Humiliation and Unwarranted Social Stigmas

Today’s blog entry is a little different.  Although the topic has quite a bit of overlap with bankruptcy, it is not a bankruptcy article per se, but instead speaks to a much broader issue.
I can’t begin to tell you how many times one of my bankruptcy clients has admitted to me that they put off filing for bankruptcy for years because of intense pressure to avoid bankruptcy – usually from family or friends.  It’s safe to assume that for every person who finally has the courage to declare bankruptcy, there are undoubtedly many more people who refuse to get the assistance that they need out of a misplaced sense of pride.
There are many different ways in which societal norms can have detrimental effects on individuals, because they are discouraged from getting help because of the stigma attached to it.  Of course, this isn’t a new revelation to me, or (I imagine) anyone else reading this article.
Recently, I’ve had the privilege to begin volunteering with a youth suicide prevention organization.  My involvement with this group has opened my eyes to just how broad and deep some of these social stigmas go – and how many of them we take for granted without thinking of them, without questioning their value, and without challenging their validity.
It is possible to cause someone great psychological harm without intending to do so, and even without overtly insulting remarks.  For instance, many educators and parents discourage the use of the word “retard”, even when used in jest.  LGBT youth can feel marginalized by phrases like “that’s so gay” or even assumptions that they should be dating someone of the opposite gender.  Many people in need of counseling for mental health are discouraged from doing so because of the connotation that people who visit psychiatrists are “crazy”.  And of course, people are steered away from bankruptcy based on the idea that “if you incur a debt, you’re responsible for paying it”.
Of course, I don’t intend to suggest that people should incur debt without any intention of paying it back.  However, most people who are insolvent are that way due to mistakes or even events that are out of their control.  Isn’t the state of insolvency punishment enough?  Should people really be forced into poverty for the rest of their life to repay debts that they’ll never get caught up on?
What right does anyone have to sit in judgment of someone else?  To assume that just because they have enough money to pay their bills, that everyone else must have enough money to pay their bills?  To assume that just because they’re enjoying a happy and healthy point in their life, that people with problems shouldn’t seek out a counselor?
Most people cannot fully appreciate just how much power certain words, phrases, and assumptions can have on other people.  Even the most innocuous and benign words can have a major impact.
We live in a society that treats mental illness as somehow less important than physical illness or injury.  We teach kids a silly rhyme about “sticks and stones”.  But these words and presumptions can hurt and do serious harm.  They marginalize.  They stigmatize.  And they invalidate.
People who discourage some of the things I’ve mentioned are often called overly-sensitive or zealously politcally-correct.  I admit, I used to think that, too.
But I’ve seen just how detrimental these stigmas can be.  So today, I write this post to implore people to be less judgmental, to be more conscientious about the words you use and the assumptions you make.
If you’re depressed – there is no shame in consulting a psychiatrist.  If you’re gay, there are places to find love and support.  If you’re struggling with debt, talk to a bankruptcy attorney.  Don’t let the opinions of narrow-minded people deter you from getting help.
There are plenty of resources out there, no matter what you may be dealing with.  But you must take the first step, and liberate yourself from these social stigmas.

Bankruptcy Mills

Not all law firms (or attorneys) are the same.
In recent months, I’ve worked with several people who had the unfortunate experience of having hired a bankruptcy mill to represent them.  These people lost a lot of money, for which they have very little recourse, and ultimately got screwed over.
First, let’s clarify what I mean by “bankruptcy mill”.  I’m referring to large law firms that offer seemingly low rates to file bankruptcy.  They’re often located in large cities, like Chicago, but claim to have local attorneys who will work with you.  These are firms that make their money by working in high volume and performing low quality work; which oftentimes falls well below the standard of care required of attorneys, in terms of competence and diligence.
In many of these cases, clients never meet with or speak to an attorney.  Documents are drafted by staff, and never reviewed by an attorney.  Phone calls and e-mails go unanswered.  Filings are deficient.  Motions and objections go unanswered.  Cases are dismissed.
Over the years, I’ve watched these firms continue to exist and operate.  They have A+ ratings with the Better Business Bureau, even though their business practices should – by any standards – get most of their attorneys disbarred (or suspended or sanctioned).  Accordingly, I’ve long ago lost my faith in the various regulatory agencies that exist to police these sorts of things.
So, for my part, I wish to issue this warning.
Be careful of who you hire to be your attorney.  Insist on an in-person consultation, and make certain that you’re talking to an actual attorney.
Make sure that all of the fees have been disclosed.  Many attorneys out there will lowball their quote and not include important things like court filing fees, counseling course fees, or credit reports.  You might pass on hiring one attorney because you think they’re too expensive and because one of these mills gave you a lower quote, only to find out that the mill’s quote didn’t include filing fees – and in the end, the first attorney was actually cheaper!
Everyone must review and sign actual bankruptcy documents.  If a case has been filed for you without you having to look through a (roughly) 60 page document beforehand, that should throw up several red flags.
If you retain an attorney and they’re not meeting your expectations, switch attorneys BEFORE you file your bankruptcy case.  Yeah, you’ll probably be out the retainer fee, but it’s worth it.  Most attorneys are reluctant to jump into a case that has already been filed, because it raises several potential issues, conflicts, and traps.
In no way do I intend to suggest that all large law firms are bad and all local sole practitioners are good.  There are good quality large firms out there.  There are bad sole practitioners out there, as well.
But the main moral of this story is to realize that you get what you pay for.  If you’re shopping around looking for a deal on attorney fees, you should be suspicious of a fee quote that is substantially lower than all of the others.  At the very least, ASK why their quote is so much lower.
They might have a good reason.  For example, Attorney X might not have as much experience dealing with a particular issue in your case, so he needs to charge more to do extra research, whereas Attorney Y has a lot of experience handling cases similar to yours, and can charge less.
But frankly – most of the time – Attorney Y is going to offer you sub-par service.  And it won’t be worth the few dollars that you might have saved.
Shopping around and looking for deals is good for things like toilet paper and laundry deterrgent.  But if you carry that attitude when you’re looking for medical or legal professionals, discount doctors and discount lawyers are almost always going to disappoint you.  It’s a fair bet that you’re going to wish that you had spent a little extra money for better service.
After all, what’s a few hundred dollars when you’re getting tens of thousands of dollars discharged in bankruptcy?

Notice to WE Energies Customers

Section 366 of the Bankruptcy code permits utility companies to demand a security deposit from bankruptcy debtors, and failure to remit such payment can result in a disconnection of services.  This is a power that utility companies have had for some time, but historically, one that they have exercised only occasionally (typically in cases with high delinquencies).
In recent months, it has become apparent that WE Energies has gotten into the custom of demanding these deposits on a regular basis.  It took some time to detect that pattern, since most of our clients are Wisconsin Public Service customers.  But that pattern has become obvious recently, so this note is to serve as a reminder to bankruptcy debtors – especially those with delinquent accounts with WE Energies – to expect a deposit demand.

How Chapter 13 Can Buy You Time to Decide

On several occassions in the past, I have written about the benefits of Chapter 13 Bankruptcy, to try to educate a public that generally fears the concept.  Recently, I posted a video to explain some of the myths and benefits of Chapter 13.
Here’s another reason to consider it – even if you technically qualify for Chapter 7 Bankruptcy.
Conversion.
Many of the people I prepare bankruptcy petitions for are attempting to get an emergency injunction against things like wage garnishments, utility shut-offs, bank levies, repossessions, and foreclosures.  They need to file immediately.
But many of them are not yet prepared for life after bankruptcy, and they risk getting into financial trouble again.  For example…
  • Someone who lost their job, and hasn’t yet found work, or hasn’t found work sufficient enough to cover his monthly expenses.
  • Someone who is undecided about whether to surrender a home, try to save it, or try to sell it.
  • Someone who will continue to incur major medical expenses in the foreseeable future.

Uncertainty is a fact of life.  Nobody knows what tomorrow will bring.  But some people have far more uncertainty in their lives than others.  For people like that, rushing into a Chapter 7 might not be the wisest option.  If they qualify for Chapter 7, but instead choose to file Chapter 13, it is likely that they will still be qualified to convert to Chapter 7 down the road.  But Chapter 13 gives you 3 to 5 years before you get your discharge.  You can use that time to get protection, get a better handle on your finances, and perhaps to see how certain imminent events are going to unfold.
Once your life has become more stable and predictable, then converting to Chapter 7 might make more sense.  Plus, almost any debt incurred while you’re in Chapter 13 is dischargeable upon the conversion under 11 U.S.C. ยง 348(d).  As crazy as this may sound, that means you can file Chapter 13, incur additional debt, and have that new debt discharged upon conversion.
Now, as a general rule, you’re not allowed to incur debt without prior approval from the court or the trustee (except emergency medical care).  But this can be incredibly useful for someone who needs bankruptcy relief now, but will continue to have medical debts going forward.  The Chapter 13 buys you some time to get your affairs in order before making everything final.

Payday Loan Interest Rates

A few weeks ago, comedian Jon Oliver addressed the topic of payday loan stores.
They weren’t kidding when they said that interest rates could be as high as 1900%.  I personally have reviewed many payday loan agreements with four digit interest rates (and to be clear – that’s WITHOUT a decimal in there somewhere).
As amusing as Jon Oliver’s coverage was of this issue, I thought it might be helpful to put some real numbers out there.  Because – as bad as 1900% interest might sound, I’m skeptical that very many people understand just how bad it is.
So, for this example, we’re going to take a simple $1,000 loan, and we’re going to pay it off in just 12 months.
At prime rate (3.25% currently), you would make 12 payments of $84.81, for a total of $1,017.72.  $17.72 is not a bad finance charge, and actually very reasonable.
At 19%, you would make payments of $92.16, and pay a total of $1,105.92.  Still not awful.
At 190%, your monthly payments are $191.08 – more than double what you were paying at 19%.  In total, you’ll pay $2,292.96, or more than double what you borrowed.
At 1900%, your monthly payment is $1,583.35.  More than 150% of what you borrowed PER MONTH.  And a total payment of $19,000.20, almost 20x what you borrowed.

Trustee Retirement

Chapter 13 debtors here in northeast Wisconsin should be aware that Thomas J. King, the standing Chapter 13 Trustee here, is due to retire in November.
On a personal note, I wish to express my profound sadness that he is retiring.  He has been a mentor and taught me a great deal ever since I began my practice.
At this time, Tom’s replacement has yet to be announced.  Although we expect minimal disruption to pending cases, I do not know if the new trustee will continue to offer the free financial management course that Tom’s office is currently offering.  Pending Chapter 13 clients should try to arrange to take that course immediately, or be prepared to pay for one of the online or telephonic courses.