Recently, I allowed a few scanned documents to be filed with the court without proper redaction of the information. According to my attorney, FD a MAJOR sin. He advised there was nothing to do except count this as a future liability for the CU. Any financial loss of the member due to the information breach or even only perceived as the possible source of the personal information breach would be the ongoing responsibilty of the CU that filed the documents. The member’s attorney filed a motion to have the claim documents sealed against public access. My attorney also said that the CU could have been accessed the fees for the debtor’s attorney that filed the motion. The Judge’s decision did not require that. Yea.

RULE 9037 – short recap: SS numbers- only last four digits. Use only initials of minor children. Include only the birth year of member/debtors. Account numbers- count backwards four digits including the suffix, use only these four numbers.

This case was the same case posted earlier in regards to the 341 Meeting in Charlotte, NC August 21, 2008 that was a little stiff.

Technorati Tags: Bankruptcy RULE 9037, Filing Bankruptcy Claims, Redaction

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Federal Courthouse Charlotte, NC

The location for the meeting was actually across from the courthouse and was not as obvious. It was marked but not a large entrance at all. It was very nice inside. There was a security gate, but the x-ray machine conveyor was broken. This held things up a bit. There were two men fulfilling the Trustee duties. The first arrived after I did and carried a big box of files. He was the attorney for the members in our case. I introduced myself, and he said we would have to wait until after the hearing to discuss our case.

402 W. Trade St. Charlotte, NC

The members had filed their bankruptcy during a workout agreement we had with them. It was a bit sticky, because we had no signed loan modifications. This was not procedure, but things happen sometimes that we need to work around. There were two vehicles loans – each 1999 models. My only question during the hearing was to ask the members if they had intentions to reaffirm their loans. They said – yes. I wanted that on the records, though I knew they wanted to pay. After the member’s attorney had finished his part of the meeting, we proceeded to conference room. He talked to his clients first, then brought me in to the room. The attorney asked about the signed documents, I said there were none for the last payment adjustment. We had discussed previously the options for payments, and he had talked to the members before I went into the room. After making it clear that the members would be struggling to pay $200/month for each loan, I accepted that arrangement, and we completed  loan modifications with the attorney’s blessing. We will forward official reaffirmations to the attorney, and he will have no problem with the loans being paid. So, what did I learn? When facing a situation like the one we were in with no signed documents or some other error, talk to the attorney BEFORE the 341 hearing and discuss options. Do not wait and spring demands or surprises on the attorney. You get further that way. I had taken time to fax amortization schedules to the attorney to explain to him that the present payment amount will not pay-off the loan in a reasonable time frame. He quickly agreed. Remember the member’s attorney has to sign that he agrees that the reaffirmation will not place “undue burden” on the member/debtor or their dependents. In the words of a very good Credit Union defense attorney in SC, when a mistake is found, be the first to correct it, and it will work out better all the way around.

Technorati Tags: 341 hearing, Bankruptcy, reaffirmation

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After easily finding a place to park, I entered the building. There were no security gates. There was a security guard telling you to turn off your cell phone, if you enter the court room. I was just on time. However, the members and their attorney were not there. I went in to the court just to listen. This was when I saw a man coming to the hearing as a “pro se” filer. (He was his own attorney.) It was not his first time in the court. From what I could understand, he was trying to save at least 2 properties from foreclosure. The Trustee had to tread lightly, as they cannot give legal advice. But, it was so evident he did not have the basics for defending his position or strategy and needed an attorney desperately! If anyone ever comes to you and wants to file pro se; tell them that unless they went to law school, then don’t even need to think about filing. It is way too complicated!

After 35 minutes, they called the case, and the Trustee’s assistant makes the announcement that the case has been delayed due to a conflict with the debtor’s schedule. The case was to be heard at 1:00PM. So, I had a couple of hours. I called a client in the area and learned she was on vacation. So, I just hung-out at a local eating place and spent time on my Blackberry.

The case was not called until about 1:20PM. The member/debtors were present with their attorney. After the swearing in and general info was announced about the case, their attorney made the court aware that the schedule B has to be amended to include the car that the member owns and the father pays for. The Trustee reminded the attorney about schedule “D”, I believe. Then it was my turn. The Trustee asked me to proceed. I began by asking questions about the truck. How many miles are on it? The husband said about 48,750. Was it repaired? “Yes.” As we had been told by their attorney that was in the shop. Where was the damage? “Left wheel” Was it insured? What company and was it full coverage? “Nationwide- full coverage.”

Then I started asking about the vehicle she drives and her father pays for. What value were they going to place on the schedule for it? Their attorney answered, “Kelly Blue Book”. The Trustee was obviously listening and corrected him and said. “Do you mean NADA?” He said, Yes. I added – full retail? He just nodded his head. I asked about insurance and who paid for it and other such things. The answers were now coming only from the wife and she was getting more snooty by the minute.

Two days previous, a teller had allowed the wife to cash a $50 check drawn on the account of another member. She brought it to me and I asked for a copy. The check said “Child care” in the bottom left. I emailed our attorney and he said “There is a clause in the code that states if there is any income revealed within 45 days of the petition that was not disclosed previously, then the petition must be thrown out.” FD I had discussed with the President our strategies. She agreed that we should at least ask. So, I began by saying the two days previous she had cashed a check for $50 at the CU and the notation was “child care”. She immediately rolled hers eyes and huffed. I asked her if she kept children in her home? At that point, she launched into a dissertation about the check and how she kept one child for one day and all kinds of other stuff. It was not a regular thing and she has three of her own to keep! Her voice was climbing in volume, and I knew the next question would not help. The Trustee must have believed her, and we went on to the next issue.

When we asked her attorney initially about the second car, he said that he could not get in touch with his clients, “They are on vacation.” So, I told her that her attorney had told us they had gone on vacation. I asked her how long were they gone? Did anyone go with them? And who paid for it? She was very huffy at this point. They had been gone for a week, and her sister’s family went with them and her Daddy paid for it! Well, by that time she was rambling, and I held my hand up to stop her and told her I was only asking the questions.

The Trustee took over from here. But, I had one more question. So I interrupted, I asked her attorney if we could inspect both units and take pictures for the file some time the following week. He sheepishly said – yes. At the end of the hearing, I did not stay around for chatting, I left.

If all this sounds strange, let me give you my perspective. The whole deal was not a pleasant experience. I did not relish the fact that I had some idea the wife would get testy. But, here are the facts as they came out in the hearing and ones we know from previous information. The wife does not work, she attends school as came out in the hearing, and will not finish until 5/10. The husband does have a 401K loan that will not pay-off until 2011, if he remembers right. He does have a good job. However, after going on vacation, they had not paid their August plan payment of $730. The Trustee reminded them of this during the hearing. They drive two vehicles that are each two years old. They have financial struggles for sure. This is not their first bankruptcy. They filed in 2001(?) if I remember right. But, sometimes you have to make decisions to cut back and live within your means! It is my humble opinion that this couple will not make it through their chapter 13 plan to completion unless there are major changes in their lifestyle, which includes spending habits.

What does that mean for the Credit Union? If they get dismissed, then they would not be able to pay their loans current, and they would have to sell the unit for pay-off (that will not happen, they are upside down now!) or we repossess. We would lose more money then, than if we could get them out of bankrutcty now. So, it is tough, because they fit the model for the typical couple filing. But, that is why I went. We have to examine each case and put forth the effort on behalf of the members of the CU that pay on time and keep their deposits in our CU. Just as it stands right now, after selling the first repo and charging off the repo balance and unsecured balances, we will lose about $10,000! Why charge-off the unsecured? Because in most plans, you may get 10% on the dollar starting 18 to 24 months from the confirmation! The truck is worth $20K retail, the balance is $22K. If we had to sell it we may get $15K. We probably will not see money from the Trustee until October.

So, it was not pleasant, I felt compelled to go and at least make known our concerns. We must take the losses seriously and do what we can to stem the tide of further losses. The couple across the room was stressed, as they brought at least part of it on themselves by the choices they made.

If you haven’t been following you chapter 13′s or 7′s closely, then it is time to start. The number of filings is up, and I don’t see it going down anytime soon. You can comment and/or email questions. I will gladly answer or get you the answers you need.

Technorati Tags: "pro se', 341 hearings, Bankruptcy, chapter 13

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4600 Park Rd. Charlotte, NC

First, a little background is needed for this case. Do you have some members that seem to have more situations than others? Things can go right, but then some things can go wrong in a hurry! That is the case here. This couple had been severely delinquent on two vehicle loans, a personal loan and an overdraft loan. After several broken promises, you know “the 401K loan has been delayed”.. we will pay some next week… You have all heard them.. We sent a repo agent to their home to recover both vehicles. He picked up one and said the member told them they were filing bankruptcy and hiding the truck until they get a case number.

We did not think that was unusual. Members had done that before. However, we asked the repo man to come back at different times and look anyway. We gave him relatives addressess and employment address for the husband. As time went on, we got the feel that the repo man was not giving this case any of his attention. So, we withdrew the assignment from that company and forwarded it to another one that had a done a good job for us on another case. We assigned the account on a Friday afternoon. Monday, before I could get to work, I get a call saying the repo man for the second company was wanting to talk to me real bad. Also, I got word that the member had called and asked some strange questions. So, just as I arrived at the office, the member called in again. Her first line- “Why did you send a bounty hunter to come pick up my husband over the weekend?” I said, “Excuse me?” She was accusing the repo man of being a bounty hunter. I told her I would call her back after I spoke to our repo agent. He had not secured the truck, but there must be more! During this conversation, I also learn that her attorney as WG of notorious fame as having won many consumer/debtor cases over the last 30 years! So, I call the owner of the repo company and tell him about the conversation I just had with the member. He admitted that his repo agent used to be a licensed bounty hunter in another state and still wore the t-shirts on occasion. Great! The member said he had a gun. Well, I found out he carries mace and a tazer! I told the owner to get a written statement as to the whole deal and fax to me. (He never did by the way.) Wow, my next call is to our attorney – FD.

But, before I get to that call, I get a call from the repo agent that ran the assignment. He goes on to explain that the member was friendly, and after 30 minutes of conversation, he shook hands and departed. In the conversation, he learns that the first repo man (per the member) turns out to be a part-time bartender at a place in Charlotte and personally knew the members from their attendance there! Well, that wasn’t so bad, but this fellow tells me that the member said the other repo man told them to hide the truck and how to avoid getting it taken by the next guy! As if that is not enough, the member asks the second repo man for legal advice! Yes, he gives it! They ask if they could ever get arrested for not turning over the truck when we came for it? He gives his opinion! He admits to wearing the t-shirt, carrying a taser and mace. But, he denies that the whole deal was confrontational. He said he tried to get info out of the member to see if he could find the truck himself! At this point, I get off the telephone and make the President aware of the situation. She is as shocked as I am. Somewhere in all this mess, I had also fielded a call from the paralegal for the member’s attorney, and she wanted to let us know that the members had indeed filed for bankruptcy and would be getting a case number soon. I told her I would call her back for more details and answers to the actions of the repo man from the previous Saturday.

I get our attorney on the phone, and what he said about our repo man is not printable. After a brief on the situation, he volunteers to call the member’s attorney and speak to him personally. Later that day, I receive an email saying the whole deal had been worked out, we would not be sued and that the member would have a case number soon. But, there is more…

Before this episode, I find the wife had a vehicle titled to her that she did not sign the note as liable for the loan. She signed as “owner” of collateral. Her father was the sole maker on the note. After review by our attorney, he advised we could repo the car before she gets the case number, but now the father could default, and we would lose all the way around. So, that made the bankruptcy case more interesting, as you will see. I will continue in the next post about attending the meeting and asking questions of the member/debtor.

Technorati Tags: attorneys, Bankruptcy, repossessions

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