Some banks recently started charging debit card use and other fees. (For more, see this post by Andy Miofsky, and my earlier one.)

The New York Times recently reported how the practical problem of changing an online account from one bank to another contributes to how some banks now charging debit card use fees are keeping some dissatisfied customers: Online Banking Keeps Customers on Hook For Fees.  Customers can feel trapped because of the problems they have or think they have in starting a new online account.

I just did this. I changed from one bank to another financial institution (credit unions can be good choices, too) because of new fees (not debit card use fees, as I do not use debit cards, but relating to minimum balance requirement) that the new bank does not add.  These financial institutions do exist –  look for them! My new one is even more conveniently located than the old and has better customer service than the old.

But it can be true that if you are already set up at one place with online banking, it is a pain to redo it all. BUT I will also attest that it can be done.  Work carefully, methodically, and ask the financial institution’s technical support whatever questions you have, and you will succeed.

I decided to move accounts not only to save myself some money, but also because I wanted the old bank to lose my business. I am not sympathetic to its policy decisions — maybe it had good reasons, but I am not aware of them. There wasn’t even much if any explanation (and not much notice) before the bank’s policy changed about why the bank believed this was an acceptable change.  In the end, the move cost me time and some irritation, but I feel I was putting my money where my “mouth” was.

Wildfires devastated New Mexico this summer.

New Mexico had its largest wildfire in its history this summer — the Las Conchas fire burned  156,593 acres (244.6 square miles) not far from where I live.

To me, the continuing harsh economic times also continue to consume ground people once took for granted. In my state, New Mexico, starting on October 14, 2011, Wells Fargo bank will charge a $3.00 Debit Card Activity Fee each month a checking account holder makes purchases or payments using any card linked to that account. The notice letter I got from Wells  Fargo noted that retailers may also charge a fee for purchases. The bank is testing the new program (of fees) in Washington, Oregon, Nevada, and Georgia, too, and is expected to eventually expand to all states.

It doesn’t affect me personally as I simply do not use debit cards (or ATM machines). I’m in the process of moving my bank accounts away from Wells Fargo any way, though, because they also started a new program, effective about 2 weeks ago, of monthly checking account fees for accounts that never required them before.  It doesn’t seem right to me, so I found another bank, even closer and more convenient to me, which both charges me no checking account fees and pays interest (admittedly, a very small amount, but Wells Fargo paid no interest).

But many people do use debit cards, and they may not have opened that letter from Wells Fargo (I admit I sometimes do not open the “important bank [or credit card] information within” letters which seem to tell me some new term I have no power over).  They may find the new debit card use fee on their checking account statement — I wonder if some will be so close to their balance that it causes a check to bounce? And then an additional fee will be accessed without immediate notice and some of their own checks may bounce.  (I know this because a client’s payment check bounced recently. I happen to check my account balances online relatively frequently so I saw what had happened before the letter came in the mail informing me of the check that did not deposit and the charge to me for the check that did not deposit. Good thing — the client’s payment check was large enough that it did bring my working account balance down at that point. But I did catch it in time.) And then more fees for their own bounced checks.

I wonder if more people will return to using cash?

For more, read:

Cash Makes You Feel Good — No, Really!, by Wendell Sherk, Missouri Bankruptcy Attorney, and

Banks Threaten To Increase Debit Card Fees, by Andy Miofsky, Illimois Bankruptcy Attorney

New Mexico bankruptcy lawyer Gini Nelson focuses her law practice in bankruptcy and bankruptcy avoidance advising and representing individual consumers and small business owners in these challenging economic times. Her practice also includes family law and the implications and impact of bankruptcy in family law.

Why bother to do a bankruptcy?!?

A client told me yesterday he had been researching on the internet over the weekend and had learned that “judgments cannot be discharged”, and so “why is it worth doing a bankruptcy?”  He was concerned because a big part of his problem is liens placed on his house and he wants to sell it and relocate. I asked him to send me a link to what he had found because, at least in my state of New Mexico, judgments can practically always be discharged in a chapter 7. (There are some exceptions – you’ll need to discuss them with  your lawyer.)

It turned out, not surprisingly, that the language used in the article he had found was confusing — even I had to read it more than once — and it had, indeed, left him confused.  Thankfully, he had checked it out with me and we continue preparing his papers for filing.

First comment — be careful about believing everything you find on the internet! Use critical thinking skills!

My post is itself an example of this. The law is different in different places, and how things work in practice differs in different places. This is one of those areas where it’s especially important to talk with an attorney knowledgeable about bankruptcy.

Second comment — just identifying judgments and any related liens by listing them in your bankruptcy papers does not necessarily solve your problem — it does if you are surrendering the property, but not if you want to keep or manage or sell the property yourself.  The lien remains of record until it is specifically removed, and removal does not automatically happen. It will take extra steps, how many extra depending on the creditor and how many hoops they want to make the debtor jump through.

Other posts give you more to think about when thinking about judgments and liens: Jonathan Ginsberg, Atlanta Bankruptcy Attorney recently wrote What Does It Mean to Have Judgment Filed Against You?, and  Susanne Robicsek, North Carolina Bankruptcy Attorney wrote Bankruptcy Has Many Points Including Dealing With Judgments. Both posts give needed background to this issue.

Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.

My client asked me this last week as we were going through her final papers for her Chapter 7 bankruptcy filing. I told her the easy way I think of them: property that is exempt from being liquidated by the case trustee.  In my state of New Mexico, you generally can choose between using the state exemptions and the federal exemptions.  (But only one choice — it’s use the state for all that you have or use the federal for all). Both are found in statutes and both state what property is protected against being taken from you by legal process.

For most things you are trying to keep the New Mexico and the federal exemptions do not vary in significant ways.  New Mexico’s protects a little more equity in your car ($4,000.00) than the federal’s ($3,450.00).  But they vary in big ways for some property — New Mexico protects $60,000.00 worth of equity in your home while the federal exemptions only protect $21,625.00.

So if you are thinking about bankruptcy, ask your lawyer about exemptions — what options do you have, what property will you be able to keep?  She will also ask you about whether there are any liens on your otherwise exempt property because that can complicate matters (and not necessarily in a bad way! Read Maryland bankruptcy attorney Brett Weiss’ post on When  a Tax Lien Can  Be a Good Thing…).

According to an article entitled The Soon-to-Evaporate Help for At-Risk Homeowners in 32 States in the Bucks blog of The New York Times, there still could be emergency financial aid from the federal government available for some homeowners through a program known as the Emergency Homeowners’ Loan Program.  To find out whether you might qualify check it out very quickly, as preliminary applications must be submitted by July 22, 2011.  CALL SOON!

The program is available in Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.  The article also notes that the program is offered in Puerto Rico, and that Connecticut, Delaware, Idaho, Maryland, and Pennsylvania have similar programs.

I wish I felt more optimistic about the feasibility for most of saving their homes when things are dire.

I still get reports of months to get a response and of hours spent on hold, in trying to work directly with a creditor.  For more on this, see South Carolina attorney Russell DeMott’s article — I love the title!–Why Are Some Creditors So Stupid? “The Grand Illusion”.

We also hear how limited the success is of the federal programs that have been implemented.  For more on this, see HAMP Mortgage Modifications and Bankruptcy, by L. Jed Berliner, Springfield & Marlborough, MA Bankruptcy Attorney.

We see huge increases in foreclosure filings in the state courts causing the courts to try new programs, such as in  my local district court, mandatory mediation in foreclosure cases.   For more on this, see this article on the increase in foreclosure defense self-help.

So, please have your eyes wide open when you are considering all your options.  Determining what to do about your home is not for the weak and faint-hearted.  You may have even more options then you think, by the way — for more, see:

You’ve Got Choices For The House After Bankruptcy

by Cathy Moran, California Bankruptcy Lawyer.

There is to be a new experiment in permitting New Mexican pro se debtors (self-represented debtors) file their bankruptcies electronically.  The purpose is to help permit greater access to court, but I suspect another primary purpose is to try to ease some of the burden on court staff, as pro se filers before could take their papers to the clerk’s office, and the clerk’s office would file the papers for them. You see, attorneys must file electronically. Possibly by the end of 2011, pro se debtors will be filing electronically, too.

New Mexico is one of three bankruptcy districts that will be part of the trial project. It’s so new that it hasn’t even been announced yet on the Bankruptcy Court’s web site, but here’s an article announcing it on the ABQJournal Online, with a free trial subscription access if access is otherwise blocked.

As Norman H. Meyer Jr., the Clerk of the Bankruptcy Court, states in the article:

New Mexico is one of three bankruptcy courts selected nationwide to participate in the Pro Se Pathfinder Project, an e-filing program for do-it-yourself bankruptcy filers that’s been compared to Web-based tax preparation software.

…

New Mexico, where roughly one out of every 10 bankruptcy petitions already is pro se, was chosen for the initial rollout of Pathfinder as representative of a rural state, Meyer said. There’s a scarcity of consumer bankruptcy attorneys in much of the state, which saw 6,569 bankruptcies filed in 2010.

“As a web-based application, it can be brought up in Jal or Clayton,” he said, adding that some planners originally wanted to offer Pathfinder through a kiosk in the lobby of the court clerk’s office in Albuquerque. “We said, in our district, we needed it accessible over the web.”

Also participating in the rollout is California’s central judicial district — the Los Angeles area — where one-third of all bankruptcy petitions are pro se; and New Jersey, where 8 percent are pro se and access to courthouse services is comparatively convenient.

As readers know, I support enabling self-represented people to “DIY” when it comes to certain legal proceedings.  (See, e.g.,  Unbundled legal services, Part I, and Unbundling Legal Services, Part II.) It’s utterly necessary in many state courts, for family practice, because of the overwhelming numbers of people filing without the assistance of lawyers. Unbundling is when a lawyer can help someone with a piece of their legal needs and not be responsible — and not be paid for — handling their other legal needs.

It’s still a very  new concept in federal bankruptcy court, and not being easily received, even with the massive increases in bankruptcy filings without attorneys.  I agree it’s potentially dangerous for someone to be in a court proceeding with less than full legal advice and assistance. But if that person cannot afford a lawyer for everything relating to the case, what are the options?

There are projects around the country to get more lawyers to perform more pro bono (free) services for low-income persons — for example, my local state court’s (1st Judicial District of New Mexico) Local Pro Bono Committee together with the Santa Fe Community  College is presenting a Santa Fe Legal Fair this Saturday (5/7) from 10 a.m. to 1 p.m. , providing free consultations in many areas of law touching on the lives of regular people, including bankruptcy and foreclosure.  I’ll be there. But, to me, that does little to solve the problem on a structural level.

Unbundling of legal services is increasing of necessity in state courts and will, with time, become more acceptable in the federal bankruptcy court.  I’m excited that my bankruptcy court is trying this — the Clerk’s Office is staffed by almost universally friendly and unflappable individuals and there is real intelligence at work there. But … how do I know this? Well, when I was learning to file bankruptcies for my clients — at the time I started there was not electronic filing in the state courts where I practiced — I made some mistakes, actually, some big mistakes, and I found it a frustrating, difficult process to learn how to file.  The clerk’s office was really helpful and kind to me.

So, I actually find myself somewhat concerned about the prognosis of pro se electronic filing for something as complicated as bankruptcy schedules and all that must be filed.  I wish the clerk’s office well with its efforts and hope the staff will be given big bonuses in whatever form possible when the system goes into effect.

Look at this post about a do-it-yourself assistance program for people being foreclosed on in New Mexico — if you are doing it yourself, you have an extra burden and responsibility to learn what you have to do, and to do it well. Otherwise, you might squander what advantages you have in representing yourself, and even put yourself at risk of harm.

Two years ago, the New Mexico Attorney General’s Office proposed regulations that would help control debt collector abuses (as reported by Bankruptcy Law Network here) by requiring debt collectors to inform people that the debt they were trying to collect was too old to try to collect in a court proceeding.  The final rule went into effect on December 15, 2010 but applicability was delayed for 90 days, until approximately March 15, 2011 — it is now fully in effect in New Mexico.

Here’s part of the Attorney General’s statement:

The Rule, “Collection of Time-Barred Debt,” requires all debt collectors doing business in New Mexico to make a good faith determination of whether a debt is “time-barred” (beyond the judicial enforcement period established by the applicable statute of limitation). If the debt is time-barred, the debt collector must so inform the debtor in both written and telephonic communications. The Rule also requires the debt collector to tell debtors that they would “revive” the debt (start a new enforcement period running) by making a partial payment on the obligation in any amount, or by signing a written admission or new promise to pay.

“Under the state’s Unfair Practices Act, the fact that a debt is so old that a person can not be sued to collect on it is considered material,” says Attorney General King. “If it is material, New Mexico law requires that it be disclosed to the debtor. This Rule is intended to ensure that debt collectors provide important information to consumers so that they can make informed decisions when they are confronted with a demand to pay an old unenforceable debt.”

See also this earlier BLN post by Michael  Doan about federal and state rights to sue based on time-barred debts.

Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.

There’s a good recent post here on the Bankruptcy Law Network about non-filing spouses — Springfield, and Marlborough, Massachusetts’ attorney Jed Berliner’s article on “non-filing” spouses. He wrote about the impact on the means test.

There are more implications, at least when  you are in a state like New Mexico, with community property and community debt.  There are several ways this can come up — Jed speaks more to the situation where the spouses are still living together. There’s also the situation where the spouses have separated, but have not gotten a divorce or a legal separation. That has complications, too, such as cooperation when things are no longer sweet music and roses between you.

Generally, I have to tell a client in this situation something like this, after having advised them, first, to have the non-filing spouse get legal counsel and possibly also file bankruptcy — this advice assumes the non-filing spouse is unwilling or unable to file for bankruptcy and is not or may not fully cooperate with my client:

Your spouse is not willing to also file for a bankruptcy. Thus, you will be filing as married, with a non-filing spouse. That has several implications, including:

1. Because you are still married and this is a community property state, the legal presumption is that all income made by each of you is still community income, and all debt incurred by each of you is still community debt.
2. You will need to request full income and asset, and expense and debt information from your spouse. If he or she does not provide it, we will so indicate on the papers filed with the Court.
3. You can “claim” the non-filing spouse’s share of the “homestead” exemption in the house, even though he or she is not filing.
4. Your non-filing spouse will have some protection against creditors for debts you also signed for and for which you get a discharge, so long as he or she is still married to you and you are alive. Once there is a divorce or you die, creditors can go against the non-filing spouse for debts for which you received a discharge.
5. Your discharge of debts in bankruptcy may  not defend you against claims your non-filing spouse may make against you in a divorce later.

I also inform clients that this can complicate their cases, which can mean their cases will take more time and cost more than an uncomplicated case.

This situation is an especially good one to be sure you get legal advice!

Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.

Okay, this is not about bankruptcy per se, but it’s about how hard life is (that is contributing to the massive increase in bankruptcy filings) and about what we might be able to do about it, individually and as a community. If you live in Albuquerque, New Mexico, consider attending a National Issues Forum (NIF) public forum on economic security that the University of New Mexico’s law school’s Institute of Public Law is conducting in conjunction with the Albuquerque Journal. It takes place March 23, 2011. The Forum will also be the topic of a Sunday morning 10:00 a.m. television interview with IPL Director Paul Biderman (on KOB TV‘s “Eye on New Mexico” program).

As the Forum’s brochure states:

As the nation slowly recovers from its worst recession in decades, it is a good time to ask how we can best take charge of the future so families can feel reasonably secure, parents can help their children prosper, and everyone can move toward a financially stable retirement.

Three options for gaining economic security will be discussed: (1) Act More Responsibly with Our Money; (2) Look Out for Each Other; and (3) Grow Our Way Out.

The NIF works on naming and framing local issues for public deliberation, funded in part by the Kettering Foundation of Dayton, OH, which is sponsoring a national project. From the NIF website, explaining what they do:

About National Issues Forums (NIF)

National Issues Forums (NIF) is a network of civic, educational, and other organizations, and individuals, whose common interest is to promote public deliberation in America. It has grown to include thousands of civic clubs, religious organizations, libraries, schools, and many other groups that meet to discuss critical public issues. Forum participants range from teenagers to retirees, prison inmates to community leaders, and literacy students to university students.

NIF does not advocate specific solutions or points of view but provides citizens the opportunity to consider a broad range of choices, weigh the pros and cons of those choices, and meet with each other in a public dialogue to identify the concerns they hold in common.

Although all forum activity is locally organized, moderated, and financed, the materials they use in common are produced by the Kettering Foundation of Dayton, Ohio, among others, and promoted by the National Issues Forums Institute. Among the publications developed each year are issue books used in the forums-clearly written nonpartisan booklets that describe the problem and present citizens with the advantages and costs of alternative policy choices. Regular, abridged, and Spanish editions of many of the issue books are available, as are videotapes and, in the case of the most recent books, DVDs. Abridged editions are designed for both adult and young new readers

Click here for a link for the brochure about and registration for the Albuquerque Economic Security Forum.

Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.

“I just got served papers for a repo car from 2007. I made copies of it for my paperwork, but I am not sure what to do.”

I just got this message from a client. The office is working with him to prepare his chapter 7 bankruptcy filing but he is not yet ready to file, and he has just been served with a  complaint for the deficiency left after a repossessed car was sold by the creditor for less than the contract note.  What should he do, he asks.

My general advice is that a debtor should not “let” a default judgment happen, if it can easily be avoided. Don’t let a default judgment happen without discussing its implications with your lawyer. A default judgment is the judgment a judge can give the creditor when the defendant fails to show up and participate in the lawsuit.  While court rules in some circumstances permit that defendant to go back in and challenge the judgment later, no one should count on that. Stopping a default from happening does mean entering a appearance in the lawsuit in some effective way.

Why do this if the debtor expects to file a bankruptcy and discharge any possible deficiency debt?

Who knows what will happen between now and the discharge of debts pursuant to a bankruptcy? What if the debtor has an unexpected delay in filing, and, with a default judgment, the creditor is able to garnish wages? Or place liens on property? Yes, some of these consequences can be remedied in a bankruptcy, but usually at some expense of time, money and energy, resources a debtor can find hard to muster.

What if the debtor has a problem getting the debt discharged? Usually things do not go bad for a client, who is working well with his attorney, but what if the client has forgotten something critical, or failed to tell the attorney something, and, in the end, the debt is not discharged? (And if the debtor is pro se, not working with a bankruptcy lawyer, there are greater odds of problems happening.)

And what is lightning strikes and money somehow comes to the debtor, and a bankruptcy is not necessary in the end? (Okay, this is much less likely, but still… keep it in mind.) The debtor at that point will probably owe more on that deficiency judgment than would have been owed had he not defaulted, and been able to address it under the more controlled circumstances of a bankruptcy proceeding.

I’ll be talking with my client later today. If you have a bankruptcy lawyer, be sure to talk with her, too.

For more posts on this subject, see How Does Repossession Work, http://www.bankruptcylawnetwork.com/2009/12/18/how-does-a-repossession-work/, and Karen Oakes’s post on notice and default judgments, http://www.bankruptcylawnetwork.com/2009/07/31/you-never-got-notice-of-being-sued-the-judge-just-may-believe-you-now/.

Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.