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Why I am Thankful to be a Bankruptcy Attorney in West Michigan

As a bankruptcy attorney in West Michigan, I get used to the idea that no one is ever happy to come see me. Nobody sees an attorney because things are going well, nobody ever wants to file for bankruptcy, and most people in the community view me as a necessary evil. You might think this would be unfulfilling at best, and down right depressing at worst — you would be wrong.

When people see me it is because they have given up hope. They are at what is usually the lowest point in their lives, they feel like a failure who could not provide for their family, they beat themselves up more than any debt collector ever could. They have lost jobs, income, their life savings, and view bankruptcy not as a financial decision, but a moral one.

One of my favorite parts of meeting with a client is seeing the change in their outlook after I tell them that yes, there is help. That we can stop the harassment, stop wage garnishments, and rebuild their credit. There is a light at the end of the tunnel, and I feel genuinely privileged to be able to help shepherd my clients through that tunnel. Just seeing them relax, and even smile, makes me feel a little bit better.

Most attorneys get frustrated by their career which is probably why attorneys have such a high substance abuse rate. In fields like Divorce, Criminal Law, and Litigation, there is always an element of tragedy, and most times the people involved are never happy with the outcome or their attorney. One of my friends who is a divorce attorney once told me the way she knows that a divorce judgment was successful is that both sides hate it. With bankruptcy, my clients start out hopeless, but by the end of the process they are hopeful. They have seen that they can start their financial lives over, and most of the time the only regret people have is that they didn’t see me sooner.

Bankruptcy is not pleasant, but it is necessary, and can help people at the worst moments of their lives. I am proud to be a bankruptcy attorney, and I am honored that my clients place their trust in me to guide them through the process. I never thought I would be a bankruptcy attorney, but I always wanted a job where I could help people — I have that sort of job, and I love every day of it.

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DEFAULTING ON YOUR STUDENT LOANS — THE CONSEQUENCES

Student loans have been a big topic for me lately, mainly because I see so many people with so much student loan debt. Recently, the amount of credit card debt outstanding in the nation was surpassed by the amount of student loan debt. According to  recent report, roughly 20 million people attend college each year, and of that 20 million, 12 million borrow money to help pay for tuition. Current estimates show that the total amount of outstanding student loan debt is somewhere between $902 Billion and $1 Trillion  — Trillion, with a T. Perhaps even more frightening are the following statistics:

1. Only 37% of federal student loan borrowers between 2004 and 2009 managed to make timely payments.

2. Two out of every five student loan borrowers are delinquent at some point in the first five years after entering repayment.

3. The current student loan default rate is 14.7%, and for every student loan that goes into default, two others become delinquent.

I am pretty sure I’ve convinced you that this is a massive problem. What I am really hoping to do is convince you to do something about it before you go into default on your student loans. So, let’s start with the basics, what is default? Well, that depends on whether you have federal or private student loans. Let’s talk about private student loans first.

Private student loans become defaulted as soon as you miss one payment. No grace periods, no 30, 60, or 90 day late notices. If you miss just one payment, you are technically in default. As soon as you are in default on a private loan, your lender could accelerate the amount due and could file a lawsuit. Now, most private lenders don’t do that right away, but they could.

Federal loans are different than private in how a loan goes into default. Once your federal loan enter repayment status you have to start making payments. If you miss payments, you will not be in default until 270 days after the first payment was due. If you don’t know how long it has been since you made a payment, call your lender, they can tell you exactly.

So now you know how loans go into default, but what does it really mean? Well, for private loans, not much. They can sue you, and they might, but there isn’t much more that they can do except bother you and harm your credit. Now federal loans are a different story. Once you go into default these are just some of the actions they can take:

1. COLLECTION FEES: Once your loan goes into default, a debt collector who has contracted with the department of education is assigned the file. This collector gets to automatically tack on a 25% collection fee to the outstanding balance of your loan. So let’s say you had $100,000 in outstanding student loans, once you default, you now owe $125,000! Now, you can get rid of this fee by curing your default, but it is replaced by an 18.5% cure fee. So instead of $125,000 you now owe $118,500. Better than $125,000, but still a heavy price to pay.

2. ADMINISTRATIVE WAGE GARNISHMENT: The department of education can garnish your wages without having to file a lawsuit. All they need to do is give you notice that they intend to garnish, and thirty days later they can begin taking up to 15% of your wages.

3. TAX REFUND INTERCEPT: The IRS will send any refund you may receive straight to the department of education, you get nothing.

4. SOCIAL SECURITY OFFSET: Not even Grandma’s social security check is safe.

5. LOSS OF SECURITY CLEARANCE: If you are a government employee, or a government contractor, you could lose your security clearance, which could then mean you lose your job.

6. PUBLIC SHAMING: Doctors who have defaulted on certain loans have the news that they defaulted published on the internet by the department of education. And, their ability to participate in Medicaid programs could be jeopardized. http://bhpr.hrsa.gov/scholarshipsloans/heal/defaulters/index.html

Terrified yet? Don’t be. There is no good reason you should ever go into default on a student loan. We can help you to avoid default by getting you in a manageable repayment plan, your payment could even be $0.00. If you are already in default, call us immediately. We can help you get out of default and obtain a manageable repayment. The worst thing you could possibly do is ignore the problem. Student loans are scary, but manageable with the right planning. So don’t default, call us instead.

For additional information on this topic visit our Student Loan Help services.

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FORGIVENESS OF YOUR STUDENT LOAN – YOU MAY QUALIFY

If you have student loans and work for certain employers, you may be eligible for Public Service Loan Forgiveness. There is a government program that far too few people know about, but it could save people with student loans tens of thousands of dollars. Here is how the program works, if you work for a 501(c)(3) non-profit corporation or a governmental entity, you can enroll in an income-based repayment plan, and after ten years of payments, the balance of your federal student loans is completely forgiven by the government.

Unfortunately, this provision is barely used because most people either don’t know about it, or think that it only applies to certain groups. Most people usually think that only people like Teachers, Nurses, and Police Officers qualify, but that is not true. For example, Spectrum Health is a Non-Profit, so guess what, if you work at Spectrum Health in ANY capacity, whether janitor, parking attendant, or anything else — You can have your loans forgiven! This also means anyone who works for any form of government, federal, city, or state, whether you are a crossing guard or a lunch lady, you can have your federal student loans forgiven.

Here is a good example, let’s say Jim is a medical assistant at Spectrum Hospitals. He is married with two children, earns has a total household income of $60,000 per year and has $55,000 worth of student loan debt. Under the standard repayment plan, Jim would pay $632.94 per month for ten years for a total of $75,953.02 paid over the ten years. Now if Jim enrolls in Public Service Loan Forgiveness, he would have a monthly payment of $308.00 per month for the next ten years. Jim would pay $36,960, and the rest would be forgiven. So by enrolling in the loan forgiveness, Jim will save $38,993.02!

Sounds great right, so why don’t more people enroll in it? Well, most people just don’t know about it. Further, it can be complex because if you don’t have the right type of student loans, you don’t qualify. The trick is finding a good attorney with knowledge of student loan law. A qualified attorney can make sure that if you don’t have the right loans, we can turn them into the right kind so that you get your loans forgiven.

Not only will this save people tens of thousands of dollars, but for some people who are struggling financially, it could mean the difference between filing bankruptcy or not. While I am a bankruptcy attorney, I want to do everything I can to help people avoid bankruptcy if they can. So if you think you could benefit from being enrolled in this program, call us. It doesn’t matter if you are current or behind on your loans, call us so we can go over your information and determine what the best course of action may be.

For more information visit our services page about Student Loan Forgiveness.

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STUDENT LOANS AND THE ZOMBIE APOCALYPSE

Anyone with a student loan debt that has ever considered filing for bankruptcy, or met with a bankruptcy attorney, has probably been told the same thing — Student Loans Never Go Away. And while it is true that student loans are generally non-dischargeable, do they really stick around forever? Well, I say no, they don’t. You have options, not all great options, but options. So let’s go over them briefly. I promise starting next week I’ll go over all the options individually and more in depth, but for now, let’s just hit the highlights.

1. Bankruptcy:  It is true that in most cases student loans are non-dischargeable, but I personally believe that far too many bankruptcy lawyers just accept the fact that student loans will not go away instead of really delving into the facts. In order to have your student loans discharged, you must show that: (1) Based on your current income and expenses, you cannot maintain a minimal standard of living if you are forced to repay your loans; (2) Your financial situation is unlikely to improve; and (3) you have made a good faith effort to repay your student loans. This test has historically been very hard to satisfy, but with recent cases coming down, the standards are getting relaxed and improve the prospects of getting your student loans discharged. Check out this case in Oregon where a bankruptcy filer discharged almost all of his loans.  Yes, it is an uphill climb, but student loans CAN be discharged in bankruptcy, just make sure you have an experienced bankruptcy attorney to help you.

2. Income Based Repayment Plans: These plans allow you to make monthly payments based on your income if they meet a debt-to-income test. Under that plan, your payment would be lower than payments under the Standard (10-year) repayment plan. Some people even have $0 per month repayment plans. The upside to these is that it allows you to maintain your credit score, and after 25 years, if there is still a balance, the loan is forgiven.

These are the two main options for people staring down student loan debt, and we will go over them in depth next week, as well as several others that might help people struggling to pay their bills. Student loans are a problem, but they can be solved, you just need the right lawyer to help you out.

Make sure to visit our student loan help services page for additional information.

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DMX: Y’all gon’ make the US Trustee lose her cool up in here! Up in here!

Way back when, I was just a bright-eyed law student full of hope, full of vigor, and ready to take on the world. I figured I would assuredly be writing briefs to be submitted to the US Supreme Court one day. Today is not that day. Today I am writing about DMX. Yes, DMX the rapper (If you don’t know who that is, ask your children). It seems that DMX had to file Bankruptcy, because he has lost his money — and his damn mind.

This story in the Wall Street Journal explains how he has not properly filled out his bankruptcy schedules, has not disclosed all assets, has not shown up for any court hearings, and is generally being recalcitrant. Because of his behavior, DMX’s case may very well be converted to Chapter 7, or dismissed entirely. I really have to wonder what bankruptcy attorney he hired. The errors on his petition are astounding for example, he claims to spend $1,000 per month on clothes, yet states that he does not own any clothes.

I suppose this goes to show that just because your bankruptcy attorney is expensive, doesn’t necessarily mean they are a good bankruptcy attorney.

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Get out of Debt for $0 down and as little as $100.00 per month.

Each year I meet with hundreds of people who need to file bankruptcy. As of today, I have met with 587 potential clients in 2013. Some don’t need to file bankruptcy, and I tell them so. Some retain us to file for bankruptcy and eliminate their debts. Some need to file for bankruptcy but simply cannot afford it– It is those people who keep me up at nights. Bankruptcy is a powerful tool that can help people get back on their feet, give them peace of mind, give them equal access to justice, and I believe no one should be denied that relief.

So why can’t people afford to file for bankruptcy? Well, there are two types of bankruptcies, one under Chapter 7 of the United States Bankruptcy Code, and one under Chapter 13. A chapter 7 bankruptcy is great, but the law requires that attorneys collect all fees and costs up front. The problem with that is that it means you have to pay between $1,300 to $3,500 up front before you can get relief. In order to file a Chapter 13, our office normally requires a minimum of $1,000.00 up front to file and the rest of the money is paid to us over time.

Those methods have worked well for us, but times are tough in West Michigan and we want to help. That’s why for at least the next month  we can file your bankruptcy for $0 down.

When I say $0 down, that is exactly what it means. Zero money out of pocket for financial relief. Zero dollars to make the phone stop ringing. Zero dollars to stop garnishments. There are so many people who are desperate to get out of debt and desperate for relief, people who could afford a monthly payment in a chapter 13 bankruptcy if they could only get the up-front costs together. I decided that we need to help them.

My staff thinks I’m crazy, and other bankruptcy attorneys hate it, but I need to help my community. I am in the business of helping people get a fresh start through bankruptcy, to set their past mistakes behind them and move on. If I needed help, I would want someone to do this for me, so I want to do it for others. We do it by using the awesome power of the Chapter 13 bankruptcy.

With the Chapter 13 bankruptcy we can lower your car loan interest rates, save your home, and we can actually make your creditors pay my fees. You will have a small monthly payment, as little as $100 per month, and we will propose a plan that forces your creditors to accept our offer.

If you qualify for our $0 down program, you can get the help you desperately need today. So call us now and get set up for a free consultation. There is no risk, you get to talk to us for free and get professional advice. So call us now and let us help you.

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New Honor: Jeffrey D. Mapes, Board Certified Bankruptcy Attorney

Yesterday I received news from the American Board of Certification that I have officially passed their test and passed peer review, and am now Board Certified in Consumer Bankruptcy. This now puts me in a group with only ten other bankruptcy attorneys for the entire Western District of Michigan. This means that our clients are truly getting the best, and most qualified representation they can get. I’ll let the American Board of Certification explain a little more about the process below:

“Board Certification means that the certified attorney has met rigorous, objective standards and has demonstrated knowledge in bankruptcy and/or creditors’ rights law. Hiring an attorney with expertise in any specialized field of law can be a bewildering experience. As a client, you want to make sure your counsel is experienced in the particular field. Unfortunately, prospective clients usually have little objective criteria on which to rely.

The American Board of Certification’s (ABC) programs are designed to identify and recognize those attorneys in consumer or business bankruptcy who have met or exceeded rigorous certification standards relating to experience, continuing legal education, integrity, and peer review; in addition to demonstrating a sophisticated understanding of the law in their specialty area.

The goal of ABC is to provide meaningful information to those seeking legal services to enable them to make informed decisions in selecting experienced counsel. To become certified as a bankruptcy specialist by ABC, an applicant must successfully complete a comprehensive day-long written examination covering (1) general bankruptcy/creditors’ rights law (2) legal ethics, and (3) substantive questions in the specialty area. In addition, each applicant must show significant experience in legal matters and a substantial dedication of their practice to such matters, as well as providing professional references and participating in at least 60 hours of continuing legal education over a three-year period.”

I am truly honored and proud to have achieved this. It was the result of a great deal of studying, and a great deal of work. Perhaps most rewarding is that five other debtor attorneys, and five creditor attorneys all recommended me for board certification. I have worked very hard to develop a good reputation among clients and my peers, and I am happy to see that it has not gone unnoticed.

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You Can’t Stop the Bankruptcy Court for the Western District of Michigan!

Last Friday the Chief Judge for the United States District Court for the Western District of Michigan issued Administrative Order 13-088. This order will keep all Federal Courts open during the current government shutdown, and will make sure that the Bankruptcy Court remains operating. In the order, Judge Paul Maloney deemed all judicial officers and staff of the United States Bankruptcy Court necessary and essential. So what does this mean to you?

Bankruptcy Petitions can still be filed.

This is a big one for bankruptcy attorneys such as myself. Obviously if we can’t file bankruptcies, we don’t have any business. But it also means that if there is a foreclosure sale of your home scheduled, we can still file a bankruptcy and stop it. It means that the citizens of Grand Rapids and all of West Michigan still have access to the constitutionally guaranteed protections of the bankruptcy court.

Court Hearings will still occur.

There had been some question about whether or not court hearings such as confirmation hearings and meetings of creditors would still go forwards. This ensures that they will, so if you have a meeting of creditors coming up in your bankruptcy case, make sure you go. It also means that if you filed a chapter 13 bankruptcy and there is a confirmation hearing scheduled, it will go forward and your bankruptcy plan will have the full force and effect of the Bankruptcy Court.

New Bankruptcy Judges will be appointed.

In the same order, the courts are prohibited from hiring new personnel unless expressly authorized. Luckily, filling the two judicial vacancies in the bankruptcy court is now considered essential and it will go forward.

So overall, good news, but it does mean the bankruptcy court is still operating on a shoestring budget. This will likely mean delays in filings, delays in hearings and overworked staff. Hopefully the political theater will end soon and we can get back to business. But it is at least good to know that if you live in Grand Rapids, Lansing, Kalamazoo, or anywhere else in West Michigan, you can still file bankruptcy.

Bad Banking

I came across this article today in the Wall Street Journal about Bank of America harassing debtors in bankruptcy and it got me thinking. In my line of work I deal with dozens of banks, some are easy to deal with, some are difficult, and then there is Bank of America. If you have a mortgage owned by Bank of America, may God have mercy on your soul, because Bank of America sure won’t. The biggest misconception most of my clients have about banks is that they act rationally — they do not.

I cannot begin to tell you how many times I have had clients with money trying to pay their mortgage, and they are declined. Below is a true example of a time where I was dumbfounded by this bank:

I had a client whose home was foreclosed upon despite his best efforts to work with Bank of America. Fortuitously, he inherited quite a bit of money shortly after his home was foreclosed upon. In Michigan you have six months from the date of foreclosure in which you can still keep your home if you pay the full amount owed to them. During this six month period the client and I spent hours on the phone with Bank of America trying to pay them over $150,000.00 –the full amount owed on the mortgage — and kept getting bounced around from desk to desk. Bank of America had two options, decline our money, and lose over $50,000 when they tried to re-sell the house, or accept our offer get paid in full and move on. A rational person wouldn’t think twice, you take the money. But this is Bank of America. It took over six months, hours on the phone, and a lawsuit to get them to accept the money.

So the next time you think that if you could only talk to the bank, you could come up with a deal that makes sense, realize you can’t. Banks aren’t people, people generally have common sense, banks do not.

Dave Ramsey’s Worst Advice Ever

Let me say first, I like Dave Ramsey. I enjoy his radio program and I find most of his advice to be  a dose of common sense that people are all too often lacking. I even agree with Dave that Bankruptcy should be avoided id possible, but today I came across some advice Dave gave out that made me start yelling profanities at my computer screen. So what is this terrible awful no good advice that turned me into a red faced brute? This:

“You never cash out a 401(k) or IRA to pay off debt, unless it’s to avoid a foreclosure or bankruptcy.”

If Dave had just stopped after You never cash out a 401(k) or IRA to pay off debt, I would wholeheartedly agree. Why is cashing out a 401(k) or an IRA to pay off debt bad advice? Well, let’s let Dave himself answer that:

“Let’s say you take $50,000 out of your 401(k). Do you know what happens next? They’re going to charge you a 10 percent penalty, plus your tax rate. If you make $75,000 a year, that puts you in a 25 percent tax rate, plus the penalty. That’s a 35 percent hit, and that’s how much of your money is going straight down the toilet.”

So both Dave and I agree that taking money out of a retirement plan to pay off debt is a terrible idea, but why on earth does Dave think you should do it to avoid Bankruptcy? I wish I knew, there is no good reason. Let’s look at what a bankruptcy could do in a situati0on like this:

  • Chapter 13 could stop a foreclosure and allow you to cure the arrears over time, AND let you keep your retirement savings.
  • Chapter 13 could allow you to repay most or all of your debts in one payment, AND let you keep your retirement savings.
  • Chapter 7 could eliminate most if not all of your debts, AND let you keep your retirement savings.
  • Either Chapter 7 or Chapter 13 would allow you to continue saving for retirement and free up more money to do so.

I can understand Dave’s idea that you should do whatever it takes to repay your creditors, but this idea is irresponsible. If for not other reason that those retirement funds are there for a reason — FOR RETIREMENT! If people don’t have those funds when they retire, they become reliant upon the government or go further into debt, so I just don’t see how anyone would benefit in that scenario.

Cashing out a retirement plan is not a solution, it is a stop gap measure. You are trading one creditor for another, because you may get Visa or MasterCard off your back, but the IRS will take their place. I don’t know about you, but I’d rather deal with Visa than the IRS. More often than not, people who cash out retirement plans still end up filing bankruptcy, except now they don’t have any retirement savings.

Obviously Dave Ramsey is a successful guy who has made a career out of giving financial advice, but that doesn’t mean it is always good advice. Dave himself went through bankruptcy and it helped to set him up for future success, and it very well could do the same for you. If you are thinking of taking money our of your IRA or 401(k) to avoid bankruptcy, you owe it to yourself to talk to a competent bankruptcy attorney first.