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We’ve Moved!

New posts from our bankruptcy, debt, and foreclosure experts are now located on Nolo’s blog at blog.nolo.com. Choose either “Bankruptcy & Debt” or “Foreclosure” from the right side of the page to see the latest posts in those areas.

Nolo Author Leon Bayer to Be Featured on KALW’s Your Legal Rights

Your lawyer won’t call you back?  Missed a deadline? Failed to appear in court?  Doesn’t seem to have the expertise to handle your case? Or maybe you just don’t agree with your lawyer’s advice?

Find out your options if you are having trouble with your lawyer.  On November 26, 2014 you can hear Leon Bayer live on KALW’s “Your Legal Rights” radio show. Leon will be talking about what to do if you have issues with your lawyer and will answer calls from you!

Here are the details:

Live Radio Show:  Got Lawyer Trouble?

When to Listen: November 26th, 7 PM to 8 PM.

How to Listen:  The program airs live on KALW 91.7 FM Radio, San Francisco, California. The program also streams live on the Internet at http://kalw.org/listen-live.

Can’t Tune In on the 26th?:  You can listen to the recording later.

About Leon Bayer

Leon Bayer is a Los Angeles, California bankruptcy attorney, practicing since 1979. He is coauthor of Nolo’s The New Bankruptcy: Will It Work for You? and the author of “Ask Leon” — a regular feature of this blog.

Forgive us our debts…and give us discounted lawyer fees, too.

ASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon,

I want to file bankruptcy. My case is simple. I’m in my 20’s, I make next to nothing, and I own next to nothing. My debts are less than $15,000 on mostly old credit cards that I got when I was young and stupid. I can’t afford a lawyer. What are the odds of a successful bankruptcy if I file on my own without a lawyer?

Matthew

Dear Matthew,

You can file on your own and may very well get a discharge. But before you go this route, you should carefully consider a few things:

  • You might make a mistake in your case that will affect your bottom line. Worse, you might not find out about the mistake until years later.
  • You probably can afford a lawyer.

Bankruptcy Mistakes That Haunt You Later

If you represent yourself and get a discharge, you may think you’ve been successful. A successful bankruptcy case means: you discharged all of the debts that you were allowed to get rid of in bankruptcy, you kept all of the assets that you were allowed to keep, and creditors are no longer popping up to bother you. (Learn more about what the bankruptcy discharge is.)

Unfortunately, I hear from lots of people who completed a bankruptcy on their own, but then later had problems that related back to the old case, such as:

  • debt collectors pounding them to collect on an old debt that they forgot to list in the bankruptcy (learn more about what happens if you forget to list a debt in bankruptcy), or
  • courts throwing out a car accident case because they failed to list the case correctly in the bankruptcy.

Getting a lawyer can also help if you need credit in the future. An experienced lawyer can usually point out some strategies that will help you get new credit without waiting ten years for the bankruptcy to drop off your credit report.

How to Get a Lawyer to Discount the Fees

Here’s your real concern: You want a lawyer but you think you can’t afford one. This means you are in the same boat as most bankruptcy clients.

Here’s how to get a lawyer that you can afford. And I mean a quality, top-notch, experienced bankruptcy lawyer.

First, figure out what you think is a reasonable lawyer fee based on your personal finances. Whatever that amount is, put it in your pocket, and go see some bankruptcy lawyers for a free consultation. (Read Nolo’s tips on finding a bankruptcy attorney.) Don’t do this over the phone — lawyers don’t want to spend time on the phone with shoppers. You’ve got to do it in person.

During the consultation, the lawyer will quote you a fee. Then, tell the lawyer what you can afford. Be humble. Grovel a little bit. Tell the lawyer you are truly sorry that you can’t pay more, and that you know the lawyer is worth every bit of the quoted fee. But, as the lawyer can see, you are truly dead broke. Tell the lawyer that if the fee you can afford is agreeable, you are ready to pay it right now. If your case is as simple as you think it is, most lawyers will agree to your suggested fee.

-Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

Find Leon on Google+

 

 

Fake Arrest Warrant for Unpaid Debt

Arrest_WarrantASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon:

I just received an arrest warrant for an unpaid debt. I had no idea I could be arrested for something like this.  I am scared. What should I do?

Here is a copy of what I received. (View the arrest warrant here. There are two pages.)

Dear Lynn:

No, you cannot be arrested if you don’t pay a debt.  The arrest warrant you received is a fake. By using this scare tactic, the debt collector has violated federal and state law.

Can I Be Arrested for Not Paying a Debt?

If you simply default on a debt, you cannot be arrested. The creditor can call you, send you letters, or sue you (as long as it stays within the bounds of the law when it does so), but it cannot have you arrested.

There is one caveat. If you fail to follow a court order, the court can send you to jail. If that court order relates to an unpaid debt, it might feel like you are being sent to jail for failure to pay a debt.  (To learn how this happens, see The New Bill Collector Tactic: Jail Time.) This is a disturbing trend, but not one that applies in your situation.

The Warrant Is a Fake

If it weren’t so egregious, the “warrant” would be laughable.  It’s full of weird language and grammatical errors. Not the type of document you’d get from a real federal court. Plus, it’s full of inconsistencies – for example, Ronnie is from the “State Attorney Office” (there is no such thing) and yet the arrest warrant is from a federal court.

In any event, neither the state nor the federal government would be “pressing charges” against you (or arresting you) for nonpayment of a debt.

State and Federal Fair Debt Collection Laws

The federal Fair Debt Collection Practices Act prohibits debt collectors from using false representations to get you to pay a debt. (Many states have fair debt collection practices acts as well.) The arrest warrant that you received is pretty egregious in its false representations:

  • it pretends to be an arrest warrant from a federal district court
  • it says that the charges are “violation of federal banking regulation” – not paying a debt is not a violation of a federal banking regulation
  • Ronnie Willson is impersonating an employee of the State Attorney’s Office
  • the warrant has a fake judge’s “signature”
  • the warrant implies that if you don’t pay the debt, you will face ten years in prison and a fine of up to $50,000

By the way, apparently you aren’t the only one to get an arrest warrant from Ronnie.  See:

My advice to you?  Ignore it.

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

Find Leon on Google+

35% of U.S. Consumers Have Delinquent Debt

debt & foreclosure helpOn July 30, 2014 the Urban Institute released the results of its study, Delinquent Debt in America. The alarming numbers revealed that among adults who have a credit file:

  • 35% of U.S. consumers (77 million) have a debt or unpaid bill that has been sent to collections, and
  • 5% of U.S. consumers have a recent debt or bill that is more than 30 days late.

These numbers reflect nonmortgage debt only – credit cards, auto loans, student loans, and medical bills. The Urban Institute gleaned the information from 2013 data from one of the nationwide credit reporting agencies.

What Is a Debt Past Due?

Debt past due (or unpaid debts or bills) are those debts that creditors have reported to the credit reporting agencies as being more than 30 days late. Among those with debts past due, the average amount needed to become current is $2,258.

What Is a Debt in Collections?

The Urban Institute defines a “debt in collection” as one that has been charged off by a creditor (which generally means it’s more than 180 days delinquent). Some of these debts can be quite old since they remain on a credit report for seven years. The average total debt in collections per person is $5,178. The report noted that some people are likely unaware that they have old debts listed on their credit reports as charged off or in collection. (This underscores the importance of checking your credit report regularly and fixing outdated information or errors. To learn how, see Nolo’s Cleaning Up Your Credit Report.)

Actual Numbers of People in Debt Are Likely Even Higher

The percentage of those in debt is probably even higher than these figures because the statistics do not take into account:

  • adults who don’t have a credit file (these are low-income people who don’t have access to traditional credit, but often have other types of delinquent debts or loans outside the financial mainstream)
  • those who are behind in, or are struggling with, mortgage debt, and
  • people who owe money to friends or family.

Delinquent Debt by Region

The study looked at these statistics in various regions of the country. Check out the report’s map that records the concentration of Americans in debt across the nation.  The South had the largest percentage of residents in debt, but the study points out that you see more variances in the number of adults with delinquent debt as you look at smaller and smaller geographical areas (rather than large regions of the country).

Any Relief in the Future?

Not likely. That a large number of people in this country are struggling with debt is no surprise, although the actual percentage cited in the study is alarming. The reasons for this level of debt are many. Sure, some people could stand to control their spending a bit and live within their means. But more likely, for the vast majority of people with unpaid bills, merely tightening their belts will not solve their financial troubles.

Years of high levels of unemployment and underemployment, the housing bust, the shrinking middle class, the fact that wages have not quite kept pace with inflation, and the higher cost of college and graduate schools, are just a few of the issues facing us and our country. Unfortunately, these hard-to-solve problems mean that debt will be the reality for many residents of the U.S. for the foreseeable future.

Senator Warren Takes Private Student Loan Industry to Task

Since 2005, private student loan lenders have enjoyed a special privilege in bankruptcy – their loans are not automatically discharged (eliminated) in bankruptcy. This sets them apart from credit card lenders, medical providers, and most other lenders of unsecured loans and credit. This special privilege puts them on par with entities such as the Department of Education and parents who are owed child support. And, believe it or not, it even gives them an advantage over the IRS. You can get rid of certain older income tax debts in bankruptcy, whereas your private student loans can be as old as the hills and it doesn’t matter for bankruptcy. (You can discharge student loans in bankruptcy if you prove undue hardship, a difficult standard to meet. It hasn’t helped many student loan borrowers over the years.)

There doesn’t seem to be any good reason for the private student loan industry’s special privilege (more on that in a previous blog post), other than the fact that banks form a powerful lobby. And consumer advocates have been vehemently pointing this out in recent years as the student loan debt crisis heightens in our country (student loan debt has surpassed credit card debt in the U.S. – no easy feat).

Even Congress is taking notice – some legislators are pushing to take away the special privilege that private student loan creditors enjoy in bankruptcy, and instead treat them like other unsecured creditors, such as credit card companies.

In a Senate Banking Committee hearing yesterday on Capitol Hill, Senator Elizabeth Warren did a great job of highlighting just how little banks do to help private student loan borrowers who are struggling to repay their debt (unlike the federal government, which provides an array of flexible repayment programs, loan forgiveness, and cancellation options for federal student loans). She recounted the story of a couple who takes care of their three grandchildren because the children’s mother (the couple’s daughter) died. The couple cosigned a private student loan with their now-deceased daughter, and is now struggling to raise three little children and make payments on the $100,000 loan. They tried to get some help or relief from the bank, but not surprisingly (at least to any of you who has a private student loan), they hit a brick wall. No loan forgiveness even though the student borrower is dead. No loan modification to stretch out payments over time, reduce the interest rate, or offer some other way for them to afford the payments. Nothing.

Senator Warren’s spirited exchange with Richard Hunt, President and CEO of the Consumer Bankers Association, is worth a listen – it exemplifies how the private student loan industry does nothing to help struggling borrowers while at the same time enjoys an immense advantage in bankruptcy.  (Listen to the exchange on YouTube: https://www.youtube.com/watch?v=haoKLe3rJxc&feature=youtu.be). As Mr. Hunt tries to assure the committee that there are options for struggling borrowers, Senator Warren refuses to let him off the hook. The colloquy highlights what anyone with a private student loan already knows – those assurances are meaningless. Senator Warren’s questioning makes clear that there is one fair option – removing the private student loan industry’s special treatment in bankruptcy.

Nolo Publishes 50-State Series on Redeeming Your Home After Foreclosure

home on lifeboatAre you in foreclosure or did you recently lose your home to foreclosure? In many states, you have one last chance to get your house back — called redemption. When you redeem your home, you essentially repurchase your home from the person or entity that bought the home at foreclosure. If your state gives you the right to redeem, the purchaser must give you the home back if you pay the correct amount within the redemption time period.

How Does Redemption Work?

To redeem your home, you must:

  • act within the allotted time period (which varies by state), and
  • repay the amount that the purchaser paid at the foreclosure sale, plus certain costs and other fees. In some states you must also reimburse the purchaser for any repairs or maintenance done to the home.

The costs, fees, and other “extras” that you must pay vary by state.

Do You Always Get the Right to Redeem?

No. In some states, once the house is sold at foreclosure, you are out of luck. And in some states other factors affect whether you can redeem — for example, whether the foreclosure was judicial or nonjudicial or whether the loan documents waived the right to redeem.

How Much Time Do You Get to Redeem?

‘The time period in which you must redeem also varies widely by state. You might get 60 days or you might get a whole year.  Often the time period is different depending on the type of foreclosure process used (judicial v. nonjudicial), whether you’ve abandoned the home, or whether the property is agricultural.

How to Find the Redemption Law in Your State?

Nolo recently published a series of articles on whether you can redeem your home after foreclosure. The series covers each of the 50 states, plus the District of Columbia. In your state’s redemption article, you’ll find out whether you have the right to redeem, the redemption time period, the amount you’ll have to pay, any special procedures you must follow, how to find your state redemption statute, and more.

To find your state’s redemption after foreclosure article, go to Nolo’s Getting Your Home Back After Foreclosure topic page and click on your state. You can also find your state’s redemption article, plus other foreclosure articles specific to your state on Nolo’s State Foreclosure Laws topic page (again, click on your state).

Other Options to Get Your Home Back

In every state, you redeem your home before the foreclosure sale (this is called the equitable right of redemption). And you usually have other options available to save your home before the foreclosure sale, many of which are better than redemption. For example, you might be able to reinstate the mortgage by paying past-due amounts plus costs. Or you could try to work out a loan modification, forbearance agreement, or repayment plan with your lender. To learn about your options, see Nolo’s Alternatives to Foreclosure topic page.

Bankruptcy Filing Fees Will Increase on June 1, 2014

Bankruptcy_Petition_iStock_000008359066XSmallStarting on June 1, 2014, the fees required to file for bankruptcy will increase. Here are the new amounts:

Chapter 7 bankruptcy:  $335 (up from $ 306)

Chapter 13 bankruptcy:  $310 (up from $281)

Chapter 12 bankruptcy:  $275 (up from $246)

In addition to these fees, you’ll also have to pay a small amount to participate in pre-bankruptcy credit counseling and pre-discharge debtor education.  The cost for each of these services usually ranges from free to $50. (Learn more about the procedures to file for bankruptcy.)

Got Bankruptcy Questions? Ask Leon Tonight on KALW

Leon Bayer PhotoLos Angeles Bankruptcy attorney and co-author of this blog, Leon Bayer, will be featured on KALW Public Radio in San Francisco tonight, October 9th, from 7:00 to 8:00 p.m.  He’ll be a guest on “Your Legal Rights” hosted by Chuck Finney. Leon will talk about student loans, loan sharks, foreclosure, and anything else dealing with bankruptcy that the audience wants to call about.

You can listen live, or to a postcast. Go to http://kalw.org/ and click on “listen live” to hear the show.

What to Do If You Can’t Open a Checking Account After Bankruptcy

Bank check

ASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon, 

I filed bankruptcy and I included money that I owed in bank fees and overdrafts on my checking account. The bank closed my account. My bankruptcy was granted. Now I can’t get a new checking account. Every bank I go to turns me down, saying I am listed on something called checksystems. 

How can they do that when my bankruptcy was granted? 

Thank you, 

Cassandra 

Dear Cassandra,

I’ll explain what’s happening. ChexSystems is a consumer reporting agency, just like Transunion, Equifax, and other credit reporting agencies. According to its website, ChexSystems specializes in providing banks with credit reports about people whose checking accounts are overdrawn and closed. That’s why it has a report on you.

You are entitled to obtain a free copy of your report. If you feel there is anything on the report that is less than accurate, you can dispute it. (To learn how to get your report and how to dispute inaccurate information, visit Nolo’s Credit Repair area.)

But for now, you want to open a checking account. I have a suggestion that might help. Go to a small bank or credit union and open a savings account that has debit card privileges. Your debit card will work just the same as a checking account. In fact, very few people today bother to write paper checks. Most people are using plastic to pay for everything. (But use caution when using the debit card. See Nolo’s article on Debit Cards for tips and warnings.)

Sincerely,

Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

Find Leon on Google+