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The Truth About the Mortgage Modification Process

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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.”

Filed Under: Blog, Personal Finance, Rhode Island, Rhode Island Bankruptcy Articles, Rhode Island Chapter 7 Tagged With: bankruptcy attorneys, bankruptcy lawyer, bankruptcy lawyers, CERTIFIED FINANCIAL PLANNER, Chapter 7 bankruptcy, filing for bankruptcy in RI, foreclosure, HAMP, Home Affordable Modification Program, Mark Buckley, mortgage, Rhode Island bankruptcy, Rhode Island Bankruptcy lawyer

Get Bankruptcy Advice Even If You Have No Intention To File

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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.

Filed Under: Blog, Personal Finance, Rhode Island, Rhode Island Chapter 7 Tagged With: bankruptcy filing, bankruptcy lawyer, bankruptcy lawyers, Chapter 7 bankruptcy, credit card, credit cards, debt, filing bankruptcy in Rhode Island, filing for bankruptcy in RI, Mark Buckley, Rhode Island bankruptcy, Rhode Island bankruptcy law, Rhode Island Bankruptcy lawyer, Rhode Island Chapter 7, RI bankruptcy lawyer, RI Chapter 7

“How Much Do You Charge To File Bankruptcy”

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A percentage of callers always begin with that magic question:  What do you charge for bankruptcy?

Price is always a fair question when it comes to hiring any professional.  If I were paying a plumber to fix a toilet, or a dentist to pull a tooth, I want to know two things:

  1. is he experienced to do the job
  2. is his fee reasonable for my particular job

Sometimes you strike a good deal and sometimes you don’t.  Hiring a bankruptcy lawyer is no different.  Sit in on some Rhode Island bankruptcy court hearings in Providence for a day and you will quickly discover that good bankruptcy lawyers know what they are doing, but many “general practice” lawyers do not.

You will also determine which lawyers are running bankruptcy mills.  I have seen some lawyers file 30 cases at once, miss filing deadlines and receive court sanctions for their poor representation.  Don’t be fooled by the big billboards, the radio advertisements or their claims of filing more cases than any other firm.  You should hire a lawyer who is respected by the court and the bankruptcy trustees; not someone who has a reputation of cutting corners and being unprepared.

So, back to the question of “price”.  What do I charge for a Chapter 7 bankruptcy?  It truly depends on what your case looks like.  Its not like buying a gallon of gas where you just buy it from whoever is the cheapest.  Bankruptcy is anything but a one-size-fits-all situation.  Tell me your story first, we will explore all options, and if we are a good fit, I will quote you a price you can afford.  (And yes, I do realize that if you had a lot of money, you wouldn’t be needing to call me.  I get it.)

Filing for bankruptcy is a very complex process with specialized procedures tailored to your individual situation.  Remember, your legal costs correspond to the complexity of your bankruptcy case.  Fortunately, bankruptcy attorney fees are relatively inexpensive in comparison with the relief of having your debt cleared once and for all.

Another factor that will influence the amount of your bankruptcy attorney fee is the length of time your case will take to run its course. Generally speaking, a more complicated case will take longer for a bankruptcy lawyer to see through, resulting in higher prices than would be charged for a short, simple case.  Easy cases should be done quickly and inexpensively.  That is why I charge the lowest fee to a senior citizen, living on Social Security, with no real estate and only a few credit cards.

The costliness of your legal fees also depends on the size and volume of your assets and debts. In most cases, your legal bills will be lower the fewer assets, properties, cars, investments, and debts you have accrued. The Law Offices of Mark Buckley can provide an initial consultation to determine the value of your assets, and, consequently, determine the cost of your bankruptcy case.

Lastly, the amount of money you pay to file for bankruptcy is directly related to the type of bankruptcy you file under. When a client files bankruptcy under Chapter 13 of the US Bankruptcy Code, for example, his attorney can put the majority of his attorney fee in the Chapter 13 plan, a payment scheme that demands less money up front from the person filing.

As a RI bankruptcy lawyer practicing for 21 years, I have counseled thousands of good people struggling with bad debt problems.  If you are getting collection calls, being sued for wage attachment, or just simply getting close to your breaking point, its time to call a professional.

Filed Under: Blog, Rhode Island Bankruptcy Articles, Rhode Island Chapter 7 Tagged With: Bankruptcy, bankruptcy court, bankruptcy filing, bankruptcy lawyer, bankruptcy lawyers, bankruptcy low fees, Chapter 13, Chapter 7 bankruptcy, cheapest bankruptcy, credit card, debt, filing bankruptcy in Rhode Island, how much to file Chapter 7, Mark Buckley, Rhode Island, Rhode Island Bankruptcy lawyer, Rhode Island Chapter 7, RI Bankruptcy Court, RI Chapter 7, what does bankruptcy cost

15 Ways To Prepare for Filing Bankruptcy in Rhode Island

by Craig Stein

What To Do Today to Prepare for Filing Bankruptcy in Rhode Island

A smooth Rhode Island bankruptcy case generally depends on how prepared you are. Here are some simple steps you can take to make your Chapter 7 case less stressful for both of us.  It really works!

  1. Stop using all of your credit cards immediately.  No more robbing Peter to pay Paul.
  2. Ideally, try to make sure that there is little to no purchase activity in the prior 90 days.
  3. If there were very large purchases, cash advances, or balance transfers in the prior 365 days, there should be no less than 3 payments made on such credit accounts.  Your lawyer may suggest making additional payments or waiting several months before filing for bankruptcy.
  4. Do not withdraw retirement funds early to pay bills. These withdrawals may be counted in the six-month income calculation and delay your filing date.
  5. Do not transfer any property out of your name, like real estate, bank accounts, or other valuable property.
  6. Gather your income tax records for the past two years.
  7. Make copies of all pay-stubs for the last 6 months and keep collecting them up until the filing date of your case.
  8. If you already have a judgment against you, do not warn a creditor’s law firm that you may be filing bankruptcy soon. This might trigger them to seize any money you have in your bank account.
  9. If you intend to keep certain secured property, continue to make payments to that secured creditor. This is very important if you want to protect your house and car.
  10. Perform a title examination on your real estate to make sure there are no unknown liens.
  11. Do not repay debts owed to friends and family members within one year prior to filing bankruptcy.  The trustee could force them to refund the money to the bankruptcy court.
  12. Disclose all property that you may have an interest in. This includes parent’s bank accounts, parent’s real estate, personal injury cases, and anyone who may owe money to you.
  13. Download your free credit reports at http://www.annualcreditreport.com to make sure no creditor is omitted from your bankruptcy petition.
  14. Start saving money for your bankruptcy filing. Although most attorneys will provide a free consultation, they are not permitted to file your case until they are paid in full.
  15. Hire the best bankruptcy lawyer you can afford. Find one who devotes his practice to bankruptcy representation, knows what he is doing and is not a beginner.

Filed Under: Blog, Rhode Island, Rhode Island Bankruptcy Articles, Rhode Island Chapter 7 Tagged With: bankruptcy filing, Chapter 7 bankruptcy, Rhode Island bankruptcy, Rhode Island Bankruptcy lawyer

Debt Settlement Plans: Part II

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You’ve tried calling each credit card company to work out a debt settlement plan, but they aren’t interested.  Interest rates have only skyrocketed in the past year.  The bills keep coming and you are drowning in debt.

What if your “minimum payments” on credit cards add up to $ 1,000 a month?  Few debtors can honestly afford repaying such a high amount without using other cards for their daily living expenses.  It becomes a game of robbing Peter to pay Paul.

It would seem like a miracle for a “credit counseling” company to get your payments down to $750 per month by decreasing your interest rates.  Who wouldn’t want to save $ 250 a month?  Although saving $250 per month may sound good at first, here is the bigger question.  Do you honestly even have the $ 750 available?

If you can only afford $300 a month, a plan that requires you to pay $750 per month will not do you much good. You are still in debt. For this reason, “credit counseling” companies and “debt management” companies focus exclusively on the amount of savings they offer, rather than whether you can actually afford your payments.  Many clients who ended up filing bankruptcy in Rhode Island wasted thousands of dollars on unrealistic repayment plans first.

Added to the misleading nature of “debt management” company claims are hidden fees and fraud. Consumer Reports claims that

” Many [“debt management” companies] advise rolling high-interest debt into a second mortgage. But by using your house as collateral for what was unsecured debt, you risk losing your home. Some firms can persuade creditors to cut your debt. But if you miss payments they can later back out of the deal and demand full payment, potentially landing you in bankruptcy court after you’ve already paid a large portion of your debt.”  Consumer Reports online report, June 2005.

Filing Chapter 7 bankruptcy offers a straightforward, honest, effective alternative to the misinformation propagated by “debt management” and “credit counseling” companies. Federal bankruptcy laws were created by Congress for the purpose of helping hardworking citizens pay off their debts.  Unlike DMPs, bankruptcy actually reduces both interest and debt. In fact, bankruptcy is the only way to completely eliminate a debt.

Bottom line: Before you look into signing up for an unrealistic debt management plan, consider consulting a qualified Rhode Island bankruptcy lawyer.

Filed Under: Blog, Rhode Island Chapter 7 Tagged With: Bankruptcy, bankruptcy lawyer, business, Chapter 7 bankruptcy, credit, credit cards, credit counseling, debt, debt management, debt management companies, debt management plan, debt relief option, debt settlement, debt settlement plan, economics, filing bankruptcy in Rhode Island, filing for bankruptcy in RI, finance, insolvency law, Mark Buckley, part ii, payment plan, Personal Finance, Rhode Island, Rhode Island Bankruptcy lawyer, rhode island bankruptcy lawyers, secured loan, settlement planning, the truth about

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