Archive for August, 2013

Think Like Filing Chapter 13 Bankruptcy Is like a Marriage?

Thursday, August 15th, 2013
article by admin

The chapter 13 process in bankruptcy is surprisingly similar to a marriage.

First a debtor seeks out a bankruptcy attorney. Like going to a bar looking for someone to spend the evening with, a debtor will ask around about who is a good attorney, who he can communicate with easily, and who has the time to devote to the “relationship.”

Once an attorney is located, the dating process begins. The debtor “courts” the attorney by telling him everything, bringing papers, documents and payment for the services. The attorney “courts” the debtor by answering questions, being available for phone calls, organizing and reviewing the paperwork and counseling the client.

The case is filed. The courtship is over, the couple is engaged, and the confirmation process begins. There is discussion about the “plan” as there is about wedding details. But, with some work on both sides, the plan gets confirmed.

The honeymoon period begins. Everything is great – the creditors have stopped calling, the debtor is making the monthly payments, the attorney has put the file in the “confirmed” box and off his desk, and the communication between attorney and debtor is peaceful and pleasant.

For a while, just like in a marriage, things fall into a pattern: everything is going smoothly, and it’s all fine.

Then it happens: the debtor wants a new car, or to refinance or modify the house payment. In a marriage, the first thing that happens is a discussion of such a change. That should be the first thing in the Chapter 13 also: the debtor should talk to the attorney about how this will affect the existing plan.

Unfortunately, often the debtor forgets to call the lawyer. Much like the discord in a marriage when one spouse takes unilateral action affecting the family economics, so too will a debtor’s actions affect the chapter 13. Now there is a motion to bring and court approval of a modification of the Chapter 13 plan. And if the debtor acts completely unilaterally, without consulting his attorney, it can cause a motion to dismiss the plan. As in a marriage, calmly dealing with the problem can fix things, but not talking to each other will quickly end the relationship!

Treat your chapter 13 attorney like a spouse: tell him about any changes you want or need to make.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:

www.bankruptcyfortampa.com
or call (727) 254-1704.

To Get College Transcripts…File Bankruptcy?

Friday, August 2nd, 2013

article by admin

Bankruptcy can help in a lot of ways.  One less well-known benefit is to free up a copy of a college transcript to use for employment or future school applications, when you can’t afford to pay the college back right now.

As of 2013, Americans owe more in student loan debt than credit cards.  And a growing portion of that debt is in default.  In some cases, your former college will be a servitor of those loans for a state lender.  Or the college is owed money from some other account, like room and board or part of tuition.  In those cases, the college will sometimes hold the transcript hostage to satisfaction of the debt or at least reasonable payment arrangements.

You can’t blame the college for trying to do its part to support the financial system that keeps it alive.  But when the former student files bankruptcy, the rules change.  When the bankruptcy is filed, an automatic stay is typically created.  As described in many articles on this site, the stay prevents a creditor from taking any action to collect the debt owed without the court’s permission.

The automatic stay is a broad and powerful tool.  Sometimes judges even forget how important it can be.  In March 2013, Judge Dwight Williams in Alabama did not.  He concluded that a college withholding a transcript to force payment of a debt was a violation of the stay and the only question was what damages would be ordered.

The judge concluded that it did not matter that the student loan owed to the college (as servitor) was would not be wiped out in the bankruptcy.  It mattered that the college continued to use this tool to “encourage” payment.  And that’s enough to get the college into trouble.

So keep this in mind.  Getting your transcript freed up may not be a good enough reason to consider bankruptcy.  As we say, don’t drive a nail with a sledgehammer.  But if your debt load is a problem — which is likely if you have college loan problems — then it may be worth exploring how bankruptcy could benefit you.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:

www.bankruptcyfortampa.com
or call (727) 254-1704.