It’s the Bottom of the 6th and the Score is Twenty Two to Nothing

My original idea was to interview Robert based on his spreading fame as an attorney willing to go to battle for the unfortunate victims of the current economic conditions.

Prepare your Bankruptcy Filing Better

Prepare your Bankruptcy Filing Better

I had a very interesting lunch the other day with local attorney and real estate entrepreneur Robert Peters. To call Robert “interesting” however would be an understatement. He is a man of many colors and shapes; from attorney by profession to charity volunteer by sentiment and from landlord by choice to adventurer by passion.

My original idea was to interview Robert based on his spreading fame as an attorney willing to go to battle for the unfortunate victims of the current economic conditions. His law firm has helped out many an unlucky soul getting a better foreclosure or bankruptcy deal than they were heading into and his pointed advice in many of those cases turned out practical and actionable. Lenders and financial institutions pay attention when the name Robert Peters appears on a short sale request or foreclosure proceedings. Soon into our lunch at comfortable Bright Mornings Café in Fernandina Beach however, the conversation turned towards one of his true passions called WarriorVacations.org on which I will devote a complete article on the coming weekend.

Before this turn, Robert made an interesting analogy on the topic of foreclosure and bankruptcy which I used as the title for an article contributed by Nick D. They’ll both forgive me (I hope) for this Publisher’s Prerogative, but in reading the following you will understand why I did it.

People wait far too long before filing for bankruptcy

It is Attorney Peters’ experience that people wait far too long before undertaking the necessary steps that need to give them at least a fighting chance of survival. “They come to me in the bottom of the 9th inning with no hope left”, he says, “rather then accepting defeat earlier on in the game and take precautions that can help them re-build their lives from a better foundation.”

With that in mind, here is Nick D’s article:

As you read this your probably know someone who has had to file bankruptcy, or heard of a friend of a friend who had to. You may very well be one of the ones who had to file. Where are we in Florida when it comes to bankruptcy filings? Did you know that Florida ranks second in the number of filings in the U.S? So what has triggered this upsurge in filings? Home values that continue to sink, job losses abound and people who are just strapped with debt.

Bankruptcies are up almost fifty percent over 2008. In Florida we have seen almost 71,000 filings this year alone. Job loses and sinking home values have left many people broke with no way to pay off their debt. Many are turning to bankruptcy as a way to keep the collectors at bay. Just a couple of years ago if you mentioned bankruptcy you automatically thought of it as a “blue collar” thing, today we are seeing lots of “white collar” professional people filing. There are cases of professionals such as doctors and lawyers who have had to file just to survive.

Frightening Amount of Personal Bankruptcies in Florida Alone

The majority of filings in the state are not commercial, but rather personal filings. So far this year there have been over 68,000 personal filings in Florida with only 2,600 commercial filings. Last year the majority of the people having to file were from the real estate industry, developers, builders and investors. Today is it is all over the radar, from airline pilots to medical professionals, it’s everywhere.

There are also many who have simply just given up, they can’t afford to file for bankruptcy.  To file on a personal basis it usually cost around $1,500, many people don’t have it and can’t file. If you are considering filing on a commercial business the cost to file could run into many thousands of dollars. Because of the expense to file, many are just moving away, changing their phone numbers and letting the chips fall where they may. Of course they are ruined in terms of their credit and doing future business but right now putting groceries on the table is more important. Bankruptcy is the answer for many but it comes with a huge price tag to be paid at a later date. A strong credit score could fall as much as 500 points under bankruptcy compared to a 125 loss under a foreclosure. Of course the question remains how important a credit score will be in the future.

Other Options to Consider Before Bankruptcy

-Try talking with your creditors and establishing something that is workable for you, arranging a payment plan you can manage. Most creditors don’t want you to file for bankruptcy, they would much rather work with you and over a period of time receive the money due them.
-There is also the option to make payment arrangements with a good attorney, not one that only takes the bank’s side and money, and let him or her do their magic.

I have always used the expression, “Stop digging when you’re already in the hole”. Knowing when you’re in the hole and how deep the hole is, may give you a much better recovery option.

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9 Comments

  1. tommylee

    What is the $1,500 fee for to file for personal bankruptcy? I can understand Legal fees but asking people to dish out that amount to file for something they really are, then what's the point?

    In vocabulary terms bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors.

    If you ain't got it you ain't got it.

  2. tommylee

    There's been something else that has been nagging me: Credit Score. Maybe it is my European/Dutch upbringing / background that failed to understand a system that has me baffled.

    Looking into what Credit Score means I come across an avalanche of information that determines what your credit score is. The more credit history you have the higher likely your “score” if you did not default on your credit payments. In essence it is designed based on how long you are in DEBT and how you service that DEBT!!!

    What, come again?

    So let me look at this from a Dutch perspective. I know, we are cheap ones, the frugal ones but then again, just bear with me for a second.

    Scenario: I never used credit cards only debit cards (I like to pay for things with money I have and not borrow). I earn $200,000 per year and I rent the place I live in, so no mortgage. I save a good deal of my money that I annually make and have a million dollars in the bank. I never bought a car on credit but always paid it outright in cash.

    Now I decide to buy a house, market is good to buy it now and I decide to get a mortgage in stead of using my own money because credit is cheap.

    I'm sitting down with the bank manager who manages my bank account to negotiate the mortgage. Mind you that the mortgage is less than what I have in my savings account. We are enjoying over a nice cup of coffee a little chit chat about the state of the economy and the pleasantries of life and start discussing the mortgage I would like to apply for. I think all is fine and dandy until the secretary of the bank manager walks in with my “Credit Score”.

    I'm off the charts: 0 SCORE. Nothing, Nada, No history… Paid all my life for every purchase with my own hard earned money, never had any debt.

    I can't believe my hearing when the bank manager, hums and clears his throat to announce that I unfortunately do not qualify for a bank loan. He's very apologetic about it but in no uncertain terms tells me that the Bank's Credit Committee would never approve my mortgage request because i'm considered a high risk in failing to make “CREDIT PAYMENTS”. Too baffled to even argue with the good man who is conditioned beyond a point of reason, I walk out the bank.

    Returning the next day to close my account and transfer my money to another, hopefully more understanding, bank i'm asked to wait for that same manager before executing my desire to close the account. Without delay i'm ushered into his office, being a great customer for the bank all these frugal saving years and he wants to know why I have decided to close the account. What my reasoning was? Was I unhappy with the service, he asked. Unhappy with the service?

    My reply was if he could see the reasoning as follows:
    All these years of frugal savings has provided the bank the capability to lend against my saved money to people that see credit as free candy but with a perfect credit score, lived off credit cards while not realizing they are paying 20-50% more for their groceries when paying with credit and thus are considered “model credit score customers”, yet when I come to borrow against my money due to some idiocy rating system that has no hand nor feet i'm told that I'm a credit risk!!!

    What's the moral to the story?????

  3. Hal_Burns

    Bankruptcy should the avenue of last resort. There are many professionals, like Mr. Peters who could be of help if you are drowning debt. Good article and good information.

  4. achoubeach

    What I hope is taken away by the readers is File when you first realize you're in trouble. Waiting is the great hazard. What Robert does takes care and time but it ain't free.

  5. Conrad Stevens

    Welcome to the world of bubbles. From the first moment I set foot on US soil, all my business partners, friends and acquaintances insisted that I'd use someone else's money to build a business, buy a house or buy a car or a wide screen TV. Never did, never will. Call it frugal, call it dumb or call it having a good sleep at night…every night. Credit is the first step, leveraging is the second step, bankruptcy is the 3rd step.

  6. Conrad Stevens

    Welcome to the world of bubbles. From the first moment I set foot on US soil, all my business partners, friends and acquaintances insisted that I'd use someone else's money to build a business, buy a house or buy a car or a wide screen TV. Never did, never will. Call it frugal, call it dumb or call it having a good sleep at night…every night. Credit is the first step, leveraging is the second step, bankruptcy is the 3rd step.

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  9. tommylee

    Re-reading this article and being a year further down the line in 2010 I think I have a better understanding about Florida's Bankruptcies and the reasons why Florida is or was second highest ranked…

    The answer lies part in that Florida is a “Vacation destination” which means that overall most “income” is derived from tourism related activities including retirement purchases.

    Tourism pillar economies are much more fragile based on the premonition that in the good years plenty of money is made and this is used as a guideline that life will remain good as tourists will keep on pouring in. Well, there is nothing more fragile than tourism based economies and when the tides turn it is not a slow pace drying up but rather a massive retraction.

    All those that “built their future on an ever growing tourism dollar” are caught with their pants down and go faster down the drain than you and I can empty a bottle of water against the magnetic twist (did you know that a drain always drains with the rotation of the clock in the northern and counterclockwise in the southern hemisphere?).

    And the chain reaction (retraction) is set in motion that can bankrupt a state faster then you and I can spell “help”.

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