Adam Levitin makes an interesting point on a recent post on CreditSlips.org where he notes the contrast between Chrysler and the average homeowner.  He asks how different would the current situation be if the average homeowner had the leverage to avoid foreclosure by getting their bank to reduce their mortgage (as Chrysler seems to have done).

It’s an example of the classic statement about the average person’s lack of negotiating leverage:  If you owe people a little bit of money, you’re in trouble.  If you owe them a lot of money, they’re in trouble.

For average homeowners, their mortgage amount is most likely a relatively small amount from the bank’s perspective.  However, that doesn’t mean that you’re entirely powerless to negotiate with your bank.

Banks, generally speaking, don’t want your home.  They’d prefer you keep making payments.  You’re less likely to do that if you succumb to foreclosure or file for bankruptcy.  That’s why, in certain situations, they’ll take a little haircut if they think it will ensure that you’ll be able to keep making payments.

Of course, they’re not going to just up and tell you that.  Nor will they tell you how much they might be willing to cut you some slack.  Nonetheless, it’s still important to know that there is still some room to negotiate.

A good way to increase your leverage in the negotiation is with a knowledgeable bankruptcy lawyer who has experience negotiating loan modifications.  Having a good bankruptcy lawyer on your side can help you feel out where the bank might have some flexibility while you still maintain the option of filing for bankruptcy if necessary.

In other words, you may not be Chrysler, but you still have some leverage if you play your cards right.

If you’re considering filing bankruptcy in Las Vegas or if you need Chapter 13 help Las Vegas, but you’re worried about losing your home, don’t rule out an attempt to renegotiate your mortage. 

Feel free to contact us for a free initial consultation to learn more.

In a previous blog entry, we discussed what happens during the course of a Chapter 7 bankruptcy case.  We will now describe the events of a Chapter 13 case.  

For the most part, the events are similar, with the exception that in a Chapter 13 case, the debtor needs to file a plan indicating how he or she will repay debts over a period of 3-5 years.  For more information about the differences between a Chapter 7 case and a Chapter 13 case, click here.   

Here are the major highlights of a Chapter 13 case:

• Before filing for bankruptcy, call our Las Vegas offices at 702-880-5554 to schedule a free initial consultation with our knowledgeable and experienced bankruptcy lawyers.  If you are calling from within Nevada, you can also reach us at 1-800-LAWYERS.  We’ll help you determine whether bankruptcy is right for you.   

• You must complete a credit counseling course within 6 months prior to filing for bankruptcy.  Our bankruptcy lawyers will provide you with a list of approved credit counselors in Las Vegas.

• Once the course is completed, our bankruptcy lawyers will file your bankruptcy petition for you, along with other appropriate documents listing your creditors, assets and liabilities, in the bankruptcy court in Las Vegas.  Your creditors will be notified by the clerk of the bankruptcy court, and all legal actions and collection activities must stop immediately.  Additionally, the bankruptcy court will assign a bankruptcy trustee to oversee your case. 

• Within 15 days after your bankruptcy case is filed, you will need to file your repayment plan.  Our lawyers will help you decide how much each creditor will receive, and when to pay them. 

• Within 30 days after your bankruptcy case is filed, you must start making repayments under your plan.
   
• In the 3-6 weeks following your bankruptcy filing, the bankruptcy court will schedule a meeting of your creditors, which you are required to attend.  The trustee appointed to your case will also attend.  At this meeting, you will be asked questions about the documents filed in your bankruptcy case with the bankruptcy court, as well as your repayment plan.  Our lawyers will represent you at the meeting and will resolve anything your creditors or the trustee do not agree with or understand. 

• Following the meeting of your creditors, the bankruptcy trustee and your creditors have 30 days to object to all of your exemption claims.  We will make sure that your exempt property does not fall into the hands of your creditors.  Your creditors then have 60 days after the meeting to object to your plan. 

• 45 days after the meeting of your creditors, the bankruptcy court will have a confirmation hearing, during which the bankruptcy trustee will recommend to the judge whether or not your repayment plan should be approved by the court.  At this point, we will likely have already resolved any objections by your creditors to the plan, and can guarantee that your plan will be confirmed.  

• Your creditors must then file their proofs of claim with the bankruptcy court within 90 days after the meeting of creditors.  These proofs of claim identify how much you owe them. 

• You must complete your repayments under your Chapter 13 plan between 3-5 years after you make your first plan payment. 

• Once you have finished making your payments under the plan, you will receive your discharge. 

• You are now ready to start fresh, with your financial life back on track!

Many of our Las Vegas clients contemplating bankruptcy ask us to describe what will happen during the course of their bankruptcy case.  A Chapter 7 bankruptcy filing, if done correctly, can be a straightforward and simple process.  Make sure, however, that you have a bankruptcy lawyer who will stand up to your creditors and guide you through your case so that you can emerge from bankruptcy with little, or no, debt.  

Here are the major highlights of a Chapter 7 bankruptcy:

• Before filing for bankruptcy, call our Las Vegas offices at 702-880-5554 to schedule a free initial consultation with our knowledgeable and experienced bankruptcy lawyers.  If you are calling from within Nevada, you can also reach us at 1-800-LAWYERS.  We’ll help you determine whether bankruptcy is right for you.   

• You must complete a credit counseling course within 6 months prior to filing for bankruptcy.  Our lawyers will provide you with a list of approved credit counselors in Las Vegas.

• Once the course is completed, our bankruptcy lawyers will file your bankruptcy petition for you, along with other appropriate documents listing your creditors, assets and liabilities, in the bankruptcy court in Las Vegas.  Your creditors will be notified by the clerk of the bankruptcy court, and all legal actions and collection activities must stop immediately.  Additionally, the bankruptcy court will assign a bankruptcy trustee to oversee your case. 

• In the 3-6 weeks following your bankruptcy filing, the bankruptcy court will schedule a meeting of your creditors, which you are required to attend.  The trustee appointed to your case will also attend.  At this meeting, you will be asked questions about the documents filed in your bankruptcy case with the bankruptcy court.  Our lawyers will represent you at the meeting and resolve any issues your creditors or the trustee do not agree with or understand.

• Following the meeting of your creditors, the bankruptcy trustee and your creditors have 30 days to object to all of your exemption claims.  Our lawyers will ensure that your exempt property does not fall into the hands of your creditors. 

• Your creditors then have 60 days after the meeting to object to the discharge of any of your debts.  The bankruptcy trustee also has 60 days after the meeting to dismiss your case if he finds that your bankruptcy is an abuse of the provisions of Chapter 7.  We will fight any creditors, and work with the trustee, to make sure that you receive the relief you need in order to start fresh.

• After the 60 day-period for objecting to your discharge and dismissing your case are up, you will receive your discharge.   Your new financial life has begun!

If you believe what various news outlets and blogs are saying, it’s not looking favorable for bankruptcy legislation that would help average people avoid foreclosure by enabling bankruptcy judges to "cram down" (i.e., lower the amount of) mortgage that a person owes in a Chapter 13 bankruptcy case.

Our own Nevada Senator Harry Reid is getting ready to introduce the bankruptcy legislation on the Senate floor very soon, but he may not really be helping the cause.  Lobbyists for the mortgage industry (who oppose the legislation) are publicly predicting it will not pass, and commentators aren’t disputing them.

Help Stop Foreclosure Las Vegas
If you’re considering filing bankruptcy in Las Vegas, now is the time to step up and make your voice heard.  This legilsation would help a large number of people who will otherwise continue to be burdened by mortgages that they can’t pay off–a problem that the mortgage and financial industries helped create but are not taking any responsibility for.

Contact your own senators, and if you can, contact the senators in Maine, Pennsylvania and Texas as well, since they’re likely swing voters in the Senate.

TEXAS:  John Cornyn (R), Kay Bailey Hutchison (R)
MAINE:  Susan M. Collins (R), Olympia Snowe (R)
PENNSYLANIA:  Robert P. Casey, Jr. (D), Arlen Specter (R)

Normally Chapter 13 bankruptcy help in Las Vegas comes from good bankruptcy attorneys in Las Vegas.  But in this case you’re in a position to help your own cause by making your voice heard.

For more Las Vegas bankruptcy help or to speak with a bankruptcy attorney in Las Vegas about this issue or any others, please feel free to contact us.

Indiana bankruptcy lawyer Mark Zuckerberg had a great post last week on scams to watch out for, especially for debtors in a Chapter 13 bankruptcy case.

The gist of it is, there are various scams out there that take advantage of people who are in need of a new job.  The blog post gives a list of things to watch out for, such as non-professional e-mail addresses (e.g., yahoo.com, gmail.com, aol.com, etc.), toll-free phone numbers (but no local phone number), addresses with a P.O. box, no website, and of course any offer that sounds too good to be true.

Chapter 13 Bankruptcy Law Las Vegas
The post also notes that this is especially relevant to people in the middle of a Chapter 13 bankruptcy case.  Because, if you lose your job, then the trustee can file a motion to invalidate your case.  And since Chapter 13 is often used as a way to prevent foreclosure on a home, the consequences can be particularly dire.

Las Vegas Bankruptcy Help
As a result, many people–especially in the current economy, and especially in Las Vegas where the housing market has really hurt the local economy–are in dire need of a job.  Scammers take advantage of people in desperate situations.  And that’s why we urge you to be especially careful. 

No matter how bad your situation may be, if your seeking bankruptcy information in Las Vegas, make sure to discuss all of your issues with a lawyer first.  Especially if it’s job related.  Good bankruptcy attorneys in Las Vegas can help you spot these red flags and help make sure an already tough situation does not get worse.

A common question we get from our Las Vegas clients who are contemplating bankruptcy is whether their spouse will also need to file for bankruptcy. 

The answer is no.  BUT, in Nevada, your bankruptcy filing will have a significant effect on your spouse. 

Here’s how:  Nevada is a "community property state," meaning that property acquired by you or your spouse during marriage is considered to be owned jointly by both of you, and is divided only upon divorce or death.  If you file for bankruptcy, both halves of the community property (yours and your spouse’s) may be used to pay your creditors – even if your spouse does not file for bankruptcy. 

The good news is that your spouse will also benefit from your bankruptcy discharge!  Once you receive your discharge, neither your creditors, nor your spouse’s creditors, may touch the community property that existed at the time of your bankruptcy filing.  These creditors may also not touch the community property that you and your spouse acquire after the bankruptcy filing.  Instead, a creditor with a separate claim against your spouse can only collect its debts from your spouse’s separate property.  Examples of this separate property include assets acquired by your spouse before marriage or assets your spouse acquired through inheritance.  

For more information on this topic, or any other aspect of bankruptcy, call our offices at 702-880-5554.  If you are calling from within Nevada, you can also reach us at 1-800-LAWYERS.  Our lawyers are bankruptcy experts, and can offer you the bankruptcy services you need to get your financial life back on track.  

In a recent post, we discussed why debt consolidation is not a recommended alternative to  bankruptcy.  In this post, we’ll discuss credit counseling as an alternative to bankruptcy.

First of all, it’s important to note that the new bankruptcy laws require every individual to complete a credit counseling course before filing for bankruptcy.  Our bankruptcy lawyers have a list of authorized credit counseling agencies in Las Vegas.   The course, which should last about 60-90 minutes, will include an evaluation of your personal financial situation, and can take place in person, on the phone, or online. 

If you choose to continue with credit counseling as an alternative to bankruptcy, you may be able to manage your debt by lowering your interest rates and consolidating your payments.  Unfortunately, there are some downsides to these programs.  Here are a few examples:

• Your creditors will need to agree to any repayment plan you propose.  What this normally means is that you’ll be required to pay back your debt in full, and your creditors may offer only minor interest reductions.  As a result, you may not be saving much money. 

• Your creditors are not beholden to the repayment plan.  If you miss one payment, your credit card company can demand out, increase its interest rates, and reinstate any applicable late fees.
   
• Your participation in the credit counseling program will be noted on your credit report for almost as long as a bankruptcy is noted — and you won’t have the benefit of erasing as much debt as you would in a bankruptcy.  In fact, many lenders consider your credit rating after a bankruptcy discharge to be better than your credit rating after entering a credit counseling program. 

• It may take several months to set up the credit counseling repayment program.  During this time, you are not protected from the automatic stay as you would be in a bankruptcy.  Rather, you’ll have to continue to pay your creditors at the risk of lawsuits or bad credit reports.  

To sum up, the problem with credit counseling as an alternative to bankruptcy is that you’ll end up with some of the same credit issues that someone who has gone through a bankruptcy will need to deal with, but you will not have had the benefits of a bankruptcy.  For example, you won’t be protected from credit harassment and lawsuits, and you won’t be able to reduce your debt as substantially. 

If you are encountering financial difficulty, contact our experienced and knowledgeable bankruptcy lawyers at 702-880-5554 for a free consultation.  If you are calling from within Nevada, you can also reach us at 1-800-LAWYERS.  We’ll help determine whether a bankruptcy filing is right for you, or whether you might benefit from another alternative. 

There’s an article in today’s Washington Post (free subscription required to read the article) about the mortgage modification law that, depending on its form, may enable many homeowners to reduce the principal amount of their mortgage by filing for bankruptcy.

The article says President Obama’s administration hopes to have something in place by Memorial Day, but it sounds like there are still a lot of moving parts and no guarantee that the law that gets passed will actually end up being helpful for homeowners burdened by mortgages they can’t keep up with in the current economic crisis.

The financial industry is trying its best to make sure that "cramdown," or modification of mortgages, is used only as the last resort by homeowners struggling with debt.  Though if they have their way, the law will be completely useless.  In the bigger picture, average Americans are facing a bleak financial situation.  If you don’t give people a reasonable way out of mortgage debt, then you’re essentially pinning down a large part of our society that could otherwise be contributing to our economic recovery.

Additionally, a Bank of America spokesman gets it backwards when he says, "Any legislation should include a provision requiring the borrower to consider an offer of a modification…before a cramdown can be considered."  Rather than requiring average people to work through the bureacracy of a bank or other mortgage lender to try and get an "offer," the lenders should already be making reasonable offers to the borrowers so that the borrowers don’t feel the need to consider bankruptcy.  At least that’s what they should do if they’re smart and proactive and want to cut their losses in the long run.

Meanwhile, a spokesperson for the Financial Services Roundtable (a lobbying group) said, "Lenders and borrowers are the best people to change the terms of the mortgage" (as opposed to the government).  That sounds like the people who helped create the mess in the first place saying, "Trust us.  We can solve this better than you can."

So there are still clearly obstacles out there to a "cramdown" bill that actually helps homeowners. especially those who need help to stop foreclosures in the Las Vegas area.

Since Las Vegas has been hit so hard by the collapse of the housing bubble, filing bankruptcy in Las Vegas remains an option.  But depending on how the legislation proceeds, there may be more Las Vegas bankruptcy help on the way.

Many of our Las Vegas clients ask us if they should try consolidating their debt through a debt consolidation company instead of filing bankruptcy. 

We advise against debt consolidation.

Here’s what debt consolidation allows you to do:  You can combine all of your credit card debt, car loans and other consumer loans into one single lower-interest loan.  The idea is that you’ll be able to take the extra money you are saving and use it to get out of debt faster by making extra principle payments.

Sounds tempting, but here are some of the pitfalls:

• The number of unscrupulous debt consolidation companies being investigated by the Attorney General is astonishing.  Many of these companies have been charged with deceptive practices like charging high upfront fees or taking the first month of their clients’ payments for themselves.  Worse, some companies simply took all of their clients’ payments for themselves, and paid the creditors nothing.  Unless you do extensive research and are confident that you are dealing with a reputable and honest company, your money and credit score might be in serious jeopardy.  

• Your creditors can still call you to harass you for not paying their bills while you are paying off your consolidated debt.  In fact, they can even sue you.  Not so with a bankruptcy filing, which automatically stops creditor harassment and lawsuits.

• You may be saving money with your lower monthly interest payments, but you have to be 100% certain that you won’t use that money to get into more debt.  Many of our Las Vegas clients have told us about how debt consolidation made their problems worse, by allowing them to incur more debt than they started with. 

• You’ll need to scrutinize the terms of your new consolidated loan.  Even though the monthly payments and interest rate might be lower, the life of your new loan might be longer, meaning that you’ll end up paying more interest in the long run. 

Too many of our clients have had bad experiences with debt consolidation companies for us to recommend them.  If you live in Las Vegas and are experiencing financial difficulties, contact our Las Vegas offices at 702-880-5554.  You’ll be able to schedule a free consultation with our knowledgeable and experienced bankruptcy lawyers, who will help you decide how to get your financial life back on track.  If you are calling from within Nevada, you can also reach us at 1-800-LAWYERS.

When people contemplating bankruptcy come to our Las Vegas office for a free consultation, we are upfront with them, and tell them that they do not need a bankruptcy lawyer in order to file a consumer bankruptcy case.

But we wouldn’t recommend it. 

Why?  First of all, you will be held to the same standard that a lawyer would be held to if he or she were representing you.  That means no second chances if you file documents incorrectly, miscalculate figures under the new "means test," or miss crucial filing deadlines.  Worse, you might end up being unable to wipe out your debt if you have no one to guide you on how to properly identify, categorize and list your creditors.  Also, you may miss opportunities to protect some of your property from being distributed to creditors if you don’t claim the appropriate exemptions.  Finally, be aware that without a lawyer representing you, you will need to represent yourself in court and at the meeting of creditors. 

A successful bankruptcy filing can mean a fresh start with less debt, or even no debt.  An excellent bankruptcy lawyer is key to a successful filing.  If you live in the Las Vegas area and are contemplating bankruptcy, contact our offices at 702-880-5554 to set up a free consultation with our knowledgeable and experienced bankruptcy lawyers.  If you are calling from within Nevada, you can also reach us at 1-800-LAWYERS.  We will make sure you get the relief you need in order to get your financial life back on track.