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Senior Citizens and Bankruptcy: Special Considerations

By Jonathan on October 19, 2012

Over the past few months, Susan Blum and I have been meeting with an increasing number of senior citizens and others on fixed incomes who are considering bankruptcy because of significant credit card debt.

It is not at all unusual for us to see seniors with over $100,000 in unsecured debt that has accumulated over years – sometimes 10 years or longer. When fixed income investments and/or Social Security no longer throw off enough monthly income to pay the minimum payments, bankruptcy becomes a legitimate option.

Seniors, in particular, are often conflicted about filing bankruptcy because they came of age in an era when bankruptcy still had a social stigma and it was unthinkable not to pay one’s debts. As a result, I sometimes see cases where a client has paid two or three times the balance due by making minimum payments but the outstanding balance has not really budged. When I point this out, the stigma issue often disappears. [Read more…] about Senior Citizens and Bankruptcy: Special Considerations

What is the Status of the HAMP and HARP Programs?

By Jonathan on October 9, 2012

If you want to try to qualify for a home loan modification under the HAMP or HARP programs, you will need to find out whether Fannie Mae or Freddie Mac owns your loan. Fannie Mae and Freddie Mac may own your loan even if you send your monthly mortgage payments to another company, like Citibank, Chase or Bank of America. These banks often function as servicing agents for Fannie & Freddie. Servicing agents use their existing infrastructure – computer networks and customer service agents – to collect and process payments.

The Fannie Mae lookup tool is here.

The Freddie Mac lookup tool is here.

The difference between HAMP and HARP is as follows: HAMP (Home Affordable Modification Program) is designed to assist borrowers who are in foreclosure – that is, your lender has started the foreclosure process. [Read more…] about What is the Status of the HAMP and HARP Programs?

Don’t Forget that You have Payment Obligations in Chapter 13

By Jonathan on September 30, 2012

Chapter 13 can transform an upside down budget into one where your income equals your outflow, and it can reduce your total debt, sometimes by thousands of dollars.

Chapter 13 only works, however, if you pay what you are required to pay by your Chapter 13 plan. Specifically, for cases filed in the Northern District of Georgia, you will have to pay your mortgage(s) directly and you will need to pay your Chapter 13 trustee your plan payment until the payroll deduction kicks in.

You cannot and must not be passive about your payment obligations – if you are not current with your post-filing mortgage payments and your initial trustee payments, your case may be dismissed. In this brief audio podcast, I discuss what you need to keep in mind about your direct payment obligations in your Chapter 13 case.

Never Ignore a Lawsuit that is Served on You

By Jonathan on September 10, 2012

Last week, my secretary left me a message that read as follows:

John Smith called about a possible illegal wage garnishment. He says that his employer notified him that his wages will be garnished by a credit card company that had never sued him and that he has not heard from in over 10 years.

This sounded interesting. Was there an FDCPA claim here? When I called Mr. Smith back, he told me that he moved from the Atlanta area 5 years ago and that he did not remember being sued by the ABC Credit Card Company when he did live in the Atlanta metro area. His employer, however, was in receipt of a notice of wage garnishment and would be withholding funds from his wages.

Mr. Smith had a copy of the wage garnishment order, which had a case number on it, which meant that a lawsuit had been filed. The county where the lawsuit was filed has online access and I plugged in the case number. It turns out that the lawsuit was filed back in 2002 and a judgment issued in 2003. Under Georgia law judgments expire after 7 years unless renewed and the online record also indicated that this judgment had been renewed prior to the expiration of 7 years. [Read more…] about Never Ignore a Lawsuit that is Served on You

Can I File Bankruptcy on Behalf of my Incapacitated Mother

By Jonathan on September 6, 2012

I recently received the following question from a web site visitor:

Jonathan, my mother is 67 years old and suffers from early onset dementia, most likely Alzheimers. She recently moved into an assisted care home but my sisters and I have discovered that she has not been paying any bills and that the mortgage is about to go into foreclosure. I downloaded a power of attorney form from the Internet and had her sign it. Am I allowed to use the power of attorney to file a bankruptcy on her behalf? Thanks. Jill.

Jill, here are my thoughts:

First, I am sorry to hear about your mother’s medical condition. As I’m sure you know, you and your family have a long, difficult road ahead of you and I wish you the best.

As far as filing bankruptcy, a person with dementia most likely does not have sufficient capacity to understand and sign the papers. Instead, I would suggest that you contact an elder law attorney to discuss filing a petition for legal guardianship in the Probate Court in the appropriate county. Before issuing the order appointing someone – presumably you or your sister – as guardian for your mother, the probate judge will review medical evidence and take testimony to determine who is the best person to serve as guardian and what the powers of the guardian should be.

Decisions by guardians must be reported to the probate judge at least annually. Further, it would be wise to reveal to the probate judge your plans to file bankruptcy to preserve your mother’s assets.

Guardianship vs. Power of Attorney

A court issued guardianship is a much more robust instrument than a power of attorney. More importantly for bankruptcy purposes, the bankruptcy judge will be a lot more comfortable with a probate court guardianship order than a power of attorney. Unlike a guardian a person with a power of attorney has not been vetted by a probate judge and the bankruptcy judge has no way of knowing if the debtor was even competent at the time she signed the power of attorney, or if there are other relatives who might have interests different from yours. [Read more…] about Can I File Bankruptcy on Behalf of my Incapacitated Mother

Bankruptcy May be a Better Option than Debt Negotiation

By Jonathan on August 28, 2012

I came across a short, but very interesting video from a Maryland bankruptcy attorney named Ron Drescher that made two very important points about debt negotiation. You can view the video here (and subscribe to Ron’s YouTube feed if you wish).

Ron makes two very important points about debt negotiation:

First, when you enter into a negotiation with a bank to avoid a foreclosure or a judgment, you can expect that the bank will ask for any number of concessions from you. These concessions can range from waiving your right to future lawsuits, acceptance of a specific debt figure or even waiving local jurisdiction and agreeing that any future litigation between you and the bank will be tried in a court of the bank’s choosing – which may be hundreds or thousands of miles away.

I think it is fair to say that you are likely to get a much better result in this type of negotiation if you have the assistance of counsel.

Second, do not promise more than you can deliver. You can be sure that the bank will position a negotiated settlement as a superior alternative to bankruptcy and you may find yourself considering terms that are simply not feasible. Sometimes, however, bankruptcy is a better solution to a negotiated settlement where the terms are too harsh. Here, too, counsel from a lawyer with perspective can be very helpful. [Read more…] about Bankruptcy May be a Better Option than Debt Negotiation