About Crumbling Foundations

There was a meeting this past Saturday I wanted to let you know about…

The Connecticut Coalition Against Crumbling Basements held an open meeting at Ellington High School this past Saturday to discuss the funds allocated in the State budget for assistance with crumbling foundations and other updates.

The news everyone wanted to discuss was the $100 million that has been allocated for repairs, replacement and testing over the next five years. The questions were along the lines of “How much will I get to fix my foundation?” and “Can I be reimbursed for the costs of testing my foundation?”

The Legislature has essentially created its own insurance company (“captive” insurance, the are calling it) to make sure the funds are used properly. A board of directors of this “company” will be formed and it will be a non-profit entity.

Homeowners can apply to be reimbursed for some costs of testing from a fund out of the State budget money, and others can apply to have their testing paid for. Email me for the information on that- I picked up an info sheet at the meeting.

Other updates include progress by Representative Joe Courtney on reinstatement of the income tax exclusion for waiver of debt from a primary residence foreclosure, so that homeowners who have been foreclosed on or who have “walked away” from their homes, and owe more on their mortgage balances than their homes are worth will not also have to pay income tax on the amount that is “waived” or written off by their mortgage companies. This is an important piece of the puzzle because in the case of many families I’ve spoken to, homeowners are not willing to wait for funds to come through for replacement, or will not be able to afford the other costs associated with repair or replacement. In their cases because of the condition of their foundation, they will likely owe more on their mortgage than their homes are worth and so in addition to having lost any equity they had in their property, if they walk away, they do not want to also owe a debt to their mortgage company or a debt to the IRS. He is also pushing for tax deductions for the cost of any repairs performed. Rep. Courtney hopes to have an update on these issues by December and as soon as I find out anything I will share it with you.

It was a hopeful meeting filled with thanks to the people who have kept the issue in the public eye and on the radar of our elected officials. I encourage you to follow the Connecticut Coalition Against Crumbling Basements on Facebook (click here) for continued updates and meeting notices.

US News and World Report also covered the issue recently. To read that article, click here.

A big issue that remains is families not coming forward to report they have the problem. The idea is that if everyone who has the issue would speak up, everyone’s voices would be heard and more help may come faster. If you know anyone (friends, neighbors, family, co-workers, etc.), encourage them to come forward by contacting the Conn. Department of Consumer Protection directly or by clicking here.

Call me with any questions! Thanks and stay in touch.

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.

About My Schoolhouse Rock Facebook Post

IMG_0209Earlier today, I posted an old Schoolhouse Rock video on my Facebook page.  You’ll either recognize it from your childhood or from recently studying for the AP Government test (and why not, it’s that good!), it’s the famous ‘How a Bill Becomes Law.’

I posted it because I spent yesterday at the Connecticut State House for the formal signing of a new law, one that I helped work on in the spring.

ImjustabillIt was the bill signing for a bill that, among many other things, will prevent debt collectors from –literally—whiting out evidence that they present to the court when suing consumers on credit card debt.  Yep, they were routinely whiting out entire sections of information on documents that they didn’t think was relevant—you or I couldn’t get away with that!  And now debt collectors can’t either.

It’s great that this was signed into law, it’s pretty amazing that we had to get a law passed to stop debt collectors from doing something that has always been legally and morally wrong for the rest of us. But, it was really nice to see our little Bill grow up.

This is Where …

Broadway-0837-SlaveShip. . .I came in.

There’s a phrase that’s fast dying out. Oh, a few people still say it, usually when they get stuck listening to a repetitive argument – you know, a roll of the eyes as the speaker comes back to the same point yet again, then, “This is where I came in, I’m outta here.”

Easy to envision, we’re in the middle of a Presidential Election cycle.

Most people, though, don’t know what the origin of the phrase is. And, there’s no reason they should, it gets increasingly more archaic every day. It’s from the days when movie theaters ran features on a continuous loop. Walk in for a 4:15 show at 5:00, watch the last 45 minutes or so, then stay as the movie starts again. Bang, right back into it, you stay until you’re caught up, you leave … where you came in.

This was such a thing that some movies – Psycho, in particular – used it as a marketing Psycho_tiftool. “Absolutely No One Admitted After The Start!”

Today, there are so many ads and trailers before every movie that I, at least, need to be reminded what film I’m there to see by the time the theater finally goes dark. Even without all that, in this day of Spoiler Alert, it would never work without some form of violence.

Also – can you imagine seeing Pulp Fiction this way? Impossible to follow, I’m willing to bet.

Which – you had to know this was coming – is exactly what showing up in court after the case starts is: close to impossible to catch up. If they still let you in, because a lot of court actions come with the Alfred Hitchcock admonition, “No one … but no one” can participate after certain court proceedings start.

In court particularly foreclosure proceedings, we have to show up on time, sit through the ads and the coming attractions and go step by step, on time, from there. There’s little to no room for ‘coming in’ at any other time.

The Plague, Embalming in the Civil War, Detroit, and Internet Promises

He that maketh haste to be rich shall not be innocent. ~Proverbs 28:20

sherwood_thomas_practitioner-the_charitable_pestmaster-crop

Four things occurred when the Black Plague arrived in London in 1665. Those who could afford it were allowed to flee the city for a fairly hefty fee; everyone else either got ill or endured unlivable conditions; doctors, nurses, and clergy made heroic efforts to heal those they could and comfort those they could not; scammers descended on the city and made their fortunes.

Virtually instantaneous with the onset of the plague London was overrun with charlatans armed with herbs, potions, mysterious amulets, and every manner of fake cure or deterrent creative minds could conjure up.   They posted and handed out flyers but, of course, their best advertisement was their own good health. Or, they could point to their ‘success stories’ – the so far unafflicted.

Who could argue that their next door neighbor, healthy in the midst of disease, wasn’t that way because of the rabbit leg charm they bought a week ago? In the absence of any clue about what caused bubonic plague, who would take that chance if they had the cash to pony up?

Embalming, not yet a science or even much of an art, came into vogue in the North during the Civil War. Embalmers offered the opportunity for families to have their dead sons and fathers transported back from Southern battlefields for a proper burial. The government neither regulated nor paid for embalming.

Embalming dead soldiers quickly became ‘commoditized’ as the 100newspapers of the day quickly began to complain. Competition for bodies was fierce, flip through any period newspaper of the era and you won’t be able to miss ads that bashed the competition and made increasingly outrageous claims. Outright fraud – and worse – quickly followed, some bodies were embalmed without authorization, then held ‘hostage’ until the family coughed up $100 or so to liberate the body.

By the last year of the war it was so bad Ulysses S. Grant banned embalmers and embalming from all Union armies.

It’s pretty clear that throughout human history when something bad occurs three things happen in fairly quick succession: people cope, people help, and some people cash in and get rich.

The mortgage crisis, of course, was and is not immune to this. If anything, it’s worse. The power of computers, the Internet, everything else we enjoy about the Information Age has also been used by the scammers to profit. And, even when they don’t manage to succeed and lure in a new ‘client’ they manage to disseminate clouds of bad information that just buries the good.

1200x-1I see it every day, warn people, spend an inordinate amount of time debunking newly minted myths. My assistant, Heidi, just forwarded me an article about a scam in Detroit that’s as audacious as it is heartbreaking: getting people to lease-to-own abandoned homes, fix them up, pay for years, only to find out that the company has never paid the real estate taxes. Or the mortgages. Or anything. The real estate management company, the leasing company, the company holding the mortgages, and the financing company all had slightly different ownerships and were completely, totally removed from any responsibility.

This scheme looked spectacular on paper – well, on the website. The scammers promised the city it could clean up Detroit’s blighted neighborhoods, Detroit funded the company with public pension funds, lost them. It promised citizens of Detroit a home, it delivered foreclosure notices.

So, just a note that the foreclosure crisis is not over and the charlatans are still out there. Every time someone runs a Google search for ‘foreclosure defense’, or ‘debt consolidation’, or ‘credit card help’ they’re there to hand out that flyer that will most assuredly cure you.

Google, Ben Affleck, Dogs, and Foreclosure Defense

The Internet? Is that thing still around? ~Homer Simpson

I have a love-hate relationship with the Internet. On one hand it brings imageme Netflix, instant access to my court cases, MapMyRun, legal research, and Netflix.

On the other, it has cost me hours – lots of hours – with potential clients while I refute and correct the ‘facts’ about foreclosures they Googled before meeting me.

Don’t get me wrong, a client trying to learn as much as possible about their situation and options is a nice client to have. The problem does not lie with them, the problem’s with the information not so innocuously floating around ‘out there.’ There’s tons of it and only a very small percentage is close to accurate.

Especially in foreclosure defense. Because of the way the mortgage crisis hit, because of the devastation it wrought so quickly, because of the publicity of ‘Too Big to Fail’ and everything it implied, because so many people were affected, because it all occurred in the single moment in time when the world was wired together with instant information and communication it has spawned hundreds of thousands of blogs, articles,ads, Facebook posts, LinkedIn rants, op-eds, and faux news reports.

None of which are the slightest help to any of my clients about to walk into a courtroom, though sometimes it’s hard for me to dial back expectations so cruelly raised on-line.

“Live free in your house for years,” “Get your house for free,” “Take down your mortgage company,” “Ten easy steps to win any foreclosure case,” and many, many more.

Enticing, alluring, seductive claims that also happen to be remarkable lucrative for a great many self-proclaimed experts.

Which brings me, naturally enough, to Ben Affleck.image In 2001 he starred in Pearl Harbor, a movie that was universally panned. As a matter of fact, it had some of the best written, funniest bad reviews of all time.

Back in 2001 movie reviews were pretty much the sole purview of newspapers and PBS’ Ebert and friends. It was pretty easy to figure out that Pearl Harbor was a stinker of a movie without having to blow $12.50 to confirm it.

None of that is clear today. Pearl Harbor is in pretty heavy rotation on cable. If you check on the film-goers’ online Bible, IMBd, while trying to decide whether it’s worth three hours of your time to watch it, you’ll find it has an almost respectable rating of 6.0.

How is this possible? Simple, when it came out a few dozen influential publications lined up to annihilate it. In the intervening years, however, the studio – and probably Affleck’s family and agent – have continued to post reviews on ‘movie review blogs’. Great reviews. About 200 last time I looked.

This is standard practice now. Studios have legions of on-line critics that post – sometimes months before the movie comes out – glowing reviews that will boost any less than perfect ones.

Which should be an object lesson for anyone looking for legal help online. Especially such a high profile, widespread, legal issue like foreclosures.
imagePeople are using the Internet to boost themselves and their agendas. There have been a few, fairly high profile, successful ‘get the house for free’ legal actions in the eight years since this all began. These few have been claimed as their own by any number of online foreclosure ‘experts’.

“Based on our original legal theory,” “they followed our blueprint,” “we guided the legal team through …” “here’s what our client’s say.”

Nowhere is there anything laying out the cold reality of legal outliers – the cases were issue and state specific, would never work anywhere else, the homeowners spent years and a fortune to pursue them, the fact pattern is most assuredly not yours.

This, then, is my problem – where the Internet does a grave disservice, It creates the illusion of authority/proficiency/excellence where there is none.

As the cartoon says, “On the Internet, nobody knows you’re a dog.”

The Politics of Debt

A man buys a house with a business partner and good friend. They buy at the height of the market, overpay at that; since both are starting their careers, have young families, and are hardly flush with cash, they opt for a mortgage where they pay only interest for the first seven years or so.

imageAfter all, by the time that ends the house’s value and their careers will be soaring and the (much) higher payments won’t be a problem.

But, of course, the recession hits; the housing market tanks; one of the partners falls into a financial abyss; an enormous tropical storm rolls in, floods the entire area so thoroughly canoes and small boats are the only way to get around for days.

The seven years of interest only payments end; the monthly payment skyrockets; there’s $20,000 of repairs due to the storm; the house is valued far below the sale price and it promises to only keep falling in the area it’s in; the other partner cannot pay anything toward the house; foreclosure is looming.

One of my clients? No, but he easily could be. I’ve certainly heard variations of this story hundreds of time.

This story, though, is Marco Rubio’s story.image But, you won’t hear any of this from Rubio or his campaign team. When asked about it at the Republican debate, he replied that it was part of ‘things his opponents use to attack him that have been discredited.’

Later in the week, he and his staff, as has been their policy for months, refused to discuss the matter. Instead, they blamed the media.

To me, his finances mark Rubio as a ‘regular guy’, someone who has actually experienced the economic stresses most of the rest of us have. He gets it, he knows home prices can go down, he knows a natural disaster can wipe out savings, he knows what lousy mortgages can do a few years in.

I find no shame in any of this. I do, however, find it shameful that he will apparently go to any lengths to keep this hidden.

That’s an insult to the millions of Americans who have gone through what Rubio went through, and worse. It hardly encourages people to forgo shame and guilt and meet their credit card debt or looming foreclosure head on. And that’s the shame of Rubio’s financial problems.

 

Why I’ll Be Cringing During the Republican Debates (… it’s not what you think)

Cassidy-GOP-Debate-group-shot-1200There are three Republican Presidential debates over the next six weeks and they are sure to have a chilling effect on my clients. I’m not referring to the politics, or the issues, I’m talking about Donald Trump’s business background and what are sure to be continuing attacks by one or more of the other candidates.  Specifically, I’m talking about his bankruptcies. To be fair and accurate, his corporate bankruptcies.

In the September 16th debate, Carly Fiorino made this an issue. It was a fair point, of course, but the manner in which she asked Trump about his casinos’ financial problems rubbed me the wrong way.  She was accusatory and made the implication that Trump had used – the verb employed in its most pejorative manner – ‘government programs’ and had played the system. Equally implicit was ‘How could you have done such a lousy, irresponsible job?’

That may be good politics and was probably a fair question. The thing is, I work with people buried under credit card debt or who are facing foreclosure and attacking someone for using the bankruptcy system, and creating spin around it, does not help. These attacks simply serve to add to the stigma and shame that hangs over having debt issues.

It’s well known to lawyers, court officers, judges and anyone who is sees credit card collection matters and foreclosure cases on a regular basis, that the homeowners and consumers involved are slow to respond to court, if they respond at all.  Many people I work with are fighting the shame and embarrassment of having papers served on them at their homes and fear their neighbors, family members, friends and co-workers will find out about their money problems.  Because there’s still a strong Puritan work ethic in the U.S. inertia usually goes hand-in-hand with the perceived stigma of having unpaid debt.

People who start participating in the process late into the game are lined up outside my office door.  Most come heads hung low, sleep-deprived, embarrassed, ashamed, believing they deserve the abuse they sometimes get from collectors or their mortgage servicer.  I spend a lot of time and expend a lot of energy explaining- counseling, really – that, in most cases, they had little to no choice but to fall behind on their bills. You just can’t control certain life events- health, career, market forces, recessions, corporate mergers/bankruptcies/relocations/relevance; divorce; death; children; aging/ailing parents; severe weather; and a hundred other things.

Anything can happen, any time. Mortgages are thirty years long. Something bad will happen to most of us over thirty years that will prevent us from being able to pay our bills on time.  How many things actually last thirty years? The Thirty Years War didn’t last thirty years.  Most marriages certainly do not last thirty years.  Trump’s four bankruptcies occurred over a 25 year period, a time of total upheaval in the casino industry and the real estate market.

The shaming of those who seek out bankruptcy protection or mount a defense in court is unfortunately being reinforced heavily this presidential political cycle.  Bemoaning ‘free stuff’ and drawing dire inferences from another’s business decisions serve only to reinforce the feelings of shame and avoidance that my clients struggle with.

I’m hoping the candidates don’t continue down that road in the upcoming weeks, but I know they will.

Trying to shame a politician is one thing – though I have to believe Mr. Trump is pretty much shame proof.  Shaming someone for participating in a court process that has been a part of our judicial system going back to Colonial America is to shame the millions of Americans who have used the bankruptcy process, or foreclosure mediation, or credit card debt defense, to get a fresh start and subsequently recover financially and start giving back to the economy, is wrong.  It’s anti-Americans, if you will.    (The S on the end of Americans is intended.)

This is important to all of us, no one wants to own a home on a block where your neighbors’ houses are darkened by foreclosure.  That helps no one.

The DaVinci Code, Debt, and A Book Announcement

I’m working on a book – Got Debt? Essays from the Front Lines of America’s Debt Epidemic. I’ll be writing (and talking) a lot more about it over the coming weeks but I’m excited and hope you will be too.

For now, here’s a little bit from the introduction:

films.01If you read Dan Brown’s The DaVinci Code – or survived through the movie – you may remember the hero, Robert Langdon, talking about the mysterious Knights Templar, driven underground by King Philip IV of France in the early 1300s.

They knew great secrets’ and were persecuted, hunted down, thought wiped out but live on, unnoticed, influencing great events … you know the spiel.

Under Brown’s layers of conspiracy theories is a historical truth that should speak loudly to millions of us today. In reality, the Templars did indeed very much exist. They were fabulously wealthy, the result of certain extracurricular activities during the Crusades.

They were entrenched in France when Philip philippe_le_bel-1bcd9b4ascended the throne. It being France and the Middle Ages, Philip spent the majority of his time fighting the English. When peace broke out with them, he turned his attention to the Flemings.

Wars are, and have always been, expensive. Philip borrowed heavily from the Templars, probably far more than he or the kingdom could ever hope to repay.

He certainly could not maintain his wars or refill his empty coffers while repaying the Templars. For our purposes, think of being short of cash in the middle of February and needing to choose between paying the oil bill or CapitalOne.

Philip faced that same quandary, solved his fiscal quandary on Friday, October 13, 1307 by having the entire order of the Templars simultaneously arrested.End of the Templars, Philip burned his notes to them and…. well, the Templars as well. Then he confiscated all their holdings.
In one fell swoop Philip wiped out his debt and filed his coffers.

Philip burning his I.O.U.s
Philip burning his I.O.U.s

It’s good to be king.

While most of us can only dream of taking care of our debt with such . . . finality . . . it’s important to take a few lessons from this.First, debt, credit, debtors, creditors, collections, and defaults have been around for a very long time. Second, everyone – you, me, kings, queens, dictators, presidents, Founding Fathers – have debt. Lastly, we have options in how we handle that debt – not Philip’s options – but options still, and more than most people are aware they have.

A Glimpse at the Future.

imageI can guess where some of my future clients will be coming from – online fantasy sports games credit card debt.

In the last month, if you’ve watched TV or surfed the web, or turned on your smart phone, AM-FM radio, opened a newspaper, or stood near someone who has, you have been assaulted with ads for Draftkings and FanDuel.

They are online sports fantasy games and they are everywhere. Their pitch is simple – sign up, log in, charge a few bucks to your credit card (they will match your funds up to $200, so . . .), plug in your lineups on their easy to use platforms, hit enter, and WIN!

According to their websites there’ll be $2 billion in winnings this year.

Oh, yeah, it’s a game of skill, not gambling, though being lucky doesn’t hurt.

imageHundreds of thousands of people spend hundreds of millions of dollars playing hundreds of games daily and getting additional ‘credits’ for automatically refreshing their accounts ala Starbucks.

People do win . . . it’s just pretty much the same ones over and over again because the pros have moved in. The guys who spend thousands a pop, work at this 10-12 hours a day, design computer programs and algorithms to play a thousand or so games at a clip, subscribe to professional newsletters and sites . . . those are the guys winning all the money.

By the way, that sounds a whole lot more like a job – a tough job – than FUN.

imageAccording to NPR and the NY Times, these sites – who may merge any day now – break down into two distinct groups – the pros and the rest. The pros comprise 1% of the players and 80% of the prize money, and rising.

This fact will stop no-one because the games are fun, addictive, and there is that chance of winning, however slim. And, you can watch a crappy NFL game, like most of them this past weekend, and still have a rooting interest.

Which has not gone unnoticed by the powers that be – NFL teams are pumping funds into these companies on a record pace, hence all the money available for the nonstop ads.

Absent an act of Congress – which inadvertently recognized these sort of games as not gambling – they aren’t going anywhere.

One percent pulls in the overwhelming bulk of the rewards, computer programs and algorithms stilt the competition, enormous corporations  invest and stand to profit greatly, ‘regular’ people are racking up debt to play.

That remind you of anything?