• Famous Bankruptcies: Abraham Lincoln

    Chances are good that you have probably seen the infamous “Abraham Lincoln Didn’t Quit” list that has appeared in numerous emails and books ever since it was first created, even appearing in Reader’s Digest in 1967. The 16th President of the United States indeed overcame a number of difficulties in his life, but as the urban legends reference pages at Snopes.com notes about the “Didn’t Quit” list, much of the information contained on the list is guilty of exaggeration or taken out of context.

    One claim on that list is that in 1833, Lincoln “borrowed some money from a friend to begin a business and by the end of the year he was bankrupt. He spent the next 17 years of his life paying off this debt.” As Snopes points out, “Honest Abe” had no money for his half when he and William F. Berry purchased a general store in New Salem, Illinois, that year. Rather, he signed a note with one of the previous owners for his share. When he was unable to pay off that note after the debt on the store became due the following year, CNN noted, “Lincoln didn’t have modern bankruptcy laws to protect him.”

    CNN said Lincoln lost his two remaining assets, a horse and some surveying gear, but as Snopes notes, “Lincoln had obtained a position as the New Salem postmaster, and by 1835 he was earning money both as a surveyor and a state legislator.” While CNN reported that Lincoln continued paying off his debts until well into the 1840s, Snopes pointed out that it did not take 17 years nor  was Lincoln “completely financially encumbered until it was paid in full.”

    While Lincoln’s struggles might be subject to some embellishment over time, the fact remains that the man whose face appears on the penny had a period of time in his life where he did not have “a single cent to spare,” as CNN put it. And as CNN also mentioned, other presidents such as Thomas Jefferson, Ulysses S. Grant and William McKinley have also experienced bankruptcy.

    You might not have hopes of becoming commander-in-chief, but Abraham Lincoln and other presidents who overcame bankruptcy can hopefully prove to you the heights still available after filing for Chapter 7 or Chapter 13.

    Benjamin Brand Services – Chicago bankruptcy attorney

  • Will Changes To HARP Change The Number Helped?

    As the Obama administration’s revamped Home Affordable Refinance Program (HARP) goes into effect this month, the latest version will offer some key changes that should make it more attractive to the lenders that are not required to offer these loans to their borrowers. Some of the differences include the removal of the 125 percent loan-to-value (LTV) ceiling, reduced risk-based fees or loan-level pricing adjustments, representation and warranty relief for the lenders committing loans to the program, and an extension through the end of 2013 for the program.

    However, as syndicated real estate and personal finance columnist Ilyce Glink noted in a column published on December 2, 2011, HARP “does not have a great track record up to this point” with fewer than 100,000 underwater borrowers able to refinance their properties. Saying that it is “hard to imagine these numbers will grow substantially,” Glink added that “the need is huge.”

    Glink wrote about a woman she spoke to on her radio show who has a 6.5 percent interest rate on her loan and originally put down 20 percent on the property, but now has a house that is worth only about $110,000 instead of the $175,000 she paid eight years ago. Now far underwater, the caller’s husband lost his job and the couple is struggling with their monthly debt obligations because his new job pays so much less.

    Glink said the biggest problem is that neither Fannie Mae nor Freddie Mac owns the couple’s mortgage, a conventional 30-year loan. Furthermore, the loan servicer refuses to disclose who owns the loan, only confirming that the company is not participating in “HARP 2.0.”

    “This is another family that might well end up in foreclosure, and not for lack of trying,” Glink said.

    Does this sound familiar? Have you tried to take advantage of HARP for foreclosure help only to find dead ends? Did you know filing for Chapter 7 or Chapter 13 bankruptcy could not only stop foreclosure and help keep you in your home, but could also reduce, reorganize or eliminate your debt and end creditor harassment?

    Benjamin Brand Services – Chicago bankruptcy attorney