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.

A Study of How Sadness can affect Personal Debt

Posted on April 25, 2013 by Staff Writer

People seek different ways to deal with sadness. It seems unfortunate in the grand scheme of things, but a study shows that sadness can have a negative effect on a person’s financial bottom line and also further deteriorate their mental state.

In a study run by students Jennifer Lerner of Harvard’s School of Government and Elke Weber and Ye Li of Columbia reviewed the connection between sadness and debt. The results were published in the Psychological Science journal last year.

They came up with a term called “present bias”. The unhappiness of people makes them value the present more so than the future. This leads them to put more importance on instant gratification rather than the long term consequences. So it seems natural that “retail therapy” would be an avenue that people would use to make them feel better.

The bad news is that when debt becomes a problem then the sadness can turn into depression. Especially if the debt can’t be turned around and necessitates a bankruptcy. “Many of us confuse our self-worth with our net-worth,” clinical psychologist Bradley Klontz said. “As such, financial problems can deal devastating blows to our self-esteem. Bankruptcy can lead to feelings of guilt and shame, and cause us to isolate from our family and friends out of embarrassment.”

For some people, it has to get worse before it can get better. Filing for bankruptcy can alleviate your money issues and allow you to have a fresh start If you feel like bankruptcy is your best option, then contact a legal professional who can help you through the process. An experienced bankruptcy attorney in Phoenix can show you the options for turning around your situation so contact them today.

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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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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.

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.

Arizona Bankruptcies Continue to Fall

Posted on October 8, 2012 by Staff Writer

New data shows that bankruptcies in Arizona have continued to decrease over the last year. Filings in the Phoenix area have fallen at a double digit pace year over year. The US Bankruptcy Court in Phoenix released that in August of this year, only 1,809 people filed for bankruptcy compared to 2,431 in 2011. That decrease is 26 percent, continuing the streak of 14 consecutive double digit decreases.

The news comes as a shock to the citizens of the valley. An independent survey of 500 residents measured financial optimism at a record low not seen since June 2009. This is due partially to the fact that the employment market has yet to make a full recovery. Factors such as improvements in housing prices, employment growth, strong corporate performances and other factors seem to ease private debt.

An example of the reduction of private debt is overdue credit-card balances. Valley residents’ debts are down 16 percent compared to the past year through August to an average of nearly $5,000. Credit-card debt is a major kind of debt which consumers seek to ditch by declaring for bankruptcy. The same is true for mortgages and student loan balances over the past year for Phoenix residents. Luckily the news about Phoenix is merely a microcosm of the whole state of Arizona. Arizona is also seeing a decline in bankruptcy filings.

While this is good news for people in Arizona, it doesn’t mean they’re out of the woods yet. There are still people who need a fresh start while the economy is recovering. If you believe that bankruptcy is your only option, contact an expert bankruptcy attorney in Arizona today.

Bankruptcy Filings Up in Phoenix

Posted on July 31, 2012 by Staff Writer

The month of June saw an increase of bankruptcy filings in the Phoenix metropolitan area, to the highest point in the past nine months. Individual, as well as business, filings have increased steadily in the past four months. The number of filings on the state level line up with the same trend, with May numbers rising steadily from April figures.

The bulk of the filings were for Chapter 7 bankruptcy, in which a business or personal assets (only those which are non-exempt) are liquidated to pay debts and creditors, with debt forgiveness after the proceeds are exhausted. The rest of the filings were primarily Chapter 13, calling for a reorganization of the debtor’s finances to structure repayments to creditors.

Situations that contribute to bankruptcy filings are unemployment and underemployment without cessation. Another issue that impacts figures is increases in foreclosures. Many homeowners file for bankruptcy after receiving notice of impending foreclosure on their homes. The number of foreclosures is directly tied to the number of new bankruptcy filings: as foreclosure numbers increase, bankruptcy filings also increase within one to two months afterwards.

The good news indicated by these numbers is that bankruptcy filings for the Phoenix metropolitan area have leveled off, with the past sixteen months coming in at lower rates than the same months in 2010 and 2011.

Becoming faced with job loss or an inability to secure employment that pays what your financial circumstances require is not an easy situation. For legal and emotional support through this difficult time, contact an empathetic Arizona attorney who specializes in bankruptcy. This expert can assist you in navigating through what can otherwise be a stressful, humiliating and almost impossible turn of events, and can assist with recuperating financially afterward the case is resolved.

Delinquent Medical Debt Leads to Increase in Bankruptcy Filings

Posted on May 6, 2012 by Staff Writer

Most people think that most of those who file bankruptcy did so because they got way over their heads in credit card debt; however, research shows the truth is much more surprising. 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.

A significant percentage of those listing medical debt as the reason for their bankruptcy are 65 and older. Other groups disproportionately bankrupted by medical debt include single women raising children on low wages or who have been abandoned by their husbands who refuse to pay child support.

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.

If you are struggling with medical debt, consult with a qualified Tucson, Arizona bankruptcy attorney, who can help you explore if bankruptcy is an option for you. Tucson bankruptcy lawyers are familiar with all of the available options for relieving your debt, and can discuss the best route for your particular situation.

American Airlines Bankruptcy Could Affect Arizona Residents

Posted on April 30, 2012 by Staff Writer

Over 1,000 Tucson-area residents may be affected by a recent development in American Airlines Chapter 11 bankruptcy restructuring plan. The company filed for bankruptcy in November of 2011, and according to abc15, will likely be closing a Tucson reservations center as part of their plan to reduce their labor costs by over $1 billion.

As the airline was unable to renegotiate contracts with its numerous unions, they will now ask the bankruptcy court to let them void their current union contracts. Some of the reservations agents will be offered the chance to move or work from home, while others may lose their jobs – the total number of positions eliminated under the restructuring plan is estimated to be around 14,200.

According to an SFGate.com article, the airline may consider a merger as part of its bankruptcy restructuring plan. During testimony at the U.S. Bankruptcy Court in New York, where the bankruptcy case is filed, David Resnick stated that a merger is likely because “American is obliged to get the highest value for stakeholders.” Tempe Arizona-based US Airways is also hoping to gain support for a potential takeover of AMR Corp, American’s parent company.

When large corporations go bankrupt, this can have wide-spread bankruptcy implications. For instance, it’s certainly possible that some of the over 14,000 American Airlines employees who lose their jobs will end up considering bankruptcy. Arizona residents who are facing financial difficulties and wondering if bankruptcy is the right option for them should contact an experienced Phoenix, Arizona bankruptcy lawyer for advice.

How Does Filing Bankruptcy Affect a Prenuptial Agreement?

Posted on April 26, 2012 by Staff Writer

When one person owns a considerable amount of assets such as money, property or business investments, this individual may feel more secure about getting married if a prenuptial agreement is filed prior to the marriage. “Pre-nups” are documents detailing how everything would be divided legally if the marriage ended in divorce or if the spouse owning most of the assets would die first. Prenuptial agreements can also define perimeters of spousal and/or child support payments, child custody arrangements and aspects of the last will and testament that states inheritance rights.

According to NOLO Legal Encyclopedia, some states call a prenuptial agreement a prenuptial “contract” or “antenuptial agreement”. Generally, prenuptial agreements are desired by one or sometimes both spouses when either one has experienced previous marriages ending in messy and expensive divorces. By implementing a pre-nup, the individual who is “once-bitten, twice-shy” should not be subjected to outlandish spousal support or property acquisition demands made by his or her spouse if a divorce in the event a divorce is initiated.

However, even though prenuptial contracts are legally binding according to the federal Uniform Premarital Agreement Act, protection provided by such a contract from creditor actions during bankruptcy is questionable. In other words, the spouse who does not file bankruptcy is not guaranteed immunity from any Arizona bankruptcy court proceedings just because a prenuptial agreement exists.

Additionally, divorcing couples residing in “community property” states may both be subjected to creditor harassment even if only one spouse files bankruptcy, regardless of the legality of any prenuptial contract. If you implemented a prenuptial agreement prior to your marriage and are getting a divorce but your soon-to-be-ex-spouse plans to file for bankruptcy in Arizona, immediately contact a professional and experienced Glendale Arizona bankruptcy lawyer who will ensure that you are protected from creditor demands and any presumed liability for your spouse’s debts.