Spiritually Bankrupt

Finally, some truth about bankruptcy makes the news

Ron — Mon, 21 May 2012 17:41:35 +0000

I got to this article through a link from the Wall Street Journal’s bankruptcy blog, which is always interesting and which doesn’t require a subscription to read. It caught my attention for a hundred bankruptcy-geek reasons (including how hard it is to get 40 year-old court records as opposed to current ones, which take only a click of the mouse and 10 cents a page), but this quote really jumped out at me, because it’s what I tell all my prospective clients.

“Even though it is counter-intuitive, post-bankruptcy is actually a relatively easy time to obtain credit because you have no other debts and you are a lower credit risk because you cannot file for bankruptcy again for a period of time,” said Bliss, McMahon’s campaign manager.

No one in the media appears to know or care very much about bankruptcy, and when they do write something, it’s rarely something positive or even factual, so kudos to the Hartford Courant. I knew nothing about this Senate race, but my ears are now perked up.

Bank of America profiting from defaults?

Ron — Wed, 16 Mar 2011 02:43:36 +0000

I read this New York Times article (click here) to say that a Bank of America subsidiary was doctoring accounts in order to sell force-placed insurance on accounts that didn’t need it. (Do you agree with my reading? I think that’s one of the problems with relying on blogs as a news source: you may get it faster, but it may be sloppily written and not checked for accuracy in the same way. I tend to think that’s the world we’re headed towards–a world of opinion rather than fact. Did Nietzsche call it 130 years ago or what?) In other words, the homeowner had insurance in place, and the subsidiary would put a more expensive policy in place and then bill the homeowner. Naughty.

Know When to Walk Away (Know When to Run)

Ron — Tue, 25 Jan 2011 19:57:04 +0000

Wow, I haven’t blogged in some time! I wanted to point out, though, this useful article on NYTimes.com today running down the factors to consider when deciding to keep or walk away from your upside-down house. Typically, big banks don’t pursue deficiencies in Texas, so that’s not as much of a factor as you would guess.

Click here to read the article (it’s short).

Dealing with Debt Collectors

Ron — Sat, 04 Sep 2010 05:34:58 +0000

I will flesh out this post in the near future, but here is a piece of info that clients always ask me that I never have an exact answer for. The question is: how much do debt collectors pay the original creditor to purchase the right to collect from you. Answer:

Excerpt from 2009 GAO report on debt collection practices

Source (opens PDF)

Coming soon a more thorough consideration of debt collection and settlement. Stay tuned!

Mobile Issues Resolved

Ron — Thu, 12 Aug 2010 15:56:50 +0000

Problems with my cell phone’s blog application have been resolved. I will now be able to post a bit more often.

Facing Foreclosure? Yes, Bankruptcy Helps!

Ron — Thu, 22 Jul 2010 05:03:54 +0000

Great article in CNN today. The banks and even the government play down how helpful bankruptcy can be to prevent foreclosure, so I am always thrilled to see articles like this one (click here).

Corporate Chapter 7 – Point

Ron — Fri, 28 May 2010 04:42:20 +0000

Here is what I was taught about corporate Chapter 7 cases and is why I rarely file them. Typically I do state-law corporate dissolutions instead. To be clear, this regards filing the business entity itself, not the business owner. Usually the business owner has to file bankruptcy because he or she has personally guaranteed the debt. At that point, though, he or she can typically walk away from the old business entity and even start a brand new one to do the same kind of business.

Thank you to Weldon Ponder, a great bankruptcy attorney here in Austin. Stay tuned for the counterpoint article shortly (after I get permission from the authors):

I have always thought the vast majority of these Chapter 7 filings for small corporations were a waste of everyone’s time and money and can turn into more grief than they are worth for the principals involved. A corporate debtor does not get a discharge, so what’s the point? In most cases, every asset is encumbered to an under-secured creditor, and there’s nothing there for the Chapter 7 Trustee to administer.

There are exceptions, of course. If there’s little or no secured debt, then filing the Chapter 7 petition at least submits whatever assets are there to distribution through a formal process, and there is perhaps less risk someone will claim the shareholders made off with everything or favored themselves or their friends by repaying some debt and not others. But for every case I’ve seen like that, I’ve seen ten where the Chapter 7 Trustee found something in the corporate books that opened up the insiders to a preference claim or worse.

I’ve only done one or two of these corporate Chapter 7 cases in 30+ years of bankruptcy practice and nowadays, I have to be convinced there’s a valid reason to file one (a reason other than me making an easy fee).

I know why a lot of people file these: In probably most cases, it has the practical effect of shutting everyone up. But depending on what’s buried in those bank records, it doesn’t always work out that way. Right, trustees?

I’d be interested in opposing points of view on this. It is a subject I have thought about many times. Usually, my inclination is to let the closely-held corporation “die on the vine” and try to help the individuals maneuver their way through the mess they’ve created without putting the corp into bankruptcy. Let the creditors take judgments against the corporation to their hearts’ content!

–Weldon Ponder

B. Weldon Ponder, Jr.
Attorney at Law
Building 3, Suite 200
4601 Spicewood Springs Rd.
Austin, TX 78759
Office Phone (512) 342-8222
Office Fax (512) 342-8444

Bankruptcy is Amazing!

Ron — Thu, 06 May 2010 23:40:37 +0000

Here’s an excerpt from an article in today’s Times about one of the possible Supreme Court nominees.

Kathleen Morris was not thrilled to be working on a dry bankruptcy case. But when Ms. Morris, then a law clerk, shared her feelings with her boss, Sidney R. Thomas, a federal appeals court judge, his answer startled her.

“Bankruptcy’s amazing, Kathleen,” she recalled him saying. “It’s about life. It’s about failure — it’s about overcoming failure. It’s about dreams dying.”

The rest is not so bankruptcy-centric, but you can read it here. I think he looks like a very nice man, and I hope he gets the job!

Options

Ron — Thu, 29 Apr 2010 05:12:34 +0000

If you are at the end of your rope with calls and the pressures of being in debt, call me or another bankruptcy lawyer. If you are feeling feisty, sue debt collectors! Here’s the rundown from The New York Times.

The Unforgiven (Home Loan Modification – Part 5)

Ron — Mon, 05 Apr 2010 16:21:49 +0000

An editorial in today’s New York Times sheds some light on a new mortgage modification plan that goes into effect today. Lenders are now going to have to do modifications for people who are unemployed and for people who are current on their loans. I would add the word *supposedly* because in my experience, lenders almost always need some extra prodding in the form of a letter from an attorney or even a lawsuit. Though you would hope legal action wouldn’t be necessary to get your loan modified, it may be worth it, as you will save a lot of money over the life of the loan. I do advise clients to try modification on their own first, as I’ve had some clients who’ve had good luck with it. If you go back and forth with your lender or servicer, if they lose your documents or deny you for no reason – that’s the time to get an attorney involved.

Also, use caution selecting your representative – under Texas law, ONLY an attorney can represent you in a loan modification. Anyone else offering the service (besides your own lender, of course), is not legitimate.

Click here for the editorial.