A Modest Proposal (and unintended consequences . . . perhaps)

June 17, 2019

I posted on Facebook post last month about a proposed bill from Bernie Sanders and Alexandria Ocasio-Cortez about controlling credit card interest rates.

The post generated a lot of views, clicks, and shares along with some comments in response to my opinion that it will never pass.

A few of those comments were purely political.

Others sounded like they came from people who live in a country where a significant percentage of households have maxed out credit cards and are barely paying the interest and fees, never mind paying down the actual debt. People, in other words, who can’t help but notice they’re paying 21%+ interest at a time of historically low rates on other credit products like mortgages. Sound at all familiar?

Two comments, however, were about the unintended consequences of enforcing a nationwide 15% cap on credit cards which would, in essence, bring us back to the 1970s.

Here’s the history first. Before 1978 (I know, a million years ago, but bear with me for a moment) banks issued credit cards in the state they were chartered in (anyone remember Mechanics Savings Bank and CBT?) and, of course, needed to abide by the interest rate rules of that state.

So if you lived in Windsor and wanted a credit card, you went to your local bank, put in an application, probably talked to the manger who was also probably a neighbor, and you waited a couple of weeks or more to be approved. The bank was careful about who it approved for credit.

The highest interest rate the bank could charge under Connecticut Law at the time was 12%. In the 70s, only 38% of American households had at least one credit card.

Then came 1978 and the Supreme Court of the United States heard a case that changed it all. Most people would say it is one of the most boring cases in Supreme Court history. But the effects of the decision are fascinating and changed everything. One bank from Nebraska was deluging Minnesota residents with sales flyers offering credit cards with NO FEES! And they also seemed to approve everybody for an account.

Another bank, a stolid Minnesota institution, also offered credit cards but was bound by the state’s interest rate law and could only charge customers 9% interest. They charged a yearly fee to help offset the low interest rate.

The first bank was chartered in Nebraska, a state with very lax interest rate rules. They charged no fees but they made up for it with 18% interest rates and higher. Because they could charge so much more in interest, they could accept the risk of giving cards to people with so-so credit.

The stolid Minnesota bank maintained that all this was unfair competition and, besides, banks that did any kind of business in Minnesota needed to follow the interest rate law of the state.

The Supreme Court bought none of it. They ruled 9-0 in favor of Nebraska. Judge Thurgood Marshall stated that the Minnesota bank “did not have a legal problem but they did have a marketing problem.”

Banks now only needed to abide by the interest rate law of the state they were chartered in, not where their customers resided. You can thank the Supreme Court for all the junk mail you get from South Dakota, Nevada, and Delaware.

Ten years after the ruling, 56% of households in the U.S. had at least one credit card.

Today it is up to 75%.

The more credit cards out there, the more credit card debt. Add in the astronomical fees and high interest, and you are increasingly unable to keep balances down. Already almost half of all Americans don’t have a at least $400 on hand for emergencies. More and more people are accepting those offers from South Dakota, Nevada and Delaware but just to pay off the credit card balances they already have.

A cap at 15% interest just might help people get the balances down, get things under control – certainly a better shot at it than at 25.6%, $35 fees, over-limit or late fees, and more.

One commenter on the Facebook post pointed out (cynically or wisely, you decide), (a) the banks would adapt and substitute higher fees for the loss on the interest side, and (b) people with no credit, people with bad credit, people trying to rebuild their credit, would no longer be able to get credit cards.

The concern is people will “lose” credit – in my book I talk about a client who had his credit lines slashed by his bank. All of a sudden the guy who thought he had a few thousand dollars in available credit for a rainy day had none. This happened to a lot of people after the economy crashed in 2008—the credit card companies just didn’t have the money to lend anymore, or, they knew as people lost jobs they would rely on credit so the companies cut a bunch of us off before we could get deeper in the hole.

Put another kind of control on the credit card companies and I can see them tightening the belt again. If their business models work only if they can charge $35 for each fee and over 21% annual interest, they will definitely pull back if limits are placed.

The thing is, I’d much prefer bank customers getting it together and planning a way out from the debt. That’s the way you deal with it. A cap is well-intentioned but, really, who doesn’t think the banks will find all manner of ways around it?

It’d be like the government dictating that Lucy had to hold the ball for Charlie Brown from here on out. She’d agree, smile, and wink because she knows they didn’t tell her how to hold it, and there’s a dozen different ways of doing that while still insuring poor ol’ Charlie never kicks a field goal.

The federal government doesn’t need to pass a law for you to start handling and managing your debt better. You don’t need me to tell you what to do—you know you should have a savings account, you know you shouldn’t live “beyond your means.”

The issue is whether you WILL ever do it, whether you will ever cut out credit card use, have a plan for future purchases, increase your income so you can live the way you want without pawning away your future.

I have some great tools for you to get started. Let me know when you’re ready.

About Got Debt 2.0 (the preface)

May 28, 2019

I published the first edition of Got Debt, Dispatches From the Front Lines of America’s Debt Crisis in October, 2017. At the time the economy wasn’t treading water, wasn’t booming. It was just, or so it seemed to me, moving along in a hopeful direction while I was still cleaning up the detritus left from the Recession.

The economy eventually did take off – at least according to the media in all its forms. Unemployment dropped like a rock, the stock market soared, economic indicators indicated “great things,” everybody was working, houses were selling – although nowhere near the rate of the early 2000s, but we all know how that worked out so lower growth there was just fine.

Through all this good news I noticed a few things. For one, I was as busy as ever with foreclosure and debt cases and they weren’t leftovers from 2008, they were new. The economy may have been zipping along but homes were still going into foreclosure, credit cards were being maxed out, late payments piled up as before, banks were issuing default notices, and collection firms, lean and mean after consolidation and some house-cleaning during the Recession, were enjoying a golden age.

It doesn’t take a rocket scientist or a lawyer who deals in consumer debt every day to realize that wages – the regular working wage of the regular middle-class worker – hadn’t changed at all. At least not in comparison with inflation.

The dollar is not going as far as it did and that’s a trend that doesn’t look like it’s going to change anytime soon, despite constant promises from politicians.

People continue to supplement lagging incomes with credit. Still. They’re just doing it today a little more quietly than during and immediately after the Recession. Debt back then was front page news, now it’s stuck – when it’s mentioned at all – back in the “Consumer Help Team” section.

Debt is still there, the crisis is still there, the coverage is not and as the coverage goes, so goes the awareness.
Not too long ago, I read a review of a terrific movie, Hell or High Water, a movie very much about foreclosure. It was shot on location in West Texas and Eastern New Mexico. The cinematography is brilliant – as noted in the review.

The reviewer loved the movie, loved the performances, loved everything but had this criticism (I’m paraphrasing): “They really overdid it with the boarded up buildings, empty houses with foreclosure signs, billboards for pawn shops and companies that buy distressed homes.”

I’ve been to conferences in Texas – Florida as well – and I can personally attest that the filmmakers didn’t overdo anything, they simply shot what was there on the side of roads not interstates.

The review simply wants us to believe what is not supported by fact – the Recession is over and that foreclosures and crushing debt are fading away with it.

Debt is still everywhere and it affects almost everyone in one way or another. Pretending it’s not is not only irresponsible, it is setting the stage for another recession and new generations afflicted to be by it. I share here the story of the law firm that used to foreclose on medical debt, and when that became public and the firm fired by the hospital after the shameful news broke, how it moved on to focus on collection of old credit card debt- a more “under the radar” type of work as there is less general sympathy for the person who couldn’t pay a credit card than someone who couldn’t pay a medical bill. So has gone the story of crushing debt—we have become desensitized to it, and so overwhelmed by our own situations we have no empathy left for others. It has become old news, it’s that simple.

Hence this new edition.

99 Homes

A week or so back, I was at a conference table with another lawyer and a client. The subject was, of course, debt and a pending foreclosure. I’d known the attorney for some time, always thought of him as a sort of analytic, ‘just the facts, ma’am’ kind of guy.

So, he shocked me when he, emotionally, started talking about the movie 99 Homes, several years old now, but … well, here’s what I wrote about it after it came out:

99 Homes is a kick in the stomach. It’s visceral, it’s brutal.

It sarahblogbegins with a court hearing in Orlando, Florida. A twenty second hearing during which a character, alone before a judge in a chaotic courtroom is told his paperwork is not in order and even if it was it’s too late and he will be evicted by the bank in the morning. Quick, devastatingly direct.

The subsequent eviction scene was tense and just heart-ripping. It was hard to watch.

Something really hit me in the brief moments before the sheriffs come –  it’s a quick, easy to overlook shot, though that it’s repeated later in the movie, a few times actually, albeit in different forms.

This is it: the homeowner’s sitting at a kitchen table buried in paperwork. He’s frantically burrowing through it while calling attorneys on his cell phone. It’s crystal clear he’s ignored dozens – at least – notices from the bank, court, and the sheriff’s office.

Later, as the movie takes some dark turns and heads toward the ’99’ homes of the title, it’s obvious that most of the people Michael Shannon (great in this, as in almost everything else) is evicting have done exactly the same thing – they’ve ignored notices, even ones stuck on their front doors by day-glo red tape.

99-homes-18It’s a theme I’ve explored more than a few times and really thought I had a handle on. But seeing it … was hard. There’s a natural reaction to wanting bad news to go away without having to do anything. There’s the depression that hits, the ‘nah, this isn’t really happening’ denial … well, really most of the steps normally associated with the grieving process.

Except here, as so vividly shown in the film, there is no acceptance, just sheriffs and a bank rep at the door to wrest the home away.

I’m still a little rocked by this but I’m pretty sure the next time someone hesitates before hiring me I’ll just tell them to watch 99 Homes and get back to me.

My First Solo

It was twelve years ago today, October 2, 2006, that I went solo.  I actually didn’t have much of a plan. I had obtained a position reviewing documents for large class actions which I could do from home on my computer. That was going to pay enough to pay my bills. That’s as far as I had gotten with my plan.

I had been working in consumer protection for four years, helping all kinds of people out of all kinds of bad deals, protecting them from harassing debt collectors, unwinding their complicated identity theft problems, and recovering money taken by home improvement contractors, car dealers and even dating services.  But even as fulfilling as that was, there was something missing. I didn’t know what, I just knew I needed a change. I didn’t really look around for other jobs, but I found the document review opportunity and thought it would allow me to rethink my path as an attorney.

Within a week or two, my old boss called asking if I was interested in helping all the people that called his firm looking for help defending against credit card and medical collection.  So I shifted from being the lawyer that brought suit to being the lawyer that defended clients in court. And no one else was really doing that with any regularity.

Almost exactly two years later, though, the economy dramatically shifted when the real estate bubble burst and the country went into recession.  The need for lawyers helping homeowners in foreclosure increased dramatically and as I had already handled a few foreclosures for homeowners, I was in position to take on more of these cases.  Now I have the largest foreclosure defense practice in the state.

This did not come easy.  Helping a homeowner save their home from foreclosure is labor-intensive, document and paperwork intensive and takes a lot of time and patience, both on my part and the part of the homeowner.  I have had to hire staff to handle the paperwork, answer the phones and manage the office. This was a scary process- I used to work alone in a spare bedroom, then I rented a small office, but now I need space for four employees, and then some.  This all needs to be paid for. Everyone wonders how I do it: “How do you get paid if your clients can’t pay their mortgage?”

Good question.  Probably the most important lesson I’ve learned from growing this business is to figure out what clients really want.  When you think about it, people pay for the things they want. If they REALLY want that Starbucks coffee, they will have the money to pay for it.  If they REALLY want a Lexus car, they will find a way to pay for it. And if they REALLY want help in court when their home is in foreclosure, they will make sure to pay their lawyer for that help.  

I did assume for a long time that everyone wanted to save their house, or that everyone who called me wanted to pay for legal services.  I’ve been working on how to have the conversation to figure out what people really WANT. I’ve learned it’s OK to not want to keep your house, and it’s OK if people don’t think paying for a lawyer is worth it.  I want to work with the people who REALLY want legal help from me, people who value having a lawyer by their side, a lawyer who will explain the process to them, who will walk them through each step and clarify what is going on in court so they aren’t so confused, don’t feel helpless, and aren’t spending any more sleepless nights over their foreclosure.  

Even better are the clients who know we will solve their legal problem and who want to do better in the future.  People who are motivated to manage their money so they will NEVER be in foreclosure again, and who will have savings and a retirement plan and a future to look forward to.  Because I’ve learned it was never the foreclosure that was the problem, that was just the symptom of many decisions over the years that led to an inability to pay the mortgage.  I can treat the symptoms, but the fulfilling part is working together with clients to cure the underlying problem.

Black Mirror, China, and Moving On

This piece is the result of a perfect confluence of a couple of scattered news articles that flitted across my news feed over the last week and a 12:30 am TV commercial.

First, the commercial: two friends hanging out when one gets a text, YOUR CREDIT SCORE HAS CHANGED! “Whoa,” the other friend exclaims, ‘why’d you get that?” “I get instant updates on all my credit reports,” replies the other, “don’t you know credit scores can change anytime?”

No, the friend didn’t know that, but he’s filled in now, credit scores can change any time, who wouldn’t want to be on top of it? It’s implied, not very subtly, that it’s the height of irresponsibility not to track one’s credit score 24/7.  Luckily, XYZ company is there for you and, get this, it’s free to start!

The news items were about China – they are expanding their efforts to bring their brand of capitalism to the world and they have begun to institute a system of ‘social credit’ scores for their citizens, a program that has just started but is slated for a nationwide roll-out in 2020.

‘Social credit.’ I first became aware of the concept like a lot of people did, through the Netflix and BBC show, Black Mirror.  The first episode of the third season, Nose Dive, was about a not so distant future where every one of our social interactions, from buying a coffee at Starbucks, to standing in line in an airport, to who you interact with in the office, are rated on a 1 to 5 scale. Your place in society is determined by your average score, the higher the average the better the car you can lease, community you can live in, job you can apply for.

It’s scary in that ‘it can easily happen’ sort of way that China seems ready to turn into reality. The whole, ‘let’s grade everyone on everything they do’ motif feeds into a ‘let me see what I’m rated today’ that can quite easily become an obsession that just gets in the way of, well, life.

But, that’s not why I’m writing about this today. What all this did was remind me, vividly, of a constant theme of this blog and my book, the effect shame and embarrassment have on potential clients. We have long been conditioned to consider a dropping credit rating, an unpaid bill, a certified letter or 1-800 call, a law suit, a foreclosure, anything about money that negatively reflects on us, mortifying.

And, indeed, there is a public shaming element to ‘social credit’, it’s implicit. But, we’re not there yet and hopefully never will be. In the meantime, despite this, I am constantly explaining to new clients that what they are going through has, indeed, happened to other people, often. That it’s not a matter of being embarrassed or shamed, it’s a matter of just taking care of the issue in the best possible way and moving on with one’s life.

No one who matters is judging you, credit scores can be repaired, the banks, lawyers, court clerks, judges, and collection companies are all on to the next case, there are no institutional memories.

Embarrassment and shame and a dozen other emotions serve only one purpose – they inhibit people from seeking help at the time professional help is most effective. This goes for foreclosure defense as well as family law issues and dealing with the IRS and a host of other matters.

Good lawyers have seen everything in their area of practice, they deal with everything, they will not judge. Most of all, they won’t be rating you on or off social media.

Dickens, Debt, and Christmas

So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.

~ Charles Dickens, Great Expectations

imageWhere would Charles Dickens have been without debt? Where would English Lit, Hollywood, and Christmas be without Dickens?

The running themes through Dickens’ long – and lucrative – career were crushing debt, workhouses, courts snarled in technicalities, poverty, sour credit, low wages, foreclosures, banks, scams, mass incarceration, sweatshops, social injustice … All very much applicable today.

If Dickens came back tomorrow, he’d be astonished by the speed of today’s communications; overwhelmed by the modern technologies used in finance; awed but probably pleased with the serialized novel on TV and Netflix, et al – I imagine him binge watching Breaking Bad and The Wire.

He’d find some things appallingly the same, others miraculous. He’d immediately recognize Pharma Bro, everyone running for President, the bankers in The Big Short. Give him a week and he’d be working on a new novel.

Dickens had an unfailing eye for all this because he lived it. He grew up in a imagemiddle class family, comfortable, good at school, apparently fairly happy. All that was destroyed when he was twelve and his father was tossed into debtor’s prison (right). Charles’ mother and younger siblings went with him – as was the custom. Charles,was forced to pawn his school books, was sent off to a workshop to help pay off his father’s debts.

An inheritance saved the family though Dickens’ mother was adamantly opposed to his leaving work and forced him to stay there for long, unhappy months before he left to resume his studies. He rewarded her for that particularly slight through dozens of novels and plays. (From Dickens to Bob Dylan and Alanis Morissette, it’s never a good idea to upset an artist with wide reach).

In his early writing career – he was pretty much a prodigy from the start – he covered the courts and, briefly, Parliament.

He saw the system from every angle and he set out to attack it in the only way he could, through his writing, within the flexibility and thin protection of the novel. He opened Victorian eyes to the seamy underbelly of British wealth, society, and empire.

imageIn 1843 he turned his wrath to Christmas. At the time, many – including his good friend Washington Irving – felt that Christmas season was ebbing away from the poor and increasingly put upon middle-class.

He didn’t like what he was seeing, feeling, and he sat down to write a scathing pamphlet about the issue. It soon occurred to him that a novel would work much better, reach more people. In six weeks he crafted his ‘ghost story’, A Christmas Carol.

He published it himself in an effort to not be ripped off by his usual publisher.A Christmas Carol in prose. - caption: 'Marley's Ghost. Ebenezer Scrooge visited by a ghost.' In today’s parlance, it went viral. Immensely popular, even his [many] critics extolled it. Thousands and thousands of copies were sold, many more – particularly in the United States were ‘bootlegged’ – and it was immediately adapted for the stage. Dickens himself did stage readings of the entire manuscript. It was everywhere.

Humanitarianism, redemption, a dead-on accurate portrayal of early-Victorian England, it hit a nerve in Great Britain and the United States. It hit, hard, the people bearing the burden of the Industrial Revolution, changed the way everyone thought of the Christmas season.

imageHow a man who, when first confronted with poverty and homelessness, says, “Are there no prisons? Are there no workhouses?” Finds empathy is inspiring regardless of religious belief. A Christmas Carol was a great story, a strong, bitter indictment of the times, and it worked. It changed things. It has never been out of print.

Again, no debt, no Dickens, no Dickens, no holiday season? The latter may be a stretch, but it’s not unthinkable.

So, sometime in the next few days I plan on catching the 1950 Alastair Sim, A Christmas Carol – a great adaptation (out of dozens, beginning with Thomas Edison’s version in the early 1900s!).

And to all my readers, I hope it’s obvious, “God Bless Us, Everyone.”

A Conversation with a Twelve-Year-Old

An Excerpt from Got Debt? 

Recently, I was sort of interviewed about what I do. My neighbors asked me to pick up their 12-year-old son from school, he was getting home late from a field trip to Boston, they were tied up at work and in meetings, and I was available to help.

He got in my car, we talked about how his trip to the museum was, then he fell silent. He’s a great kid, I’ve known him since he was about two years old, he’s very smart, musical and athletic and he’s the quiet sensitive type so I did not expect a lot of conversation.

As we drove down Washington Street, I pointed out the courthouse that I go to all the time.

He said, “Oh yeah you’re a lawyer. Do you ever have scary cases?”

“Do you mean do I do criminal law?” I asked back.

“Yeah.”

“Nope, I help people with mortgage foreclosures.”

“What does that mean?”

I paused for a second, then explained that when people want to buy a house they borrow money to buy the house. And when they can’t make the payments, they are taken to court for not making their payments. And, if they can’t make their payments, they have to move out of their houses.

Finished with the Cliff Notes version, I added, “So, I guess it can be pretty scary.”

He took that in for a moment or two, then, asked “Why don’t you do criminal law?”

“It just isn’t something I ever was interested in or ever had experience with,” I answered, “I think it’s scary enough when a client of mine has to move out of their house, I would be terrified if because of me someone had to go to jail.”

He nodded, “So are you good at Monopoly?”

“I don’t know what you mean!”

“You know with all the buying and selling of houses and mortgages.”

Rough approximation of my neighbor and the car we had the conversation in. Rough.

Of course! It caught me off guard, I said something about I hadn’t played in a long time, we’d have to play and see how good I am at it.

I love how he made the connection between what I do and the game of Monopoly.

But he didn’t stop there, “Do your clients tell the truth?”

I said, “Yes, sometimes my clients are put under oath and should tell the truth . . . but, even when people are put under oath sometimes they don’t tell the truth. Sometimes.”

That seemed to surprise him a bit and I immediately felt a little bad, like maybe I was being too cynical with a 12-year-old. But it didn’t seem to faze him and he moved on to, “Are you friends with your clients?”

“Not really, it’s not recommended that lawyers become friends with her clients . . . though I have worked with some people for so long they’re almost like family.

“You know, you get along with them, you have to deal with them once in a while, but you don’t tell them what you would tell your friends.”

He nodded acceptance, moved on to, “Since you have to go in court and speak in front of people, do you like public speaking?”

“Sure,” was my immediate reply, then I thought for a second, and added, “but if you told me when I was younger I would be doing as much public speaking as I do, I probably never would’ve left my bedroom.”

“Do you have to convince the judge to help your clients, like you see lawyers arguing in court on TV?”

“Yeah, the judge comes out in a black robe, everyone has to stand up and it’s very official. Sometimes I have to tell my clients’ story to get the judge to give my clients what they’re looking for.”

He thought about that for a second, pulled out a folder full of homework, asked, “Are your clients afraid?”

“When they first call me, they are usually afraid of something, like they think they have to move out of their house in a very short period of time. But I explain that I can usually get them more time, maybe save the house, at least get them the opportunity to figure out what they’re going to do or where they’re going to live next.”

He made some kind of sound of agreement and dove into his homework, while I just drove and marveled.

I think everyone should have to talk to a 12-year-old once in a while and explain what they do. It gives you a different perspective on how you spend your time every day.

Conversations like this would make everybody a better person.

Psychology & Debt

From Got Debt, Dispatches from the Front Lines of America’s Financial Crisis

The more I work with people with debt, the more patterns I see. This has been an interesting way to observe that the psychology of having debt that can’t be repaid is almost universal no matter what the demographic.

The biggest part of having too much debt that plagues the average American, especially when someone gets to the point where they can’t repay it, is what I’ll call the “boogeyman in the closet” phenomenon.

This is the fear that something terrible will occur THE MINUTE someone can’t make a payment on their bills. The belief that missing a payment due date on a credit card is going to cause the sky to fall, it’s going to cause instant public shame, AND on top of that, the boogeyman is going to come out of the closet or out from under the bed and GET YOU.

I know that this boogeyman is real because of the questions I get and the things people tell me based on their assumptions (or on the gobbledygook they read on the internet or that they get from their brother-in-law).

The boogeyman comes in the form of:

“If I miss my credit card payment, can they take my car?”

“If I’m overdue on my credit cards will they put a lien on my house?”

“Will my boss know?”

“Will they garnish my wages?”

“Will they take all my retirement?”

And, the big one,

“Can I be arrested?”

I’m heartbroken when I hear the fear that plagues people who can no longer make credit card payments, but am hopeful and encouraged, in a weird way, by their fear response. These questions signal to me genuine concerns about personal financial stability, reputation and a moral sense of right and wrong.

It shows that the average person, the majority of people, want to pay their bills, and want to pay them on time. I find that reassuring on many levels.

The answer to all the above questions is No. Some of those things can happen after several steps occur and usually only if someone ignores those steps or does not take advantage of their right to participate in those steps.

The state of mind that comes from the fear of not being able to pay bills is like that of a child hiding under the blankets in the dark while trying to fall asleep. The hard part is getting people to understand that they have control and that the boogeyman does not exist.

One of the first steps when counseling someone about their debt is to ascertain the level to which this fear is clouding their judgment and preventing them from being able to have a conversation about the real facts about their debt.

Their fears cause them to make less educated and less desirable decisions when it comes to dealing with their debt. They usually default to doing what they think they should do to not hurt their credit score. This includes doing what they think they should do to pay everyone at least something each month. When payment becomes difficult, they start having conversations with their creditors and think that what the creditors tell them (i.e., skip a month, or just pay $10 or $20 instead of the actual minimum payment) is official and overrides the requirement under the credit card agreement to make their actual payment. They are very vulnerable in this phase and even more so if they do skip payments and an account goes to collection.

By the time an account goes unpaid for about three months, a creditor will usually assign it to another company for collection. The exception is for car payments- not paying for more than a month or two puts you at serious risk of repossession of the vehicle, even if the creditor gives you verbal permission to make a late payment or a partial payment.

The good part about when a credit card account goes to collection is that by then the average person realizes there’s no boogeyman. Their car is still in their driveway, there’s no foreclosure sign in front of their house, their name isn’t posted in front of town hall, and no one has shown up to put them in a stockade on their front lawn. But a new phase has begun.

The typical debt collector in the U.S. may not actually even be in the U.S. The collection industry has consolidated considerably in the last decade (especially since the financial crisis of 2008-09) to where large percentages of unpaid accounts are sent to just a few collection companies. These are third party companies that are assigned portfolios of accounts, and the most common tactic for attempting to squeeze a payment or two out of the consumer is with phone calls.

Although the “fear of boogeyman” phase is typically over by this point, the vulnerability and susceptibility remains. They’re out of the woods, so to speak, but a sense of “I’m a bad person” takes over which makes them susceptible to abuse and harassment from debt collectors.

The Healthcare Vote, the Media, and My Practice.

After the House vote on the Health Care bill Thursday – you may have heard about it, it’s been mentioned on a couple of TV shows – my friend and associate, Donna Convicer,  received a series of phone calls from friends and clients. They were upset, as, of course, so many people are.

The crux of their concern -does the repeal of Obamacare mean that I’ll have to choose between paying my mortgage or paying my health insurance? That’s a grim choice, but one that’s certainly being debated out there on TV morning talk shoes. Scary stuff.

I have a friend who actually gets paid to follow the news and write. He tweeted a photo of the celebration in the Rose Garden with this comment: “House members of the GOP celebrating in the Rose Garden after vote is like the Patriots celebrating a preseason win. Over the Browns.”

He wasn’t being flippant (much) he was making a very solid point – one lost over days, now,  of rampant speculation; one nailed by Saturday Night Live last night – Thursday’s vote changed absolutely nothing. It had no tangible effect whatever on healthcare, taxes, or anything else.

Until the bill gets through the Senate, it is a theory. Not a very pleasant theory for way too many people, but a theory nevertheless. The Senate may not even schedule hearings on the thing for months.  The odds on the bill even being recognizable by the time it gets through the Senate are low.

You’d never know that from the media coverage over the last few days, unless you read the full articles, or listened to the end of every show – the little tidbit about the Senate’s vital part in all this tends only to get mentioned on the back end.

So, it’s been scary for a lot of people … and what does this all have to do with my practice?

Just this – every one of my clients has gone through exactly this range of emotions before they speak with me. Getting the first notice of a court hearing; that first official, legal document served by marshal or certified mail; is a shock every bit as hard hitting as the news people on Obamacare heard this week.

But, and here’s the thing, usually, just like this week’s news, there’s a long way to go before something substantial happens. A big part of my job is telling people shaken by the initial news that it’s just that – the beginning. There’s a long way to go, there are options.

Get served, sign for that letter at the post office … call me, exhale.

 

A Different ‘Night Before…’

We love Christmas, love the holiday season, so please take the following in the spirit in which it is written.

To all our clients and clients to be, who are thinking of presents under the tree instead putting the December mortgage payment in the mail.

‘Twas the night before Christmas, when all through the house

santa-sleigh-reindeer-jpg-500x0_q80_crop-smart_upscale-trueNot a creature was stirring, except me and my mouse;

I was moving bill payments around with care,

In hopes that Christmas presents I could Amazon there;

The children were nestled all snug in their beds,

While visions of PlayStations danced in their heads;

I, to make Christmas as great as they hopefully awaited,

Put off the mortgage payment Sarah so carefully negotiated;

And so, instead I ordered a Sanyo flat screen

With Amazon Prime, it was only eight-seventeen;

Then out on the lawn there arose such a clatter,

I sprang from my desk to see what was the matter.

Away to the window I flew like a flash,

Tore open the shutters and threw up the sash.

The moon on the breast of the new-fallen snow

Gave the lustre of mid-day to objects below,

When, what to my wondering eyes should appear,

But a miniature moving van, and a tiny auctioneer….

We are seeing this a lot, even this early in the Holiday Season, people putting off their modification plan payments in order to make Christmas special for the kids. We understand the temptation, we understand the pressures of the holidays that mount every time you put on the TV and see shiny happy people (sorry, R.E.M) buying cars for Christmas (really, really, hate those ads).

But, kids just want to be kids – with their parents and in their own beds in their own home.2af616a

We know, also, that some people put off hiring a lawyer for their foreclosure because they want to spend money on Christmas. Christmas, though, as we all know from It’s a Wonderful Life, doesn’t stop a case from moving forward or a deadline from passing.

So, please just think about that before right-clicking on order.