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.

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.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

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.

Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net

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.

Image courtesy of FreeDigitalPhotos.net

Benefits of Filing a Joint Bankruptcy Petition

Posted on December 29, 2012 by Staff Writer

Finances are always a major stress for married couples, so it important to know what options are available. When filing for bankruptcy, married couples have the choice to file individually or jointly. The process is similar either way because all held debts must be reported. It may be more valuable to consider filing jointly for the following reasons.

The first concern with people filing for bankruptcy is obviously cost. By filing jointly, couples can share documentation and other legal fees. Joint filing can also result in better protection during bankruptcy. That is because if one spouse files individually, the other spouse may be pursued for debts if they are jointly held.

The second benefit is efficiency. As long as one spouse has not filed for bankruptcy recently, the bankruptcy will go easier. The amount of work for two individual bankruptcies is generally twice as much work.

There are also a few disadvantages to filing jointly as a married couple. There are chances that jointly or separately held assets or debts may negate certain state and federal exemptions. Also, if all debts are held by one individual, it may save the other spouse’s credit score to file individually.

If you or your spouse are considering filing for bankruptcy the first step is to compile a list of all debts assets and property. The next step is to meet with a qualified bankruptcy attorney to speak about your options. Contact an experienced bankruptcy lawyer in Phoenix today.

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.

Bankrupt Arizonans may be able to keep specific assets

Posted on September 12, 2012 by Staff Writer

According to the AZ Business Gazette, Arizonans may have found a clever way to legally shield their assets from creditors during the bankruptcy process.

The 9^th U.S. Circuit Court of Appeals banned the argument of trustees regarding people that have recently declared bankruptcy. The argument stated these individuals did not have to surrender the values of their life insurance annuities and policies if the beneficiaries were minors. This was based on a unanimous decision.

According to the judge– “That’s just how the law reads in Arizona.” The question of policies and annuities may not apply to all individuals looking for protection from creditors. Arizona laws allow exemptions that differ from others but these can be critical.

A perfect example of these exemptions involves the cash surrender value of a 2 year old life insurance policy. The policy states that he beneficiary must be immediate family, for example:

Spouse
Parent
Child
Sibling
&/or any other dependent family member

There were arguments from the trustees that these exemptions shouldn’t apply because children weren’t dependents.

Smith, a man who wrote for the unanimous appellate panel, stated the arguments were simply a “misreading of the law”. He explained that the “other” in the documents is referring to diversity. The judge stated “A beneficiary will fit into two different categories, either as previously stated or another dependent member of the family”.

The judge commented that “If the legislature wanted the exempt members to only be dependents, the legislature should have exempted ‘these dependents’, opposed to listing specific family members.

Smith followed up by saying “if the courts adopted the trustees’ understanding, the wording of the law would not make sense because the exempted members that were on the list, would be inapplicable.

He continued to say that even if the term “other” meant obscure, something the courts aren’t acknowledging is that it still wouldn’t support the arguments of the trustees. The impression that certain items were sold off or exempt from liquidation is not exclusive to these insurance policies and annuities.

The list of allowable exemptions is pretty systematic. This list includes:

Musical instruments with values below $250, used solely for personal use. This limit would also apply to manuals, books, and other published documents.

Individuals declaring bankruptcy can keep specific items, which includes:

Bibles
Firearms

The law permits one bible and one gun, as long as the weapon isn’t valued higher than $500.

If you are considering a bankruptcy, consult with an Arizona bankruptcy lawyer first and they will be able to advise you on the best way to handle your situation. A knowledgeable bankruptcy attorney in Arizona will be able to help you determine which of your assets you will be able to hold on to when you file for bankruptcy.

Fair Debt Collection Practices Act

Posted on September 3, 2012 by Staff Writer

There are many laws that provide protection to debtors from aggressive debt collectors. The most widely known law for protecting the public is the Fair Debt Collection Practices Act (FDCPA). Often debt collectors violate the law through their relentless collection efforts.

Common FDCPA violations:

Made threats

Called repeatedly

Called at unusual hours

Told someone other than your spouse about your financial situation

Mislead you about the debt status or the amount you owe

Implied that you have committed a crime by failing to pay your debt

Misrepresenting their employer or acting like that work for a government agency.

They’ve talked to or sent letters to other people about your debt.

If your FDCPA rights have been violated, our Arizona bankruptcy law firm can help you file a FDCPA lawsuit against the debt collector. By filing a FDCPA claim you may be able to receive statutory damages, actual damages for medical costs and lost wages, and reimbursement for your FDCPA attorney’s fees and all other FDCPA filing fees.

Debt collectors want to avoid FDCPA lawsuits because it increases their debt collection costs and insurance rates. It also adds to their cost of business to defend FDCPA lawsuits and can result in additional government regulation.

As a consumer, you may feel at a loss to defend yourself against the complicated debt collection tactics many collection agencies use, but as a consumer you have rights. If your rights, which are established under the Fair Debt Collection Practices Act (FDCPA), are violated, you have a right to compensation.

If you have had your FDCPA rights violated, call an Arizona bankruptcy lawyer, we have the resources, and experience necessary to recover the damages you deserve.

Bankruptcy Not Only for the Average Joe

Posted on July 30, 2012 by Staff Writer

After the annual National Football League’s draft season, it is reported that an estimated 200 college athletes will secure contracts worth millions of dollars. Yet, in as little as five or ten years, these same athletes may become bankrupt.

This phenomenon is not limited to any specific group of athletes, but basketball and football players seem to file bankruptcy in the highest numbers. Sports Illustrated set forth estimated numbers (in 2009) of 78% of NFL players and 60% of NBA players were experiencing financial strain between two (NFL players) and five (NBA players) years of retiring. Exactly how does this happen?

Although there are several reasons for this occurrence, one of the contributing factors seems to be a result of unsound financial advice. The new millionaires become magnets for so called “advisors” who may not actually be experts in handing financial matters. Also, marriages and extramarital affairs contribute to huge income losses for athletes.

Athletes receive their pay early in their careers and there is a marked lack of the same cash flow after retirement or as the athlete ages. Unwise money management from the beginning can create bankruptcy in later times.

The average person who files bankruptcy may not have the same status of financial high points as these professional athletes, but they face financial mishaps in a similar manner. The Supreme Court set forth the definition that bankruptcy “gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” As such, bankruptcy is an available tool to help alleviate financial burdens and learn from past missteps to plan for a successful future. Contact a compassionate Arizona bankruptcy lawyer today to begin your new life.

AMR to File for Bankruptcy

Posted on June 30, 2012 by Staff Writer

AMR. Corp. (AAMRQ), parent to the third-largest U.S. airline American Airlines announced today that it would seek to extend its right to file a bankruptcy reorganization plan by three months. Efforts to secure $315 million in cost concessions have been slowed by a pilot’s union vote on the matter. The extension request may come as soon as next week according to Bloomberg BusinessWeek.

Union leaders agreed to let members vote on the cost concessions this week, but balloting will not end until Aug. 8. The union is required to take six weeks to brief members before voting on the contract. That timeline was not considered by AMR in its original petition, or in New York Bankruptcy Judge Sean Lane’s ruling that AMR void existing contracts by today.

The extension of the deadline from Sept. 28 to Dec. 27 means the company will likely miss AMR Chief Executive Officer Tom Horton’s goal of exiting bankruptcy by 2012. AMR’s plan calls for nearly half of the proposed $2 billion in annual spending cuts to come from labor costs. Judge Sean Lane has delayed ruling on whether American can reject contracts of stock clerks, flight attendants and mechanics until August 15, after the pilots vote.

The extension request will also delay a possible takeover by US Airways. While a formal merger request to AMR creditors has not yet been made, the Tempe, Arizona based airline has already secured agreements with all of American Airline’s unions that would take affect if the airlines combined. The company has also been building support for its plan, which cannot be offered until AMR’s exclusivity rights end, with AMR’s creditors.

If you or your company is considering filing for bankruptcy, you need the best legal representation possible. Contact a caring and qualified Arizona bankruptcy attorney for a consultation. They will help guide you through the legal process and get you started on the path to financial recovery.