession sing along at the Newsday web site. Click the following for a direct link to the animated video.

Maybe you have to be old enough to remember the West Side Story movie from the 1960s to fully appreciate this thing. I don’t see how the mortgage broker singing “I Feel Greedy” could quite have the full intended impact unless the viewer is familiar with the original “I Feel Pretty” from the movie.

A sales tax for filing bankruptcy? Some change!

It seems that the leadership of our Minnesota state legislature is considering slapping a sales tax on legal services. If they have to do that, I would suggest that there be an exception for legal services connected with bankruptcy filings. I just sent the following email to Minnesota State Representatives Kelliher, Sertich, Lenczewski and Benson; and to State Senator Bonoff:

I am a lawyer who does bankruptcy work. Many people who contact me cannot afford to file a bankruptcy the way it is. Adding a sales tax to my fee would make that much worse.
A sales tax for filing a bankruptcy. Some change that would be.

Warning about Debt Management Scams

I’m looking this morning at the March 15th tip of the day from Kim Komando. It’s a rather long article entitled Beware of debt management offers. She describes three different types of programs which one will find when running a Google search: 1) Debt negotiation, 2) debt consolidation, and 3) debt elimination. Personally I would like to add one more type: 4)debt management.

The third one – debt elimination – is always a scam. These are people who are trying to sell information that they claim is secret that you can use to make your debt just go away entirely. If anybody tells you they have that sort of a program, which sometimes is in the form of a magic form you can fill out and then send to the creditors, run away as fast as you can. There is no such program.

Debt negotiation or debt consolidation programs may or may not be legitimate. The Komando article suggests that you should make sure that any agency you use is licensed by your state and also accredited by one of two organizations, the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. I would also suggest that you make sure they are on the approved Department of Justice list for counseling programs acceptable for the pre-filing and post-filing credit counseling required by the bankruptcy statute. You can find a link to the Department of Justice list of approved bankruptcy counseling agencies on my web page at http://www.mn-bankruptcy.com/chapter7.html. At that page click on “Credit Counseling Requirement.”

My two favorite local places to go for real counseling are Lutheran Social Services and Family Means. Both have offices fairly close to my office. Both are non-profit. Both do debt management, my Item 4 on the above list. Debt management might involve negotiation, but not necessarily. They are not trying to make money out of your desperate situation. They are tying to figure out how to get you on a payment plan that will actually work. And if that is a hopeless idea for you, they will tell you and suggest that you talk to someone like me.

Credit Card Industry Profits Increased

I find myself looking at a 32 page report, complete with colorful graphs and charts, written by a gentleman by the name of Michael Simkovic. Mr. Simkovic was a fellow in law and economics at Harvard Law School between 2006 and 2007. He published this report last July. His subject is the effect of the 2005 “Bankruptcy Abuse Prevention and Consumer Protection Act.” Many of us call that BAPCPA (pronounced “bapceepa“).

The report begins by reminding us that supporters had claimed that ultimately this law would benefit consumers, because it would lower the cost of credit card debt. The data shows, however, that while credit card company losses decreased, and the card companies had record profits, costs to consumers actually increased. “In other words,” says Mr. Simkovic, “the 2005 bankruptcy reform profited credit card companies at consumers’ expense.”

No big surprise there. But thanks to Mr. Simkovic for laying out the details and proving it beyond a reasonable doubt. This seems to be very consistent with a series of articles published in the Star Tribune last October which stated, among other things, that BAPCPA has been one of the contributors to our current economic meltdown.