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Credit Card Delinquencies at Record 10%

The "side" entrance to our office building, in Houston

The "side" entrance to our office building, in Houston

A record percentage of credit cards are delinquent, 10% according to published reports. This is absolutely stunning, as credit card delinquencies historically have run 3%, maybe 4%.

Most people don’t know that credit card debt is “securitized,” or rolled into bond-like financial instruments and sold on Wall Street. This could turn into another mess like recently happened with mortgages; securitization of mortgage debt recently almost wrecked the worldwide economy.

I understand from published reports that the banks are having to “rush to the rescue” of some of these credit card trusts. By securitzing their credit card debt, banks keep much of the risk of the stupendous amount of credit card debt in this country “off the books” and technically not a risk that they have to keep reserves to cover, I suppose. That way, it doesn’t hurt their profitability.

In my opinion, it’s just greed. The world worked a lot better before debt was a commodity, and became this country’s biggest export. It was better when credit was more difficult to get, and people had to qualify for it. Perhaps we’ll get back to that model soon; it may just take another financial catastrophe or two before we collectively wise up.

Posted in Bankruptcy Issues, Credit. Tagged with , .

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June 25, 2009

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Foreclosures Pass One Million Mark For 2009

A Chicago Sunsel from 45th Floor Marriott Hotel

A Chicago Sunsel from 45th Floor Marriott Hotel

Last week the nation reached a dismal milestone: one million new foreclosures initiated since January 1 this year.  In addition to devastating the families who lose their homes, the neighbors suffer, too. Our updated “spillover” analysis shows that 69 million households who just happen to be located near foreclosures will lose $502 billion in property value — about $7,200 per family.

If Congress had only approved the Mortgage Modification bill, to allow bankruptcy judges to modify home loans, it wouldv’e given several hundred thousand homeowners at least a fighting chance to stay in their homes.

“Hopefully” the Hope for Homeowners and similar programs will have some effect, but there is no sign of it yet. I am having some luck suing mortgage servicers and lenders that made “toxic” or predatory loans to my clients, or have violated mortgage servicing laws. As part of a settlement, we demand that the loan be modified to more reasonable terms. But I can only help a small number of people, compared to the number that could have been helped had the law been changed.

Can’t get your loan modified? Call your Member of Congress! They are the ones, particularly the U.S. Senators, that defeated the mortgage modification bill. If you can’t get a loan modification, call your U.S. Senator’s office and tell them that you need help getting a reasonable loan modification of your mortgage.

Posted in Bankruptcy Issues, Foreclosure. Tagged with , .

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June 12, 2009

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Creditors, Debt Collectors Violating Stay and Discharge Injunctions

It's almost summer in the backyard

It's almost summer in the backyard

We have had a rash of creditors and debt collectors trying to collect their debts illegally recently, I’m not sure why. I guess times are tough all over, particularly if you are in the debt collection business.

If creditors or debt collectors try to collect their debts during a bankruptcy case, without first getting permission from the Bankruptcy Court, that is a violation of the “automatic stay,” one of the fundamental protections of people that file bankruptcy. Under the Bankruptcy Code, you have the legal right to sue that creditor for any actual damages that you have, punitive damages, court costs, and most importantly, attorney fees.

I’m not kidding about the attorney fees, they really are the most important part. If the violating creditor or debt collector didn’t have to pay the debtor’s attorney fees, the debtor would have to pay them, and if they didn’t have the money to pay the attorney, a lot of these actions wouldn’t get filed, that should have been filed.

If a creditor or debt collector tries to collect a discharged debt after the bankruptcy discharge, that is a violation of the bankruptcy discharge. The Discharge is the permanent, federal court order that extinguishes or cancels the debtor’s personal liability to pay most types of debts.

While the Bankruptcy Code does not have a specific section that provides for a cause of action or lawsuit, as for violations of the automatic stay, the Bankruptcy Court can punish a violator of the discharge injunction. The debtor’s attorney can bring an action against them for contempt of court (for violation of the discharge order), and also under Section 105(a) of the Bankruptcy Code, which gives the Bankruptcy Judge the power to enforce their own orders.

My office is available and ready to help our clients stop illegal debt collection action by creditors and debt collectors. Depending on the facts of each case, we will sometimes send a final demand to the violating party, trying to get them to stop, or to withdraw their demand. If they won’t, we file an action in Bankruptcy Court, and ask the judge to award damages, sanctions, and/or attorney fees and costs. Unfortunately that is a fairly common occurrence.

But if enough other debtors and their attorneys file these types of actions, that may change. The “word will get around” that creditors and debt collectors cannot engage in illegal debt collection, particularly in connection with a bankruptcy case.

Posted in Bankruptcy Issues. Tagged with , , .

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May 27, 2009

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Judicial Mortgage Modification loses, as do consumers

The FBI Sign

The FBI Sign

The U.S. Senate on April 30 voted against allowing bankruptcy judges the power to modify or change predatory mortgages. The legislation could have helped avoid an estimated 800,000 foreclosures. Bankruptcy judges would have had the ability to reduce the interest rates, from as high as 14-16%, to a more reasonable market rate, reduce the principal of the mortgage loan to the value of the house, and also extend the term of the mortgages to 40 years. This would have helped force mortgage companies to offer their own loan modifications, or face possibly facing a bankruptcy judge who would give the debtors a fair shake.

“These bankers who brought us into this crisis are literally shunning and stiff-arming the people who are facing foreclosure,” said Senator Richard Durbin of Illinois, who was the sponsor of the legislation and the Senate “whip” or the second ranking Democrat.

It’s unbelievable to me that the same banks and financial institutions that got us into this current economic mess, that invented and originated these so-called “toxic” loans, still have such political power that they can crush a pro-consumer bill like this. I guess it’s just another example of the “Golden Rule” at work: “them that has the gold, make the rules.”

Posted in Bankruptcy Issues, Foreclosure. Tagged with , , .

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May 4, 2009

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Another Sad Debt Settlement Company story

A furry neighbor decides to visit me at the house in Sugar Land TX

A furry neighbor decides to visit me at the house in Sugar Land TX

I had another prospective client come in tonight, owing $65,000 in credit card and medical debt, and she had been with a Debt Settlement company. Most of them seem to be from Florida or California. She had paid them over $15,000 in fees, plus $700 a month for 8 or 9 months. And they had settled one debt!

And when she told them she was going to see a lawyer, they said “Oh No! Don’t go see a lawyer! They’ll tell you to file bankruptcy!” Well after reviewing all her circumstances, income, assets, debts, and expenses, that did indeed make sense so that was my advice, to file a Chapter 7 bankruptcy, discharge all that debt, and get a fresh financial start. Of course, I always leave the ultimate decision up to the client after we review all available options.

Most so-called “debt settlement” companies are operating illegally in Texas, as they are not properly licensed under the Texas Debtor Assistance Law, which is Chapter 394 of the Texas Finance Code. The Texas Finance Code is at http://tlo2.tlc.state.tx.us/statutes/fi.toc.htm.

These services must be registered with the Texas Consumer Credit Commissioner in order to be operating legally. A list of those services that are registered is on the web site of the Texas Consumer Credit Commissioner at http://www.occc.state.tx.us/pages/searches.html. Click on “List of Debt Management Services Providers” to see if your service is listed.
If you are a Texas resident, and your debt management service is not listed on that page, or if they have violated other provisions of the act, you may have a right to recover from them: (1) all the money you’ve paid them; (2) any actual damages you’ve suffered as well as punitive damages; (3) attorney fees for enforcing your rights; and (4) injunctive relief (a court order stopping them from continuing to operate illegally).

If you believe that your debt management service has violated this law, you are welcome to come in and visit with me about it, and your rights to recover money from them. There is no charge for your first visit. Please bring any and all documents that you received from the debt management service, and a list of the amounts and dates of your payments to them.

If you want to settle your debts, you can hire a legitimate attorney, or if you’re up to it, you can even do it yourself with some appropriate coaching. If you want to try it yourself you can buy a (relatively) inexpensive coaching program and do it yourself. Here is one: ZipDebt - #1 Source For Do-It-Yourself Debt Elimination that I am familiar with, and I think it could help you.

Otherwise, go see a professional like myself, who can give you advice based on many, many years of experience. Filing bankruptcy may be the answer or it may not, but if it is not, I’ll be the first one to tell you. Tom Black

Posted in Bankruptcy Issues, Debt Settlement.

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April 22, 2009

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J.K. Harris Tax In Hot Water With Texas Attorney General

Dawn from Hilton Head Island

Dawn from Hilton Head Island

If you have been in trouble with the IRS before, or maybe if you just watch TV or read the newspaper, you’ve see ads from J.K. Harris & Company, who say they are the largest tax defense company, etc. They apparently have also made other claims, according to the State of Texas Attorney General, who in a recent lawsuit, has accused the company of “materially misrepresenting their ability to help Texans resolve their unpaid tax obligations.”

According to the state’s enforcement action, JK Harris failed to provide promised services, misrepresented its employees’ professional skills and experience, overstated its ability to reduce debts that customers owe to the Internal Revenue Service, and accepted large, prepaid fees from customers whose tax liabilities the firm knew – or should have known – it could not reduce.

“The defendants are charged with unlawfully misrepresenting – and overstating – their ability to reduce unpaid debts that taxpayers owe to the IRS,” said Attorney General Greg Abbott. “Struggling Texans who paid large, upfront fees were told that their unpaid taxes could be resolved for pennies on the dollar. Today’s enforcement action seeks restitution for the defendants’ Texas customers and a court order enjoining the defendants’ unlawful conduct.”

JK Harris and related companies, LLC, JKH Financial Recovery Systems LLC, and Professional Fee Financing Associates, along with the firms’ owners, John K. Harris and Charles R. Harris, Jr., are all named defendants in the state’s enforcement action. Citing Texas Deceptive Trade Practices Act violations, the state is seeking an injunction, penalties, fees and restitution for the Texas-based JK Harris customers.

The defendants’ advertising and marketing materials claimed that JK Harris could settle customers’ unpaid tax obligations for pennies on the dollar. JK Harris typically charged $2,000 to $5,000 – paid in advance – for its tax resolution services, which largely relied upon the IRS’ Offer-in-Compromise (OIC) program.

According to court documents filed by the state, the defendants charged customers without actually reviewing individual tax files to see whether individual taxpayers were eligible for relief through the OIC program – which is limited to very specific situations.

The state’s investigation revealed that few of JK Harris’ customers qualified for OIC relief. Further, the defendants’ often failed to file their customers’ OIC application forms and frequently took no steps to reduce customers’ tax debts. When customers realized that JK Harris had undertaken little or no action, they frequently demanded refunds – and the defendants often failed to return the customers’ money.

My law office handles the defense of I.R.S. matters. But I’m careful to show prospective clients all the 5 available ways of dealing with IRS tax problems. I’m also realistic about explaining to clients that most people do not qualify for the Offer in Compromise program. Many of my prospective clients then either have me help them negotiate an Installment Agreement, or we file some kind of bankruptcy case for them, either to discharge the taxes in Chapter 7, or pay some or all of the taxes in Chapter 13.

But if you hire some big national outfit to help you with such a personal financial problem, it’s no wonder there can be problems. The big company is tempted to just treat you like a number, like a money producer. If you hire an attorney, the attorney is your fiduciary, the attorney has a high degree of legal duty to you, to do the best job possible, and treat your case as he would his own. And the crazy thing is, hiring your own local attorney, C.P.A. or enrolled agent to help you with your I.R.S. tax collection defense matter, can actually be less expensive than going with the big national company like J.K. Harris. But by all means, investigate and make your own decision on who to hire to help you with your IRS problems.

To read the full press release from the Texas Attorney General’s office, go to http://www.oag.state.tx.us/oagNews/release.php?id=2924 . Texans who need additional information, believe they have been harmed by a tax-assistance firm’s unlawful conduct or wish to file a complaint may contact the OAG at (800) 252-8011 or do so online at www.texasattorneygeneral.gov.

Posted in Bankruptcy Issues, Debt Settlement, IRS Taxes.

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April 17, 2009

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Court Stops Bogus Mortgage Loan Modification Operations

It's Springtime in my backyard

It's Springtime in my backyard

The Federal Trade Commission has been quite active lately, protecting consumers. Of course there is a lot of work to do. Particularly in the areas of debt settlement companies and mortgage loan modifications. Many of the people that I counsel in connection with bankruptcy cases have already been scammed or duped by companies that talked them into parting with their money for a debt settlement scam or a mortgage loan modification scam.

A U.S. District Court Judge recently granted FTC requests to stop two companies from falsely advertising that they are part of a government-endorsed mortgage assistance network and that they successfully modify mortgages for almost all of their clients or else give refunds.

In fact, the FTC alleges that the defendants are not affiliated with the legitimate HOPE NOW Alliance mortgage assistance network, often divert one month’s mortgage payment as a fee from distressed homeowners, fail to help them modify their mortgages, and then deny them refunds.

“With many consumers desperate for relief and afraid they might lose their homes in these difficult economic times, some unscrupulous individuals prey on these fears for their own financial gain,” said FTC Chairman Jon Leibowitz. “The New Hope and Hope Now scammers have given consumers false hope under the guise of the government-endorsed HOPE NOW Alliance. We won’t hesitate to take action against these types of con artists now and in the future.”

The complaints and temporary restraining orders were entered against: 1) Hope Now Modifications, LLC, Hope Now Financial Services Corp., also doing business as (dba) Hope Now Modifications, and their principals, Nick Puglia and Salvatore Puglia; and 2) New Hope Property LLC, also dba New Hope Modifications LLC, and its principals, Brian Mammoccio and Donna Fisher. The FTC continues to seek a permanent halt to the defendants’ illegal conduct.

If you need legitimate help seeking a loan modification, there are non-profit HUD- approved housing counselors that can help you for little to no fee. For a list of HUD-approved housing counselors, go to http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

Of course if you are posted for foreclosure and need help immediately, and live in the Houston Texas metropolitan area, call my office at 713-772-8037 to make an appointment to meet with me. You may need to file Chapter 13 bankruptcy, to stop the foreclosure and give you up to 60 months to catch up. It may still be possible to obtain a loan modification during your Chapter 13 bankruptcy.

Posted in Bankruptcy Issues, Debt Settlement, Foreclosure.

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March 30, 2009

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Help Stop 20% of the Coming 8 Million Foreclosures; Call or Email President Obama and Your Senators about Senate Bill 61

This foreclosure solution costs taxpayers NOTHING.

Over 6,600 American families a day are losing their homes to foreclosure.

In the next five years, over 8,000,000 American family homes

will be lost to foreclosure, unless we do something now.

If we don’t, the value of all of our homes will keep going down and our neighborhoods will suffer.

DON’T LET THE BANKS BLOCK

THIS NO-COST ACTION TO

SAVE FAMILY HOMES AND OUR COMMUNITIES

AND HELP RESTORE OUR NATION’S ECONOMY

Our Senators have the opportunity to pass legislation that would allow courts

to change bad mortgages so struggling homeowners can save their homes from foreclosure.

The result? Fewer foreclosures and more stable home prices for all of us.

Tell your Senators to support Senate Bill 61 - the

Helping Families Save Their Homes in Bankruptcy Act of 2009

Reduce home foreclosures at no cost to taxpayers.

Call your United States Senators toll free: 877.354.4958

Or email them at:

www.nacba.org/TellCongress

The mortgage modification proposal has been endorsed by leading economists, 22 state Attorneys General, state and local elected officials, newspaper editorial boards from around the country and nearly

100 leading national organizations representing seniors, consumers, religious affiliations,

financial professionals, working families, and civil rights and housing groups.

Paid for by the National Association of Consumer Bankruptcy Attorneys, Inc., a nationwide organization dedicated to protecting the rights of honest, hard-working, financially distressed Americans.

Go to www.nacba.org/S61 for more information about the bill and how you can help get it passed.

Posted in Bankruptcy Issues.

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March 16, 2009

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46,000 Foreclosures Per Week & My Senator Worries About Banks

Capitol Building Washington D.C.

Capitol Building Washington D.C.

It was “Mr. Black Goes To Washington” this past week, Mr. Black going not as a Congressperson, but as a lobbyist for a day as part of the Capitol Hill Meeting or “Lobby Day” sponsored by the National Association of Consumer Bankruptcy Attorneys (NACBA).

It’s always interesting, I’ve been to these twice before. You go to meet with your Representative or Senator (almost always you meet with their staff), and explain why or why not a particular bill concerning bankruptcy should or should not become law.

This time we were telling them why the “Helping Families Save Their Homes in Bankruptcy Act of 2009″ should become law. The bill (H.R. 200 and S. 61) permits bankruptcy judges to modify the terms of mortgages for people in chapter 13 bankruptcy, to make it affordable so that people won’t lose their homes to foreclosure.

It is estimated by the credit industry itself, that this bill would save 20% of the homes that are likely to be foreclosed upon in the coming 3-4 years. When there are 46,000 homes per week being foreclosed upon, that is quite a few!

Anyway, our Congressional representatives from Texas (at least the ones that I met with) seemed to be more concerned about the banks, than the people that live in their state. During one meeting with legal counsel for Sen. John Cornyn, eight of us bankruptcy lawyers were talking to him around a big conference table.

We talked to him for over an hour, and answered every objection and addressed every concern. Then he came up with a real kicker: (paraphrasing) “If we change the law like you say, the securitized trusts (that hold most of these subprime loans) will have to take the bankruptcy losses pro-rata over all the tranches; this will cause the banks to have to increase their capital reserves.” Whew, what a mouthful.

Spoken like a true banker.. he was really saying that Texans like you and me are not Sen. Cornyn’s constituents; his constituents are all the big banks- the very ones that came out with these predatory, toxic loans that have wrecked the economy. It turns out that this last objection, that the bill would cause banks to have to increase their reserves, is of dubious validity.

So, there you have it. We are still hoping that the “Helping Families Save Their Homes in Bankruptcy Act of 2009″ becomes law this year, and as soon as possible. President Obama is for it. If it doesn’t become law, it will be because of Congressmen like this one, that spends all his time worrying about banks instead of people. And we are talking about 46,000 families per week are losing their homes. It’s time to start worrying about people, not banks.

By the way, if you’re interested in getting your two cents in with your Congressperson about this issue, you can go to the web site http://www.savehomewithbankruptcy.com and send an email to your U.S. Senators and Representatives. They really do keep count of your votes. Please help.

Posted in Bankruptcy Issues, Foreclosure. Tagged with , , .

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February 14, 2009

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Unemployment Causing Lots of Bankruptcy Cases

Downtown Houston from the jogging trail off of Memorial Drive

Downtown Houston from the jogging trail off of Memorial Drive

Sudden job loss and unanticipated unemployment is causing a lot of bankruptcies that we are seeing at my bankruptcy law office in Houston.

One client called yesterday and said that her boss let them work all day at an assembly plant, and then called all the employees together at 4 pm. “I’m sorry,” the boss said, “but we are out of money and have no money to pay you. The company is shutting down and you are all out of work. Please shut your machines down, and leave.” That was it; 50 people out of work, no notice, no warning, no severance pay.

A prospective client was in this morning. She had lost her job after 18 years; again, no notice, severance or anything. At her age (mid-50″s), it will not be easy to find another job. She may never find a job paying as much as the one she lost. She was “shell-shocked,” just couldn’t get over it. I can understand.

Anyhow, a bankruptcy case can get these folks out of debt, but it can’t get them a job or a livelihood. I don’t know what is going to become of some of them. I guess some will end up living with relatives or friends for a while, until they can find some kind of work, that will pay enough to live independently.

But meanwhile they will have to change their entire lifestyle, they’ll lose houses and cars, and not be able to help relatives like they used to. Some people are keeping their jobs, just not getting raises, or having their hours cut back. One lady this morning said that she was told she would keep her job, but have her hours cut back to 32 per week.

I’m sure most of these folks will be all right. Heck, the unemployment problem in Houston is not yet as bad as other parts of the country. But it seems to be getting worse.

Have you had an experience with job loss that you can share? Any that caused you to file, or consider filing bankruptcy? Please post any comments that you have.

Posted in Bankruptcy Issues. Tagged with , .

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January 28, 2009

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