BANKRUPTCY
- CREDITOR and DEBTOR RIGHTS:
Neither Debtors nor Creditors want to be involved in a
bankruptcy. This law is designed to assist both groups in
protecting their interests in property. Good representation is
imperative in making the rights decisions and avoiding the pitfalls.
CREDITORS:
The firm focuses on both creditor and debtor rights in Bankruptcy Court.
We represent large national and individual lenders in situations where a home owner has
filed bankruptcy. Normally this bankruptcy has been filed because
our firm is in the process of conducting a trustee's sale or foreclosure
of the debtor's property. The bankruptcy is used to give
the debtor time to cure the arrears and/or pay off the debt.
DEBTORS:
We also
represent individuals and small companies who use bankruptcy in order to protect their
assets.
It is very important that debtors understand
their rights and use the full value of the law in protecting their
property. Bankruptcy can be used to stop foreclosures and trustee
sales, stop wage garnishment and the harassment of phone calls to both
home and work. In addition, we assist larger companies in bankruptcy,
but co-counsel with other very experienced bankruptcy attorneys in order
to keep legal fees to a minimum.
TRUSTEE
SALES AND FORECLOSURES:
Since 1985 this firm has represented some of
the larger national lenders with real property lien enforcement,
including trustee sales, foreclosures and forfeitures. We have
done over 3,500 trustee sales. Even though
the process is automated we still give each file individual attention so
that your interests are protected. A trustee's sale is too sophisticated
a process to leave to companies are not dedicated to providing
specialized services trustee's services to their clients. In our
office every trustee's sale is personally supervised by an attorney that
is an expert in trustee's sale. No title company or trustee sale
process company can give you the
type of service that we guarantee.
FORCIBLE ENTRY AND DETAINER:
Once a Trustee's sale is completed it is not unusual
that the new owner is faced with a "tenant" still residing in the
property. There are two choices: enter into a
lease/rental agreement with the tenant (perhaps the old owner
of the property), or ask them to leave. The forcible
detainer is filed whenever the
tenant will not voluntarily leave. The legal action is usually completed
with 2 to 3 weeks.
WHY BANKRUPTCY AS
MY PRIMARY FOCUS?
You
may wonder why I chose to concentrate on bankruptcy as my
primary area of practice. It is simple - it is the only
area of law that reminds me of why I went to law school - to
help others. Every day I am fascinated by how the
bankruptcy laws resembles magic. When a bankruptcy is
filed a "magical" umbrella, called the automatic stay,
surrounds the debtor and their property. This umbrella is so
powerful that it stops almost everyone in their tracks - even
the IRS. No mortgage company, bill collector, or
creditor of any type, including the Sheriff, can touch either
the debtor or any property of the debtor. The automatic stay
also protects the creditors from more aggressive creditors
taking valuable assets from the Debtor. Many times those
assets are worth far more than that aggressive creditor is
owed, resulting in other creditors suffer unnecessarily.
The automatic stay is invoked immediately upon the Bankruptcy
Clerk date stamping a document called a bankruptcy petition.
Unlike most areas of
law, bankruptcy dictates that the lawyer be a very good
negotiator, well versed in many areas of law and sensitive to
the differing needs of all those involved. It is the
only area of law that does not normally pit one party against
the other. There is rarely a battle of copy machines,
nor does the number of associates assigned to the case
directly affect the outcome. In fact, a lawyer's value
is measured more in their creativity than their ability to
write eloquent briefs. A good bankruptcy lawyer must be
well-tuned into the actual cost of continuing litigation
versus the benefit to the parties (both creditor and debtor).
Therefore, the more the bankruptcy lawyer knows about the
practical issues facing the parties, the better the conclusion
for all and the lower the financial losses (attorney fees).
To ice this cake, the judges in the Arizona Bankruptcy Court
are dedicated to a fair and equitable result for the parties.
They are not shy to shame and financially punish a large
national lender for abusing an individual borrower. Nor,
are the judges willing to award attorney fees to over-reaching
attorneys and their clients (whether debtors or creditors).
These judges demand practical, efficient and appropriate
lawyering on all matters. Our Arizona bankruptcy judges
are vested in their cases and are dedicated to helping
everyone, especially the debtors.
All of this may not sound like
such a big deal to some of you with deep-rooted negative
feelings about the bankruptcy law, but it
illustrates an important point. When a bankruptcy
petition is filed people's lives can change dramatically for
both creditors and debtors.
The basic principals behind bankruptcy is to permit the debtors
an opportunity to get a fresh start and the creditors
are to receive equal distribution of available assets. What a magical
theory! Before filing bankruptcy someone's life is
barely held together - they are terrified of answering their
own phone; they are
embarrassed at work by calls from collection companies and
they may be in fear of losing their home or car. After a bankruptcy
is filed many of my
clients tell me that they can breath easier and sleep through
the night. They go to work with their heads held high;
they are not afraid to answer their phones and they can
actually open their mail without feeling sick.
Bankruptcy law has two
main players -- debtors and creditors. I love debtor work because
I can actually make a difference in someone's life.
Nothing makes me feel better about my day than helping a client, who is barely
existing on a minimum wage, stop a creditor from garnishing
their wages. I feel like I have contributed to my client's peace
of mind when I contact a very
aggressive collector to let them know that they are now
permanently prohibited from ever contacting my client or
trying to collect the debt.
Years later it is a
joy for me to hear from a client who has been able
to refinance their home or buy a new car. This is
truly why I went to law school.
The banking industry would argue that borrowers
choose to accept and use credit cards and take on loans.
Borrowers also sometimes choose to obtain money from a loan
shark yet the lender is prohibited by law from breaking any
bones for late or non-payment. There also is free choice
involved when an innocent person discloses personal
information to an unscrupulous telemarketer, yet the consumer
fraud division of the state attorney general's office will
still protect the individual. Banks, due in large part to
their greed, sometimes make flimsy investments, yet they
receive, at taxpayer expense, a bail out. Credit card users
need a bail out - thus bankruptcy laws are developed.*
Bankruptcy laws are
very powerful and they are all encompassing. Bankruptcy
affects people and small companies in many ways. Other
laws must bow to the bankruptcy laws. A divorce, a lawsuit
and a foreclosure of property are all put on hold until, and
only if, the bankruptcy is no longer in force, or the Bankruptcy Court gives those creditors permission
to continue with their actions. A bankruptcy
practitioner must know a little bit about everything - taxes,
labor relations, divorce are just a few. Perhaps now you begin to see
what I mean when I say that bankruptcy law is fascinating.
Why is there such a
stigma on bankruptcy? Possibly because it reflects a
failure; a failure to protect the family; a failure to build a
successful business or a failure to follow the steps of a
parent who was not faced with similar challenges. Many
assume that the debtor did not properly plan financially and/or
they abused their use of credit cards. That, as a result
of
their poor judgment, they are choosing to file for bankruptcy
protection. The reality for most is
that they were able to pay their bills but life suddenly changed. Their employer closed its doors, their spouse
abandoned them, their father needed money to pay for his
cancer treatment or the market collapsed. These are the real situations that
many of my clients have faced. I say to these naysayers
that they need to walk a few miles in my clients' shoes.
I tell them that they had better say their prayers, because
there is no guarantee that tomorrow they will not be in the
same position as the person they were wrinkling their nose at.
I also remind my
clients that the Bible encourages forgiving debts
and that those principals are the foundation for our
bankruptcy laws.
The theory of consumer protection has been around since the
time of Moses -
"Do not mistreat any widows or orphans. If you
lend money to a poor person, do not charge any interest. Do
not mistreat any foreigners among you. Leave part of your
harvest in the fields for the poor to glean. Do not spread
false rumors. Do not give false testimony in court. Make no
false accusations. Do not accept bribes. If you take a poor
man’s cloak as surety for a loan, give it back to him when he
needs it to keep warm. If your enemy’s animal is running
loose, return it safely to him."
Leviticus -
"If a fellow Israelite living near you becomes poor and cannot
support himself, charge no interest on any money you lend him
and take no profit on any food you sell him.
Jesus Christ didn't
suffer the greedy well. "And He found in the temple those who
sold oxen and sheep and doves, and the money changers doing
business. When He had made a whip of cords, He drove them all
out of the temple, with the sheep and the oxen, and poured out
the changers' money and overturned the tables" (John
2:14-15).* Let's not forget the Lord's prayer: "...and
forgive us our debts as we forgive our debtors" Jewish
law provides for
cancellation of the debts of brethren every 7 years
(Deut. 15: 1-2, NIV) and, on the 50th year (jubilee) "shall
proclaim liberty throughout the land, too all its inhabitants"
(Lev. 25:10, NIV).
The Jewish lawmakers knew that keeping people under heavy debt
forever would only hurt their overall economy. As a
result of these basic principals their economy stayed healthy
and continued to grow
"If your debtor be in
straits, grant him a delay until he can discharge his debts;
but if you waive the sum as alms it will be better for you, if
you but knew it. Believers, have fear of God and waive
what is still due to you from usury, if your faith be true; or
war shall be declared against you by God and His apostle. If
you repent, you may retain your principle, suffering no loss
and causing loss to none." The Koran 2:276.
Some creditors, especially
credit card companies, have become outrageously greedy, and
sometimes very deceitful. Many times these creditors
have actually been the reason that my clients are forced to
file bankruptcy. For instance - a
collection company for American Express told my client, an
82-year old widow, that he "had the legal right to bring a
moving van to her house and take anything he wanted".
The Commandments brought by Moses regarding greed have been
broken by these creditors. Biblical warnings against usury (an
immoral charging of interest) are ignored. Today, credit card
companies are allowed to engage in legalized loan sharking.
Shockingly, Christian leaders are silent, passive, and
apathetic when it comes to working men and women in
contemporary society who are crushed by usurious interest
rates. Christians in general seem complacent about their own
victimization. It is difficult not to see how charging 18
percent or more is anything other than greed. There are
numerable Biblical references regarding the evils of greed
(Proverbs 30:15, 1:19; Luke 11:39; 1 Timothy 6:10, 3:3, 6:10).
Scripture teaches that we are stewards of God's wealth. Hence
it would be a sin to misuse, squander, or misappropriate it.
This is not to suggest that interest isn't a legitimate
charge. The excessive charging of interest, however, is usury
--which is a form of theft (Proverbs 11:26; 1Timothy 6:17;
Luke 19:46; Matthew 21:10-17).
This sin created excessive consumerism that
gave birth to a false god in violation of the First
Commandment.*
Company bankruptcies
are absolutely necessary to stop aggressive creditors from
closing down viable, but overwhelmed businesses. Through
a Chapter 11 the company
pays back some of their debts, but does so at terms it can afford.
Chapter 11 is used to refurbish small and large companies.
It may be a method to help a company scrape off debt that is
overwhelming and get rid of obligations that are over
financed. Through a Chapter 11 employees are kept
working, inventory purchased and taxes paid. Without
Chapter 11 those employees would be out of work, the providers
of the inventory would suffer financial hardship and taxes
burden would fall on others.
Sometimes the debtors
are abusing creditors. The debtors take on debts that
they never intend to pay. The debtors falsify
their financial statements. They purposely lie about
assets and use every method to mislead old and new creditors.
The bankruptcy laws are also designed to help protect the creditors. If a debtor sells assets for less than they are
worth, puts debts on credit cards knowing that they cannot pay
the debts or fraudulently takes money without the intent of
paying - those creditors are not the aggressors; they are the
good guys. The bankruptcy laws permit reaching back in
time and recapturing the assets that were sold or money that
was paid. These assets are brought back into the
bankruptcy estate and distributed evenly among the creditors.
Bankruptcy is not a time for injured creditors to be passive.
They must actively participate in the process in order to be
protected.
We are not the first to
face this economic problem, nor will we be the last.
Even some of the founding fathers didn't
think much of financial institutions. Thomas Jefferson called
banks "more dangerous than standing armies." Andrew Jackson,
told a delegation of bankers that they were a "den of vipers
and thieves." Thousands of years
before the birth of Christ excessive charging of interest had
been denounced. In the ancient world writers, philosophers,
and political figures all noted its harm to society and the
individual. Aristotle called the birth of money from money
"unnatural." Julius Caesar capped the interest of loaning
money at 12 percent and Justinian dropped it to 8 percent.*
God gave us this wisdom in the
Bible: “Owe no man any thing, but to love one another:
for he that loveth another hath fulfilled the law.”
(Romans, Chapter 13, Verse 8.)
Can you now see
how the very economy of our country would be directly affected
if we were not protected by these well founded principals of
bankruptcy? Perhaps this helps you understand how important bankruptcy is to
our daily personal, professional and social lives. Every one of us would be
directly affected if the
bankruptcy laws did not exist.
Therefore, the next time
someone mentions the word "bankruptcy," don't be so quick to
form a negative opinion and assume "failure" goes hand-in-hand
with bankruptcy. It actually takes more time, energy and
will power to put yourself under the close scrutiny of the
bankruptcy process than it takes to close the business or go
underground as a consumer. Think of it as an area of law that
holds our lives together and keeps us functioning as a growing
and healthy economy. Give bankruptcy law the credit it deserves and you
will find it to be a fascinating field of law.
All of this and more it
why I wake every morning excited that I can help both debtors
and creditors understand bankruptcy.
By Diane L. Drain, attorney and
counselor at law. *I thank Bishop Paul Peter
Jesep, Ukrainian Autocephalous Orthodox Church - Sobornopravna
of Europe and the Americas for his help on the theological
history of usury and credit. To quote the Bishop "If
credit card representatives told Jesus he had to pay 18
percent interest or more, he may have taken a whip of chords
to show his disapproval. Because Jesus is not here in person
to take action, it's time Christian leaders use their
political clout to drive out today's moneychangers from the
homes of families."
Catholic Reflections &
Reports.
His Grace is based in New England. He may be
reached at
VladykaPaulPeter@aol.com.
