Customer Service

After filing for bankruptcy, MOST debtors will not be speaking on the phone to MOST of their creditors.  But some will.  And talking to the right person may make the difference between a productive phone call and a hair-pulling experience.
Some of you may need to contact your creditors to arrange for reaffirmation agreements after filing a Chapter 7 Bankruptcy.  Some of you may need to contact your creditors to make post-filing mortgage payments after filing a Chapter 13 Bankruptcy.  Still others may need to call creditors for different reasons entirely.
But no matter why you’re calling a creditor, if you dial a generic 800 number to reach customer service – particularly with the bigger national creditors like Bank of America, Wells Fargo, Capital One, Citi, and others – odds are the first person you speak to isn’t going to know the first thing about bankruptcy.
Most front-line customer service agents are trained only to answer basic questions, and many of them have little training and little experience, as the revolving doors on those jobs spin quite rapidly.  Even higher level supervisors often aren’t particularly helpful.
If you have filed for bankruptcy, the very first thing you should tell any creditor you contact – no matter the reason – is that you have filed for bankruptcy and ask to speak to their “bankruptcy department” or “loss mitigation department”.
It’s very important that you only do that AFTER you have filed for bankruptcy.  Remember that hiring an attorney to file for bankruptcy is not synonymous with actually having filed your case.  If you tell a customer service agent that you have filed for bankruptcy when you actually have only hired an attorney, you’re going to confuse the hell out of the representative.
Once you reach the bankruptcy department, you can ask questions about reaffirmation agreements, make post-petition payments on mortgages, and so forth – and you’ll probably have an easier time of it since the people in those departments tend to have better training and are specifically trained to deal with bankruptcy issues.

Chapter 13 Defaults and Second Chances

If you’re the “TL;DR” type – skip ahead to the bottom of this post – that what’s written in red.  Because this post contains very important information.
For anyone who has ever filed a Chapter 13 Bankruptcy case, there is an obligation to make monthly plan payments to the Chapter 13 Trustee, who – in turn – makes distributions to certain creditors (read more here on what gets paid and what doesn’t get paid in Chapter 13).
Homeowners in Chapter 13 also have an additional duty to make monthly mortgage payments (unless they are surrendering their home or if their future payments are being paid through the bankruptcy (known as a conduit mortgage provision).
A default on either one of these payments will eventually trigger a motion – a motion to dismiss the bankruptcy case, in the event of a default on plan payments, or a motion for relief from stay, in the event of a default on mortgage payments.
For as long as I can remember, conventional wisdom has been that either type of default can be resolved with an objection and the almost certain guarantee that the debtor would be given a second (or third or fourth) chance under what we call a doomsday provision.  A doomsday provision is a period of time (usually 6 months) during which all plan or mortgage payments must be made, and that there are no second chances in the event of a default during the doomsday provision.  Also, plan payments would often have to increase to either accommodate a supplemental claim for the defaulted mortgage payments or to otherwise get the debtor caught up on missing plan payments.
But that conventional wisdom seems to be changing – at least with one judge.  While waiting my turn for a telephonic confirmation hearing several days ago, I was able to listen in on several hearings regarding motions to lift the automatic stay (debtors who had defaulted on their mortgage payments).  From just the handful of hearings I was able to observe, it seemed clear that the judge was no longer willing to hand out doomsday provisions and “second chances” that we had become so accustomed to  and taken for granted in the past.
This is not to say that a motion for relief from stay cannot be defeated.  But it seems that the standard for getting that second chance has been raised significantly.
If I were to summarize and characterize a new doctrine based on the hearings I observed – I would say that motions for relief from stay will be granted unless the debtor can demonstrate a good faith effort to make mortgage payments and remain current on those payments.  Cases in which no mortgage payments have been made since the inception of the bankruptcy case and cases where no mortgage payments have been made in a long time may now be far more susceptible to having the stay lifted, even if an objection is timely filed.
The obvious disclaimer here is that this is an observation based on a handful of hearings in front of a single judge and on a particular type of motion.  But it is not unreasonable to expect that our other judges will adopt a stricter policy on issuing second chances to debtors, and that these policies may also be applied to motions to dismiss on account of defaulted plan payments.
I can’t say that I blame this particular judge for this new approach.  I have always cautioned my clients that there is no 100% guarantee that we will prevail on an objection to a motion to dismiss or a motion for relief from stay.  But now, what we used to take for granted as a 99% certainty may have been knocked down quite a few percentage points.
What to take away from this post?
If you default on your Chapter 13 Plan payments or your post-filing mortgage payments – DO NOT TAKE FOR GRANTED that you will be able to prevail in objecting to a Motion to Dismiss or a Motion for Relief from Stay.  Obviously, sometimes things happen that cause these defaults, and I am not at all suggesting that there is a strict “no second chances policy”.  But the more you can demonstrate a good faith effort to make good on these payments, the better chances you will have of earning that second chance.

Moving?

While your bankruptcy case is pending, it is important to keep your attorney apprised of any changes of your contact information.  Not only is it important so that we can keep in touch with you, but so we can also inform the bankruptcy court of any change of address.  This way, you won’t miss out on any official notices filed with the court.
But hey – your attorney probably isn’t the only important person in your life who you need to make sure has your new address.  And as someone who has moved many times in his life – I know that it’s daunting trying to think of a list of everyone you need to send a notice to.  And invariably – some folks get missed.
That’s why filing a change of address with the USPS is so critically important.  It’s fast, easy, and free (if you go to the post office and do it in person).  If you do it online, it costs a whopping one dollar.
Not only will the post office forward any mail addressed to your old address to your new address, but those envelopes will be specially marked so that you can see who is still sending mail to your old address.  Then you can notify those people as you remember / become aware of them.
In short – there is NO EXCUSE for not receiving important communication from either the bankruptcy court or your attorney just because you moved.  Mail forwarding is easy, and if you want to register for it online, you can do it right here:

New Median Income Levels, Effective 11/1/2016

New median income level figures went into effect today.
In the State of Wisconsin, the median income level rose for a household of 1 from $44,817 to $47,804.  For a family of 2, it went up from $59,668 to $62,130.  For a family of 3, from $69,492 to $75,230.  And for a family of 4, from $85,961 to $88,133.
What does this mean for you?  Since the median income levels rose across the board, it means people who are hoping to qualify for Chapter 7 will have an easier time qualifying (based on income) now than yesterday.  Median income levels change about once every 6 months.
Although I don’t have historical data readily available – my recollection is that these are the highest numbers I’ve seen since I began practicing 10 years ago.