Lifting the Financial Burden of Cancer

Written by Patrick T. Keith, Suzanne Miller-Cormier, and Mirna Hernandez
Published in the Virginia Lawyer Magazine

 Jane never imagined a routine exam would land her in an oncologist’s office and ultimately lead to her cancer diagnosis. Her immediate concerns were how this would affect her husband and two small children. The family was struggling financially, and her out-of-pocket medical expenses were going to significantly increase. Jane underwent two surgeries and began treatment. As a part-time secretary, she was not eligible for paid leave.  As a result the household income decreased and the family fell behind on all of its bills. 

Overwhelmed, Jane was battling her creditors as well as her cancer. She wasn’t able to focus on getting better because of her inability to earn a living while going through treatment. A hospital social worker recommended the nonprofit LINC (Legal Information Network for Cancer). LINC’s mission is to ease the burden of cancer for patients and their families by providing assistance and referral to legal, financial, and community resources. LINC referred her to the Boleman Law Firm for bankruptcy counseling and Clearpoint Credit Solutions for debt management and credit counseling. Both worked with creditors and the hospital to get the household’s finances in order. These collaborative efforts eased the financial burden of Jane’s diagnosis and allowed her to focus on her health. 

Cancer patients frequently endure treatments that dramatically impair their ability to financially support their families.  Patients often incur significant medical debts, and they use credit cards to supplement their income and pay for medications. This added financial stress is harmful in their battle to overcome disease. Many LINC clients are young and some have small children. They worry about how their sickness will affect their families. It is overwhelming for them to confront their creditors on their own, and providing an advocate for them dramatically reduces their stress. 

Patrick T. Keith of the Boleman Law Firm, a pro bono attorney with LINC, said, “Many people decide to obtain their law degree so they can provide a positive impact in people’s lives. LINC provides attorneys this opportunity. As a bankruptcy attorney, I am able to assist clients that are suffering significant financial issues, and provide them relief and hope for their future.  Providing pro bono services to LINC clients is rewarding, as you can truly make a tangible difference in the lives of cancer patients and their families. LINC provides them with advocates to ensure they are not alone in facing the financial realities that cancer can create.

 “When a resolution is discussed, it is common for the clients to sob as they release the stress they have been holding back. The client has a renewed sense of hope, and this can only positively impact their battle against cancer.

“As a pro bono attorney with LINC, you will be rewarded with the realization that you have assisted a person on their road to recovery against this much-too common disease.”

LINC was founded in 1996 by attorneys Ann C. Hodges and Phyllis C. Katz who are breast cancer survivors. During their treatments, they met other cancer patients who were not receiving needed treatments or were not able to provide for their basic needs because they lacked the financial resources. They saw the need for an organization to help cancer patients find the means to sustain themselves and their families during treatment.

LINC also provides educational services to cancer patients and the medical community. LINC believes that education enables individuals to be more effective advocates. With LINC’s information, resources, and skills training, patients are better able to meet the day-to-day challenges of cancer. Individualized support provided by LINC allows cancer patients to find the means to sustain their lives while in treatment, which enables them to focus their energies on fighting the disease.

LINC provides services free of charge to clients and uses other community resources that charge nothing or a nominal fee. Attorneys who partner with LINC agree to a sliding fee scale or charge nothing, depending on the client’s finances.

LINC needs attorneys and certified financial planners willing to help on a pro bono or nominal fee basis. To learn more about LINC, give of your time to help a LINC client, or make a donation, go to www.cancerlinc.org.

Six Tips on Interviewing a Bankruptcy Lawyer

Choosing a competent bankruptcy lawyer is essential to getting a fresh financial start. Most good bankruptcy lawyers do not charge for an initial meeting. During this first meeting, the lawyer should be able to assess your financial situation, understand your goals and outline the options that are available to you. You want to determine if you and the lawyer communicate well. Also, at the end of the meeting you want to have confidence that your case will be professionally handled with care and competence.

Here are seven ideas to help make your meeting productive.

1. Before the meeting, write down all of your questions so you will be sure to gather the information that is important to you.

2. Find out what percentage of the lawyer’s practice is in personal bankruptcy. You want to hire a lawyer whose primary focus is bankruptcy.

3. Ask how long they have been practicing bankruptcy. Bankruptcy is complicated and you want someone with experience.

4. Pay attention to how your questions are answered. Do you understand? Is the lawyer willing to provide explanation and clarification?

5. Determine if there are any unique or troublesome issues in your case. If there are, ask about the possible consequences and any additional costs.

6. Review the pricing of the services. Most lawyers charge a flat fee for a bankruptcy but sometimes there can be additional costs.

7. Get the fee agreement in writing.

At the conclusion of the meeting, you should have a clear understanding of your options and have a good idea about how well you can work with the lawyer and his or her firm. If you have any concerns, it is OK to leave that first meeting without retaining the lawyer and to interview other lawyers.

Take Control of Your Finances – Create a Personal Budget

The most important step in taking control of your personal finances is to create a realistic budget and stick to it. A budget is the road map you need to reach your financial goals. If for instance your goal is to save $200 each month and you only save $50 the first month, don’t give up!  Evaluate where and what you are spending and adjust. More importantly don’t give up on the process.  The more you analyze and understand your spending, the better you will be at sticking to your budget and meeting your goals. When creating a budget, here is a suggested model for allocating your money: 

Housing = 35%

• Mortgage/rent
• Utilities
• Insurance
• Taxes
• Home maintenance

Expenses = 25%

This should include:

• Food
• Clothing
• Childcare
• Medical Expense
• Tithing
• Entertainment
• Travel
• Charity
• Other

Debt = 15%

This should include:

• Student Loans
• Court fines and costs
• Credit Cards
• Installment Loans
• Personal Loans
• Medical Debt
• Tax Debt
• Other

Transportation = 15%

This should include:

• Car Payment
• Insurance
• Maintenance
• Gas
• Parking/Tolls
• Other

Savings = 10%

This should include:

• Savings
• Emergency Cushion
• 401k
• Other

Boleman Law Firm, P.C. has created a Financial Management Guide that can assist you with creating a budget you can live with.  To get your free copy, e-mail ajscott@bolemanlaw.com, and a copy will be e-mailed to you.

Recovering from Bankruptcy

Recovering from a bankruptcy takes some time and some work on your part but is easier than you might imagine.  After a bankruptcy, you probably think it will be almost impossible to obtain anything on credit or qualify for a loan ever again.  The fact is that with on-time payments you can qualify for a credit card or a loan with a reasonable interest rate in as little as 12 months. 

Filing a bankruptcy provides you with a fresh start so that you can put your financial problems behind you and start to establish good credit.  This fresh start doesn’t happen by itself.  To get the best results, you need to be pro-active with your finances. 

Here’s how:

1. Once you receive the Bankruptcy Discharge Order from the Court, send a copy of this Order, along with a copy of your bankruptcy petition and the list of creditors to each of the three credit reporting bureaus.  The credit reporting bureaus have 30 days to make any corrections once they have received the information from you. 
2. About 60 days after you have mailed your bankruptcy papers to the credit reporting bureaus, obtain a free copy of each of your corrected credit reports by visiting www.annualcreditreport.com.  Federal law allows you to obtain a free copy of your credit report from each of the three credit reporting bureaus on an annual basis.
3. Pay your bills on time.  If possible, pay them early so there is no risk of paying a bill late. 
4. Open up a checking and saving account.  See if you qualify for an account at a credit union as the terms from a credit union are friendlier to consumers.
5. Never take a payday loan or an auto title loan.  The fees and interest are too high.  It is very easy to get sucked in and again get into financial trouble. Once you have a payday or auto title loan, it is very difficult to repay it.
6. Avoid loans from finance companies.  Credit from a finance company is not good for your credit score.  Not only is it very expensive, but having finance companies appear on your credit report lowers your FICO credit scores (which makes everything else more expensive).
7. Obtain a secured credit card.  A secured credit card is allows you to deposit cash in an account and make purchases on the credit card up to the amount of the deposit. Each timely monthly repayment on the credit card will be reflected as a positive mark on your credit report.
8. Be wary of “credit repair” scams. There is no way that any company can “wipe out” the negative information on your credit report – this includes the bankruptcy itself. These companies charge a lot and the negative information is still on your record. 
9. Create and actively use a good financial budget.  It is one of the most important steps toward living within your means and bouncing back after bankruptcy.  Boleman Law Firm, P.C. has created a Financial Management Guide that can assist you with creating a budget you can live with.  To get your free copy, e-mail ajscott@bolemanlaw.com, and a copy will be e-mailed to you.

Types of Personal Bankruptcy

There are two basic types of personal bankruptcy, Chapter 7 and Chapter 13. The laws changed in 2005 and now certain conditions must be met before filing for bankruptcy under either chapter. As soon as you file you get immediate protection from the harassing collection efforts of your creditors. This is called an automatic stay.

There is one requirement you must meet in order to file: At your own expense you must complete a credit counseling course from a government-approved organization. See www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm.

The bankruptcy code was dramatically changed in late 2005 to encourage people to file Chapter 13 instead of Chapter 7. Chapter 13 is known as the “wage earner plan.” This chapter permits those filers with a steady income to retain certain property, like a home with a mortgage or a car that is still owed for and make monthly payments for part (in some cases all) of the debt to creditors over a 36 to 60 month period. The bankruptcy court must approve the repayment plan. Certain debts like child support and most taxes must be repaid, while car loans and home mortgage payments on cars and houses being retained must also be repaid. Some debts, like student loans, usually cannot be discharged.

Chapter 7 or “straight bankruptcy” allows you to discharge or erase most debts without any repayment. A bankruptcy trustee will collect any non-exempt property, sell it, and pay out the proceeds to your creditors. Certain debts like past due child and spousal support will not be excused and the trustee may even be able to sell property you transferred to someone else if you transferred it in an attempt to avoid losing it. There is no repayment plan to be filed with the court. Additionally, you will not be able to retain vehicles or homes if you owe debt on them unless you can pay the debt, and you may be forced to “reaffirm” (a new legally enforceable promise to pay) the debt if you wish to retain the property.

Chapter 7 and Chapter 13 filings are managed by a trustee appointed by the US Department of Justice. The trustee reviews each debtor’s filing information, disburses money to creditors through the debtor’s payments (in Chapter 13) or by selling non-exempt assets (in Chapter 7), and oversees a “meeting of creditors” about a month after a case is filed. Each bankruptcy case is assigned a judge.

A lawyer is not required and you can file by yourself, which is known as a pro se filing. However, a bankruptcy filing is complex and requires completion of a lot of paper work, so you may want an expert bankruptcy lawyer to advise you and do the filing for you.

Chapter 7 usually takes about three months to complete but the case stays on your credit report for 10 years. Chapter 13 lasts from three to five years, depending on your circumstances, and remains on your credit record for seven years from when it was filed. Before discharge of the case under either chapter, you must receive certification for a completed course in financial management from an approved counseling agency.

Debt Relief Solutions

U.S. consumer debt is at approximately $21,900 per household, nearly double what it was ten years ago. Consumer debt today equals 132% of the average household’s annual disposable income. Many families are looking for solutions to their mounting burden of debt. There are essentially two major avenues for relief – non-bankruptcy options and then bankruptcy.

Non-Bankruptcy Debt Relief Solutions

Liquidating assets. This is the most commonly used non-bankruptcy debt relief solution. Because it is easy, many people invade their retirement accounts but there are often tax implications for early withdrawals. Refinancing a house and using the equity to repay other debt is another popular option. But of course you must pay for it plus interest plus any refinancing fees over a 20 or 30 year period.

Credit card cash advances and balance transfers. These are often readily available options but at high interest rates. Too often these solutions are only temporary and if a person’s spending habit hasn’t changed, those individuals will find themselves right back in the same situation of too much debt and too little cash.

Credit counseling. Credit counseling is a surging industry that has come under scrutiny because many of the outfits function like glorified collection agencies, receiving fees from clients’ creditors on recovered debts. Success is low and the payments often exceed what people can afford on a monthly basis. Another issue is creditor participation – not all creditors will participate. Here are some tips if you are considering going this route:

1. If you are considering credit counseling, make sure you do it face-to-face. Do not provide a voice over the phone with all of your important information. These days, you can not even be sure that the voice on the phone is even in the United State.
2. Ask the credit counseling company if they can assure that all of your creditors will participate. If you have a creditor that is not covered then you have a debt that will have to be settled outside of the credit counseling plan.
3. Make sure that you can pay both the credit counseling amount plus the amounts you might have to pay outside of the plan.
4. The credit counseling alternative will not address payday loans, secured debts and old liabilities which are in collection.
5. Credit counseling will be reflected in your credit report and will impact your credit rating.

Negotiated settlement with creditors. This could take the form of a reduction in principal for a lump sum payment or simply extended payment terms. The risk in this strategy is your creditors taking damaging actions against you before you have time to amass sufficient cash to pay your creditors the settlement amount. Proceed with caution and hire a bankruptcy attorney to assist you. A reduced principal settlement can have possible tax implications. If negotiating extended payments be mindful of the interest rate and know when the debt will be fully satisfied. Insure that you are dealing with someone who has the authority to negotiate a settlement with you. Be certain that all of the debt is settled and released whether through a lump sum payment or extended terms.

Loss mitigation and loan modifications are debt relief options for mortgages. Loss mitigation works to either relieve the homeowner of the mortgage obligation or create a mortgage resolution that is financially feasible for the homeowner. Loss mitigation options include:

Loan modification: This option modifies a homeowner’s mortgage and both the lender and homeowner are bound by the new terms. The most common modifications are lowering the interest rate, reducing the principal balance, ‘fixing’ adjustable interest rates, increasing the term of the loan, forgiveness of payment defaults and fees, or any combination of these.

Short sale: This option is made possible by a lender agreeing to accept a payoff that is less than the principal balance of a homeowner’s mortgage which in turn permits the homeowner to sell the home for the actual market value of the home. This applies to homeowners with a mortgage balance greater than the market value of the property. Without such an agreement the homeowner would not be able to sell the home. There can be, and usually are, tax consequences to these deals as well as harmful effects on one’s credit rating.

Short refinance: This option is possible when a lender reduces the principal balance of a mortgage so that the homeowner can refinance with a new lender. The reduction in principal must be sufficient enough to meet the loan-to-value guidelines of the new lender making refinancing possible. Tax and credit consequences are the same as with short sales.

A deed in lieu of foreclosure: An option whereby a mortgagor voluntarily deeds over the collateral property in exchange for a release from all mortgage obligations. This is extremely damaging to credit ratings.

Forbearance: This is an arrangement that allows the homeowner to make no monthly payment or make a reduced monthly payment for some period of time. Sometimes, the lender will ask that the reduced or missed payments be repaid when the forbearance has been finished while other times the lender will just modify the loan.

Bankruptcy

Simply put, bankruptcy is the legal forgiveness of debts. The bankruptcy laws changed in 2005 but you can still file. It is a bit more complicated now which makes it even more important than ever before to be represented by a bankruptcy lawyer or expert legal counsel that specializes in bankruptcy.

There are two types of personal bankruptcy, Chapter 7 and Chapter 13.

Chapter 7. This is known as the “complete or straight bankruptcy.” In Chapter 7, a debtor turns over his non-exempt property to a bankruptcy trustee who liquidates the property and distributes the proceeds to the unsecured creditors. The debtor is granted a discharge of some debt; however, certain debts (e.g. spousal and child support, student loans, some taxes) will not be discharged. The amount of property that a debtor may exempt varies from state to state. From beginning to end, the typical Chapter 7 bankruptcy will last about six (6) months.

The typical person filing Chapter 7 will have
a. a large amount of unsecured debt [i.e., payday loans, medical debt, and credit card debt];
b. no car loan;
c. no mortgage or does not wish to keep the home;
d. no tax debt; and
e. have little or no assets or income.

A Chapter 7 bankruptcy remains on one’s credit report for 10 years. Chapter 7 relief is available once in any eight year period.

Chapter 13. This is known as the “wage earner plan.” It enables debtors to retain their assets and make monthly payments for part of the debt to creditors over a 36 to 60 month period. The amount and the time of the repayment plan depend upon a variety of factors, including the value of the debtor’s property and his income and living expenses. Secured creditors may be entitled to greater payment than unsecured creditors but debtors get to keep the collateral and often pay less than owed on the obligation.

The typical person filing Chapter 13 may be:
a. behind on the mortgage and wants to keep the house;
b. about to have or are already having their wages garnished and want the garnishment to stop and even possibly get some or all of the garnished wages back;
c. behind on the car note and want to keep the car or they are seeking the return of a repossessed vehicle;
d. owing taxes to the IRS or the State. Taxing authorities must immediately stop penalties and interest on your account as soon as a bankruptcy has been filed.

Unlike in a Chapter 7, a Chapter 13 filer may keep all of his property, whether or not it is exempt. If the plan appears feasible to the trustee it will typically get confirmed and the debtor and creditors will be bound by its terms. Generally, the payments are made to a trustee who then distributes the funds according to the terms of the confirmed plan.

When the debtor makes all payment as detailed in the plan, the Court will grant the debtor a discharge of the debts listed in the plan. However, if the debtor does not make the agreed upon payments, the Bankruptcy Court can dismiss the case. Upon dismissal, creditors will likely pursue legal remedies to the extent a debt is unpaid. A Chapter 13 bankruptcy remains on one’s credit report for up to seven years after filing a case.

When should you consider bankruptcy?
1. If you have been served with lawsuit, judgment or possible garnishment.
2. If you are considering liquidating assets, refinancing you home, or cashing in your 401k to take care of certain financial matters.
3. If you are behind on your mortgage payments. Also if you have a foreclosure pending or intent to foreclose has been issued by the lender.
4. If your vehicle has been repossessed or you fear your vehicle will be repossessed very soon.
5. If you owe money to a taxing authority.
6. If calls from creditors and/or collection agencies are causing you and your family stress.

The down side to bankruptcy is the impact on your credit score, however, even after filing bankruptcy, if you make timely payments to creditors, within 18 to 24 months, your credit score should significantly improve itself so that you do not have to rely on sub-prime lenders and you should receive more favorable interest rates on loans. The upside to bankruptcy as a debt relief solution is that you get a fresh start without the burden of some or all of your debt.

How to Choose a Good Bankruptcy Lawyer

The one thing that is worse than filing bankruptcy is hiring the wrong lawyer to handle your case. Finding an experienced, competent and expert bankruptcy attorney can make a huge difference to your future financial situation. Choosing the right lawyer or firm is important to your reclaiming your financial life. Here are 10 tips to help you find the best attorney for your case.

1. Don’t put it off – People frequently begin looking for a bankruptcy lawyer only after they are in a major financial crisis. Under these stressful conditions it is just too easy to choose a lawyer who is friendly and supportive without checking into his or her background and experience. Waiting until the last minute won’t give you the time you need to find a good attorney.
2. Spend a morning in bankruptcy court – Observe the attorneys in action to see who you might want to represent you. If possible talk to other debtors and ask them how they feel about the job their lawyer did for them.
3. Get a bankruptcy expert – The practice of law is specialized like medicine and you want a bankruptcy attorney that specializes in personal bankruptcy. Look for a lawyer whose practice is limited to bankruptcy. The expert you want is both skilled and experienced in filing Chapter 7’s as well as Chapter 13’s and in addition can provide a non-bankruptcy workout if that is the best option for your situation.
4. Get someone with vast bankruptcy experience – The “right lawyer” is the person who has extensive experience handling cases like yours and knows what to do immediately. Be sure to ask, “How many bankruptcies do you handle in a month or in a year?” Again, bankruptcy is a specialized area of the law and you want a lawyer that has seen it all and done it all and knows exactly what to do to get you the best solution for your case. When it’s all said and done, you want a lawyer who knows the system and will do the best job of representing you
5. Get someone respectful – Pay attention to how you are treated on the phone and in person. Do you feel comfortable? Do these people seem like the kind of people you will like doing business with? Remember, people that are too busy or too important to be polite are too busy to give your case the attention it deserves.
6. Get someone helpful and supportive – There are many forms to fill out for filing a bankruptcy. Find a law firm that will assist you in completing the required paperwork. You want someone to sit with you and help you do it right the first time.
7. Check out the law firm’s offices – You are not looking for a pretty or well decorated office but pay attention to the organization of the office. An orderly, well organized office will give you a clue as to how your case will be handled.
8. Get clarification about your rights and responsibilities – There are things that your lawyer should do for you and there are things that you absolutely must do if your case is to be successful. Make sure you understand what you can expect and what you have to do to make your bankruptcy work. Get it in writing. If you have any questions, get them answered before you leave the office.
9. Get a fee agreement – Ask for a copy of the attorney’s fee agreement. As with all documents, make sure that you understand it fully before you sign it. No reputable attorney will pressure you to accept a fee agreement on the spot.
10. Make sure you meet with a bankruptcy lawyer – Insist that you talk with a licensed lawyer, not a clerk. Though an administrative staff person will likely be your primary contact throughout your case you want to be interviewed and advised by an expert bankruptcy lawyer.