Fees Are Where The Profits Are

I read a great article in the June 26 New York Times business section titled “How Housing’s New Players Spiraled into Banks’ Old Mistakes.”

The article focused on a mortgage servicer named Nationstar. Nationstar is a private equity mortgage servicer and mortgage originator based in Dallas, Texas. If you are a homeowner and you pay your mortgage payments through a servicer (and most of you do!), you must read this article.

The mortgage payment collection business and its spin-offs are an endless opportunity for fees to be charged to the homeowner. Like banks, for mortgage servicers, fees are where the profits are.

They Were Under Oath & On Reality TV! Part 2

Abigale Lee Miller is the central presence on Lifetime channel’s “Dance Moms,” reality television surrounding the Abby Lee Dance Company, a painful drama of driven pre-teen competitors and hovering mothers and Miller – our next reality star whose bankruptcy truthfulness was found wanting.

Abby Lee Miller’s rise in celebrity status began seven months after filing a Chapter 11 bankruptcy reorganization in December 2010. This court-supervised repayment plan obligated her to truthfully tell the court, every month, what her gross income was, what her expenses were, and deposit all monies earned in a traceable account. She was to make a set payment for a number of years on this plan. But Miller’s fame and fortune caught up.

When Miller’s actual finances were discovered in early 2013, as a result of a bankruptcy judge channel-surfing and spotting her show well before any investigation, she offered to amend her Chapter 11 plan and pay off all if her debts in full. The judge wanted an investigation, as $288,000 in income was disclosed at the February 1, 2013 hearing (link opens a PDF, see page 12) without any explanation. According to the indictment, Miller told the court that income from the reality television show was “volatile” and denied that any contracts for the show existed (link opens a PDF, see #23 on page 9).

under oath

Miller really doubled down. Within less than a month after that hearing before the bankruptcy judge, and freshly admonished, she – according to Reuters.com and the indictment – sent an email to a joint partner and her accountant with a subject field stating “LET’S MAKE MONEY AND KEEP ME OUT OF JAIL.” To be clearer, she then told them that they needed to avoid raising any “red flags” and instructed both of them: “DON’T PUT CASH IN THE BANK!!!!” The end result was more investigation, culminating in the October 13, 2015 indictment for 20-counts of bankruptcy fraud for concealing income.

This is an indictment, not in a conviction. But to you or me, if that’s her email, that is evidence of criminal intent.

What did Joe, Teresa and allegedly Abby fail to comprehend? Their core failure was to take not take seriously the obligation to disclose to the court what they owned. No lawyer can correct dishonesty.

The concept of what a person contemplating bankruptcy actually owns is technical and complicated. Being vague and being downright dishonest are recipes for disaster, as the above television stars have realized.

It is natural to resent the fact that what you have worked hard to gain could be jeopardized because of collapsed finances. Our advice is not to let that resentment lead you astray when considering, and filing, bankruptcy.

Sources: IMDB.com, Reuters.com, The United States District Court for the Western District of Pennsylvania (opens a PDF), WTAE.com

They Were Under Oath & On Reality TV! Part 1

Over the last couple of years, there have been two high-profile examples of reality television stars failing to fully reveal all of their property and possessions during bankruptcy proceedings.

These two examples provide insight into the effects of untruthfulness – where the intersection of facts and bankruptcy proceedings collide with fame and fortune.

Lying under oath has consequences for all – the rich and famous, the middle class and for the down and out. Anyone lying during their bankruptcy proceedings will get caught, and can pay a high price. Jail time is the scary reality!under oath

Joe and Teresa Giudice are our first case study. Their lives were detailed in a Bravo reality show called “Real Housewives of New Jersey,” which premiered in May 2009. That high profile and visible television presence spelled doom for them.

The Giudices filed a chapter 7 bankruptcy in October 2009, claiming that their income was not sufficient to pay their debts. That may or may not have been true at the time. But, their disclosure filed under oath to the New Jersey bankruptcy court in 2009 was definitely not true. Much of that falsehood was created by ‘leaving off’ personal property. Like ATVs, go-karts, a rental property (see page 17 on this linked U.S Department of Justice indictment), a cement mixer (who hides a cement mixer?).

Ultimately, in July of 2013, Joe and Teresa Giudice were federally indicted on 39 counts, including lying on their bankruptcy disclosures, and other counts stretching back over ten years, for fraudulently obtaining secured loans against properties, and tax evasion. In some cases, they had created false documents, like pay stubs for jobs that didn’t exist and tax returns that were never filed and were largely fiction. In other cases, they moved income around to shell companies.

The evidence was overwhelming. On October 14, 2014, after Teresa had previously plead guilty to four counts and Joe to five counts of bankruptcy and mail fraud, Teresa was sentenced to fifteen months in federal prison, with her husband Joe facing forty-one months.

Stay tuned for part two, with Abigale Lee Miller of Dance Moms.

Sources: Justice.gov, NYTimes.com, & this NYTimes.com.

Debt Vultures

If you have unpaid debt on credit cards and loans, a debt vulture could come circling.

What is a debt vulture? A debt vulture is my description for a kind of collection company that may be on your tail.

Image from http://occupywallstreet.net/story/debt-vultures.

Image from http://occupywallstreet.net/story/debt-vultures.

These types of collections companies have taken over a large segment of the collection of delinquent debt from people whom are unable to pay them. That kind of company is called a “debt buyer.”

Their business model is genius. These companies purchase debts that were written off by credit card issuers, store credit like Lowe’s, Home Depot, and Best Buy – along with medical bills and balances remaining after vehicle repossessions. They purchase these debts at a deep discount, in bulk (think hundreds of thousand accounts at a time!) and then the hunt commences!

They look for the unfortunate borrower, who has a job, with wages they need to pay their family’s bills, and look to force payment, usually through a lawsuit or the threat of lawsuit, and garnish wages and bank accounts.

And of late, my office has seen smaller and smaller balances being sued for – less than $500 in one recent case!

This scary industry is huge. The largest debt vulture of them all is Encore Capital, Inc., located in San Diego, California. You likely never heard of them. They don’t use their name to collect. They do it through subsidiaries with names like Asset Acceptance Capital Corporation, Midland Credit Management, and Midland Funding LLC.

If you get threat letters from these, and similar, companies, the debt vultures are after you.

The second largest debt vulture is Portfolio Recovery Associates. As a public corporation, you can buy their stock!

Both corporations make a handsome profit from this aggressive and depressing business model.

And, if you get mail from these companies, keep in mind that you are the ‘asset’ in Asset Acceptance, you are the ‘fund’ in Midland Funding, and the ‘portfolio’ in Portfolio Recovery. I think that these companies see you – their victims – as a body of ore, to be mined.

This is American commerce, and the debt is real. But most consumer debt has built-in contractual mechanisms, mostly default interest rates well over twenty percent – along with late fees – that cause the amount owed to mushroom.

Of special concern are unpaid accounts that are four years or more since payments were defaulted. At least in Arizona, these companies, if lawsuits and garnishments are their aim, must sue with the allotted time under state law, which, in Arizona, is a long six years from default. So, when a debt vulture is running out of time to sue is when this species gets most aggressive, often filing lawsuits before the deadline runs out to preserve their position.

Not all has been roses for debt vultures. In September 2015, the Consumer Financial Protection Bureau announced its findings into the debt collections practices of Encore and Portfolio, and ordered them to in some cases refund monies to consumers, and “overhaul their debt collection and litigation practices and to stop reselling debts to third parties.” You can read more about it here.

I predict that they’ll keep mining the ore body of the working public, because it is just too lucrative. After all, if these companies pay less than five percent of the face value of debt, and average even a paltry ten percent in total recovery, but they own hundreds of millions in debt, their profit margin is pretty beefy.

If you get mail or phone calls from these aggressive vultures, I can help you consider your course of action. Schedule a free and thorough consultation of your options by contacting my office for an appointment at (520) 299-4922.

Saving Pennies, Losing Dollars: Tales of Bankruptcy Filings Without Legal Advice

Mounting bills, calls from creditors and declining funds leads to a maddening level of desperation. People often feel that they are too broke to hire an attorney to file their bankruptcy. You are between a rock and a hard place, you need to get rid of the stress of your debts and it seems like the best thing to do is to file a bankruptcy on your own.

You are not alone in this thought. Between 25% and 33% of all bankruptcies filed in Arizona are filed by people who have either attempted to prepare their own bankruptcy documents or hired a paralegal service to prepare them.

Many of those people end up having an unpleasant and expensive experience with the bankruptcy court. Many will have assets confiscated. Many will lose the only decent sum of money they receive all year – their tax returns. Yes, the bankruptcy court will take your tax returns! This is why you need to plan for a bankruptcy with an attorney.

Here’s an example what can happen if you choose to file a bankruptcy without the assistance of an attorney.

I met with a woman about a year ago who was unaware that her tax refund, which was substantial, would be confiscated by the Bankruptcy Court Trustee. She ending up losing nearly $8,000 in her tax return money that she desperately needed to the bankruptcy system. Because she didn’t have an attorney at her side. That money could have been used to purchase a vehicle, pay for an attorney, and help with utilities. With careful disclosure of that spending, she would have survived her bankruptcy without losing other assets. She thought she had to be in a rush to file the bankruptcy, and didn’t get the advice she needed to plan accordingly.

This can be avoided with experienced representation. 

I stress that this planning must be done appropriately, by competent attorneys with an intimate knowledge of what is allowable in pre-bankruptcy planning and what is not. Pre-bankruptcy planning is intricate and can take time. But it is extremely valuable.

Another classic scenario involves a person who has been sued, and is consequently highly motivated to file a bankruptcy before a wage garnishment starts, but may also have a large tax refund coming, or perhaps a reimbursement for some work expense, or a personal injury claim, or an inheritance.

Again, they rush in with no legal advice, get a paralegal service to type up what they think they need to file, and then lose assets unnecessarily.

Recently, my office assisted a bankruptcy client with pre-bankruptcy planning on how to purchase a home for their family by using a personal injury recovery as a down payment. We were able to help them to keep that home.

Saving pennies can cost significant dollars. The main ally you have is an experienced attorney who can offer sound advice and good knowledge. Document preparers, and, sadly, lawyers who charge cut rates and who will only provide cut-rate legal advice, are not in your best interest.

Don’t be penny-wise and dollar foolish!

If you have questions about your bankruptcy eligibility, or ways to avoid bankruptcy through other means, schedule a free initial consultation with Daniel Rylander by calling (520) 299-4922. Upon hire, we provide sustained support throughout your bankruptcy process.

No Shame, No Judgement

Considering filing a bankruptcy is an emotional time. It is confusing and scary!
Being confronted with debt you cannot possibly pay causes immense stress and emotional strain for any person. It is very common to feel guilty and blame oneself for being partially responsible for the situation. There is fear of the unknown, fear of lost wages, fear of being publicly humiliated, fear of the threatening phone calls, fear that the one will lose their job, or house or car.

We are here to help you understand your situation and take away fear of the unknown by arming you with knowledge. We work for your best interest. We will help you get rid of the creditors and the fear-inducing debt.

We strive to put you in a position where you can get your financial situation back in order without guilt or shame. There is no shame or judgement. Bankruptcy protection is in the United States Constitution. Always remember – you are not alone and you are neither a criminal nor a loser!

If you have questions about your eligibility for bankruptcy, or ways to avoid bankruptcy through other means, schedule an appointment with Daniel Rylander at (520) 299-4922.

Planning for a Successful Bankruptcy Filing

“I just want to get this over with . . . “
“Do you really have to meet with someone at the Bankruptcy Court”?
“And are we really required to provide all this information”?
“I just want to get this over with . . .”

In order to get an informed, legal, ethical and successful bankruptcy result, you need a plan. That plan, put together with your attorney’s expert advice, will – depending on your circumstances – likely involve timing the filing of the case, or getting your tax refund you are owed by governments spent wisely. It will involve disclosing properly your financial transactions, and getting advice to avoid financial transactions that may hurt, or complicate your case.

We find that the most stressful time for our clients is before their bankruptcy is filed. Make sure you understand your plan, truthfully inform your lawyer of any changes to your financial and asset situation, and work with your lawyer and staff to obtain your debt relief. With that approach, your successful result is within reach.

Debt relief through bankruptcy is more than just the numbers. It’s the fear removed. It’s the knowledge that you did it honestly, and earned the relief.

You can get through it. We can help you create a plan. Schedule an appointment today.

Flagstar Bank “Benched” By Consumer Financial Protection Bureau

On September 29, 2014, the Consumer Financial Protection Bureau (CFPB) took serious action against Flagstar Bank, a financial institution based in Michigan, for severe violations of CFPB’s mortgage servicing rules. Flagstar at one point in 2011 had 13,000 applications from mortgage borrowers seeking help with their monthly payments through modifications or loss mitigation. Flagstar had 25, that’s right, twenty-five employees and a company in India assigned to those applications.

Flagstar has been significantly sanctioned for its egregious failures.
For more information, see the full article here.

Don’t Wait Until Your Hair is on Fire (To File Bankruptcy)

FireHairMany people who have debt that cannot be paid will procrastinate. Waiting until your hair is on fire means that the creditors have found you, are coming after you, have sued you or are garnishing you. It burns. Badly.

Procrastinating means to be slow or late about doing something that should be done. If you have already consulted with an experienced attorney and mapped out a plan to file a consumer bankruptcy, procrastination in moving forward with the needed steps to get your successful bankruptcy filed after a thorough analysis has been done, and, even, after hiring and partially or fully paid the attorney – procrastination is an especially very bad idea.

There are several reasons why:

  • Your income may change for the better and you may no longer be eligible for any bankruptcy relief, or be forced to pay back a significant amount of the debt.
  • You may be sued by a creditor while you procrastinate, which will complicate any eventual bankruptcy filing and possibly result in lost wages (garnishment) prior to filing your bankruptcy.
  • You may inherit money and be unable to protect it from creditors either in or out of your bankruptcy.
  • You may take other financial actions, like paying back a debt to a relative, that will complicate your bankruptcy and likely involve your relative.
  • Your bankruptcy attorney may charge your more money when you finally start moving forward on your bankruptcy as your situation has changed and become more complicated.

Bottom line, it is largely a myth that the creditors will ‘go away’. They don’t and won’t.
Act today.

At all costs, don’t bury your head in the sand – it won’t put the fire out.

%*&^ Robocalls!

robocallsDid you know that those recorded, computer voice calls that ring at the most inappropriate times – advertising products or offering to sell you services to reduce your debt – are ILLEGAL? Which ones are allowed? According to the Federal Trade Commission, candidates running for office, charities asking for donations and “messages that are purely informational. That means you may receive calls to let you know your flight’s been cancelled, reminders about an appointment, or messages about a delayed school opening. But the business doing the calling isn’t allowed to promote the sale of any goods or services. Prerecorded messages from a business that is contacting you to collect a debt also are permitted, but messages offering to sell you services to reduce your debt are barred.” What should you do if you get an illegal call? The FTC recommends: “Hang up the phone. Don’t press 1 to speak to a live operator and don’t press any other number to get your number off the list. If you respond by pressing any number, it will probably just lead to more robocalls. “Consider contacting your phone provider and asking them to block the number, and whether they charge for that service. Remember that telemarketers change Caller ID information easily and often, so it might not be worth paying a fee to block a number that will change. “Report your experience to the FTC online at or by calling 1-888-382-1222.” For more information, visit: www.consumer.ftc.gov.