Now more than ever clients and ordinary people are trying to save money any way they can. People will seek out obvious ways to save such as eliminating eating out or for me, stop coffee purchases. But what about looking for not so obvious ways to save money? Gas is one of those necessary expenses we think we have no control over the price we pay. But, that may not be true.
Rescission, what is it and what does it have to do with bankruptcy? 11 U.S.C. § 524(c)(4) outlines the basis for rescission but it really does not identify what rescission does for you. A rescission breaks or cancels a promise to pay and it is completely legal IF performed according to 11 U.S.C. § 524(c)(4). Clear as mud? Let’s break it down even further.
I like my clients. I find bankruptcy work rewarding because I can offer positive change to the lives of honest, hardworking people who have an immediate financial problem.
However, I can be an absolute pain in the rear end to my Chapter 13 clients after we file and during the two to four month period of time prior to the plan confirmation hearing.
Why does this disconnect exist? Why would you want to hire a lawyer who will be demanding and abrupt? The answer is simple - if you want your Chapter 13 to work, you and I have a lot of work to do after we file but many Chapter 13 debtors do not realize this.
It is tempting to think that your problem has been solved the minute we file your Chapter 13 case. The immediate pressure of foreclosure, repossession, wage garnishment and lawsuits is gone and all adverse creditor action stops. The phone stops ringing and the collection letters dwindle.
The first court hearing - your meeting of creditors - won’t occur for 30 to 45 days so it is only natural that you will enjoy the quiet.
The obvious reason the IRS files a lien is because someone owes it money. If you have a lien filed against your property the IRS is attempting to collect a debt. It could be an aggressive or passive collection attempt but the lien signals the...
I have been a personal bankruptcy lawyer in Atlanta for more than 30 years and one of the trends that I have seen over all these years has been that personal bankruptcy is more complicated and confusing now than it is ever been in the past.
Back in 1988, for example, I would often see pro se (people who filed bankruptcy without a lawyer) appearing at 341 hearings and Chapter 13 confirmation hearings. At that time, a pro se filer could head over to Office Depot and buy Chapter 7 or Chapter 13 forms, fill them out with a pen, make copies and stand in line with everyone else to file a case.
In those days, there was no online access to the Clerk of Courts office and everyone - lawyers and non-lawyers - would have to stand in long lines with 5 or 6 copies of bankruptcy petitions and wait for the clerk to hand stamp each copy.
Bankruptcy schedules in 1988 were fairly straightforward and other than figuring out how to declare the right exemptions to protect property, a reasonably intelligent person could muddle through a Chapter 7 case. Chapter 13 cases were problematic for pro se filers even in the 1980's but occasionally a friendly trustee would take the time to help a non-lawyer navigate the waters of Chapter 13.
Are you familiar with the term cognitive bias? A cognitive bias represents an error in reasoning or decision making when you disregard accurate information in favor of your subjective preferences and beliefs.
In other words, you exhibit a cognitive bias when you “go with your gut” rather than more objective information.
Taken to an extreme, cognitive biases can lead you into bankruptcy, or can prompt bad choices when you are in bankruptcy. Here are some examples.
Have You Fallen Victim to the Sunk Cost Fallacy?
One cognitive bias I see frequently in my bankruptcy practice is the sunk cost fallacy. It usually takes the form of a client refusing to surrender an expensive and unaffordable house or car because “I have put so much money into that house/car I would be throwing all that money away if I gave it up.”
Obviously, your financial capacity to pay a car note or mortgage in the future has nothing to do with what you have invested in that item in the past. Either you can comfortably afford your purchase or you can’t, and if you are contemplating bankruptcy you should fight against the sunk cost fallacy. There is an old saying “don’t throw good money after bad” which is the correct frame of mind if you are struggling with a sunk cost decision.