Name: Attorney Mark Buckley, CFP
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Top 7 Reasons To File Chapter 7 vs Chapter 13

The US Bankruptcy Code provides a number of choices to people struggling with debt. The most popular choice is to file a Chapter 7 Bankruptcy petition. Here are seven reasons why.

Time—A normal Chapter 7 bankruptcy case takes about 100 days from beginning to end. After a brief creditor’s meeting one month into the process, the case ends two months later.
Property—Because federal and/or State exemption laws allow a debtor to protect their assets, most Chapter 7 filers do not lose any property. The bankruptcy trustee handles most cases as “no asset” cases, meaning that the debtor is not required to forfeit any property.
Cost—Filing under Chapter 7 is considerable cheaper than filing under Chapter 13. Even though lawyer fees may differ from state to state, most bankruptcy attorneys will quote a fee that is fair and affordable. Bankruptcy lawyers who practice exclusively in bankruptcy (not general practitioners) understand you don’t have extra money to overpay for their services.
Repayment—You are not required to repay unsecured non-priority creditors like credit cards, utility bills, personal loans, or medical bills. If you created your debt in good faith and no creditor objects to your bankruptcy, most unsecured credit obligations will be destroyed in your bankruptcy.
Privacy—Record of your bankruptcy is only accessible in the court system. In most cases, the only people who will know you filed for bankruptcy protection are you, the court, and your creditors.
Credit—Most people who file under Chapter 7 can reestablish credit shortly after their bankruptcy concludes. (Your debt to income ratio improves once your debt has been eliminated: the first step towards rebuilding your credit.)
Stress—Most chapter 7 filers never set foot in a courtroom. Instead, they merely attend a brief, informal hearing with the trustee assigned to their case.

The Truth About the Mortgage Modification Process

by Mark Buckley

Obama’s mortgage modification program: on its way out?

Could the Obama Administration’s program to help American homeowners stay afloat be nearing the end of its usefulness? A committee of Washington Republicans assigned to oversee White House programs says this could be the case.

Soon after it became obvious that a major national financial crisis was looming on the horizon, the Obama Administration launched its Home Affordable Modification Program (HAMP), offering mortgage lenders financial incentive to restructure their customers’ payment plans. Although optimists predicted this program would stem the tide of sub-prime mortgage failures, it only ended up being temporarily effective: confusing paperwork, uninformed staffs, and poorly organized processes hopelessly confounded a large number of participants, many of whom ultimately failed to acquire long-term mortgage modification.

Newly elected Republican officials are expected to study and scrutinize many of the President’s recession-protection strategies, and thanks to its less-than-stellar performance, HAMP will probably make an easy target. “This program seems to have outlived its usefulness,” stated Darell Issa of the House Oversight and Government Reform Committee. In Issa’s opinion, the incentive program is yet another example of superfluous government intervention.

This allegation is not entirely without basis in reality. Although hopes ran high for HAMP, in truth the entire program was rushed and poorly planned from the beginning. Of the 500,000 homeowners granted temporary mortgage modifications under HAMP, only a miniscule fraction was approved for permanent modifications. In the long run, this left many further behind on their mortgage than they began.

Additionally, recent unemployment rates have been less than conducive for HAMP’s success. In recent years it has become impossible for much of the country to attain income levels capable of handling modified mortgages, let alone unadjusted ones.

The fact that HAMP has been associated with the robo-signing controversy only compounds problems. Republicans now blame Democratic regulators for not paying close enough attention to the foreclosure industry. Representative Robert Goodlatte is quoted in a recent hearing on Capitol Hill as demanding Democrats to “explain how the OCC [the agency in charge of overseeing the activity of America’s largest banks] …failed to detect that there were foreclosure documentation issues well before this turned into a crisis.”

Julie Williams, Chief counsel for the OCC, had little to say in response: “In hindsight, if we think about the volume of transactions that were going through the process, we could have been more suspicious.”

Get Bankruptcy Advice Even If You Have No Intention To File

by Mark Buckley

A common emotion for most Chapter 7 bankruptcy filers is REGRET. Not regret for filing bankruptcy, but regret for not seeking legal help earlier for their financial struggles.

This may sound self-serving coming from someone who has helped more than 3,000 clients in Rhode Island file for bankruptcy relief, but ask anyone who has filed a Chapter 7 bankruptcy. Most debtors waste time and money on weak attempts to solve an unfixable mess.

Recently, I spoke to married client who hadn’t saved much for retirement. He sold his house a few years ago and put the $ 120,000 profit in the bank, hoping it would supplement the $ 40,000 kept in a 401k plan.

Over the years, he spent $ 80,000 of his precious savings and all of his 401k in order to pay substantial credit card debt. He still owes $ 37,000 and asked me if he could NOW file a Chapter 7 bankruptcy to discharge the remaining debt.

Under federal bankruptcy protection laws, he would have difficulty protecting his remaining $ 40,000 in the bank. Because the account is joint, he may be able to protect half, but the rest is fair game for the bankruptcy trustee to go after. Now in his 70’s, there is no way this retired man could afford to lose $ 20,000.

What went wrong? What should he have done?

If he had called me years ago, I would have explained how under Rhode Island law, he could have exempted all the equity in his modest home and still file bankruptcy to discharge his considerable credit card debt. I would have also explained how it almost never makes sense to liquidate qualified retirement assets to pay credit card obligations. Instead of taking a 10% penalty on the early withdrawal, paying income tax on the gain, and forfeiting the future growth of the account, he should have known that bankruptcy exemption laws are quite generous in protecting retirement assets.

In other words, he could have kept his house and retirement account and discharged all his credit card debt . . . with ease!

It is unfortunate that he spent most of his life savings on debt that could have been eliminated with a simple Chapter 7 bankruptcy filing.

Here is my point. You may never want to, or need to, file for bankruptcy relief. But you should talk with a skilled bankruptcy lawyer who can explain all of your debt options.

So, when do you know its time to seek help? Do you have more than $10,000 in unsecured debt, are you robbing Peter to pay Paul, are debt collectors calling you at home or at work? If so, something is seriously wrong.

Bottom line: You would be surprised what you could learn from sitting with a qualified bankruptcy attorney. A good bankruptcy lawyer can offer a free consultation and patiently explain all of your debt-relief options.

Bankruptcy for RI Seniors

by Mark Buckley

Bankruptcy Relief For RI Seniors

“An increasing number of Americans aged 65 and older are declaring bankruptcy,” writes Reuters in a recent report. “Those aged 65 and older represented seven percent of bankruptcy filers in 2007, a mind-boggling jump from 1991. They are easily the ‘fastest-growing age demographic…’”

The sad fact is that many older Americans cannot help living beyond their means. Age discrimination, paired with fewer job openings, makes it almost impossible to increase their income. American seniors are dealing with an unsettled economy, decreasing pensions, increasing medical expenses, and unstable investments. Because members of America’s senior population rely mostly on fixed incomes, they are increasingly forced to rely on credit just to survive.

In the end, the only course of action left for many senior citizens is to file for Chapter 7 bankruptcy relief. Although the idea of filing bankruptcy may initially be hard to accept, it is important to understand the benefits of filing for bankruptcy when there are no other reasonable options for debt repayment.

One of the biggest misconceptions about filing for bankruptcy is that you automatically have to give up certain assets. This is clearly not true. In Rhode Island, for example, those who meet the residency requirements can protect up to $ 300,000 worth of equity in their home. Rhode Island exemption laws also allow protection of up to $ 12,000 worth of equity in motor vehicles (cars, trucks, motorcycles).

There is also generous protection of retirement accounts, household furniture, clothing, jewelry and a Rhode Island “wildcard” that can be used to protect an additional $ 5,000 worth of other property. Bottom line, most who file a Chapter 7 bankruptcy in Rhode Island don’t lose any property at all.

An ideal Chapter 7 debtor should be current on the secured debts for property she intends to keep, like mortgages and car loans. In as little as 100 days after filing her Chapter 7 bankruptcy petition, her case concludes and her dischargeable debt is wiped out.

While the number of seniors filing for bankruptcy relief is increasing, many others still do not understand their rights under the law. They are often bullied by creditors to hand over their social security checks and not have enough money left over to buy food or medicine. It becomes increasingly important to seek the help of a qualified bankruptcy attorney in these situations.

Do Chapter 7 Debtors Have to go to RI Bankruptcy Court?

by Mark Buckley

Going to court is rarely fun. Financial and family court matters can be issues of serious stress and discomfort. Court cases are filled with uncertainty and conclude only after lengthy legal battles.

Thankfully, a Rhode Island Chapter 7 bankruptcy case is entirely different. In the vast majority of RI bankruptcy cases, debtors rarely enter a courtroom. Although your RI bankruptcy lawyer files your petition with the US Bankruptcy court in Providence, your case is reviewed by an attorney at the US Trustee’s office, meaning that your bankruptcy case does not need to be heard in a courtroom. No judge, jury, or bailiff will be necessary.

The room where I handle my RI bankruptcy creditor meetings is nothing like a courtroom, with only a few scattered tables and chairs. RI Chapter 7 bankruptcy meetings are almost always the same: no excitement, no drama, very predictable and uneventful. You will sit next to me and across from the bankruptcy trustee at a table with a tape recorder and computer. The bankruptcy trustee will typically hear your case within an allotted 5-minute time span. Only improperly-prepared petitions, or extrememly complicated bankruptcy cases, take longer.

One key to a stress-free Chapter 7 bankruptcy case is to find an experienced bankruptcy lawyer with attention to detail and who can do things right the first time. If this kind of lawyer prepares your petition, your hearing should be entirely uneventful.

If you hire a lawyer from a bankruptcy mill, however, be prepared for headaches.

The bankruptcy hearings take place at the Federal Center, 380 Westminster Street, 6th floor, room 620. You should arrive 30 minutes prior to your hearing and have with you a state issued identification card (driver’s license) and your Social Security card.

Top 7 Reasons To File Chapter 7 vs Chapter 13

The Truth About the Mortgage Modification Process

Get Bankruptcy Advice Even If You Have No Intention To File

Bankruptcy for RI Seniors

Do Chapter 7 Debtors Have to go to RI Bankruptcy Court?

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