Common Mistakes Made by Bankruptcy Filers and Their Attorneys - #8

  8. Laziness can lead to disaster for bankruptcy filers.

We all have a lazy streak in us. It's just human nature. We want to get a job done with the least amount of effort. The attorney, who may have filed hundreds or even thousands of bankruptcies, begins to see them as routine or fitting into a common mold. So he begins to assume facts or take the word of the client rather than confirm them on his own. To do a bankruptcy correctly takes a lot of time and effort. Many times it may seem like a thorough review of every pay stub, bank statement, loan document or tax return is  a waste of time, but often this diligent scrutiny pays off and a serious problem can be dealt with rather than left to chance. 

Clients are lazy too. They hate to dig back through their records, if they even have any, to get the information needed to properly fill out the bankruptcy schedules. They often figure that if they don't have a record of it, nobody else will, so they can forget about it. Unfortunately, it doesn't work that way. The debtor has an obligation to fill out the schedules completely and the burden is on him to find the records if he doesn't have them himself. This means requesting records from the bank, credit card company or the IRS. 

I am amazed at the looks clients give me when I tell them I need a complete list of all their personal property along with a fair assessment of the market value of each. They often just stare at me like I have told them they have to travel to the moon for their 341 meeting. In actuality preparing a personal property inventory shouldn't take more than an hour or two and is a handy thing to have around anyway if you ever have a fire or other casualty loss. 

Another priceless look on a client's face is when you hand him his completed petition and schedules and ask him to review them carefully. Of course, the completed petition, schedules, statement of financial affairs, matrix, and means test can be several inches thick. The reality is most clients won't have the patience to read every question and then review his answer to for accuracy and completeness. This means the attorney must sit with the client and read every question out loud to make sure he understands them and has answered them correctly.

Clients may also be reluctant to ask questions because he really doesn't want to know the answer if it means he will have to do more work or disclose things he'd rather not deal with. He mistakenly believes his ignorance will be an excuse if the facts are later discovered. In this case the attorney must observe the client carefully so he can pick up on the signs of possible omissions that might come back to haunt both of them. 

Attorneys and clients are often tired and frustrated with the complexity of a bankruptcy filing and there is often a persistent urge to ignore possible irregularities or unwanted complexities. These urges must be resisted.

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Common Mistakes Made by Bankruptcy Filers and Their Attorneys - #5

5. Ignoring Creditor Collection Attempts after Filing and Discharge.

There are a number of mistakes that debtors and their bankruptcy attorneys make that often cause  problems after discharge or after their chapter 13 is confirmed. These mistakes often make it difficult to enforce the discharge or the automatic stay and can cause the debtor to suffer a serious financial loss.

It’s human nature to avoid embarrassment and conflict, if at all possible. So, it is not understandable that Debtors would ignore calls and letters from creditors after filing bankruptcy. They know the debt is no longer collectible, so they throw away the collection and letters and ignore the calls that keep on coming after filing and even, sometimes, after a discharge is received. This, however, is a mistake.

Some creditors intentionally ignore a bankruptcy notice hoping that the debtor can still be coerced to pay. Whether it is to buy peace, ease feelings of guilt, or believing it will help improve their credit, debtors will often pay discharged debt even though they have no obligation to do so. The problem with ignoring these illegal contacts after bankruptcy is that the creditors will just continue to harass the debtor with calls, letters, by illegally pulling their credit reports, and they may even report the debt as active and collectible to the credit bureaus.

These acts may prevent a debtor’s credit score from properly rebounding after filing bankruptcy and threaten the fresh start they were expecting. What all debtors should do is keep every letter or email received from creditors, document each phone call carefully and report these contacts to their attorneys.

There are various laws that protect bankruptcy filers from these types of illegal contacts, but they can only be successfully prosecuted if there is evidence to show the court and jury. The actual letters, telephone records and documentation of damages are all needed to prevail in bankruptcy court, in state courts, or the federal district courts.  But nothing will happen unless an attorney who handles these type claims is retained and he has the proof necessary to prevail.

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Common Mistakes Made By Debtors and Their Attorneys

There are a number of mistakes that debtors and their bankruptcy attorneys make that often cause problems after discharge or after their chapter 13 is confirmed. These mistakes often make it difficult to enforce the discharge or the automatic stay and can cause the debtor to suffer a serious financial loss..

 

2. Failing to monitor returned chapter 13 payments after confirmation.

 

This most often occurs with property taxes. A debtor files bankruptcy and includes the home loan and delinquent property taxes. The plan is confirmed and everything seems fine. But a year or two down the road the mortgage company notices the property taxes are delinquent and elects to pay them. When the chapter 13 trustee sends a payment to the taxing authority it is returned because the mortgage company has already paid it. The following year the debtor gets a notice that his house payment has increased dramatically because there is an escrow shortage. The Chapter 13 Trustee usually sends the attorney a letter advising him that the payment was returned, but these letters are often ignored. If two or three years have gone by it’s a very difficult problem to resolve because the payments that should have gone to pay taxes are diverted to unsecured creditors. If this situation is handled immediately upon receipt of the trustee’s notice it is a problem that can be solved quickly without any permanent damage.

 

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Common Mistakes by Debtors and Their Attorneys

 

There are a number of mistakes that debtors and their bankruptcy attorneys make that cause serious  problems after their discharge or after their chapter 13 is confirmed. These mistakes often make it difficult to enforce the discharge injunction or the automatic stay and can cause the debtor to suffer a serious financial loss..

1. Failing to Send Notice to Late Added Creditors



One of the mistakes attorney's often make is failing to send the bankruptcy notice to creditors who are added after the initial filing. This can make it difficult to enforce the discharge injunction. We find this all the time. A new creditor is added and since the bankruptcy notice has already gone out the creditor doesn’t get notice of the bankruptcy. Although the creditor may get other notices or a copy of the discharge, the creditor has been deprived of its opportunity to attend the 341 meeting or file a proof of claim. Although the debt will probably still be discharged it will be hard to successfully prosecute a contempt action if the creditor continues to try to collect the debt. Invariably, the creditor will claim they didn’t get notice of the bankruptcy and we won’t be able to prove otherwise. The solution would be for the attorney to send the bankruptcy notice to late added creditors by certified mail, return receipt requested, so there will be  proof they got proper notice of the bankruptcy filing.

 

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Don't Mess With Texas Consumers!

Tell It Like It Is

 

 

 

 

 

 

 

 

 

 

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Consumers Need to Monitor Their Credit After Bankruptcy

It is a common belief that bankruptcy ruins a consumer's credit, but that's not necessarily true. The fresh start consumers are searching for when they file bankruptcy can apply to their credit too. When a consumer files bankruptcy all of his existing debt should be reported as "discharged in bankruptcy" and "balance -0-." If that actually happens, filing bankruptcy gives the consumer a clean slate. Sure, the bankruptcy is a negative, but its impact on the consumer's credit score will diminish in time. This gives the consumer an opportunity to re-establish their credit fairly quickly--often in six months to a year. Sure, a consumer won't have perfect credit with a bankruptcy on his record but his credit score will often be high enough to get car loan, rent an apartment or even refinance a home at market interest rates.

 

Unfortunately, this won't happen automatically. Creditors often do not report the bankruptcy to the credit bureaus, Experian, Transunion, and Equifax, correctly which will prevent the credit score from recovering the way it should. This is why is imperative for consumers to monitor their credit after bankruptcy. This can be done with a credit monitoring service or simply by going to AnnualCreditReport.com and doing it themselves.

For our clients it is part of our service. We help them get copies of the credit reports and then review them to be sure the reporting is correct. If it turns out to be wrong we get it corrected and do our best to make the offending creditors pay our fees. Either way, our client's never pay us a dime out of pocket.

For information on how to obtain your credit reports follow this link or, if you would like our assistance in getting a fresh start on your credit, visit our Website.

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Creditors Can’t Seem To Stop Illegally Accessing Credit Reports

It is a perplexing phenomenon but some creditors can’t stop illegally pulling consumers’ credit reports even after they are caught doing it. On numerous occasions we have sued a creditor for illegally accessing our client’s credit reports after their debt was discharged in bankruptcy. Once the debt is discharged they have no legitimate reason to be pulling them, yet sometimes before the ink on the settlement agreement is dry, they start pulling the credit reports again. In a few cases we have had to sue them three times before they finally stop. And it’s not because the penalties are small. Damages can run $500 to $1500 per illegal pull, plus actual damages, costs and attorney’s fees. If anybody has an explanation, let me know.

 

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Bankruptcy: Chill, It's No Big Deal

       Chill, It's No Big Deal!

Get a nasty letter in the mail?
Send us money or we’ll give you hell?
Don’t lose your cool, don’t get upset
Chill, it’s no big deal

Creditor called and wants his bread?
Got to have it now, no more said?
Don’t get upset, don’t be depressed
Chill, it’s no big deal

Constable came knocking at your door?
You’ve been sued, can’t take no more?
Take a deep breath, don’t despair
Chill, it’s no big deal.

Didn’t pay your taxes? Owe a lot?
Accounts been seized, checks are hot?
Take a walk, get some air
Chill, it’s no big deal.

Rent is late? Landlord lookin’ for the cash?
Wants the rent or you’re out on your ass
Take two aspirin and go to bed
Chill, it’s no big deal

‘Cause when your world starts to crumble
Your lawyer will make sure you don’t stumble
He’ll smile as he takes your cash and tell you
Chill, it’s no big deal

Chill, It’s No Big Deal
William Manchee, March 2009

I wrote this poem initially to get across the point that it's advisable to get an attorney immediately when you get in trouble. Better yet, get an attorney when you first smell trouble. Too many people wait until it's too late to take any preventative or defensive measures before they seek legal advice. The consequences of that strategy can be devastating.

But there's another message in the poem that is important in today's economy. When you lose a job or take a pay cut, remember, we're just talking about money. Don't let your temporary financial difficulties destroy the most important things in you life like your marriage, your family and your integrity.

If bill collector's are hounding you, your rent is late, or the repos man is looking for your car, go see your attorney and discuss bankruptcy. Millions of Americans file bankruptcy every year. It's not a disgrace. It's a fact of life in our credit driven economy. And bankruptcy doesn't mean you lose everything. In fact, most people don't lose anything but their debts. Chapter 13 is a great way to catch up on your house payments, cure a default on a car loan, or pay your delinquent taxes.

Remember, it's just money. Chill, it's no big deal!