What does a bankruptcy debtor look like?

Bankruptcy clients don't look or act any differently than anyone else. They hold jobs, have kids, are retired, go to church, belong to clubs, volunteer. People who file for bankruptcy come from every walk of life. They are your neighbors, your co-workers, your friends, and people you pass on the street. They are poor and middle class. They are renters, home owners with modest homes and luxury homes. I could go on, but you get my point. Especially with the economy the way it is today, you just can't look at a person to see if they are bankruptcy. Not even yourself. Sometimes the only thing standing between someone who is bankrupt and not bankrupt is a few paychecks.

Most of my clients would rather do anything than talk to me (a bankruptcy attorney), so they put off calling for months, often years. The one thing that almost all my clients have in common is that they are good people who would pay their debts if they could. Almost every one who comes in tells me that they never imagined that they would find themselves facing bankruptcy. Most have tried everything they could not to consider bankruptcy, including trying to solve their problems but only digging their financial hole deeper. There is always a final straw, a feeling that they are descending a staircase to nowhere. Help may be found in bankruptcy. It provides a fresh start to many. It eliminates debts they may never be able to pay. Until you speak to a lawyer, you won't know if it will help you. Don't wait until you are at the bottom of that staircase. Ask for help.

NC Attorney General Warning About Fake IRS Contact

New Alert from NC Attorney General Roy Cooper warnng against giving out any information that appear to be requests from the IRS.

Attorney General Roy Cooper Warns North Carolina Consumers about Fake IRS Emai


SCAM: Consumers in North Carolina have received phishing emails that claim to come from the IRS. The phony emails tell people that they have qualified for an economic stimulus refund and can receive their money more quickly by providing their bank account information. The phishing emails include a link to a website where people are asked to provide their bank account and other personal information, supposedly so their economic stimulus refund can be deposited directly into their account. The fake emails even tell people that their refund will be delayed if they don’t provide this information.

TIPS: The IRS is not contacting people about their refunds by email, so don’t take the bait. Always beware of emails that ask for personal information such as your Social Security Number or bank account number. Many times, these emails contain the logos of real companies to make them more believable. Don’t be fooled by them. Never reply to these emails or click on any links. If you do respond to a phishing email, contact your bank and credit card company immediately. Finally, it’s always a good idea to use updated antivirus and firewall software on your computer.

If you’ve been the victim of a similar scam, please contact Attorney General Roy Cooper’s Consumer Protection Division for assistance at 1-877-5-NO-SCAM.

This message brought to you on behalf of North Carolina Attorney General Roy Cooper.

*** Visit our Identity Theft website at www.noscamnc.gov ***

On NPR this past weekend was a program called "This American
Life" with Ira Glass. They had an incredibly detailed, interesting
account of the subprime/housing mess, including the terminology and
lots of statistics, and how consumers and Wall Street bankers accepted the
huge risks.

Below is a link to the show, "355: The Giant Pool of Money" which you can
play to hear:

Link to This American Life

Why You Should Be Thinking About Christmas Now

Christmas isn't something that most people think about in April, but they should. It is amazing how much people spend each year buying presents, and a lot of it goes on credit cards. In fact I believe a major reason people overspend is because it is so easy if you are using plastic to 'pay' for it. I am filing bankruptcy cases now for people and see the Christmas charges on the statements and while the purchases may not be extravagant, many purchased more than someone in financial stress should have paid.

For people who don't file bankruptcy to get out from under the debt load, it will take years to pay off those 2007 Christmas purchases. If people started a little savings account now and put $25-$50 per pay check into the account, there would be cash to buy presents for the next holiday season. Maybe you wont' be able to afford anything big, but the security of knowing that those presents won't be causing your debt obligations to climb will be the best present you'll get.

Mortgage Crisis

You can't turn on the TV or open a newspaper without seeing another report on the mortgage crisis. This isn't just the problem of the people whose homes are foreclosed - this problem is affecting everyone. Homes are being foreclosed upon in unprecedented numbers, and neighborhoods everywhere are seeing home values dropping as more houses flood the real estate market. Lenders have less money to loan out, and even borrowers with good credit are having problems finding financing.

This is a controversial subject, with many people blaming the borrowers for getting in over their heads. But it isn't that simple. In my encounters with clients, these homeowners (or former homeowners) didn't intend to get into this mess. Many faced job and income loss, medical problems or divorce - all problems that were beyond their control. Others didn't realize that A.R.M. rates would rise beyond their ability to pay, or believed brokers and other real estate advisers who told them that they could refinance before the rates increased.

No matter the reason, America has a problem that has to be dealt with, and soon. Bills are being introduced into the House and Senate that may hold some relief, with borrowers paying lenders, lenders making a profit, and the government not being the one to provide the bail out. These bills would allow court supervised modification of loans in the United States Bankruptcy Court. Lenders will bear some of the responsibility of this solution in sacrificing higher interest rate returns, but still being paid for the loans at rates that will still provide profits. In fact, keeping people in their homes and preserving a performing loan will help provide a profit that was destined to be lost in the foreclosure.

For more information regarding the mortgage crisis and the mortgage solution, please read my article on the BankruptcyLawNetwork, where you will find many articles on this issue as well as other information about bankruptcy.

How Is Bankruptcy Like Gastric Bypass Surgery?

Like gastric bypass surgery, bankruptcy can yield dramatic results in a short period of time and give you the ability to get where you need to be quickly.

Like surgery, it isn't for everyone and it can be painful.

Like surgery, bankruptcy can be life saving; financially life saving when you have debts you can't repay.

Most important, like gastric bypass surgery, bankruptcy is a tool for good short term success, but the long term success depends on the ability of the person to live on a healthy financial "diet".

If a person files for bankruptcy, but doesn't have a budget that is balanced, they stand a good chance of getting back into debt again. Therefore when someone takes the serious step of filing for Chapter 7 or Chapter 13 bankruptcy to get out of debt, it is important for their financial future that they take steps to stay out of debt. Think of the budget like a financial diet plan, crucial to your long term health.

Chapter 13 Bankruptcy Or Mortgage Assistance Workout?

Mortgage assistance companies contact consumers upon learning of pending foreclosures. In North Carolina, all foreclosure notices are posted in the county courthouse where the property is located. NC foreclosures can take place in under two months from the filing of a foreclosure complaint in the court. Anyone can look at the new foreclosure cases filed, and mailing lists are gathered daily.

Homeowners can, and should, contact the mortgage company's "loss mitigation" department to negotiate with the company. All mortgage companies have departments set up to look at loans that are in trouble. These are the departments that mortgage assistance companies contact and the homeowner can call them too.

Homeowners have to consider that the payment to the company uses up money which is in short supply. The money that you have is your most valuable resource at this troublesome time. Those funds could be used to make a payment to the mortgage company if they agree to a workout, to hire an attorney to file Chapter 13 bankruptcy, or in the worst circumstance to pay a down payment on a rental if you have to move.

Unfortunately many companies are run by individuals who charge a lot of money for the same outcome that the homeowner could get. And if that result is a refusal to workout the default, the homeowner is facing a foreclosure with a lot less money. The company might have more experience speaking to mortgage companies than most homeowners do, but that does not mean that they are always able to get better results. Charlotte's NBC Station WCNC did a story about such a company (Mortgage Assistance of the Carolinas) on February 21, 2007. You can see the full story at the WCNC website.

If you want to use one, there are a few things to check out first, before you pay them.

Always check out the company with the Better Business Bureau and the NC Attorney General before you pay any money to them.

Consult an experienced Chapter 13 lawyer in your area before you make your decision or pay the company’s fee. You need to know what choices you have. You can always listen to what the mortgage assistance company has to say, and weigh it against what the lawyer explains to you. A good lawyer can look at your situation and often tell you in your first meeting if you are a good candidate for Chapter 13. I can not tell you how many people come to me after paying one of these companies, who tell me that the company wasn't able to do anything for them. Worst, this sometimes happens just days before the foreclosure sale leaving the homeowner little time to check into other (and better) options, like bankruptcy.

Even if workouts are achieved, if you can't make the payments required by the workout you may find yourself facing foreclosure again. Silly as this sounds, a workout is only a workout worth doing if it works.

Chapter 13 may also be able to reduce or eliminate many of your other debts, freeing up funds to pay your mortgage. This is something that no mortgage workout can do for you. Chapter 13 can stop a foreclosure and give you up to five years to catch up on the missed payments. Many homeowners are able to catch up their missed payments if they are given the time to do so. Mortgage assistance or workouts directly with your mortgage company will normally give a matter of months, not years, to spread out the missed payments.

Your decision should be decided knowing all your options. A good attorney can, and will, freely discuss whether workout is a better option for you.