Los Angeles Bankruptcy Blog

Does credit card management or debt consolidation work?

While there are some good arguments about why it might work, my experience is that there are many reasons to avoid credit counseling and consolidation.

All it does is delay the inevitable… kind of like paying your mortgage with your credit card.

You are stuck with your debt if you can’t budge it.

I see a lot of people in my office asking about filing bankruptcy. More often than not these days, it’s a realtor or mortgage broker or loan officer who has lost income. Oh, and they have two investment houses and those investments aren’t panning out. As I said, this happens a lot nowadays.

Yesterday, a gentleman who is from the above template strolls in. I’m very sympathetic to his plight. He might have to let two properties go, his wife’s income barely pays the mortgage where they live. At the end of our time together, I ask, “have you sold, given away or transferred any valuable property in the last four years?”

The answer? Yes, I sold a house. How much did you get? $250,000. No, I mean, how much did you clear from the transaction after the mortgages and liens were paid? Same answer: $250,000. Great! And you purchased your current home that same year… how much of that did you put down? Zero down. When did this happen? Less than two years ago: 2006. And where is that quarter-million dollars now? Home improvements. You must have a lot of receipts from Home Depot. The Chapter 7 Trustee will be wanting to see all of them. He looked at me, puzzled.

Who gets a ton of money from selling a house and goes zero down on their new home and can’t show where the gobs of cash went? Is it possible he’s telling the truth? Sure. But if he were to file bankruptcy, you can bet the US Trustee will be all over him.

It’s just amazing to me.

Every now and then, someone asks me, “why would you want to be a Los Angeles bankruptcy lawyer?” I mean, all of my clients don’t have a lot of money, they have real problems and need help.

Actually, that’s the reason: people need help. It’s nice to make a difference in people’s lives.

Also, to be a bankruptcy lawyer means that you really have to know about other areas of law that crossover. It’s not unusual to have to unravel issues real property, wills/trusts and estate planning, and just this morning, there’s a very basic contract law dispute that came up. And this doesn’t even mention the community property, since a lot of bankruptcy cases coincide with a separation or divorce.

So, the practice of being a bankruptcy attorney is never boring or dull, as you get the “I’m getting a divorce, but we transferred the house to someone and used my uncle’s inheritance to put a down payment on a new house but we never finalized the offer” situations. Discuss.

And it’s really neat to help people.

People think that being a bankruptcy lawyer is easy, just about filling in forms. Here is how I spent part of my day on Friday:

• Preparing an Objection to Proof of Claim for a Chapter 13 case where the pro se creditor thinks they should be a priority debt compared to a general unsecured non-priority claim. Of course, I needed a Declaration to go along with this for my client, the debtor.
• Researching and negotiating a claim for a Chapter 13 bankruptcy where the Los Angeles Chapter 13 Trustee thinks that it might be unfair discrimination between claims in the same class to pay one nondischargeble claim 100% compared to the others.
• Responding to a letter from the United States Trustee questioning whether a client should be entitled to a Chapter 7 discharge based on prior income.
• Replying to a creditor who is very curious about massive credit card spending the debtor in another Chapter 7 case did prior to filing bankruptcy. There may be an adversary proceeding here on 11 USC 523.
• Answering a bunch of questions from existing clients who, after hiring me to let ther house go in foreclosure during the bankruptcy, are now suddenly prey to realtors and real estate agents who want to “help them” with a quick sale and why bankruptcy is better than a short sale.
• Personally reviewed a bankruptcy petition (you know, the simple bankruptcy forms) with a client before we both signed it and I file bankruptcy for him.
• Preparing for court on Tuesday where I’m helping three clients get their cases “confirmed” at their Confirmation Hearings at the bankruptcy court in Woodland Hills. (do we have the mortgage declarations? the plan payments? did we satisfy the Chapter 13 trustee’s requests for business expenses and short form?).

And I didn’t even fill in one free bankruptcy form.

People don’t realize that practicing bankruptcy law is a bit more involved than, say, filing taxes. I love it, and I wouldn’t give it up for anything in the world.

It kind of goes without saying, but what the heck? Let me just throw this out there: If you need a Los Angeles bankruptcy lawyer / attorney to help you file bankruptcy and give you quality professional help with your credit card debt, foreclosure, wage garnishment or whatever, I can take care of that for you. Just call (888) 54-BK LAW or (818) 908-2018 for the next step.

The US House of Representatives just had a hearing on the role of the US Trustee. I have a new hero: Hon. A. Jay Cristol:

“[T]he U.S. Trustee is not one dog. It is a pack of dogs.”

See Attorney Hale Antico (that’s me) in the new video.

I’m curious as to what’s on your mind. Ask me your questions at

888.54.bklaw at gmail dot com

Interesting and common questions will become the subject of an upcoming article, so make sure you check back or add us to your rss or del.icio.us !

Did you know that you can subscribe to this blog with your favorite newsreader (rss, xml) and have the feeds come to you? Just go to the left column of this page where it says RSS Feeds (posts) and either click or copy the URL and add it to your favorite news reader.

http://www.msnbc.msn.com/id/20464621/

I’m seeing people who borrow from the credit cards to make their mortgage payments.

At some point, that strategy will stop working.

The result contributes to the defaults of credit card debt.

Ditech, the famous mortgage lender with its slick TV commercials these past years, has a new slogan: “People are Smart.” This replaces the bumbling loan guy who is always cursing, “lost ANOTHER one to Ditech!” Foiled again!

But why did he always lose another one to Ditech?

And why is a mortgage company making a blanket statement about a trait concerning all of humanity? After all, if everyone was smart, that would be just normal. Kind of like Lake Woebegone, where all kids are smarter than average.

But I digress from my point.

Why?

I have a theory. Ditech doesn’t really think you’re smart. Or me either. They think you’re a sucker for their business tricks, and will do what it takes to get you into a loan.

Sometimes, these loans aren’t what’s best for you.

They look around, and see New Century and their subprime company filing bankruptcy. They also see Countrywide having good credit customers defaulting. Foreclosures are up nationwide.

So what to do? They’re convincing and flattering a future jury pool that, golly, your eyes… they are like pools of clear water. We never meant to trick anyone to get into a bad mortgage. See? We think you’re smart! Everyone in the whole world who can see our ads is smart. We don’t think you’re dumb “marks” for our ploys, so why would you come after us?

Of course, this is all just my opinion. But can you come up with a better explanation for such universal flattery having nothing to do with the nature of their business?

According to this blog site, bankruptcy blogs will see an increase in traffic in the upcoming years.

“… will you take a post-dated check for your services?”

Of course, to succeed here, I have to do all the work in less than 3 days, putting aside clients who have paid me to do the work on their case.

So, if I say “yes,” I’m going to trust that this check will be good. But I won’t know until two weeks from now. The potential client only has the resources to muster up some of the funds, but I’m exposed here. What if the check is not good? Why should I take that chance?

If I say “no,” will the prospective client find someone else that will take on an emergency case on a rush basis and then on faith alone see if the money is good in two weeks?

Again, we want to help people, and there were lots of warning signs before three days prior to a foreclosure sale that it’s going to cost money to save the house. The guy missed all these signals, hasn’t paid his mortgage in 3 months, and has been living “rent-free” for a while, with no money saved away.

What would you do?

One of the ways a bankruptcy attorney like me can help people file bankruptcy inexpensively is by taking payments as clients make them. I’m flexible in this regard, and figure once you make the first payment, you’re going to want to finish.

Some people want to pay as quickly as possible, and if they have access to a relative or friend who has the money for a typical Chapter 7 bankruptcy, great. We’ll file your case in a week or two.

On the other hand, if you’re like most people, you don’t have over a thousand dollars for an attorney fee just sitting around. That is why we break up payments into halves, thirds fourths or whatever.

How much to start? Well, really, all we need is $200 and I’m your lawyer. You can pay $200 a month, every paycheck or just whenever you have it. Then, once there is no more balance, let’s sign papers and file your bankruptcy.

Bottom line: We’re flexible, and will do whatever we can (within reason!) to become your bankruptcy attorneys. I got into this field to help people, not get rich. So, your fresh start is a goal within reach.