Going Pro Se With Bankruptcy ~ A Trap for Jimbo?

Going pro se (LATIN, “for one’s own behalf.”) with bankruptcy  was his original idea, but…OH MAN!… did my buddy, Jimbo, ever dodge a bullet the last two weeks!pro se

Jimbo was only trying to save a few dollars toward the next place he would hang his hat and bed down, albeit as a tenant, no longer a homeowner. He figured he could “go it alone” in the bankruptcy court if he burned the midnight oil and read every article available about bankruptcy that he could find online. He had to act quickly. His home was about to be auctioned away in four days!

Jimbo really is a good and able guy. In fact, for years he acted the faithful husband, a Road Warrior, earning all of his income, averaging a decent $15,000 per month, through his personal sales efforts.

Sure, he’d had to travel three weeks of every month on the road. Sure, he’d done the job for 18 years. Sure, there were temptations — the Devil always tries to get his due — and, yet, Jimbo had kept his nose clean and to the grindstone, and he brought home the bacon, month after month, year after year.

Jimbo looked forward to a retirement that included a homestead he owned free and clear of any mortgage. He looked forward to larger Social Security benefits kicked in at 65, which would allow him to do more than dream about writing and fishing for the rest of his days and nights. He was comfortable with his plan — hard work was noble; and his father had been a hard worker who came from “good stock,” which is why every time he got the mortgage statement from the bank he always looked first at the current value of his home — it was a kind of  payback. Right there in black and white was his Nest Egg.

Jimbo’s Woes

cracked-nest-egg2008 changed all that for Jimbo: the bottom dropped out of America’s real estate values. The Nest Egg cracked overnight. Still, after a few adjustments, Jimbo was back up on his feet. The Great Referee was telling him he could stay in the ring and keep fighting. Jimbo was groggy, but his dizziness had gone away.

2009, however, was worse. In May, the company he’d represented for more than 18 years, and where he had been Number One in sales every year, unceremoniously dropped Jimbo from the sales staff roll.

Without explanation.

By email.

Caught without their financial pants up, Jimbo and his patient wife, Rita, had no Reserve Account on which to rely. They struggled to keep up with the unrelenting days, weeks, and months that brought more and more escalating credit card bill invoices and mortgage payment due notices.

“Too much month at the end of your money,” as they say in some circles. — Jim Rohn, motivational speaker

Jimbo’s New Reality

street selling illustrationAt times, for weeks on end, Jimbo and his sweetie, Rita, could be found around the local area on street corners busking drivers to stop and buy their wares just so they could eat that day. Soup for most of a year was the main entree at morning, noon and night-time mealtimes. They both lost weight, but their health didn’t seem to suffer — maybe this is a blessing they each thought as they looked in the mirror. In doing so, they discovered they could do what they had to do to stay alive, even to make some sense of how to pull themselves up out of the hole in which they found themselves.

Jimbo and Rita went from gig to gig, trying to find some of the stability they had thought they had in early May of 2009. The lead-up to their current point of bankruptcy spilled past six years.

Jimbo’s new reality, at first, was anything but pretty: first, the second car had to go. Rita and Jimbo wondered how they would make do on separate schedules with one vehicle, but they found a way.  Next, the yard work, they realized, took a lot more of their time away from working on their income problem than they liked, so they found an inexpensive service to do that work, while cinching their belts tighter at mealtimes.

The creditors’ letter and phone call demands, they eventually learned, could be staved off by challenging them in reply with Requests for Validation of Debt letters. These bought Jimbo more time to see if he could discover another sales game that would pay well.

While the Val/Debt requests caused some creditors to fall away, there were always others to replace them in the money chase. Credit counselling agencies had been an earlier “solution,” back when they still felt they would surface quickly, but the real, unshakable, underlying problem of never as much income to count on to pay the bills, persisted.

How long could Rita and Jimbo hold their breath before drowning?

Strategic Planning

strategic defaultAdvised back in 2009 to stop paying the bank that held his mortgage, because “banks will not negotiate a better situation with you until they see you really can’t pay them… you have to stop paying them,” Jimbo, like many others, had the best of intentions to set it aside that money and not touch it. Those funds were reserved for either the day he could modify his mortgage to a lesser payment that he could afford; or the local court would rule that the new bank — the one that had bought Jimbo’s old bank and mortgages — had provided no proof of ownership and dismiss the foreclosure case with prejudice, telling the bank to move on to new ground.

Unfortunately, as earlier mentioned, earning income was the better half of Jimbo and Rita’s struggle, and problem. The couple had to eat every day, feed the car’s gas tank weekly, somehow keep moving forward with their hopes every hour of every day and night. They worked plan after plan, trying they put themselves again on sure economic footing.

“The thrown pebble disturbs more than the water’s surface.” — Li Po, Chinese Poet (a.k.a. Li Bai)

Their plans seemed to be working, too. Seven days a week, each spouse worked 2-3 jobs, or entrepreneurial ventures, well into each night and often into early-morning hours. A flow of funds trickled in slowly but steadily.

Sure, Jimbo and Rita were further in debt from the accumulating bank fees and interest rates, but their hopes had not been totally dashed… so far. One by one, some of those unsecured creditors had even reached their limits of patience and given up their fights. Statutes of Limitations kicked in, or heated arguments dissolved or went moot.

Still, new “walking wounded” — newly “assigned” hound-dog creditor firms — licked their chops over the “fresh meat” offerings that crossed their transoms. When one creditor gave up the fight, they sold the papers to another one.

A Line of Creditors is a Never-ending Gravy-train Line!

debt7You see, Jimbo uncovered, by having to figure creative ways to stay afloat on his sea of debt, that when banks write off credit card debt, they sell the “paper” to blood-thirsty legal firms for pennies on the dollar. These legal beagles, in turn, hunt the unwary debtor who, unknowing, believes the new guy’s claim is real and valid (never mind that they had never met before) and gets sucked into apparently new versions of old, discharged debts that went away.

Original bank-card creditors write their paper debts off after a specific time, because their regulator rules require them to; and federal and state statutes of limitation deadlines kick in variously.

Challenged with Val/Debt Letter requests, many debt-chasers fold up their tents… but not without first selling off the “dead” paper to another bunch of hound dogs willing to attempt the same pursuit.

The unwary debtor never realizes his rights or the existence of the statutes of limitation and, instead of making the debt go away, which is what he/she wants to do, he makes it more possible for ever larger unpaid balances to be judged and levied against him. Unknowingly, he is liable to extend statute time limits for collection attempts of certain debts, often resulting in new judgement liens aimed at his eventual payment of bills long-ago written off by the original creditor.

Bankruptcy is a Personal and Legal Condition

Not paying your bills and obligations, no mistake about it, is a moral and legal situation. Jimbo and Rita’s funnel of choices devolved to the one legal remedy that resolves accumulated and ultimately overwhelming problems: bankruptcy — an action not to be taken lightly.

There are different classes of bankruptcies to help all sides up from the table –feeding trough, if that makes you feel better about it — with something tangible to show for timely and costly efforts expended by both sides. There is no doubt that bankruptcy is an embarrassment and, in a way, an admission of failure, but it is also a legal solution for starting out anew, a second chance, if you will.

In Jimbo’s case, the local courts eventually sided with the national bank that had taken over his mortgage. The judge told both the creditors and the debtors (Jimbo and Rita) that the bank could move ahead and foreclose on his home. Trouble was, no one thought to notify Jimbo and Rita about that judgement, and Jimbo had only days to burn the midnight oil or be out on the street, homeless.

To make matters bittersweet, Jimbo’s initial research into bankruptcy lulled him into thinking he could make a favorable showing at the bankruptcy trustee’s meeting, if he went “pro se” (Latin, “for oneself, on one’s behalf’). If Jimbo could confront and manage the pile of Schedules and their instructions for filling them out, correctly, though it would take him hours — try scores of hours, he might prevail over his creditors. He would have all of his debts discharged by the bankruptcy. In a couple of months, he and Rita could, at least, be debt-free and able to move forward.

Practically homeless and still on a minimalist’s diet, but with a little more breathing room after having, like the lowly oyster, spit out the grainiest air-passage blockers, Jimbo and Rita thought they could struggle forward onto dry land and rejoin the Land of Opportunity without impunity.

Oysters, the Sea and Bankruptcy

But oysters come from the sea, and, by analogy, in Jimbo’s case, the sea kept pushing sand and surf inside his mouth just when he had inhaled and exhaled. Believing that he had finally gotten ahead of another one of those darned bankruptcy schedule forms, which had to be filled out exactly to avoid the risk of his bankruptcy being dismissed on a technicality, he almost missed listing one or more creditors, which would have then survived the bankruptcy and been able to bring other powerful forces against the beleaguered, hapless Jimbo and his lovely mate Rita, who, by now, were simply  getting exhausted.

Having spent the last 36 hours awake in preparing the forms to file bankruptcy before their home was auctioned away, Jimbo and Rita scraped up the fee for filing the papers, filed, and waited.

Automatic Stays

going pro se with bankruptcyIn the vacuum of the silence — filing a bankruptcy causes an automatic stay against any creditor actions against the debtor, Jimbo got nervous. With a little more sleep under his belt he reviewed his work and discovered some discrepancies. He got scared. He also knew he didn’t have it in him, or time on the clock, to go more rounds against the gargantuan gauntlet of redoing the bankruptcy forms and filing amended forms to the court’s trustee.

Turning to Rita, Jimbo said, “We need to see a bankruptcy attorney, just to make sure.”

Rita, herself exhausted, seeing her husband going down for the count, agreed to see an attorney, rather than go pro se with bankruptcy.

Within one hour of initial consultation Jimbo knew he had made the right decision. Yes, the attorney’s words directed at him after reading his forms work, were a humbling experience. And, yes, he had to agree to the attorney’s reworking of his papers, but Jimbo and Rita’s RELIEF alone was worth the price of the representation. And because Jimbo really had done a lot of homework, he at least understood what the attorney advised him, which added to his comfort every hour right up to and through the single Creditors’ Meeting they would have to face.

Money Can Be Over-rated

In the end, Jimbo found out that what he was really after was not money saved but peace of mind. dodging a bulletWhen he poured and drank his first lemonade after the creditors’ meeting, after he and Rita had shaken their attorney’s hands and thanked him for his services and returned home — what would be a temporary home for at least a 60-day period in which creditors could appeal the permanent discharge of their particular debt — Jimbo realized that he really had dodged a bullet in the last two weeks.

While going pro se had been a bright idea and possibly workable (where no complications come up), Jimbo’s papers had to be amended and, had they not, the outcome might have had bad, bad consequences.

In fact, every new realization of that fact renews Jimbo’s spirits, and that lets him turn his attention to the other half of his problem: how to bring in more income. After the bankruptcy experience, they feel like they can handle that.

© 2014 by Ronald Joseph Kule. Reserved.

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