Be very very careful who you work with for debt solutions.  It’s a field that attracts snake oil salesmen – they move right into the void of information and exploit the fear that comes with financial crisis.

The North Carolina Attorney General shut down another firm this week, The Consumer Law Group.  Doesn’t that name just sound reputable?  They’re on the side of the consumer, they’re laywers, they’re the guys in white hats.  Nothing could be further from the truth.

They reached out to people from their headquarters in Florida and fleeced them for over a million dollars pretending they were affiliated with the government and lawyers when they were not.  The Consumer Law Group promised to cut debt in half and leave their clients debt-free without bankruptcy.  It was a promise full of hot air designed only to separate people from their money.  The Consumer Law Group did

little or nothing for their clients and kept exorbitant fees until the Attorney General stepped in.

The moral of the story is that if you lie down with dogs, even if they’re pretending to be sheep, you’ll get up with fleas – and a much lighter wallet.  Only do business with firms you trust, who can explain exactly how they do what they do and who don’t try to get paid before they do anything.

In Orange County, California, foreclosures take a year, not just months as in the old days.  In my experience many take even longer, especially if you’re in short sale or loa
n modification negotiations.  This extra time gives you room to investigate all your options, keeping the home, not keeping the home, loan modification, short sale, foreclosure, to see what fits best with your long term plans.

Bankruptcy can be part of that strategy because it places an automatic stay on a foreclosure which gives you additional time.  It can also put in place a long-term way to bring loans current.

What to do with an upside down house, or one that’s in arrears is a big decision.  It’s your home.  Sometimes that home’s a blessing and sometimes it a curse.  Knowing which one it is and how to best approach it is freeing.  I’m happy to help guide you in that decision.

Collectionscreditrisk.com had a very interesting article on Thursday the 12^th.  JPMorgan Chase & Co. (no relation to yours truly) quietly stopped filing lawsuits to collect on delinquent consumer card accounts.  They also let go in-house attorneys who had been very successfully obtaining judgments for years.

Collectionscreditrisk.com reviewed the electronic court records in California, Florida, Maryland, New York and Washington and found that all of Chase’s collection actions had been dismissed and no others had been filed.

As would be expected, Chase didn’t have a comment and wouldn’t say if they planned to begin pursuing judgments again or planned to pursue borrowers in a different fashion.

There is some speculation that Chase’s actions are linked to a whistle-blower case where a former Chase employee, Linda Almonte in Chase’s San Antonio credit card services division, accused the bank of firing her for objecting to the sale of $200 million in legal judgments obtained by the bank’s attorneys. Almonte claimed that the judgment did not have proper documentation and at least a sixth had the wrong amounts.   The case was settled and the settlement terms are confidential, but it could have a bearing on Chase’s recent behavior.

Chase’s actions could also be linked to the documentation issues that have arisen in connection with mortgage foreclosures.  Mortgage lenders have been under government investigation and in trouble with the courts for shady loan documentation and “robo-signing”.  “If sloppy record keeping and problems with false affidavits is a problem with mortgages, it’s 100 times bigger in credit card accounts,” says Michelle Weinberg of the Legal Assistance Foundation of Metropolitan Chicago.

Episode 008   The Year of Hope, Leigh Steinberg’s Chapter 7 Bankruptcy and Filing Bankruptcy Solo

Welcome to 2012- the year of hope.  You can create a debt-free life this year and I’ll be there every Thursday with a podcast full of answers to your questions.

Leigh Steinberg, the inspiration for the movie Jerry McGuire, filed Chapter 7 bankruptcy.  His life is well reported and his debt and its fall-out were very public so he wrote to us about the reasons behind his bankruptcy and what he hopes to accomplish.  You can read the article here.

Beware of identity theft after a bankruptcy.  If your credit card applications are getting declined, order your credit card right away – there may be an unpleasant surprise.

Questions answered in this episode:

Q:            Who will know about my bankruptcy?

Q:            My husband wants to file bankruptcy. He feels there is no other choice for his financial situation (that was bad long before we married a year ago). He says that he can file on his own (I have never been even a day late with any of my payments and we have no “joint” credit) but I have concerns it could affect my credit situation or that his creditors could come after me for what he owes. Are there any precautions I can to take? Is it possible for him to claim bankruptcy without affecting me even though we are married?

Thank you for your questions.  There’s a link right at the top of our home page at Big Dumb Stupid Debt where you can submit your question directly to me.  No question is too big or small and if you’re wondering – someone else is too.

There are many options when dealing with debt.  The difference between debt consolidation and debt negotiation is often confused, not only because the names are similar, but because the process is as well.

Both debt consolidation and debt negotiation involved ultimately settling the debt with the creditor for a lower amount than is actually owed.  In both debt consolidation and debt negotiation, the debts must be delinquent, i.e., payments have been missed.

The real difference between consolidation and negotiation is that in negotiation you already have the funds available (or will have them soon) and with debt consolidation you work with a company that helps you gather the amount you need by saving a monthly payment for you.

Many people think they automatically fall in the debt consolidation category.  The thought process goes, “if I had money for my debt I wouldn’t be in this position.”  Surprisingly, many people have access to more resources than they initially believe especially if accessing those resources means they no longer have the burdensome minimum payments to make.  That savings alone can make debt negotiation a viable option.

Of course the key is to work with a reputable company – this is especially true with debt consolidation because companies who are saving your money for you face a large temptation to close up shop and head to Tahiti.

The holidays are over and life is slowly returning back to normal in our new year, 2012.  With the new year comes resolutions and together with losing weight, getting finances under control always tops the list.  As well it should because problematic finances affect every area of life and it’s a radically different world when you’re not worrying about how to make the next credit card payment, if you’re going to receive a foreclosure notice or if a wage garnishment is going to take a big bite out of your next paycheck.

You can almost taste the relief that comes with drawing a line in the sand and taking back your financial reins.  You may not know how exactly to get that done and that’s where I come in.  We sit down, unpack the pieces of your particular financial puzzle, talk about your goals and put together a plan to help you move into your most productive years.  I’m happy to help and I love being involved in that moment where everything goes from crazy-out-of-control to humming-along.  That makes a great new year for both you and I.