Fewer People are Filing for Bankruptcy because of New Habits

Posted on August 18, 2013 by Staff Writer

Since the beginning of 2013, consumers in the United States are not filing for bankruptcy protection as much as previous years. The way consumers are carrying debt has also improved. Credit card debt is one type of debt that can be removed or reduced through bankruptcy. Only 2.4% of credit cards were delinquent by thirty days or more, which is the lowest percentage in over 20 years.

“Sharply lower delinquency levels reflect improving consumer balance sheets, steady job creation and a continuing increase in household wealth,” said James Chessen, the American Bankers Association’s chief economist. “Many consumers have learned the hard lessons of recession and have redoubled their efforts to keep debt at manageable levels.”

This decrease in filings is a trend not only nationally, but in the Phoenix as well. Compared to the same period of last year, there was almost a 25% decrease in filings. Overall, bankruptcies have been decreasing since their peak in 2009.

Certain bankruptcy experts look to temper this good news by looking at possible causes for this decrease. They say it is not necessarily a sign that the economy is recovering, but that consumers are reluctant to sign up for new bills. The executive director of the American Bankruptcy Institute, Sam Gerdano, said that consumers have limited the chance of filing for bankruptcy by living on their base income alone.

If you have experienced a change in your life and need a fresh start financially, consider filing for bankruptcy. Large medical expenses, losing your job, and filing for divorce can all put a major strain on your bank account, even if you are frugal with your money. Don’t let an unexpected event get in the way of your future, contact an experienced bankruptcy attorney in Phoenix today. They can see if you qualify for bankruptcy and let you know what options are available to you.

Doctors Facing Bankruptcy

Posted on July 29, 2013 by Staff Writer

It’s not just the unemployed or underemployed that are still dealing with the ripple effects of the financial crisis. According to CNN Money Magazine, “as many doctors struggle to keep their practices financially sound, some are buckling under money woes and being pushed into bankruptcy.” The American Bankruptcy Institute’s health care committee, chaired by Bobby Guy, has recently noted a spike in bankruptcy filings by physician practices. Guy told CNN Money that there was a period in early 2013 when there were eight filings in a row, which before would have been considered unusual.

But it’s not doctors working in large hospitals or practices that are necessarily facing financial insolvency. Chapter 11 bankruptcy for physicians is more common when the doctor has a small private practice. Guy told CNN Money that “the weak economy has taken a toll on doctors’ revenue as consumers cut back on office visits and lucrative elective procedures.” There is also the issue of “shrinking insurance reimbursements, changing regulations, and the rising costs of malpractice insurance, drugs, and other business necessities” for a doctor’s practice, according to CNN Money.

It’s not only doctors who are affected by their practices closing—Chapter 11 does, of course, affect the filer first and foremost, but in areas where there’s only one small doctor’s practice, its closing can severely affect the community. “Having a cancer practice closer,” for example, “can be debilitating to a community,” according to CNN Money. An oncologist in Connecticut, who had had a successful solo practice for years, told CNN that his revenues began to fall when “reimbursements for treatment and drugs” starting shrinking. While he referred his patients to larger area hospitals, his practice closing likely had a severe affect on them as well. And it’s not just specialists facing bankruptcy. Primary care doctors “face similar challenges,” according to CNN Money. Fewer patients able to afford care means less profits for doctors.

If you or someone you know is a doctor who is facing financial insolvency, bankruptcy may be the best option. Don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

New Program Aims to Lower Medical Care Costs

Posted on June 25, 2013 by Staff Writer

It’s no secret that healthcare will be one of America’s greatest challenges in the 21st century. Due to the rising costs of medicine and the growing percentage of an older population more at risk of expensive procedures, it’s no wonder that medical bills are one of the leading reasons for personal bankruptcy. In fact, according to a survey conducted by the Harvard Law School and Ohio University and reported by Reuters, more than 60 percent of personal bankruptcies in the U.S. every year are because of medical bills. “Unless you’re Warren Buffet,” Harvard’s Dr. David Himmelstein told Reuters, “your family is just one serious illness away from bankruptcy. For middle-class Americans, health insurance offers little protection.”

This can be terrifying for any family with older members who are now considering their options. According to National Public Radio, the annual average cost of a nursing home with a semi-private room is almost $80,000—not a small bill by any means. The average annual cost of having someone to work as a home health aide is just over $20,000, which is significant as well. But a new experimental nationwide program is aiming to “keep people healthy and out of the hospital,” which will hopefully help to lessen some of these cost burdens. The program “dispatches hospital-trained nurses to patients’ homes to do whatever is necessary—manage prescription drugs, take blood-sugar readings, teach healthy eating habits or even arrange delivery of a motorized wheelchair,” according to AZ Central.

The government is calling these new initiatives Accountable Care Organizations, and Banner Health, a Phoenix-based hospital system, is among 32 organizations in the country to adopt the experimental program, according to AZ Central. These are meant for people on government-issued health insurance, but “private insurers such as Cigna and Health Net are launching similar agreements with hospitals for patients who have private health insurance.” A spokesperson for Banner told AZ Central that during the first year that the program was in operation for 51,000 metro Phoenix residents, “it reduced Medicare spending by 2.5 percent per person.”

If you or someone you know is facing bankruptcy because of high medical bills, don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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New Bankruptcy Laws Possible in Arizona

Posted on April 23, 2013 by Staff Writer

New bankruptcy laws may be enacted soon in Arizona, according to VerdeNews.com. The new laws have been proposed by the head of the House Judiciary Committee in an effort to “update Arizona’s dated and sometimes anachronistic bankruptcy laws,” according to VerdeNews.com. There wouldn’t be anything in the new laws that would allow individuals to seek protection from creditors, however, because “those are set in federal law.” That same federal law, however, allows each state to determine just what assets a person filing for bankruptcy can keep, and Representative Eddie Farnsworth, the lawmaker seeking change for Arizona laws, said that the “list for Arizona is long overdue for an overhaul.”

An example of this is that if a person in Arizona files for bankruptcy, law allows him to keep “one kitchen table and one dining room table with four chairs each.” Other permissible items, according to VerdeNews.com, include “three living room lamps, one radio alarm clock, one vacuum cleaner, and a choice of one television set, radio or stereo.” Yet the total value of all these cannot exceed $4,000. This law doesn’t allow for the inclusion of family heirlooms. “One person may have a hutch from their great grandmother that they want,” Farnsworth said. His revision to the law would give more flexibility to people filing bankruptcy when it comes to deciding which specific pieces they’d like to keep when breaking up their home.

Arizona was one of the hardest-hit states in the economic recession, experiencing more personal bankruptcy filings than the average state. Yet those numbers are dropping, according to Arizona Bankruptcy Court statistics. The district including Phoenix, Tucson, and Yuma, for example, had 22 percent less bankruptcy filings in 2012 than in 2011—from 35,072 total filings in 2011 to 27,298 total filings in 2012.

That doesn’t mean, of course, that all residents in Arizona are in the clear. If you or someone you know is considering bankruptcy, the most important first step is to seek the counsel of an attorney. Don’t go through it alone. Contact a dedicated Arizona bankruptcy lawyer today.

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Law Firm Dewey & LeBoeuf Bankruptcy Plan

Posted on March 18, 2013 by Staff Writer

According to the Chicago Tribune, Dewey & LeBoeuf Law Firm was, at one point, an employer of 1,000 lawyers in over 26 offices worldwide. The firm promised great compensation by the leaders of the firm to its many partners to encourage hard work. Promises made were not able to be kept and led the way for the great law firm to fall apart and hit bankruptcy.

A liquidation plan for the law firm will help Dewey & LeBoeuf pay back their creditors tens of millions of dollars and will benefit both the estate and the creditors. The nine objectors to the filing are almost resolved and will be satisfied thanks to this plan.

So here is the plan: to be released from any type of litigation, past partners have agreed to pay the law firm’s estate $71.5 million; satisfaction of secured lenders payments of $262 million; and, one unsecured creditor for $120 million. There is also a $50 million management liability insurance policy that the estate could possibly get to cover the former leaders of the firm and their actions to which put the firm in this predicament.

Before this was confirmed, many partners were upset because it played favorites to those who made more, in their minds. As well as partners who retired disagree to paying out because they were not part of the breakdown of the firm and had no responsibility in it. However, in the end they mostly all agreed that it would be better to settle on the plan then pay out and fight it.

Bankruptcy hurts creditors and owners of businesses; however, many forget that employees play a crucial role. If you are in a situation where your place of employment is going through bankruptcy and you feel you are not getting treated fairly through the process, contact an Arizona bankruptcy attorney who can guide you.

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Reform of Complicated Mortgage Forms to Help Potential Homeowners

Posted on February 28, 2013 by Staff Writer

On June 20, 2012 the Consumer Financial Protection Bureau (CFPB) testified before the House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity to highlight CFPB solutions to the problems with the current federal law regarding consumer mortgages. In a presentation, CFPB Deputy Director Raj Date explained that the two forms consumers must agree to under federal law have overlapping information and inconsistent language. “Not surprisingly,” he said, “consumers often find the forms to be confusing. It is also not surprising that lenders and settlement agents find them burdensome to provide and explain.”

The first of these developed under the Truth in Lending Act (TILA), and the other by the Real Estate Settlement Procedures Act. (RESPA) According to Date, these forms did not properly detail how mortgages worked with consumers. “For example,” he said, “many consumers select a loan based on their ability to afford the mortgage payments. But some consumers experienced “payment shock” because they did not understand that they payments could include unaffordable amounts a few years or even months after closing.” The Dodd-Frank Act transferred authority of the TILA and RESPA to the CFPB in 2011.

This ultimately means that the convoluted TILA and RESPA will be replaced by the CFPB with easier-to-understand forms “that will make the mortgage process easier for consumers and industry.”

Research to come up with the new forms include but is not limited to:

Meeting with consumer advocates, other banking agencies, and credit settlement agents to better understand the issues that consumers and the industry face
Launched the “Know Before You Owe” project—an informative drive on the CFPB website to share prototypes of the disclosure funds and a place for consumer feedback.
A Small Business Review Panel to “gather information from representatives of small lenders, mortgage brokers, settlement agents, and not-for-profit organizations about the costs of the proposals under consideration and potentially less burdensome alternatives.”

While these new procedures won’t help the one in 17 Arizona homeowners who foreclosed in 2010—and those who faced subsequent bankruptcy because of it—it is good new for Arizona residents as the state recovers from its particularly bad housing crash. If you or someone you know does, however need bankruptcy assistance, contact a dedicated Arizona bankruptcy attorney today.

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U.S. To Export Bankruptcy Code to Mexico?

Posted on February 25, 2013 by Staff Writer

Arizona, because of proximity, is sometimes more affected by happenings in Mexico than other northern U.S. states. Yet when it comes to bankruptcy of Mexican companies, the effects are felt nationwide. In late June, Mexican glassmaker Vitro SAB, according to Reuters, is “heading to a U.S. appeals court to save its restructuring at home from an assault by U.S. creditors.” This is one of the first times that the U.S. bankruptcy code could be transported beyond the nation’s borders.

Chapter 15 is a clause in the U.S. bankruptcy code that was added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. According to U.S. Federal Bankruptcy Court, “it is the U.S. domestic adoption of the Model Law on Cross-Border Insolvency” set out by the United Nations. Its purpose it to provide “effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country.” It’s meant to promote cooperation and establish legal certainty for trade, among other things.

The issue with Vitro stemmed from a Dallas bankruptcy court ruling that “refused to enforce the company’s Mexican restructuring against U.S. hedge funds.” Reuters analysis purports that the “restructuring plan violated a bedrock rule of U.S. bankruptcy by rewarding shareholders before repaying creditors in full.”

In today’s global market, when a company anywhere in the world files for bankruptcy protection, ripples are felt across the market. The U.S. is, of course, affected when major international importers and exporters go insolvent. And subsequently, U.S. business markets are affected adversely as well.

If you or someone you know has been affected by an international company’s insolvency, or have questions about how the system works, contact a dedicated Arizona bankruptcy lawyer today.

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New Bankruptcy Laws for 2013

Posted on January 21, 2013 by Staff Writer

To put it simply, there are no new bankruptcy laws for 2013. However, the good news is that the 2007 Mortgage Relief Act has been extended through 2013! The 2007 Mortgage Relief Act allows taxpayers to exclude from income the amount of debt that is forgiven or canceled by their lenders. Normally, under U.S. tax law, any debt forgiven is considered taxable income. Normally, your lender would send you a 1099-C and the forgiven debt would be treated as income on your tax filing.

So, for example, if you owe $250,000 on a mortgage and your lender forgives $50,000 of that debt in a $200,000 refinancing, that $50,000 is considered income. If your combined federal and state marginal tax rate is 36%, you would owe $18,000 in taxes. However, under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers are allowed to exclude from income the discharge of debt on their principal residence.

The 2007 Mortgage Forgiveness Debt Relief Act was enacted on December 20, 2007 and set to expire on December 31, 2012. However, Congress recently extended the Act to December 31, 2013.

Now a major benefit of filing for bankruptcy is that you do not have negative tax consequences from forgiven debt. So if you are struggling to make your mortgage payments call us for a free consultation and one of our attorneys can let you know what options are available.

Bankruptcy Charges in Arizona

Posted on January 14, 2013 by Staff Writer

It may seem backwards, but if you’re cash-strapped enough to file for bankruptcy, there’s one more major bill you’ll have to pay, and that’s for the filing itself. Some families considering bankruptcy might think it’s a cheaper option to forgo a qualified attorney to handle the proceedings, but even the Federal Bankruptcy Court advises always hiring a competent attorney to walk a person through the process. Not only are filing fees the same to file with or without an attorney, bankruptcy is a complicated process that has plenty of room for error. Bankruptcy crime is a fraud punishable by a fine of up to $250,000 and/or five years in prison. It’s always best to know what you’re getting into, and this means hiring an experienced bankruptcy attorney to take you through the process.

Filing fees vary from state to state, and tend to change every year. In November 2012, Arizona announced its newest bankruptcy charges. The typical Chapter 7 (liquidation), Chapter 13 (reorganization) and Chapter 12 (family farmer) bankruptcies are the least expensive, at $306, $281, and $246 respectively. These aren’t the only fees associated with filing in Arizona—any reopening of a case, copies, the splitting of a jointly filed case, or exemplification of any document are examples of additional fees are applied whether or not the case was filed by an attorney. An amendment to a case will cost $30, and even abandoning the bankruptcy all together will cost $176. This fee alone is a reason to seek counsel to determine if bankruptcy is right for you.

If you or someone you know is considering bankruptcy for any reason, don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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New Bankruptcy Exemption in Arizona

Posted on December 2, 2012 by Staff Writer

Many people in Arizona have found that bankruptcy is the only option left to save their financial future. The silver lining about bankruptcy in Arizona is that there are exemptions in place to protect the debtors and their possessions. Typical exemptions include a person’s car (to a value of $5,000) and homestead property (to a value of $150,000). Recently, the Ninth Circuit Court of Appeals had to examine an exemption concerning the cash value of life insurance policies.

Arizona has a current exemption concerning the cash surrender value of life insurance policies. The statute states that these policies are only exempt if “named as beneficiary the debtor’s surviving spouse, child, parent, brother or sister, or any other dependent family member”. The case which helped change this decision was concerning an adult non-dependent daughter who was named as a beneficiary.

The dependency issue was a huge tipping point for this case. The trustee of the bankruptcy was trying to reverse the exemption due to the non-dependent status of the daughter. Since the daughter is grown, this particular case fell outside of the statute. Ultimately, the appellate court found that the exemption should include independent children who are listed as beneficiaries.

As you can see the bankruptcy laws of Arizona are complex and also being updated constantly. That is why it is absolutely imperative to have the best legal counsel available. If you are serious about the possibility of a bankruptcy, then you should definitely contact an experienced bankruptcy attorney in Phoenix to start discussing if bankruptcy is your best option.