Author: Dan LaBert

Association Executive @NACBAorg, Fmr. NFL Scout @4for4football, Sports Radio/TV Host, Fantasy Football Guru, Penn State Alum, @BrewersofPA #runDisney

Student-Loan Bankruptcies: NACBA Inspires Need for Clarity

Dear NACBA Member:

As you know, the mission statement of NACBA is to serve the needs of consumer bankruptcy attorneys and protect the rights of consumer debtors in bankruptcy. It is also the responsibility of the organization to weigh-in on policy matters where the playing field may not be level in the area of bankruptcy law.

Over the past few days, the volunteer members of the NACBA Legislative Committee received notice that their efforts are gaining momentum in Washington D.C.

Three members of the United States Senate, Dick Durbin (D-IL), Jack Reed (D-RI) and Elizabeth Warren (D-MA), and four members of the United States House of Representatives, John Conyers (D-MI), Elijah Cummings (D-MD), Steve Cohen (D-TN) and Hank Johnson (D-GA), joined together to urge the Secretary of Education, Arne Duncan, to bring more fairness to struggling students by establishing clear standards of eligibility for “undue hardship” discharge of federal student loans in bankruptcy.

The action taken by the listed elected officials was inspired by a NACBA Legislative strategy dating back to 2012. For the past two years, NACBA members (and strategic partner organizations) have met with members of the United States House and Senate and urged their assistance for Administrative Action on the growing $1.2 trillion student loan debt. Not only did NACBA members voice concern on Department of Education practices but also suggested solutions that would not require legislative action. It was noted that the Department of Education should create “clear standards” for borrowers to qualify for discharging their student-loan debt.

During a time when Washington D.C. displays nothing but gridlock and partisanship, the voices of NACBA Members have not fallen on deaf ears. We will be closely following any response and keep you apprised.

NACBA works daily on state and national issues that impact bankruptcy law and will continue to do so. As a member of NACBA, you are providing much needed support for our work and help ensure the every segment of the population can participate in the bankruptcy system should their finances come under strain by layoffs, accidents, or other unforeseen life events, they will be protected.

Thank you for your continued membership.

Featured NACBA Member Benefit: Certificate of Service

What is the NACBA/CertificateofService.com Member Benefit?

NACBA and CertificateofService.com have joined forces to create a special mailing service only for NACBA members. To access the special mailing service web portal, NACBA members should bookmark the webpage located here (http://www.bkattorneyservices3.com/bkasmailform_017.htm).

I heard I get a discount for being a NACBA member!

Not only do you get a discount for being a NACBA member, but NACBA also benefits every time you use the special NACBA member webpage portal! Every mailing project that is uploaded through the NACBA benefit webpage portal will have a portion of the proceeds paid to support NACBA!

Can I access the member benefit portal from the www.certificateofservice.com site?

No, the only access to the NACBA member benefit portal is through the NACBA website. You may wish to bookmark the webpage located here (http://www.bkattorneyservices3.com/bkasmailform_002.htm).

How do I benefit from using the NACBA member benefit webpage portal?

NACBA users who use the NACBA member benefit webpage portal receive a 10% discount from the normal print rate, a two cent discount from the normal postage rate, and NACBA receives a portion of the proceeds derived from the mailing jobs uploaded through the NACBA Member Benefit Webpage Portal.

Do I get a NACBA discount for using the normal bankruptcy mailing upload portal at www.certificateofservice.com?

No, the only way to obtain the NACBA member benefit discount and to benefit NACBA is by using the specific portal created for NACBA and located here (http://www.bkattorneyservices3.com/bkasmailform_002.htm)

Why did CertificateofService.com agree to a member benefit program?

CertificateofService.com was created by a bankruptcy attorney for bankruptcy attorneys. As luck would have it, certificateofservice.com has been incredibly successful over the past several years and much of that success is directly attributable to the members of NACBA. Certificateofservice.com was launched by a NACBA member who wanted to help and ensure that NACBA and its members thrived. Creating this member benefit was a great way to provide a win-win situation for NACBA members, www.certificateofservice.com and the NACBA organization itself.

What is the difference between the Member Benefit Portal and the normal CertificateofService.com portal?

The NACBA member benefit portal charges less for mail processing projects than the normal website and a portion of the proceeds are shared with NACBA. There are some significant differences in the portal site however. Only one document is uploaded for mailing, no account needs to be set up, you will simply pay for each job processed as it is uploaded, mailing projects are mailed to the entire ECF matrix with no exclusions, mailings will be dropped into the USPS mailstream within one business day and there are no special instructions or exclusions section. This format works well for 95% of all the mailings that www.certificateofservice.com does everyday. If you have a need for more customized features, the portal at www.certificateofservice.com is still available to you.

Who do I contact if I have questions about the member benefit?

You can direct all your questions to www.certificateofservice.com for further explanation of the member benefit program. We can be reached at 509 412 1356 or you can email Kathryn directly at Kathryn.jump@bkattorneyservices3.com.

Open Letter to Members of the Pennsylvania Senate (re: Debt-Settlement, SB 622)

Dear Representative:

As Pennsylvania members of the National Association of Consumer Bankruptcy Attorneys (NACBA), we write to express deep concern regarding SB 622, as this legislation would allow debt settlement companies to prey on the most debt-burdened consumers in our state.

Although debt settlement companies market their services as relief, such programs rarely work as promised and involve an inherently problematic business model. SB 622 would eliminate existing protections, while increasing the following harmful debt settlement practices:

Debt-settlement schemes encourage consumers to default on their debts.[1] Because creditors frequently will not negotiate reduced balances with consumers who are still current on their bills, debt settlement companies often instruct their clients to stop making monthly payments, explaining that they will negotiate a settlement with funds the client has paid in lieu of their monthly debt repayments. Once the client defaults, he or she faces fines, penalties, higher interest rates, and are subjected to increasingly aggressive debt-collection efforts including litigation and wage garnishment. Consequently, consumers often find themselves worse off than when the process of debt settlement began: They are deeper in debt, with their credit scores severely harmed.

Debt settlement often makes a bad problem even worse. When a consumer defaults on his or her debt, the overall debt burden can rise quickly. As accumulating penalties and interest charges inflate the consumer’s debt-load, creditors begin collection efforts and many eventually sue. This is why debt settlement is always a gamble: If any of the creditors refuse to settle, the consumer is left worse off than when they started.

Even “successful” debt settlements can come with a high price. The few consumers who are successful in debt settlement may find themselves with another unexpected bill: tax liability. Depending on the consumer’s financial condition, the amount of savings realized from debt settlement can be considered taxable income. Credit card companies and other creditors may report a debt reduction to the IRS. Unless the consumer is considered insolvent, the IRS considers it income and the consumer will be on the hook to pay taxes on it.

The problem is not limited to “bad actors” since the debt-settlement approach itself is flawed. Debt settlement schemes are a trap for most consumers because inherent in the industry’s standard business model is the requirement that clients breach their contractual obligations with creditors.

Many creditors refuse to work with debt settlers. The knowledge of which creditors do or do not is not known by the consumer at the time of the debt settlement contract.[2] Once defaulted per the debt settlement company’s instructions, consumers face accelerated collection attempts by these creditors. According to the debt settlement industry, lawsuits from creditors are a critical reason why customers become unable to complete the debt settlement program.[3]

Here is one example:
Bankruptcy attorney Cynthia Reed, a NACBA member from Lancaster, Pennsylvania said: “In my 14 years of practicing bankruptcy law in Pennsylvania, I estimate nearly 1 in 3 of my clients present with a debt-settlement experience. Many of these clients come in for an initial bankruptcy consultation after having attempted debt settlement, the client’s story usually starts like this: “Well, I was trying to pay my debts and I signed up with this company . . .” (here the client usually names the company that he/she was using such as Liberty Debt Choice or Freedom Financial Network; the client then goes on to relate how he/she paid hundreds, and in some cases thousands to the settlement company with modest or no results.

During the time that the client is paying the debt settlement company, the client is not paying the creditors, and they are getting harassed by the creditors and the collectors; their credit goes completely in the tank and, in some cases, I’ve had clients who now were being sued. So they come to me, figuring that a bankruptcy is their only option and, by that time, it really IS their only option. I’ve seen people who were paying $800, $900 and more per month with nothing happening. They can’t reach anyone at the debt settlement provider’s office or if they do they’re told they just have to be patient and keep making their payments. So, for a while they do. And still nothing happens. Finally, they come to see me about a bankruptcy. This has become increasingly the case in the past 5 or 6 years, even after the FTC rules banning advance fees.

It’s heartbreaking, because so many people think they’re doing the right thing by trying to pay SOMETHING, and they feel good that they’re getting a handle on their finances, until they realize that they’re deeper in the hole than before. The whole concept of “debt settlement,” at least as it is practiced right now, does little more than hold out false hope to desperate people.

___________________________________________________________

In response to claims made by debt settlement companies regarding bankruptcy and about the effects of the recent changes to the FTC’s (Federal Trade Commission) rules that prohibit charging advance fees, we wish to note the following points:

Debt settlement is not a safe alternative to bankruptcy. Many debt settlement clients end up filing for bankruptcy anyway, after debt settlement fails. Additionally, debt settlement does not provide the same protection to creditors or consumers which bankruptcy provides. For example, similar to Chapter 13 bankruptcy, debt settlement attempts to settle debts at a reduced rate—except there is no court-approval, no assurance of fairness to other creditors, and no right for creditors to be heard. Additionally, bankruptcy prevents the cascade of creditor lawsuits that is common in debt settlement since consumers in bankruptcy are protected by a statutorily mandated automatic stay of other lawsuits.

Debt settlement is not a safe alternative to legal representation regarding defenses and rights against creditors. Debt settlement programs often suggest that consumers should use the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”) and the Unfair Trade Practices and Consumer Protection Laws, to forestall collection and build counterclaims against creditors. Many even provide forms for consumers to use to this effect. However, the use of these laws often becomes fraudulent and abusive. Further, debt settlement programs are unable to advise consumers whether debts are legally collectible for reasons including the Statute of Limitations, identity theft, or other deficiencies, instead settling claims that the consumer may have no obligation to pay.

While the FTC Rule effectively addressed some abuses, it has not resolved all of them. Since debt settlement programs can take three years or longer to complete and only three years have passed since this rule change took effect, it is unknown whether the advance fee ban will result in better success rates. Debt settlement companies have not yet publicly released completion rates, or even partial completion rates, of consumers enrolled over this period. Moreover, recent data from Colorado’s Attorney General reveal little change in that state upon implementation of the advance fee ban.[4]

Debt settlement programs routinely provide legal advice. Whether provided online, in brochures, or through television and radio advertising, materials from debt settlement programs routinely provide consumers with information regarding their rights under a variety of state and federal laws, including bankruptcy, the FDCPA, FCRA and the Unfair Trade Practices and Consumer Protection Laws. This information is often misleading or inaccurate (skewing against consumers seeking forms of assistance other than debt settlement), although even when this advice is accurate, it can constitute the unauthorized practice of law. Further, it is difficult to understand how a debt settlement program can adequately advise consumers regarding their rights and options under state and federal law, including defenses to invalid debts, debts barred from collection under the Statute of Limitation, bankruptcy options, etc., without illegally giving legal advice. SB 622 frees debt settlement programs from oversight by the Pennsylvania Bar and allows non-attorneys to dispense often inaccurate legal advice, without the client protections under which the fully regulated and supervised legal community provides.

There is growing consensus that debt settlement is a problematic manner of providing debt relief. For example, The Better Business Bureau has designated debt settlement as an “inherently problematic business.”[5] Similarly, the New York City Department of Consumer Affairs called debt settlement “the single greatest consumer fraud of the year.”⁶ SB 622 is troubling because it creates financial incentives for companies to encourage consumers to stop paying their debts, allows for unlimited fees regardless of whether any savings are actually achieved, provides no standards to ensure that debt settlement is suitable for a particular consumer, and does nothing to ensure the consumer will not be worse off in light of the practices authorized by the bill.

For these reasons, we urge you to oppose SB 622.

Thank you for your consideration of these concerns. Please let us know if we can provide any additional information.

Sincerely,
Henry Sommer
NACBA President Emeritus
Philadelphia, Pennsylvania

___________________________________________________________

[1]The General Accountability Office investigated abuses in the debt settlement industry using “mystery shoppers,” who called debt settlement companies posing clients. The GAO reported, “Representatives of nearly all the companies we called—17 out of 20—advised us to stop paying our creditors,” These included 5 members of The Association of Settlement Companies (now doing business as American Fair Credit Council)—purportedly representing the “better” debt settlement companies. Debt Settlement: Fraudulent, Abusive, and Deceptive Practices Pose Risk to Consumers, U.S. Gov’t Accountability Office Rep. No. GAO-10-593T (Apr. 22, 2010) at 9 [hereinafter U.S. GAO Report], available at http://www.gao.gov/new.items/d10593t.pdf.

[2] Inside ARM Debt Settlement Survey: How Creditors and Collectors Utilize the Debt Settlement Industry to Increase Collections, INSIDEARM.COM (Jan. 2013) (finding that only one-half of collectors (including credit card companies, debt collectors and debt buyers) were willing to engage with debt settlement companies). http://www.insidearm.com/freemiums/debt-settlement-industry-collections/

[3] “One of the most critical factors in keeping consumers in debt settlement programs is the willingness of the consumer’s creditors to forebear from pursuing collections efforts through lawsuits,” according to Freedom Debt Relief and AFCC. See AFCC is “American Fair Credit Council,” the industry trade association formerly known as TASC. April 28, 2010 letter from Robert Linderman, General Counsel of Freedom Debt Relief and Vice Chairman of the Board of The Association of Debt Settlement Companies (now doing business as American Fair Credit Council), to David C. Vladeck, Director, Federal Trade Commission Bureau of Consumer Protection, at 5 n. 9 (emphasis supplied).

[4] Data from Colorado show that nearly 55% of consumers who enrolled after the advance fee ban had already terminated from the program (thereby not succeeding) within the first two years (industry claims that programs last 3-4 years).

[5] The Better Business Bureau provided data to State attorneys general showing that since 2007, debt settlement and debt negotiation companies have annually generated the most complaints received by the Bureau. See Comments of the National Association of Attorneys General to Federal Trade Commission re Telemarketing Sales Rule – Debt Relief Amendments, Matter No. R411001 at n.5 and text (Oct. 23, 2009, available at http://www.ftc.gov/os/comments/tsrdebtrelief/543670-00192.pdf.

⁶See “Department of Consumer Affairs Declares Debt Settlement Top Fraud of the Year”, available at http://www.nyc.gov/html/dca/html/pr2011/pr_030911.shtml

NACBA Member Profile: David Shaev

David Shaev

Based on random sampling of NACBA’s membership, the Member Profile strives to answer the question: Who are Consumer Bankruptcy Attorneys? It looks at a variety of economic and demographic characteristics, as well as, business practices and “war stories.” NACBA is and always will be your “Your Practice Partner!”

Allow us to introduce, our “Practice Partner,” Attorney David Shaev of New York. NACBA Member since January 2005.

David Shaev is the managing partner of Shaev & Fleischman LLP, a New York-based firm that is a debt relief agency and helps people file for relief under the U.S. Bankruptcy Code. David is an active member of the National Association of Consumer Bankruptcy Attorneys and serves as the New York State Co-Chair.

Q. How many years have you been practicing?
A. About 35

Q. What has been your most challenging case?

A. The Olga Paredes case, which made the NY Times Business/Front page and settled after appeal; Obasi case, which was featured on CNN where Judge found attorneys for banks actions in fling proof of claim to be sanctionable, but did not sanction on a technicality.

Q. What is the best advice you received from the NACBA national Listserv?
A. Don”t discuss politics on the Listserv! You will live longer. Actually, I use the NACBA Listserve, the NY Listserv and Bootcamp Listserv on a daily basis for issues too numerous to list.

Q. The NACBA benefit you couldn’t live without?
A. Conventions for knowledge, refreshing the desire to go out there and kick creditor butt, and a few extra days for vacations (I miss the fall convention already)

Q. Who is your mentor – who do you look up to professionally?
A. I wish I had a mentor. Unfortunately, I learned on my own, and later on with the help of NACBA and Max Gardner Bootcamp. Of course, I admire Max and many of my fellow Bootcampers, as well as the great work that Jon Rao and Tara Twomey do for all of us.

Q. What is your favorite part of being a consumer bankruptcy attorney?
A. Stripping off liens, modifying mortgages and paying unsecured creditors the least amount possible! Of course, having a client walk out in much better condition than when they first consulted with me.

Q. Name and area of the the law that you’d like to learn more about?
A. Not so much an area, but trial work in general.

Q. Most memorable moment in NACBA?
A. There have been many, so it is difficult to choose; I will never forget the great conventions in San Fran and Chicago during the BACPA reform period; my last great memory is New Orleans, one great restaurant after another!

Q. In another life, you’d be?
A. A tennis and ski bum. I gave up wanting to be a rock star when I entered college.

NACBA Shoots & Scores with Bill Clement

The importance of a convention keynote speaker should never be overlooked or downplayed. Choosing the right keynote speaker can change the entire tone of a convention. The right speaker can attract attendees to the event. The best speakers can even inspire attendees long after the event. With the 22nd Annual NACBA Convention just a few weeks away, a goal has just been scored for NACBA membership.

NACBA is proud to announce that two-time Stanley Cup champion and current actor, author and broadcaster Bill Clement will be the keynote speaker at the 2014 Annual Convention. His presentation, “EveryDay Leadership: The Power to Influence Outcomes,” will be delivered on Friday, April 11th, 12:30 PM to 2:00 PM.

After talking with Bill on multiple occasions, I can tell you he is a high energy guy that puts emphasis on making the most of your day. He strongly believes that we all sit in leadership chairs, regardless of title. After all, you never know who you can inspire. He is brutally honest about his failures and having to rebuild success after complete financial and emotional defeat.

With many members feeling the economic pinch, Bill Clement is a great success story on the impact a consumer bankruptcy attorney can have on a person’s life. In a climate of often having to do more with less, our personal performance as an “EveryDay Leader” is crucial not only to our organization’s victories, but also our individual success.

If you haven’t already done so, register to attend the 22nd Annual Convention of the National Association of Consumer Bankruptcy Attorneys. In addition to hearing from Bill Clement, we’ve put together a line-up of 60+ bankruptcy experts, including twelve U.S. Bankruptcy Judges. This is the country’s largest gathering of consumer bankruptcy attorneys.

On a side note, Bill Clement will be signing copies of his new book, “EveryDay Leadership: Crossing Gorges on Tightropes to Success” (with a foreword by Wayne Gretzky) at the Friday evening reception.

As always, thank you for your continued membership.

Start Spreading The News….NACBA New York Convention

NACBA’s 22^nd Annual Convention is an unprecedented opportunity to meet with your peers to discuss industry trends or just to have fun. This year, we’ve selected the city that never sleeps, the world’s biggest urban playground, the big Apple, yes, I’m speaking of New York City, sometimes known as Gotham! Ok, you get the point.

Here are the top five reasons to attend the NACBA Annual Convention:

#5. Network with 700+ bankruptcy attorneys

Not only is the NACBA Annual Convention like a family reunion of bankruptcy practitioners from all 50 states, but it is also a place to develop new relationships and network with others who face very similar professional challenges. Experience the NACBA Hallway Magic!

#4. Your professional development is the focus.

The networking opportunities and the targeted tracks focus on building your unique skill set. You will leave this conference with fresh ideas, new skills, and a stronger network to call upon when you are executing your ideas back home. Consider the NACBA Annual Convention a living, breathing, on-location listserv!

#3. 60+ experts are speaking and facilitating panels. Over 15 hours of CLE!

The agenda is full of seasoned experts who know bankruptcy law. We have twelve (12) United States Bankruptcy Judges and over 60+ bankruptcy experts. From the NACBA co-founders to litigation experts to policy wonks to legislative outreach pros to technology gurus to leadership advisers to storytellers and outside-the-box thinkers on hand to help you become excellent in your profession and grow your client base

See the packed agenda for a list of speakers.

#2. Added Value to your Registration – What’s New in the Practice of Law?

NACBA has put together one of the most extensive list of exhibitors in convention history. See and try the latest in products, services, publications and technologies from 30+ exhibitors. These businesses may offer that one solution that you have long been searching for.

#1. Experience New York City

Who wouldn’t want to visit New York in the Spring and get to know the most vibrant city on the East Coast? See a Broadway show (hotel is within walking distance), take a stroll on the High Line, visit a few art galleries, taste an unrivaled restaurant scene or go see David Letterman and get a real top ten list!

New York City and our convention is a combination that offers an unparalleled opportunity to learn, enjoy the wonders of the “Big Apple,” and socialize with your colleagues at the best consumer bankruptcy attorneys conference in the United States. Make plans to join us at the 22nd Annual NACBA Convention, April 10-13, 2014. REGISTER HERE

NACBA Now….You Are Cleared For Take Off!

Welcome to NACBA Now, the National Association of Consumer Bankruptcy Attorneys entree into the blogosphere!

The goal of NACBA Now is to engage in conversation with our members on a wide range of legal and business issues facing you in every stage of your career. The posts at NACBA Now will be meant to inform, inspire and elicit your interaction, which is a goal of mine as NACBA’s new executive director.

Moving forward, the NACBA team will focus on making “membership an experience, not just a transaction.” We want to make the value of NACBA membership so clear, so compelling, that NACBA members as well as potential members find it indispensable.

We want to hear from you on issues that affect your ability to continue to be a successful professional. How have recent economic issues impacted your ability to practice law? What are the pressure points you face? Let us know.

Thank you for your continued membership.