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Brian
Therrien:
Rob Moore here with us today. Rob,
how you doing? Rob
Moore:
Good. How you doing? Brian
Therrien:
Last I checked I was going pretty darn good.
Thanks for coming out today. This
is a great topic that we’ve been wanting to cover for quite some time,
and I
know you’re a resident expert in helping people address, sometimes
reduce,
or even eliminate their debt. So
look forward to going through and learning more about this.
For those of you in the audience, what we’re going to cover
today are
strategies to help you protect your assets, stop those harassing
creditor
calls that really make you squirm when you pick up the phone and you
don’t
know who it is, we want to help you out with that.
A lot of people get their wages garnished if they’re still
working
and their in debt and really how you can go through and wipe the slate
clean
and get a fresh start. So, Rob, I
know this is a tall order to cover but I’m confident that you’ve got
some
tips and strategies that we can go through to help people out today.
So again, welcome. Rob
Moore:
Absolutely. Thank you very
much. I’m glad to be a part of
this.
Brian
Therrien:
Well, good. Well, let me
just set the table a little bit. Our
audience -- a lot of people fall into a similar set of circumstances
where
their health has taken a turn for the worse and they’re not able to
work as
much or at all anymore and they go through a combination of things
which is
medical bills, not working and really it takes just a toll on their
credit so
-- and a lot of people are faced with difficult situations that if
they’re
applying for disability it may be 18 months until they get approved
but they
still might not have insurance and then they’ve got to wait another 24
months until they get their -- get on Medicare.
So there’s all kinds of chunks of very troublesome waters that
people
have to get through. So that’s
where we’re at and I know that you have done a lot of work in this
area for
quite some time and have helped people. So
where do you think we should start? Rob
Moore:
Well, I probably would recommend -- I mean a lot of times
individuals
are facing the same things as I’ve seen that people that are listening
in
today are facing. There’s
typically three different ways to really look at the type of debt that
you
have and determine whether or not which direction makes sense.
The first one that I normally recommend is looking at trying to
do some
sort of a debt settlement. If you
do have a chunk of outstanding debt that’s out there and depending
truly on
what type of debt it is, whether it is medical, whether it is credit
card.
A lot of times people that have limited means or really no
means.
If you’re waiting for Social Security to kick in and there’s
really
no income coming in. If you do
have high medical bills, a lot of times the first thing would be to do
is
contact some of those facilities -- the providers that provided those
services. See if there is some
sort of a charity program that’s available and/or seeing what can be
done
about doing some sort of a settlement so that if you do have a certain
amount
of money that you’re able to try to work out some sort of a settlement
with
them, that may or may not be an option depending on what each person’s
financial portfolio looks like. So
definitely should try that, the settlement option.
There are certain programs that are out there that are designed
specifically to try to work with individuals to do settlement
programs.
I have yet to come across, frankly, many that I would hang my
hat on.
I’m sure there’s one or two out there that would be worthwhile
to
look at but I’m always sceptical because a lot of times people will
come to
me after -- in a worse situation for going through those programs
because a
lot of times those programs will take individuals money and not
disburse
anything to any creditors. So I
guess I would always be wary and do your research if you’re looking
for a
specific program in your area. The
second type of -- I guess the second type of approach I would
recommend is
doing what they call a debt management program.
And that’s not a settlement program at all.
What it is it’s typically with a non-profit organization you
would
work with and they would look at your budget, look at your income, if
anything’s coming in, your expenses of what’s going out and try to
develop, with you, some sort of management program to try to catch up
on these
bills. Again, it’s not a
settlement so you’re not paying less than what is out there but it’s
really aimed at educating an individual and seeing how to get back on
their
feet without having to do any sort of a settlement program.
And
then the third option which unfortunately this day in age you see
quite a bit
of, is the bankruptcy option and I guess we can dive into that a
little bit
more coming in. But that would be
depending on the circumstances of the individuals and were able to
completely
liquidate that debt depending on what is out there debt wise and/or do
a
court-ordered repayment plan. As
opposed to a lot of these settlement programs, it’s truly at the
discretion
of each creditor, whether they want to engage in those settlements
with you.
But in certain bankruptcy types, a Chapter 13, you’re able to
force
the hand of those creditors and do a workout program with them. Brian
Therrien:
Okay. So you’ll -- Rob
Moore:
You’re given the options. Brian
Therrien:
You’ve given us three different options.
The settlement, a management company and then a bankruptcy
option.
Let’s break these down if I could, Rob. Rob
Moore:
Sure. Brian
Therrien:
Let’s take the settlement option and the thing that you
mentioned
there is first of all try to settle the debt on your own?
Is that what you’re advising? Rob
Moore:
You can, yes. Typically and
I guess, again, it always depends the individual, the type of debt
that’s
out there. But typically I would
try to approach -- and I guess it depends on the various amounts of
debt that
are out there. But I think the
first -- before you get too deep into it, you should contact each one
of the
creditors, let them know what’s going on in your circumstances and a
lot of
times certain creditors will actually have programs that you may or
may not
qualify for. Whether it’s a
debt, interest-rate reduction program or whether it’s -- if it’s a
credit
card, for instance, whether it is shutting down the card and then
stopping any
interest that’s accruing. It
really depends on each of the creditors. But
I would definitely reach out to each of them and see if that’s even an
option before going that next step. Brian
Therrien:
Okay. So see your options.
Now I know when people join, there’s a large number of people
mention
that credit card debt was a very significant concern for them.
Now I have also been in and around people and, at one time, had
to go
through a distant relative of this experience where I knew my credit
had
gotten banged up and I knew it was going to take awhile for me to get
it back
and accepting that was going to be a period of time.
I was able to go to the credit card companies, at this time,
and say
well listen, I can pay you X amount now or I’m likely not going to be
able
to pay anything. I mean do you
have any comments on that strategy? Is
that still valid out there in today’s environment? Rob
Moore:
To reach out to them? Brian
Therrien:
Yeah. To reach out and
negotiate. Rob
Moore:
Absolutely. And I would
again, depending on the credit card company, itself, whether they’ll
engage
with you or not is a different circumstance.
I always believe that if they’re willing to work with you then
they
will. But unfortunately, sometimes
some of these credit card companies, you’re only going to get to a
customer
service representative that has a script that they’re reading off of
and
sometimes they don’t have that flexibility to provide you. Brian
Therrien:
You’ve got to get to a manager, right, yeah.
That’s what I think. Rob
Moore:
Exactly. Brian
Therrien:
I’ve also heard that, again, it’s back to the fact that, if
you’re just faced with the situation and you just can’t pay it is I’ve
heard that there is a strategy to just stop paying it.
Wait to get to the best person that you can to negotiate the
best deal
that you can and offer -- and some people have been able to settle for
pennies
on the dollar. Rob
Moore:
Yeah, and that does happen. I
guess -- if you have the ability to keep making payments, I would
always be
wary about telling somebody to not pay. Brian
Therrien:
Yeah. Rob
Moore:
But a lot of times, a lot of individuals, especially this day
and age,
do not have the ability to keep paying and that’s why certain things
become
priority and credit cards, frankly, should not be the priority.
Trying to catch up a mortgage, trying to save a vehicle, trying
to put
food on your plate, those are priorities. Brian
Therrien:
Those are the priorities, okay. Rob Moore: Exactly and with the credit card companies, if you do end up falling behind more often than not they will end up wanting to do some sort of a settlement down the road. Whether or not it’s beneficial for you, they typically would and before they’re actually serious about getting to some sort of a settlement, often individuals are behind in those payments. Brian
Therrien:
And is there a certain amount that somebody needs to get to,
like a
benchmark amount that you would say that makes sense to pursue a
settlement or
is it any amount? Rob
Moore:
No. I think it depends on
the individual. A lot of times it
really depends on what’s coming in. If
somebody has thousands of dollars in disposable income per month
that’s one
thing, but if somebody is truly looking at their budget, they’re on a
fixed
income or no income, less is always going to be a better situation to
that
individual. So once you sit down,
you look at your finances and you determine I’m not going to be able
to keep
this up, something’s got to give, then at that point, I mean that’s
when
you should be proactive and looking for [audio went blank 12:07.3 -
12:10.4]
settlement, a management program or any other option that’s out there. Brian
Therrien:
So, again, try to settle it on your own, be very leery of using
those
advertisements to settle your debt, right?
Rob
Moore:
Absolutely. I would
recommend doing your research about those companies.
Whether it be with the Better Business Bureau, a lot of states
have
consumer protection agencies within the state government or state
executive
office. I would utilize those
resources to determine whether something is just too good to be true. Brian
Therrien:
So, again, in the settlement environment what they’re doing is
they’re going back to all of your creditors and they’re basically
doing
the negotiating for you using whatever strategies that they use to get
your
debt down and then they take what money they can get from you and they
take
their cut and pay off, right? Rob
Moore:
Exactly. That is correct. Brian
Therrien:
What a racket. And then the
other one is, again, the management option which is management
companies, do
they -- when they -- do they approach the creditors and work out a
deal
that’s to freeze the debt in any way and then repay it? Rob
Moore:
Depending on the program, yes. They’ll
help at least with -- basically will stoping of the accruing of the
debt but
it, again, it’s not -- they’re not looking to do any sort of a true
settlement. It would be paying off
exactly what’s out there but just budgeting it over either an amount
of time
that they’re willing -- that their creditor is willing to work with
you and,
again, as I mentioned earlier, both these options would truly hinge on
the
fact that the creditor is going to work with you and they don’t
necessarily
have to. Brian
Therrien:
I know a lot of folks have medical bills that have accumulated
and
mortgage concerns. Are there any
unique strategies or tips, Rob, that you would have for people to
either
settle or manage these? For
example, I know of people that have used, I guess you call them,
medical bill
auditing services. Have actually
just riffled through pages of medical bills and have been able to
drive that
bill down and they get paid a difference.
Are there other tips out there like that that you know of? Rob
Moore:
Well, actually, and I guess I have a unique experience because I
also
-- prior to becoming a lawyer I worked in the billing department of a
hospital, local hospital here, and so for my experience I guess,
again, it
depends on a lot of the individuals. There’s
often certain charity programs that are out there so a lot of times if
you
have limited means, you don’t have the ability to make payments, you
should
contact whether it be like the hospital or whoever the provider and
see if
they have some sort of a charity program and it’s under utilized quite
a bit
and, unfortunately, just with the current economy the way it is and
what
people are going through, those options are still out there.
A lot of times as well with medical debt, I do see a lot of
individuals
that end up filing bankruptcy to discharge that type of debt as well,
which,
again, is always an option if somebody is interested in going that
avenue. Brian
Therrien:
Would you say the medical debt is usually accumulated because
individuals are not insured? Rob
Moore:
Yes, absolutely. Brian
Therrien:
My plug and our guest speaker next month is -- we have found a
resource
that insures; one-third of the people that are uninsured actually do
qualify
for a program, but they don’t know about it.
So we have a guest speaker next month so be sure to come on
back out
and listen to that. So, okay, very
cool. Let’s talk a little bit
about the work that you do now. You
shared a bit, which I didn’t know, that you were working in a hospital
on
one side of the equation and then you moved into the practice of law
and
you’re working for Bostock Law down in New Hampshire.
You folks do some great work in different areas of bankruptcy
and you
also do some Social Security disability work and you’ve had quite a
bit of
experience in going through and helping some people understand their
options
and a lot of people come to you and my understanding now, in today’s
environment, to really explore the possibilities of bankruptcy which,
please
don’t take this the wrong way, but when people hear that word, at
least
myself, it’s a bit frightening. So
if you could what would be helpful for me and those in the audience is
to walk
through the ABCs of bankruptcy. Is
it applicable? Is there -- first,
is it applicable, when is it applicable? I
think the biggest -- is there life after bankruptcy? Rob
Moore:
No, not a problem. I can
kind of jump in on this. There’s
always an option of bankruptcy if somebody is facing that.
A lot of times -- well, let me kind of back up here.
There are several different types of bankruptcies that are
available to
people. There’s something called
the Chapter 7 bankruptcy and that’s what most people think of when you
end
up filing. What it would be it
would be a discharge of all the debt that that individual accrues.
So that would be any credit cards, it would be medical bills;
it would
be personal loans, things of that nature.
In a Chapter 7 you do have the availability to keep your -- any
mortgages or car loans that are current when you file as long as --
and you do
have the option of surrendering those debts even if you’re current as
well.
I do have quite a bit of clients that are actually in the
construction
business right now, can’t afford high truck payments and because their
businesses are suffering, end up surrendering their vehicle and they
go out
and they get a smaller vehicle, more economical, and something that
they can
budget better for going forward. And
then there’s something called a Chapter 13.
And what a Chapter 13 bankruptcy is, it’s a reorganization of
debt.
And what it typically is used for are individuals that are
behind in
their mortgage and, for whatever reason, they got laid off, got
injured and
fell behind in their mortgage, but have the ability to keep making
mortgage
payments going forward. So if
they’ve lost their job, for instance, they got behind in their
mortgage for
X amount of months, mortgage company put them into a default or headed
toward
the foreclosure but they’ve gotten reemployed and have the ability to,
at
least, make the normal monthly mortgage payments again, but the
mortgage
company won’t work with them. The
Chapter 13 is designed to force the mortgage company into a workout
program
and so that they are stopped from going forward with any foreclosure
and
basically you safeguard that house and you basically do a repayment
plan for
that past due arrearage over a number of months and it’s usually three
to
five years to really ease the burden on the individual so they don’t
have to
come up with like say five, ten, fifteen grand in a matter of months.
They do try to give you enough time to be able to bring that
mortgage
current. Brian
Therrien:
You know you said something that was very interesting because I
hear so
many times that the housing issue is just a major factor for people
that lose
their income and their home and they can’t afford it.
So one thing that you said that was interesting is you said it
in both
7 and 13 is that there is the ability, possibly, to keep your house,
right? Rob
Moore:
That’s correct. Brian
Therrien:
So what would -- could you give us an example of a situation
where
somebody could keep their house? I
guess more specifically what I’m asking is would somebody still need
to have
some type of income coming in after they file for Chapter 7 to be able
to
prove that they can actually be able to pay the mortgage or could it
be a
situation where they say okay, well listen, I’m filing for disability,
I’m
going to go through Chapter 7, when I get approved for disability I’ll
have
X amount of dollars that I can allocate, I think it’s a third that can
be
allocated to housing, and would an example like that be possible? Rob
Moore:
Well, with something like that you would need to -- I guess it
depends
on where the timeline is. If
you’re looking -- if this individual is current with the mortgage, has
a
bunch of other debt that’s out there, credit cards, medical bills,
personal
loans, wants to get rid of that so when somebody is on Social Security
you can
just focus on making those mortgage payments then, at that point, I
would
recommend doing a Chapter 7. The
difference is, though, in a Chapter 7 you have to be current with the
mortgage
when you end up filing the bankruptcy so those that are behind don’t
have
that luxury to -- going forward, don’t have that luxury to protect
that
property in the bankruptcy if you’re not current with it.
And, again, I guess this is where my prior comment comes in
about
really doing what’s the priority. If
you do have a piece of property and I see it all the time, a lot of
people
will pay medical and credit cards before paying their mortgage just
because
they’re smaller bills per month and if that’s the case, I would
definitely
-- if the mortgage is something you’re concerned with, I would focus
on the
mortgage and making sure that’s as current as you can get it if you
were to
file either Chapter 13 or Chapter 7 bankruptcy. Brian
Therrien:
That’s a great tip right there. Wow.
Well, you never know when your health turns, right, you lose
your
income. Rob
Moore:
Absolutely. Brian
Therrien:
All right. So you need to
be current. So you don’t need to
be current for 13 but 13 is more like a kind of like using the debt
management. You’re basically
reorganizing your debt in 13; is that correct? Rob
Moore:
That’s correct. Well,
what you’re doing -- and with the 13, it is reorganizing.
If you have a piece of real estate and it’s reorganizing the
debt
that is outstanding on it, so that arrearage, and focusing really on
catching
that up. However, with most
Chapter 13s, any other debt that you might have rolled into that
Chapter 13,
so if there are medical bills, credit cards, that is typically treated
as a
Chapter 7, so you’re still going to discharge all of that debt.
They might get pennies on the dollar but the Chapter 13 is
truly aimed
at catching up a mortgage arrearage. Brian
Therrien:
So all right. Now, back to
7. If you’re not current on your
mortgage, you’ve got a rich uncle that catches you up or something,
does
that change the picture? Rob
Moore:
Yeah. So in order to --
exactly. If you’re current and
either that you were able to bring it current right before you file,
after you
file, then yeah that would not be a problem to go ahead and do that
because
what normally happens is if you are current when we file, you have no
problem
keeping the property. And it’s
not that the court will order that you have to surrender this property
up but
what happens is the lender has an ability to basically pierce the
bankruptcy
in a Chapter 7 -- if you’re not making payments or you’re not keeping
current on it to basically pierce the bankruptcy and begin the
foreclosure
process. So that’s why -- with
the 7, there definitely would be a stress to make sure that you keep
current
with any of those payments and the rest of the debt would be
liquidated,
meaning you don’t have to pay it back. Brian
Therrien:
So let’s do -- can we walk through an example?
Somebody’s got a $200,000 mortgage and look in Vermont and New
Hampshire where you can actually buy a house for that amount. Rob
Moore:
Yeah. Brian
Therrien:
Some parts anyway, right? Rob
Moore:
That’s right. Brian
Therrien:
And so they’ve got that, they’re current and they’ve got other
debt, medical bills and a car. So
if they’re current, with 7, on their mortgage and they’re behind on
their
medical bills and their car and that then they can consider
approaching a
Chapter 7, which would allow them to reduce or eliminate the other
debt, the
medical bills and the car, but keep the house, correct? Rob
Moore:
Absolutely. That is correct
and I guess with that being said, though, a vehicle loan, if you are
behind in
that, that gets treated the same way as a mortgage because if
something, what
they deem a secured debt where they take a security interest in that
particular piece of property, and so, again, you would want to make
sure that
if the car was -- I mean, if the car is something you want to
surrender in it
and discharge any potential deficiency, then you do not need to be
current
with it, but if it is something you are looking to keep on the tail
end, I
would try to keep it as current as possible.
But that is correct with the rest of the example, that truly if
it’s
somebody that walks into my office and says, Rob, I have a house, I’m
current with it, have a vehicle, I’m current with it, but I have
mounting
credit card debt that I just can’t get out from under and building
interest
and I just can’t do anything with that well then, I’ll really look at
their income and determine, yes, you look fine for doing a Chapter 7
and
we’d be able to wipe out all that debt so you can focus on those
things that
you want to keep. Brian
Therrien:
Are bankruptcy regulations the same in every state?
I mean what we’re talking about here applies for somebody in
Iowa?
Rob
Moore:
Typically yes and I say typically because bankruptcy is all
federal law
so it is throughout the country the same bankruptcy code that you see.
Really where you get into differences is truly where you come
into
local rules for each state as well as exemptions and that the -- each
state
has their own set of exemptions to protect the property you currently
own.
I’m saying property, as in both real estate or any personal
property,
so I know in our jurisdiction as in most, for instance retirement
accounts.
If you do have a retirement account, that’s 100 percent
protected.
Brian
Therrien:
Oh, wow. Rob
Moore:
In New Hampshire you’re able to protect $100,000 per filing
individual of equity in any real estate that you’re living in, so a
homestead. But each state is very
unique in what exemptions they have. So
I guess that’s where you would need somebody from that jurisdiction to
better analyse and breakdown with you exactly whether or not it makes
sense to
go that route. Brian
Therrien:
If somebody’s listened to this and they’re saying oh, gees,
maybe
this could be applicable to me. When
should somebody file or does it pay to wait or what’s the right time
to
really take a look at this? Rob
Moore:
The right time to look at it? I
mean, I would always be proactive. If
you get to the point where you know, at the end of each month, you’re
starting to get more and more short on paying bills, I would look at
the other
options that we discussed but a lot of times people come to the
realization
that, in fact, none of these options are true options.
So a lot of people will meet with me and dive into more about
the
bankruptcy option and it’s really -- again, if you’re -- if you don’t
have the ability to keep making payments on these credit cards and
medical
bills, the next step is that a lot of these places, the lenders are
going to
send them to collection agencies which will hit your credit further,
and each
month that goes by it’s hitting your credit so it’s actually reducing
that
credit score more and more per month that goes by.
The flip side of that, even then, I mean, you may or may not be
fine
but really when it really starts to get to a head is when somebody
will walk
into my office and say I have a court date scheduled for next week for
Discover Card that’s coming after me and looking for attorney’s fees
and I
have to go to court. So it’s not
necessarily the best time to come in and meet with me. Rob
Moore:
But it’s something that -- I’m able to give individuals at
least a
fresh start at that point and be able to stop any collection efforts
on behalf
of any of those credit cards. Brian
Therrien:
Yeah, that’s making you work under the gun, yeah.
So if somebody’s gone through the settlement and the management
options and they’re just really getting to the point, like you said,
where
they don’t see it getting any better and are not able to resolve it,
it’s
a good time to investigate this? Rob
Moore:
Absolutely. And not that
it’s any more comforting to needlessly go through this process, but I
guess
one thing I will say is that right now you’re seeing record number of
people
that are filing and I guess I would definitely explore it sooner
rather than
later because if somebody’s at the point where they believe that
they’re
either on the fence or they, frankly in their own minds, have -- it’s
more
of the stigma of filing bankruptcy that’s really stopping them more
than
anything. I would definitely reach
out to somebody that does bankruptcy law and just put it past them.
A lot of places do free, initial consultations.
They’ll sit down with you; they’ll look at the situation and
determine whether or not it makes sense. But
if there was ever a time to file, this would be the time. Brian
Therrien:
So here’s a question for you. If
somebody files for bankruptcy, what’s the approval process?
I mean does it go through a court process of approval? Rob
Moore:
It does, it does. And I
guess what I’ll do if you have a little bit I’ll do a little bit of a
timeline, if I can, of each chapter. The
Chapter 7 is truly, what happens is, once you file the bankruptcy
about 30
days out you have to meet with a trustee who’s appointed to the
bankruptcy
case. It’s typically just
another bankruptcy attorney in the area and, depending on when you
file, you
get assigned to that individual. Their
job is to sit in as a representative of the court and, which we’d meet
at
what they call a creditor’s meeting. And
the trustee sits down with the client and myself and basically asks a
series
of questions just verifying that all the information is accurate, are
you who
you say you are, what do you do for work, where do you live and,
again, they
just want to make sure that their financials are an open book so that
they’re not hiding the house in Maui or the BMW at a friend’s house.
They truly just want to make sure that everything is accurate
and
nothing is being -- not disclosed to the court of the Trustee.
In our jurisdiction, they schedule about six to eight people
per half
hour block, so it’s truly a conveyer belt, these days, of people
coming in
and out unfortunately and frankly with a lot of individuals in it. I
guess it depends on the circumstances. Some
people have small businesses with trucks and trailers and certain
assets and
some people don’t have much. So
typically, though, you’re in and out very quickly and then there’s a
60-day window of opportunity for anybody that has a legal right to
contest the
bankruptcy to do so. And that
would be only if you ran up your credit cards right before you filed
or took
big cash advances out right before you filed.
It’s aimed at curtailing fraud. So
basically, if you’re using a credit card for basic survival mode right
now,
not for luxury items but for necessities, that doesn’t get factored
into
this equation at all. It’s
really just aimed at looking at fraud. And
then at the end of that 60 days somebody is entitled, whoever is the
filer, is
entitled to their discharge and then they close the case.
So all in all, it’s about a 90 to 100 day process. Brian
Therrien:
Not that long. Rob
Moore:
For the Chapter 7. No,
it’s really not and actually when I go through the timeline, most
individuals are [audio went silent 35:07.0 - 35:12.4] to be in front
of a
judge, at least in our jurisdiction and I’m assuming in most, because
we
also do a fair amount of Massachusetts work as well, but you would
just meet
with that trustee in a Chapter 7. The
Chapter 13, just because of its complexity and the fact that it is a
three to
five year program, it has, frankly, one more step even though it’s a
little
longer. You file the petition.
Thirty days out, you meet with a Chapter 13 trustee who, again,
will go
over that information with the individual and the attorney.
At that point, there’s usually a three to four week span in
which, in
our jurisdiction at the very least, the attorneys have to go in front
and have
the Chapter 13 plan, that is proposed by us, approved by the court and
typically it’s one of those things that the judge turns to the trustee
and
the judge says how does everything look, how do the numbers add up?
And the trustee says if everything looks good then the judge
rubber
stamps it. If not, well what are
the issues, what needs to be changed and how much time do we need to
resolve
the issues that are present in the case? It’s
a success-based plan. They want
you to succeed in it and they’ll give you every opportunity to do so.
But then once the plan is approved by the court, you just keep
making
those monthly payments to the trustee each month and then at the end
of the
plan, you get your discharge which, again, wipes out the rest of that
debt,
and at that point, you’re current with the mortgage. Brian
Therrien:
So that plan could be for how long? Rob
Moore:
Three to five years typically. It
can be paid off sooner so if you do have a family friend.
Again, it depends on the amount that you’re paying back but if
somebody’s able to help you out, it can be a lot sooner but the court
requires that the minimum of what is proposed is a 36-month plan and
the
maximum is a 60-month plan just so that there are certain parameters
for the
court. Brian
Therrien:
So we’ve gone through a lot of advantages and I know there’s
costs
associated with filing for bankruptcy. Can
you speak in general terms to those so the audience can kind of get an
idea? Rob
Moore:
Absolutely. For -- I guess
it depends on what you’re looking to do.
I mean in the standard sense, what we normally charge for a
Chapter 7
is typically around $1,800. But
depending on circumstances, a lot of times filing fees can be waived
in
certain jurisdictions, the costs can vary.
Or if somebody comes into me and says I have this business, I
have all
these assets, it’s going to be a more complex case.
There’s typically a range but most bankruptcy attorneys, from
what I
understand, throughout the country, frankly, they do it on a flat
rate.
So it’s not something like you would see in a normal litigation
case
or a divorce case in which they would bill hourly.
Typically, under either a Chapter 7 or a 13, it’s done by a
flat rate
and the $1,800 is inclusive of the filing fees as well to the court
for a
Chapter 7. The Chapter 13, usually
is a bit more just because, again, there’s many more steps that are
involved
at least on behalf of the attorney and it really depends on whether or
not
somebody is looking to strip a second mortgage but usually you’ll see
anywhere from $2,500 to $4,000, at least in our jurisdiction. Brian
Therrien:
So still, if you’re talking about possibly thousands of dollars
worth
of debt, if you can come up with it, then it could make a big
difference,
okay. Rob
Moore:
Absolutely. Brian
Therrien:
So $1,800 for a 7, $2,500 to $4,000 for a 13, all right.
Now, one other area -- did you have something else to say on
that Rob? Rob
Moore:
Just real quick. I know in,
at least in our jurisdiction as well, in a Chapter 13, a lot of times
people
will say how am I going to come up with that kind of money and lot of
times,
at least in our jurisdiction and I believe in most, you’re able to
roll in a
bunch of the fees into that Chapter 13 plan.
So, again, that can be spread over the three to five year plan
as well.
So that, again, might be something to discuss with an attorney.
I know if somebody’s in an emergency situation, we are able to
roll a
bunch into the plan and do it that way and spread out that cost
especially if
something urgent needs to be addressed immediately. Brian
Therrien:
So it’s not necessarily 100 percent out of pocket? Rob
Moore:
No. Not 100 percent up
front. That’s exactly it. Brian
Therrien:
So once somebody goes through, they’ve gone through, they’ve
done a
7 or a 13 or maybe they’re different, what’s in the rebuilding
process?
I mean, for example, right after you’re done, I mean, if you
need to
buy something and it requires credit or even going down to Lowes and
getting a
Lowes card. I mean, can you do any
of that? Rob Moore: Typically you can. What normally happens is when you file the bankruptcy, that’s when your credit takes the most hit. Once you get your discharge and then they close your case, your credit starts to surge because you have a clean slate and you have nothing dragging you down each and every month. Now, it does take the hit because you filed but typically and frankly most of my clients are surprised to see it, once you get your discharge and then they close your case, a lot of clients of mine have gotten credit card offers in the mail, loan offers because they’re more secure to lend money to then say Joe Schmo walking down the street who can file at any time. Because you can only file Chapter 7 bankruptcy once every eight years, so you’re locked in. If you obtain more credit, they can go after you, they can sue you and there’s really no remedy that you have, at that point, until you reach that eight-year span. So they’re willing to take more of a chance on you. Brian Therrien: Wonder if there are any statistics that shows that people -- do people file multiple times in their life? Is it like divorce? Rob Moore: Well, there are.
Brian Therrien: Share it with me. What do you know? Rob Moore: No. Typically I will have, what we often call, repeat customers and I have had one that has filed three times and a lot of the people that end up in that situation are people that, frankly, have had gross medical issues, that have been self-employed for years and every time the economy hits and really hits, they’ve been taken along with it. So a lot of times it’s not frankly, for the most part, it’s not individuals that are running up credit cards, being all irresponsible. It’s individuals that, unfortunately, just have been tied into some sort of catastrophe in their life and, fortunately, it’s kind of gone the same way with the peaks and valleys of the economy. Brian Therrien: So you can rebuild your debt, or your debt -- you can rebuild your credit afterwards and it’s possible that you can even get credit cards right away. Rob Moore: Absolutely. Brian Therrien: So how long is a bankruptcy? Go ahead. Rob Moore: I just wanted to throw this in, too. I actually have a former client of mine who is now a mortgage broker and she actually said that usually it takes about a good two years after obtaining your discharge that you can still get qualified for a mortgage. So although it can be on your credit report for up to ten years, a lot of times the longer span that you have before you go and try to obtain credit, the more likely you’ll be able to obtain it. So if you do wait a good two, three years you’re going to have much better rates than somebody that is applying for a loan right after getting their discharge. So, from my perspective, I usually advise people to -- if you can hold off and wait on obtaining new credit to wait unless you just get a small credit card and try to rebuild your credit score quicker, I would refrain from seeking any big loans because you’re going to be obtaining better rates in basically about two to three years out. Brian Therrien: Would that be the same after you go through a settlement or a management process? Rob Moore: Frankly, yes. Typically what will happen is if you do end up doing a settlement with either a lender or a creditor, what will normally happen is that you are going to take a hit because they’re going to report it as being paid less than full and the credit score does take a hit as well and so that will stay on that credit report and, again, it’s potential for up to ten years. Brian Therrien: Great. Well, you shared some fantastic information here. Anything else that you can think of that would be helpful for the audience to know about the settlement option, management option, considering bankruptcy? Rob Moore: What I would do is, and again because so many different jurisdictions that I’m speaking with right now, but I guess I would see what options are out there. Whether your state has certain nonprofit debt management programs and see, if you are looking to do a debt settlement program, to see if you can check with the either the Attorney General’s Office in that particular state, the Consumer Protection Office. Again, just do your background and try to learn as much as possible to better educate yourself. I definitely think that knowledge is going to be a beneficial tool in whatever option that you end up choosing. So I would just try to get as much information as you possibly can on any of these three options. Brian Therrien: One other thing I wanted to share with the audience that we have discovered here at the Disability Digest and, Rob, perhaps you can use this in some of your customers that come to you is that if you’re disabled and have student loans, there is a process that you can get those forgiven and it’s on our blog. But what we will do is when I send around the replay, it will be on the webpage associated with it and it does work. I know people that have been able to get their student loans forgiven. So that certainly could be helpful. Rob Moore: That is very helpful. Brian Therrien: Yes. So let’s just do a quick recap. I guess the key here that I see is really to be aware of all your options in advance. If you’re going through the disability approval process or have been approved, some of the key things are, if you’re not approved, is, first of all, you want to concentrate on winning your case quick because dragging it out and letting it go three years or so and not doing it right [audio went silent 47:39.4 - 47:43.4] from the start. So make sure you do that. As you’re going through the process or wherever you are in the stage, what I’ve learned from your work, Rob, is that you really want to focus on keeping your mortgage current. That is your top priority, correct? Rob Moore: Absolutely. Brian Therrien: Keep that mortgage current and then look at the other things as a secondary priority. Credit cards, car, medical bills, etc. And then explore all of your options. The settlement option that we talked about, the management option that we talked about, see what’s available in your local area and if those don’t get you to where you need to go, then you can take a look at filing for either Chapter 7 or Chapter 13 bankruptcy. So that’s what I see as the recap. Did I miss anything? Rob Moore: No. That sounds about it. Brian
Therrien: Well, listen, in
closing, I want to really think you for the great work that you do and
taking
the time to come out here and share all of this wonderful information
with the
Disability Digest members. For
those of you that are listening in the audience, there are resources
on the
webpage and if you don’t have the exact address of the webpage it is www.thedisabilitydigest.com/debtrelief. Rob Moore: Not a problem. I’m glad I could be of help and if anything ever comes up, please let me know. Brian Therrien: We will. Thanks everybody and until the next time, this has been Brian Therrien. Thanks again.
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