Declaring Bankruptcy to Save Your Home—Can It Work?

Posted on June 23, 2013 by Staff Writer

Arizona is still ahead of the national average when it comes to the foreclosure rate, even several years after the brunt of the housing crisis is behind us. In 2013, according to Realty Trac statistics, the percentage of units nationwide that were in foreclosure was .11, while in Arizona the percentage of unites that were in foreclosure was .13. The good news is that both figures are finally at less than 1 percent, after several years of remaining higher. The good news continues for Arizona residents with the fact that houses in auction in the state are down nearly 64 percent from last year, and those that are bank owned are down 52 percent from the previous year, according to Realty Trace. Yet that doesn’t mean that all Arizona homeowners are out of the dark, and many may still be considering filing for bankruptcy in an effort to avoid losing their home. Is this a possibility?

According to Fox Business News, it’s not. “This will not stop the foreclosure, only delay it,” states Fox. “In some cases, only for a month or two.” That’s bad news for any family really desperate to keep its home. Filing for Chapter 7 does in fact stop the foreclosure procedure, according to Fox. But “the lender can make a request to the court to remove the house from bankruptcy protection, also known as a ‘relief from stay.’ Getting this relief means the lender can continue with the foreclosure process,” according to Fox. And lenders, as one may imagine, are “usually very efficient in requesting that relief.”

The one recourse a person has, according to Fox, is to attempt to modify the loan with your lender so your mortgage is more manageable. The trick is that for any loan modification to be approved, a person must have sufficient income—which is often the catch 22 for families approaching bankruptcy.

If you or someone you know is considering bankruptcy, the most important first step is to talk with a qualified professional to determine if it’s right for you. Don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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Bankruptcy and Medical Bills

Posted on May 31, 2013 by Staff Writer

With the implementation of Obamacare getting closer, there are several questions about what the Affordable Care Act will do for Americans facing high medical bills due to an ongoing illness or disease. According to the Washington Post, “the nonpartisan Congressional Budget Office estimates that 30 million more Americans will have health insurance by the end of decade.” That’s a big number, but it doesn’t take into consideration those Americans who will indeed have coverage, but who “will still face big financial burdens after they gain insurance coverage,” a sub-sect that will likely exist, according to two new academic studies cited in the Washington Post.

According to Reuters News Service, “medical bills are behind more then 60 percent of U.S. personal bankruptcies.” U.S. researchers told Reuters that, “for middle-class Americans, health insurance offers little protection,” and even healthcare reform isn’t on the right track. Dr. Sidney Wolfe of the Health Research Group at Public Citizen told Reuters that “expanding private insurance and calling it health reform will fail to prevent financial catastrophe for hundreds of thousands of Americans every year.”

Arizona has long had one of the highest rates of both personal and consumer bankruptcies in the country. Though that number significantly decreased from 2011 to 2012—according to Arizona Bankruptcy Courts, by 22.2 percent—Arizona residents are still at a high risk of bankruptcy. In 2012, there were 27,298 bankruptcy filings in Arizona, the large majority of which were in Phoenix.

As Obamacare is implemented, everyone will be looking to see if the expanded coverage will reduce bankruptcies due to medical bills. Stephanie Woolhandler, a professor at the City University of New York, conducted research to determine this on a smaller scale after the state of Massachusetts expanded healthcare coverage, and found that “in 2009, two years after the insurance expansion took effect, just about half the debtors (52 percent) attributed their bankruptcy at least in part to medical bills,” according to the Washington Post. “In 2007, before the expansion, the number stood at 59 percent.”

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

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The Bankruptcy Means Test

Posted on May 23, 2013 by Staff Writer

Back in 2005, President George W. Bush signed a new bill into law on October 17^th. It was the Bankruptcy Abuse Prevention and Consumer Protection Act and changed the ways that bankruptcies are managed in the United States. One way is by compelling filers to receive certified credit counseling as a step to securing a bankruptcy. Another way that the bankruptcy process has been changed is by creating a “means test” to qualify for bankruptcy.

This “means test” is necessary because of differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 is also known as a liquidation bankruptcy because it discharges most debts through the sale of a debtor’s assets. Chapter 13, on the other hand, is a reorganization of debts. It allows you to keep most of your assets but sets up a repayment plan which lasts up to 5 years.

To qualify for a Chapter 7 bankruptcy, one important form that must be filled out is the “means test”. It is one of the ways to qualify for a liquidation bankruptcy. The “means test” reviews your current monthly income to see if you are able to repay your creditors in a Chapter 13 bankruptcy. If you can’t, then you are eligible to file for a Chapter 7 bankruptcy.

Current monthly income is an average of the six months leading up to your filing consisting of complete calendar months. This is all income from work, insurance, unemployment compensation, interest, and other forms of money earned. It is not including payments that were earned from previous months but paid in the six month period.

This will provide an accurate picture of your household income, which will be reviewed in two different ways. If your monthly income is below the median income for the same size household in your state, you qualify for a Chapter 7 bankruptcy. If it does exceed the median income, the rest of the “means test” will see if you have enough “disposable income” to repay your bills. For more information about bankruptcy or to file, contact an experienced bankruptcy attorney in Phoenix today.

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Bankruptcy and Employment

Posted on February 13, 2013 by Staff Writer

Many people who have to file bankruptcy have obvious and well-founded fears of losing employment after filing. Section 525 of the Bankruptcy Code, approved in 1943, ensures that no governmental unit can terminate employment or discriminate, with regards to employment, for a person having filed bankruptcy. And yet a U.S. Court of Appeals decision issued in 2011 set a precedent that could hinder this decades-old protective law. In Myers v. Toojay’s Management Corp., an appellate court in Florida decided that while government employers may not deny employment to an individual who has filed for bankruptcy, this does not apply to private employers. The Bankruptcy Code is murky, and other courts may not uphold this controversial decision. Yet anyone who files for bankruptcy should be aware of its implications.

Regardless of this new ruling, most bankruptcy attorneys agree that they’ve never heard of a private employer denying employment based solely on a prior bankruptcy filing. Losing employment after filing for bankruptcy but independent of the filing is another story, and most definitely one many would consider absolute worst-case scenario. If this happens to you, the most important first step is to contact the bankruptcy attorney who handled your bankruptcy filing. He or she will be able to help you explore options, especially if you filed a Chapter 13. You may be eligible to temporarily waive monthly payments while you seek other employment.

According to U.S. Bankruptcy Court statistics, there was a 22 percent drop in the number of bankruptcy filing in Arizona between 2011 and 2012. This figure includes both personal and corporate, but is good news regardless for Arizona residents. Despite the drop, many individuals are still dealing with bankruptcy, and could have subsequent employment concerns because of it. For this and any other reason, if you or someone you know is considering bankruptcy don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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Declaring Bankruptcy before or after Marriage?

Posted on January 2, 2013 by Staff Writer

When two people forge a bond and want to get married, there are a lot of things to consider. On one hand, there is the planning that goes into a wedding. Finding a florist, booking a venue, and all the other vendors that must be contacted make a long list. On the other hand, there are issues with where you will live, what your goals are, and other important marriage related concerns. So if you have debts, this is the time to consider filing for bankruptcy.

There are many reasons to file for bankruptcy before marriage. The means test is a very important part of being able to declare for bankruptcy because it measures if you are able to recover from being in a bad financial position by yourself. Having a separate income, being single, you may be more likely to be qualified for a bankruptcy. Once you are married, your income is considered with your spouse, even if your debts are not.

This is because Arizona is a community property state. That means that your new spouse is not accountable for the debts accrued before marriage. Those debts will be in your name regardless of your marital status. It behooves you to consider your future spouse’s credit score and income. If they also have a bad credit score, you might be better off trying to work through your debts so that you can get loans for cars or a house.

Help alleviate the stress associated with these major steps in your life. Don’t put too many things on your plate because going through a bankruptcy is as time-consuming as preparing for a wedding. The best advice is to contact a skilled bankruptcy attorney in Arizona who can help you decide the best step for you before your nuptials.

Credit Card Tips after Bankruptcy

Posted on December 26, 2012 by Staff Writer

A Chapter 7 bankruptcy will stay on a credit report for up to 10 years. A Chapter 13 bankruptcy will stay on a credit report for up to 7 years. Everyone who applies for a credit card, car loan, or mortgage, gets their credit report reviewed. Filing for bankruptcy can make you a poor candidate for bowing money or getting credit, but there are ways to rebuild credit.

While it always seems that credit cards are the reason that people declare bankruptcy, they are one easy way to rebuild credit. There are credit cards which are termed secured, which can be used by those who filed for bankruptcy. It is termed secured because the user secures their debt by paying a security deposit to the credit card company.

Before you apply for this type of credit card, do some research and get some counseling. Make sure that the card reports to all three credit bureaus. This will allow your timely payments to affect you credit scores as much as possible. Once you have a new credit card, keep the balance around 10% to 15%. Another common mistake is closing credit cards. If you close a card, it reduces the amount of credit you have available. If you can’t stop using your cards after the balance is paid, then just cut the card in half.

Bankruptcy can be an important tool to secure your financial future. If you have any question about rebuilding your credit or life after bankruptcy, reach out to a professional. Contact a helpful bankruptcy attorney in Tempe who can guide you back into a new financial future.

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 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.

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U.S. Municipal Credit Bet Cut In Half

Posted on August 29, 2012 by Staff Writer

Reuters reported a story about Berkshire Hathaway Inc. cutting $8.25 billion in credit default swap protection it has sold on municipal debt. According to regulatory filings, this amounts for more than a half of the $16 billion in protection they have sold on bonds of states, cities, and towns.

Berkshire Chairman Warren Buffet, a billionaire investor, says three municipal bankruptcies in California in such a short time have been making traditionally objectionable Chapter 9 municipal bankruptcy filings more palatable. He says this is especially true for local governments in financial crises. Buffett is one of many investors who foresee a rise in U.S. municipal bankruptcies.

Berkshire sells protection against the default of states, towns, and cities using credit default swaps, which means they would be required to reimburse the counterparty of a contract for debt losses in case of a municipal bankruptcy. Berkshire’s filing stated that it has reached an agreement with a counterparty to terminate $8.25 billion of the CDS portfolio. The portfolio references over 500 state and municipal debt issuers.

Citigroup analysts said that the $8.25 billion is likely to be remains of contracts Berkshire held with the estate of the failed Lehman Brothers bank. Lehman had bought $8.25 billion in CDS protection on bonds of 14 states before failing.

You might not be filing for bankruptcy on behalf of a city or a municipality, but every bankruptcy should be handled with care. Do not struggle with your bankruptcy alone, but get experienced legal assistance to help you find the best way to proceed. Reach for a better outcome in your bankruptcy, and contact an experienced Arizona bankruptcy attorney today.

New Allowances for Small Banks

Posted on August 14, 2012 by Staff Writer

After the Consumer Financial Protection Bureau (CFPB) proposed new regulations that require banks to disclose all fee requirements for customers, many small banks across the nation were worried that the regulations could run them into bankruptcy. Yet in mid-August, the agency “took a step toward giving smaller institutions relief in a key area: remittances,” according to American Banker.

The CFPB decided that institutions with fewer than 100 remittances “a year are freed from new fee-disclosure requirements.” The agency may have killed two birds with one stone with this ruling—a Texas banker launched a court challenge to the legitimacy of the agency after the new regulations were proposed, citing the remittance rule as a reason that the agency should be abolished.

In the original new regulations, the CFPB had excused banks with a 25-transfer limit, and raised this to 100 upon the controversy regarding remittances. CFPB Director Richard Cordray said in a press release that the agency “recognizes that in regulations, one size does not necessarily fit all. The final remittance rule will protect the overwhelming majority of consumers while making the process easier for community banks, credit unions, and other small providers that do not send many remittance transfers.” Our skilled bankruptcy lawyers in Phoenix can help you understand these new regulations and how they can work for you.

The CFPB initially proposed the new regulations as a mandate issued by the Dodd-Frank Act, meant to improve the financial solvency of cash-strapped Americans in the slow economic recovery. The new allowance by the CFPB is good news for the many smaller, community banks in Arizona, many of whom were hit hard by the economic downturn, according to a 2010 article in the Arizona Star.

If you or someone you know is facing financial insolvency despite efforts to curb personal bankruptcies across the nation, don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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