Debtor Attorney: Frequently Asked Questions
(click questions for answers)
1) What is 722 Redemption Funding, Inc.'s role in the
disbursement of Attorney fees?
722 Redemption Funding is strictly a disbursement mechanism. If
an attorney charges an additional fee for securing a redemption
loan, the amount of that fee is obtained from attorneys on every
redemption loan, and disclosed to the debtors on the loan contract.
DEBTORS, AND ONLY DEBTORS, DETERMINE TO WHOM FEES ARE DISBURSED
- TO THE ATTORNEYS DIRECTLY OR TO THEMSELVES.
If the debtor elects for the attorney to be paid directly, the
process is handled as follows: Upon the debtor returning the new
redemption contract, fees are placed into the Client Attorney Escrow
Account where they remain until the debtor signs and has notarized
the attached Acknowledgment and Authorization for Release of Attorney
Fees from Client/Attorney Escrow Account form.
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2) What is 722 Redemption Funding, Inc.'s role in the determination
of Attorney Fees?
None. The attorney fees are determined by the attorneys, not 722
Redemption Funding. Only individual attorneys and his or her client
determine what, if any, fees should be included in the debtor's
new redemption loan.
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3) Are attorney fees a way of inducing attorneys to file
redemptions?
An attorney's fiduciary duty is to act in the best interest of
each client. If a redemption loan saves his or her client money,
it could, and should, be considered a dereliction of an attorney's
fiduciary duty to not pursue a redemption loan.
Additional fees for redemptions, as always clearly stated in the
retainers of ethical and responsible attorneys, are charged regardless
if the fees are financed through the debtor's redemption loan. Financing
of attorney fees is therefore a debtor-friendly alternative allowing
debtors to benefit from a redemption loan when otherwise not possible
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4) Does 722 Redemption Funding, Inc. recommend that attorneys charge attorney
fees?
No, ironically, as the amount of any loan increases, the loan
becomes riskier, Allowing debtors to borrow additional funds for
legal costs serves no other purpose than providing equal opportunity
access to the benefits of our Redemption program to those who otherwise
could not afford the additional legal costs.
As stated above, attorneys have their own, independent fee schedules
that are mutually exclusive from our program. U.S. Bank provided
the no out-of-pocket cost option strictly as a service to those
debtors benefiting from a redemption loan only in response to feedback
from the bankruptcy community.
Also, since 722 Redemption will only fund redemption loans when
the sum of redemption payments (inclusive of all fees) are less
than a debtor would have under a reaffirmation agreement, the slightly
higher payments resulting from attorney fees prevent some redemption
loans.
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5) Is 722 Redemption Funding, Inc. a predatory lender?
722 Redemption Funding, Inc. has set itself apart from the growing
number of predatory lenders entering the redemption financing business
with an exclusive agreement with the nation's 8th largest bank (U.S.
Bank). 100% of loans originated by 722 Redemption Funding are financed
by U.S. Bank. This gives debtors an extraordinary opportunity to
reestablish credit with no penalty for early payoff. Additionally,
722 Redemption Funding will refuse to finance a redemption loan
to any debtor that does not save money (inclusive of any and all
fees) when compared to a reaffirmation on the same vehicle.
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6) On average, how much time does an attorney spend securing
a redemption for his client?
While we can not say for certain how much time is involved in
any redemption, there is much more involved than simply filling
out and filing a form. From our decade of experience in financing
redemptions for Chapter 7 debtors, we have put together the attached
Attorney Checklist with the goal of obtaining the highest level
of due diligence by the debtor's bar. While clearly not a requirement,
many attorneys have told us they follow this checklist closely.
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7) What steps does 722 Redemption Funding, Inc. take to
protect Chapter 7 debtors in the loan process?
The steps taken by 722 Redemption Funding, Inc. to protect Chapter
7 debtors are many:
- a) A redemption loan will never be processed if a Chapter 7
debtor is not saving money versus a reaffirmation.
- b) All fees are disclosed on the loan contract, and clients
are requested in writing to call to discuss all loan paperwork
and go over contracts line by line.
- c) All funds borrowed at the debtor's request for legal costs
are disbursed strictly in adherence to the debtor's instructions.
- d) All funds borrowed by a debtor for legal costs are placed
in a client/attorney escrow account until the debtor sends written
request for disbursement.
- e) Our loan process is completely transparent for debtors, attorneys,
trustees and judges.
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8) In the event debtors borrow additional funds for legal
costs, when is the attorney paid for legal work?
Our failsafe system ensures that attorneys have completed all
necessary legal work and have secured a successful redemption for
their client, prior to any fees being disbursed. This, when combined
with the above-mentioned Authorization and Acknowledgment
form, guarantees that attorneys are paid only when his or her client
confirms that all work has been completed and consents to the amount
of the fee.
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