September 10, 2025 • 44 mins
Bankruptcy may be a taboo subject in personal finance, but it can be a necessary option for those facing overwhelming debt. Attorney Mitchell Dickson and bankruptcy specialist Nicole Duhon demystify the bankruptcy process and help listeners understand who should consider this path.
• Chapter 7 bankruptcy involves the liquidation of assets and is typically for those with lower incomes needing a fresh start
• Chapter 13 creates a 3-5 year repayment plan allowing individuals to keep homes and vehicles while paying what they can afford
• Most bankruptcies result from traumatic life events like divorce, death, medical issues, or disabilities – not financial irresponsibility
• Making only minimum payments on credit cards for years or falling behind on mortgages/car payments are red flags that bankruptcy might be appropriate
• The bankruptcy process typically involves three meetings with an attorney and one court appearance (now usually via Zoom)
• After filing, the "automatic stay" immediately protects from creditor actions like garnishments, foreclosures, and repossessions
• Bankruptcy doesn't mean losing everything – secured debts can be maintained if payments continue
• Credit unions often close accounts of members who discharge debts through bankruptcy, especially if the institution suffers a loss
• Recovery is possible – with responsible credit usage post-bankruptcy, financial healing can happen relatively quickly
• Free consultations with bankruptcy attorneys provide confidential, personalized information with no obligation to file
If you're considering bankruptcy, schedule a free consultation with a qualified bankruptcy attorney to receive professional advice tailored to your specific situation. Bankruptcy can be a financial reset rather than a financial death sentence.
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Welcome to Money Matters, the podcast that focuses on how to use the money you have, make the money you need and save the money you want – brought to you by Neighbors Federal Credit Union.
The information, opinions, and recommendations presented in this Podcast are for general information only and any reliance on the information provided in this Podcast is done at your own risk. This Podcast should not be considered professional advice.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms KimChapman.
Speaker 2 (00:14):
Welcome to another edition of Money Matters, and
I'm your host, kim Chapman.
So today we're going to talkabout a taboo bankruptcy.
You probably don't hear a lotof personal finance podcasts
talking about this.
Definitely it's a subject thatboth banks and credit unions
hate, but guess what?
It's a necessary evil.
So today we're going to uncoverwhat bankruptcy really is and
(00:37):
who should, or who shouldn't,file.
So joining me today areattorney Mitchell Dixon and then
our in-house bankruptcyspecialist, nicole Duhon.
Speaker 4 (00:47):
Welcome, thank you, thank you.
Thank you, ms Chapman, forhaving us.
Speaker 2 (00:50):
So I think this is going to be a really, really
interesting topic because, likeI said before, it's a necessary
evil.
Nobody, you know envisions,wakes up and aspires to file for
bankruptcy, but it's somethingthat happens.
So, Mitchell, I want to, youknow, have you kick it off first
, Tell for bankruptcy, but it'ssomething that happened.
Speaker 4 (01:10):
So, Mitchell, I want to have you kick it off First.
Tell us how did you even getinto this particular industry as
an attorney?
What is your background?
Well, I'm happy to answer thatfor you.
Sure, First, thanks for havingme.
I enjoyed doing this andenjoyed getting to meet you so
far, and just delighted to behere.
My background was just going toLSU Law.
I graduated from there in 2013.
And at the time, the job marketin the legal field was not
(01:32):
great.
You know, I was applying when Igraduated.
I didn't have any offers, so Iwas on the job hunt and the
first really appropriate,acceptable offer that I received
was at a consumer bankruptcyfirm here in Baton Rouge.
I had not even taken bankruptcylaw in law school, so I was
starting fresh and I jumpedheadfirst in.
(01:54):
You know, just gave it my alland decided I liked it.
You know, the math always madesense to me and, you know, kind
of just took off from there.
Speaker 2 (02:06):
And Nicole, you've been in that bankruptcy office
for forever.
I don't know that you've doneanything else for neighbors, so
give us a little bit about yourhistory.
Speaker 3 (02:15):
Whenever I first got to neighbors, I handled the
legal accounts, so that isrepossessions, filing
garnishments, filing suit,working closely with our
attorney's office that handlesthat for us.
And then I shifted over tobankruptcy, probably about four
(02:36):
years later.
So I've been here for 20 years,just made my 20 years.
Congratulations, I'm hot onyour trail.
So I've been here for 20 years,just made my 20 years.
Congratulations, I'm hot onyour trail.
So I've been doing it for about16 years now, so it's been a
(02:56):
learning event.
I didn't have any knowledge ofbankruptcy whenever I took the
position, just on the legal sideof it, not the actual
bankruptcy part of it.
We have a fantastic attorney,stacey Butler, and I've learned
a great deal from her, so it'svery interesting.
I love it.
Speaker 2 (03:17):
So let's dive in.
And you know, there are a listof words that just kind of bring
up those negative feelings.
At the top of that list I liketo think of IRS, but then right
behind it there's bankruptcy.
So while most consumers knowthe term, a lot of them don't
know the real ins and outs.
So let's start with maybehaving Mitchell talk about what
exactly bankruptcy means.
Speaker 4 (03:38):
Well sure, let's kind of start off by dividing
bankruptcy into both consumerbankruptcy, which is what we're
going to talk about, andbusiness bankruptcy, which is
something that is outside therealm of what we're going to be
talking about.
Speaker 2 (03:52):
We'll do another show just for that.
Sure, yeah.
Speaker 4 (03:55):
And so consumer bankruptcies are typically both
Chapter 7 or Chapter 13.
13.
Okay, and the people that gointo that, consider doing those
kinds of bankruptcy cases, areusually the people that are
going through a lot and are notable to handle those issues
themselves financially.
People can be behind on avehicle, behind on a house, need
(04:16):
a fresh start.
You know, have tax issues youmentioned the IRS, those kinds
of things.
But bankruptcy if there's onething I want to communicate to
you today, it's just it's notthe end of the world for these
people.
We've had over a thousandclients through the years now
and we've gotten good results.
People are happy they've done abankruptcy case, but it's also
(04:39):
not for everybody.
One of the bankruptcyattorney's most important roles
is to kind of provide counsel inadvance of filing a bankruptcy
case, so that somebody knows ifit's a good idea for them to do
or not.
Speaker 2 (04:54):
That way they're not just trying to file as many
bankruptcy cases as possible andthrowing people who maybe
shouldn't be in a bankruptcycase in a bankruptcy case and be
in a bankruptcy case, in abankruptcy case, and I think I
want to kind of go next tomystifying one of those myths,
because I think there are a lotof consumers that have the
conception of misconception that, hey, I'll file bankruptcy and
I don't have to pay off any ofmy debt.
(05:15):
Sure, how does that really work?
Speaker 4 (05:19):
So general advice, of course, right.
This is anything I say heretoday is not going to be
specific legal advice for anyindividual listening to this
right.
Always go get proper legaladvice from a qualified attorney
, absolutely Right.
But in general, if you do achapter 13, you're paying to
keep your stuff.
Okay.
(05:39):
You're doing a chapter 13because you want to keep your
house and or keep a vehicle andyou're not doing that for free
okay, you're paying to do that.
You're doing a chapter 13because you want to keep your
house and or keep a vehicle andyou're not doing that for free
Okay, you're paying to do that.
You're also paying theunsecured debt that you can
afford to pay Okay.
So if your budget allows foryou to have the surplus income
to pay unsecured debt, you'regoing to pay that too.
And a chapter seven if you wantto keep secured debt, such as a
(06:04):
mortgage or a car, you're notkeeping the collateral if you
don't keep the debt.
So you know there's no freehouse or free car, no free ride,
let's say, in a bankruptcy case.
Speaker 2 (06:14):
And so, nicole, being that you've, like you say,
you've been doing this in thisparticular area for 16 years, so
it's got to be a pretty bigdeal in that they have at least
one person dedicated.
So, on the backside, what doesit mean for a credit union when
you have consumers or membersthat file bankruptcy?
Speaker 3 (06:31):
Well, we, you know, will pull.
I will pull all of thedocuments that's filed by the
attorney, such as Mitchell, andreview them to make sure we are
being treated fairly.
In the plan, we are receivingthe proper value for our
(06:51):
collateral in a 13 and in a 7,making sure that the documents
get signed if they would like tokeep their car or house.
It's called a reaffirmation andthat's just reaffirming the
debt that you already have withneighbors.
Speaker 4 (07:11):
Functionally exclude.
I'm sorry, excuse me, butfunctionally excluding that
particular debt from the Chapter7 discharge, right, right.
Speaker 3 (07:19):
And that's what the reaffirmation does.
Speaker 4 (07:20):
Yeah.
Speaker 3 (07:22):
So that's how it's handled on our end.
Does so that's how it's handledon our end, just looking at all
of the documents that's filedin the bankruptcy and making
sure that we're treated fairly.
Speaker 2 (07:33):
And so and Mitchell may not realize this, but of
course I do a lot of teaching,of financial education, not just
for our members but in theschool system, and a lot of
times when consumers come in tosee me they've gotten in over
their heads and a lot of it isjust, you know, sometimes
wanting to keep up with theJoneses.
But that's not the only reasonpeople get into financial
(07:54):
trouble.
So, mitchell, what are some ofthe most common reasons that you
see individuals come in andfile?
Speaker 4 (08:00):
If we're looking at the period of multiple years
ahead of the period ahead of thetime when they file a
bankruptcy case, oftentimeswe're looking at traumatic life
events.
You know things like a death inthe family, a divorce.
You know because nobody everplans on getting divorced, but a
lot of marriages unfortunatelydo end that way and people do
(08:22):
end up in financial hardship dueto divorce.
Very, very often there's alsovery commonly medical issues and
disabilities, just things thathappen to people through no
fault of their own.
That kind of cause them to nolonger be able to meet their
obligations.
And some people have savings,some people live off that
savings for a while, but ifthey're still not able to go
(08:43):
back to work, that's wheneverthat a person might look at
doing a bankruptcy case.
Speaker 2 (08:49):
And I'll ask each of you this question Do you find
that there are any particulartimes of the year where there is
a spike in the number of peoplethat file for bankruptcy,
whether that be the first of theyear, the summer?
Is there any any trend that you, that either one of you see?
Speaker 4 (09:09):
I can probably help.
Speaker 3 (09:10):
Yeah, you go first on this one.
I want to see what you say, sofor Chapter 13s.
Speaker 4 (09:15):
A big drive for Chapter 13 filings is
foreclosures and a lot of timesChapter 13s are filed a very
short period before a home isput up for sheriff sale at the
end of a foreclosure, and not awhole lot of sheriffs hold
foreclosure auctions around theholidays.
So there's not a whole lot ofchapter 13 filings, let's say,
between Thanksgiving and NewYear's.
(09:36):
On the other hand, chapter 7filings a lot of times the
people that look at doing aChapter 7 are really, really
living on a very tight budget.
Okay, and the only time of theyear they can afford to even
consider doing the Chapter 7 iswhen they get the tax refund,
you know, and they might get awhatever you know X number of
(10:00):
dollar refund, use some of it topay a month's rent, use some of
it to catch up a car note anduse the rest of it to pay for a
bankruptcy case.
And that might be the time ofyear they have those extra funds
because, you know, livingpaycheck to paycheck.
Speaker 3 (10:12):
That actually makes a whole lot of sense.
Yeah, it sure does.
And now I'm sitting herethinking about, you know, my
caseload over the years and howthe trend goes, and that
definitely makes sense.
I would say that there's reallyno filings during the holidays
November through really thebeginning of February.
Speaker 4 (10:34):
And the other part of that, Nicole, is.
Attorneys don't like to workaround the holidays either, so
we're not like I hate togeneralize but I don't mean to
generalize, but it's, you know,we're not trying to take all the
appointments we can aroundChristmas, you know, and you
know just trying to give staffas many as much of a holiday
break as we can as well, youknow to treat them right,
because y'all work just as muchas we do.
(10:57):
Well, yeah, I just, I truly dovalue our staff, you know, and
want to make them feelappreciated and give them the
time off between Christmas andNew Year's, for instance.
Oh, yeah, definitely.
Speaker 3 (11:23):
I would say that a spike in filings would come
around the beginning of school,which would be the August, july,
august, kind of the season thatwe're in right now.
Speaker 4 (11:29):
I've, throughout the years, seen a spike during that
time, Very, very and you canalso just on a national basis.
You can kind of trackbankruptcy filings just along
with the economy, just kind ofhow the how the national economy
is doing.
You know definitely, and ifit's not doing well, people are
losing money on theirinvestments.
If unemployment rate is rising,you can bet bankruptcy filings
(11:51):
are probably going to be goingup as well.
Speaker 2 (11:53):
So let's talk who should be filing for bankruptcy.
I mean, statistics say eightout of 10 Americans in debt.
Right, so that pretty muchcovers most of us.
But just because you have debt,bankruptcy may not necessarily
be the option for you.
And I want to circle back andwe can kind of talk a little bit
about other options.
But who are those candidatesthat really, really fit the bill
(12:16):
that this is the right decision?
This may be the only decisionfor them.
Speaker 4 (12:21):
It's somebody who is living the right way but can't
make the numbers work.
Okay.
So it's somebody who is tryingto pay the debt.
It's somebody who is payingwhat they have to pay for.
They're paying their rent, youknow, because that's the first
thing you got to pay.
They're paying the electricbill because you got to pay it.
They're paying their car notebecause if they don't pay the
car note, they don't have a car,can't make any money to pay any
(12:44):
of this stuff, right.
And they're just paying theminimum payments on the credit
cards if they can do that, right.
That's the kind of person thatis going to sell through a
chapter seven bankruptcy casebecause they're not going to
have any bad acts in the recentpast before they look at doing a
bankruptcy.
They're in good faith.
We would say they're tryingtheir best and just can't make
(13:06):
the numbers work through nofault of their own.
That's the kind of person whowould look at doing a Chapter 7.
That's one of the types ofpeople who would look at doing a
Chapter 7.
Alternatively, often we haveclients who are senior citizens
on a fixed income and those arevery often Chapter 7 cases
because any debt that gets outof hand when you're a senior on
(13:26):
a fixed income, you can'texactly go get a job in addition
to the Social Security, becausethe Social Security will get
taken away from you, right,right.
So those are often Chapter 7filings and for Chapter 13s it's
people who either make too muchmoney to look at doing a
Chapter 7 or people who arebehind on a house or behind on a
car that they want to keep, andthen those are the kind of
(13:50):
people we look at doing aChapter 13 for.
Speaker 2 (13:52):
And of course, in my world, unfortunately.
You know, we offer freefinancial counseling services,
but I find far too often peoplewait until they are in over
their head before they come inand seek that counseling and
they kind of miss out on thosealternatives or different
opportunities.
So what do you think are somebig red flags that consumers if
(14:12):
somebody's listening to thispodcast and they're thinking
I've got a lot of debt, I'm thateight person out of eight out
of 10, but how do I know thedifference between whether I can
handle this or is it time forme to seek some professional
help?
What are those common red flagsthat you see?
Speaker 4 (14:28):
That's a great question and that's something I
should have delved into more inmy last answer.
But for people, when they'relooking at their credit card
statement, ok and, as you said,people often let this pile up on
themselves, which I think ishuman nature because we try to
avoid the things that cause usbad feelings or anxiety or
stress.
Right, if clients are behind oncredit cards, they're not
(14:49):
waiting for it to come in sothey can look at the statement.
Right, but if you look at thestatement, you're going to see a
truth in lending box thatfederal regulations require to
be on every credit cardstatement and it's going to tell
you if you make the minimumpayment on this card, it's going
to take you this many years,this many months to pay this off
, and I would love for listenersto keep in mind that that means
(15:13):
you don't use the card anymoreeither.
Okay, that means you cut up thecard that day and just make
that minimum payment for therest of your life practically
Right, which is, you know, onthose truth and lending boxes,
it can be eight years or youknow whatever to pay those off,
you know, or whatever.
And if that, if that, if that'swhat somebody is looking at as
(15:34):
their only option to pay offthat card, I think it's time to
probably consider looking atdoing a bankruptcy case, because
you're not really doingyourself any good making minimum
payments If that's all you cando on that card and forgive me
for saying this, I'm in anoffice of a credit union, but
this is how banks, this is howlenders, make a lot of money on
(15:55):
these cards.
Right Is that people take along time to pay them off.
They're just paying interestfor an extended period of time.
But that's often a ifsomebody's in that kind of
spiral where they're just payinginterest on interest on
interest, come go see abankruptcy lawyer, yeah.
Speaker 2 (16:11):
And hopefully I like to think that I can kind of
bridge that gap, because if theyknew Right, If we as consumers
knew what 30 percent actuallyreally meant when we went and
put something on a credit cardor signed up for a loan, you
know, I don't think any of uswould have.
You know, hey, a computer it'sonly $200 if we pay cash.
But, if we put it on a creditcard, we could pay upwards of
(16:31):
$1,000.
Nobody willingly signs up forthat type of debt.
Speaker 4 (16:34):
It's really important , though.
Also, though, really importantfor us to acknowledge that we're
probably coming at this from anangle of at least a little bit
of privilege.
To say that, right, because youknow, clients are not excited
about signing for a 30% car loanor 21% car loan.
They're not excited to go get apayday loan.
Right, it's a last resort to doeither of those things, and if
(16:58):
they're signing for a 23.99% carloan, it's because they have to
get to work to have a job.
They're not signing that carloan, happily, you know, and
that's an important thing tokeep in mind too for those
people.
Speaker 2 (17:13):
So can you walk us through what does the process
look like if somebody walks inyour office today and say, hey,
I think I need to filebankruptcy?
Speaker 4 (17:20):
I think most bankruptcy firms around here
will operate very similar tothis, which is we'll have a
potential client in for a freeconsultation.
That consultation will be withan attorney at our office.
At our office it's either withme or my associate attorney,
who's named David McBride.
(17:40):
That consultation typicallylasts around 30 minutes and
we'll just kind of get to knoweach other, kind of get an
assessment of the potentialclient's situation and and, to
the best of our ability, behonest about whether or not a
bankruptcy could be a good ideafor them.
And if it is a good idea forthem, we'll make that
recommendation, typically quotethem a fee to file.
(18:02):
Don't take any payment, ofcourse.
That day we're just kind ofmaking a quote and we provide
them a list of documentstailored to their particular
situation that we'll ask them toget together for our next
meeting.
Okay, that second meeting iswhere we get all those documents
.
We sign a retainer agreement.
Okay, following that, we'llhave a third meeting where we
(18:26):
sign everything to file abankruptcy case.
Okay, of course we have to getall of those documents at the
second meeting to properlyprepare everything accurately
for the third meeting, which iskind of the battle sometimes
right.
So sometimes it ends up beingmore than three meetings, but
ideally it's three meetings andyou get all the documents at the
second one, you know.
And once you file after thatthird meeting, somebody files.
(18:50):
They're immediately protectedby what's called the automatic
stay, which either stops agarnishment, stops a foreclosure
, stops a repossession,immediately provides you
protection from creditors.
You'll typically have a courtdate roughly about four to six
weeks after you file Around here.
Those court hearings are heldover Zoom ever since COVID.
(19:13):
Court hearings are typicallywith your attorney.
They should be with yourattorney, in my opinion.
They certainly are at ouroffice and that's typically the
only time a bankruptcy clienthas to make an appearance in
court is over Zoom for that onehearing.
Speaker 2 (19:30):
So you mentioned one, two, three meetings and then,
of course, the court appearance,which is done for Zoom.
So from that first meeting to,I'm on my plan now.
The collection calls havestopped.
I don't have to worry aboutNicole or anybody else harassing
me anymore.
What is that process?
What is that timeline generallylike and I know it can vary for
(19:51):
each- consumer.
Speaker 4 (19:52):
So a lot of times clients, as you mentioned a few
minutes ago, they'll wait untilthere's a fire to come in, right
?
So there might be a foreclosurenext week or the car might be an
active repossession, ok, and ifthat's the case, we're going to
tell them.
Yeah, this is a case we'reinterested in, but we need to
get filed by this time next week, and what that means is I need
(20:16):
all your documents within 48hours, okay.
If you don't have them to mewithin 48 hours, I'm not sure
we're going to be interested inthis file.
Okay, and if you set thestandard with the client in that
kind of way and the clientlives up to the standard, I, as
the attorney, want to live up tothat same standard, and what
(20:36):
that means for me is I'm goingto get that file ready and it's
going to be ready to sign assoon as it can possibly be ready
, and that's going to be withina few hours of the time I get
those documents.
If the client needs to have itfiled that day and that's
something David and I are verygood at is efficiently getting
those, prioritizing those filesto get those done so that we get
the automatic stay in effectfor those clients that need it
(20:58):
quickly.
Speaker 2 (20:59):
And, like you mentioned, sometimes it is one
of those emergency situations.
So I know that there are casesor situations where a client
meets with a bankruptcy attorney.
They file, we get paperwork,but, nicole, how often do you
see that you know, somewhere inthat process it's canceled, they
change their mind.
Speaker 3 (21:15):
See that you know somewhere in that process it's
canceled, they change their mind.
I don't really come in untilafter they have already filed,
so once they have filed, thenI'll receive their notice that
they have filed.
Every now and then we'll havemembers that call me, contact us
before they file.
Just to say this is kind ofwhat I'm thinking about doing.
(21:39):
How is this going to affect myrelationship with you guys?
You know what?
And then at that point it's ona case by case basis.
It is going to depend on whatthey have financed with this.
Is it current, is it past due?
What chapter are you filing?
Speaker 4 (22:00):
And how do you want to treat the credit union?
Yeah, do you want to keep thedebt?
Exactly, do you?
Speaker 3 (22:03):
want to.
You know you bank with us, Doyou not bank with us?
So there's a lot, of, a lot ofdecisions that go into it, but
it is on a case-by-case basis,you know, and a lot of times
they have no idea what casethey're going to file, and it's
not let me rephrase that, it'snot that they may want to file a
(22:26):
certain type of case.
There is a standard for that.
So they kind of get told whatcase they're going to file.
So at that point I just kind ofgenerally go over everything
with them, tell them todefinitely meet with an attorney
, and then give me a call backand let me know what what they
(22:47):
decided to do.
Speaker 2 (22:49):
And it's clear from this conversation that this is
not a decision that consumersmake lightly, so obviously
there's got to be a downside toit, right?
So let's talk about that.
What is, what are thedisadvantages, what are the
negative consequences for anindividual that does file
bankruptcy?
And I'll let Mitchell answerthat, and then you can kind of
briefly talk about, from thecredit union's perspective, if
(23:12):
we have a member that filesbankruptcy.
Speaker 4 (23:14):
Sure, I'd like to start just by telling you I have
to keep in mind, whenever we'rehaving those first meetings,
those consultations, you knowwe're meeting potential clients
that day and we have to keep inmind we're meeting them at their
worst possible time.
Right, you know we're, you knowthey're not.
Speaker 2 (23:29):
Stress level is high, tension is thick, Exactly right
.
Speaker 4 (23:33):
So our job in that consultation, we got to give
them some grace, Right.
You know, a lot of times we'reproviding an immediate benefit
upon filing Right.
But there are downsidesdepending on the chapter of
bankruptcy you file.
For instance, if you're doing aChapter 13, a Chapter 13 plan
will typically last 36 to 60months, so we're talking three
(23:53):
to five years.
It's a big deal Right.
In those three to five years,it's a big deal right.
In those three to five years youneed to be on your financial
best behavior and what thatmight mean is you're not taking
out any new debt, so you're notusing a credit card.
You're not taking out a carloan.
You're not buying a houseduring that three to five year
period unless you get courtapproval to do any of that stuff
.
Okay, You're not doing any ofthose things.
(24:15):
You're also turning over taxrefunds during that time period
Okay.
The inability to use credit forthree to five years is a big
deal and an importantconsideration and I think it is
a downside worth mentioning In achapter seven.
Most of the times it depends onwhere we're starting at,
because a lot of clients willhave been going through it
(24:36):
already, you know and the filingof the bankruptcy case will
raise a credit score for anumber of clients, unfortunately
because they waited.
They were at rock bottom yeahthey waited so long to file a
bankruptcy case, which you knowthey're trying their hardest,
right, but I wish they wouldhave come to see me a little
earlier for those people, thosepeople.
(24:57):
What I'll tell people, though,for long-term goals in a chapter
seven, is that the downside, ifyou want to buy a house, you're
looking at three years of goodbehavior after a chapter seven
discharge before you're going tobe able to get a federally
backed mortgage.
Okay so, and if you're a firsttime home buyer, that's what
you're going to be getting isgoing to be a federally backed
mortgage.
So if you're thinking aboutdoing a Chapter 7 and you also
have a short-term goal of buyinga house, it's maybe not
(25:20):
congruent with each other andyou might need to evaluate other
options to pay off that debt ormaybe your goals regarding the
house.
Speaker 2 (25:29):
Unfortunately, and Nicole, from the credit union's
perspective, what does that meanfor a member when they have
filed and they've included theirdebts with the credit union?
Speaker 3 (25:42):
Now these are really just going to be general
information.
Like I said, everything's on acase by case basis.
So in a 13, you know you'regoing to be in the plan for
three to five years and itdepends on if you, if you're
banking with us, if you're notbanking with us, if you're going
(26:04):
to, you know, keep your yourcollateral with us.
Let's say you're on your bestbehavior and everything goes
smoothly, we're receivingpayments, you're keeping
insurance on your car.
Then everything will beabsolutely gorgeous in your life
(26:25):
.
Best case scenario right.
Best case scenario yeah, worstcase scenario if you give your
auto back to us, your house backto us or what have you, and we
do take a loss on your behalf.
Unfortunately, you can nolonger have services with our
credit union and that isindefinitely, so anytime we take
(26:50):
a loss.
Speaker 4 (26:52):
That's very typical within the industry.
So any credit union that I'vedealt with has pretty much the
same policy.
So, uh, for instance, if aclient only has a credit card
and a uh checking and or savingsor share account or whatever
right, I had a credit union andthey file a chapter seven to get
rid of that credit card.
Any credit union I have toprepare the client for this.
(27:12):
Very often.
Uh, any credit union is goingto take away your banking
privileges.
So a lot of times clients arehaving to change direct deposit
ahead of bankruptcy filing to anew bank account.
That way they don't have apaycheck or two sitting in limbo
once the bankruptcy case isfiled.
Speaker 3 (27:28):
Yes, and greatly appreciate you guys giving them
that information.
I know that there's so muchinformation whenever they, you
know, come into your office andthere's so much to cover and I
really appreciate y'allremembering to do that.
It makes my job a lot easier.
Speaker 4 (27:46):
Listeners can probably tell we haven't
mentioned this on air, butNicole and I have known each
other not in person we met inperson today, yes, but since I
became an attorney in 2013 andstarted working at that first
firm, we've known each otherthrough email, and so it was
delightful to meet her today, ofcourse, yeah, yeah.
Speaker 3 (28:02):
Yeah, so we, we definitely try to do the best
that you know we can do for ourmembers.
If, for some reason, there'sjust no way around it, they
can't keep the debt, you know,then we understand and I do give
them, you know, time to changetheir direct deposits, change,
(28:26):
you know, their financialinstitutions.
We don't just go in and, youknow, shut it down.
We do, you know, give themgrace.
Speaker 4 (28:33):
Yeah, and neighbors has always been reasonable, in
my experience as well.
Yeah.
Speaker 2 (28:37):
Thank you and kudos to Mitchell for knowing the
credit union language.
I heard him say that shareaccount.
I like that Definitely.
So what are some other mythsthat you find?
Consumers walk into your office, you know that are
misconceptions about bankruptcy.
Oh gosh, that's another hour.
Speaker 3 (28:56):
Right, Right, there's a lot of those.
Speaker 4 (28:59):
I've heard some wild stuff, right, because a lot of
times you know somebody willcome in and they've read
something on the internet, right?
Or they have a cousin who knowssomebody who's related to
somebody else, who did somethingin a bankruptcy case in
Illinois or something right.
And I'm like well, I don't knowthat person, you know.
I don't know what happened, youknow, so I can't tell you what
(29:19):
happened there, but I can tellyou what I can do for you here.
Right, you know.
But a lot, of, a lot of themyths are really just whatever
you might see on social mediaregarding bankruptcy because
don't get your legal advice fromsocial media, Don't get your
legal advice from your.
Tiktoks.
Speaker 1 (29:34):
All right.
Speaker 4 (29:34):
And I'm going to sound like a grandpa because I'm
not on the socials, right, butit's.
I've heard a lot from clientsabout what they'll, what they'll
see on TikTok, especiallyApparently, there's a lot of
financial influencers of somesort on TikTok who give this
kind of advice, advice.
I don't believe they'reattorneys, it's just people
doing their stuff and you knowclients might come in thinking
(30:01):
you know, I can make whateverkind of money I'm, you know I'm
making, and still do a chapterseven.
You know, or it doesn't matterhow much equity I have in my
house, I can still do a chapterseven, right?
Or I can do a chapter 13 and Idon't have to pay back any of my
credit cards.
You know, because I saw aTikTok video that says this
person didn't have to do it.
And I just really encourage you, encourage listeners, to keep
in mind that this is why it's soimportant to get individualized
(30:24):
legal advice.
Do not listen to these TikTokvideos and do not listen to me
today giving you this generaladvice, right, and then saying
I'm going to go file a chapterseven by myself, right, because
that'd be the worst thing youcould possibly do.
Speaker 3 (30:36):
Ten out of ten would not recommend, of course, right.
Speaker 4 (30:40):
Get proper legal advice from an attorney who's
going to listen to what you haveto say about your situation.
Right.
Speaker 2 (30:47):
That way you can make an informed decision and you're
not relying on whatever halftruths you may have read on
social media or just through thegrapevine truths you may have
read on social media or justthrough the grapevine, and
because there are so many halftruths out there and I imagine
you have many consumers walkthrough the door that really
don't have a real grip on whatthey're walking into.
So what responsibilities doattorneys have in terms of
(31:07):
providing that financialeducation and their support
before they take this big step?
Speaker 4 (31:12):
Yeah, I believe attorneys have an ethical duty
to make sure clients are wellinformed about what they're
doing before it happens.
Ok, and to me what that means isthat whenever we're signing
documents at that thirdappointment, it's an attorney
going through that stuffexplaining it to them when we're
signing it.
It is not a paralegal toflipping through it, it saying
(31:33):
sign here, sign here, sign here.
I think there's a real ethicalobligation.
That is an attorney who doesthat kind of thing because
there's going to be a legalquestion or two that pop up in
that signing.
The attorney is the only onewho should be answering legal
questions.
Additionally I don't know ifyou've heard of the, and
bankruptcy is not the kind ofthing that could just be rubber
(31:56):
stamped.
If I have a consultation todayfor a Chapter 13, the
consultation I had yesterdaythat was also a Chapter 13 could
be completely different andevery case has to be looked at
by the attorney individually tomake sure we're doing the best
we can for that particular fileand there's real attorney work
that goes into it and I worrythat that's not always done for
(32:20):
the people that it should bedone for.
Speaker 2 (32:22):
And so we live in a world where scams it's hard to
avoid that.
So in the bankruptcy world, arethere common scams that you see
individuals trying to pull off?
Speaker 4 (32:39):
individuals trying to pull off.
Yes, yes, so I've gosh, I couldtell you.
There's stories and maybe someof these are better for off air,
but but, but I've worked inthis field on multiple different
sides and you know, obviouslynow I represent people going
through bankruptcy cases.
Right Previously I'verepresented mortgage companies
in foreclosures.
Ok, I've also done trustee work.
Who is I've represented?
I've been a staffures.
I've also done trustee work.
I've been a staff attorney forthe Chapter 13 trustee here who
(33:02):
kind of oversees Chapter 13filings, and in that position
you see a lot of scam artists,in particular people who are not
attorneys but are giving legaladvice to people to file their
own bankruptcy cases and notdisclosing it as required under
(33:23):
federal law.
Uh, these people can be rolledinto court, can be arrested by
the United States marshals andcan be imprisoned, uh, if they
don't stop.
Uh, while I was at thetrustee's office, there was a
woman in particular who Ibelieve was in Gonzalez, who
didn't want to stop and uh, yeah, created a.
It was a woman in particularwho I believe was in Gonzalez
who didn't want to stop and,yeah, it was a big problem for
(33:43):
her, of course, and we ended upcatching it because the person
who had filed the bankruptcycase themselves.
Whenever I conducted the hearing, her name was spelled wrong on
her filings and so I asked her.
I said, how'd you misspell yourown name?
Because, meeting her she seemedto be of reasonable capability.
I had no reason to think shewouldn't know how to spell her
name.
And she immediately told me thetruth.
And you know, it just shows howlittle care that person
(34:07):
actually put into the documentsif the person's, if the
bankruptcy filer's first namewasn't even spelled correctly.
Speaker 2 (34:13):
Yeah, so you've both been in this industry for seems
like, over a decade.
What changes?
What are some of the biggestchanges that come to mind that
you've seen with bankruptcy overthe years?
Speaker 3 (34:25):
Well, there were a lot of new laws that got rolled
out and 05.
And uh oh five.
Speaker 4 (34:35):
BAP.
Cpa was, uh, a reconstructionof the bankruptcy code.
That was 2005.
I was 20 years old at the time,so I cannot provide any
anything more than generalinformation about what
bankruptcy was like before then.
Uh, chapter seven, though priorto 2005, there was no income
limit, is my understanding.
So ever since 2005, you had tobe either average or below.
Speaker 3 (35:02):
It's actually median median or below median income to
do a chapter seven.
But as far as like individuals,is that what we're asking about
?
I think just the economy ingeneral.
You know COVID hit.
There was a lot of things thatwent on during COVID.
People lost their jobs.
(35:23):
You know that was a huge thingfor everybody to try to navigate
through you know and not filebankruptcy.
Speaker 4 (35:32):
The bankruptcy world locally here has been pretty
static since I've been anattorney going on 12, 13 years
now and that's because ourChapter 13 trustee and all three
of the Chapter 7 trustees havebeen constant from that time
(35:53):
through now.
We did have our bankruptcyjudge retire a few years ago.
He was replaced with anotherjudge who, in my mind, has
continued a very stable andresponsible court, so there was
not a whole lot of change therefrom my point of view.
I do think there are going tobe changes within the next few
years because all those trusteesI mentioned are now of a
(36:16):
certain age right wherebankruptcy locally here might be
going through a change over thenext decade or so.
Speaker 2 (36:25):
So you mentioned earlier once a consumer files
bankruptcy.
Generally they're not supposedto, you know, incur any new debt
.
They're going to have to stopusing those credit cards and you
know that, I'm sure, goes witha grain of salt.
What are some of the mostcommon or biggest mistakes you
(36:45):
find?
Speaker 4 (36:46):
consumers make while they're in the midst of their
plan.
Oh gosh.
So if there, if somebody is ina confirmed Chapter 13 plan, the
perfect client is somebody.
Once they're confirmed, likeI'm saying, so we're six months
into the case, they're on easystreet so long as they're making
their payments.
The perfect client I never hearfrom until the case is over,
because they're making theirpayments, so no issues pop up,
(37:08):
nobody's complaining, life'sgood, right.
But the common mistakes in themiddle of Chapter 13 are going
to be, let's say, not turningover a tax refund, right.
Not making your direct mortgagepayments during the case,
because if you own a home thathas a mortgage on it and you're
(37:29):
in Chapter 13, you're going to,in general, have two big
payments and you're in Chapter13, you're going to, in general,
have two big payments.
There's going to be a Chapter13 payment that's going to pay
for again, in general,everything outside of the house
the ongoing mortgage payment,and then we're going to have the
ongoing mortgage payment on theside.
Your bankruptcy attorney canonly help you with that
bankruptcy payment.
(37:51):
The ongoing mortgage payment iswithin the client's purview, so
I can make sure that bankruptcypayment gets made Right.
I have to rely on the client tomake that house payment, and so
a very common thing that happensis that if a client is short
budget wise, the mortgage willfall behind again.
Right, and that's,unfortunately, is probably the
(38:19):
most common reason a chapter 13will will fail.
When they fail is because ofrepeated mortgage default.
Additionally, I did tell youearlier, one of the drawbacks of
doing a Chapter 13 is that youcan't take out debt during the
case.
A mistake, of course, is goingto be not taking, not following
that rule right.
Speaker 2 (38:32):
You're going to get a brand new car.
Speaker 3 (38:35):
It's like I don't have to pay these loans anymore.
Well, sometimes it does,Unfortunately, you know, things
happen during three to fiveyears of your life.
Speaker 4 (38:42):
That's a really long time it is.
Speaker 3 (38:43):
And accidents happen.
Cars get wrecked, you know, youlose your job, you know.
So all of these things do playa part in your Chapter 13.
Speaker 4 (38:53):
Yeah.
Speaker 3 (38:54):
You know you wreck a car.
What are you supposed to do?
It's totaled.
I need a new car.
I have to get to work.
Speaker 4 (39:00):
Yeah, A mistake in that case would be to not
immediately notify your attorney.
You know the mistake would beto sit on it for a little while
Definitely, we'll figure it out,you know get the attorney's
office involved, provide themwith insurance documentation and
contact information for theinsurance adjuster.
That way things can be handledappropriately and timely and
(39:20):
you're not without a rental carand or the ability to finance
something else for an extendedperiod.
Yes, yeah.
Speaker 2 (39:26):
So we could talk about this subject, obviously
for hours and hours, and hours,but I want to give Mitchell
definitely an opportunity togive his best piece of advice to
anybody that is sitting therecontemplating.
You know, should I file?
Is this so scary?
You know how can we kind of getthe elephant out of the room?
What advice would you give tothem?
Speaker 4 (39:47):
My advice would be that a consultation is going to
cost you literally cost younothing.
Okay, to my knowledge, everyconsumer bankruptcy attorney in
this area provides freeconsultations.
No decent attorney is going topressure you into doing a
bankruptcy case at all.
I think any decent attorney isjust going to provide you with
(40:09):
information, allow you to makean informed decision, and not
going to make you feel likeyou're buying a used car.
Okay, the best advice I cangive you is take the legal
advice that is given to you.
Okay, make an informed decision.
Go to that consultation.
Go with an open mind.
Okay, you don't have to file abankruptcy case If you go to
(40:30):
that consultation.
Go find out some information.
Okay, an attorney might tellyou you don't need to do a
bankruptcy case.
This is a better option for you.
Why don't you take this asset,pay off this debt, solve your
problems?
You don't need a bankruptcycase in your credit report.
Okay, rather, just find outmore information.
Right, just don't go to TikTokfor the information.
Go take a little initiative,meet with an attorney, tell them
(40:54):
your information it's private,it's confidential and just get
some more.
You know, get professionaladvice.
That's the best thing I canprobably tell somebody.
Speaker 3 (41:02):
And there is a life after bankruptcy.
A lot of people you know theythink it's such a taboo.
I can't do this.
You know I'm going to be ruinedforever.
I'll never be able to getanything ever again in my life
and that's just simply not thetruth, especially not this day
and age, absolutely.
Speaker 4 (41:21):
It's not the truth at all.
If somebody is responsible withtheir credit usage and finances
after a bankruptcy case, then Ithink those are the people who
are able to recover very quickly.
On the other hand, if you justgot a chapter seven discharge,
every creditor out there knowsyou have no debt and cannot file
another bankruptcy for eightyears.
(41:42):
Okay, and so if they want toloan you money, they know they
can sue you if you don't pay andthere's going to be no other
creditor who's in line togarnish you or take your money.
So you're an attractivecustomer at that point.
But just you got to be smartabout the kind of debt you incur
after doing that bankruptcydischarge?
Speaker 3 (41:59):
Yes, you have to.
You have to learn how to manageyour money.
Yeah, yes.
Yeah.
Speaker 4 (42:05):
Money matters.
Speaker 2 (42:06):
And that's why we have podcasts like this.
We have free financialcounseling, so I think a key
part is definitely getting thateducation, education, knowing
where your limits are, and then,if you find yourself in a
financial hardship, don't waituntil you're drowning to seek
that consultation, and then youmay never have to see a person
like Mitchell or have to, youknow, have your file come across
(42:29):
Nicole's desk.
But if they do need to seeMitchell, how can they contact
your office?
Speaker 4 (42:34):
Well, they can always call us at 225-369-9922.
Also, our website is Dixon,which is D-I-C-K-S-O-N
lawfirmcom.
Potential clients can schedulea free consultation there.
If they call us at that number,I provided they'll speak to
Kiara, who is the mostdelightful receptionist, slash
(42:55):
legal assistant they'd everspeak to.
So just give us a call and talkto Kiara.
Speaker 2 (43:00):
Definitely so.
Hopefully, if you're out there,this is not a circumstance
where you will ever have to filebankruptcy, because, again,
there's always that blueprintfor financial success where
we're here to help you work outthose financial hardships, but
definitely sometimes bankruptcyis that necessary evil hardships
, but definitely sometimesbankruptcy is that necessary
evil.
So I want to thank our guest,mitchell Dixon, for coming out
(43:20):
and definitely our in-house, msNicole, for sharing that
information.
Speaker 3 (43:23):
Thank you so much.
Speaker 1 (43:26):
It's time for Blueprint Building Blocks Small
changes that lead to bigfinancial wins.
Let's stack up for success.
Speaker 2 (43:36):
Know your numbers, and you can do this by tracking
your income, expenses and debtearly.
Don't ignore those red flags,things like missing payments,
juggling credit cards, fallingbehind on basics or warnings
that you need to act now.
And, of course, before filing,explore your alternatives first
(43:56):
Maybe debt management plan, freefinancial counseling like the
Blueprint for Financial Success,or some other repayment plan
arrangements.
Recovery is possible.
Bankruptcy doesn't have to endyour financial life.
It can be a reset.
Speaker 1 (44:12):
That's a wrap on today's Blueprint Building
Blocks.
That's a wrap on today'sBlueprint Building Blocks.
Stay on track with yourfinancial journey.
Subscribe to the Money Matterspodcast and visit
neighborsfcuorg slash financialwellness for more tools to help
you build a strong financialfuture.
Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms KimChapman.
Speaker 2 (00:14):
Welcome to another edition of Money Matters, and
I'm your host, kim Chapman.
So today we're going to talkabout a taboo bankruptcy.
You probably don't hear a lotof personal finance podcasts
talking about this.
Definitely it's a subject thatboth banks and credit unions
hate, but guess what?
It's a necessary evil.
So today we're going to uncoverwhat bankruptcy really is and
(00:37):
who should, or who shouldn't,file.
So joining me today areattorney Mitchell Dixon and then
our in-house bankruptcyspecialist, nicole Duhon.
Speaker 4 (00:47):
Welcome, thank you, thank you.
Thank you, ms Chapman, forhaving us.
Speaker 2 (00:50):
So I think this is going to be a really, really
interesting topic because, likeI said before, it's a necessary
evil.
Nobody, you know envisions,wakes up and aspires to file for
bankruptcy, but it's somethingthat happens.
So, Mitchell, I want to, youknow, have you kick it off first
, Tell for bankruptcy, but it'ssomething that happened.
Speaker 4 (01:10):
So, Mitchell, I want to have you kick it off First.
Tell us how did you even getinto this particular industry as
an attorney?
What is your background?
Well, I'm happy to answer thatfor you.
Sure, First, thanks for havingme.
I enjoyed doing this andenjoyed getting to meet you so
far, and just delighted to behere.
My background was just going toLSU Law.
I graduated from there in 2013.
And at the time, the job marketin the legal field was not
(01:32):
great.
You know, I was applying when Igraduated.
I didn't have any offers, so Iwas on the job hunt and the
first really appropriate,acceptable offer that I received
was at a consumer bankruptcyfirm here in Baton Rouge.
I had not even taken bankruptcylaw in law school, so I was
starting fresh and I jumpedheadfirst in.
(01:54):
You know, just gave it my alland decided I liked it.
You know, the math always madesense to me and, you know, kind
of just took off from there.
Speaker 2 (02:06):
And Nicole, you've been in that bankruptcy office
for forever.
I don't know that you've doneanything else for neighbors, so
give us a little bit about yourhistory.
Speaker 3 (02:15):
Whenever I first got to neighbors, I handled the
legal accounts, so that isrepossessions, filing
garnishments, filing suit,working closely with our
attorney's office that handlesthat for us.
And then I shifted over tobankruptcy, probably about four
(02:36):
years later.
So I've been here for 20 years,just made my 20 years.
Congratulations, I'm hot onyour trail.
So I've been here for 20 years,just made my 20 years.
Congratulations, I'm hot onyour trail.
So I've been doing it for about16 years now, so it's been a
(02:56):
learning event.
I didn't have any knowledge ofbankruptcy whenever I took the
position, just on the legal sideof it, not the actual
bankruptcy part of it.
We have a fantastic attorney,stacey Butler, and I've learned
a great deal from her, so it'svery interesting.
I love it.
Speaker 2 (03:17):
So let's dive in.
And you know, there are a listof words that just kind of bring
up those negative feelings.
At the top of that list I liketo think of IRS, but then right
behind it there's bankruptcy.
So while most consumers knowthe term, a lot of them don't
know the real ins and outs.
So let's start with maybehaving Mitchell talk about what
exactly bankruptcy means.
Speaker 4 (03:38):
Well sure, let's kind of start off by dividing
bankruptcy into both consumerbankruptcy, which is what we're
going to talk about, andbusiness bankruptcy, which is
something that is outside therealm of what we're going to be
talking about.
Speaker 2 (03:52):
We'll do another show just for that.
Sure, yeah.
Speaker 4 (03:55):
And so consumer bankruptcies are typically both
Chapter 7 or Chapter 13.
13.
Okay, and the people that gointo that, consider doing those
kinds of bankruptcy cases, areusually the people that are
going through a lot and are notable to handle those issues
themselves financially.
People can be behind on avehicle, behind on a house, need
(04:16):
a fresh start.
You know, have tax issues youmentioned the IRS, those kinds
of things.
But bankruptcy if there's onething I want to communicate to
you today, it's just it's notthe end of the world for these
people.
We've had over a thousandclients through the years now
and we've gotten good results.
People are happy they've done abankruptcy case, but it's also
(04:39):
not for everybody.
One of the bankruptcyattorney's most important roles
is to kind of provide counsel inadvance of filing a bankruptcy
case, so that somebody knows ifit's a good idea for them to do
or not.
Speaker 2 (04:54):
That way they're not just trying to file as many
bankruptcy cases as possible andthrowing people who maybe
shouldn't be in a bankruptcycase in a bankruptcy case and be
in a bankruptcy case, in abankruptcy case, and I think I
want to kind of go next tomystifying one of those myths,
because I think there are a lotof consumers that have the
conception of misconception that, hey, I'll file bankruptcy and
I don't have to pay off any ofmy debt.
(05:15):
Sure, how does that really work?
Speaker 4 (05:19):
So general advice, of course, right.
This is anything I say heretoday is not going to be
specific legal advice for anyindividual listening to this
right.
Always go get proper legaladvice from a qualified attorney
, absolutely Right.
But in general, if you do achapter 13, you're paying to
keep your stuff.
Okay.
(05:39):
You're doing a chapter 13because you want to keep your
house and or keep a vehicle andyou're not doing that for free
okay, you're paying to do that.
You're doing a chapter 13because you want to keep your
house and or keep a vehicle andyou're not doing that for free
Okay, you're paying to do that.
You're also paying theunsecured debt that you can
afford to pay Okay.
So if your budget allows foryou to have the surplus income
to pay unsecured debt, you'regoing to pay that too.
And a chapter seven if you wantto keep secured debt, such as a
(06:04):
mortgage or a car, you're notkeeping the collateral if you
don't keep the debt.
So you know there's no freehouse or free car, no free ride,
let's say, in a bankruptcy case.
Speaker 2 (06:14):
And so, nicole, being that you've, like you say,
you've been doing this in thisparticular area for 16 years, so
it's got to be a pretty bigdeal in that they have at least
one person dedicated.
So, on the backside, what doesit mean for a credit union when
you have consumers or membersthat file bankruptcy?
Speaker 3 (06:31):
Well, we, you know, will pull.
I will pull all of thedocuments that's filed by the
attorney, such as Mitchell, andreview them to make sure we are
being treated fairly.
In the plan, we are receivingthe proper value for our
(06:51):
collateral in a 13 and in a 7,making sure that the documents
get signed if they would like tokeep their car or house.
It's called a reaffirmation andthat's just reaffirming the
debt that you already have withneighbors.
Speaker 4 (07:11):
Functionally exclude.
I'm sorry, excuse me, butfunctionally excluding that
particular debt from the Chapter7 discharge, right, right.
Speaker 3 (07:19):
And that's what the reaffirmation does.
Speaker 4 (07:20):
Yeah.
Speaker 3 (07:22):
So that's how it's handled on our end.
Does so that's how it's handledon our end, just looking at all
of the documents that's filedin the bankruptcy and making
sure that we're treated fairly.
Speaker 2 (07:33):
And so and Mitchell may not realize this, but of
course I do a lot of teaching,of financial education, not just
for our members but in theschool system, and a lot of
times when consumers come in tosee me they've gotten in over
their heads and a lot of it isjust, you know, sometimes
wanting to keep up with theJoneses.
But that's not the only reasonpeople get into financial
(07:54):
trouble.
So, mitchell, what are some ofthe most common reasons that you
see individuals come in andfile?
Speaker 4 (08:00):
If we're looking at the period of multiple years
ahead of the period ahead of thetime when they file a
bankruptcy case, oftentimeswe're looking at traumatic life
events.
You know things like a death inthe family, a divorce.
You know because nobody everplans on getting divorced, but a
lot of marriages unfortunatelydo end that way and people do
(08:22):
end up in financial hardship dueto divorce.
Very, very often there's alsovery commonly medical issues and
disabilities, just things thathappen to people through no
fault of their own.
That kind of cause them to nolonger be able to meet their
obligations.
And some people have savings,some people live off that
savings for a while, but ifthey're still not able to go
(08:43):
back to work, that's wheneverthat a person might look at
doing a bankruptcy case.
Speaker 2 (08:49):
And I'll ask each of you this question Do you find
that there are any particulartimes of the year where there is
a spike in the number of peoplethat file for bankruptcy,
whether that be the first of theyear, the summer?
Is there any any trend that you, that either one of you see?
Speaker 4 (09:09):
I can probably help.
Speaker 3 (09:10):
Yeah, you go first on this one.
I want to see what you say, sofor Chapter 13s.
Speaker 4 (09:15):
A big drive for Chapter 13 filings is
foreclosures and a lot of timesChapter 13s are filed a very
short period before a home isput up for sheriff sale at the
end of a foreclosure, and not awhole lot of sheriffs hold
foreclosure auctions around theholidays.
So there's not a whole lot ofchapter 13 filings, let's say,
between Thanksgiving and NewYear's.
(09:36):
On the other hand, chapter 7filings a lot of times the
people that look at doing aChapter 7 are really, really
living on a very tight budget.
Okay, and the only time of theyear they can afford to even
consider doing the Chapter 7 iswhen they get the tax refund,
you know, and they might get awhatever you know X number of
(10:00):
dollar refund, use some of it topay a month's rent, use some of
it to catch up a car note anduse the rest of it to pay for a
bankruptcy case.
And that might be the time ofyear they have those extra funds
because, you know, livingpaycheck to paycheck.
Speaker 3 (10:12):
That actually makes a whole lot of sense.
Yeah, it sure does.
And now I'm sitting herethinking about, you know, my
caseload over the years and howthe trend goes, and that
definitely makes sense.
I would say that there's reallyno filings during the holidays
November through really thebeginning of February.
Speaker 4 (10:34):
And the other part of that, Nicole, is.
Attorneys don't like to workaround the holidays either, so
we're not like I hate togeneralize but I don't mean to
generalize, but it's, you know,we're not trying to take all the
appointments we can aroundChristmas, you know, and you
know just trying to give staffas many as much of a holiday
break as we can as well, youknow to treat them right,
because y'all work just as muchas we do.
(10:57):
Well, yeah, I just, I truly dovalue our staff, you know, and
want to make them feelappreciated and give them the
time off between Christmas andNew Year's, for instance.
Oh, yeah, definitely.
Speaker 3 (11:23):
I would say that a spike in filings would come
around the beginning of school,which would be the August, july,
august, kind of the season thatwe're in right now.
Speaker 4 (11:29):
I've, throughout the years, seen a spike during that
time, Very, very and you canalso just on a national basis.
You can kind of trackbankruptcy filings just along
with the economy, just kind ofhow the how the national economy
is doing.
You know definitely, and ifit's not doing well, people are
losing money on theirinvestments.
If unemployment rate is rising,you can bet bankruptcy filings
(11:51):
are probably going to be goingup as well.
Speaker 2 (11:53):
So let's talk who should be filing for bankruptcy.
I mean, statistics say eightout of 10 Americans in debt.
Right, so that pretty muchcovers most of us.
But just because you have debt,bankruptcy may not necessarily
be the option for you.
And I want to circle back andwe can kind of talk a little bit
about other options.
But who are those candidatesthat really, really fit the bill
(12:16):
that this is the right decision?
This may be the only decisionfor them.
Speaker 4 (12:21):
It's somebody who is living the right way but can't
make the numbers work.
Okay.
So it's somebody who is tryingto pay the debt.
It's somebody who is payingwhat they have to pay for.
They're paying their rent, youknow, because that's the first
thing you got to pay.
They're paying the electricbill because you got to pay it.
They're paying their car notebecause if they don't pay the
car note, they don't have a car,can't make any money to pay any
(12:44):
of this stuff, right.
And they're just paying theminimum payments on the credit
cards if they can do that, right.
That's the kind of person thatis going to sell through a
chapter seven bankruptcy casebecause they're not going to
have any bad acts in the recentpast before they look at doing a
bankruptcy.
They're in good faith.
We would say they're tryingtheir best and just can't make
(13:06):
the numbers work through nofault of their own.
That's the kind of person whowould look at doing a Chapter 7.
That's one of the types ofpeople who would look at doing a
Chapter 7.
Alternatively, often we haveclients who are senior citizens
on a fixed income and those arevery often Chapter 7 cases
because any debt that gets outof hand when you're a senior on
(13:26):
a fixed income, you can'texactly go get a job in addition
to the Social Security, becausethe Social Security will get
taken away from you, right,right.
So those are often Chapter 7filings and for Chapter 13s it's
people who either make too muchmoney to look at doing a
Chapter 7 or people who arebehind on a house or behind on a
car that they want to keep, andthen those are the kind of
(13:50):
people we look at doing aChapter 13 for.
Speaker 2 (13:52):
And of course, in my world, unfortunately.
You know, we offer freefinancial counseling services,
but I find far too often peoplewait until they are in over
their head before they come inand seek that counseling and
they kind of miss out on thosealternatives or different
opportunities.
So what do you think are somebig red flags that consumers if
(14:12):
somebody's listening to thispodcast and they're thinking
I've got a lot of debt, I'm thateight person out of eight out
of 10, but how do I know thedifference between whether I can
handle this or is it time forme to seek some professional
help?
What are those common red flagsthat you see?
Speaker 4 (14:28):
That's a great question and that's something I
should have delved into more inmy last answer.
But for people, when they'relooking at their credit card
statement, ok and, as you said,people often let this pile up on
themselves, which I think ishuman nature because we try to
avoid the things that cause usbad feelings or anxiety or
stress.
Right, if clients are behind oncredit cards, they're not
(14:49):
waiting for it to come in sothey can look at the statement.
Right, but if you look at thestatement, you're going to see a
truth in lending box thatfederal regulations require to
be on every credit cardstatement and it's going to tell
you if you make the minimumpayment on this card, it's going
to take you this many years,this many months to pay this off
, and I would love for listenersto keep in mind that that means
(15:13):
you don't use the card anymoreeither.
Okay, that means you cut up thecard that day and just make
that minimum payment for therest of your life practically
Right, which is, you know, onthose truth and lending boxes,
it can be eight years or youknow whatever to pay those off,
you know, or whatever.
And if that, if that, if that'swhat somebody is looking at as
(15:34):
their only option to pay offthat card, I think it's time to
probably consider looking atdoing a bankruptcy case, because
you're not really doingyourself any good making minimum
payments If that's all you cando on that card and forgive me
for saying this, I'm in anoffice of a credit union, but
this is how banks, this is howlenders, make a lot of money on
(15:55):
these cards.
Right Is that people take along time to pay them off.
They're just paying interestfor an extended period of time.
But that's often a ifsomebody's in that kind of
spiral where they're just payinginterest on interest on
interest, come go see abankruptcy lawyer, yeah.
Speaker 2 (16:11):
And hopefully I like to think that I can kind of
bridge that gap, because if theyknew Right, If we as consumers
knew what 30 percent actuallyreally meant when we went and
put something on a credit cardor signed up for a loan, you
know, I don't think any of uswould have.
You know, hey, a computer it'sonly $200 if we pay cash.
But, if we put it on a creditcard, we could pay upwards of
(16:31):
$1,000.
Nobody willingly signs up forthat type of debt.
Speaker 4 (16:34):
It's really important , though.
Also, though, really importantfor us to acknowledge that we're
probably coming at this from anangle of at least a little bit
of privilege.
To say that, right, because youknow, clients are not excited
about signing for a 30% car loanor 21% car loan.
They're not excited to go get apayday loan.
Right, it's a last resort to doeither of those things, and if
(16:58):
they're signing for a 23.99% carloan, it's because they have to
get to work to have a job.
They're not signing that carloan, happily, you know, and
that's an important thing tokeep in mind too for those
people.
Speaker 2 (17:13):
So can you walk us through what does the process
look like if somebody walks inyour office today and say, hey,
I think I need to filebankruptcy?
Speaker 4 (17:20):
I think most bankruptcy firms around here
will operate very similar tothis, which is we'll have a
potential client in for a freeconsultation.
That consultation will be withan attorney at our office.
At our office it's either withme or my associate attorney,
who's named David McBride.
(17:40):
That consultation typicallylasts around 30 minutes and
we'll just kind of get to knoweach other, kind of get an
assessment of the potentialclient's situation and and, to
the best of our ability, behonest about whether or not a
bankruptcy could be a good ideafor them.
And if it is a good idea forthem, we'll make that
recommendation, typically quotethem a fee to file.
(18:02):
Don't take any payment, ofcourse.
That day we're just kind ofmaking a quote and we provide
them a list of documentstailored to their particular
situation that we'll ask them toget together for our next
meeting.
Okay, that second meeting iswhere we get all those documents
.
We sign a retainer agreement.
Okay, following that, we'llhave a third meeting where we
(18:26):
sign everything to file abankruptcy case.
Okay, of course we have to getall of those documents at the
second meeting to properlyprepare everything accurately
for the third meeting, which iskind of the battle sometimes
right.
So sometimes it ends up beingmore than three meetings, but
ideally it's three meetings andyou get all the documents at the
second one, you know.
And once you file after thatthird meeting, somebody files.
(18:50):
They're immediately protectedby what's called the automatic
stay, which either stops agarnishment, stops a foreclosure
, stops a repossession,immediately provides you
protection from creditors.
You'll typically have a courtdate roughly about four to six
weeks after you file Around here.
Those court hearings are heldover Zoom ever since COVID.
(19:13):
Court hearings are typicallywith your attorney.
They should be with yourattorney, in my opinion.
They certainly are at ouroffice and that's typically the
only time a bankruptcy clienthas to make an appearance in
court is over Zoom for that onehearing.
Speaker 2 (19:30):
So you mentioned one, two, three meetings and then,
of course, the court appearance,which is done for Zoom.
So from that first meeting to,I'm on my plan now.
The collection calls havestopped.
I don't have to worry aboutNicole or anybody else harassing
me anymore.
What is that process?
What is that timeline generallylike and I know it can vary for
(19:51):
each- consumer.
Speaker 4 (19:52):
So a lot of times clients, as you mentioned a few
minutes ago, they'll wait untilthere's a fire to come in, right
?
So there might be a foreclosurenext week or the car might be an
active repossession, ok, and ifthat's the case, we're going to
tell them.
Yeah, this is a case we'reinterested in, but we need to
get filed by this time next week, and what that means is I need
(20:16):
all your documents within 48hours, okay.
If you don't have them to mewithin 48 hours, I'm not sure
we're going to be interested inthis file.
Okay, and if you set thestandard with the client in that
kind of way and the clientlives up to the standard, I, as
the attorney, want to live up tothat same standard, and what
(20:36):
that means for me is I'm goingto get that file ready and it's
going to be ready to sign assoon as it can possibly be ready
, and that's going to be withina few hours of the time I get
those documents.
If the client needs to have itfiled that day and that's
something David and I are verygood at is efficiently getting
those, prioritizing those filesto get those done so that we get
the automatic stay in effectfor those clients that need it
(20:58):
quickly.
Speaker 2 (20:59):
And, like you mentioned, sometimes it is one
of those emergency situations.
So I know that there are casesor situations where a client
meets with a bankruptcy attorney.
They file, we get paperwork,but, nicole, how often do you
see that you know, somewhere inthat process it's canceled, they
change their mind.
Speaker 3 (21:15):
See that you know somewhere in that process it's
canceled, they change their mind.
I don't really come in untilafter they have already filed,
so once they have filed, thenI'll receive their notice that
they have filed.
Every now and then we'll havemembers that call me, contact us
before they file.
Just to say this is kind ofwhat I'm thinking about doing.
(21:39):
How is this going to affect myrelationship with you guys?
You know what?
And then at that point it's ona case by case basis.
It is going to depend on whatthey have financed with this.
Is it current, is it past due?
What chapter are you filing?
Speaker 4 (22:00):
And how do you want to treat the credit union?
Yeah, do you want to keep thedebt?
Exactly, do you?
Speaker 3 (22:03):
want to.
You know you bank with us, Doyou not bank with us?
So there's a lot, of, a lot ofdecisions that go into it, but
it is on a case-by-case basis,you know, and a lot of times
they have no idea what casethey're going to file, and it's
not let me rephrase that, it'snot that they may want to file a
(22:26):
certain type of case.
There is a standard for that.
So they kind of get told whatcase they're going to file.
So at that point I just kind ofgenerally go over everything
with them, tell them todefinitely meet with an attorney
, and then give me a call backand let me know what what they
(22:47):
decided to do.
Speaker 2 (22:49):
And it's clear from this conversation that this is
not a decision that consumersmake lightly, so obviously
there's got to be a downside toit, right?
So let's talk about that.
What is, what are thedisadvantages, what are the
negative consequences for anindividual that does file
bankruptcy?
And I'll let Mitchell answerthat, and then you can kind of
briefly talk about, from thecredit union's perspective, if
(23:12):
we have a member that filesbankruptcy.
Speaker 4 (23:14):
Sure, I'd like to start just by telling you I have
to keep in mind, whenever we'rehaving those first meetings,
those consultations, you knowwe're meeting potential clients
that day and we have to keep inmind we're meeting them at their
worst possible time.
Right, you know we're, you knowthey're not.
Speaker 2 (23:29):
Stress level is high, tension is thick, Exactly right
.
Speaker 4 (23:33):
So our job in that consultation, we got to give
them some grace, Right.
You know, a lot of times we'reproviding an immediate benefit
upon filing Right.
But there are downsidesdepending on the chapter of
bankruptcy you file.
For instance, if you're doing aChapter 13, a Chapter 13 plan
will typically last 36 to 60months, so we're talking three
(23:53):
to five years.
It's a big deal Right.
In those three to five years,it's a big deal right.
In those three to five years youneed to be on your financial
best behavior and what thatmight mean is you're not taking
out any new debt, so you're notusing a credit card.
You're not taking out a carloan.
You're not buying a houseduring that three to five year
period unless you get courtapproval to do any of that stuff
.
Okay, You're not doing any ofthose things.
(24:15):
You're also turning over taxrefunds during that time period
Okay.
The inability to use credit forthree to five years is a big
deal and an importantconsideration and I think it is
a downside worth mentioning In achapter seven.
Most of the times it depends onwhere we're starting at,
because a lot of clients willhave been going through it
(24:36):
already, you know and the filingof the bankruptcy case will
raise a credit score for anumber of clients, unfortunately
because they waited.
They were at rock bottom yeahthey waited so long to file a
bankruptcy case, which you knowthey're trying their hardest,
right, but I wish they wouldhave come to see me a little
earlier for those people, thosepeople.
(24:57):
What I'll tell people, though,for long-term goals in a chapter
seven, is that the downside, ifyou want to buy a house, you're
looking at three years of goodbehavior after a chapter seven
discharge before you're going tobe able to get a federally
backed mortgage.
Okay so, and if you're a firsttime home buyer, that's what
you're going to be getting isgoing to be a federally backed
mortgage.
So if you're thinking aboutdoing a Chapter 7 and you also
have a short-term goal of buyinga house, it's maybe not
(25:20):
congruent with each other andyou might need to evaluate other
options to pay off that debt ormaybe your goals regarding the
house.
Speaker 2 (25:29):
Unfortunately, and Nicole, from the credit union's
perspective, what does that meanfor a member when they have
filed and they've included theirdebts with the credit union?
Speaker 3 (25:42):
Now these are really just going to be general
information.
Like I said, everything's on acase by case basis.
So in a 13, you know you'regoing to be in the plan for
three to five years and itdepends on if you, if you're
banking with us, if you're notbanking with us, if you're going
(26:04):
to, you know, keep your yourcollateral with us.
Let's say you're on your bestbehavior and everything goes
smoothly, we're receivingpayments, you're keeping
insurance on your car.
Then everything will beabsolutely gorgeous in your life
(26:25):
.
Best case scenario right.
Best case scenario yeah, worstcase scenario if you give your
auto back to us, your house backto us or what have you, and we
do take a loss on your behalf.
Unfortunately, you can nolonger have services with our
credit union and that isindefinitely, so anytime we take
(26:50):
a loss.
Speaker 4 (26:52):
That's very typical within the industry.
So any credit union that I'vedealt with has pretty much the
same policy.
So, uh, for instance, if aclient only has a credit card
and a uh checking and or savingsor share account or whatever
right, I had a credit union andthey file a chapter seven to get
rid of that credit card.
Any credit union I have toprepare the client for this.
(27:12):
Very often.
Uh, any credit union is goingto take away your banking
privileges.
So a lot of times clients arehaving to change direct deposit
ahead of bankruptcy filing to anew bank account.
That way they don't have apaycheck or two sitting in limbo
once the bankruptcy case isfiled.
Speaker 3 (27:28):
Yes, and greatly appreciate you guys giving them
that information.
I know that there's so muchinformation whenever they, you
know, come into your office andthere's so much to cover and I
really appreciate y'allremembering to do that.
It makes my job a lot easier.
Speaker 4 (27:46):
Listeners can probably tell we haven't
mentioned this on air, butNicole and I have known each
other not in person we met inperson today, yes, but since I
became an attorney in 2013 andstarted working at that first
firm, we've known each otherthrough email, and so it was
delightful to meet her today, ofcourse, yeah, yeah.
Speaker 3 (28:02):
Yeah, so we, we definitely try to do the best
that you know we can do for ourmembers.
If, for some reason, there'sjust no way around it, they
can't keep the debt, you know,then we understand and I do give
them, you know, time to changetheir direct deposits, change,
(28:26):
you know, their financialinstitutions.
We don't just go in and, youknow, shut it down.
We do, you know, give themgrace.
Speaker 4 (28:33):
Yeah, and neighbors has always been reasonable, in
my experience as well.
Yeah.
Speaker 2 (28:37):
Thank you and kudos to Mitchell for knowing the
credit union language.
I heard him say that shareaccount.
I like that Definitely.
So what are some other mythsthat you find?
Consumers walk into your office, you know that are
misconceptions about bankruptcy.
Oh gosh, that's another hour.
Speaker 3 (28:56):
Right, Right, there's a lot of those.
Speaker 4 (28:59):
I've heard some wild stuff, right, because a lot of
times you know somebody willcome in and they've read
something on the internet, right?
Or they have a cousin who knowssomebody who's related to
somebody else, who did somethingin a bankruptcy case in
Illinois or something right.
And I'm like well, I don't knowthat person, you know.
I don't know what happened, youknow, so I can't tell you what
(29:19):
happened there, but I can tellyou what I can do for you here.
Right, you know.
But a lot, of, a lot of themyths are really just whatever
you might see on social mediaregarding bankruptcy because
don't get your legal advice fromsocial media, Don't get your
legal advice from your.
Tiktoks.
Speaker 1 (29:34):
All right.
Speaker 4 (29:34):
And I'm going to sound like a grandpa because I'm
not on the socials, right, butit's.
I've heard a lot from clientsabout what they'll, what they'll
see on TikTok, especiallyApparently, there's a lot of
financial influencers of somesort on TikTok who give this
kind of advice, advice.
I don't believe they'reattorneys, it's just people
doing their stuff and you knowclients might come in thinking
(30:01):
you know, I can make whateverkind of money I'm, you know I'm
making, and still do a chapterseven.
You know, or it doesn't matterhow much equity I have in my
house, I can still do a chapterseven, right?
Or I can do a chapter 13 and Idon't have to pay back any of my
credit cards.
You know, because I saw aTikTok video that says this
person didn't have to do it.
And I just really encourage you, encourage listeners, to keep
in mind that this is why it's soimportant to get individualized
(30:24):
legal advice.
Do not listen to these TikTokvideos and do not listen to me
today giving you this generaladvice, right, and then saying
I'm going to go file a chapterseven by myself, right, because
that'd be the worst thing youcould possibly do.
Speaker 3 (30:36):
Ten out of ten would not recommend, of course, right.
Speaker 4 (30:40):
Get proper legal advice from an attorney who's
going to listen to what you haveto say about your situation.
Right.
Speaker 2 (30:47):
That way you can make an informed decision and you're
not relying on whatever halftruths you may have read on
social media or just through thegrapevine truths you may have
read on social media or justthrough the grapevine, and
because there are so many halftruths out there and I imagine
you have many consumers walkthrough the door that really
don't have a real grip on whatthey're walking into.
So what responsibilities doattorneys have in terms of
(31:07):
providing that financialeducation and their support
before they take this big step?
Speaker 4 (31:12):
Yeah, I believe attorneys have an ethical duty
to make sure clients are wellinformed about what they're
doing before it happens.
Ok, and to me what that means isthat whenever we're signing
documents at that thirdappointment, it's an attorney
going through that stuffexplaining it to them when we're
signing it.
It is not a paralegal toflipping through it, it saying
(31:33):
sign here, sign here, sign here.
I think there's a real ethicalobligation.
That is an attorney who doesthat kind of thing because
there's going to be a legalquestion or two that pop up in
that signing.
The attorney is the only onewho should be answering legal
questions.
Additionally I don't know ifyou've heard of the, and
bankruptcy is not the kind ofthing that could just be rubber
(31:56):
stamped.
If I have a consultation todayfor a Chapter 13, the
consultation I had yesterdaythat was also a Chapter 13 could
be completely different andevery case has to be looked at
by the attorney individually tomake sure we're doing the best
we can for that particular fileand there's real attorney work
that goes into it and I worrythat that's not always done for
(32:20):
the people that it should bedone for.
Speaker 2 (32:22):
And so we live in a world where scams it's hard to
avoid that.
So in the bankruptcy world, arethere common scams that you see
individuals trying to pull off?
Speaker 4 (32:39):
individuals trying to pull off.
Yes, yes, so I've gosh, I couldtell you.
There's stories and maybe someof these are better for off air,
but but, but I've worked inthis field on multiple different
sides and you know, obviouslynow I represent people going
through bankruptcy cases.
Right Previously I'verepresented mortgage companies
in foreclosures.
Ok, I've also done trustee work.
Who is I've represented?
I've been a staffures.
I've also done trustee work.
I've been a staff attorney forthe Chapter 13 trustee here who
(33:02):
kind of oversees Chapter 13filings, and in that position
you see a lot of scam artists,in particular people who are not
attorneys but are giving legaladvice to people to file their
own bankruptcy cases and notdisclosing it as required under
(33:23):
federal law.
Uh, these people can be rolledinto court, can be arrested by
the United States marshals andcan be imprisoned, uh, if they
don't stop.
Uh, while I was at thetrustee's office, there was a
woman in particular who Ibelieve was in Gonzalez, who
didn't want to stop and uh, yeah, created a.
It was a woman in particularwho I believe was in Gonzalez
who didn't want to stop and,yeah, it was a big problem for
(33:43):
her, of course, and we ended upcatching it because the person
who had filed the bankruptcycase themselves.
Whenever I conducted the hearing, her name was spelled wrong on
her filings and so I asked her.
I said, how'd you misspell yourown name?
Because, meeting her she seemedto be of reasonable capability.
I had no reason to think shewouldn't know how to spell her
name.
And she immediately told me thetruth.
And you know, it just shows howlittle care that person
(34:07):
actually put into the documentsif the person's, if the
bankruptcy filer's first namewasn't even spelled correctly.
Speaker 2 (34:13):
Yeah, so you've both been in this industry for seems
like, over a decade.
What changes?
What are some of the biggestchanges that come to mind that
you've seen with bankruptcy overthe years?
Speaker 3 (34:25):
Well, there were a lot of new laws that got rolled
out and 05.
And uh oh five.
Speaker 4 (34:35):
BAP.
Cpa was, uh, a reconstructionof the bankruptcy code.
That was 2005.
I was 20 years old at the time,so I cannot provide any
anything more than generalinformation about what
bankruptcy was like before then.
Uh, chapter seven, though priorto 2005, there was no income
limit, is my understanding.
So ever since 2005, you had tobe either average or below.
Speaker 3 (35:02):
It's actually median median or below median income to
do a chapter seven.
But as far as like individuals,is that what we're asking about
?
I think just the economy ingeneral.
You know COVID hit.
There was a lot of things thatwent on during COVID.
People lost their jobs.
(35:23):
You know that was a huge thingfor everybody to try to navigate
through you know and not filebankruptcy.
Speaker 4 (35:32):
The bankruptcy world locally here has been pretty
static since I've been anattorney going on 12, 13 years
now and that's because ourChapter 13 trustee and all three
of the Chapter 7 trustees havebeen constant from that time
(35:53):
through now.
We did have our bankruptcyjudge retire a few years ago.
He was replaced with anotherjudge who, in my mind, has
continued a very stable andresponsible court, so there was
not a whole lot of change therefrom my point of view.
I do think there are going tobe changes within the next few
years because all those trusteesI mentioned are now of a
(36:16):
certain age right wherebankruptcy locally here might be
going through a change over thenext decade or so.
Speaker 2 (36:25):
So you mentioned earlier once a consumer files
bankruptcy.
Generally they're not supposedto, you know, incur any new debt
.
They're going to have to stopusing those credit cards and you
know that, I'm sure, goes witha grain of salt.
What are some of the mostcommon or biggest mistakes you
(36:45):
find?
Speaker 4 (36:46):
consumers make while they're in the midst of their
plan.
Oh gosh.
So if there, if somebody is ina confirmed Chapter 13 plan, the
perfect client is somebody.
Once they're confirmed, likeI'm saying, so we're six months
into the case, they're on easystreet so long as they're making
their payments.
The perfect client I never hearfrom until the case is over,
because they're making theirpayments, so no issues pop up,
(37:08):
nobody's complaining, life'sgood, right.
But the common mistakes in themiddle of Chapter 13 are going
to be, let's say, not turningover a tax refund, right.
Not making your direct mortgagepayments during the case,
because if you own a home thathas a mortgage on it and you're
(37:29):
in Chapter 13, you're going to,in general, have two big
payments and you're in Chapter13, you're going to, in general,
have two big payments.
There's going to be a Chapter13 payment that's going to pay
for again, in general,everything outside of the house
the ongoing mortgage payment,and then we're going to have the
ongoing mortgage payment on theside.
Your bankruptcy attorney canonly help you with that
bankruptcy payment.
(37:51):
The ongoing mortgage payment iswithin the client's purview, so
I can make sure that bankruptcypayment gets made Right.
I have to rely on the client tomake that house payment, and so
a very common thing that happensis that if a client is short
budget wise, the mortgage willfall behind again.
Right, and that's,unfortunately, is probably the
(38:19):
most common reason a chapter 13will will fail.
When they fail is because ofrepeated mortgage default.
Additionally, I did tell youearlier, one of the drawbacks of
doing a Chapter 13 is that youcan't take out debt during the
case.
A mistake, of course, is goingto be not taking, not following
that rule right.
Speaker 2 (38:32):
You're going to get a brand new car.
Speaker 3 (38:35):
It's like I don't have to pay these loans anymore.
Well, sometimes it does,Unfortunately, you know, things
happen during three to fiveyears of your life.
Speaker 4 (38:42):
That's a really long time it is.
Speaker 3 (38:43):
And accidents happen.
Cars get wrecked, you know, youlose your job, you know.
So all of these things do playa part in your Chapter 13.
Speaker 4 (38:53):
Yeah.
Speaker 3 (38:54):
You know you wreck a car.
What are you supposed to do?
It's totaled.
I need a new car.
I have to get to work.
Speaker 4 (39:00):
Yeah, A mistake in that case would be to not
immediately notify your attorney.
You know the mistake would beto sit on it for a little while
Definitely, we'll figure it out,you know get the attorney's
office involved, provide themwith insurance documentation and
contact information for theinsurance adjuster.
That way things can be handledappropriately and timely and
(39:20):
you're not without a rental carand or the ability to finance
something else for an extendedperiod.
Yes, yeah.
Speaker 2 (39:26):
So we could talk about this subject, obviously
for hours and hours, and hours,but I want to give Mitchell
definitely an opportunity togive his best piece of advice to
anybody that is sitting therecontemplating.
You know, should I file?
Is this so scary?
You know how can we kind of getthe elephant out of the room?
What advice would you give tothem?
Speaker 4 (39:47):
My advice would be that a consultation is going to
cost you literally cost younothing.
Okay, to my knowledge, everyconsumer bankruptcy attorney in
this area provides freeconsultations.
No decent attorney is going topressure you into doing a
bankruptcy case at all.
I think any decent attorney isjust going to provide you with
(40:09):
information, allow you to makean informed decision, and not
going to make you feel likeyou're buying a used car.
Okay, the best advice I cangive you is take the legal
advice that is given to you.
Okay, make an informed decision.
Go to that consultation.
Go with an open mind.
Okay, you don't have to file abankruptcy case If you go to
(40:30):
that consultation.
Go find out some information.
Okay, an attorney might tellyou you don't need to do a
bankruptcy case.
This is a better option for you.
Why don't you take this asset,pay off this debt, solve your
problems?
You don't need a bankruptcycase in your credit report.
Okay, rather, just find outmore information.
Right, just don't go to TikTokfor the information.
Go take a little initiative,meet with an attorney, tell them
(40:54):
your information it's private,it's confidential and just get
some more.
You know, get professionaladvice.
That's the best thing I canprobably tell somebody.
Speaker 3 (41:02):
And there is a life after bankruptcy.
A lot of people you know theythink it's such a taboo.
I can't do this.
You know I'm going to be ruinedforever.
I'll never be able to getanything ever again in my life
and that's just simply not thetruth, especially not this day
and age, absolutely.
Speaker 4 (41:21):
It's not the truth at all.
If somebody is responsible withtheir credit usage and finances
after a bankruptcy case, then Ithink those are the people who
are able to recover very quickly.
On the other hand, if you justgot a chapter seven discharge,
every creditor out there knowsyou have no debt and cannot file
another bankruptcy for eightyears.
(41:42):
Okay, and so if they want toloan you money, they know they
can sue you if you don't pay andthere's going to be no other
creditor who's in line togarnish you or take your money.
So you're an attractivecustomer at that point.
But just you got to be smartabout the kind of debt you incur
after doing that bankruptcydischarge?
Speaker 3 (41:59):
Yes, you have to.
You have to learn how to manageyour money.
Yeah, yes.
Yeah.
Speaker 4 (42:05):
Money matters.
Speaker 2 (42:06):
And that's why we have podcasts like this.
We have free financialcounseling, so I think a key
part is definitely getting thateducation, education, knowing
where your limits are, and then,if you find yourself in a
financial hardship, don't waituntil you're drowning to seek
that consultation, and then youmay never have to see a person
like Mitchell or have to, youknow, have your file come across
(42:29):
Nicole's desk.
But if they do need to seeMitchell, how can they contact
your office?
Speaker 4 (42:34):
Well, they can always call us at 225-369-9922.
Also, our website is Dixon,which is D-I-C-K-S-O-N
lawfirmcom.
Potential clients can schedulea free consultation there.
If they call us at that number,I provided they'll speak to
Kiara, who is the mostdelightful receptionist, slash
(42:55):
legal assistant they'd everspeak to.
So just give us a call and talkto Kiara.
Speaker 2 (43:00):
Definitely so.
Hopefully, if you're out there,this is not a circumstance
where you will ever have to filebankruptcy, because, again,
there's always that blueprintfor financial success where
we're here to help you work outthose financial hardships, but
definitely sometimes bankruptcyis that necessary evil hardships
, but definitely sometimesbankruptcy is that necessary
evil.
So I want to thank our guest,mitchell Dixon, for coming out
(43:20):
and definitely our in-house, msNicole, for sharing that
information.
Speaker 3 (43:23):
Thank you so much.
Speaker 1 (43:26):
It's time for Blueprint Building Blocks Small
changes that lead to bigfinancial wins.
Let's stack up for success.
Speaker 2 (43:36):
Know your numbers, and you can do this by tracking
your income, expenses and debtearly.
Don't ignore those red flags,things like missing payments,
juggling credit cards, fallingbehind on basics or warnings
that you need to act now.
And, of course, before filing,explore your alternatives first
(43:56):
Maybe debt management plan, freefinancial counseling like the
Blueprint for Financial Success,or some other repayment plan
arrangements.
Recovery is possible.
Bankruptcy doesn't have to endyour financial life.
It can be a reset.
Speaker 1 (44:12):
That's a wrap on today's Blueprint Building
Blocks.
That's a wrap on today'sBlueprint Building Blocks.
Stay on track with yourfinancial journey.
Subscribe to the Money Matterspodcast and visit
neighborsfcuorg slash financialwellness for more tools to help
you build a strong financialfuture.
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