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5 years 3 months ago

How to Talk About Filing BankruptcyWorried what people will think if you file bankruptcy?
Sally pulls up to the red light, blinking furiously to fight back the flood of tears that threaten to overwhelm her. She’s just left her lawyer’s office and he has advised her that it is time to file for bankruptcy. Until today she had never spoken the word out loud for fear of what it may do to her reputation. As a recently divorced single mom, she has prided herself on being self-sufficient and savvy. “How did this happen to me?” As the light turns green her thoughts switch to her family, her two beautiful twin boys who lover their new dog they rightly named Oreo. “How will I explain to my kids that Oreo will have to go to a new home?” And then there is Mike, her ex-husband, who has remained as a co-signor on the mortgage for the home she lives in with her sons. And then there are her parents, who will have unending questions. “What do I say to them? How do I explain that this is not the end of me?”
What do you say when you have to file bankruptcy?
If you’re considering bankruptcy  you probably have similar questions and concerns that Sally has. The characters may be different, but the storyline is the same: having the conversation with your friends and family about bankruptcy. Declaring bankruptcy can be a difficult experience for everyone that is involved. It often begins with coming to terms with the fact that there are no other options and this may be the best chance at a fresh start. If you’re wondering how to handle this difficult conversation with your loved ones, here are a few pointers to keep in mind.
Do you really need to tell anyone that you are filing bankruptcy?
Filing for bankruptcy is a very personal experience and it is up to you to decide who you want to share this information. It may be important to inform people who will be directly impacted such as family or friends whom you may owe money to or others who have co-signed on your debt.  How you share this information may be different with each family member or friend. You may decide to pull someone aside and tell them privately, while others might be briefed in a group setting.
Explain why bankruptcy is the best option.
Whether by your own decisions or extenuating circumstances, explain to your family what has led you to this point. This is not the time to play the blame game, but instead should allow everyone to understand the seriousness of the situation and why bankruptcy was the best option.
Be realistic that a bankruptcy may lead to some changes.
People fear change but people are absolutely terrified of unexpected change. Particularly with young families, it is important to explain the impacts of downsizing your current lifestyle to something more suitable for the current financial situation. The car, home or normal family leisure activity may no longer be possible. But also remember to highlight the benefits of doing a bankruptcy such as reduced debt burden, no more calls from creditors and a chance at a fresh start. Your strength and confidence will be important in helping others understand that this is the best step forward.
It is okay to ask for help when you are filing bankruptcy.
Bankruptcy is not something you have to face alone. Enlisting your family and friends by helping them to understand your needs can grow into a support system as those closest to you get behind the new step you are about to take.
Your friend is not a bankruptcy lawyer. 
There are too many myths about bankruptcy to rely on anyone who doesn’t deal with bankruptcy issues on a daily basis.  Although friends and family members may have good intentions, it is best to assume that they do not know what they are talking about when it comes to giving legal advice about filing bankruptcy.
Call an Experienced Bankruptcy Attorney
The hardest part about filing a bankruptcy is making the decision.  We all tend to fear the unknown. What really happens is usually not nearly as bad as what we feared.  The first step is to speak with an experienced bankruptcy lawyer.  Joe Volin and Trucly Pham Swartz are experienced bankruptcy attorneys.  You can meet with us for free and learn the truth about filing bankruptcy.
Original article: Bankruptcy: How to talk about filing bankruptcy©2013 Arizona Bankruptcy Lawyer. All Rights Reserved.The post Bankruptcy: How to talk about filing bankruptcy appeared first on Arizona Bankruptcy Lawyer.


5 years 3 months ago

As a person who regularly checks his credit report, I was surprised a few years ago when one of the credit bureaus reported that I had filed for bankruptcy.  This was not true; I was only eighteen or nineteen at the time, and had no reason to file.  It was actually a family member of mine who had filed for bankruptcy.  Adding to the absurdity of the situation was that the bankruptcy had been filed in 1995, when I was only 7 years old.  Despite the inherent nonsense, I still had trouble convincing the representative of the credit bureau over the phone that the bankruptcy did not actually belong to me.  I eventually got the situation resolved, but it took a lot of needless time.
Of course, that was not the only account listed on my credit report that did not actually belong to me.  There were multiple other accounts past due which were incorrectly attributed to me on my credit report.  I believe I have had incorrect listings on my credit report every time that I have checked it, including earlier this year.  Based on the way that credit reports are currently structured, it seems to me that the system runs contrary to its stated goals.
First, I should mention that the only website that will give you an actual free credit report every year is AnnualCreditReport.com.  It will give you your reports for Equifax, Experian, and Transunion.  I find it troubling how few people are aware of this; television, of course, is littered with commercials for websites with misleading names about the prices of their credit reports, which lead to monthly account charges. AnnualCreditReport.com is mandated to exist as a consequence of 2003’s Fair Credit Reporting Act, and will provide anyone with a truly free credit report once every year.
The goal of credit reports, as I understand it to be, is to provide information on the worthiness of a customer to receive credit.  Some aspects of the credit report adequately serve this function: if I were considering lending money to a consumer, I would certainly like to know whether that consumer has recently defaulted on loans, has filed for bankruptcy, or has substantially more debt than income.
My main problem, though, is that a consumer’s credit score lowers when the consumer has his or her credit checked, whether that is by the consumer or by a potential lender.  This, to me, should be changed.  Whereas things like bankruptcy and past due accounts generally show a degree of financial mismanagement, frequent checking of one’s credit is indicative of diligent awareness of one’s creditworthiness.  Even beyond this, people in my situation, with incorrect information constantly showing up on my credit report, have somewhat of a “damned if you do, damned if you don’t” scenario.  If I fail to check my credit report frequently, then incorrect information shows up and I don’t have the chance to correct it until I have already been denied credit due to the faulty information.  If I do check my credit report frequently, my credit score will consequently decrease, and I will similarly have a difficult time obtaining credit.  I am aware that there are services available which alert consumers about changes to their credit reports, but I have trouble believing that every consumer should have to pay a monthly fee to utilize such a service, considering the mandatory nature of having reports with the three major credit bureaus for any consumer who wishes to obtain credit.
If that aspect of the credit system does not change (or even if it does), then new procedures need to be put in place to ensure that information on credit reports is actually correct.  For example, for any information that appears on my credit report, if either the creditors or the bureaus had bothered to verify that my social security number matched that of the delinquent debtor, they would have discovered quickly that the accounts did not actually belong to me.  Instead, however, many of these creditors see a similar name and/ or the same address, they incorrectly report the debt to the credit bureau without any further verification.  A mandatory social security number verification, by either the credit bureau or the creditor, would easily resolve this situation.
When incorrect information does appear on a consumer’s credit report, the consumer’s remedy is to submit a dispute to the credit bureau.  The credit bureau will then contact the creditor and ask them to verify that the information is correct.  If the creditor fails to report back to the bureau with affirmation that the information is indeed correct, then the credit bureau is legally required to remove the information.  This system is not perfect either, however.  With at least one account that has incorrectly been reported as mine on my credit report, I disputed the account, and the company STILL reported incorrectly that I was past due on an account with them.  When the credit bureau contacted the company, the company was lazy enough to report back to the credit bureau that I actually did owe them money, clearly without adequate verification.  I eventually got in contact with this company and asked why they still reported that I owe them money, even after the dispute gave them reason to believe that the information was faulty.  Their response was that they get hundreds of those every day, and sometimes these things just slip through.  I dislike a mandatory credit system that allows for corporate laziness to harm consumers in such a way.
My solution is for Congress to act on this and either put more stringent requirements to verify credit information or to remove the disincentive to check one’s credit report frequently.  The system, as is currently is, produces bizarre results and incentives that often do not reflect creditworthiness, but instead harm consumers for forces beyond their control.  Unfortunately, this is not a talking point that receives much attention in the media, so I am not confident that such changes are imminent.
Please let me know what you think.  Unlike my previous blog entries, this one is largely based on opinion, and I am curious to see whether other have similar gripes.  Also, you may have noticed that I said I said in my last entry that I would write about the discharge of medical malpractice debts.  I felt more motivated to write about this at the moment.  I’ll probably write about that at some point.  I plan on writing every other week from this point, and I am not sure at the moment what my next entry will be. Please come back here in a couple weeks and find out. Thanks for reading.
J.P. Morgan


5 years 3 months ago

People often buy cars for their children or for an elderly parent. When they do so, some of these people put their own names on the car title to get lower insurance rates or to reflect their own contribution to...


5 years 3 months ago

Thursday, June 28th, 2012 the Supreme Court decided it was constitutional to mandate health insurance.  This blog is not about my opinion – rather it’s what this decision can avoid.  So many people have had to file bankruptcy, Chapter 7 to get rid of their unsecured debt, and/or Chapter 13 to ultimately save their home because they could not afford to pay their medical expenses.  Devastating illness for many families has resulted in devastating bills.  It truly is heartbreaking to see folks who have worked hard all their lives and consequently had to file bankruptcy to get out from under the stacks of bills they incurred while fighting to get well.  Overwhelming debt puts a huge burden on any family and it’s especially difficult for the ‘patient’.  The guilt, responsibility and fear the ‘patient’ feels as a result of his/her illness is truly painful to witness.
flower child, freedom from bankruptcyI’m still a flower child at heart and frankly I really hate for our government to tell me what to do.  I promised this blog was not going to be about my political preferences, however, I can’t deny how long I resisted wearing my seatbelt just because it was the law.  Well, I’m older and hopefully a bit wiser and I for one truly hope this new law  eliminates people having to file bankruptcy because of their medical bills.  Fighting to get and stay well is hard enough.  Isn't that the point??


5 years 3 months ago

Real estate investors and some bankruptcy trustees are looking for ways to make money off your upside down homestead. Many Chapter 7 debtors with upside down homesteads do not utilize their homestead exemption on their bankruptcy petition because there is...


5 years 3 months ago

A great number of us use our bank for everything: paychecks are on direct deposit; pay credit cards, mortgage payments and utilities bills electronically.  Some bills are setup for automatic payment and others are scheduled manually.  We are familiar with on-line banking;  an understanding of how our bank’s online software works and have mastered its applications. The thought of changing how we use our bank account or worse the thought of actually changing banks is an enormous pain.  Sometimes, in preparing to file your bankruptcy it is often necessary.
Cash on hand and cash in the bank is often non-exempt (not excused).  In limitedstressed man at bank after filing bankruptcy, bank took money after filing bankruptcy circumstances when exempt it will be for a limited amount of money claimed on your bankruptcy schedules.  In a Chapter 7 case, any excess cash (the difference between what's in the bank and the exemption amount) will end up in the hands of the Chapter 7 Trustee unless you can amend your bankruptcy schedules to claim the additional amount as exempt (excused), which often is not the case.  In a Chapter 13 case, the amount of non-exempt cash in the bank may increase your Chapter 13 monthly payments. 
The amount of cash in banks gets listed on your bankruptcy schedules at the time your bankruptcy is filed, without considering outstanding checks or incoming paychecks, social security checks or the like.  Therefore, it is important all outstanding checks have cleared the bank before your Bankruptcy case is filed. It's routine to adjust the amount listed on your bankruptcy schedules before your case is filed.
Well the foregoing is tough enough to keep straight, what's worse is having to change banks.  Opening a new account at a different bank and having to learn the new bank’s system, redirect your automatic deposits and set up automatic payments is without question time consuming   and disruptive.  The two situations that require a person about to file bankruptcy to change banks are: 1. If you owe your bank money (for example: an automobile loan, furniture loan, etc.).  If that's the case, there is every reason to believe your bank will grab the money in your account and apply it to the debt leaving a person with checks bouncing and no money to pay ordinary living expenses.  2.  Depends on a particular bank’s policy when one of it's customers files bankruptcy.  There are banks that will freeze your account when they discover  you have filed bankruptcy, which leads to checks bouncing and bank service charges for each NSF check.  Assuming you are entitled to keep the cash, some banks take up to 10 working days to free up your account. 
 


5 years 3 months ago

When I mention to clients that they will be required to appear at a 341 First Meeting ofsurrounded by creditors, 341 meeting, First Meeting of Creditors Creditors, most of them cringe and become nervous immediately. They imagine a Meeting where they are interrogated and questioned about every aspect of their case.  In El Paso, the Creditors Meetings are nothing to be nervous about. I explain to my clients from inception that their 341 First Meeting of Creditors is in most cases quick and painless.  In a normal Chapter 7 case you will be asked the same series of questions as every other debtor. If anything else is going to come up we will almost always know ahead of time.  As your attorney it is our job to make this experience as simple as possible. I always make an effort to explain to clients that the questions asked are straightforward and simple. In Chapter 13 Creditor Meetings, the questioning may be more extensive but again they are straightforward questions and the Chapter 13 Trustee is not trying to trick you. All in all, your 341 First Meeting of Creditors should not be a torturous experience and your attorney should explain exactly what you should expect.
On a last note do not forget your SOCIAL SECURITY CARD and DRIVERS LICENSE!! Your meeting will not be held without it!!


5 years 3 months ago

A Chapter 13 Bankruptcy can last anywhere fromm 36 to 60 months.  Three to five years is a considerable amount of time and a lot of things can change.  There are a number of issues that may affect your bankruptcy.  Some of the most common changes that need to be addressed are:1. Change in Income.  Over the course of your bankruptcy you may find that you change jobs, become employed when you previously were not, or get a promotion or pay raise.  Any change in income should be reported to your attorney, regardless of whether it is a pay increase or decrease.  You attorney may advise that you need to amend certain schedules and/or amend your Chapter 13 repayment plan. 2. A need to replace a vehicle arises.  Your vehicle may break down, or perhaps it is just time to replace your current vehicle.  If possible you should speak with your attorney before a new vehicle is an absolute necessity.  The steps your attorney will need to take depend on the situation.  If you are purchasing a new vehicle outright, free and clear of loans, you may need to explain where the funds for the vehicle came from.  If you want to purchase a vehicle with a loan your attorney will need to file a motion to incur debt.  You will have to show that you can afford your plan payment and the vehicle.  A motion has to be filed with the court and you must allow at least 21 days for objections.  If there are not any objections your attorney will file an order with the court allowing the purchase of a vehicle.  If your previous vehcile was being paid through your chapter 13 repayment plan you and your attorney may need to amend your plan to reflect the changes.3. If you become entitled to receive a lump sum of money or property.  You could become entitled to receive money for a variety of reasons, including an inheritance, proceeds from a lawsuit or settlement, cashing out a 401k.  This list is not all inclusive.  If you receive a sum of money for ANY reason you should contact your attorney.  Generally, if you receive a sum of money while in a Chapter 13 that will have to be turned over to the trustee to be distributed to your creditors.  Generally, this will be added to your plan base and may mean that you are paying off more of your creditors.This is not an all inclusive list.  If something changes while you are in a bankruptcy you should contact your attorney.  If you have questions, or would like to schedule a consultation, please contact a St. Louis Bankruptcy Attorney Today.


5 years 3 months ago

Last week, I came across an article in the Washington Examiner while I was riding the metro to work. This article noted that residents of Maryland carry more student loan debt than any other state in the country at $33,087. Virginia ranked sixth at $30,855. The average is $29,088. Compared to the debt load I will be carrying due to law school, these numbers actually seem rather modest to me, but they still go to show that student loan debt is on the rise, especially in this geographic region. I try to put my thoughts of future student loan payments at ease by reminding myself that I am getting a degree in a (hopefully) lucrative field, but it is not only law students who are racking up substantial amounts of student debt. The debt, of course, can get crippling for young graduates. In connection with this, I have heard many espouse the false statement that student loans cannot be discharged in bankruptcy. The statement is false for its overbreadth; while student loans generally cannot be discharged in bankruptcy, the Bankruptcy Code does contain an exception in certain situations.
To explore this, I ask that you open up your copy of the Bankruptcy Code to section 523(a)(8). It reads:
“A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt — unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for — an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or an obligation to repay funds received as an educational benefit, scholarship, or stipend; or any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual.”
So what does this mean? Probably the two most important words in that paragraph are “undue hardship.” It’s the key to this whole thing. The Bankruptcy Code does allow individuals to discharge their student loan debt; they just have to prove that they have an undue hardship.
What does undue hardship mean? First, I’ll tell you what it does not mean. I recall once hearing a former Bankruptcy Judge discuss an individual who attempted to have his student loans discharged in a case before him. This individual was a dentist. When said Judge asked him why a man with a good job and (presumably) good earnings would have an undue hardship in paying his student loans back, he responded that it was too difficult to balance paying off his student loans with the payments for his new expense sports car (I think it was a Porsche).
The judge did not consider this to be an undue hardship.
I should mention before I go further that I was inspired to write this blog in part because of an excellent podcast I recently listened at the American Bankruptcy Institute’s website (www.abiworld.org). I recommend that you check it out. Said podcast discussed the different tests that the Circuits use to determine what constitutes undue hardship. Since I suspect that most people reading this live within the Fourth Circuit (Virginia, Maryland, West Virginia, North Carolina, and South Carolina), I’ll discuss that rule first, which also happens to be the majority rule in the United States. The Fourth Circuit, like most other Circuits, has adopted the rule from the 1987 case of Brunner v. New York State Higher Education Services Corp., decided in 1987. Brunner contains a three-prong test to determine whether a debtor in bankruptcy meets the test for undue hardship:(1)   “that the debtor cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for herself and her dependents if forced to repay the loans;”(2)   “that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans;” and(3)   “that the debtor had made good faith efforts to repay the loans.”
Under Brunner, a debtor must satisfy all three of those qualifications in order to qualify for undue hardship. There are some additional factors that courts use in making these determinations; for example, did the debtor successfully graduate from her program, or does she simply have looming loans from four years’ worth of college and no degree? Can the debtor pay back at least a portion of the loans? What are the debtor’s career prospects and earning potential?
Not all courts have used this test, though. The Eighth Circuit (Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) instead uses a totality of the circumstances test to determine whether a debtor would have an undue hardship in paying off educational loans, which is obviously a less strict test than the majority of courts use.
For whatever reason, a good portion of the population seems to believe that there is no way that student loans can be discharged in bankruptcy, but 523(a)(8) and cases modeled after Brunner clearly state the contrary. Interestingly, before the current Bankruptcy Code was passed in 1978, there was no bankruptcy statute which limited the ability to discharge student loans. Don’t be mistaken though: although it is indeed possible to discharge student loans in bankruptcy, it is by no means an easy thing to do. Debtors who plan on attempting to do so would be ill-advised to buy expensive automobiles beforehand – remember, Brunner talks about a minimalstandard of living.
Restrictive as it may be, I agree with the participants from ABI’s podcast – it is a good thing that some form of discharge from student loans exists under the Bankruptcy Code. A test such as the one used in the Eighth Circuit would no doubt be more useful to the debtor in bankruptcy, but in the current economy, some form of discharge for student loans is essential. By this, I am speaking in part about the new wave of for-profit universities which do just at their name indicates – try to make a profit, which is necessarily at the expense of the students. Unfortunately, these students all too often find themselves in tremendous debt, with degrees in areas which are not overly marketable in the first place, and even less so in an economy with an 8.1% unemployment rate.
Please let me know what you think. I hope I was thorough enough to give a clear understanding as to how the undue hardship exception works. Next week, I’ll be writing about the ability to discharge medical malpractice debts, based largely off the Supreme Court’s 1998 decision of Kawaauhau v. Green. I promise I will talk about things besides discharge after that. Thanks for reading.
J.P.


5 years 3 months ago

Richmond, VA-based Suntrust Mortgage will pay out $21 million to more than 20,000 African-American and Hispanic home loan borrowers to settle a federal government suit charging discriminatory mortgage pricing from 2005 to 2009. The lawsuit charged Suntrust with violating the Fair Housing Act and Equal Credit Opportunity Act.

This settlement comes on the heels of a settlement last December by Countrywide Financial Corp. and subsidiaries for $335 million for similar loans made between 2004 and 2008. Currently under investigation by the Department of Justice is Wells Fargo & Co.

"At the core (of the suit) is a simple story: If you are African-American or Latino, you likely paid more for a SunTrust loan than equally or similarly qualified white borrowers," Thomas E. Perez, assistant U.S. attorney general for the civil rights division, told the Richmond Times-Dispatch in a May 31, 2011conference call. "You paid what amounted to a racial surtax," ranging from hundreds to thousands of dollars per borrower," he told the newspaper.

The problem arose because of the way loan officers and mortgage brokers were incentivized, according to the lawsuit. The discriminatory charges (probably "yield spread premiums") boosted the commission for the loan agent when he or she could obtain an inflated price for a loan. Furthermore, the bank gave the loan officers and brokers free reign to do so by giving them broad discretion on prices beyond what should have been charged based on the customer's credit profile alone.

The investigation took two and half years and involved the review of more than 850,000 residential loans. Under the terms of the settlement, Suntrust will hire an independent administrator to contact the victims. Mailings are expected to begin at the end of this year. Suntrust admitted no wrong-doing.

The payout will average about $1,000 per person. However, in the opinion of this author, that will not nearly compensate the actual loss to many of the victims. Our law office has seen many who had homes with equity, refinanced during the height of the market, and then ended up losing both the equity and the home upon the collapse of the economy.

It's a sad state of affairs.


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