Filing Bankruptcy: Pros and Cons

By Christopher C. Carr, Esq., Suburban Philadelphia Bankruptcy Lawyer

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

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Christopher C. Carr , Esq., MBA explains the types of bankruptcy and weighs the pros and cons of filing bankruptcy.

In these troubled economic times many people are having difficulties paying their bills and may be wondering whether a bankruptcy will help them. To examine the various strategies available to avoid bankruptcy, we must first understand what bankruptcy is and what it can and cannot do. The United States Bankruptcy Code offers several types of debt relief. The United States Bankruptcy Code offers two primary paths for consumers:

A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all of the debtor’s eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy.

A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy such as a Home Affordable mortgage modification is obtained. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13. If either is exceeded then the debtor will have but one alternative if they wish to file for bankruptcy:

Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other Advantages to Bankruptcy: The overall goal of every bankruptcy case is to give the debtor a “fresh start.” The “automatic stay” in bankruptcy will apply once your case is filed. This generally halts all collection activities, foreclosures, repossessions, Sherriff’s sales, etc. while in effect.

Disadvantages to Bankruptcy:

Many people wish to avoid bankruptcy because of the social stigma perceived to be associated with “going bankrupt” even though it is perfectly legal and in fact is guaranteed by the US Constitution.
bankruptcy remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit.
Homeowners, who have racked up large arrears in their mortgage payments which have to be repaid in full over the 3-5 year plan period in a chapter 13 , may find the payments too high to afford causing the bankruptcy ultimately to be discharged or converted, perhaps thus only delaying the ultimate loss of their home in contrast to a Home Affordable (HAMP) mortgage modification where as the name implies ideally a long term affordable solution is reached.
Not all types of debt are dischargable in bankruptcy, a good example being guaranteed student loans.
While perhaps not strictly speaking a disadvantage, there is a substanitial waiting period once a bankruptcy has been discharged…the debtor has to wait to file again, the timeframes varying with the type(s) of bankruptcy selected. For this reason, bankruptcy should be considered strategically. When its gone, its gone, at least for a good long time!

The key point is that each debtor’s situation is unique and deserves special consideration. Further, because the process is hardly ever as smooth as it is supposed to be because of the complexities and pitfalls involved, it is advisable to consult a competent and compassionate attorney who has experience in bankruptcies and/or in negotiating modifications to guide you through the process and help you properly complete the paperwork.

If you live in the Suburban Philadelphia area, including the counties of Berks, Bucks, Chester, Delaware, Lancaster, or Montgomery, and are seeking a competent and compassionate bankruptcy lawyer to help you explore your options and find the optimum solution, please call Attorney Christopher C. Carr, MBA (Finance) at 610-380-7969 (Offices in Paoli and Coatesville) for a FREE DEBT RELIEF EVALUATION. Or visit my web site at westchesterbankruptcyattorney.org and fill out the contact sheet.

I also provide Mortgage Mod Services.

IMPORTANT NOTE: I am not your bankruptcy lawyer, and nothing within this site creates that relationship. Bankruptcy law requires that for me to be your lawyer, you and I must have a written contract. So, unless we both agree in writing, you are not my client. Therefore, nothing written herein is to be relied upon as legal advice such as I might give to a client.

I am a debt relief agency. I help people file for bankruptcy relief under the bankruptcy code.

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Now that you Have Your Bankruptcy Discharge: 10 (actually 11) Things to Do to Make the most of it!

Mar19

So You Finally Got that Bankruptcy Discharge
Congratulations! You’re on your way to a fresh start.
Now you’ve got more to do? See why below:
1. Check debts that didn’t get discharged: Child or spousal support, student loans, or taxes for years for which you did not file a return (unless the IRS exceptions are met) are not dischargeable in bankruptcy. The discharge order will not tell you which debts survive and which do not, nor will the Court provide this information so you may continue to require the services of a knowledgeable bankruptcy lawyer to help you to assess this.
2. Verify lien balances: The discharge eliminates your personal liability for dischargeable debts; liens survive. If you plan to keep a house or car encumbered with liens, find out what you owe and resume payments. Otherwise, the creditor can enforce its lien by foreclosure or repossession.
3. Reset Banking Priveleges: Online banking and automatic bill pay may have been disabled while you were in bankruptcy but can be restarted at your request now..
4. Do Some Record Keeping: Save your bankruptcy papers and keep a copy of your discharge paper handy: You’re likely to encounter efforts by buyers of to collect debts that have been discharged in your case, or so called “zombie debt”. You need to be able to show that the debt was discharged in your case. Creditors with notice of the bankruptcy, and likewise those who buy up their worthless accounts and try to collect on them, were discharged (unless they fall within Rule #1 above). The services of a knowledgeable bankruptcy lawyer may be necessary to stop these collectors, or even under some circumstances to sue them for unfair practices and potentially turn the tables by collecting from them, including your legal fees.
6. Join a credit union: Credit unions are owned by their members. They are in the business of extending credit to members (hence the name, “Credit Union’: “Credit” stands for what they do and “Union” for the members they lend to) and the profits from such loans flow to members. Rates are almost always lower and terms better than the commercial banks, savings and loans and private lenders. Start out with a savings or checking account. Sooner or later you will probably need a car loan or even a home loan. Joining now will give you the longevity that adds credibility to a credit union.
7. Maintain insurance coverage: Even though you may have elected to surrender property through the bankruptcy that still stands in your name, make sure that you are insured for liability. Liability insurance covers you for claims of anyone injured on your property. Electing to surrender property doesn’t take you off title until someone else goes on title. Post bankruptcy claims arising from property you’re trying to offload can potentially ruin the fresh start.
8. Get a credit report: Several months after your discharge, check your credit report to make sure all discharged debts reflect a zero balance. The bankruptcy history can properly remain on your credit for up to 10 years, but you are entitled to a showing that you now owe nothing on all discharged accounts (but see Factor #1 above) This is crucial because your debt to income ratio (“DTI”),one of the primary if not THE primary factor lenders look to in extending credit. Getting erroneous entries corrected may be facilitated using the services of a knowledgeable bankruptcy lawyer. You are entitled to a truly free credit report annually from each of the 3 major credit bureaus which you can get by clicking here and credit experts recommend that you check it at least once a year.
9. Budget and Learn to Spend Within Your Means: Studies have shown that people who go bankrupt only do so ONCE in their lives. WHY? Well debt relief is only one side of the coin. On the flip side are the lessons people take from bankruptcy. So, like these now money wise people, take advantage of the fresh start that bankruptcy has provided, and make lifestyle changes so that it does not happen again. Follow Rule # 10 below and stop using trade credit (AKA: Credit Cards). Get a debit card instead and be you own bank, there is no interest that way!
10. Use credit Wisely. Once Lenders see that you have received a discharge, they may well start sending you “preauthorized” credit card applications. However, if you start to load up on credit again, you will soon be right back where you started. So the rule of thumb is to have just one credit card that you keep in a drawer somewhere for emergencies; If you do use it, make it “free credit”, that is: plan to pay it all back in the same month as incurred so that you are not left carrying a balance ant interest. That way you are living within your means. See Rule # 9 above. The only other credit to use generally speaking is for major purchases such as car or home loans.
11. Build up a reserve for emergencies and start saving again. Set up automatic savings Bankruptcy probably brought home to you how little net worth you have and how thin the safety net is. Arrange for automatic savings for both an emergency fund and for retirement.
Since you no longer have trade credit, it will be easier to devote some of your income to savings…follow the rule “Pay yourself first”. Experts recommend a reserve of 6 months salary and at least a 10% savings rate. Contributions toward your IRA or 401K at work count as you can withdraw these funds (with penalty if applicable) in an emergency.
If you follow these rules, you are more likely to take full advantage of your fresh start and not ever be back to see your friendly local bankruptcy lawyer!

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More on Judgment Liens and their Impact upon PA Homeowners: Lien Revival.

Feb5

By Christopher C. Carr, Esq., Suburban Philadelphia Bankruptcy and Foreclosure Lawyer

My Credo: “I Save Homes”

Tel: 610-380-7969 Email: cccarresq@aol.com

Website:

westchesterbankruptcyattorney.org

In my previous post on this topic, I discuss how a judgment lien can come to attach to your home and some ways to avoid such lien attachment. However, due to unfortunate ambiguities in the wording of the relevant Pennsylvania statutes, there is another common misperception regarding what I will call the “extinguishment” of liens against land titles within the Commonwealth, which I would now like to dispel.

Under our statutes, recently recodified, (Pa. R.C.P. 3023, et seq.), a lien attaches to all real property in the county of residence of a defendant automatically upon the entry of a judgment against that defendant’s name in the judgment register of the county but that judgment is only a lien against the real property which the judgment debtor owns at the time that the judgment is entered. The lien lasts for a period of five years (Pa. R.C.P. 3023). It is technically correct that a judgment is not a lien against real property which the judgment debtor acquires after the judgment has been entered of record. Philadelphia Nat’l Bank v. Taylor, 421 Pa. 35, 218 A.2d 246, 247-48 (1946). It is also technically correct that the lien of a money judgment is lost if a proceeding to revive that judgment is not commenced before the expiration of a five-year period from the date the judgment was entered, Shearer v. Naftzinger, 747 A.2d 859, 861 (Pa. 2000).

Many defendants, noting that five years or more has passed and the judgment against them has not been revived will blithely assume that a.) any real property they own is now free and clear of liens and will be so FOREVER and/or b.) that they can now safely purchase real estate in their own name without threat of a lien EVER attaching to it. A lender (let’s call it “BB Bank” for Big Bad Bank) will be willing to lend against such property during this hiatus because they are assured of obtaining a first priority mortgage lien since this is a “fresh” transaction, e.g. the property was not owned by the defendant at the time the now lapsed judgment lien was first entered. These poor unfortunates are wrong on both counts. The judgment lien has not been extinguished, it has at best lapsed, subject to a potential statutory revival which is always available to the judgment creditor by institution of what is called a “praecipe for a writ of revival.”

For as the Explanatory notes published in the Pennsylvania Bulletin explain, a praecipe for a writ of revival substantially the form provided by Rule 3032 once granted by the court, has a dual function: it i) continues any lien which has not been lost at the time it is filed and/or creates a lien in all property then owned by the defendant (called “after acquired property”) .

It is important to recognize that the rules regarding real estate liens were enacted not to create a “safe harbor” for debtors but to permit of an orderly prioritization of liens on real property as between large corporate creditors and other entities. That is, if you, the judgment creditor, allow your lien to lapse (by allowing the initial 5 year period to go by without filing a praecipe for a writ of revival), later lenders can step ahead of your lapsed priority and if and when you revive, your lien stands in an inferior position as to those filing in the interim, such as BBBank. But sadly, if you are in the position of a homeowner who has acquired property during the hiatus we have been discussing, once the lien is revived, it WILL capture all property you own at that time, subject to the priority of the BBBank lien ahead of it. That is, a judgment can by revival be made a lien against after-acquired real property by renewal of the lien after the real property has been acquired.

How long does this right of revival go on? Does it have any “statute of limitations”? Well, in the words of Chief Justice Zappala in the concurring opinion in Shearer v. Naftzinger, ibid at 861 , “There is no outer time limit to executing against real property to satisfy a judgment…”

In the related previous post, I discussed potential methods for avoiding the initial attachment of a lien, and in later (as yet unwritten) posts I intend to delve into how to prevent revived liens from attaching, despite the statutory scheme I have just been describing. I will also describe the remedies the judgment creditor can use to enforce the collection of their money judgment, if not so defeated.

Note that this right of revival does not apply to personal property which is govened by a separate PA statute.

I also provide Mortgage Modification Services.

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The Telltale Signs of an Email Fraud

Feb3

Edited by Jenny Greenhough of Rocket Lawyer | August 10, 2012

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Rocket Lawyer Guest contributor Christopher C. Carr , Esq., MBA on how to spot a fraudulent client or transaction in your inbox. Slightly reedited for this blog publication.

Don’t let a fraudster pull the wool over your eyes.

As discussed in my prior post, attorneys need to stay on alert for collection scams. Even for a savvy attorney, it’s easier to become an unwitting target of fraud than you may realize. For example, publicizing a big win in a lawsuit on your website may indeed bring you new clients, but some of them may actually be intent on profiting from a fraud perpetrated against your firm.

These scams can take on many guises. For example, a few weeks ago I got a very sophisticated scam letter. This time it was purportedly the representative of a Japanese law firm wanting local representation for litigation against debtors in the US. I immediately asked for his bona fides and he wrote back pretending to be insulted by my lack of trust. I then wrote back and explained that I had been taken in before and had lost some $2,000 in such a scheme and had thus adopted a policy whereby my firm holds all payments until final payment is issued to my bank by the depository bank on any settlement check (not just provisional payment because the check can still bounce until honored by the depositary institution).

Needless to say, I never heard from my Japanese “colleague” again.

Reading the signs

Let’s look at some if the identifying marks of this trade:

Typos and other language errors: Note the punctuation errors and idiomatic problems in the text above. These are harbingers of this type of fraud and may actually be intentional for the purpose of hiding the true identity of the author from the authorities. However, the message will virtually always contain typos or non-idiomatic English usage, suggesting that the drafter is not even employed by the institution they claim to represent.
No logos/Crude or Incomplete Logos: Another dead giveaway is a suspiciously “plain” appearance. But don’t use this as your only guide. I have recently begun seeing fake PayPal and even some bank items bearing an authentic looking logo.
International debt collection: The message will nearly always solicit your assistance to collect a debt purportedly owed by some American commercial entity or ex-spouse of a foreign national.
Different names: The account you are supposed to credit with the payment will not be in the same name as your client. There may be some excuse like “it’s my mother’s account and she has a different last name than mine.”
Urgency: Anyone who pressures you to pay them however gently or subtlety should be immediately suspect; it means they’re trying to get paid before you receive notice of final payment.
Slow build-up: Sometimes the scammers take a different route: they actually pay a couple of checks for smaller amounts to lull you into a false sense of security. Then they float a big rubber check with a reason like: “We are in a cash flow crunch, would you please pay us early just this once because you are holding up a lot of our money.” If you fall for it, the check bounces and they are never heard from again.
Righteous indignation: When you express doubt about their claims or start asking questions, they respond as if they’re offended. In actuality, they’re trying to make you doubt your own better judgment.
Reality check: As always if it seems to be too good to be true, it probably is!

So how do you test for legitimacy?

If you see any of the telltale signs above or anything else that makes you suspicious, make sure you:

Check their IP address. It should be in the same location as they claim.
Ask them to wait until you are notified of final payment. Just watch for the “slow build-up trick”.
Ask for their ID. Make sure it’s legitimate, and do some in depth Internet research as well to see if the company they claim association with is legit and has a real address where they say it is.

If you use caution, common sense, and follow the tips above, you should be able to spot a scammer without too much trouble. The old adage applies: IF IT SEEMS TOO GOOD TO BE TRUE, IT MOST LIKELY IS. Otherwise, you and your family or coworkers could find yourself the victim of a home-shattering or firm-busting fraudulent transaction.
About the Author

Christopher C. Carr is a suburban Philadelphia, Pennsylvania solo consumer bankruptcy attorney. He has been in practice for over 25 years in Real Estate & Mortgage Modifications; Debtor & Foreclosure Defense; Small Business, including Business Divorces; Elder Law; Technology, including Computer Law & E-Commerce & Entertainment Law. His background also includes significant experience as a financial planning analyst with a Fortune 100 Company.

Mr. Carr blogs regularly on debt and bankruptcy topics at http://christophercarrlaw.wordpress.com/.

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Don’t Let a Scam Put Your Solo or Small Firm Out of Business

Jan14

Don’t Let a Collection Scam Put Your Solo or Small Firm Out of Business

This Article and a companion piece first appeared on RocketLawyer.com, Edited by Jenny Greenhough| July 27, 2012

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ROcket Lawyer Guest contributor Christopher C. Carr , Esq., MBA describes a debt collection scheme that nearly took him in and what attorneys can learn from his experience.

Sometimes clients aren’t as they appear.

A single fraudulent transaction can easily wipe out the entire bank account of a small firm and expose the firm and members of the firm to lawsuits in the matter of just a few days. A few years back I was taken in by a fraud scheme, and suffered what was luckily a much smaller loss, so when another scam came in through my email a year ago, I knew how read the signs.

In this most recent case, I would have been defrauded to the tune of $180,000 by a collection scheme that came in through my email. A supposed British subject hired me to collect $600,000 owed her under a very real looking promissory note from her ex-husband, a West Chester, Pennsylvania resident. I even got her to sign a fee agreement. The background of their relationship and source of the debt is beyond the scope of this article; suffice it to say that their ruse was very detailed and convincing.

These two had a relationship alright, but it wasn’t the one they told me about.

When I contacted him by email threatening suit, the correspondent in the fraud (the supposed ex) hemmed and hawed a bit (to make it look realistic) but ultimately agreed to pay a large installment on the debt. A Fed Ex pack duly arrived a few days later containing a check written on a Nova Scotia bank. I called the bank and verified that he was a customer of the bank but they would not tell me his balance for reasons of privacy. I then deposited the check in my bank and watched my “available balance” soar. The fee letter required me to remit the proceeds less my fee by wire to an account in the UK. Had I done so, I and my bank would have been left holding the bag for hundreds of thousands. So I waited. I ultimately got a notice from my bank that the check had been dishonored upon presentation to the Nova Scotia bank, which took about 10 days from the time of my deposit.

The couple perpetrating the international fraud obviously counted on this “float” period where I had funds in my account that did not really exist. Clearly their check was written on a foreign bank to try and extend this time as long as possible.

I contacted the local police who took a police report but nothing ever came of it. Although I didn’t suffer any loss in this instance, there would have been little or no insurance coverage for such a loss, had it occurred.

The only traceable elements of this scam typically are:

The account (and routing information) into which the proceeds are to be paid
The IP address of the defrauder (where the computer or other device is located in the world). It cannot be cloaked and can be checked using a free service available via the internet.

This information can be of use in detecting fraudulent activity as to avoid detection and apprehension these people will rarely be where they say they are. This should be a dead giveaway.

What do you need to do ethically if a client attempts to defraud your or others? My blog on a related topic may provide some answers.

My advice is to fellow attorneys is to stay on alert when it comes to transferring large sums of money. Never take anything for granted, and you won’t get taken to the cleaners.

About the Author

Mr. Carr is a federally designated debt relief agency attorney, with his pricipal offices in Paoli and Coatesville, Chester County , PA with experience in chapter 7 bankruptcy, chapter 13 bankruptcy, mortgage modifications, debt settlement, foreclosures, and fair debt collection/debtors rights. He also works in small business intellectual property (including software licensing and entertainment law) and entertainment law. Mr. Carr is an MBA (in Finance) and a lifetime member of Beta Gamma Sigma, the national honor society for outstanding business graduates, with several years of business experience as a financial planning analyst and government contracts officer with the NCR Corporation for which he received the NCR “Outstanding Performer” award; as an insurance adjuster and in bank data processing . His legal specialties are consumer bankruptcy, debt settlement, fair debt collection, foreclosure prevention; business law, including “business divorces”, entertainment law, IT, including the preparation and negotiation of complex international and US banking software licensing, support and enhancement agreements and E-Commerce law. Mr. Carr is a graduate of Ripon College (B.A. degree, Philosophy, Magna Cum Laude, recipient of Ripon’s Philosophy Prize and Honors Philosophy Comprehensive Exam); of The Ohio State University – The Max M. Fisher College of Business (M.B.A. degree with Honors); of The Ohio State University Moritz College of Law (J.D. degree); and of the Pennsylvania State University-Great Valley Graduate Center, (CERT/MIS, Post MBA Certificate in the Management of Information Systems). \Mr. Carr is also a member of Phi Beta Kappa and has been listed in Who’s Who in American Law.

Mr Carr is licensed in Pennsylvania and Ohio and is admitted to the US District & Bankruptcy Courts for the Eastern District of Pennsylvania & the Middle District of Pennsylvania.
WWW: http://www.westchesterbankruptcyattorney.org/
Bankruptcy Blog: http://christophercarrlaw.wordpress.com/

Attorney Carr may also be reached to schedule an appointment at 610-380-7969 or via email at cccarresq@aol.com.

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X in Bankruptcy is for (Old) Chapter X

Dec18

Brings the Series to an End (See Below)

By Christopher C. Carr, Esq., Suburban Philadelphia Bankruptcy Lawyer

Tel: 610-380-7969 Email: cccarresq@aol.com

Website:

westchesterbankruptcyattorney.org

What X Was:

You have heard of Chapter 11 right? Everybody has. But how about Chapter 10? Ever heard of that? Well, here is a bit of history:

Chapter X was a portion of the bankruptcy code that dictated bankruptcy processes and procedures for corporations. 1978 was the last year corporations were able to file bankruptcy under Chapter X

Chapter X, (or “Chapter Ten”) was originally introduced in the Bankruptcy Act of 1898. Chapter X was used as a blueprint for the reorganization of financially unhealthy corporations under which a company would have to present full disclosure of current financial conditions to the court for review. Along with working in cooperation with the courts, the company would have to be be willing to develop a debt reorganization plan that would allow for the orderly retirement of its current outstanding debt. If the court found that the company met the qualifications for a Chapter 10 and that the reorganization plan was workable, the court would grant the protection and a appoint a manager for the plan. The court-appointed manager was to serve as an ongoing liaison between the court and the debtor company.

Chapter X was a notoriously complex procedure, and was seldom used during its time. Most corporations instead opted to file Chapter XI (the Chapter 11 of that time) because it did not displace the company’s management with a court appointed manager and gave management more control over reorganization. Chapter XI was also more popular because it gave corporations more control over how and to what extent the company would repay creditors and liquidate assets.

Why X Matters Today:

Though Chapter X was removed in 1978 under the Bankruptcy Reform Act, its ideas were revised and combined with Chapter XI and other bankruptcy laws to create today’s Chapter 11. One of the most important of these concepts which pervades the modern Bankruptcy Code was that of “disinterestedness”, which meant that as a condition of employment, trustees and court-appointed professionals were not allowed to have a personal interest in the outcome of the cases.

Note: This completes the 24th and final letter in the ABC’s of bankruptcy which I commenced with the letter C on November 22, 2011, Who would have thought it would take me a year to get through the alphabet once?

I dedicate this final blog in the series to my son Ethan Forrest Carr, whose 16th birthday it is today! Congratulations, Ethan!

I also provide Mortgage Modification Services.

Other lawyers blogging “X” include:

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THE LETTER “Y” IS FOR YO-YO AUTO SALES OR “CAN I GET MY CAR BACK AFTER REPOSSESSION BY FILING BANKRUPTCY”?

Dec2

By Christopher C. Carr, Esq., Suburban Philadelphia Bankruptcy Lawyer

Tel: 610-380-7969 Email: cccarresq@aol.com

Website:

westchesterbankruptcyattorney.org

A yo-yo sale is a consumer vehicle purchase under a valid signed agreement of installment sale which is followed, days or weeks later, by a phone call from a sales person at the agency that sold the vehicle who states that the consumer must return the vehicle, get a co-signer for the loan or sign new paperwork typically because, “the financing fell through.” Of course, this is impossible because the financing was locked in before the car was ever delivered but even so the befuddled consumer will fall for this line and present himself and his vehicle at the dealership for a new round of negotiations.

The way this scheme plays out the dishonest dealer will either negotiate more favorable terms after the fact or to repossess the car and resell it. With touch ups to the paint and an (illegal) odometer rollback, he may be able to pass it off as brand new. While yoyo sales are actually quite illegal under various federal and also state laws, they are quite prevalent especially in economic downturns. And they can result in the loss of your vehicle to repossession and oftentimes with it all the valuable property you left within it.

With the help of a skilled attorney, Yoyo’s can often be prevented especially if reported right away so they can be documented while in progress. However, you must still at least pay according to the original terms of the installment agreement or the vehicle can legitimately be repossessed by the dealer or the creditor.

Oftentimes, the Yo-yo victim, not knowing what to do or where to turn will simply stop paying his or her car payment entirely. This is a very bad idea because they will have then not complied with the terms of the original agreement and have lost most if not all of the ammunition needed to fight the Yo-yo legally but also will ultimately lose the vehicle as well to the repo man. What remedies may be left to help you to get your car back in such a situation? Well, bankruptcy may still help, to a greater or lesser degree, depending on whether you elect to proceed under a chapter 13 or a 7.

SO, CAN I GET MY CAR BACK AFTER REPOSSESSION BY FILING A CHAPTER 13 BANKRUPTCY?

If your car has already been taken out of your driveway, and if it has not yet been sold, you can get the car back in a Chapter 13. See Note 1 below. You will not need to come current (as you do in a Chapter 7, see below), but will just have to be able to make regular Chapter 13 car payments, which will almost always be smaller than the payments that you were making before filing. See Note 2 below for an example of how the car payments can be reduced. You usually also have to pay a reasonable repossession fee, these range in the hundreds of dollars, and wait anywhere from one week to a couple of months before getting it back. So why deal with the delay, inconvenience, added expense and potential damage to your car and/or loss of personal property involved in a typical repossession? A Chapter 13 filed before the repo man does his dirty work is your best bet.

CALL ME IF YOU ARE BEHIND IN PAYMENTS AND WE CAN AVOID THIS NASTY SCENARIO AND LOWER YOUR PAYMENTS TO BOOT. See Note 2 below.

BUT, CAN I ALSO GET MY CAR BACK AFTER REPOSSESSION BY FILING A CHAPTER 7 BANKRUPTCY:

In a Chapter 7, no, you cannot get the car back without the creditor’s permission because chapter 7 involves liquidation of the debtor’s non-exempt property. The only way that most creditors are going to agree to return your car to you is if you are able to catch up on the payments right away and sometimes the creditor will not even accept this but will accelerate the note and demand the entire balance due and owing on the vehicle. So, there is virtually no difference between this and not filing at all in terms of what you have to pay.

A Chapter 7 filed before repossession will stop the repo man temporarily, but it won’t take long for the creditor to get the court’s permission for relief from the stay and take the car anyway. The only sure way to save a car is in a Chapter 13, unless you can find a way to pay the value of the car in one lump sum but if you can chances are you probably aren’t thinking about bankruptcy.

Note 1: In Pennsylvania where I practice, you can stop the repo man from coming on your property to take your car if you are watchful enough to spot him in the act. That is trespass. It is however suggested that if you meet with resistance, you call 911 and summon the local constabulary rather than attempt to defend the property yourself. This of course is not true for a sheriff who enters upon real properly with a valid writ of execution or if your car is parked on a public thoroughfare or in the parking area of your apartment building, since you do not own it.

Note 2: For instance, let’s say you have a car that is worth $15,000.00, on which you still owe $20,000, and are paying $519.00 per month at 19% interest on a 60 month note. (This is only an example…every situation will vary.) I can always lower the interest rate down to 2 or 3 points above the prime rate and in many cases, assuming you have owned the vehicle long enough; we can set the payments based on the $15,000 valuation, rather than the $20,000 debt.

In this example, the monthly payments would be reduced to roughly $380.00, for a savings of $139 per month or a whopping $8,325 over the life of the loan, (based on the WSJ prime rate quote for 11/8/2012 of 3.25 plus 2% Risk Factor or 5.25% total.) If we are able to drop the loan down to $15,000 the payment would be only about $285 per month, for a savings of $234 per month. The same thing applies to boats, RV’s, motorcycles, motor homes, appliances, furniture, electronics, and any other secured property, except for primary residences.

I also provide Mortgage Modification Services.

Other lawyers asking “Y” include:

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Z is for “Zealous”, How far can your Lawyer go in representing you in Bankruptcy?

Oct13

By Christopher C. Carr, Esq., Suburban Philadelphia Bankruptcy Lawyer

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

“Have Gun, Will travel”

Richard Boone as Paladin

Z is for Zealous.

Subsection 2 of the preamble to the Pennsylvania Rules of Professional Conduct: (“RPC”) “A Lawyer’s Responsibilities” states thatas advocate for his/her clients, “a lawyer zealously asserts the client’s position under the rules of the adversary system”.

Sounds simple enough but of course, the RPC nowhere gives any guidance as to the meaning of the word “Zealous”. Encarta defines the term simply as: “actively and unreservedly enthusiastic”. It is a sort of “boundary” term in the law in that we come to understand what it means more by understanding what we as lawyers serving bankruptcy clients can and cannot do in its name. So let’s approach it from that angle.

A prerequisite for zealous representation is competence: RPC Rule 1.1 states that a lawyer shall provide competent representation to a client. Competent representation requires the legal expertise, skill, thoroughness and preparation reasonably necessary for the representation. In the bankruptcy context this means that a lawyer must have studied and understood the aspects of the Bankruptcy Code that are implicated in any representation. Even if this requirement is met in general, should he or she not be well versed in a particular sub-area, there is a duty to seek the assistance and mentoring of another attorney who has the requisite skill set. For example, the implications of divorce for bankruptcy are so complex and localized/varied to the laws of each of the several United State as to be beyond the ken of most bankruptcy lawyers and equally so for most divorce specialists…cross disciplinary expertise must often be sought to answer these questions.

However, it is clear that the lawyer who is competent is not thereby necessarily zealous. Zealous representation, which is not defined in the RPC, serves for most as the benchmark for excellence. Perry Mason may not have had all it its legal points correct but it does stand in the eyes of the public as the more dinified epitome of this attribute. For those who consider law practice more a profession than a business, it evokes the image of a crusader for justice. To others, however it suggests a fanatical, “no-holds-barred” advocate, willing to do anything for a client (for a fee). A hired gun… Have gun, will travel.

Thus, being overly “zealous” clearly can land a lawyer in deep trouble. Some attorneys have attempted to use it to justify unacceptable conduct even though it may have disciplinary or malpractice liability consequences (or both). For example, we bankruptcy lawyers frequently are asked clients for advice on what might be called “pre-bankruptcy asset protection planning.” While the ethical dangers associated with advice in this area are very real [See, for example, Ohio Rules of Professional Conduct (“ORPC”) Section 8.4(c), prohibiting a lawyer from engaging in conduct involving fraud], the consequences can reach beyond the realm of ethics and involve actual criminal liability for both transgressing client and counsel. This will reach to knowingly assisting a client who wishes to perpetrate a fraud on the bankruptcy court. See my blog on the topic of Bankruptcy Fraud for more information. For example, in a recent West Virginia case a bankruptcy lawyer was criminally indicted for advising his clients to transfer a mobile home to a relative before bankruptcy so as to attempt to “remove” the asset from the reach of the Trustee in Bankruptcy.

Thus while lawyers clearly have an obligation to advance their clients’ cases with competence and enthusiasm, they also have an obligation as officers of the bankruptcy court they serve to refrain from knowingly counseling or assisting a client to commit a crime or fraud. RCP 1.2 (d).

Picture credit: Wikpedia: http://en.wikipedia.org/wiki/Have_Gun_%E2%80%93_Will_Travel

I also provide Mortgage Modification Services.

Picture credit: Wikpedia: http://en.wikipedia.org/wiki/Have_Gun_%E2%80%93_Will_Travel

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