on February 10, 2009
This is not, in my opinion, a very useful book for the ordinary consumer debtor.
It's also a little sloppy and fast and loose with facts and law. For instance, on page ten there's a "legal note" that asserts "in a bankruptcy, an unsecured debt that has been converted to a judgment retains its unsecured character and gets no preferential treatment in a distribution." Well, not exactly. First, a judgment that's recorded at the County Recorders office in my state, Arizona, where I've practiced bankruptcy law for thirty years, becomes a judgment lien upon real property owned by the judgment debtor in that County.
And that's just one example. But what bothers me more about the book is the assumption that it's fairly easy to negotiate credit card type debts. Frankly, it once was. About thirty years ago.
But these days a consumer who tries to talk to the credit card company with whom he is trying to negotiate is just as likely as not to get a call center in a country where English is not a first language. And trying to negotiate with folks there is all but impossible, because they're paid very few rupees per hour, and can only do what they are instructed to do on their call center flow chart.
In fact, credit card debts are among the most difficult debts to negotiate away, for the simple reason that there are a bunch of them in an ordinary situation. And to make the problems go away, all of them have to be willing to play ball. And the 80/20 rule applies in negotiations with a bunch of creditors. If you have 10 creditors, and all of them have to agree to get you to your goal, there will be two that never want to see things your way.
And another thing: ordinary consumer debtors, in my experience, don't have the mind-set and psychological balance to deal with negotiating their own debts away, or down. And one reason for that is that the debtor who negotiates for himself has no professional objectivity, and that clouds his judgment.
Another idea that this book pushes is that workouts with credit card companies and collectors can be done by the consumer borrowers themselves, and that in the process they will get the credit card companies to remove the derogatory information in their credit reports. I believe it will happen at about the same time the temperature in a place that bad people may go after the end of their lives drops below the point at which water become solid.
Another odd concept in the book is that bankruptcy is financial suicide, and that most credit card and unsecured debt problems should be easily dealt with by negotiation. I simply disagree, and it's not just because I'm an Arizona bankruptcy lawyer. I've seen people with overwhelming debt rebuild their credit and their lives after bad luck or bad decisions forced them to file, and they get on with their life just fine (note: it is absolutely correct that a bankruptcy, whether a Chapter 7, 13, 11 or 12 is a very big deal, and should never be gone into lightly. That said, you shouldn't take penicillin when you have the hiccups, but if you have pneumonia, you better head to the penicillin man.) Also take a look at Bounce Back from Bankruptcy, also available on Amazon, to see exactly how difficult it is to reestablish credit.
Is there anything good about this book? Sure.
For instance, the author strongly suggests that consumer debtors make a budget and learn their "nut", and learn to live within their means. Bravo.
But after I say that, I look back at another "legal note" that's misleading: "Judgments against corporations, limited partnerships and limited liability companies are normally not enforceable against individual owners, stockholders or limited partners and should have no effect on their personal credit record."
Well, that's true as far as it goes. But in the real world of small business, the primary owners of the business almost always have to personally guarantee substantial debt incurred by the business. So ignoring a threatened lawsuit because of the "legal note" above would get the average business owner with the average lawsuit against his business into substantial hot water, because that lawsuit would normally name him as a defendant as well.
So read this book, because it's interesting and because the author is clearly passionate and sincere. But before you take ANY of his advice, talk to an "av" rated bankruptcy lawyer, or a bankruptcy attorney who has a 10.0 rating from AVVO.com, or a Martindale AV rated bankruptcy lawyer, and read a lot of other books, because if your plan is based exclusively on this book, you may be stepping on a land mine.
p.s. as I write this postscript, there is a raging debate in Congress over a provision in the Bankruptcy Code that may, after amendment, permit the stripdown of some OR all mortgages on residential real property. Will that statute pass? Listen, I've practiced bankruptcy law in Phoenix, Arizona for about thirty years, and I've watched a long series of amendments to the "New Code" of 1979; and I've watched as Congress debated in the past. The 2005 amendments took about a decade to work their way through Congress. So MAYBE the Bankruptcy Code is about to change a lot. And MAYBE it's not. But if you're contemplating bankruptcy in Phoenix, Arizona, or anywhere else, you should be aware that the law is currently MAYBE about to change in a way that could be helpful to debtors, IF they qualify and are willing to put up with a Chapter 13 bankruptcy (which makes a root canal look like fun).