Wednesday, September 19, 2012

Lawyers in "Hot Water" over mortgage modifications

A few years ago I looked into offering mortgage modification services to my Bucks County bankruptcy clients.  Frequently, my clients were attempting to modify their mortgages, but either had a poor experience with a company or lawyer who assisted them or they were unable to achieve a modification on their own. 

I knew there were some snake-oil salesmen promising modifications and I thought there could be a better way.  What I learned after exhaustively researching mortgage modifications, was that there is limited benefit a service or lawyer can provide.  Essentially, as one U.S. Trustee mentioned to me when I was representing a Bucks County Chapter 7 client, "It comes down to diligence and persistence."  She was right. 

My determination is that if someone needs their hand held through the process to meet deadlines and submit paperwork, then they should use a company for their modification.  But, they can easily do it themselves if they are diligent and persistent.  What this means is that a person must submit timely documents to the mortgage company (i.e. paystubs, bank statements) and follow-up with their point-of-contact.  Paperwork seems to get lost frequently during modifications, so the follow-up is key. 

This all leads me to the article in today's Wall Street Journal.  "Lawyers Land in Hot Water" highlights the alleged fraud lawyers have been committing in over-promising and fraudulently marketing mortgage modifications.  The article states that there are approximately 11,000 mortgage complaints involving attorneys received from California's bar since early 2009.  And that's in California only! 

The takeaway from all of this is:  Buyer Beware.  Mortgage modification is hot.  Homes are underwater and unemployment is high.  This makes for a perfect storm for people to seek some mortgage relief.  But, remember that it may be best to pursue this avenue on your own, rather than rely on the promises of a company or an attorney. 

Thursday, September 13, 2012

Fees in a Bucks County Bankruptcy - Chapter 7

The credit to this picture comes from a bankruptcy listserv of which I am a member which then attributes the picture to Reader's Digest.  

Attorneys fees should always be discussed with your Bucks County bankruptcy attorney at the first consultation.  The filing fee is $306 for a Chapter 7 bankruptcy in Bucks County, which is set by the U.S. Trustee

After discussing legal fees, a client must understand that those fees must be paid prior to the filing of the Bucks County bankruptcy.  A Bucks County attorney cannot be considered a "creditor" under bankruptcy law.  Therefore, any payment plan arrangements must be satisfied prior to filing the Chapter 7 bankruptcy in Bucks County

Finally, each Bucks County attorney is required to file a statement with the bankruptcy petition outlining the legal fees (not including the filing fee) received from the client.  This is to ensure ethical behavior and transparency in the attorney. 

Sunday, September 9, 2012

Bucks County Bankruptcy and Student Loans

I recently blogged about student loans and bankruptcy.  It appears that the NY Times is becoming the "voice" for individuals burdened with tremendous student debt against the "accounts receivable management" industry, aka ARM.

Specifically, this Sunday's Times tackles the collection efforts (and bounties) companies are seeing through student loan collections.  Here's the most shocking number,

As the number of people taking out government-backed student loans has exploded, so has the number who have fallen at least 12 months behind in making payments — about 5.9 million people nationwide, up about a third in the last five years.
In all, nearly one in every six borrowers with a loanbalance is in default. The amount of defaulted loans — $76 billion — is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities, according to a survey of state education officials.
 The secret gem in the article, highlights a little-known secret for those in default on student loans and for those who a Bucks County bankruptcy is not an option:
Introduced in 2009, income-based repayment was supposed to help change that by allowing borrowers with high levels of debt but modest incomes to make relatively small payments over a long term. But many borrowers were never told about the income-based option, and many others have been frustrated by the onerous requirements. So far, 1.6 million borrowers have applied for income-based repayment; 920,000 are active participants and another 412,000 applications are pending.
 Thus, it makes sense to consider requesting an income-based repayment plan if the creditors are hounding you.  It is not as lucrative for the "sponge-squeezing" collectors, but that's their problem.

Frequently, student loan debt and inability to repay such debt coincides with credit card debt and/or mortgage foreclosure in Bucks County.  If you need Bucks County bankruptcy help, please do not hesitate to contact me for a free consultation.