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General

The Most Insightful Pieces of Financial Wisdom of 2018 for People Struggling with Debt

With 2018 coming to an end, now is a great time to reflect on what we learned about managing money this year. Considering all the smart financial information published, we should have learned a lot. Here are some of the most insightful pieces of financial wisdom published in the past year.

Many of the wealthiest people in the world weren’t born that way—they built their empires and saved their cash through making smart choices. Read this wealth building advice from titans like Warren Buffet, Oprah Winfrey, Mark Cuban and Tony Robbins.

How working a job you love, delaying gratification, and spending your money on experiences rather than things and other advice people can use to set themselves up for wealth later in life.

It’s hard to get ahead when there’s no cushion in your bank account. Here’s how to save money, even when your paycheck barely covers your expenses.

Speaking of, seeing that $0 balance in your checking account at the end of each pay period is depressing and stressful. What if you were able to have a little left over to save, even without your income increasing? Follow these suggestions and say goodbye to living paycheck to paycheck.

How opting for a little less convenience, designating days to spend no money at all, and filling your grocery cart—and then removing five items before paying—will leave you with a much fatter wallet.

Should you establish a healthy emergency fund or pay of your debts first? Which is more important? Though experts tend to be evenly divided on which is the wisest course, these experts say that the best approach is to divide your money in half and do both simultaneously.

There have never been more resources available to help you manage your money, but with so much information out there, assessing those resources can be like drinking from a fire hose. How do you know which ones are really worth your time and trust? Here are seven of the best resources available for a free personal finance education.

No matter what your financial goals are, achieving them starts with education. Until you know how to get to your destination, you’re unlikely to get there. By knowing where you stand, knowing where your money is going, and knowing where you want to be, you can start on the road to financial recovery.

Now is a great time to revisit the smart lessons from the past year so they’re fresh on your mind for the new year. Need some help climbing out of your financial hole? Ronald J. Drescher has been assisting clients with their legal and financial troubles for more than three decades.

Categories
General

NFL Bankruptcy Tailgate Party

Despite thrilling us every weekend with their on-field skills, these NFL stars proved incapable of managing the millions of dollars they earned during their professional careers. Some simply invested their money in high-risk ventures that had little chance of success. Others were victims of their own “too much too fast” impulses. All of them found that easy cash and easy credit don’t always add up to a successful financial life.

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Bankruptcy

Edit Your Life and Take Back Your Time

It’s hard to feel on top of life when you never seem to get caught up. Your to-do list is too long, your inbox stays full, you’ve got voicemails to return, your house is a mess, and your bills … ahh, the bills. 

The only way you’re going to simplify and streamline your life is to cut some things out—but where? And what?

1. Set a morning routine.

It may not seem like much, but creating and sticking to a morning routine will set the tone for the rest of your day. Whatever it is that helps you get going in the morning, do it every day, and defend that time. Use your morning ritual to collect your thoughts for the day. Make a list of all the things you need to get done so you don’t forget anything and so you feel ready to take on the day. Bonus: it’s very gratifying to cross those things off your list.  

2. Say ‘yes’ less.

Over-extending yourself complicates your life and eats away your free time. Learn to tell others no when you don’t want to do something. Memorize and repeat this line, “No, that’s not going to work for me.”

You don’t owe anyone a reason or an excuse. If the person persists, repeat it again. After the second time, the person will get the message.

3. Unsubscribe.

Is your email inbox full of newsletters you never read? Unsubscribe. Are you bombarded with messages about sales on items you don’t need? Unsubscribe. Do you get magazines you rarely read? Unsubscribe. And, most of all, unsubscribe from subscription box services. You don’t need those things. You probably don’t even want them. And if you don’t forget to log in and skip each month, they’re going to charge you anyway. Unsubscribe, unsubscribe, unsubscribe. 

4. Be your own gatekeeper.

Stop answering calls from people you don’t want to talk to, replying to texts you don’t want to reply to, and saying yes to events you don’t want to attend.

If an old friend is still committed to bad habits you want to kick, stop hanging out with her. You don’t have to stop caring about her well-being, but you can care without exposing yourself to her unproductive tendencies. Same goes for social media—unfollow what’s-his-name who offends you on Twitter, Facebook, etc.

Streamlining your life may feel risky at first, but the time and mental clarity you’ll gain make it well worth the effort. The payoff is more time, more money and less stress–and who doesn’t want that?

Need some help getting back on track? Ronald J. Drescher has been assisting clients with their legal and financial troubles for more than three decades.

Categories
General

The Panama Canal – A Bankruptcy Between The Seas

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Guide to Saving Money

Surprisingly Useful YouTube Videos About Saving Money

Maybe you already turn to YouTube for cat videos, make-up tutorials and funny viral bloopers, but did you know that YouTube is the second largest search engine in the world, ranking just behind Google?

That means, if there’s something you want to know more about, odds are great that there are a few hundred (or thousand) YouTube videos already posted on the topic—those related to personal finance and money saving.

However, with that many videos available, it’s easy to fall down a YouTube rabbit hole, wasting hours of precious time watching videos with useless—or worse, inaccurate—information. Here are some suggestions of a few videos featuring subject matter experts who dispense solid, proven tips for getting a handle on your finances.

  • This Bank of America created short video offers helpful tips well beyond the oft-cited “make your own coffee.” The video goes into the bigger habits and thought patterns you can change to keep from falling into overspending traps.
  • Dave Ramsey has been a personal finance guru for decades because he dispenses plainspoken, easy to understand advice for real people in real life situations. In this, one of his all-time top viewed videos, he explains the core concepts of his winning system.
  • Funny and very relatable, Lydia Seen offers her “7 Daily Habits of Frugal People” in this video, in a straightforward style. Her tips are the sort that anyone can easily adopt.
  • In this TEDX talk at London Business School, Adam Carroll explains an experiment he conducted with fake money to demonstrate why people spend more when they don’t pay with cash.
  • In “15 Things Poor People Do That The Rich Don’t,” the host doles out a list of 15 habits that differentiate the poor from the rich. We suggest that you take the video with a grain of salt, because some of her descriptions are overly harsh and beyond the control of many people. However, we still think it’s worth checking out, because the habits she lists will nonetheless challenge you to think about how you spend your time and money.
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General

The Bankruptcy Big House

On June 29, 2009, Bernie Madoff was sentenced to 150 years for perpetrating the most immense fraud of all time. Celebrities, physicians, pension funds and captains of industry all lost fortunes investing in Madoff’s gargantuan ponzi scheme.

All too often, crime and bankruptcy go hand in hand. This infographic explores a eight of the most notorious debtors in bankruptcy history.

Categories
Interview

The Hidden “Gotchas” in Bankruptcy – Interview April 2018

https://www.drescherlaw.com/wp-content/uploads/2018/04/Attorney_Ron_Drescher_April_2018_Interview.mp3?_=1
Katherine: Hello everyone, and thank you so much for joining us on “This Needs to be Said”. Our friend, attorney Ron Drescher, is here with us on Today, and we’re going to continue to help you understand bankruptcy and how it can help you reset your life. There’s something that Ron is going to show us today that’s going to help us navigate this even more, and he’s calling this the hidden “gotchas” in bankruptcy. Attorney Drescher, thank you so much for joining us again on This Needs to be Said. How are you?
Ron Drescher: I’m great, Katherine, how are you doing?
Katherine: I am fantastic. You know, every time I think I can listen to one of our interviews after we do them, and I say, “Oh, you taught me is much more and I think I’m so smart,” you come back with something else that lets me know I can’t do this on my own. Outside of the fact it’s not legal, but I’m just thinking, oh I’m so smart, I’ve been listening to him, and I see the benefits of bankruptcy, but now you have something else that I don’t even know what you’re going to bring today, called Hidden Gotchas and Bankruptcy. Now what? What’s the only thing or things you need to watch out for?
Ron Drescher: One of the things is that we have … when you file bankruptcy, all of your assets come into the bankruptcy case. I’ve always liked to think about it like it’s a big stack. Everything you own goes into that stack. That’s pretty easy when it comes to bank accounts, and when it comes to cars or jewelry or furniture or homes or things like that, or retirement accounts, they all go into this stack. But what’s scary, is that stuff that we might own and not even think we own, that also goes into that stack. When that happens, you’ve got to be really careful. The number one thing that you think you own, is inheritance. I’ll give you an example. Let’s say somebody dies from whom you might inherit. Let’s say it was your mom or your dad and they had a house that was in their name. They didn’t leave a will, but you’ve got a sibling.
Ron Drescher: You let the house go, maybe you’re living in the house, maybe your sibling is living in the house, maybe the house is being rented out. You never do anything with the house, it continues to be in your parents’ name, then you decide, you know what, I’m going to need to file bankruptcy because I’ve got some other debt problems. You go to the bankruptcy lawyer, and the lawyer sits down with you and takes down a list of what you’ve got, and they say, “Where are you living?” You say, “Well, I’m living in this house.” They say, “Are you renting it or do you own it?” And the client says, “Well, neither, because it was my dad’s house, but he died and so I’m living in the house.”
Ron Drescher: Your lawyer is going to tell you, “You know what, you have an interest in that house.” And you might say, “No, I don’t have an interest in that house, because it’s not in my name. Never been put in my name. How could that possibly impact my bankruptcy?” The answer is, it impacts your bankruptcy because you have what we call an expectancy interest. That is an interest right now that … you may not think you own it, it may not be in your name, it may not be a thing that you can easily go and sell, but it is an asset, and if you don’t list it in your bankruptcy, and somebody finds out about it, you could lose your discharge and the trustee can then go and grab that property and by himself, do a probate, take title to the property, sell that property out from under you, and out from under your sibling.
Ron Drescher: You didn’t even know that you were an owner of that property. That comes up all the time in my practice. Granted, there’s nobody pushing you most of the time, to transfer property into your own name, until let’s say somebody wants to sell the property, or you want to split the proceeds, or something like that happens. Many, many, many times people never transfer the title to a property that their parents owned, and so you just go about your business, not even realizing that that’s an asset that you have. If you file that bankruptcy and the trustee finds out that you have that asset, you can have a lot of problems. That could be a very serious gotcha.
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Katherine: The question is, is this something that if I was the one living in that house, and didn’t realize I owned it, is it something that I could’ve done so I didn’t have to include the house, is the goal to include the house, or not include the house? I want to be clear.
Ron Drescher: Let’s assume the house is a valuable asset. The important thing to know is, how do I preserve the asset? There may be a lot of different ways that you can preserve the asset that maybe it involves you not filing bankruptcy right away. Maybe it involved your transferring that interest and waiting for a few years before you file the bankruptcy. Maybe it involves actually filing a chapter 13 instead of a chapter 7, and paying your creditors. So there are a lot of different things that you might be able to do, but the key thing is don’t get surprised. Don’t file the bankruptcy and then realize, oh no, I’ve got a problem. I own this property and now I’m going to lose it.
Katherine: That’s why we have you. I say that every time, but that’s why we have you. All right, you said number one, so it sounds like there’s some more “gotchas” that we need to be looking out for.
Ron Drescher: Number two gotcha is if you owe money to family or a significant other and you’re paying them. Let’s say every once in a while, let’s say you owe $5,000 to your mom. You come up with $1,000 and you pay her back. You come up with another $1,500 and you pay her back. Then, six months later, you file bankruptcy. Your trustee can sue your mom to get all the money you repaid to her during the year before the bankruptcy.
Katherine: Why?
Ron Drescher: That’s the law. For most creditors, the trustee can come back during the 90 days before the bankruptcy. You know Katherine, a lot of people are familiar with that law, that preference clause act law, which is very, very frustrating to a creditor who’s done nothing wrong but still gets sued by a trustee to get back money that they were paid for a legitimate debt. But what’s especially painful, is if you are a family member and you loaned your kid some money to help them out, and the kid has done their best effort to pay you back, and then you get sued to return that money. Nobody wants their parents to get sued, or their girlfriend, or their boyfriend, …
Katherine: That’s damaging possibly to the relationship. Wow.
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Ron Drescher: Nobody wants that. That’s another thing you really have to look out for. One of the things that I do to help my clients in that situation is I … obviously when we’re doing their intake, and we’re going through all their documentation, we want to know, have you paid anybody back? Have you paid any relatives back? Do you own any money to your relatives? Sometimes they say, “Yeah, I just paid back my brother. You know what? You have two choices. Your brother could either return the money now or we could put off the bankruptcy for a year. I’ve done that. I’ll put off bankruptcy for an extended period of time in order to plan around that. That’s a very upsetting thing to people, because one of the questions I get all the time is, is my bankruptcy going to impact other people? The other people could be a co-owner of property, it could be a family member, it could be a spouse, it could be a business, it could be an employer, it could be a child.
Ron Drescher: Sometimes the bankruptcy will impact another person. And you have to know that. I love to tell people, “No, it’s not going to impact the other person, and it’ll be fine.” That’s not doing anybody any good. So I do tell them, “Yes, this is going to impact this other person and here’s how it’s going to impact them, and here’s what to do about it.”
Katherine: I know we’re running short on time today, and it sounds like we have more to cover on the hidden “gotchas” in bankruptcy, am I right?
Ron Drescher: There are many of them, but those are the two I really did want to talk to you about today.
Katherine: Okay, great. We can always continue this conversation in our future interviews if you choose to, but in the meantime, I want to let the audience know how to get in touch with you outside of “This Needs to be Said”.
Ron Drescher: The two best ways, you could call the office at 443-438-1966, or you can go to the website, drescherlaw.com. D-R-E-S-C-H-E-R-L-A-W.com.
Katherine: Awesome, thank you so much for joining us on “This Needs to be Said” attorney Drescher. Until next time, have a super day.
Ron Drescher: Wonderful, thank you so much, Katherine.
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Categories
General

How Quora Commenters Save Money

Saving money is hard. Really hard. In order to set money aside as savings, you have to have extra money. And one way to do that, is to cut costs. It’s true that seems easier said than done, but there are resources out there to help. One such avenue is Quora, a question and answer website with over 190 million users worldwide. A great source for tried-and-tested advice–including advice on how to save money, Quora users post questions and other users answer them. Still other users vote for the answers they like the best. So you’ll find kindred spirits—those who ask the same questions you have—and the answers that many have found to work.

How do Quora users suggest you find extra money to save?

1. Don’t buy things you use temporarily; instead, get them for free or inexpensively.

For example, “If you need something because of its use rather than its existence, then you need to check whether you can just get and use it for free or at lower price,” says Quora commenter Jenny. “I have very few books on my bookshelf, but I borrow books from the library each week. It works better than purchasing books, keeping them on a bookshelf, and seldom opening them.”

Justin, another Quora commenter, says, “I use public transport a great deal. I take busses and trains to commute rather than paying to own my own vehicle. This saves me money in fuel costs, the price of acquiring and maintaining the car, as well as insurance. Also, I walk.”

2. Small changes can add up to big savings.

“Switch out all your old lightbulbs with LED bulbs. Ditch the hot water heater which uses energy 24/7 and invest in a hot water on demand system. And turn off the lights when you leave the room,” suggests Quora commenter Denise. “Since making these changes I have cut my electric bill by more than two thirds.”

And consider little luxuries you may take for granted.

“Even if you only drink only regular coffee instead of fancy coffee drinks, making your own coffee at home can save you $1,300 a year,” comments Bryan.

3. Be disciplined.

Quora commenter Danielle offers these great ideas:

“Plan your meals for a week, make a grocery list based on that and shop strictly by the list. Unsubscribe from email lists for special offers. End all auto-charging subscriptions except for basic utilities. Don’t hang out with people who are obsessed with materialistic things—it’s contagious.”

Danielle also recommends not buying clothes that need to be dry cleaned and not having a hair style that requires frequent touch-ups.

4. Start saving.

Start saving, even if you have to start small. Quora user Julie has a novel system: “Get a jar and put 5 cents in it,” Julie says. “Increase it by 5 cents each day for a year and watch your money grow.”

Using Julie’s system, you would deposit 5 cents the first day; 10 cents the second day; 15 cents the third day, and so forth, for a year.

5. Decide; Save; Buy

Most people buy something, often on credit, then earn money to pay off the debt.

But Ron suggests flipping the process around, to what he calls “new things from new money.”

“This was a rule I created for myself around 2010,” Ron says. “When the decision is made to buy something, it must be paid for with money earned after making the decision.”

As an example, explained Ron, “Even if you have $10 million in the bank, if you decided you wanted to buy a $5,000 ATV today, you can’t just go write a check for it–you have to wait until after you’ve saved up another $5,000, then you can buy it.”

Ron says this works at any income level, and there are immediate benefits to this shift in thinking:

  • You stay focused on things you want, so you save more and spend less
  • You never reduce savings by blowing money on impulse purchases
  • You spend more time considering if you really want that thing, and if it’s worth saving for longer to splurge on extra bells and whistles
  • More often than not, by the time you save up the money, you won’t really care about it anymore

“I’ve done this for my last four vehicles, furniture and everything else,” Ron says. “The cool part was that most of the stuff I thought I wanted and would have just bought, I realized I didn’t want it that bad when it came time to part with the saved dollars.”

Spending is really about setting priorities. And your long-term financial health should be the biggest priority of all.

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Interview

Real Estate and Bankruptcy – Interview March 2018

https://www.drescherlaw.com/wp-content/uploads/2017/07/June_2017_Interview_Ron_Drescher_Convenience_Bankruptcy.mp3?_=2
Katherine: Hello everyone and thank you so much for joining us here on This Needs to Be Said radio. Our friend, Attorney Drescher, has joined us again and today he’s going to talk about real estate bankruptcy. And I’m not sure what that means. That’s why you and I are tuning in to take notes. So get your pen and paper out because class is in session.

Welcome back to This Needs to Be Said, Attorney Drescher. How are you?
Ron Drescher: I’m doing well but I hate to have everybody take notes. They can just listen and check my website or your website later.
Katherine: The teacher has spoken. Pay attention. Pens down. So you’re talking about real estate bankruptcy. Give me a definition in layman’s terms. What does that mean for me or could mean for me?
Ron Drescher: That could mean a lot of things. What it means today is if you’re in a situation where you can’t pay the mortgage or you have fallen behind on the mortgage, these days lenders offer you lots of alternatives that we call Loss Mitigation Alternatives. But what most people think of is loan modifications or short sales or deeds in lieu of foreclosure.
Katherine: I’ve heard of those.
Ron Drescher: And so I want to talk to you about how those fit in with bankruptcy and a dash of a very scary concept in tax law that also plays into everything. So you can decide, which of these make the best sense and when to do them.

I want to branch out into two … There are two different roads to go down. One is the road you go down if you want to keep your home and the other is the road to go down if you’d just as soon not keep your home.
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Katherine: Okay, okay.
Ron Drescher: So let’s go down the road where you would just as soon not keep your home.
Katherine: Okay.
Ron Drescher: And if you don’t want to keep your home, the routine thing, the normal thing is sell the house, pay down the … get a buyer. Pay the mortgage off. If you have any spare money you get to keep it and you get to move on with your life. But that’s not the kind of situation we’re talking about. The kind of situation we’re talking about is you can’t sell it for enough to pay off the mortgage. When that happens, you’re looking at two different alternatives.

You’re looking at a deed in lieu of foreclosure or a short sale. In lieu of foreclosure happens when you are just going to say to the lender, “Here. Take the property back. Take the home back and relieve me of the debt.” And frequently, they will agree to do that.

The alternative is a short sale where you say to the lender, “Okay, look, I’m going to sell the property for less than what I owe you and you’ll agree to let that sale go through and then whatever is left on the mortgage, you’ll either forgive or we’ll work out something to pay it back.” Those are the two options if you don’t want to keep the house. Now the problem with both of those options is, first of all, if you have to pay the money back, that’s … I don’t know, I guess it depends. If you only have to pay back a small amount of money and you can afford it, a short sale is a great option for you and you don’t have to consider bankruptcy.

But let’s say that’s not your situation and let’s say you’re going to sell the house for way less than the mortgage pay off. Then you may really want to consider a bankruptcy because that gets rid of that deficiency. Some people say to me, “Wait a second, if I can do a short sale, and the lender will forgive the difference between what I sell it for and what the mortgage is, isn’t that great? Doesn’t that mean I don’t have to file bankruptcy?”

Well, my concern in that situation is a pretty nasty tax concept called Discharge of Indebtedness Income. And that’s a very, in my opinion, mean-spirited provision of the tax code.
Katherine: Now what does that mean in layman’s terms, Attorney Drescher?
Ron Drescher: Alright, what that means is if a creditor says, “You don’t owe me this money,” the IRS will say, “Well, you have to pay tax on the amount of money that that creditor said you didn’t have to pay anymore.” You discharged the indebtedness and now you have to pay tax on it, which is a terrible thing. Because-
Katherine: You discharge … Let me make sure I understand because I’m listening-
Ron Drescher: Sure.
Katherine: I owed money I was able to discharge it through bankruptcy, is that what you’re saying?
Ron Drescher: No, not through bankruptcy.
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Katherine: Okay, but my agreement with the lender, I made an agreement with them to discharge it and then I pay … Am I following right?
Ron Drescher: Yes, you are following exactly right.
Katherine: Okay, so I make an agreement with them on what … we’re going to wipe the slate clean and I don’t owe you, but I’ve got to pay taxes on what I owe you. So what if it’s $100,000 or $50,000 or $20,000?
Ron Drescher: That’s right.
Katherine: That’s a lot of tax. Whatever it is.
Ron Drescher: That’s a lot of money. And it really defeats the purpose. And for a while, during the time immediately after the real estate crisis, Congress was passing laws that said well if you have money that was on a home loan that was forgiven, you’re not going to have to pay taxes on that money. So it won’t apply to your principle residence, but they haven’t renewed that law and under the new tax law, nobody knows if they’re going to. In fact, the last couple of years, before the new administration came in, they didn’t renew that law until the very end of the year. So you didn’t know if they were going to report that discharge debt to the IRS and that you would have to pay tax on it. So it’s a very nasty gotcha that could happen if you do a short sale or deed in lieu of foreclosure and you get forgiven that debt.

But there’s a huge, huge exception to that rule, which is that if you discharge the debt in bankruptcy, you don’t pay tax on it. So because otherwise, bankruptcy would be a terrible thing. So you don’t pay tax on debt that is discharged in bankruptcy. So here’s the rule, instead of doing a short sale, do a bankruptcy first then do the short sale. Now you might say to me, “Why bother with the short sale if you discharged the debt? Just let the lender take the property back and let them foreclose.”

That is not a terrible strategy, by the way, but if you’re going to want to get into another home, sooner rather than later, and believe it or not most people who let go of their homes, they do. They want to get into another home that they’re going to be able to afford this time. They don’t want to make the same mistake this time that they made last time. They want to be a little bit smarter about it but they do want to get into another home. When you apply for a loan for the new home, they’re going to want to know how long it’s been since you owned a home that was your primary residence and if it’s been less than two years, you’re not going to get that loan.

So it makes sense for you to continue to try to do that short sale, not so you can be relieved of the debt but so you can get out from the house so that that two year time period starts ticking sooner.
Katherine: Okay, I see.
Ron Drescher: So if you want to get into another house after a house that you’re in rapidly declines in value, you can’t afford to pay the mortgage, the right thing to do is file bankruptcy first, then try to do the deed in lieu of foreclosure or the short sale. That’s very important because that way you protect all your bases. So that’s the first half.

Does that all make sense to you so far?
Katherine: Yes, and I was able to follow along and maybe this has nothing to do with the topic, specifically, but if I … I want to back up to something you said earlier, if I have made an agreement with the company that I owe money to, the mortgage company and they said, “Okay, we’re going to wipe the slate clean, but you’re going to have to pay taxes.” Why was that a good idea? I mean this person is in the financial situation, how would them paying taxes on what is owed better? Or why was that even factored in?
Ron Drescher: You mean why does that law exist?
Katherine: Yes.
Ron Drescher: You know, it doesn’t really make sense, but you know what? It doesn’t make sense that people who really can’t afford it pay a lot more, a lot higher interest rates than the people who can afford it. It’s one of those non-intuitive laws that you just have to know is out there.

So now we’re going to go down the other road, and the other road is the loan modification road, what you need to do if you want to try to keep your house. This is another potential gotcha because what you’re going to do is you’re in default under that home loan. And that’s another thing, they won’t give you a loan modification unless you’re in default for at least 90 days. Because they might say, “Well, listen, you’re paying it as agreed, why should I give you relief from the loan?” So you have to fall behind. Sometimes people call that a strategic default but in my experience it’s just that people are really suffering hardship and they just can’t afford to make the mortgage payments.

So you’re behind. So, let’s say you’re behind 90 days. The lender is going to start foreclosure on that property. So depending on the state you’re living in, it could take a year, it could take nine months, it could take 60 days. In the meantime, you are applying to that lender to get a loan modification and what the loan modification will do, amongst some other things, is going to take all the money that you owe on that loan, all the arrears, and it’s going to add it to the principle balance. So that you’re starting from scratch but with a slightly higher loan and they’ll give you the best interest rate they can and hopefully that’s going to make it possible for you to stay in your home.

Now, the problem is … And that’s a great outcome. And that is a desired outcome and if you can do it, you should do it and not file bankruptcy. The problem is that while my clients are applying for these loan modifications to cure the default, the lender is moving forward with the foreclosure process. So there’s a two prong approach. There’s the foreclosure approach and the loan modification approach. And the left hand almost never knows what the right hand is doing.
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Katherine: Wow.
Ron Drescher: So as a result, people are calling the loan servicing line, they’re on the phone to the lender all the time and the lender says, “Yep, we’ve got your application, we’ve got all the documents. Everything looks good and we’re just going to send it to underwriting to consider it.” In the meantime, they’re getting a notice from the lawyer for the lender that says we’re going to foreclose on your house in 10 days. And you know what? A lot of my clients disregard that notice because they think that they’re going to get that loan modification and it’s going to be all right.

But once they go through with the foreclosure sale, that loan modification is gone. It’s dead. They’re going to close that file and you’ll never have a chance to get a loan modification and you’ve lost the house.
Katherine: Wow.
Ron Drescher: Yes, that’s right. So what you need to do, you need to pay very close attention to what’s going on with that foreclosure. What you need to do is you need to file that Chapter 13 to stop that foreclosure. Then while you’re in the 13, you’re going to try to get that loan modification. You get that loan modification, they approve it then you’ve got a few options. One option is, depending upon the rest of your debt situation, you can convert to a Chapter Seven and just discharge all of your other debt. Another option is if you don’t have a lot of other debt problems and your only real problem was this mortgage, you get that modification, you make the trial payments, the modification becomes fixed, you dismiss your Chapter 13 case.

A third option is, depending upon what other kind of debt you have, you stay in Chapter 13 and you just go ahead and you move forward with all the benefits that Chapter 13 offers. And that’s a discussion for a different time. You know, Chapter Seven or Chapter 13, that’s a different option but if you’re going to be going forward with a loan modification, you need to be prepared to file that Chapter 13. And even though you’re in a Chapter 13, the lender will still consider your loan modification application.

If they deny the loan modification, you’re not necessarily totally out of luck, because Chapter 13 does give you the opportunity to catch up and pay that defaulted loan amount over the life of your plan with is 36-60 months, but a lot of times my clients really can’t afford that. So a loan modification is a better alternative for them than a Chapter 13, but sometimes a Chapter 13 is your last best chance of holding on to that house.
Katherine: Okay, okay. It’s always good to talk with you. I’m trying to soak it up and I want to know … People want to contact you to get their specific situation heard, give me a summary of what you shared here today. I know we have options but are you suggesting that one may be better than the other? Or what? Because if I do one thing that doesn’t benefit me, you shared that that could mess me up, period. I won’t ever be able … Was it a loan modification? A mortgage-
Ron Drescher: Well, you want to decide going in, do I want to keep this house or do I want to get out from under this house. That’s your first question and that’s not a legal question. That’s your life. I mean, a lot of people take heroic measures to try to hold on to their homes and many, many times it’s just not worth it. It’s so expensive and it just cripples the rest of their life to try to hold on to, and a lot of people recognize that and they say, “Okay, I’m not going to take those heroic measures, I’m going to try to get out from under that house.”
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Katherine: Okay.
Ron Drescher: And that’s a financial consideration that you make regardless of bankruptcy. What I’m saying is once you make that decision, do the bankruptcy first. And then proceed with either the short sale or deed in lieu of foreclosure, if you want to let go of the house. Or you proceed with the loan modification if you want to stay in the house. But do the bankruptcy to protect yourself from things like from the foreclosure or from that really nasty tax law.
Katherine: Okay, alright. Well that clears it up because I know it’s how you do it. It’s not necessarily what you do. It’s the order in which you do it. So you need a strategy it sounds like.
Ron Drescher: Yes, that’s right. Timing is everything.
Katherine: Alright, well, Attorney Drescher, you were here to help people who are in need of putting together a strategy to reset their lives. And when you were talking about the real estate, you talked about a primary residence so this sounds like this could be for someone who has, maybe rental properties?
Ron Drescher: Rental properties are a different discussion completely.
Katherine: Oh, okay. Alright. Wanted to clarify. Because you talked about a principle residence so I wanted to know if that meant multiple properties.
Ron Drescher: Yeah, just the principle residence.
Katherine: Different conversation.
Ron Drescher: That’s right.
Katherine: Alright. Well tell people how to get in touch with you outside of This Needs to Be Said so they can talk with you about their individual situation because we know that one size does not fit all. And they can find out what strategy they need to get their lives back on track.
Ron Drescher: You know what? The best thing to do is contact us on our website, www.drescherlaw.com, D-R-E-S-C-H-E-R-L-A-W dot com. Gives you a link to call. Or you know what? You can order my book. We have a book, File Bankruptcy and Get Rich that has over 1,500 copies in print and feel free to contact us to try to get a copy of that. I think that’s a great way to get in touch with us.
Katherine: Awesome. What’s your website?
Ron Drescher: Drescherlaw.com.
Katherine: Drescherlaw.com. Thank you so much, Attorney Drescher, and until next time, have a wonderful day and thank you for sharing your knowledge again with the This Needs to Be Said audience.
Ron Drescher: Wonderful. Thank you. It’s always great to be here.
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Bankruptcy

The Masters – A Bankruptcy Unlike Any Other

In the early years of “The Great Depression”, golf immortal Bobby Jones and his colleagues believed that the economy would soon turn around and businessmen in the northeast US would flock to an exclusive golf club open only during the winter months. Like so many others, Jones miscalculated the ravages of the financial downturn and his beloved golf club, Augusta National, found itself in the jaws of financial ruin. I created this infographic to tell the story about how Augusta National and the Masters emerged from the shadows of bankruptcy, foreclosure and debt.

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