Bankruptcy

How to Find a Competent Attorney

find-competent-attorney

There are literally thousands of lawyers within a stone’s throw of most of our clients, but finding a competent attorney is not so simple. There are massively large law firms with hundreds of lawyers, law firms with folks who have been in the practice for 40 years, solo practitioners who specialize in certain areas of law. So with all those options, why would someone choose my law practice?

We’ve found that there are only a few grounding principles needed to master the practice of law:

  1. Be competent;
  2. Look people straight in the eyes;
  3. Tell clients the truth; be it good, bad, or ugly; and
  4. Put yourself in your client’s shoes

You’d be amazed at how many lawyers fail at one if not all of these basic rules. Large law firms only take large clients since their overhead is so high and firms who specialize in one area or another are often incapable of walking clients through the various complexities in their lives. While they may actually have compassion for your situation, they really don’t have the time to deal with that complexity.

There are fancier law firms than TMBC. Their marble and mahogany offices with piles of outdated law journals shimmer and impress visitors and clients alike. The specializing firms do well; but only in their specialized areas. Our experience has taught us that often a client filing bankruptcy is also going through a divorce, or has a criminal matter, or has an employment concern, or might be fighting for custody of a child or grandchild. Though we do have four offices to serve our clients from Hamilton to Champaign Counties in Ohio, they are basic. Our overhead is very low so we can keep our rates equally low. Yet we have the experience and training to handle many areas of law people need. Besides tax law, Medicaid/Medicare law, and probate law, there is not much we have not competently and completely handled.

At the end of the day, we can help you in the areas in which we practice, we look clients in the eye and tell them the truth, even if they might not be thrilled with the answers, and our clients have told us often that we seem to empathize with their concerns. Choose your attorney wisely. Your life or livelihood might indeed depend on this important decision.

When NOT to File Bankruptcy

At the Mark Bamberger Company my staff and I have successfully completed hundreds of Chapter 7 and Chapter 13 bankruptcies over the better part of the last decade. Bankruptcy, though never a thrilling experience, has allowed millions of people to start over (as in Chapter 7 cases) or to reorganize their debt (as in Chapter 13 cases). I have lost track of the number of former clients who have broken into tears and hugged me when they realize they can stop “robbing Peter to pay Paul” and can finally start thinking about the future; perhaps in a new house or car.

However, being an ethical attorney, I have sent some people away with the advice that they should avoid bankruptcy. Generally there are four reasons for this:

  • Not enough debt – in some cases, the price of even the cheaper Chapter 7 case makes filing for some clients unnecessary. In those cases we can often represent folks and haggle settlement offers from creditors for the clients to pay off; without having a bankruptcy on their record.
  • Too little time – in some cases, clients have filed previous bankruptcies and cannot yet file another. That ranges from eight (8) years between Chapter 7 cases to as little as two (2) years between Chapter 13 cases.
  • Too recent debt – for Chapter 7 and some 13 cases, if a client has very recently used credit cards or purchased an expensive item, there would be reason for an objection to the case or even sanctions for abuse of the bankruptcy code if someone incurs significant debt, then turns around and files bankruptcy. In 2005 the federal bankruptcy code changed a lot to make it harder for people to “game the system” when they in fact could pay back at least some of their debt. Those Chapter 7 cases have since been funneled into 13 cases where debtors have to commit to paying back something. For that we are all thankful, as bankruptcy was contemplated by the Founding Fathers to be a step up, not a hand out.
  • Too little money – in some instances where the client has too much household income, has filed a Chapter 7 too recently, or else has a house in jeopardy, we recommend filing for a Chapter 13 reorganization. However, if the household income is too little to sustain a monthly payment plan, that is a recipe for default and other problems that can make filing anything problematic.

In general, folks can file a form of bankruptcy that assists them in dealing with their financial problems. But an ethical attorney will know when not to file as well as when to file. Find one of them!

The Cyclical Nature of the Practice of Law

I am often asked about the cyclical nature of the practice of law. Certainly there are ebbs and flows in new cases that come in the door at different times of the calendar year. In 2016, roughly 33% of our business involves some form of family law (dissolution, divorce, guardianships, custody, grandparent rights) 33% involve bankruptcy (Chapters 7 and 13), and the other 33% included a diverse collection of criminal defense, corporate law, civil litigation, employment law, animal law, etc.).

Often divorces tend to peak around tax refund time and early Fall. Each year we get a number of cases based on our clients telling us that “…they wanted to wait until after the holidays to file”. This is sad, but a fact of life. Likewise, bankruptcies often peak around tax time since people have the money to file. A large caveat to this is that folks can file a bankruptcy anytime since, as long as they stop paying on their unsecured debt (e.g., credit cards, medical bills, payday loans, etc.), they can accumulate the funds to pay an attorney to file and begin the case for them.

As for the other areas, employment law cases can arise anytime but often peak in the late Summer to early Fall when businesses start setting their next fiscal year budgets; and in doing so look for sleazy ways to trim their payroll on the backs of their employees. Criminal work often follows economic downturns since people get desperate about job loss, mounting bills, or a generally poor economy.

Learning the lesson of the Irish Potato Famine, I have tried to keep this practice of law diversified. Not only is that smarter economics, but it also means our job is NEVER boring. Each day is challenging and engaging…just as we like it!

7 Is Smaller than 13, Right?

Mark J. Bamberger, Ph.D., J.D., Owner/Attorney and Counselor at Law
The Mark Bamberger Co., LLC

It’s a simple fact of math. Seven is smaller than 13. But in considering bankruptcy, (Chapter) 7 might not be better than (Chapter) 13. In simple terms, a Chapter 7 (“BK7”) is a full, start over from scratch, bankruptcy option for individuals and/or small businesses. They are generally cheaper and faster than a Chapter 13 “(“BK13”).

A BK13 is a personal (or small business) reorganization program whereby you propose to pay back a percentage of your unsecured (and 100% of your secured) debt to the trustee of the court for his or her systematic distribution to your creditors. That percentage can range from 0% to 100%. Typically a personal BK13 payment plan ranges between 2% and 50%. BK13s are generally more expensive since your attorney has to shepherd the case from filing through confirmation to discharge and closure. BK13s last between three (3) and up to five (5) years.

The decision as to which option to pursue is far more complex than a short article here can handle. There are some general rules of thumb, but you should seek legal counsel before making the decision:

  • If you have relatively minor unsecured debt and do not have real estate in jeopardy, you may be able to get away hiring us to haggle settlement offers for your unsecured debt and avoid bankruptcy altogether;
  • If only one spouse has debt in his or her name, you may consider having that one spouse file bankruptcy alone;
  • If you do not own real estate, have not filed a BK7 within the past eight (8) years, and have a household income under what is termed the “Means Test”, a BK7 might be best;
  • If you own a home that is in foreseeable jeopardy of defaulting and you want to try to keep the property, a BK13 is probably best for you and your family; and
  • If your household income is above the Means Test and/or you have filed a BK7 within the past eight (8) years, consider a BK13.

Needless to say, there are many more considerations to be made and I would be happy to schedule a free, no obligation consultation to explore your particular situation. Mind you, you do have the legal right to file your case by yourself (pro se), but bankruptcy law under 11 U.S.C. can be complex and unforgiving, so professional assistance is often strongly recommended.

Chapter 13

Chapter 13 allows you to restructure your debts while retaining many of your most important assets.
The option exists under Chapter 13 to retain assets such as your home or vehicle, while paying other creditors less than the full amount owed. You might even be able to reduce or eliminate a second mortgage or a disadvantageous car loan using Chapter 13.

In Chapter 13, most of your debts will be paid through a “Chapter 13 Plan” that is reviewed and approved by the Bankruptcy Court. The amount to be paid under the Chapter 13 Plan will usually be limited to an amount equal to your monthly “disposable income” for a period ranging from 36 to 60 months, depending on your level of income and family size. Most debts not repaid through the Chapter 13 Plan payments will be discharged once your plan is completed (including some not eligible for discharge under Chapter 7).

You will not have to deal directly with your individual creditors while in Chapter 13. The Automatic Stay remains in place throughout the time you are in your Chapter 13 plan, providing your peace of mind from harassing collection calls and protection from repossession or garnishments.

Your Chapter 13 Plan will be administered by the Chapter 13 Trustee, who is responsible for collecting the payments from you and distributing them among your creditors in conformity with the Chapter 13 Plan and other legal requirements.

Chapter 13 is also a potentially powerful tool for people who owe back taxes, even though these debts are often not dischargeable. The rules permit you to use funds that normally would go to other creditors to satisfy tax debts. Additional interest and penalties can often be substantially reduced or eliminated in Chapter 13 as well.

Chapter 13 is subject to certain eligibility requirements, the most important of which is a verifiable regular income. Contact Bamberger Law to arrange a free consultation.

Chapter 7

The purpose of bankruptcy is to allow individuals deeply in debt to obtain a fresh start. When serious and sometimes unavoidable circumstances result in insurmountable debt issues, bankruptcy protection can be the answer.
There are many reasons that individuals simply cannot pay their debts. Illnesses, loss of job, divorce, bad money management, or just bad luck are just a few of the circumstances that can occur. Eligibility for Chapter 7 relief is limited.

Bamberger Law will determine if you are eligible for Chapter 7 based on your income and several other factors. If you are not eligible for Chapter 7, you may be eligible for Chapter 13 relief.

How It Works

First, if you are contemplating the filing of a Chapter 7 petition you should visit a bankruptcy attorney. Your attorney will confirm that you are eligible for Chapter 7 and that Chapter 7 represents the best approach based on your issues.

Then you will be required to provide certain documents and information to your attorney, and undergo credit counseling, which can be accomplished online. Your attorney will use this information to prepare a series of documents that list in detail your assets and liabilities, income and expenses which will be filed with the court and served on creditors.

Automatic Stay

From the moment your case is filed, creditors can no longer attempt to collect debts by any means. This rule, called the automatic stay, provides much needed relief to the debtor.

Meeting of Creditors

The debtor must then attend a “meeting of creditors” before a bankruptcy trustee. The trustee is a court officer assigned to administer the assets and pay the debts according to the rules set forth in the bankruptcy code. At the meeting of creditors, the trustee asks a series of simple questions designed to ensure that there are no irregularities that could be a sign of bankruptcy fraud, and asks about assets that might be available to pay creditors some of what they are owed. In the majority of cases, neither is found, and the meeting is generally completed in as little as 10 minutes.

Discharge

After the trustee has administered the case, arrangements are made to sell non-exempt assets in order to pay off creditors. Once this process is completed, any remaining unsecured debts will be discharged and the debts are extinguished forever. With respect to some debts like certain taxes and student loans, there are limitations on discharge, so these debts may survive bankruptcy. However, the discharge of your other debts will free up funds that can be used to satisfy these debts, so even if you have non-dischargeable debts, Chapter 7 may still be a good option for you.

Chapter 7 can be a great way to begin again, and regain your peace of mind. A reputable bankruptcy attorney should be retained to help with the process.

The Dark Side of Foreclosure

As if filing bankruptcy was not tough enough…

Clients walk into the offices of The Mark Bamberger Company with some dreadful problems.  One of the more common is the threat or ongoing nightmare of a foreclosure.  In some cases, their lender is saying it is right on the horizon.  In more cases foreclosure has been commenced.  What is important to know is that the filing of a foreclosure complaint is only the first step of a long process; ending in a sheriff’s auction sale of the property out from under my clients.  This process can take between three and 18 months; depending on how vigorously the client fights, how clever their attorney is in stalling for time or negotiating a refinance or loan modification, or how badly the lender really wants the property.

The Automatic Stay

Often I am asked how foreclosure ties into bankruptcy.  Whether the bankruptcy is under Chapter 7 or Chapter 13, the answer is roughly the same.  Filing bankruptcy puts ALL pending or ongoing legal action “on ice”.  This is legally termed the “automatic stay”.  The only way a creditor gets out of this is to wait out the discharge of the bankruptcy or move the bankruptcy court for relief from the automatic stay; which often takes about as long as the bankruptcy itself.

Never Surrender

Bankruptcy CAN be an efficient way to stop a foreclosure long enough to negotiate a deal with the lender.  Before the filing of a bankruptcy petition, the lender has all the power.  After filing the petition, the debtor gains some power since they can choose whether to keep or “retain” the property or give it up, called “surrender”.  Even if the debtor says they want to keep it; five minutes and an amendment to the petition can change the outcome.  What that means is that the lender gets the property; with all the debt and non-performing loan that goes with it.  They generally do not want that, no matter how nice the house is, since they are inheriting debt; plain and simple.

So much for mandated loan modification

Unfortunately, as has been reported on the national news, the major lenders took billions in federal bailout money; only to go back on their promises to make loan modification easier.  Sometimes they seem to be cutting of their nose to spite…my clients!  The bottom line is this – a bankruptcy can be used as leverage, but never guarantees success in a client keeping their home!

Mark J. Bamberger, Esq., Owner and Attorney at Law

The Mark Bamberger Co., LLC

Offices in Tipp City, West Chester, and Enon

The Economy is Getting Better…Right?

Economic recovery? Or titanic disaster?The Economy appears to be improving; at least that is what the numbers and news broadcasts relay.  However, many of our clients at The Mark Bamberger Company see people who continue to suffer pain.  As I related in a previous article, many experts report a second wave of foreclosures and resultant Chapter 7 and 13 bankruptcies due to a second expected bounce in some adjustable rate mortgages.

Many of our clients are still either unemployed or severely under-employed.  Many of them continue to see mounting bills they cannot pay.  Home mortgage lenders seem to be “cutting off their nose to spite their face”, by taking billions in government bailouts; then openly imposing obstacles to mortgage modifications.  Additionally, finance charges and late-payment penalties are making creditor payments harder than ever.

What is the answer?  There is no standard answer for everyone; but with planning, families can avoid the pitfalls of the still-hindered economy.  Bankruptcy may be a good option; but before that decision is made, debtors should meet with their attorney; be it me or someone else, and do a global assessment of their financial situation.  Specific questions to ask, among many others, include:

  1. Is my house safe from foreclosure or loss in a bankruptcy?  If my house is in foreclosure, how far in is it (from initial complaint through final sheriff’s sale)?
  2. How much equity do I have in vehicles and other big-ticket real and personal property?
  3. How much unsecured debt (e.g., credit cards, medical debts, and personal loans) can be discharged in my bankruptcy?
  4. Can I afford to pay for a bankruptcy?  This is often easier than many think since they can be economical, paid off through monthly payment plans, and paid from the money not paid to unsecured debt during the bankruptcy period.

Above all, don’t panic; there are almost always options.  Empowerment comes from taking control, even if the situation appears dubious!

MJB  7/3/10

The Second Wave of Bankruptcies

Mark J. Bamberger, Esq., Principal

The Mark Bamberger Co., LLC

Those with adjustable rate mortgages (“ARMs”) who made it through what seems to have been the worst part of the recent Recession are taking a deep breath in thanks of maintaining their homes from foreclosure either within or without Bankruptcy.  It is good news, to be sure.  But before uncorking that champagne, bear this in mind.  Many economic experts who study these things forecast that a second wave of foreclosures and bankruptcies on the near horizon.

The reason for this pessimistic prediction has to do with the structure of many housing loans.  Many of the ARMS still out there are about to hit a second “adjustment” phase, in which, like the first one, the rates will shoot for the sky.  This could raise some ARMs from 6% to perhaps more than 10%, meaning hundreds of dollars more in monthly mortgage payments for the average household and further financial peril.  This wave is predicted to begin washing up on our shores later in 2010 and into 2011 and 2012.  And no, this has nothing to do with the Mayan calendar!

As before, the important thing to do is avoid panic.  Just as the federal programs for home retention, for example President Obama’s Home Affordable Program, helped so many through the first wave, many who know this stuff say a second mortgage assistance program is on its way.  Also, mortgage brokers are now accustomed to dealing with attorneys representing economically challenged and desperate clients.  My mantra is this: “As wonderful as your house is, in this market the bank does not want it!  It is in their best interest to keep you as a paying customer as long as they can”.  In other words, they are on your side – well as much as a monolithic, cold, heartless creditor can be.

And on the subject of mortgage broker empathy, more often now I see more clients in my offices concerned about the pace of their loan modification under federal or state home retention programs.  They also complain about the mortgage brokers repeatedly losing paperwork and nagging them for “updated financials” to process their modification applications.  Although I join many others in assuming an insidious and nasty motive from mortgage brokers, some of this just makes sense.  As I advise my clients, mortgage creditors are so overwhelmed with modification applications that it can literally take four months or more for them to review a client file and render an offer on modification.  The lost paperwork and need for them to update that client’s financial information is more an artifact of the backlog than anything insidious.  Alternatively, if a client has evidence of nasty motives, I am more than happy to take their civil case against that mortgage broker.

Bankruptcy: The Best Choice…for Some

banner-legal-gavilIn these troubling economic times, I have a lot of clients in my offices asking if filing a bankruptcy is their best option.  Whether it be a Chapter 7 petition for a total bankruptcy as a “fresh start”, a Chapter 13 petition for a personal reorganization plan, or a Chapter 11 for business reorganization, the choice is never easy.  So often I have clients who are embarrassed with themselves or just plain mad at the world for what has happened to them.  It is true that often they have no one but themselves to blame for bad decision making.  However, the vast majority of my cases involve job loss, medical problems, or both.  These are conditions out of people’s control.  In these cases Bankruptcy is a viable and government-supported option.

I tell every client who discusses options with me that the reason bankruptcy is in federal court and not state courts is that it is an enumerated right granted to the federal government in our Constitution.   In fact, the concept of bankruptcy goes back much further than that in democratic history, but I will leave the history lesson for another time.  The bottom line is this – in some cases bankruptcy makes a great deal of sense for people to allow them the ability to “start over”.  Working in bankruptcy law is much easier ethically these days since the 2005 amendments to the bankruptcy code which made it much harder for people to file petitions just to escape paying what they owe.  There was abuse in the system, but not much anymore.  Now the bar to passing a “means test” is much higher and limits the bankruptcy option to those who truly need and deserve the assistance.

I have written in the past about the connections between bankruptcy and other aspects of my practice, namely civil litigation and criminal defense.  Usually when things start going bad for families or individuals, it goes there fast.  I have defended someone in a criminal case or filed a civil complaint for them, only to see them on my doorstep months later in dire financial shape and in need of bankruptcy counseling.  Again, for some, this option makes sense.  However, I take great pride in talking some clients out of bankruptcy when I think there are other options.  Bankruptcy is still serious business, although the stigma has been taken off it – to a large extent.   For some, I can arrange settlement offers to creditors at 20-30 cents on the dollar, allowing those clients to pay their debt and move on, without a bankruptcy.  Again, it is a tool provided by the federal government to help people, not cast them into an abyss of financial ruination.         MJB/091022