Tuesday, April 28, 2009

Dave Ramsey's Financial Peace University

There's one name that I hope my clients never forget.

No, not mine -- Dave Ramsey's.

To say I'm a big believer in Dave Ramsey and his "advanced common sense" approach is an understatement. He's awesome. He's right. And he's freeing people from the bondage of debt on a daily basis.

So tonight I finally dragged my wife to a local Financial Peace University class -- a 13 session DVD class that lays out the Ramsey Financial Peace plan. Very exciting!

Now, some might wonder about a bankruptcy lawyer who promotes Dave Ramsey. Isn't that like a field-mouse running a red-tailed hawk fan club? A seal who promotes killer whale worship? A rabbit being a hunting dog groupie?

Nah, actually Ramsey and I both agree on this point: bankruptcy is very, very painful. And it is not the cure-all to debt problems. Let me repeat that last point:


Shocking? Well, maybe. But years of watching bankruptcy clients come and go has led me to the understanding that something important is missing. Something is not working the way it should.

Why do I say that? Why wouldn't eliminating your unsecured debt be a huge head-start to getting your life in financial shape?

Well, because as Ramsey says, "Personal Finance is about behavior." Of course if you file a Chapter 7 bankruptcy, you CAN get out of debt. Maybe even quicker than Ramsey's famed Debt Snowball technique. (MAYBE - see article comments. fbc)

So why doesn't it work? Why don't my Chapter 7 clients find that bankruptcy is a life-changing experience -- in a good way, I mean?

Because they don't change the behaviors that brought them to me in the first place. If they file bankruptcy, they don't have to budget, they don't have to work with their spouse, and they don't have to learn to save for emergencies.

So when they take the short-cut of Chapter 7, they bypass a lot of important lessons and habits they need to instill to ensure success.

Now, none of this is to say that bankruptcy is unnecessary. Nor did I say or imply anywhere that people who are filing bankruptcy are "deadbeats" or somehow unsavory. (Quite the contrary -- my experience shows that most people would gladly cutoff their right arms if they could avoid bankruptcy.) They just don't see how that is possible. And they wait too long to take action. Many of them are already being sued by creditors or even having their paychecks garnished. These are NOT deadbeats. They're people who've made a couple of unwise decisions with money, and gotten trapped.

No - they're not deadbeats; they're good people with families and homes and dreams. They are professionals and housewives, mothers and fathers, blue collar and white collar. They are university educated, many of them. They're not stupid. They're not crooked. (Something I can't say about insurance companies and some credit card banks, by the way, many of whom have "lie, cheat, and steal" as a part of their business plans.) No, my clients aren't the bad-guys. They're just people who don't know how to find Financial Peace.

I'm going to be blogging about my experiences in Dave Ramsey's Financial Peace University class over the summer. Please come along and follow me as I dive in.

If you need some Financial Peace; if you're one of those good solid people who have nonetheless found themselves in extreme financial distress -- give me a call. I'll try to find a way out of your predicament and get you set back on the road to financial strength. I'll also try to map a way out that doesn't include bankruptcy. But sometimes, bankruptcy is all there is left. In that case, at least you'll know that you didn't really have another choice and that you did all you could to avoid it.

Call me, I can help.

In the meantime, check out Dave Ramsey's site: http://www.daveramsey.com ; go here for a link to his Financial Peace University intro: here

Ben Callicoat
918 582-6131

Tuesday, April 14, 2009

Foreclosure: What do I do now? (Part 1)

It's an unfortunately an increasingly common problem. You were behind on your house payments -- maybe you lost your job, or had some extraordinary medical expenses. Perhaps you recently suffered through an expensive divorce, and you're now having to survive on less income.

Whatever the reason, you've spent the last several months "robbing Peter to pay Paul" -- doing the best you could, paying the bills that you could with the resources you had. But you just couldn't hold it all together and today you've been served with a foreclosure petition? Now what? What can you do?

Several things, actually. Given the right circumstances, you may well be able to save your home from foreclosure.

Foreclosure: What it means

Foreclosure is the legal mechanism by which the mortgage holder (usually a bank or mortgage company) gains legal title to a piece of real estate from the borrower who has defaulted on the terms of the original agreement. When you borrow money to finance the purchase of a home, you granted the bank or mortgage company, a "mortgage" -- the legal right to repossess the property itself, if you failed to keep making the payments. We call this failure to make payments a "default".

Unlike the bank who holds a car note or promissory note for some other piece of personal property, a mortgage holder / creditor cannot merely "repossess" your home if you default on the contract. They have to "foreclose" (or to get back) their interest in your property in order to be able to get possession of it and sell it to someone else. State laws understand how important home ownership is in a free society, and therefore every state has laws to protect people from losing their homes too quickly or, as lawyers say, without "due process." (Note that there is a special kind of mortgage called a "power of sale mortgage" which ostensibly gives the mortgage holder a short-cut to foreclosure. Fortunately for Oklahomans and the residents of many other states, a homeowner can opt out of the "power of sale" foreclosure, and thus they're rarely used here.)

OK, so you've got the terminology down. The next thing to understand is that you're being sued. Bad as that may seem, however, it is not without it's "up-side", insofar as with any lawsuit, you have certain rights and abilities to defend yourself. And, the plaintiffs -- in this case presumably the mortgage holder -- has to fulfill certain minimal requirements before they win.

IF -- that is -- you fight back.

If on the other hand, you do nothing, then you've already lost. You might as well call the movers or the in-laws and prepare to leave. Fortunately, that probably doesn't apply to you because if that were the case, you wouldn't be reading this blog post.

Fighting Back

In a lawsuit, the plaintiff -- the person or company who is suing you -- can win by default only if you don't defend yourself. One of my law school professors -- an émigré to the United States from Eastern Europe -- used to harangue us complacent Americans for not realizing that the beauty and nobility of our judicial system is that it provides a man the ability to defend himself. But defend yourself, you must. For if you don't, no one else will do it for you. And just as you would lose a fist-fight by not fighting back, so will you lose a lawsuit in the same manner. Because, at bottom, a lawsuit is indeed a fist-fight -- but one whose consequences go way beyond any schoolyard scuffle.

In every lawsuit, the Defendant (that would be the homeowner in this example) has a certain amount of time after being served in which to "answer" (or defend) the suit. The summons will tell you how long you have to do so -- either 20 or 35 days from the date of service, depending on which the Plaintiff elects to allow.

Further, a Defendant has the right under Oklahoma law to extend that time by filing an Entry of Appearance and Request to Extend Time which will gain the Defendant an additional 20 days time to file their answer. (See 12 O.S. sec. 2012(A)(1)(b)).

Watch for Foreclosure: What do I do now? (Part 2) to be posted

If you are facing foreclosure or other serious collection related problems with creditors, call me for assistance. I am a bankruptcy professional with years of experience in this field. I love my work, and I love my clients. And they love me.

Ben Callicoat
918 582-6131

Member, National Association of Consumer Bankruptcy Attorneys