Archive for the ‘ Bankruptcy Aftermath ’ Category

I Don’t Do Magic

I don’t do magic (despite owning four bunnies that I could pull out of a hat).

I say this because I occasionally have a client who has heard of a legal maneuver to solve her problem, yet is too good to be true.  In a particular case, my client faces a foreclosure on her home after her bankruptcy is over.  She has no income, and therefore cannot modify her mortgage.  She has lived there rent-free and mortgage-free for three years.

She found a fellow named Jean Keating, who purports to have 50 years of experience at defeating foreclosures.  I read his published materials (and you can too herehere and here). My opinion: this is total gibberish.

I have no problem with, and indeed welcome, clients getting a second opinion.  That is, so long as the other opinion comes from a licensed authority.  Or someone sane.

Mr. Keating suggests that I present a “letter rogatory” to my client’s bankruptcy court.  A letter rogatory is an ancient procedure whereby one court asks a foreign court to subpoena someone in, say, Argentina.  It doesn’t do anything in a local bankruptcy court.  The foreclosure will go on and I can’t stop it.

Keating’s arguments sound very much like the claptrap I occasionally heard at the IRS – such as characters who believed a fringe on a flag meant the court was illegitimate, or that Ohio wasn’t technically a state when the 16th amendment was passed, or that the government has no authority and therefore, the government may not tax income.

Unscrupulous people sell foolish hope to desperate folks.  I hate delivering harsh reality to my clients, but it is part of what I do.  I could charge my client and try to follow Keating’s procedures, but I know that it won’t save her home.  Failure here might hurt my reputation.  More importantly, it would hurt my character: I cannot, in good conscience, take money to do something that I know won’t work.  In short, I am merely an attorney, not a magician.

Wells Fargo: Worst Bank EVER, Part III

I took a client through a chapter 7, and got her a discharge.  She and I were done, and she had no more personal debt. Then she sought a loan modification with Wells Fargo.

I knew that she was doing a loan modification because Wells Fargo sent me dozens of letters saying that this is how her loan mod is going, that they are communicating with me because I am the attorney of record, and please forward the correspondence to the client.  I wrote back five times saying, in effect, talk to her directly because I don’t represent her in the loan modification, and yes, I’m forwarding your correspondence to her anyway.

Then they sent a letter saying that because they were trying to get in touch with me and hadn’t heard from me, that they were shutting down the loan mod.  I went ballistic, and let the bank know how upset I was.  See Exhibit A. I also called the Wells Fargo functionary writing to me, left outraged messages, and copied the bank president.

Three more letters arrived in the next week: “please forward to your client, as we can’t talk with them directly.”  I had the brainstorm of sending them an invoice for my time.  See Exhibit B.

This got Wells Fargo’s attention.  Someone called me to tell me that the loan modification was going just fine with my former clients, it wasn’t being dropped, and that the bank was indeed dealing with them directly.  “Ignore our letters.”  They just don’t have the capability of turning off the automatic stream of letters.

They also said that they had gotten my invoice, were considering it, and would give me an answer.

The bank’s ultimate answer floored me. See Exhibit C and the check.

I’ve worked in big organizations before, and there is a lot of waste and mismanagement. This one gives me little confidence in the way that Wells Fargo Bank is being run, even if it did help my bottom line.

Who Really Owns Your Debt?

I deal a lot with bill collectors.  Here is an eye-opening description of how their business works.

Settling a debt can be . . . .unsettling.  If some unknown company collects on a credit card debt that’s five years old, how do you know that the collector actually has the right to collect that debt and declare it done with?  I always ask for a written settlement contract specifying that the collector has the right to collect.  It’s also important to get a company name and physical address.

Unlike these “investors,” I would never pay a cent for debt that was more than three years old.  The statute of limitations runs out on it, and the collector no longer has the legal right to collect.  The debt collector, though, sees a moral right to collect, and no law stops him from collecting on a debt that is decades old.

Education is the best defense against these people.  If you need help from debt collectors, give me a call.

Two Good Reasons to Avoid Post-Bankruptcy Loans

A client sent me a letter he got from a car dealership touting the financing he can get even though he is currently in bankruptcy.  You can find a copy of the letter here.

How does a car dealer think of a person going through bankruptcy? Desperate? A victim?  I do not see any financing terms here.  However, I would almost guarantee that this is not a good deal for anyone.  I have seen financing companies impose 8 percent interest on car loans – per month.  That’s almost 100 percent per year.  The letter suggests getting rid of your current car and getting a new one, so that you can re-establish your “good” credit.

A good credit rating, of course, just means that you will pay less to borrow money in the future.  I recommend that my clients avoid borrowing a lot of money after bankruptcy, because borrowing got them into trouble in the first place.  When there is a real need to re-establish credit, there are better ways than to buy a new car on credit.  Take a look at this article for better ideas.

So the first good reason to avoid this solicitation is because it is unlikely to be a good deal.  The second reason? This guy is in Fontana. I don’t care if you are bankrupt; I don’t want my clients to need to go to Fontana for a car.