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For these individuals, bankruptcy may be the best option to eliminate debt and relieve themselves of financial burdens so they may start anew. What many of these individuals find, though, is that student loans are usually non-dischargeable in bankruptcy.
]]> Currently, interest rates on federal student loans are set at 3.4 percent and are scheduled to double to 6.8 percent. The president and other federal officials are seeking to head off this scheduled doubling, which would save more than 7 million new borrowers of these loans nearly $1,000 a year. However, this doesn't help the nearly 37 million Americans who already have student loan debts.All of these existing debts are bringing individuals in Arizona and elsewhere to bankruptcy without offering them the ability to escape the loans that brought them there in the first place.
Reasons for why regulations were changed to make student loans non-dischargeable include bankruptcy abuse schemes that attempted to eliminate loans without evidence that the individuals seeking help were in true financial trouble. Yet, studies reveal that this sort of abuse was rarely practiced, so advocates of reform say it is unlikely such a practice would surface with a change to current legislation.
With no all-encompassing change is on the federal horizon, it is important for debtors to be fully aware of all of their rights concerning their debt and all the methods they may have at hand to manage and eliminate debts when they become too far reaching.
Source: WTOP, "Even after bankruptcy, trapped by student debt," Justin Pope, Associated Press, April 25, 2012
]]>Luckily for Arizona debtors, many of the state lawmakers overseeing the passage of the bill are skeptical of the legislation and concerned about what it would do to individuals dealing with debt. Credit card debt accumulation can be a debilitating situation, especially when one is financially unstable, and harassing collectors can only make matters worse.
There is no mention of when a final decision will be made on the bill, or what the chances are of such legislation passing and becoming law in Arizona. Nevertheless, it is no secret that many people in our area continue to suffer from overwhelming debt and need all the help they can get to confront their financial troubles once and for all.
Source: KTAR.com, "Arizona bill could lend hand to debt collectors," Jim Cross, April 30, 2012
]]>On Monday, Nadya Suleman -- arguably better known as the "Octomom" -- filed for Chapter 7 bankruptcy after her mounting debt buried her and the $50,000 in assets she possessed in a financial nightmare.
]]> Suleman rose to fame in 2009 after giving birth to eight children. Before Monday's filing and even before the octuplets were born, Suleman was in a bad situation financially.She was an unemployed, single mom with six kids already -- and suddenly the arrival of eight more placed a lot of pressure on her to produce the necessary income to support her children. Suleman received Social Security disability benefits on top of food stamps to aid her with her incredible and seemingly unparalleled position.
Things have not gotten any better for Suleman since 2009, as her Chapter 7 filing shows outstanding debts that reach $1 million: about 20 times her assets. She owes money for overdue bills, including $30,000 in late rent for a four-bedroom house, for schooling for her 14 children and she even owes her own father, though the exact reason for that debt is unknown.
What Suleman's story shows is that anyone can stumble into a financial pit and end up bankrupt. Being a celebrity or having presumed wealth means little when your situation goes beyond repair. However, it is how you come out of this unfortunate time that matters. Consult an experienced bankruptcy attorney and learn how a filing can help you get out of debt and back on your feet.
Source: CBS News, "'Octomom' files for bankruptcy, owes $30K in rent, up to $1M in debt," May 1, 2012
]]>Sometimes, filing for bankruptcy can be a complex process, but for those in dire straits financially, these complications should not steer you away from filing. With the aid of an experienced bankruptcy lawyer, you can have your questions addressed correctly and save yourself the trouble of worrying about making a mistake on your filing.
]]> For a couple in Nebraska, they chose to avoid the law in general and if the case against them is proven, it will come back to bite them.A woman who is married to a county official in the state allegedly hid $159,000 in commissions after being awarded a grant. She and her husband entered bankruptcy in 2003 and obtained the grant funds in 2004. It wasn't until six years later, in 2010, when the wife sent the bill to the county board - which reimbursed her and had the influence of her husband, who is a member of the panel.
Federal prosecutors and a state auditor are looking into the issue and will attempt to charge the couple with bankruptcy fraud.
Ultimately, this will cause more financial pain for the couple, all because -- if proven -- they deceived officials with their bankruptcy filing and then attempted to cover it up. It serves as a warning to bankruptcy filers everywhere to have a professional look over your filing, such as a legal representative with knowledge of the ins and outs of bankruptcy law.
Source: Omaha World-Herald, "Buffalo County board chairman, wife indicted," April 18, 2012
]]>It is something that many people are guilty of, but it can cause you headaches down the road. Letting your debt hang around by only paying the minimum affects your interest rate and can even damage your credit score. Worse yet, imagine you pay $50 for some shoes with your credit card. According to a financial author in the source article, paying the minimum essentially doubles the price of those shoes, especially if your interest rate is in the "high teens or above."
]]> Another step you can take to keep your credit score high and your debt to a minimum is to pay your bills on time. It is easy to let things drag on longer than they should, but that creates trouble in the future. By getting in a rhythm of paying your bills when they are due, you free yourself of late fees or fines (and interest on top of those penalties), nor will you negatively affect your credit score. If you pay late, your credit card company could jack the interest rates up on you, making it more difficult to pay off your debt.Your credit score will also suffer from late bill payments. The same financial author says that when you pay your credit card bills counts for 35% of your credit score. "One small thing -- being late -- mucks up a third of your credit score," the author said.
A couple of other strategies with credit cards are don't get too many (it can and probably will drop your credit score) and don't cancel them all at the same time (it leaves you without a line of credit and can stifle your attempts at securing a card down the line).
Source: Fox Business, "Seven Worst Credit Card Habits," Karen Haywood Queen, April 11, 2012
]]>First, the insinuation of the lawsuit having "robosigning" tie-ins is not a stretch. As the analyst points out, Bank of America's lawyers may have filed hundreds of foreclosure suits like this in one day and, in a mass-producing effort, simply wrote the name of whatever bank popped up on their computer when they searched for homes that could be foreclosed. But Bank of America says they filed these suits because they have a hand in multiple liens on the same property.
]]> Often times when a borrower takes out a home equity loan, the investor will bring in a financial institution -- such as Bank of America -- to handle the primary loan, or first lien. The institution will communicate with the borrower, deal with the loan payments and ultimately handle the foreclosure process.It is not uncommon -- especially given the popped housing bubble of 2008 -- for these mortgaged homes to have a second lien, which can be controlled by banks as well. They are more risky loans that carry high interest rates because they act as a security blanket for the first lien. Any losses are to be absorbed by the second lien before the first lien is affected.
In these lawsuits, Bank of America was servicing the first lien while also controlling the second lien. So when Bank of America (acting on behalf of the investors in the first lien) attempted to foreclose a home where they are holding the second lien, they had to name themselves as a defendant.
Source: Huffington Post, "Bank of America Sues Itself In Unusual Foreclosure Case," Zach Carter, April 10, 2012
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Well, that didn't happen. In fact, Bank of America called the debtor an astonishing 38 times after the person's bankruptcy was filed. The debtor filed suit and won a $15,000 judgment after it was found that Bank of America was aware that the person had filed a debtor's discharge and still went ahead with the unwanted forms of collection. Worse yet, letters were sent on the debtor's behalf requesting that the bank cease contact with the insolvent individual -- the calls kept coming, though.
]]> The judge involved in this case said Bank of America violated the debtor's discharge with each phone call, a clear message that the financial institution egregiously and willingly ignored the person's bankruptcy yet continued to illegally pursue that person's debt.Back in the middle of March, we looked at the role sites like Facebook and Twitter play in the practice of debt collection. Social media is just another means of which creditors can seek -- may it be legal or not -- outstanding debt from an in-debt party. A debtor's discharge is supposed to prevent this type of harassment, just like writing a letter and obtaining an attorney are supposed to stop unwanted forms of collection.
But this story shows the lengths to which debt collectors will go to make a few dollars. It applies unfair stress to an individual, and, ultimately, it's an act of bullying. If you feel you are being harassed by creditors, discuss things with a reputable lawyer with experience dealing with bankruptcy.
Source: Huffington Post, "BofA Allegedly Called Debtor 38 Times After He Filed For Bankruptcy," Alexander Eichler, Mar. 30, 2012
]]>It's a Catch-22: how do you pay your attorney while going through bankruptcy? One way is through a Chapter 13 filing. Chapter 13 bankruptcy allows the filer to restructure their debts and establish a new payment plan that is within their means. The filing must be approved by a court, but it greatly helps many people who struggle with outstanding debt.
]]> For the purpose of paying your lawyer, though, a "fee-only" Chapter 13 filing can give an insolvent party the financial freedom necessary to pay off both their attorney and their creditors. This is where the filer pays the bankruptcy estate a certain figure each month for a minimum of three years. From that estate, the filer's creditors and legal fees are paid, as well as the fee of a trustee."Fee-only" filings are usually reserved for special circumstances, but they serve an important function. Recently the First Circuit of the U.S. Court of Appeals overturned the rulings of a federal district court and a bankruptcy court, both of which rejected a man's "fee-only" Chapter 13 bankruptcy plan. The two lower courts ruled that such a plan was forbidden, but the First Circuit said it was unlawful to say that all "fee-only" bankruptcies were filed in "bad faith."
Source: Wall Street Journal, "First Circuit Lifts Ban on 'Attorney Fee-Only' Bankruptcy Plans," Joe Palazzolo, Mar. 23, 2012
]]>What is robosigning? Like the name implies, it is the robotic and thoughtless process of bank employees signing off on massive amounts of mortgage and foreclosure paperwork without verifying the actual contents of the documents. They just "do," in an effort to clear as much paperwork as possible. The result? Fraudulent and incorrect documents that cost thousands of homeowners untold amounts of money and immeasurable amounts of stress and grief.
]]> Recently the U.S. Department of Housing and Urban Development cracked down on robosigning, completing its investigation of the illegal practice. They handed out $25 billion in fines to a number of financial institutions, such as Bank of America, Wells Fargo, Ally Financial, JP Morgan Chase and Citigroup.HUD found a number of robosigning violations. Specific to Bank of America, HUD says that the bank's employees signed affidavits and foreclosure documents. The employees then claimed they knew what was contained within the signed documents, when in reality they did not. Unnamed Bank of America employees that aided the investigation claimed that sometimes an employee would sign hundreds of documents a day -- stacks of paper that were 18 inches high -- without looking over the paperwork.
In addition, attorneys and notaries at the company falsified work documents and lied about witnessing certain signatures.
Source: Charlotte Business Journal, "Feds confirm robosigning at Bank of America, Wells Fargo and others," Adam O'Daniel, Mar. 13, 2012
]]>It has become a popular practice for agencies to utilize social media tactics to contact and harass people who have outstanding debt. Some of these unwanted forms of collection include online impersonation and contacting family members to obtain information or learn your whereabouts. Considering the FDCPA does not clearly reference social media, the gray area regarding the use of Facebook and Twitter to contact an in-debt person is growing.
]]> So how can you combat such unwanted forms of collection? It may not be as straightforward as "delete your profile" - collectors could still harass friends or family online. But there are a few simple steps you can take to protect yourself from online debt collectors. One method is to respond to any letters or mail notification you get from a collection agency within 30 days.Most people have the natural reaction to ignore the issue and hope that the collectors leave them alone. It certainly would be nice, but a better course of action is to write back to the collection agency telling them that you no longer want to be contacted through any methods. It will not get rid of your debt and the collectors will seek legal action to settle the matter, but the calls, letters and online contact will come to a halt.
Remember to establish your privacy settings so that your profile is not open to anyone on Facebook. Along the same lines, do not accept friend requests from people you do not know. Online impersonation is a very real issue and debt collectors could pose as a "friend of a friend" when their real intention is to learn your personal information.
Source: USA Today, "Can Debt Collectors Contact You via Social Media?," Susan Johnston, Feb. 13, 2012
]]>A 187% increase in these pro se bankruptcy filings is a worrying sign for Arizona residents. Pro se bankruptcy filings in the state topped out at 8,726 in 2010, nearly three-and-a-half times the amount in 2007. Chapter 7 and Chapter 13 bankruptcy filings can be complicated, and it is possible that by going through the process without legal representation, you could unknowingly make an error that puts your financial well-being at risk.
]]> Considering the potential for a critical mistake that could ruin your filing, it is important to seek legal counsel. Arizona was hit hard by the recession, as bankruptcy filings jumped from 10,900 in 2007 to 36,000 last year. With so many Arizona residents in financial peril, now is not the time to skimp on an attorney to save a buck or two. The potential harm done to your filing by making that decision greatly outweighs the fees accrued by having legal representation.An experienced bankruptcy attorney understands the stress you are under, and could accommodate your fiscal situation with a financial agreement that gives you the breathing room to enjoy the support of an attorney. Remember - bankruptcy is rarely a straightforward endeavor, especially Chapter 13 filings. Having legal knowledge on your side can only help your case.
Source: Inside Tucson Business, "More Arizonans are filing for bankruptcy without legal help," Patrick McNamara, Feb. 23, 2012
]]>The National Association of Consumer Bankruptcy Attorney investigated the issue of student loan debt and found some staggering numbers. In 2010 college seniors graduated with an average of $25,250 in loan debt. By contrast, that average figure was around $24,000 in 2009. Parents are feeling the squeeze as well, owing about $34,000 in loan debt accrued by their children - a 75% increase since 2005.
]]> The rise of student loan debt is clearly a worrying trend for government officials who are seeking to continue the country's recent economic recovery.While discharging student loan debt is no easy task, there is legislation being considered by Congress to make student loan debt more flexible. The bill, called the Private Student Loan Bankruptcy Fairness Act, would allow financially-strapped students and parents to consider student loan debt under the umbrella of bankruptcy protection.
Protecting the fiscal future of the country is obviously important, but the students and families that have mounting debt from their education loans are facing real financial issues today. They need guidance and support to move their way out of the red. Considering that current bankruptcy laws can be complex and that they may potentially be changing in the near future, the best support these students and families can seek is an attorney who specializes in bankruptcy law.
Source: News10, "College debt in U.S. surpasses credit card debt," Jeff Maher, Feb. 23, 2012
]]>More data continues to roll in surrounding credit card usage and the holiday season. The Federal Reserve noted two weeks ago that the total amount of outstanding credit sat just shy of $2.5 trillion at year's end. That figure means consumer credit went up by $19.31 billion during December, almost three times greater than what financial analysts had predicted.
]]> With the economy unsettled and many people still searching for work, the month of December seems to have forced many people into borrowing to cover their holiday expenses.Sometimes increased consumer credit indicates that people are comfortable with the economy to take on more debt. Other times, it is a sign that consumers have been stretched so thin that they have no choice but to use their credit card to ensure their seasonal purchases are secure.
As the holiday season passes, in rolls tax season - a clearly important time for everyone. However, the financial situations for each individual can vary greatly, and there are many exemptions, debts and fiscal issues that need to be addressed.
You can capitalize on your tax return by consulting an attorney who can review your filing and discover these types of provisions that could bolster your refund. What you do with that refund is up to you, but for the many who routinely swiped their credit card over the past few months, it is an opportunity to clear their debts.
Source: Wall Street Journal, "Credit-Card Borrowing Surged Over Holiday Period," Jeff Bater and Jeffrey Sparshott, Feb. 7, 2012
]]>For many Arizona residents, credit card debt is a major contributor for going through with a personal bankruptcy filing. Credit card debt can be discharged (or, sometimes, restructured) after filing for bankruptcy, allowing people to get back on their feet financially. But imagine if you were to find out that the company that issued a credit card to you colluded with its competitors to deceive consumers, possibly landing you in the financial trouble you find yourself in?
]]> That could be true as an antitrust case against many major credit card issuers continues its decade-long run, as the claim states that the companies conspired to force credit card holders into forced arbitration for any disputes they had with their debt. The defendants included Bank of America, Capital One and JPMorgan & Chase, but they have since settled out of court.The remaining defendants, Citigroup and Discover, pushed on in their defense, requesting the case be dismissed. However, a federal judge in Manhattan rejected their dismissal request.
That same judge also pointed to a bevy of evidence against the companies, including a "voluminous record" of meetings between representatives of the companies starting in 1999 and concluding in 2003. Stating that the evidence "could suggest that defendants used the meetings to concoct a conspiracy to adopt arbitration clauses and boycott consumers who rejected them," it seems the judge wants the plaintiffs to have their fair shot in court.
Source: Business Insurance, "U.S. judge won't end credit card antitrust case," Reuters, Feb. 9, 2012
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