Hostess to Shut Down Operations

Posted on November 30, 2012 by Staff Writer

According to the Wall Street Journal, Hostess, “the company behind treats snacked on for generations, is poised to present to a federal bankruptcy judge a plan to shut down 36 plants and sell off the company’s business.” The announcement was made, according to the Journal, after the company’s second-largest union orchestrated a strike that resulted in a shutdown. The shutdown, Hostess announced, “would result in the loss of more than 18,000 jobs and place the fate of more than 30 American brands in jeopardy.” Union president Frank Hurt told the Journal that he “believed there was more than a good chance that a buyer quickly would swoop in to buy the profitable parts of the company and give his union’s members their jobs back.”

Yet Hostess CEO Greg Rayburn told the Associated Press, as reported in AZ Central, that there was no buyer waiting in the wings to rescue the company. Hostess is based in Irving, Texas and originally filed for Chapter 11 protection in January 2012. Yet, unlike many of its competitors, according to AZ Central, “Hostess had been saddled with high pension, wage and medical costs related to its unionized workforce.”

The shutdown isn’t only affecting the company and its workers: according to the East Valley Tribune, “the Twinkies shelves are quickly emptying across Arizona after Hostess announced it was going out of business.” Yet it’s more than cake and icing for the company’s 18,500 workers across the nation, according to KPHO Radio. There are roughly 500 bakery outlet stores across the country as well, which means that about 20,000 people are facing layoffs.

Corporate bankruptcies can lead to personal bankruptcies, and the closing of a corporation as large as Hostess will affect many across the country. If you or someone you know is facing bankruptcy, don’t go through it alone. Contact a dedicated Arizona state bankruptcy attorney today.

Image courtesy of FreeDigitalPhotos.net

Building a Better Credit Report

Posted on November 29, 2012 by Staff Writer

Your credit report is a file about you. It is full of information on where you live, how you pay your bills and whether you have been sued, arrested or filed for bankruptcy. Creditors use this information to evaluate your applications for credit, insurance, employment or a lease. A credit score is a way for creditors to find out whether to give you credit and how much to charge you for it. A credit score is a total of points from different factors. The factors are your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts. The higher your credit score, the better the chance of you getting a loan.

To start establishing credit, you should first consider applying for a credit card from a local store and use it responsibly. Second, consider a secured credit card. A secured credit card requires you to open and maintain a bank account or other asset account as a financial institution as security for your line of credit. Your credit line is usually a percentage of your deposit, typically from 50 to 100 percent. It is not uncommon to incur application and processing fees. Further, secured credit cards usually have higher interest rates than non-secured cards.

Improving your Credit Report

To make sure your credit report is accurate, the consumer reporting company and the information provider are responsible for correcting inaccurate or incomplete information. To correct any erroneous information follow the instructions at www.equifax.com, www.experian.com, or www.transunion.com. Once the erroneous information has been verified, all three consumer reporting agencies will correct the information and send you a free credit report with the correct information. This credit report does not count as your free annual credit report.

If you have any negative information on your report, which is accurate, time is the only way for it to be removed. Most accurate negative information stays on your reports for seven years and bankruptcies stay on for ten years.

Identity Theft

Here are some indications that you may have been the victim of identity theft:

· Failing to receive bills or other mail signaling an address change by the identity thief.

· Receiving credit cards for which you did not apply.

· Receiving calls from debt collectors or companies about merchandise or services you didn’t buy.

Denial of credit for no apparent reason.

There are two important steps to take right away if you suspect that your personal information has been stolen.

1. Place a fraud alert on your credit reports. You can contact any one of the three nationwide consumer reporting companies to place a fraud alert on your credit report and they are required to contact the other two companies to place an alert on your report too.

Equifax: 1-800-525-6285 or www.equifax.com

Experian: 1-888-397-3742 or www.experian.com

TransUnion: 1-800-680-7289 or www.transunion.com

Close the accounts that you know, or believe have been tampered with or opened fraudulently and contact the security or fraud department of each company. Follow up in writing and include COPIES of supporting documents. Send your letters by certified mail, return receipt requested and keep a file of all the documents that you send. When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Try not to use a number that can be easily available or easy to figure out.

4. Public record information: This shows events that are a matter of public record, such as bankruptcies, foreclosures, short sales or tax liens.

The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness and privacy of information in the files of the nation’s consumer reporting companies. There were recent amendments that were made to the FCRA. Those amendments expanded consumer rights and placed additional requirements on consumer reporting companies and businesses that provide information about consumers to consumer reporting companies.

You do have a right to know what is on your credit report, but you have to ask for it. The consumer reporting company must tell you everything that is on your credit report and give you a list of everyone who has requested your report within the past year or two.

There are four basic types of information that consumer reporting companies can collect and sell:

1. Identification and employment information: This includes your name, birth date, Social Security number, employer and your spouse’s name. It also includes your employment history, home ownership, income and a previous address.

2. Payment history: This shows you how much credit has been extended and if you have paid on time. Also, it shows if a creditor has referred your account to a collection agency.

3. Inquiries: The consumer reporting companies must keep a record of all the creditors who have asked for your credit history within the last year. They must also keep a record of individuals or businesses that have asked to see your credit history for employment purposes within the last two years.

You can order your free credit report by visiting www.annualcreditreport.com. You can request only one free credit report from each consumer reporting company each year, but you should not contact the three consumer reporting companies individually.

You may be eligible to receive other free credit reports. If a company takes adverse action against you, such as denying you application for credit, insurance or employment, you may ask for your report within 60 days of receiving notice of the action. You may also be able to receive a free credit report if you are unemployed and plan to look for a job within 60 days, if you are on welfare or if your report is inaccurate because of fraud, including identity theft. Otherwise, the consumer reporting companies can charge you up to $10 for each copy of your credit report within a year.

The Financial Picture in Arizona Starting in 2013

Posted on November 27, 2012 by Staff Writer

There have been lots of reports lately about a “fiscal cliff” that we are coming closer to as a country. The term was coined by Federal Reserve Chairman Ben Bernanke during an appearance in front of Congress. It refers to the problem which the national government will face at the end of 2012. The tax cuts put in place by the Bush and Obama administrations will be over as of midnight on December 31^st.

Payroll taxes will increase by 2% for workers. Taxes will also increase in order to fund Obama’s new healthcare initiative. There are other tax breaks which are set to expire as well as tax rates which are set to increase. The worry is that the onslaught of these new taxes will stifle the resurgence of America’s economy and send it back into a recession. Lawmakers are set to make some difficult choices soon which will affect everyone.

This will also force consumers and businesses to make some difficult decisions. In Arizona, one of the choices available for financial problems is declaring for bankruptcy. If your financial situation is bad right now, within the next year, it could be even worse. There is still an opportunity for the government to step in and change the financial future of the country. While you cannot control the economy of the nation, you can control your financial future. Contact an experienced bankruptcy attorney in Arizona who can assist you in giving you a personal financial picture and whether or not bankruptcy is your best option.

Bankruptcy Regulator Proposes Lawyer Fee Overhaul

Posted on November 23, 2012 by Staff Writer

The latest proposals to overhaul lawyers’ compensation for handling massive bankruptcies are causing law firms to disclose extensive details about billing practices. The most recent draft would, for example, make law firms compare their bankruptcy rates to those used in other legal work. Reuters reported a story about the situation.

The U.S. Trustee Program, an arm of the Justice Department that oversees corporate money spending in court-supervised restructurings, is drafting the guidelines for the proposal. The aim is to change legal fees that are considered inconsistent with the broader market.

This is not the first time bankruptcy fees are being investigated by regulators such as the trustee’s office. The reason for this is said to be that the fees are paid out of the bankrupt company’s estate, which can cause problems for creditors.

At the moment, bankruptcy courts must approve all professional fees, as far as lawyers’ compensation goes, and the trustee’s office has the right to object and argue these decisions.

The proposal first came up last November, after which law firms and other industry professionals gave feedback and criticism on the draft.

One of the points in the proposal is to call large law firms to delegate certain tasks to co-counsel if the tasks can be done more cheaply by a smaller firm. This was a response to comments that argued that greater use of co-counsel could be a big cost-saver for large-scale cases.

The final guidelines, once issued, will become effective on July 1.

This issue and proposition are to do with huge corporate cases, but individual bankruptcies deserve the proper care and attention too. If you feel bankruptcy might be the right choice in your situation, contact a dedicated bankruptcy attorney, and they can help you decide what the best course of action is for you. We can help you with your Arizona bankruptcy needs, so do not hesitate, but contact our experienced bankruptcy attorneys for a free consultation today.

Choosing a Credit Card After Bankruptcy

Posted on November 20, 2012 by Staff Writer

Many credit card companies see an opportunity for a quick sale in people who are recovering from bankruptcy. Without access to cash, and oftentimes with many assets gone, people recovering from bankruptcy often turn to credit cards as a means to get their lives back on track. While this is an obvious answer, and, if done correctly a smart one, a consumer—especially if he or she has a history of bad credit or money mismanagement—needs to be careful when choosing which card to go with. Many credit card companies have come under fire in recent years for having unrealistic payment plans and bottom lines, especially after the 2008 recession.

One such practice that consumers should be wary of is a company that offers cards with a crazy-high Annual Percentage Rate (APR). According to Daily Finance, while the “infamous First Premier credit card with its 79.9% interest rate has vanished, as have its predecessors, a 59.9% and a 49.9% APR card… other issuers seem happy to fill the vacuum left by First Premier’s absence in this market segment.” While securing a credit card after bankruptcy is important—not only as access to cash, but because using a credit card is essential to building back up credit after bankruptcy—choosing one with a low APR is essential.

The CARD Act, passed in 2009, prohibits fees from amounting to more than 25 percent of a card’s credit limit, but many credit cards still have very high fees. The CARD Act, according to Daily Finance, also “prevents issuers from hiking interest rates on existing balances and makes the bank give you both a grace period and a warning before raising your APR,” but loopholes, such as those for business credit cards, give consumers, especially those recovering from bankruptcy, something to be wary of.

Choosing a credit card after bankruptcy is only one of the many difficult processes a person recovering from bankruptcy will go through. Don’t do it alone. Contact a dedicated Arizona bankruptcy lawyer today.

Image courtesy of FreeDigitalPhotos.net

Bankruptcy Discharges: What You Need to Know

Posted on November 17, 2012 by Staff Writer

When a person files for bankruptcy, usually the end result in mind is the discharge of debts. The types of discharges available for a person in bankruptcy depends on which type of bankruptcy the person files. According to the U.S. Federal Bankruptcy Courts, a “discharge releases the debtor from personal liability for certain specified types of debts.” This means that the debtor is no longer liable for the debts incurred before bankruptcy. The discharge is the legal, permanent order that prohibits “creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communication with the debtor.” This includes telephone calls, letters, and personal contact.

The only way that a person filing for bankruptcy will not get a discharge is if there’s the need for litigation, involving objections to the discharge. The clerk of the bankruptcy will first mail a copy of the discharge to all “creditors, the U.S. trustee, the trustee in the case, and the trustee’s attorney.” Not all debts will be discharged—this depends on your state and under each chapter of the Bankruptcy Code. According to the Federal Bankruptcy Courts, “19 categories of debt excepted from discharge under chapters 7, 11, and 12.” The only way that any discharge can be revoked is if the person filing for bankruptcy did so fraudulently, which can involve a handful of shady practices.

Before obtaining a discharge, however, the first important step toward declaring bankruptcy is to do your own research into Arizona state bankruptcy code to get an idea of what the different types of bankruptcy are and what they mean for you. The next step is to hire a bankruptcy attorney. It’s not an easy process, and shouldn’t be gone through alone. If you or someone you know is considering bankruptcy, contact a dedicated Arizona lawyer today.

Image courtesy of FreeDigitalPhotos.net

Student Loan Co-Signers Face Bankruptcy When Students Default

Posted on November 12, 2012 by Staff Writer

While federal student loans don’t normally require a co-signer, the $150 million private student loan industry does require student loan borrowers to have a co-signer more than 80% of the time. At the rate at which college tuition is continuing to rise, private student loans are almost a necessity in financing a college education. Many parents, grandparents, and other relatives agree to co-sign student loans for the college-bound in an attempt to help them achieve success in life. However, these well-meaning relatives often do not think through the implications of co-signing a student loan, or the repercussions if the primary borrower defaults on the loan.

A recent article in Wall Street Journal’s Bankruptcy Beat shows that as student loan default rates continue to rise, parents and grandparents who have co-signed students loans are increasingly turning to bankruptcy when debt collectors begin to pursue them for the defaulted loans. While filing for bankruptcy protection may temporarily stave off harassing creditor phone calls and letters, however, student loans are not easily discharged.

Like the primary borrowers, co-signers must be able to prove that repaying the student loans would cause them “undue hardship,” which bankruptcy courts have traditionally construed to be an almost impossibly high standard in many cases. If, for example, the co-signer is supporting the primary borrower in other ways, such as providing him or her with a cell phone or car, but claims an inability to pay the student loan payment, the bankruptcy court is not likely to find that the co-signer is unable to repay the loans. As a result, co-signers are often simply stuck with not only the financial burden of student loan payments in later life, but also with the emotional toll that a financial dispute between parent and child can take on a family. However, in some cases, bankruptcy may be a realistic option if a co-signer is truly financially unable to repay the student loans.

If you have co-signed a student loan for a child or loved one, and that loan is now in default, bankruptcy may be an option for you. Contact your skilled Arizona bankruptcy lawyer today, and discover whether bankruptcy proceedings may be appropriate in your case.

What is a Reaffirmation Agreement in Bankruptcy Proceedings?

Posted on November 9, 2012 by Staff Writer

Sometimes, when a person files for Chapter 7 personal bankruptcy, he or she may still wish to keep paying one of his or her debts and NOT discharge it in bankruptcy. A common example would be a car loan. If you have a loan secured by a car that you are currently driving, you must pay the loan in order to keep the car. If you can still afford to make these loan payments and you want to still keep the car, despite your personal bankruptcy proceedings, then you may be able to do so by entering into a reaffirmation agreement.

A reaffirmation agreement is a contract between you and the bank or lender that holds the loan that you want to keep paying. Under this contract, you agree to pay the debt after the bankruptcy according to certain terms and conditions, even though you could otherwise discharge that debt through the bankruptcy proceeding. Since this contract occurs in the context of a bankruptcy proceeding, the Bankruptcy Code, 11 U.S.C. § 524(c) and (d), sets out very specific requirements in order for a reaffirmation agreement to be valid.

For instance, a reaffirmation agreement is not valid unless both parties agree to it before the bankruptcy discharge is final, and unless it is filed with the bankruptcy court. Furthermore, if you are represented by an attorney, your attorney must certify that you had informed and voluntary consent about entering into the reaffirmation agreement, and that it will not impose any undue hardship on you or your family. If you are not represented by an attorney, or if your attorney does not make such a certification, then the bankruptcy judge must approve the reaffirmation agreement and find that it would not cause you undue hardship and that it is in your best interest.

If you are interested in learning about more about reaffirmation agreements in the context of personal bankruptcy proceedings, contact your Phoenix, Arizona bankruptcy attorney today, and let us discuss all available options that may be right for you and your family.

Common Bankruptcy Myths Debunked

Posted on November 7, 2012 by Staff Writer

Bankruptcy is a useful legal tool available to people who are overwhelmed by debt. Bankruptcy can provide a “fresh start” to people who meet the criteria laid out in federal bankruptcy law by discharging certain types of debt. Bankruptcy is becoming a much more acceptable solution to financial straits in the current harsh economic times.

As more qualifying debtors file bankruptcy, more people are hearing second hand information about bankruptcy procedures and outcomes. The increase in bankruptcy exposure has not necessarily dispelled many of the common misconceptions people have about the process. Anyone considering bankruptcy should speak with a knowledgeable attorney about whether it is feasible and what benefits it would afford. Speaking with an attorney is a great way to separate the facts from the fiction and debunk the common bankruptcy myths.

Myth #1: Everyone will know who files for bankruptcy.

Bankruptcy is in the public record, so the information about who files bankruptcy is accessible to anyone willing to look for it. However, most people will never know who has filed bankruptcy unless they are told by the debtor herself. The creditors whose debt will be discharged in the bankruptcy will be notified by the bankruptcy court, but employers, family members, landlords, the media, etc. will not receive notice.

Bankruptcy cases that make the news are usually high profile cases where the person or business is well known or the discharge affects a large number of people. The average person files anonymously and receives her discharge anonymously, even though the information is available to the public.

Myth #2: Only very poor people are allowed to file bankruptcy.

Bankruptcy is designed to help people recover from overwhelming financial distress. People from many walks of life may fit this description. Bankruptcy is not designed to allow a person to discharge all her debt yet keep all of her expensive personal property, investments, and savings. However, even many people with higher incomes still qualify for bankruptcy.

The chapters of bankruptcy most commonly filed by an individual are Chapter 7 and Chapter 13. These chapters of bankruptcy have different rules and are designed for different situations. A person cannot file Chapter 7 Bankruptcy unless income and other requirements are met.

In very general terms, people with lower incomes often qualify for Chapter 7 Bankruptcy, whereas people with higher incomes may only qualify for Chapter 13. Each chapter has its own benefits, including the possibility of discharging large amounts of unsecured debt. An attorney can discuss when a Chapter 7 or Chapter 13 Bankruptcy applies and what benefits are derived from each chapter.

Myth #3: Bankruptcy permanently lowers the filer’s credit score.

While bankruptcy does negatively affect a credit score, it is not as devastating as many people think. Unfortunately, most people who consider bankruptcy as a solution to their financial woes already have low credit scores due to nonpayment or late payment of their debts. The addition of bankruptcy to their credit history will not be the straw that breaks the camel’s back if they try to get a loan for a new car.

In actuality, the “fresh start” from bankruptcy often enables people to improve their credit scores faster. Instead of having nonpayments reported every month, those debts are discharged and the negative reporting to the credit bureaus must end. The filer can focus on paying her essential bills—such as rent, car payment, phone bill, etc.—in full and on time.

Payment of many common bills results in positive credit reporting that will begin to increase your credit score over time. Many debtors will be able to qualify for a home loan as soon as 2 years after receiving their bankruptcy discharge.

Myth #4: Bankruptcy laws make it difficult to qualify for bankruptcy.

Bankruptcy is not the solution for every difficult financial situation a person faces. Bankruptcy is designed to provide people with a fresh financial start while holding them reasonably accountable to the extent they can afford. Bankruptcy is a very useful legal tool, but not a free-for-all.

Bankruptcy laws are very specific in which chapter of bankruptcy a person qualifies for, the assets that would be affected, and which debts are dischargeable. A person should not make any assumptions about whether she is a candidate for bankruptcy or how she would be affected by filing. The average person facing typical financial problems will very likely qualify for and benefit from some form of bankruptcy relief. A knowledgeable attorney can discuss the various bankruptcy options available based on the individual’s particular set of circumstances.

The Relationship between Bankruptcy and Divorce

Posted on November 5, 2012 by Staff Writer

The process of divorce is very clear about the division of property. As expected, assets that are held as a couple are separated to each party based upon the circumstances. For example, if a particular spouse is unable to work, they may be entitled to more of the marriage estate. Illinois is an equitable distribution state which doesn’t always mean equally half to each side. What is not often thought about is about how debts that are accrued in marriage are also divided according to these standards.

Financial issues are a big reason why couples seek divorces. Each spouse could have different spending habits and drive the union to staggering debts. This is why it is not uncommon to see people site divorce as an influential factor in filing for bankruptcy. Most lawyers would recommend filing for bankruptcy liquidation prior to filing divorce paperwork because of how easy it is divide property and debt after a bankruptcy cleans up the mess. Since the couple is filing together, there would only be one set of paperwork fees. If there is no conflict of interest, one bankruptcy lawyer might be able to assist both parties.

To ensure a fresh start after your divorce, it might be prudent to consider a bankruptcy as well. If you can talk to your spouse about it that would be the first step. Contact an experienced bankruptcy attorney in Arizona who can begin looking at your case, to see if you can benefit from filing for Chapter 7 bankruptcy before you file for divorce.