Choosing the right bankruptcy lawyer

Posted on June 30, 2010 by Mari Jo Clark

As we all know, in this economy more and more people are finding it necessary to turn to bankruptcy as a means to resolve their financial problems.  This means that many people are trying to figure out which bankruptcy attorney will be the best to handle their case and their particular circumstances. 

As explained in the June 13, 2010, issue of the Arizona Republic titled "Attorneys finding vexing issues in bankruptcy," it is important to find the right lawyer for your circumstances.  There are a lot of bankruptcy lawyers out there now who entered the field only as the economy turned poor and don't have a great deal of experience in handling the complex issues that can come up in even a seemingly simple bankruptcy case.  There are also a number of firms (labeled "mills") who seek to run the highest volume of people through their office, with the least amount of customer service possible.

In choosing the right lawyer for you, it is important to consider the following factors:

  1. experience level of the attorney in handling bankruptcy, which is not always measured by how many years in practice, but by how many cases that they have handled in the past,
  2. whether it is a specialized bankruptcy practice or a general practice firm dabbling in bankruptcy, and 
  3. your comfort level with the firm and the person who will be handling your case. 

Fees are a factor to consider, but in bankruptcy you often get what you pay for, and when your peace of mind and assets are at risk it is important to give this less weight since most bankruptcy firms will offer a payment plan prior to filing.  Overall, don't let your pocketbook guide your decision.  Base your decision on who will best handle one of the most important and scary events of your life.

 

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New HAMP Guidelines allow borrowers in bankruptcy to enter into loan modifications

Posted on June 21, 2010 by Mari Jo Clark

There was good news in the bankruptcy world recently for homeowners.  On June 1, 2010, the Treasury Department put forth Supplemental Directive 10-02 which, among other things, says that borrowers in active chapter 7 and chapter 13 bankruptcy cases are eligible for HAMP modification.   This is true whether the bankruptcy is filed before, during or after the the trial payment plan.  This is something that the bankruptcy groups have been lobbying for on behalf of bankruptcy filers due to the fact that it was previously left up to the servicer's discretion as to whether they would be eligible for consideration.  It is nice to see the Federal Government taking action for the individual after watching large corporations and banks get the lion's share of the bail out relief.

Supplemental Directive 10-2 also states that servicers must consider borrowers in active bankruptcies if the request comes from the borrower, the borrower's attorney or even the bankruptcy Trustee.  In an active case, where it is often necessary to get Court approval for loan modifications prior to finalization, Supplemental Directive 10-02 provides that servicers "should" extend the trial plan period to accommodate delays in obtaining Court approval, up to two months.

One final aspect of Supplemental Directive 10-2 benefiting bankruptcy Debtors is that borrowers who have received a bankruptcy discharge, but did not sign a reaffirmation in the case are still eligible for a HAMP modification.  This was included in previous Directives, but was reiterated in 10-02 with required language to be inserted into the modification agreement.

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How bankruptcy will affect your credit score

Posted on June 14, 2010 by Mari Jo Clark

As a bankruptcy lawyer this is the question that I receive from each and every client I meet with in my office.  It is a good question that I answer as follows.

1. Your credit score is like a pie with each piece of the pie influencing the final number.  The pieces of the pie consist of:

  • payment history,
  • amount of debt owed,
  • type of debt owed (car or home versus credit cards),
  • new credit obtained and your credit limits
  • how close your debt is to the limits,
  • bankruptcy/judgments. 

The biggest pieces of this pie are payment history and amount owed.

2. How your credit score will be impacted by filing bankruptcy has a lot to do with where you stand prior to filing.  If you come into my office with a perfect credit score and low unsecured debt owing, then you will find that bankruptcy drops your credit score dramatically, but if you are like most of my clients and you are maxed out on all of your credit cards and your debt amount is high, then you may find that bankruptcy has very little impact on your credit score and that you are able to rebuild your credit score quite quickly after filing by virtue of the fact that one of the biggest pieces of the pie (amount owed) just dropped to zero.  I have had many surprised and happy clients tell me that they were shocked at how quickly they were able rebuild their credit scores after bankruptcy and qualify for cars or homes.  Contrary to common belief, there is life and credit after bankruptcy. 

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