Bankruptcy can Raise Your Credit Score

Posted on August 1, 2013 by Staff Writer

We have all heard the horror stories about what bankruptcy can do to your credit rating. Unfortunately, your credit rating is probably suffering from things much more negative than a bankruptcy. If done right, bankruptcy could actually raise your credit score.

Whether your credit rating will qualify for credit with a specific company or a certain utility is very difficult to determine. It will be subjective and completely determined by the underwriting guidelines of the creditor. This is why a straight answer to the question is so hard to find. It may not exist.

From my personal experiences, I know that secured credit, to buy things like cars and houses, is available but it will cost more and likely come from an unconventional source like Lending Tree and not from a bank. Unsecured credit, like credit cards, is available from places like Orchard Bank, but expensive and low limits. It will take some time to develop good terms with credit card companies.

No matter what kind of credit you apply for, someone will have to read your credit report and make a determination if you qualify. Right now, your credit report probably shows some negative references . Each one of these negative marks will count against you. There is also a section of the report dealing with public documents and filings. This is where judgments and bankruptcy show up. These will really count against you because there is less of a chance they are a mistake. However, bankruptcy has a redeeming quality.

When bankruptcy is reported on your credit report, it will count against you. However, you are then able to re-classify all of the other negative reports to “Discharged in Bankruptcy” instead of “Delinquent” or other negative terms. This might take a few letters to the credit bureau, but it will be worth it. You will also be able to classify other judgments the same way. Now you only have one thing counting against you instead of several.

Another way bankruptcy can help is that it will dramatically change the amount of outstanding debt as well as available debt. Too much of either of these is normally a bad thing.

Really good bankruptcy attorneys will offer packages to rebuild your credit. They can explain it and help rebuilt it. Schedule a FREE CONSULTATION with a really good bankruptcy attorney now.

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 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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Bankrupt Swift Air LLC Ditches Phoenix Suns and Other NBA and NHL Teams

Posted on September 24, 2012 by Staff Writer

Phoenix-based charter air service Swift Air LLC, which specializes in transporting professional sports teams, filed for Chapter 11 bankruptcy protection in June, 2012, due to ongoing financial difficulties. However, Swift continues to operate its charter air service, and, up until now, has honored all of its transportation contracts.

According to the Tennessean, however, an Arizona federal bankruptcy judge ruled earlier this week that Swift could reject certain contracts with professional sports teams as part of its corporate reorganization plan. Swift alleged in court documents that it wished to focus on providing charter air service to sports teams located only in the eastern half of the country. As a result, Swift summarily rejected its contracts with a pair of NHL teams, i.e. the Colorado Avalanche and the Nashville Predators, only weeks before their season is scheduled to start, and despite its five-year-contract with the Predators that launched in 2011. Likewise, Swift rejected contracts with two NBA teams, the Phoenix Suns and the Denver Nuggets, in favor of contracts with the Boston Bruins, Chicago Blackhawks, St. Louis Blues, Boston Celtics, and Milwaukee Bucks.

Like many businesses offering luxury services, even to high-paid professional athletes, Swift apparently has suffered as a result of the recession and an increasingly competitive market. As a result, it has chosen to narrow its demographic focus in an attempt to salvage the business and restructure its debts. If Swift is able to do so through the Chapter 11 bankruptcy process, it will be able to begin operating at a profit while still paying down debt and avoiding incurring further debts that might lead to additional financial problems.

If your business has become overwhelmed by debt, harassed by creditors, and is losing profits on a daily basis, you may need the restructuring and debt relief that Chapter 11 bankruptcy relief can offer. Only a qualified business bankruptcy lawyer in Arizona may be able to help. Contact our office today, and see what options for financial relief we can offer your business.

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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Delinquent Medical Debt Leads to Increase in Bankruptcy Filings

Posted on August 8, 2012 by Staff Writer

Roughly 20 percent of those seeking financial counseling required for bankruptcy filing this year and last cited medical debt as the primary cause of their decision to seek bankruptcy protection, according to CredAbility, an Atlanta-based nonprofit credit counseling agency that serves clients nationally. The analysis included more than 47,000 clients for the first half of this year, and more than 100,000 from last year.

With unemployment persistently high, more people have lost health coverage along with their jobs. People who have lost their jobs, but are continuing their group coverage under the federal law known as COBRA, may find it difficult to make the higher premium payments and are slipping into default on premiums and medical bills at an increasing rate.

Health costs are escalating for employed people as well in the form of higher premiums and deductibles. More health plans are offering lower monthly premiums in exchange for higher deductibles, but that means people find themselves on the hook for more out-of-pocket costs if they get sick.

For healthcare providers trying to collect on delinquent debt, this means acting quickly to begin the collections process is imperative. With the good communication with the debtor, there are numerous alternatives to filing bankruptcy where the debtor can make arrangements to protect their creditworthiness, and the healthcare providers collect a higher percentage of return on delinquent debt and avoid losing the receivable to bankruptcy.

But if bankruptcy is the right option for you it is imperative to choose the right Professional Bankruptcy Firm that can guide you through the complex nuances of bankruptcy filing. Schedule a free consultation with an experienced bankruptcy lawyer to see when you should file. Keep the assets you need to start over, don’t use them to pay creditors when you don’t have to. Contact a Phoenix Bankruptcy Attorney Today!

The relationship between student loan debt and credit card debt

Posted on August 8, 2012 by Staff Writer

The most common debt plaguing bankruptcy filers is consumer debt such as credit cards. As obtaining a college degree becomes more common, so does the accumulation of student loan debt. More and more people are finding themselves burdened by this type of debt, but the treatment of student loans in bankruptcy is different than credit card debt. Student loan debt typically cannot be discharged in bankruptcy.

Student loan debt is an unavoidable burden for many who attend college. More than 80% of college students will take out a loan to help cover their expenses. College tuition costs an average of $15,000 a year, which does not even include books and living expenses. The average college graduate will exit college with $30,000 in student loan debt.

Unfortunately, a college diploma does not necessarily guarantee a job to help repay the loans. The troubled economy has half of college graduates struggling to find employment. Even those with jobs may not earn enough to repay their loans. Many graduates default on their student loans because they are unable to afford the payments.

If the average person has $15,000 in credit card debt, then the average college graduate could have up to $45,000 in combined credit card and student loan debt. Due to the nature of student loans, bankruptcy will not provide any relief for a majority of their unsecured debt. Student loans must be repaid. Failure to do so may result in garnishment, levied bank accounts, and the withholding of government benefits like social security.

This is a grim picture for college grads, but bankruptcy may still provide desirable relief from an overwhelming financial burden. Although it is likely that the student loans are not dischargeable and must be repaid, the discharge of other consumer debt may provide some breathing room. By discharging certain debts in bankruptcy, income may be reallocated to repay student loan debt.

A person burdened by debt should consult a reputable and competent attorney to determine what options are available for dealing with her debt. Contact our Phoenix, Arizona bankruptcy lawyers today!

The importance of hiring the right attorney

Posted on August 7, 2012 by Staff Writer

Bankruptcy may provide an individual the desired relief for certain overwhelming financial problems. Several options exist when considering bankruptcy relief. Although a debtor may file her own bankruptcy, she has the option of hiring a document preparer, paralegal, or an attorney.

Since bankruptcy is a solution for financial problems, many who consider bankruptcy will be worried about the costs involved. The cheapest route to accomplishing a bankruptcy may be appealing; however, as with any other service, cost is only one factor that should be considered.

Just as a person may tackle her own mechanic’s repairs to save some money, she may also attempt her own bankruptcy. The undesirable outcome of not hiring the proper professional for a car problem may be to exacerbate the problem, increase the costs, or possibly cause irreparable damage. Similarly, filing one’s own bankruptcy could result in ruining an opportunity for a successful discharge.

Bankruptcy involves more than putting a name on a piece of paper and filing it with the Bankruptcy Court. Some cases may be quite complex and confusing, while others may be simple and straightforward. A person with no bankruptcy experience may not even know whether her case is simple or complex, nor know what issues could be of great concern when she files. Filing an improperly prepared petition, or filing prior to proper planning could be disastrous in accomplishing one’s bankruptcy goals. A person looking into bankruptcy should keep this in mind when reviewing her options. She must also consider that by law, only an attorney can give legal advice.

There are no guarantees that every attorney claiming to be able to file a bankruptcy is competent to do so. Just as cases vary in difficulty, so too does the experience of attorneys. The more experience an attorney has, the more likely she is to be aware of the numbers of issues clients face in bankruptcy. Although some issues may be unforeseeable surprises, the attorney with experience is the attorney that knows which issues to be on the lookout for. A bankruptcy attorney’s job is to prevent issues from arising prior to filing the petition, not to attempt damage control after filing.

The petition and its associated documents are filed with the court subject to the penalties of perjury—the filer swears an oath that the information is correct and accurate. Therefore, incomplete or incorrect information can potentially prevent a successful discharge. What are the possible consequences of an improper filing?

A case dismissed by the court requires the filer to repeat the bankruptcy process. Improper preparation could lead to lost money, property, or assets. Perjury can result in fines and/or jail time. If nothing else, a filer could experience a lot of frustration from wasted time and unnecessary extra work.

A filer may consider several factors when deciding which attorney to hire. Cost, of course, is one consideration. But a decision based on cost alone could end up being the most expensive bankruptcy, in terms of the overall process. A filer should also look to the experience, ability, reputation, and diligence of an attorney. What good is an experienced and knowledgeable attorney that never answers questions or returns calls?

The logistics of the task should also be considered. Does the attorney have the staff support and/or personal commitment to get the bankruptcy done efficiently and in a timely manner? The attorney should be able to get the necessary information from her clients and then apply that information correctly on behalf of her clients.

Along with considering an attorney’s commitment to her clients, a filer may also look into the attorney’s standing in the legal community. The state bar may be able to disclose if any disciplinary actions have been taken against an attorney.

Bankruptcy is a decision that should not be taken lightly. Choosing a bankruptcy attorney should not be taken lightly either. The bankruptcy lawyer is a huge component in the successful discharge of a case and the client’s satisfaction throughout the process. A filer will be much happier during the process and will increase the chances of achieving her goals if she is willing to take the time to find a committed and competent attorney.

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.

Can Student Loans be Discharged in Bankruptcy Court

Posted on July 26, 2012 by Staff Writer

Student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.”

Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is the Brunner test, which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less.

If you can successfully prove undue hardship, your student loan will be completely forgiven. Filing for bankruptcy also automatically protects you from collection actions on all of your debts, at least until the bankruptcy case is resolved or until the creditor gets permission from the court to start collecting again.

Whether a student loan is discharged based on hardship is not automatically determined in the bankruptcy process. You must file a petition (called an adversary proceeding) to get a determination.

If you already filed for bankruptcy, but did not request a determination of undue hardship, you may reopen your bankruptcy case at any time in order to file this proceeding. You should be able to do this without payment of an additional filing fee. Chapter 10 of NCLC’s Student Loan Law manual includes extensive information about discharging student loans in bankruptcy.

Even if you cannot prove undue hardship, you still might want to consider repaying your student loans through a Chapter 13 bankruptcy plan.

Schedule a free consultation with an experienced Arizona bankruptcy attorney to see when you should file. Keep the assets you need to start over, don’t use them to pay creditors when you don’t have to. Contact a Phoenix Bankruptcy Attorney Today!