We like to think we do a pretty good job of protecting Americans, especially those in Las Vegas, from the bankruptcy bad guys.

But it looks like there’s a new hero who may be championing the cause of average Americans facing bankruptcy and foreclosure.  And his name is BAPCPA Man (a reference to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005).  BAPCPA Man is a new cartoon from the creators of Bankruptcy Bill (http://bankruptcybill.us), a cartoon about big firm bankruptcy lawyers.

With bankruptcy, foreclosure and unemployment at unprecedented levels, it can’t hurt to have one more hero on your side.  Even if it’s a cartoon.

In the meantime, if you need a bankruptcy attorney in Las Vegas to help you with bankruptcy planning, filing bankruptcy in Las Vegas, loan modification, to stop foreclosure or foreclosure mediation, please feel free to get in touch with us for a free initial consultation. 

We may not have super powers.  But we do have legal powers that can really help average people like you.

Miss "The Sopranos?"  

We do too.  Fortunately, the drama unfolding these days in the mega bankruptcy cases (e.g., GM, Chrysler, Stephen Baldwin…) has kept us amply entertained. 

But we recently came across a Missouri bankruptcy decision that made us yearn for the Sunday nights when we cuddled up with Tony Soprano.  Here’s the upshot:  If your husband’s death has made it hard for you to make your bankruptcy repayments, you may be let off the hook.  Even if you killed him.
 
Everything started when a husband and wife jointly filed for Chapter 13 bankruptcy.  Chapter 13 requires debtors to make repayments to creditors over the course of a few years.  If something happens that prevents a debtor from making these repayments, the debtor may apply for a "hardship discharge," which would allow him or her to stop making repayments. 

In order to obtain the hardship discharge, the debtor must prove that it would not be practicable to modify his or her repayment plan.  The debtor must also prove that the amount he or she already repaid creditors is more than what those creditors would have been paid if the debtor had liquidated under Chapter 7.  Finally, the debtor must prove that he or she is not responsible for whatever happened that is now preventing him or her from making the required repayments.  

The wife had no problem proving the first two factors.  The third, however, gave her some trouble. 

The wife did not deny the fact that she killed her husband, whose death was now preventing her from making her bankruptcy repayments.  Rather, the wife contended that she should not be held accountable for the murder because she was not criminally charged for it.  She refused, however, to explain why she hadn’t been charged for the murder.  Accordingly, the bankruptcy court could not conclude that she was not accountable for the murder, and it denied her hardship discharge.

Now, mind you, it was not the wife’s murder that caused the bankruptcy court to deny her request for a hardship discharge.  The basis for the court’s denial was the wife’s refusal to give a plausible explanation of why she was not accountable for the murder, at least according to the authorities that had not charged her. 

Lesson learned, wiseguy:  If you’re going to settle your beef by bumping someone off, that’s your business.  But if you bring it into the bankruptcy court, you’d better be prepared to snitch. 
 

In case you’re not already completely skeptical of debt settlement companies, watch this video of a recent ABC News investigative piece on debt settlement companies.  (Or read this article "Claims of Becoming ‘Debt Free’ Fall Flat for Consumers" by the same reporter where you can also see the video.)

The story focuses on Credit Solutions of America, the largest debt settlement companies in the U.S.  While they help a few people here and there, too many of their clients end up paying money to them up-front and then never hearing back.  Unfortunately, this seems to be the standard business model in the debt settlement industry. 

(Public service announcement:  Never pay money up front for debt settlement, credit counseling or loan modification services.  You should always be entitled to a free initial consultation, and you should have a contract that outlines what you get in exchange any payment you make in clear, easy to understand language.)

Another standard practice by debt settlement companies is to tell their customers to stop paying their credit card bills.  This, of course, is music to the ears of people.  But the reality is more like musical chairs, and you don’t want to be there when the music stops and you don’t have a chair anymore. 

The implication in their statement is that you don’t need to worry because the debt settlement company knows what it’s doing and will talk to the credit card companies on your behalf.  The problem is that too many times they don’t talk to the credit card companies and they don’t call you back, no matter how many times you follow up with them.  Why?  Because they already have your money.

In other words, if you give money to a debt settlement company, it’s equivalent to making a really bad bet with very little upside and very big downside. 

1. They may or may not call you back after you pay them.  Once they receive your money, they certainly have little incentive.
2. The best outcome is that they negotiate a slightly better situation for you with your credit card companies.
3. The worst case scenario–which happens all too frequently–is that you stop paying your credit card bills, the debt settlement company doesn’t do anything after you pay them, your credit card bills grow larger, your credit score gets worse, and you need to talk to a lawyer about your bankruptcy options.

Instead, if you’re looking for good debt or bankruptcy information in Las Vegas, it makes the most sense to start by finding good bankruptcy attorneys in Las Vegas. 

A good bankruptcy attorney will always sit down or talk on the phone with you for a free consultation where they’ll listen to your story and explain all of your options.

Still not convinced?  Go back and watch the ABC video.  Watch Heather Carmichael, the nice friendly Vice-President of Operations, smile without flinching while not giving straightforward answers to basic questions.  Does it really seem like a good idea to give your hard-earned money to her and her company?  And more importantly, what do think the odds are that other debt settlement companies are much different?

In the eyes of mortgage lenders and banks, there are three categories for homeowners facing foreclosure, according to an article in the Washington Post ("Foreclosures are Often in Lenders’ Best Interest").  And only one of those categories is viewed by mortgage companies as good candidates for loan modification.

Foreclosure Category 1:  You can’t keep up payments without the loan modification, but you could keep up payments with a loan modification.  This is the category for which it’s likely to be in a mortgage lender’s interest to negotiate a loan modification.

Foreclosure Category 2:  You could keep up with payments if you got a loan modification, but you’re likely to fall behind down the road, leading to foreclosure.  Mortgage lenders want to try and avoid giving loan modifications to people in this category, according to the article.

Foreclosure Category 3:  You’re behind on payments, but if you really bust your you-know-what, sell your car, take a second or third job, borrow money from friends or relatives and do whatever else it takes, you could make your payments.  People in this category are probably the ones who could most benefit from a loan modification.  But if you’re able to get blood from a stone on behalf of the mortgage lender, then according to the article, they don’t have incentive to offer you one.

Bear in mind that these categories represent the interest of the mortgage lender, a private, profit-driven company.  They do not, however, necessarily represent the best interests of society as a whole or of the economy.  It’s more beneficial to our Las Vegas society to have people in stable living situations.  And it’s more beneficial to our Las Vegas economy to have people in stable financial situations so that they can continue to be productive members of society.

That said, it’s important for Las Vegas residents to be aware of these three categories.  Because that’s how the mortgage lenders see if you if you’re facing foreclosure in Las Vegas.

Also, I want to point out that categories are not hard science.  While some people may clearly fall into Foreclosure Category 1 or Foreclosure Category 2, how can you really know if someone is in Foreclosure Category 3?  You have to imagine there’s a lot of guess-work that goes into figuring out whether a homeowner falls into Foreclosure Category 1 or Foreclosure Category 3.

For that reason, when you’re considering loan modification in Las Vegas, it can be extremely helpful to have experienced loan modification lawyers on your side who know how to: 

• evaluate your foreclosure situation
• come up with an optimal, customized strategy for you
• get the mortgage lender to attend a mandatory foreclosure mediation sessions (if necessary)
• communicate effectively with the mortgage lenders
• present your story in the most favorable way on your behalf, and
• negotiate with the mortgage lenders on your behalf.

Contact us for a free initial loan modification consultation.  We’ll quickly help you figure out your best options, whether that means loan modification in Las Vegas, bankruptcy help Las Vegas, or even a combination of the two.  And we’ll make sure you get the full benefit of the new bankruptcy laws Las Vegas.

Back in May, we posted an entry in which we lamented the defeat of the Mortgage Modification Bill in the Senate.  If the Bill had passed, bankruptcy judges would have been given the power to:

• Reduce the principal on a homeowner’s mortgage;
• Cut the interest rate; and
• Extend the loan’s terms. 

The Bill was defeated, largely because of pressure against it by bank lenders.  We called the defeat a "travesty for homeowners."

Although the Bill was defeated, President Obama put the heat on the lenders.  As part of his new "Making Home Affordable" program, President Obama told lenders that they’d have to try and negotiate with homeowners who requested mortgage modifications.  The lenders reluctantly agreed, after being offered a variety of incentives.  One of the incentives is $1,000 for every mortgage the lenders modify. 

What do you think happened? 

Right.  The lenders have not been keeping their promise.  As you know, foreclosure rates in Las Vegas and elsewhere are skyrocketing. 

And so … the Bill is back.  A Senate Judiciary subcommittee hearing on the Bill kicked off last Thursday.  We’re hoping that Congress now understands that it has to do something to keep people in their homes.  Stay tuned – we’ll keep you updated on the Bill’s status as it makes its way through the Senate.  

Most of our clients file their bankruptcy cases in order to protect their assets.  True, the bankruptcy trustee may sell some of the debtor’s assets and use the proceeds to pay creditors, but each state provides for "exemptions" to the property that may be sold.  What this means is that the debtor is allowed to keep a certain amount of his or her property.  In many instances, these exemptions are sufficient to allow a debtor to keep all of what he or she owns.

But what about the debtor that has no assets?  He or she might not own a home, a car, or any valuables.  Why would you file for bankruptcy if you have no assets?

There’s a simple answer:  To protect assets you might own in the future.

You see, if you owe debts to your creditors, they can sue you.  If they are successful, they will obtain a judgment against you.  A judgment in Nevada generally lasts about six years, and may be renewed.  This means that if you come to own property within six years after the creditor obtained a judgment against you, the creditor will pounce on it.  In some cases, the creditor may even be able to execute its judgment against any income you earn within six years. 

If you file for bankruptcy, however, there’s a good chance that judgment will get discharged, and the creditor will not be able to execute it against your property now, or in the future. 

Indeed, bankruptcy really can be a "fresh start" to your life.  If you live in the Las Vegas area, and the idea of a financial clean slate is appealing to you, contact us at 702-880-5554 to schedule a free initial consultation.  We’ll help you decide whether bankruptcy is right for you.

One of the most devious tricks that loan modification companies have come up with is to set themselves up as law firms. 

They get a lawyer (or two or three) to be part of the company and use them as front men or women.  This gives them a veneer of legitimacy.

In reality, however, they are simply loan modification scams.  FedMod, the focus of the recent New York Times article on how subprime mortgage companies have re-made themselves into loan modification businesses, is a great example.  FedMod had over 700 employees, and only 9 of them were actually attorneys.  But there are lots of other companies out there that refer to themselves as a "Law Group" or a "Law Center" or simply have the attorney’s name followed by "Esq."

Using an experienced bankruptcy attorney in Las Vegas is definitely the right way to proceed with a loan modification for Las Vegas homeowners.  However, how do you know whether an attorney is legitimate or whether they’re just a front for a loan modification company?

Here are a few red flags to look out for.  If you see any one of these red flags, that is enough to avoid them. 

1.  All they do is loan modifications.
2.  They’re not licensed to practice law in Nevada
3.  They want an up-front fee.  Good bankruptcy attorneys in Las Vegas and anywhere else will not ask for an up-front fee.  After a free initial consultation where an actual lawyer answers all of your questions and explains all of your options to you, you may pay a retainer fee to be held in trust after signing a contract that outlines all of the services that the lawyer will provide.  The retainer fee and agreement should cover everything from start to finish, including a discussion of your options, explaining the legal strategy and executing the process.
4.  They do not tell you the name of the attorney who will handle your case or let you meet the attorney in person.
5.  They tell you to stop making payments to your mortgage company, that they’ll take care of everything and not to worry.  (You should definitely worry if they say this.)
6.  They’re being investigated by the Federal Trade Commission or some other federal or state government authority, or there are many complaints against them submitted to the Better Business Bureau.  (If you do a Google search for their name, you can usually find out this kind of information pretty quickly.)
7.  They don’t offer to help you take advantage of Nevada’s new foreclosure mediation program.
8.  They’re using any sort of pressure to try and get you to sign up with them, especially high-pressure sales tactics.  A legitimate attorney answers questions and explains everything in a way where you can make the decision after gaining a full understanding of your circumstances and your options.

In addition to these red flags, of course, also just use common sense.

To get all of your loan modification, foreclosure, bankruptcy and other questions answered by good bankruptcy attorneys in Las Vegas who have been around for a long time, have a strong reputation in the community and love their Las Vegas community as much as you do, get in touch with us for a free initial loan modification consultation.

Our goal is to help stop foreclosure Las Vegas.  The more we do that, the better our economy will be and the stronger our community will grow.

Following up on my previous post on loan modification companies (Wolves in sheeps’ clothing – Part 1), I thought it would be helpful to provide a list of some of the names of loan modification companies mentioned in the NY Times article to watch out for as some of the names of the people involved in running them.

Before getting started, though, it’s also worth mentioning that whatever they call themselves–loan modification company, loan modification consultants, loan modification firm–they’re all the same and you should be wary of them.

Without further ado, here is a list of some of the loan modification companies to beware of:

Here are some more loan modification companies to specifically watch out for:

The following loan modification companies are being charged by the state of Michigan:

And the following have been sent letters by the state of Michigan (note that many of these companies operate across the country even though they’re located in a specific city):

A long list no doubt.  But there are plenty more where these came from.

For a more complete list, check out a blog called Mortgage Fraud Blog that specifically follows this topic (and is a source for a number of the parties listed above).  If you do ever consider using a loan modification company (which we strongly urge you not to do), at least do yourself a big favor and go to Mortgage Fraud Blog to do a search for the company you’re using.

At the very least, you can call Haines & Krieger attorneys if you have any concerns about a loan modification company.  And of course you can always contact us for a free loan modification consultation to discuss foreclosure, loan modification, foreclosure mediation and any other Las Vegas bankruptcy information you might need.

We knew the loan modification companies were bad.  But this New York Times article ("Subprime Brokers Back as Dubious Loan Fixers") really lays it all out and shows you what’s been going on behind the scenes.

The gist of it is that the same people who ran the subprime mortgage loan businesses that got us into this big foreclosure crisis in Las Vegas and elsewhere have reincarnated themselves as "loan modification experts."  And surprise, surprise, they’re running scams that make money off the people who can least afford it:  desperate homeowners facing foreclosure.

How do they do it?  They use high-pressure sales tactics on people who are under a lot of pressure.  They promise to take care of your mortgage if you just make an up-front payment to them of $3,000 or so.  Don’t have that much?  That’s fine, they’ll just take $1,000 now and figure out a payment schedule for the rest.

The problem, of course, is that they can’t actually help these people.  And even if they could, they don’t.  According to the article, the sales agents are getting 30% commission.  And once they’ve received payment, they have no incentive to continue helping.

The article focused on a loan modification company called FedMod.  And one former employee is quoted as saying, "I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house.’  People were giving me every dime they had, opening credit cards.  But I never saw one client come out of it with a successful loan modification."

Let me take this opportunity to say:  Never make an up-front payment to a loan modification company or consultant.  And certainly don’t make decisions in the face of high-pressure sales tactics.  There are always other options.  They key is to start with a trustworthy source, such as an established law firm that’s been around for more than a couple years.

Help Stop Foreclosure Las Vegas
If you really want to avoid foreclosure, and you’re considering loan modification, we strongly encourage you to get in touch with Haines & Krieger for a free loan modification consultation.  Thanks to the Nevada State Legislature, you now even have the option of foreclosure mediation to help stave off foreclosure and negotiate a loan modification for your Las Vegas home.

Working with an experienced and established bankruptcy attorney in Las Vegas will save you money, not to mention a lot of hassle, in the long run.  Good bankruptcy attorneys in Las Vegas will be able to explain to you all of your options.  And whether you need foreclosure, loan modification or Las Vegas bankruptcy help, a good bankruptcy attorney will never pressure you with a sales pitch.

There have been some great stories about how this recession has turned laid-off employees into entrepreneurs.  We have all the admiration in the world for people who have taken lemons and turned them into six-figure income-generating lemonade conglomerates.

We have nothing but contempt, however, for the unscrupulous who are trying to gain at the expense of those hit hardest by this poor economy. 

We warned you about the pitfalls of dealing with shady debt settlement companies.  Now we’re here to tell you about misleading mortgage modification services.  These are the people who call you and promise that they can negotiate on your behalf with your home lender to lower your mortgage payments. 

Sounds good, right?  You’ve gotten nowhere with the bank, and this person is rattling off examples of how he has saved other homeowners in your area thousands and thousands of dollars.

Hang up the phone.  Chances are very high that it’s a scam.  Your first red flag?  If the person requests a fee upfront.  These companies should only be charging a fee once services have been rendered, and for good reason.  Corrupt mortgage modification services have been charging their homeowner clients thousands of dollars in upfront fees, promising them a refund if their mortgage payments aren’t lowered. 

Time passes, and passes, and passes.  The homeowners are told to be patient and wait for results. 

Eventually, the results are that the mortgage modification companies convert your mortgage to an "interest-only" loan with low payments, that will reset at an exorbitant rate within a year.  In response to the homeowners’ complaints and demands for a refund, the companies respond that they got what they wanted – lower payments in the short term.  Keep in mind that these are the good results - oftentimes, the mortgage modification companies simply walk off with their clients’ money, or even the deeds to their homes.

These deceitful practices have become so rampant that the Federal Trade Commission has stepped in.  Just last week, prosecutors nationwide filed 189 legal actions against mortgage modification consultants.  The litany of charges run the gamut of fraudulent practices, from stealing clients’ fees, to forging signatures and falsifying documents.  

If you’d like help with trying to lower your mortgage payments, your safest bet is to contact a counselor approved by the U.S. Department of Housing and Urban Development.  Assistance by these counselors is being offered for free, as part of President Obama’s new "Making Home Affordable" program.  The plan is to help millions of families restructure or refinance their mortgages to lower their monthly payments.  Best of luck!