Fears | Nachawati Partner is Appointed to Legal Ethics Committee

We are proud to announce Fears | Nachawati Partner, Majed Nachawati, has recently been appointed to the Legal Ethics Committee by the Dallas Bar Association for the 2016 year. The Legal Ethics Committee is responsible for facilitating and planning ethics presentations for Dallas County Attorneys on an annual basis.   As a member of the ethics committee, Mr. Nachawati is proud to dedicate his time and efforts to the continuing education of Dallas County’s 11,000 attorney members.  Information about the firm or Mr. Nachawati can be found at www.fnlawfirm.com or by calling the firm at 1.866.705.7584.

Fears | Nachawati Attorneys Selected to 2015 Super Lawyers List

Fears Nachawati Law Firm is proud to announce that Partner Majed Nachawati has been selected to the 2015 Texas Super Lawyers list. Each year, no more than five percent of the lawyers in the state are selected by receive this honor.  Additionally, Partners Bryan Fears and John Raggio, were both selected to the 2015 Super Lawyer Rising Stars list. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates, and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys. The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country. Super Lawyers Magazines also feature editorial profiles of attorneys who embody excellence in the practice of law.  

Facebook Friends May Affect Credit Worthiness

Most Facebookers (noun. A person using the social networking website Facebook) know that “friending” someone can enhance or soil a personal reputation. Companies use social media regularly as part of the hiring process. A person’s online reputation may be the difference between getting hired and losing a job opportunity.

Recently it was discovered that Facebook patented technology that could allow lenders to use a borrower's social network to determine whether he or she is a good credit risk.
 
The technology averages the credit ratings of the borrower’s Facebook friends and provides this score to a lender for consideration of the borrower’s credit application. The patent states: “If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.” 
 
This is the ultimate example of “guilt by association” that your mother always warned you about.
 
Facebook has not commented regarding this technology, and it is not clear whether it will ever be used. The federal Equal Credit Opportunity Act strictly regulates what criteria creditors can use when deciding on a loan -- things like income, expenses, debts and credit history determine creditworthiness.
 
For now, it may be prudent to consider the possible implications (and future risks) of friending someone on Facebook. That’s not just good advice -- it could make a huge difference to your future financial success.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.
 

Prospective Students Get New College Selection Tool

Once upon a time, a college degree ensured a bright future. In fact, an entire previous generation taught their children to work hard, go to college, and stay away from trouble. That seemed to be a recipe for success.

 
Maybe is still is, but it has become harder to find the right ingredients to make that recipe a success – especially when choosing the “right” college and degree program.
 
Forbes estimates that the national student loan debt is $1.2 trillion – with $1 trillion of that federal student loan debt. US News estimates that the average student loan debt for 2013 graduates is $30,000. Many students graduate with six figure debts hanging over their heads as they enter the workforce. Bankruptcy is largely not an option to discharge this debt. Consequently, now, more than ever it is important to make wise decisions regarding college choice and degree program.
 
Fortunately, the US government has stepped in with a tool that provides information on graduation rates, what former students of each school earn, how much debt they leave with, and, perhaps most importantly, what percentage can repay their federal student loans.
 
The College Scorecard, put together by the US Department of Education, allows prospective students to sort and compare information on schools by either state or geographic region. 
 
“Everyone should be able to find clear, reliable, open data on college affordability and value,” President Barack Obama stated. “Many existing college rankings reward schools for spending more money and rejecting more students — at a time when America needs our colleges to focus on affordability and supporting all students who enroll.”
 
Critics of college rankings by media publications complain that the results may be influenced by advertising or other financial sponsorship by the institution. Sometimes this becomes outright comical when small for-profit schools are ranked on the same level as the nation’s best public universities. The College Scorecard seeks to provide objective information that allows the consumer to research and make a sound decision in his or her education.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.
 

Minimum Age to File for Bankruptcy Protection

There are minimum ages that are milestones as you go through life. Typically, age 16 means a driver’s license; age 18 means you can vote; age 21 means you can purchase alcohol; age 35 means you can be elected President of the United States (like your kindergarten teacher predicted for you); and age 65 means you receive Social Security retirement benefits (or age 62, or 66, or 67, or never if the government runs out of money).
 
While the government places age restrictions on many activities, there is no minimum age requirement for an individual to qualify as a debtor in a federal bankruptcy proceeding.
 
This “loophole” was used in 1998 to stop a foreclosure. In that case, 10 year old Shawn Powell filed for Chapter 13 bankruptcy protection in a Maryland bankruptcy court. The facts of the case are actually very sad: Shawn, his brother and his sister were orphaned in 1998 after his father died of liver disease; almost exactly a year after their mother died in a car accident. Shawn and his brother lived in his parent’s home with his uncle, who was not able to keep up the mortgage. Faced with foreclosure, Shawn filed for bankruptcy protection.
 
According to a Washington Post story at that time, the purpose of Shawn’s bankruptcy was to buy time for “the children to collect $100,000 from their father's life insurance policy, which would allow them to pay what they owe and stay in the well-kept home.” Shawn's bankruptcy filing lists his personal property: toys and clothes valued at $200. Shawn’s income, needed for funding a Chapter 13 repayment plan, was disclosed at $327 a month in Social Security survivor benefits.
 
Ultimately, Shawn’s bankruptcy was dismissed in March, 1999 – by Shawn. After filing, Shawn became the subject of media interest. He was interviewed by newspaper and television reporters including Barbara Walters and Montel Williams. Shawn and his family received donations in excess of $34,000. Even the mortgage company found a heart and agreed to stop the foreclosure proceeding while the insurance issue was being resolved.
 
Bankruptcy can be a lifeline, a second chance, and even provide additional time to restructure personal finances. Bankruptcy is protection for everyone, regardless of age.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

Simple Guide to Rebuilding Your Credit after Bankruptcy: Part Two

Note: This article is a continuation from Part One of the Simple Guide to Rebuilding Your Credit after Bankruptcy.

Six Months after Discharge
  • Apply for an unsecured credit card. An internet search will help in your research to find unsecured cards for individuals with a recent bankruptcy discharge. If you are declined, call the company immediately and request a reconsideration. Charge on this card monthly, but no more than $100 on this card, ever. Pay this card off completely every month as soon as you get the bill.
  • Apply for a gas or retail store card. Gas and retail cards typically don't require applicants to have good credit and, in fact, cater to folks with blemished credit.
One Year after Discharge 
  • When your secured loan at the credit union ends, request an unsecured loan between $1,000 and $2,000. You should also discuss options for an unsecured credit card through the credit union.
  • Obtain new credit bureau reports from http://www.annualcreditreport.com and review these reports for accuracy. It is surprising how often discharged debts can “magically” reappear on an individual’s credit report.
  • A new vehicle purchase should be put off until at least one year after your bankruptcy discharge. A credit score can recover quickly after bankruptcy, and many captive finance companies (e.g. Ford Motor Credit) require both a reasonable credit score and recent history of on-time payments. A new vehicle loan is a major credit purchase, and on-time payments will propel your credit score upwards and demonstrate responsible management of significant credit. 
Two Years after Discharge
  • Obtain new credit bureau reports from http://www.annualcreditreport.com. Review these reports for accuracy. Many bankruptcy debtors are able to obtain an above-average or even excellent credit score within two years after bankruptcy.
  • A home purchase is available to many debtors two years after a bankruptcy discharge. Most government-backed loans require a two year “seasoning” after a bankruptcy discharge. Speaking with your credit union about their loan products is a good first step in the home purchase process.

If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

Simple Guide to Rebuilding Your Credit after Bankruptcy: Part One

This is a simple guide for rebuilding your credit after a bankruptcy discharge. Recovering from the effects of bankruptcy takes time and attention. This guide suggests a basic 24 month timeline for rebuilding credit.

 
T minus One
Before your bankruptcy case is discharged, be sure to review your bankruptcy schedules and consider how your financial situation may have changed. It is very important to understand how your finances will be impacted by bankruptcy court’s discharge order. Some questions to ask are:
1.Which debts are discharged?
2.Are any other debtors impacted by this discharge (such as friends or family)?
3.Which debts are not discharged?
4.Do any liens survive the discharge?
5.Has the bankruptcy court avoided any liens on secured property (or judgment liens)?
6.Have I discharged my personal obligation to pay on a secured debt, but a lien survives?
 
At this point it is critical to have a clear and complete knowledge of who and how much you owe. Any debts that survive the bankruptcy must be paid on-time.
 
Immediately after Discharge
Congratulations! Rebuilding your credit begins now.
  • Collect all your bankruptcy paperwork, including a complete copy of your bankruptcy petition, schedules, and discharge order, and put these documents in a safe place.
  • Sign up for a three bureau credit monitoring service. You don’t want any surprises popping up on your credit. 
  • Obtain a copy of your credit report from each of the main credit reporting bureaus: Transunion, Experian, and Equifax. One free report from each of these bureaus is available every twelve months from http://www.annualcreditreport.com
  • Review each credit report and identify every debt that was discharged by your bankruptcy case. Each of these debts should be noted as:
    • Zero Balance;
    • Included in Bankruptcy; and
    • Current

It may be necessary to file a dispute with the credit bureau to ensure that the discharged debts are reported accurately. The credit bureaus are obligated to report back to you within thirty days and send a new, updated copy of your credit report.

  • Apply for a secured credit card that will “graduate” to an unsecured card within 12 months. Note that not all secured cards graduate. Secure this card with a minimum deposit of $500. Charge on this card monthly, but no more than $100 on this card, ever. Pay this card off completely every month as soon as you get the bill.
  • Go to your nearest credit union and open a new bank account. You may want to consider direct deposit and automatic bill pay options.
  • Open a one year / $1,000 secured loan at the credit union. The bank will place your $1,000 into an interest bearing account. Make your payment every month on-time. 
More to come in the next post.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

Green Tree Servicing Hit with CFPB Fine, so Rebrands Itself (Naturally)

In April of 2015, Green Tree Servicing agreed to pay a $63 million fine from the Consumer Financial Protection Bureau and the Federal Trade Commission for “mistreating borrowers” after failing to honor modifications for loans transferred from other servicers, demanding payments before providing loss mitigation options, delaying decisions on short sales, and harassing and threatening overdue borrowers. Green Tree agreed to pay $48 million in restitution to victims, and a $15 million civil money penalty to the CFPB’s Civil Penalty Fund for its illegal actions.

 
So what’s a shady mortgage servicing company with a sullied reputation to do?

Change its name, silly.
 
Green Tree’s parent company, Walter Investment Management Corp. (WAC), decided to merge Green Tree with another of Walter Investment’s subsidiaries, Ditech Mortgage Corp, to form a new company, Ditech Financial LLC. According to its corporate website, the new company will operate as ditech, a Walter company.
 
Readers may remember ditech commercials during the housing boom and subsequent bust of the early 2000’s. The company’s ubiquitous commercials were even parodied by Saturday Night Live, which featured a nefarious loan officer, played by actor Ron Michaelson, repeating the catchphrase “Lost another loan to Ditech!”
 
Green Tree’s website announces that the merger will be complete and effective on August 31. “Whether you’re purchasing a new home or looking to refinance your current mortgage, ditech can help you find the right solution for your needs,” the website states. “We look forward to serving you as a ditech customer.”
 
But this leopard may not be able to change its spots.
 
“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” CFPB Director Richard Cordray said last April. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”
 
Time will tell if the new ditech will be more responsible or law-abiding in its loans or its servicing than its former incarnations.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

 

Does the Bankruptcy Court Owe You Money?

In a strange case of irony, the Wall Street Journal recently reported that the federal bankruptcy courts around the country are sitting on money that belongs to others. The Wall Street Journal reports that 

 
Each bankruptcy court holds onto unclaimed money for several years before turning it over to the U.S. Treasury. The exact amount of homeless money is unclear. For all of the U.S. Judiciary, the U.S. Treasury held $280.8 million in unclaimed money as of June 30.
 
Apparently, the amount of money in court accounts is large enough to compel some action. Bankruptcy courts around the country are adopting a new financial program initially developed by the U.S. Bankruptcy Court for the Eastern District of Virginia. The Judiciary Financial System is a court financial system which includes an Unclaimed Funds Locator service that a court can make available to the general public for unclaimed funds searches. Through the Unclaimed Funds Locator, creditors can search for leftover money. Currently, 39 of the country’s 94 court websites permit access to the Unclaimed Funds Locator.
 
Usually, “leftover” funds result at the end of the case when a creditor doesn’t cash the bankruptcy court’s check, but can also happen when the court loses contact with the creditor, or the creditor dies and heirs are not aware of the funds. A simple search of the Unclaimed Funds Locator for the Northern District of Texas turned up 24 creditors owed more than $10,000 each, and three owed more than $60,000. Many of these creditors are owed money from cases filed more than 20 years ago.
 
The procedures for collecting these leftover funds varies from court to court. Most bankruptcy courts have local rules for establishing the procedures and practices, and many include an application to the bankruptcy court and service to the US Attorney. For an example of this, see the Application for Payment of Unclaimed Funds for the bankruptcy court for the Northern District of Texas.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

Donald Trump, 50 Cent, and Chapter 11 Bankruptcy

During the recent Republican debate in Cleveland, Donald Trump stated that he has never filed a personal bankruptcy. However, his companies have filed for Chapter 11 bankruptcy protection four times in 18 years. How is this different from rapper Curtis Jackson, better known as “50 Cent,” who filed personal Chapter 11 bankruptcy earlier this summer?
 
Jackson’s Chapter 11 bankruptcy is a personal reorganization bankruptcy. The Bankruptcy Code allows an individual may file for financial reorganization under either Chapter 11 or Chapter 13. Both Chapter 11 and 13 stop collection activities while the individual formulates a repayment plan. In some cases the bankruptcy court may approve a plan to restructure or change personal debts. For instance, liens on secured property may be stripped off, interest rates changed, repayment times lengthened, and some debts may be paid “pennies on the dollar” or discharged without payment.
 
Most individuals seeking a repayment plan and reorganization of personal finances choose Chapter 13 rather than Chapter 11. Chapter 11 is a more complex bankruptcy process and is used primarily by businesses to reorganize (a company cannot file under Chapter 13). An individual, such as Mr. Jackson, is ineligible to file under Chapter 13 if the person owes more than $383,175 in unsecured debts (such as a personal judgment, credit cards, and medical bills), or more than $1,149,525 in secured debts (such as mortgages and car payments).  Mr. Jackson reportedly owes in excess of $28 million.
 
On the other hand, Donald Trump avoided personal bankruptcy by incorporating his business activities.  His first business bankruptcy, a 1991 case involving the Trump Taj Mahal in Atlantic City, left his business more than $3 billion in debt. Unfortunately, Mr. Trump himself was not completely insulated from this financial collapse. In exchange for a lower interest rate and more time to make loan payments, Mr. Trump gave up half his ownership and equity in the Trump Taj Mahal, and sold off personal assets.
 
During that time, Trump told The Washington Post that he passed a beggar in New York and said to his now ex-wife, model Marla Maples, “You see that man? Right now he’s worth $900 million more than me.”
 
If you are struggling financially, speak with an experienced bankruptcy attorney and discuss your financial strategies. The federal law can be a useful tool to reorganize business or personal liabilities and provide for a more successful future.
 
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.