Detroit Bankruptcy Lawyer Kurt O'Keefe | MIchigan Bankruptcy Blog

F Is For Bankruptcy Attorney Fees

Kurt O'Keefe — Thu, 08 Mar 2012 07:06:01 +0000

Bankruptcy attorneys file bankruptcy, themselves, both Chapter 13 payment plan bankruptcies, or Chapter 7 liquidation bankruptcies, more often than we get million dollar fees.

But, what is news?

Over a billion (yeah, B as in Billion) in attorney fees, on a bankruptcy case?

Yah, you betcha.

“These fees are higher than my model would’ve predicted,” said Stephen Lubben, a professor of bankruptcy law at Seton Hall University. - as quoted on the CNN Money site, on his model for bankruptcy attorney fees.

Some model!

Of course, that is a Chapter 11 bankruptcy model, which consumers, that is, folks like you and me, rarely file.

So, more stories about how “lucrative” bankruptcy practice is.

Yeah, right.

Now, me? I ain’t complainin’, I work the broke side of the street, fighting mortgage companies and other big bad creditors, even the IRS, for individuals. Guess what? There is more money on the other side of the street.

So what.

As I heard another attorney say at a consumer attorney conference: “Isn’t it great that we can tell our children what we do for a living?”

OK, not all creditor attorneys are bad.

Not all consumer attorneys are dedicated to tilting at windmills, a la Don Quixote.

However, on average, if $ are your goal, you are in those big firms doing BIG Chapter 11 bankruptcy cases for BIG bucks.

image by: Dreamstime

Now, Lehman’s bankruptcy did involve billions and billions of dollars, and, the 1.6 billion figure includes management fees for running the company during the years it has been in Chapter 11. Said fees are not really attorney fees, but, the headline caught my eye.

You can get a FREE consultation from me, and a written retainer agreement, that spells out everything, up front, in advance.

My retainer agreements have grown over the years to cover most things bankruptcy clients ask about; as more questions arise, I throw the answers into the form.

It is 4 or 5 or 6 pages long, depending on which chapter bankruptcy you are filing.

GET A WRITTEN FEE AGREEMENT FROM ANY LAWYER YOU HIRE, FOR ANYTHING.

Other attorneys playing the alphabet game:

F is For Fees

Feel Guilty Filing Bankruptcy? Good!

Kurt O'Keefe — Tue, 28 Feb 2012 06:30:49 +0000

G Is For Guilty

image credit: Dreamstime

Most of us have been taught to pay our bills.

If you borrow money, you should pay it back. We get mad at our “friends” who don’t pay us back.

Whether it is money for furniture, a truck, a car, a boat, a house, a vacation, a student loan to get through college, or a loan from a friend or relative. We are supposed to pay it back as promised, or, at worst, when we can.

I tell my clients who file Chapter 7 bankruptcy, if you get the money later, you can pay back whoever you want.

Filing bankruptcy does not prevent you from paying your debts, it gives you relief from oppressive creditors.

Some clients told me last week they were feeling so guilty, even though they have no choice.

People who file Chapter 7 bankruptcy do not have the money to pay their bills, whether they file or not.

Hey, I tell clients there is something wrong with them if they are happy about filing bankruptcy> No one picks up that high school diploma and turns around to tell everyone their goal is to end up in a bankruptcy lawyer’s office X years down the road.

The essence of the Judeo-Christian ethic to forgive.

Most, if not all, of us would rather be in the position of forgiving a debt owed to us, than seeking forgiveness of a debt that we owe.

It is that pride thing.

Well, with the economy still in the toilet – what to do about it?

The things I hear:

“I never planned on this.” “I never thought I would be thinking about this.” They do not even want to use the word “bankruptcy.”

Image by: Dreamstime

The book of Deuteronomy speaks to these points:

“At the end of every seven years you must grant a remission.

Now the nature of the remission is this:

every creditor who holds the person of his neighbor in bond must grant him remission; he may not exact payment from his fellow or his brother once the latter appeals to Yahweh for remission.”

In lieu of direct appeals to Yahweh, we have bankruptcy courts, established by Congress as required by the Constitution. The sad fact is, those who file bankruptcy do not have a choice, they do not have the means to repay their bills, it is not as if the creditors get paid if they do not file.

It is not fun, but bankruptcy is not only legal, but, more importantly, it is also moral and ethical.

Detroit Chapter 7 Creditors’ Meeting

Kurt O'Keefe — Thu, 23 Feb 2012 06:57:59 +0000

DETROIT BANKRUPTCY COURT

This is it! Home of the Detroit, Michigan bankruptcy court. Nothing marking it other than the address: 211 West Fort.

The initial, usually, only, court date is held here on the third floor, for both Chapter 7 and

Chapter 13 creditor meetings, or, 341 hearings. Well, for certain counties in the Eastern District of Michigan. Chapter 7 hearings for Washtenaw and Lenawee counties are held in Ann Arbor, and Chapter 7 and Chapter 13 hearings for the Northern Division of the Eastern District of Michigan are held in Flint, Port Huron, and Bay City.

Judges are not even allowed to attend, so court date is not quite accurate. The hearings are presided over by the Chapter 7, or, Chapter 13, trustee.

The trustee operates the tape recorded, seen above, which is the official record of what happens. No court reporter, as such.

Most of them bring a laptop computer, as in the picture.

The trustee sits behind the machinery. If any creditors attend, a rare event other than credit unions and car finance companies, they sit to the trustee’s right.

The debtors, that is, the people who file bankruptcy, sit directly across from the trustee.

The debtor attorneys sit on the trustee’s left.

A place for everyone!

The United States Trustee, under the Department of Justice, oversees the individual trustees, who are all attorneys, except for one accountant. The U. S. Trustee even has a Chapter 7 Trustee Handbook.

They are NOT government employees.

Currently, they get $65 dollars out of the $306 dollar filing fee. And, a percentage, set by law, of any assets they bring into the bankruptcy estate. Which is their job, to reduce assets to cash for the benefit of creditors.

Not enough to get me interested in applying for the job. About twice a month, you get to sit in a small room, all day, processing 7-8 cases, every half hour. Yes, that is 30 minutes.

For more of what happens, check my U Tube video on

Detroit Chapter 7 bankruptcy hearings.

S Is For Chapter 13 Step Plan

Kurt O'Keefe — Thu, 16 Feb 2012 06:20:31 +0000

S is for Step Plan

image by: dreamstime

Chapter 13 bankruptcy is difficult enough to understand. The Chapter 13 plan is the point of a Chapter 13 bankruptcy case.

Chapter 13 is a payment plan bankruptcy case, as opposed to Chapter 7 or “straight” or “liquidation” bankruptcy.

Clients always ask: How does the court figure out how much I will pay?

The answer is: it ain’t the court, you do!

You file your Chapter 13 plan, and you really need an experienced attorney to do this.

Any financial analysis starts with: the budget.

How much is coming in, minus how much is going out for living expenses, determines the plan payment.

We will leave plan length and liquidation analysis for a letter “L” post.

So, simple enough, once you take your pay stubs – oh? self-employed, you say? Or on cmmission? Well, Congress says we have to crunch those numbers, make our best guess as to FUTURE income and expenses, and go with that.

Lots of guesswork, I know, but, them’s the rules.

Unless you are paying 100% of your debts before 3 years are up, your Chapter 13 plan must go for at least 36 months.

So, what if your car payment is done after 20 months? Let’s make it simple: you are buying this car, not a lease that has to be replaced.

In the Detroit bankruptcy court, the Trustee will object to confirmation of your plan unless you increase your payment, or, step up the payment, by the amount of the car payment, in month 21.

So, your monthly car payment is $300; your monthly plan payment starts at $400, for months 21 through 36, you pay $700.

The Trustee’s view of bankruptcy law, in this situation, is right, it says here. Regardless of my opinion, the Detroit bankruptcy Judges say she is.

What about your 401(k) loan?

The 6th Circuit Court of Appeals, In Re: Seafort, issued its opinion that when a 401(k) loan is paid off during a Chapter 13 case, the payments must step up by the amount of that loan.

Seems obvious to me, but, the Debtors’ attorney argued that they should be able to take that money, and increase their 401(k) contribution.

The 6th Circuit blew the whistle on that move, and, short of the U. S. Supreme Court, which is usually too busy for bankruptcy cases, they are the FINAL word for those of us in Michigan, Ohio, Kentucky and Indiana.

Home Value Gone – When Is It Smarter To Stay Or Walk?

Kurt O'Keefe — Thu, 09 Feb 2012 06:40:27 +0000

image by: Dreamstime

Home value in Michigan and everywhere else drops, again. Another new low in home prices.

But, hey, we hit bottom, the rebound is just around the corner?

Uh, no.

From the Washington Post story linked to above:

““The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand,” said David M. Blitzer of S&P Indices. “I spent the weekend scratching my head and saying, ‘Isn’t there some good number in here?’ ”

The Federal Reserve comment in January:

“Looking forward, continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery,”

(From the same Washington Post article)

In layman’s terms, we are still screwed.

I have been telling my Michigan clients for years, it takes people with jobs to buy houses, and we have been losing them, for years.

Michigan employment is up recently, yes. But auto workers don’t make what they used to, and those who skipped the state, left a lot of unsold homes behind them.

Shadow inventory haunts our state, homes already foreclosed, that have not even been put u for sale yet. Because, the mortgage companies learned the law of supply and demand, the more they put up for sale, the more downward pressure on home prices, and home values continue to decline, even further.

What should a Michigan homeowner do?

You cannot borrow your way out of a debt problem.

Governments can’t, and we can’t.

Don’t cash in retirement accounts like IRAs and 401ks, money creditors cannot get.

Over half the 401k accounts in the country have loans out against them.

Is $2.5 Million A Slap On The Wrist?

Kurt O'Keefe — Thu, 02 Feb 2012 07:41:32 +0000

Michigan debt collection company AGREES to pay $2.5 million dollar fine.

Would you do that if you had done nothing wrong?

In virtually the same statement every P.R. person makes for every corporation caught red-handed, Asset Acceptance states:

image credit: Dreamstime

“In a statement, Asset Acceptance said that the settlement ended an F.T.C. investigation that began nearly six years ago, and that the company did not admit to any of the allegations. “We are pleased to have this matter behind us, and to have clarity on the F.T.C.’s policies and expectations of the debt collection industry,” said Rion Needs, president and chief executive of Asset Acceptance.”

I’m sure it was all just a misunderstanding.

Asset Acceptance, a collection agency, handles thousands of debts. How are they supposed to know which ones were discharged in bankruptcy, which are past the statute of limitations?

I mean, they work in all 50 states, and probably other countries, each with its own statutes of limitation. Hey, checking all those out would be, you know, WORK!

They probably cannot get slave labor, so, more work, means more employees, or lower productivity for existing employees, which costs more, which cuts profits.

GREED – GREED – GREED.

There is a reason it is one of the seven deadly sins.

I agree with the NCLC spokesperson quoted in the N. Y. Times article linked to above:

image credit: Dreamstime

“The penalty “is certainly a slap on the wrist and probably a little bit more, but it really depends on what the F.T.C. does to enforce this in the coming months and years,” saidRobert Hobbs, deputy director at the National Consumer Law Center and author of “Fair Debt Collection” (National Consumer Law Center, 1987)”

No related posts.

Homeowner Help? Or Government Sellout?

Kurt O'Keefe — Thu, 26 Jan 2012 06:40:57 +0000

The long awaited on again, off again, multi-state settlement between the Attorneys General of our various states and the mortgage company rapists, uh, crooks, is apparently on again.

Unless this is your first trip to this blog, let me end the suspense: the proposed settlement is:

image credit: dreamstime

Sorry to ruin the ending.

What the heck am I talking about?

Many of the various mortgage crimes perpetrated on American homeowners by mortgage companies and mortgage servicers, the other companies the mortgage companies to which the mortgage companies outsourced the collection and allocation of your payments, are to be absolved, beause,

GET THIS!

The mortgage companies promised not to do it any more! Wow! I bet our various representatives, in Michigan, as in many states, the Attorney General is an elected position, really had to go to the mat to get that concession. I’ll wager there was blood on the floor!

Gag me with a spoon.

image credit: dreamstime

It is bad enough to let the mortgage mafia off the hook; but to pretend that you got something out of them when you are letting them off the hook adds insult to injury.

Gretchen Morgensten has the best account of the vast crimes wrought by the mortgage industry, in her book Reckles$ Endangerment.

The normally consumer oriented, big government will protect the little guy, Center for Responsible Lending, actually endorsed the terms of the attorney general settlement.

The bastards mis-allocate your payments, put you in default with their defective bookkeeping, which, just incidentally, increases the mortgage servicer bottom line, and, now, they promise to stop!

Fan-frickin’-tastic.

No more robo-signing.

This is akin to letting a bank robber off without jail time because he promises not to rob banks anymore.

There is much more, but how sick do you want to get?

This time around, it says homeowners can still sue on their own, and that it “would not shield banks from prosecution related to criminal activities” (from the Center for Responsible Lending site linked to above).

Whaddya mean: “prosecution related to criminal activities”?

What the hell else can you anyone be prosecuted for?

They have not been prosecuted yet; Obama just appointed a commission to whitewash the crimes at the federal level, and now the State AGs will run home and campaign on how they socked it to the bad guys. They are not going to try to take them on.

Good luck getting any law enforcement agency interested in your case.

Bankruptcy Still Offers Mortgage Debt Relief

Kurt O'Keefe — Thu, 19 Jan 2012 06:59:57 +0000

I talk to so many people trying to keep their homes, or, even rental properties, who

are unaware that bankruptcy law still offers some remedies for Michigan foreclosure issues.

image credit: dreamstime

Say you bought a house with a friend or relative when you were younger, then moved

into a bigger residence when you got married, whatever, and kept the old one to rent

out for some side income.

Great idea, right? Home values only go up, so if you break even on the rent, you make

money on the investment.

Until the bubble bursts, the music stops playing, the rental house is worth less than

you owe on it, and, no tenant!

Before you give up, consult an expert, bankruptcy law allows the cram down of that

mortgage to the value of the home, and the court can re-write the terms, including

interest rate and how long to pay it back.

This is true if the home is NOT your principal residence.

BUT THERE IS MORTGAGE RELIEF FOR HOMEOWNERS TOO!

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If you have a second mortgage on your Michigan home, odds are, the home is worth

less than what is owed on the first mortgage.

Oh, Oh, Bankruptcy Danger: Omitted Creditor

Kurt O'Keefe — Tue, 17 Jan 2012 07:12:27 +0000

Michigan bankruptcy clients forget creditors all the time. Or, don’t even know they

owe some body money, especially medical bills, which often show up months later.

Some people panic: I already had my bankruptcy hearing, is it too late? How much

trouble am I in? Will I have to pay this bill?

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Bankruptcy law gives the debtor, that is you, the person filing the bankruptcy, the

right to amend the schedules any time so long as the case is open.

Now, you have to give the creditor notice when you file the amendment adding the

creditor, and, in Michigan Chapter 7 bankruptcy cases, the creditor gets time to

object to the discharge, as they would if they had received timely notice.

What if you already received your Chapter 7 discharge?

Michigan is in the 6th Circuit, which, like most circuits, allows a case to be

re-opened to add a creditor. However, the 6th Circuit ruled that there is no reason

to re-open a case to add a creditor if (1) it was a no asset case unless (2) the creditor,

now that it knows about the bankruptcy, wants to object to the discharge of the

debt.

Michigan allows the use of the Federal bankruptcy exemptions, so most cases are

no asset bankruptcy cases.

So, in a Chapter 7 bankruptcy case, you can add an omitted creditor any time as

long as your case is open. The creditor will have a chance to file a proof of claim, if

trustee has collected assets, and a chance to object to the bankruptcy discharge.

In a Chapter bankruptcy 13 case, the same rules apply, up to the deadline to file a claim.

That is, if the creditor had actual notice of the claim. That way, there is no prejudice, as

we say in the law biz, no harm to a creditor who finds out in time to file a claim and get paid

as Chapter 13s are payment plans.

If no notice to the creditor in time to file a claim, no discharge of that debt.

A number of other bankruptcy experts across the country are playing the “alphabet game”,

writing on topics that begin with each letter of the alphabet. The other topic that

begin with the letter “O” are listed below.

Objection   Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Own   New York Bankruptcy Lawyer, Jay S. Fleischman
Omitted   Bay Area Bankruptcy Lawyer Cathy Moran
Options to Bankruptcy   Suburban Philly Bankruptcy Lawyer, Chris Carr
OOPS   Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
Objection to Discharge   Hilo Bankruptcy Attorney, Stuart T. Ing

O Is For Organize Marin County CA attorney Catherine Eranthe

Organization: Do You Need It In Your Bankruptcy? Mark Markus LA bankruptcy attorney

The Mystery of Chapter 11

Kurt O'Keefe — Thu, 12 Jan 2012 07:12:40 +0000

photo credit: dreamstime

What the hell is Chapter 11? Just the name gives most people a headache.

OK, maybe not as much of a headache as if you work for a company that files

Chapter 11 bankruptcy, or, if a company that owes you money files under

Chapter 11.

Most Chapter 11 bankruptcies are filed by businesses that want to reorganize,

because, obviously, something bad happened.

Probably not as bad as sunk as this boat.

Generally, the bigger a business is, the more complex it is, and the more

involved the bankruptcy case will be.

But individuals can file Chapter 11 too!

This does not excite you?

Chapter 7, or straight, or liquidation bankruptcy, is what most people file, and

where many companies which start in Chapter 11 end up.

In Michigan bankruptcy cases, rarely is anything liquidated; most people who

file do not lose any property to the Chapter 7 trustee.

Chapter 13 is a payment plan for individuals with regular income. Corporations

cannot file Chapter 13 bankruptcy.

Companies that file Chapter 11 can get out of union contracts, and most other

contracts for that matter. The court can re-write the terms of secured loans;

unsecured creditors, ones with no collateral, are lucky to get pennies on the

dollar. As for those who own stock or bonds, well, check with your friends who

owned GM or Chrysler stock.

Individuals in Chapter 11 cannot get the terms of the first mortgage on their

residence changed, but, can get mortgages changed on any other real estate

they own.

This can save a person in the business of, say, renting houses or apartments.

That is the point of Chapter 11, to allow reorganization, a payment plan that

pays what is required, and keeps the business going.

So, you could own 8 Michigan houses that you rent. They are all underwater,

that is, worth much less than what is owed on them. Yet, you still have paying

tenants.

But you can see this is going nowhere, you owe a million dollars more than they

are worth all totaled.

Bingo! Chapter 11 allows you to re-write every one of those

mortgages down to the value of the home, and even change the interest rate,

and how many years are left on the mortgage.

Do you have any questions about Chapter 11?