Filing Bankruptcy as an Insurance agent

[lessonlearned]

Hello,

I am a Farmers Agent in California faced with a difficult situation. I started my agency 5 years ago and have grown steadily, although not as fast as I hoped. Along with some financial mis-steps early in my career change have left my wife and I in a mountain of debt that we cant dig out of. I am considering filing Chap 13 Bankruptcy as a way to get a fresh start. I do intend to keep my business and work business as usual. I know that getting future appointments could be troublesome, but I am under the impression that my existing appointments will not be impacted. I am also under the belief that this will not be a factor in my relationship with Farmers, as their is nothing in the contract that talks about bankruptcy. Anybody have any knowledge or experience with bankruptcy with regards to carrier appointments and or Farmers Insurance?

Thank You,
LL

[BarefootIA]

I havent filed bankruptcy but I know others who have and it did not affect them. I dont know what state youre from and how your insurance contracts read, but it is generally a case by case basis. Mainly, in this economy, one would think that you could get away with it. I have considered it, I was also worried about my home forclosing, which it didnt because I was able to short sale it, but if it was going to foreclose I figured I might as well BK and get our from under whatever I had. I talked to my market reps about it and they didnt think I had anything to worry about. I am also part of a cluster, which gives me additional protection. If you are in California and are interested in knowing more about that, feel free to message me on it & I will tell ya more and how it protects you.

BarefootIA
in the Golden State of CA.

[SEANMYERS]

I too am in a situation where because of Real Estate issues gone bad I am considering BK (I'm in CA)
I'm also part of an Insurance Network with Preferred appointments. I would appreciate any info you have on the
repercussions (if any) on declaring BK and how it may effect current/future appointments.

I also have an interesting situation where the Real Estate Company hired to conduct my short sell, completed the tranasction but agreed without my knowledge or input for my 2nd loan to release the loan but still leave me owing them 50k. I of course did not read all the paperwork at closing of Escrow) and signed a note agreeing that 50k would still be owed. Long story short I am about to got through Mediation/Arbitration and if it does not go my way I may have the BK issue to deal with. Lesson to everyone out there, don't trust anyone to look out for your best interest and read what you're signing.
In this case Real Estate Company/agent did the complete opposite of what I asked them to do. Not to mention that my credit report shows foreclosure and not short sell and RE company is not doing anything to correct it. I have been given a 50/50 chance by an attorney friend of mine of this being ruled in my favor.

info@sean4insurance.com

[IndyMischief]

Sean,

Are you kidding? You didn't read the paperwork?

You're an insurance agent. In looking at your website, you look to have expertise in many, many areas. I've got to say that sounds just a little amazing for someone of your apparent caliber.

Well, if people have to learn the lesson of not signing anything they don't understand from this post, life has probably already bee really tough on them. They should have learned that lesson long before entering the insurance biz. I was taught at an early age that the most dangerous thing anyone will ever hold in their hand can be a pen that's about to sign your name. And this post just proves it.

Your an insurance agent, and I'll bet you tell people all day long what a mistake it is to play the role of their own insurance agent and do it themselves online ...and that's good advise. Why would you play the role of attorney, and interpret documents you don't understand? Or, with a cursory read-through, how could you not understand them?

I don't mean to beat up on you personally. I realize the stress you were under, and that can add to the confusion. We all make mistakes. Hopefully we learn these little life lessons earlier, rather than later, to make them a little less catastrophic, though.

One question, while I’m playing internet bully. What did you think a "short sell" entailed? Read the name - short sale. That means to me that you are short of all the money you need to pay your obligations to everyone. Did you think the Real Estate Company was doing the transaction out of the goodness of their heart? Did you think the mortgage company was just going to say, “Aw, forget the missing money, you tried to pay us all you could”?

Without having complete knowledge in this area, I may be gravely mistaken, but I think your attorney friend is either not being a good friend, or not really an attorney. It would seem to me that a miracle would have to take place to get a decision in your favor at the upcoming hearing. Am I out of my tree?

And, finally, you seem to be focused on the fact that your credit report is showing a foreclosure, rather than a short-sell. Really? Can I ask why you care? Planning on using credit to get yourself up to your eyeballs in debt as quickly as possible after this most recent “success”? What’s the difference? You couldn’t pay what you promised to pay. Foreclosure, short sell, repo …it all translates to the same bottom line, doesn’t it?

I know, I know …there were reasons. And, they were probably very good reasons. There always are.

[gregcw]

lessonlearned,

I started out life with Farmers Insurance Group in 1982. I left them in 1989. I would be careful because, while their contract does (or at least did in 1984) give only 5 reasons that they didn't have to pay you to leave, it still allows them to terminate with only a 90 day written notice and does not limit the reasons. It only gives you the right to appeal the termination. In short with my experience with Farmers I wouldn't trust the contract's silence on the issue as protection.

The only safety that you may have is if you have consistently 1) received Contract Value Bonuses, 2) written Life Insurance and 3) dealt in their Financial Services (which I did not have access to when I was a FIG agent). You probably also want to read the FARMERS INSURANCE posts that are above yours in the I/J New Discussions.

[BarefootIA]

IndyMischief: Might I suggest you ask yourself 3 questions before you run your fingers on a message board? 1. Is it true 1. Is it kind? 3. Is it NECESSARY? If what you are about to say doesnt meet 2 out of 3... sit on your hands!

As for how a short sale reads on paper, you need to dispute the Foreclosure listing with the credit bureaus. They will then carry word back to the lender and ask them why they reported it as "Foreclosed" when in fact it was not foreclosed. If it indeed was not a foreclosure they will fess up and you should see it corrected. Your Real Estate broker is going to run and hide, but I would still go after them. Chances are they had no idea what they were doing either. Promise the moon then go hide in its shadows when they find out it isnt theirs to give away.

As for the $50k... was it a HELOC? If it was a HELOC, they needed to advise you that HELOCS cant be written off in a short sale because the home is not collateral on a HELOC, the equity was but the home wasnt. Equity went bye bye leaving you responsible. Even a Foreclosure cant get you out from under a HELOC. My husband is a Real Estate Agent and he has done about 20 short sales in the last 8 months, and above all, he makes absolute certain that his clients know what theyre in for, to the very best of his ability. Short sales are a pain in the rear end no matter how you conduct them, they always get goofed up, people lose paperwork, yours goes to the bottom of their stacks (on the bank end) nothing the bank does makes any sense and every time you deal with them it will be a different person because either the last person got laid off or quit.

I short sold my house and I got a 1099 for almost $300k. We were expecting we would get it but it was still rotten to see. There is tax form for that too, there is an act that was passed in 2007 but I dont remember what its called. Its late and my brain has already checked out for the evening. If anyone needs that info I can have my husband forward me his links to everything.

I dont think a foreclosure on your record is going to keep you from buying a home, too many people lost homes and they will be off the market and unable to go into debt with a new home... theyll have to come up with a forgiveness for those who lost homes between 2006 and 2009.

I dont advise anyone to shortsale if they dont have to, principal forgiveness will come about soon enough me thinks. Too late on my home but others will be able to keep theirs.

[pita3333]

Great post from LessonLearned

My sister and brother in law are about to go thru foreclosure or a short sale. In fact they are moving out of their house at this very moment and relocating to another State in search of a stable job for my brother in law. They are also filing a BK.

The reasons for this are primarily his lack of being able to find stable employment since the market dropped from his career of more than 15 years. BTW the current financial crisis started well over 18 months ago...that is when his business as a wholesaler of furniture dried up. Since then he had had a few jobs in an effort to change his fortune. The last time he was laid off was 10/30/08, since then he has pretty much sat at home playing computer games...when he should have been busting his backside to get at least some income to support his wife and two young kids. I know that in the few times I have found myself with out work...it became my job to find a job!

I have had a few discussions with them and I understand their frustration of the situation THEY got themselves into...I am dissapointed by their lack of making any real decisions. They are being reactive rather then proactive. They let it get worse by doing nothing when the bills started backing up...but they still went out to dinner every weekend when they should have cut back. They did cancel the gardener...and I went with him to buy a lawn mower...rather then get a decent used one...he got a top of the line model from Home Depot. I was shaking my head ... he could have saved more than $300 that day.

Recently I applied for an auto loan and was notified of a collection item on my credit record. I was shocked and made an immediate call to the collection agency who put it there. It was due to an unpaid parking ticket. I did not recall receiving one in that city and asked for a copy of the document, which they had to request from the City. Yesterday after waiting 3 weeks I called the city and got a copy within 30 minutes. It was indeed my ticket for a trailer that I owned at the time. I took responsibilty and called back the collection agency ... and asked them what efforts they made to find me. Since it was under $500.00 they made NO effort other than placing a notice on my credit record! Had they googled or searched directory assistance they would have found me several times. They only way they will remove this item from my record is with full payment, after some discussion they agreed to two payments 30 days apart. But they will not put this in writing to me...so I have to take a leap of faith that they will live up to their end of the deal.

The bottom line....whenever our own financial or personal reputation is at stake WE need to take PERSONAL responsibility and read each and every word in each and every document that we sign. WE need to research via other professionals what our rights and DUTIES are. WE need to take charge of our situation and life and do what we need to do to protect ourselves. No one else will. Not in the current customer dis-service environment we live in.

Then we each need to remember what it felt like when we had a difficult situation...so that when our clients get in similar situations we can react with empathy and give them proper guidance.

[SEANMYERS]

in response the internet bully, my situation is no different than anyone who walks into my office and has to rely on my expertise, honesty and integrity as well as my fiduciary responsibility to make sure all angles of their exposure are covered whether or not they put their signature to paper.It is unrealistic to expect the average Joe to understand all aspects of an Insurance policy as I do not understand all aspects of a Real Estate Transaction.Yes of course I should have read each & every paper signed but in this particular situation I had to rely on the so called Short Sale expert to carry out my explicit instructions and advise me on any pitfalls.When I went to sign Escrow paperwork the deal between the Bank & RE Agency was already made. A signature was not even required except for the fact that the Escrow company as a matter of course, stamps, dates and obtains a signature for their own records. In other words where is the fiduciary responsibility of the RE Agency to inform me of what decisons they had made on my behalf without offering me any alternatives and very much contrary to what I told them I wish to have happen. If I was informed prior to signing documents that I would still owe 50k at the end of the day, I would have found a way to stay in the property or some other alternative. I'm a big boy, if I felt that I was offered the right or any information I would accept full responsibility and move on. As a side note, when confronted, my "short sell" expert (self titled) had no clue as to why I still owed money and had to get back to me. Well she came back with an attitude of all the things I should have done and nothing she should have done and basically told me I was sh.t out of luck! As for my credit report showing "Foreclosure" instead of "short sell" it does matter according to the RE Agent who told me a short sell would be less of a hit on my credit and therefore easier to repair. I only go to these lengths to explain my situation so that others are aware of falling into a similiar situation. My 50k gift to you!

[IndyMischief]

Sean & Barefoot,

Fair enough. I apologize. I was probably having a bad day. I was definitely rough.

Barefoot was very helpful, although I think we should all be a little careful when it comes to showing people exactly how to escape the debts they create. You might not think it affects you, but it really does. The very best solution is to keep your home at ALL costs. Take a 3rd job if needed, because there is no easy way out. Having said that, Barefoot did a much better job of expressing the real point, and being helpful at the same time. I could definitely take some pointers.

Maybe it's because I'm not from California, but I still don't understand how Sean could have given over the total rights to the home and let the RE do as they pleased. There simply must be some strongly worded paperwork on anything that a seller could possibly sign that would give those kind of rights. You must have assigned all rights to them. It simply would not occur to me to ever hand over the reins like that. But again, maybe things are done differently than they are in Texas. So, I plead innocence by ignorance. Let me just state that here, there are only a handful of papers that need to be signed for the RE. They are all simple and plain spoken. Perhaps in CA they have much more lengthy legalese, but if so, a few hundred dollars to an attorney to review would have been the best answer.

Anyway, I'm sorry to trod so heavy on the downtrodden.

[BarefootIA]

Thanks Indy, we still love ya and I totally see your point. Alot of us folks who lost our homes are hard enough on ourselves but you are right, you do have to be in Cali to hear understand the tone here. There are many reasons people lost their homes, and there is blame on both sides when it comes to a bad loan. Some people were "duped" into the bad loan, some people felt pressured as if they had no choice, others figured they would just jump on the bandwagon and make money on their home like they saw other doing and getting away with. Figured their interest rate would never increase because they could sell before that happened and make their quick dough. Some people lost their homes because they got transferred out of the area for work and were unable to sell the home, as well as unable to keep living in it. Others like myself ended up in surgery and out on medical leave for a year & it was either lose my business or lose my house, and the business was the better choice to keep. And though I had a 30 year fixed loan, I kinda feel like our equity was stolen from us. We bought a home when we needed to buy one, could afford it at the time. Times got tough, and we werent able to sell it like you ordinarily would when the goin gets tough. I have personal disability plans but they are still processing my claim... 6 months since I filed it. So some of us out here are pretty innocent in why we had to let our homes go, others though, feel the banks swindled them out of their equity by being so shady with their lending and that the bank trashed our investments. Kind of like a stockbroker who is careless with your money. Or an insurance agent talking you OUT Of your good policy and into a bad one, leaving you at risk. So, they feel the banks deserve what theyre getting, it is exactly what they asked for.

So thats Cali in a nutshell, and companies literally sprung up out of the ground to reel people in and try to make money off of their situation. Namely, Short Sale administrators. You do sign forms that give them the rights to negotiate a deal on your behalf with the Lender. The owners of the home are often left out of the loop. Usually the short sale works out great, the homeowner gets off the hook with a 1099 for the difference between what the home sold for and what was owed on it, and that 1099 amount can be pretty high... but you can apply for the amount on the 1099 to be forgiven so you dont pay taxes on it.

I understand that Texas didnt get hit nearly as hard as Cali did with the subprime loans. Lenders were literally bending over backwards to give you a loan for California property, especially in the town I live in... the foreclosure capital, blah.
At this point, there is no reason for 1 or 2 people to keep their homes and claw their eyes out trying to pay for a home that isnt worth even half what they owe, when everyone else is taking the government ques and getting out from under them. The lenders bit off a lot more than they could chew and left us with the bill... but we had our own plate full that we had bitten ourselves. So, it isnt the buyers fault entirely and not the lenders fault entirely. Now everyone is working together to see if they get each other back on track before the whole mess began.

I was in San Antonio last year and I Loved it there, didnt want to come back! You know in Texas they actually BUILD schools to go with all the new homes they plan to sell... imagine that!!!

[SEANMYERS]

yep, I think CA is a whole different story compared with Texas and even though I may have signed paperwork letting the RE folks handle my short sale, my atttorney and I still think they had a fiduciary duty to do right by me...or maybe not! We'll see!

[mikebb22]

I am also a Farmers Agent in California. I met with a Bankruptcy lawyer today. His question that he didn't have the answer to is if the trustee of the bankruptcy can keep future commissions to pay back the debt. Does anyone know of other agents that have filed for bankruptcy and if they were able to keep 100% of all future commissions without giving them up to the trustee?

[Bob123]

What about Health and Life Agents and bankruptcy. Is there any insight anyone can provide regarding us?

[babula]

How long after a bankruptcy would a person have to wait before applying for a home loan? I have heard that sometimes banks will disregard the bankruptcy as soon as 1 year after the filing. Please elaborate.
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[JIMMYE01]

I OWN AN INSURANCE AGENCY IN IOWA. I FILED A CHAPTER 7 BANKRUPTCY DUE TO CREDIT CARDS AND MEDICAL BILLS. THE BANKRUPTCY TRUSTEE LAWYER RECEIVED A LETTER FROM A PERSON THAT WANTS TO PAY THE TRUSTEE FOR MY AGENCY, WHICH IS MY LIVELY HOOD. I INTEND TO CONTINUE TO SELL INSURANCE TO MY SAME CLIENTS. I HAVE NO CONSUMER OR INSURANCE DEPT COMPLAINTS, AS I AM A HONEST AGENT. THE TRUSTEE IS EXPECTING ME TO COUNTER OFFER TO BUY BACK MY AGENCY, WHICH I STILL OWN. I HOPE SOMEONE HAS HAD ACTUAL EXPERIENCE ON WHAT A BANKRUPTCY TRUSTEE CAN AND CANNOT TAKE FROM ME. HERE ARE THE DIFFERENT AREAS OF CONCERN, AND I WOULD APPRECIATE ANY OTHER HELPFUL INFORMATION OR GUIDANCE. CAN THE TRUSTEE TAKE OR SELL THESE ITEMS IN A HOSTILE PURCHASE, AS I INTEND TO KEEP MY CLIENTS AND MY COMPANIES.
1. MY OFFICE LEASE
2. MY AGENCY PHONE NUMBERS
3. NAME OF MY AGENCY
4. EXPIRATION LIST OF MY CLIENTS. CAN HE TAKE ONLY THE NAMES, OR POLICY NUMBERS, OR PRIVATE INFORMATION TO INCLUDE SS#, DATE OF BIRTH, COVERAGES, ETC, DEC SHEETS.
5. MY AGENCY CONTRACTS WITH INSURANCE COMPANIES
6. IMPOSE A NON-COMPETE ON ME AND OR MY STAFF
7. COMPUTERS, OFFICE EQUIPMENT
8. COMPUTER DATA, SOFTWARE, COMPUTER PROGRAMS, BACK-UPS, ETC.

PLEASE LET ME KNOW IF YOU HAVE HAD A SIMILAR SITUATION, OR KNOW WHAT THE ANWERS ARE, OR WHAT YOUR IDEAS OF WHAT THE ANSWERS ARE