Myth #1: People who file bankruptcy are irresponsible. Even though debt is often linked to some kind of abuse, most people who have serious financial problems have faced a life crisis such as a job loss, illness, accident, or divorce. The compounding of a life event with already troubled financial circumstances can leave any household struggling with debt.
]]> Myth #2: Bankruptcy eliminates all past debts. While bankruptcy can help to eliminate unsecured debt, it does not eliminate judgments or court orders, including child or spousal support obligations. You will also not be able to eliminate student loan debt or taxes.Myth #3: You can spend freely right before filing without having to repay debts. Some people assume they can rack up credit card debt before filing and then have those debts discharged. Courts have considered this fraud and if you charge right before you file, you will still be liable for those debts.
Myth #4: Bankruptcy permanently ruins credit. Immediately after filing bankruptcy, you may start seeing credit offers in the mail. Secured credit cards (requiring a deposit) with low limit credit lines can often be obtained within months. When you start making regular, on time payments, you can begin to see an increase in your credit score. You should always keep an eye on your credit report to make sure debts are properly discharged. Some bankruptcy filers are able to obtain a mortgage within two or three years.
Myth #5: Bankruptcy will solve all of your money problems. Unfortunately, while bankruptcy can discharge a significant portion of your debts, it is not a "cure-all" solution. Chapter 7 could mean the loss of some property and Chapter 13 could require years on a payment plan. In either case, you should change your spending habits and learn to live on a budget after bankruptcy.
Source: USA News & World Report, "5 Bankruptcy Myths Debunked," Susan Johnston, May 14, 2012
]]>Attorney General Coakly has proposed revised regulations that the debt-collection industry has deemed "unreasonable." One of these amendments bars the practice of threatening to sue a consumer for an old debt that they know is beyond the statute of limitations. The new rules would also prohibit any collection activity on time-barred debt without explaining in clear language that the collector can no longer sue to collect it.
]]> Debt collectors have used unfair tactics such as threatening jail time, lawsuits and arrest, even without the authority to pursue any of these ends. New regulations would stop these kinds of threats and limit calls and text messages to two per week. The rules would also require that creditors and third-party buyers must be able to prove and verify that debt is valid. This is a setback for creditors who used computer files with phone numbers and payment amounts without actually checking to determine if debts were valid.The amendments aim to meet the needs of modern consumers and the advances made in technology. The goal is to level the playing field for creditors and consumers. According to consumer advocates, regulations are necessary and should be effective. For those who are facing overwhelming debt and who suffer creditor harassment, new legislation could limit unfair collection practices and give debtors an opportunity to take legal action against their creditors.
Source: Huffington Post, "Bad News for Most Debt Collectors, and Good News for Consumers," Bill Bartman, May 8, 2012.
]]>Part one of the survey simply asked consumers to rate their financial position: eighty percent concluded they were in need of a "major overhaul." Ten additional true or false questions asked specifics about credit card balances, arguments in the home about money, consideration of bankruptcy, maxed out credit cards, denial, missed payments, bill collectors, unemployment and lack of savings.
]]> The majority of consumers believed that they would benefit from professional assistance and advice regarding their finances. Advisers and other professional financial planners agree that seeking assistance can help consumers get back on track before it is too late.If overwhelmed by debt and unable to get ahead, remember that you do have options. When stressed by debt, the important thing to remember is that you have options and there is assistance available. The worst thing to do is ignore your debt, stuff bills in drawers, ignore creditor calls, and try to move forward without handling your finances. The sooner you take control, the sooner you can get back on track and start saving.
Millions of Americans pursue debt relief strategies, including Chapter 7 and Chapter 13, both legal ways to reduce and eliminate unwanted debt.
Source: Collections and credit risk, "Large majority of consumers report trouble managing finances," May 1, 2012.
]]>Now Congress is investigating the practices of a medical debt collector for violating a law that requires hospitals to provide emergency care regardless of citizenship, legal status or the ability to pay.
Representatives have been alarmed by alleged tactics of demanding patients pay outstanding balances before receiving treatment. For the millions of Americans who are unable to pay off debt, this could mean discrimination when seeking medical treatment. Doctors also believed that many patients were discouraged from seeking medical treatment because of unfair debt collection practices and harassment in the emergency room.
]]> Under the Emergency Medical Treatment and Active Labor Act, patients cannot be refused treatment because of an inability to pay or because of outstanding debts. There was evidence that the agency violated collection practices laws by embedding employees in emergency rooms and harassing patients for payment before receiving treatment. The company has also been accused of violating privacy laws in their debt collection practices.Often families go into debt after an illness or injury. Even though medical debts are often unmanageable, debts should not prevent future medical treatment in the event of an emergency. If you are overwhelmed by medical debts, you may be eligible for Chapter 7 or Chapter 13 bankruptcy.
Source: The New York Times, "In Congress, a Move to Look Into a Medical Debt Collector," Jessica Silver-Greenberg, April 26, 2012.
]]>Student loan debt is not dischargeable through bankruptcy, in general, but it does fall into a broader debt category that can impact financial well-being. Individuals with significant loan debt are also more likely to have credit card debt and other outstanding debts that may be dischargeable through bankruptcy.
]]> Tuition expenses have risen about three times as fast as wages according to the Labor Department. Income has also gone down. Changes like this in the economy can have a broad social impact on individuals as well as the market. The explosion in student debt also means a lower homeownership rate for young people.Bloomberg, "Explosion in Student Debt' Drags Down Housing: Chart of the Day," David Wilson, April 16, 2012.
]]>Refunds or rebates have also helped Americans further debt relief, by going towards bankruptcy filing. Filing for bankruptcy has been known to reduce and eliminate overall debt, stop legal action, stop harassment, and put an end to foreclosure proceedings.
]]> According to reports, more than 200,000 households will used their tax refunds to pay for filing and other fees associated with bankruptcy. Historically, there is a spike in filings at this time of year, in part because the refund can assist with fees, but also because filers are forced to take an honest evaluation and assessment of their income, assets and debts.Since 2005, the cost of filing bankruptcy increased and for many families, this means delaying filing until they have enough up-front cash to pay for the legal proceedings. In addition to filing fees, other costs for bankruptcy may involve verification of information and processing.
Many critics believe that the rising cost of bankruptcy only hurts consumers. For people that are in need of bankruptcy, they should not be forced into saving to file. Those who cannot afford filing will wait until they can pay the fees, and for a significant number of Americans, this one-time cash infusion comes in the form of a tax refund.
USA Today, "Tax refunds being used to pay for bankruptcy filings," Christine Dugas, April 13, 2012.
]]>Chapter 7 and Chapter 13 bankruptcy are options for homeowners who want to stop foreclosure proceedings. Bankruptcy puts an immediate end to creditor action, including foreclosures, lawsuits and harassment.
]]> The Tennessee Housing Development Agency's "Hardest Hit Fund" is another option. This fund has helped more than 1,100 families save their homes. The program helps those who have suffered a 30% loss of income and are able to get THDA to pay their mortgage up to 12 months or $20,000.In a recent settlement against major banks, Tennessee stands to collect $141 million to save their homes from foreclosure. The lawsuit with five of the largest mortgage lenders in the country arose from unfair lending practices.
While the money awarded to Tennessee homeowners hasn't been signed over by the court yet, the award will be broken in to four areas, including loan term modifications ($46 million), upside-down borrowers ($33 million), people who have lost their homes ($24 million) and programs similar to THDA ($41 million). It was not reported how the funds will be distributed or the process to make funds accessible, but the state now has additional resources to assist home owners who have suffered because of the mortgage crisis.
Source: News Channel 5, "Lawsuit Settlement Could Save Homes From Foreclosure," Marcus Washington, April 5, 2012.
]]>A bankruptcy judge in Florida is making the message to big banks and lenders clear: when your debtor files bankruptcy, stop trying to collect or you are going to pay. In a recent case, a debtor filed bankruptcy as well as a debtor's discharge, which offers a grace period while the debtor organizes finances.
After this debtor filed for bankruptcy protection, Bank of America, like many banks do, ignored the discharge and proceeded to call the debtor 38 times to demand the outstanding payments. The court has now ordered that Bank of America pay $12,500 for attorney's fees and damages for emotional stress to the debtor. Debtors in Tennessee and nationwide can benefit from this outcome.
]]> Bank of America has a longstanding record of mistreating debtors, including sending their information to outside collection agencies, even after the debtors filed bankruptcy. A previous case found that Bank of America sold the debts to an outside collection agency, which harassed a woman for three years, even after her account had been settled. As this case reminds big banks, these actions are illegal.The Fair Debt Collection Practices Act was intended to eliminate abusive collection practices and to gives consumers remedies for any violations. Individuals and businesses can put an immediate stop to creditor harassment by filing bankruptcy. Like in this case, additional compensation may be available for illegal collection action taken after filing.
Source: The Huffington Post, "BofA Allegedly Called Debtor 38 Times After He Filed for Bankruptcy," Alexander Eichler, March 30, 2012.
]]>Since the first wave of foreclosures, banks have been more heavily scrutinized for improper and illegal actions. It is often the case that there is not enough documentation to support a foreclosure. As regulators have been more thorough in investigating and reviewing lender actions, banks have taken a longer period of time to take control of property. Due to this delay, it is projected that 2012 will bring a new wave of foreclosures, further depressing the housing market, even as other signs trend towards an economic recovery.
]]> A $25 billion dollar federal mortgage settlement involving state attorneys general and lenders has formalized foreclosure proceedings. Experts anticipate that clearly defining these rules and regulations will help to streamline and clarify the process in the future.While 2011 may have seen a decrease in foreclosures because of delay, 2012 could mean a 15 percent increase in foreclosures. For those who do want to protect their home against foreclosure, Chapter 13 is an option. Bankruptcy immediately halts any creditor action. It also gives homeowners the opportunity to negotiate a mortgage modification or establish a manageable payment plan to reduce or eliminate debt.
The Tennessean, "Middle TN may see second wave of foreclosures," Bobby Allyn, March 19, 2012.
]]>The Fair Debt Collection Practices Act protects people in debt from just such a situation. The law outlines what behaviors and actions are prohibited for debt collectors. The law, however, was written in 1978 and obviously did not take measures to block online creditor harassment. Recently there have been lawsuits accusing collection agencies of online harassment, as the tactic is seeing a boom in popularity.
]]> For those with outstanding debt, there are a few ways you can preserve your online sanctity that do not involve deleting your Facebook and Twitter accounts. The first thing to realize is that there are privacy settings on Facebook you can utilize to block anyone from accessing your personal information. Establishing these parameters is a crucial first step.You also need to reflect on how you act on social media sites. Do you post statuses that give away job information, location or your cell phone number? It is best to think it through before making this sort of information public - especially if you are in debt.
Also, do you "like" banks or credit card companies that have pages on Facebook? You may actually like the way your bank or credit card company has treated you in the past, but the simple act of giving them a "thumbs up" could give away your information and allow creditors the opportunity to contact you.
One final thing you can do to protect yourself from debt collection tactics online is to refrain from accepting any and all friend requests. If you do not know the person trying to "friend" you or if you cannot establish how your friends know this person, the friend request might be coming from a debt collection agency posing as a forthcoming individual.
In the end, if you believe creditors are harassing you in an attempt to garner outstanding debt, you can file a motion or grievance against the agency. Not only could your legal fees be paid for, but you could be entitled to an award if it is found that the agency obstructed the Fair Debt Collection Practices Act.
Source: USA Today, "Can Debt Collectors Contact You via Social Media?," Susan Johnston, Feb. 13, 2012
]]>While there are positives to be taken from recent economic events, there are still many Tennessee residents who struggle with the possibility of foreclosure and potential bankruptcy. In Memphis, Tennessee, 30% of properties were in negative equity and facing possible foreclosure towards the end of 2011. During the same timeframe, the negative equity rate for mortgaged properties across the nation hit a level not seen since 2009, a period considered as the low point of the recession.
]]> "Due to the seasonal declines in home prices and slowing foreclosure pipeline which is depressing home prices, the negative equity share rose in late 2011," said the chief economist of a company which collected the data. "The high level of negative equity and the inability to pay is the double trigger of default and the reason we have such a significant foreclosure pipeline."That last thought is a worrying one for Tennessee residents. The threat of bankruptcy only compounds the issues of foreclosure, and vice versa. Considering the complexity involved in these matters, one way to ensure you get the advice and support you need is by consulting an experienced bankruptcy attorney.
Tennessee isn't the only state getting hit hard by foreclosure rates. Georgia residents also experienced high negative equity on properties in late 2011, with 33% of their properties considered "underwater."
Source: Memphis Business Journal, "Foreclosure picture dims in latest mortgage equity data," Cole Epley, Mar. 1, 2012
]]>That move will put a halt to any litigation between Gold Leaf Corp. and its disgruntled lender, giving the company time to assess its financial situation and reorganize, if it is needed. Gold Leaf Corp. filed for Chapter 11 bankruptcy in Chattanooga, Tennessee and the case is ongoing.
]]> So what exactly was Gold Leaf Corp. planning to do with scraps from the Statue of Liberty? During an eight-year project to restore the iconic American figure, Gold Leaf Corp. received hundreds of thousands of pounds worth metal, pipes and wood from the Statue of Liberty.Gold Leaf Corp. was selling these excess pieces to another company called Liberty's Legacy, which produces replica statues of Lady Liberty for purchase. Gold Leaf Corp. also used their leftover materials for more outrageous means. They sent some pieces to the TV show "American Choppers," where the cast created a Liberty Bike motorcycle. Gold Leaf Corp. also utilized some wood from Ellis Island to make a specially designed guitar.
Ultimately the venture did not prove very fruitful, and with their main investor winning a substantial settlement in their court battle, Chapter 11 bankruptcy was seemingly Gold Leaf Corporation's best option.
Source: Wall Street Journal, "Company That Sold Statue of Liberty Scraps Seeks Chapter 11," Katy Stech, Feb. 24, 2012
]]>The holiday season only compounds not just the stress associated with your finances, but the actual spending itself. Recently, the Federal Reserve released new figures that show consumer credit increased $19.31 billion in December, which puts the national total for outstanding credit at $2.498 trillion to close 2011. The rise in December was almost three times what financial analysts had originally predicted.
]]> Credit card debt is included in a category called revolving credit, which accounted for $2.76 billion of the inflated consumer credit rate. While increased consumer credit could point to a potentially good sign, there could also be a bleak economic outlook based on the Federal Reserve's new information.The optimist will say that people are becoming more secure with where the economy sits, and thus are more willing to take on added debt. The pessimist, however, would say that consumers are under heavy financial burdens, and because of the economy they have had few options to resolve their fiscal situation. This condition prompted a more fervent use of their credit cards, piling up new debt.
Well the holidays are over, and now its tax time. Many people prefer to do their own tax filing, and while that is a fine approach, it is even better to bring in an experienced legal professional. The knowledge they can bring to the table can benefit you greatly by enhancing your refund or discovering potentially troubling errors that few people would recognize.
Source: Wall Street Journal, "Credit-Card Borrowing Surged Over Holiday Period," Jeff Bater and Jeffrey Sparshott, Feb. 7, 2012
]]>The case began about ten years ago and was brought against many financial institutions that were forcing credit card users to enter forced arbitration. Those that did not comply with the arbitration clause were then barred from obtaining a credit card, the suit claims.
]]> While many recognizable brands have since settled out of court - such as Bank of America, JPMorgan & Chase and Capital One - Citigroup and Discover maintain their innocence and are the only remaining defendants in the antitrust suit. They recently made a formal request to dismiss the case, which was denied by a federal judge in New York.Stating that there is evidence that "could suggest that (the) defendants used the meetings to concoct a conspiracy to adopt arbitration clauses and boycott consumers who rejected them," the judge seems to believe that the case still has legs. He cited a "voluminous record" showing that companies named in the suit frequently met during a period that spanned from 1999 to 2003, and the judge also noted that arbitration policies were "roughly mirrored" amongst all of the companies.
The U.S. Supreme Court has made many rulings in recent years that have sided with credit card issuers on the subject of forced arbitration. However, just last week the U.S. Securities and Exchange Commission refused Carlyle Group L.P.'s IPO because the company had a forced arbitration clause for shareholders.
Source: Business Insurance, "U.S. judge won't end credit card antitrust case," Reuters, Feb. 9, 2012
]]>Regarding foreclosure, mortgage and homeownership - how does filing for Chapter 7 bankruptcy affect your home?
]]> If you file for Chapter 7, your assets can be liquidated to cover unpaid debt. Sometimes your assets can be protected, such as pieces of furniture, vehicles or even your home. But by filing for bankruptcy, a court-appointed trustee will review your case and conclude whether your fiscal situation affords you the chance to clear unpaid debt - such as your mortgage. If you cannot protect these costs, your home will be foreclosed.The foreclosure process will take a little time, but if you wait until the final moments and apply for Chapter 7 just before the foreclosure sale it can delay the proceedings for a while. It could be a few weeks or a few months, but ultimately this is a temporary fix.
Still, this extra bit of time can allow you to resolve any liability issues in your home or to possibly secure a loan modification that could potentially save your home. This time-borrowing method is far from an exact science, but it could help you out depending on the details of your situation.
As is the case in most bankruptcy cases, you should consult an attorney before proceeding with any Chapter 7 activity. There are few filings that are uniform, and little intricacies in your situation could alter the outcome of a bankruptcy filing. So discuss things with a lawyer to learn what course of action is right for you.
Source: FOX Business, "Can Bankruptcy Cause Me to Lose My Homes?," Justin Harelik, Feb. 7, 2012
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