18 March 2002

The Shelby Star

Luann Laubscher - Star Staff Writer

Forgiving debts goes back to the Bible. Some people involved in bankruptcy or foreclosure of their home find comfort in that scripture, said Shelby Attorney Max Gardner III. The impact of obliterated jobs and income is hitting Cleveland County through an increase of personal bankruptcies and foreclosures on homes.

"The Western District of North Carolina Bankruptcy Court was the fourth largest in case filings last year," Gardner said. "That is a significant statistic." 

Dewey Matherly, the director of Family Services for Cleveland, Gaston and Lincoln counties, supports Gardner's comments with statistics from his own department. "We have seen about four times as many people come in for foreclosure counseling this year than we saw last year," Matherly said. "We went from seeing about 20 people in 2000 to around 80 in 2001." 

The Star contacted several people with pending foreclosures. Some declined to comment because they did not want to talk about their "personal business," and some were afraid that it might negatively affect their situation. The debt repayment program at Family Services has not seen an increase this year, according to Matherly. That program assists people in repaying unsecured debt - credit card bills. "People will pay the house payment and say the heck with the other bills," Matherly said. "But you have to have an income before you can work with the mortgage company to work out catching up with your house payments. 

"Unemployment checks have stopped for many people," he said. "These people cannot even afford to file bankruptcy. There is only so much someone can do for you when you have no income." "A lot of people fall into a 'no man's land,'" Gardner said. "They hope something will happen, that a job will come along, so they can at least file Chapter 13 Bankruptcy, and save their house." 

Chapter 13 Bankruptcy is a debt repayment program while Chapter 7 is complete bankruptcy where all debts are wiped away. "If you don't have an income you cannot work up a budget to repay debts for Chapter 13 and you cannot afford to pay the attorney fees upfront to file Chapter 7," Gardner said. 

Mary Blevins, a certified credit counselor for Family Services, said it is best if people contact her office before they get too far behind on house payments. "Most mortgage companies will work with you," Ms. Blevins said. "There is nothing I can do if the company won't work with the client." And some mortgage companies, she said, will not accept partial payments. She said it is important not to wait until there is an impending foreclosure to seek help. Those people who have run through the 26 weeks of unemployment checks or are under-employed, and have bills piling up, are most likely quietly trying to get by while waiting on the other shoe to drop.

"When someone comes into my office," Ms. Blevins said, "I try to ease their worry. I tell them that bad things happen to good people. These are people who have never had to deal with anything like this before." "The emotional strain and continued threat from creditors that something bad is going to happen can be overwhelming," Gardner said. North Carolina is a non-garnishing state so creditors cannot garnish wages for debt repayment. However, they may resort to irritating phone calls. Gardner said that collection agencies are "working accounts more these days."

There are laws to protect people from nasty phone calls from debt collectors but if you can't pay your bills you most likely cannot afford an attorney to go after a collection agency, said Gardner. "Normally, we see a drop in the number of bankruptcies this time of year because of tax refund checks," Gardner said. "Not this year. It is not increasing but it is staying steady." 

The key, according to Ms. Blevins, is knowing what the mortgage company is capable of doing for a client. "People could work with the mortgage lender themselves but they are either afraid or don't know what to ask," Ms. Blevins said. "They don't know that you can request a hardship package." Before calling the mortgage lender, Ms. Blevins said she goes over the client's budget and comes up with a solid repayment plan. "You have to have a workable solution before calling the mortgage company," she said. "They don't like unkept promises." According to Ms. Blevins, financial woes come in spurts. "It struck me this year that I was seeing more people than usual right before the Christmas holidays," she said. "People don't usually seek help with debt repayment until the Christmas bills start coming in." Ms. Blevins said there was a time when she tried to keep up with what businesses in Cleveland County were hiring so she could tell clients. "Now I don't even know," she said. "Nobody's hiring. I hear more about layoffs than new jobs." You can e-mail reporter Luann Laubscher at luann_laubscher@link.freedom.com, or call her at (704) 484-7000, ext. 120.