Bankruptcy Blog

There have been some media reports about informal bankruptcy recently that suggest that it might be a cheaper way to get out of debt. The only problem with that hypothesis is that you don’t really get out of debt through informal bankruptcy.

Informal bankruptcy is what happens when someone just decides that they will stop making payments on their unsecured debt. The only recourse the unsecured creditor will have is to send the person to collections, or obtain a judgement against them in state court.

Once the creditor has a judgement, a lien can be place on any property owned by the debtor. This could become a problem when you decide to sell a home, land or vehicle.

The creditor could also obtain a court order to seize your assets to settle the debt. Filing bankruptcy can stop unsecured creditors from coming after your home, car or other assets in order to collect on your debts.

Bankruptcy protections under Chapter 7 or Chapter 13 allow you to legally clear your debt, leaving your creditors with no claim on your income or assets.

Laws in some states protect the assets of a person, whether or not there is a formal declaration of bankruptcy in federal court. This usually makes the judgement unenforceable until the person’s death, when the estate would be responsible for the debt.

Taking legal action to clear your debt will protect you and your loved ones in the long run. Handling your financial problems in a legal and responsible way will insure that your assets are protected.

Contact a bankruptcy attorney for a free evaluation today to see if bankruptcy is right for you.

Some may wonder why bankruptcy? Why can’t you afford to pay your bills? Why take such a drastic step? The truth is, there is no one answer for why someone should consider filing bankruptcy.

They may have fallen behind on house payments and are now faced with foreclosure notices. Sometimes forces outside their control affect them in ways that they never anticipated. An unexpected illness can send anyone’s finances into a tail spin. Discord in a family may result in divorce and unforeseen expenses. Losing a job can leave someone with much less income than they expected, leaving them unable to afford to pay everyday expenses, much less outstanding debt.

People often resist filing bankruptcy due to the shame associated with failure. Bankruptcy isn’t necessarily failure. It is a way to restructure your debt, and secure your future. Businesses use the tools available in bankruptcy law to stay open and recover from bad financial situations. Personal bankruptcy allows individuals to do the same thing.

So far in 2008, over 800,000 people have filed bankruptcy. Experts expect that by the end of the year, around one million consumer bankruptcy cases will have been filed this year. You are not alone in considering bankruptcy to solve your financial problems.

Getting the advice of a qualified bankruptcy attorney is essential to getting the best possible outcome from a bankruptcy filing. A good bankruptcy lawyer can guide you through the process. They will show you the best way to legally protect your assets and protect your rights throughout your case.

Even if you don’t feel 100 percent sure that you are ready to file bankruptcy, contact an attorney for a free evaluation of your specific situation. They can assess your case and help you decide if filing bankruptcy is the right decision.

The national economic crisis might have left you on the unemployment line with the growing number of Americans who are loosing their jobs as the nation’s unemployment rate has reached a 14-year high.

An illness may have left you unable to work and brought you mounting medical bills. Gaps in your insurance coverage may have drained your savings and waiting in the backlog of Social Security disability claims may have drained your savings.

Your marriage may have ended leaving you with more debt than income to pay it.

No matter what got you into your current position, if your financial situation is causing you stress you need to weigh all your options.

Recently there have been a number of people discussing informal bankruptcy as a solution. Informal bankruptcy is what occurs when someone stops making payments on their unsecured debt without using the legal system for relief from their creditors. Some even speculate that the effects of informal bankruptcy on credit ratings is less than a legal bankruptcy filing.

Ignoring the problem will not solve your woes. Creditors can continue to come after you for payment as long as they want. If they hold a lien on your car or home, they may repossess or foreclose. If they own your unsecured debt, they might file a lawsuit against you if you stop making your payments. Your credit score will suffer as long as the creditor seeks to collect on the debt.

Filing bankruptcy will provide you with legal protections for your assets and personal belongings. Bankruptcy laws were written to provide consumers with a “fresh start.” Most people who have become mired in debt can use bankruptcy protections to drain debt that has swamped them and find themselves on more solid ground.

Getting the advice and assistance of an experienced bankruptcy lawyer can save you from the harassing phone calls of debt collectors. BankruptcyHome.com is here to provide you with a free consultation with a bankruptcy attorney in your area, who will evaluate your case and help you make the best decision for your personal situation.

Waiting may only add to your problems. Act today, and get the “fresh start” you are looking for.

A recent press release issued by RealtyTrac, a national database for foreclosed properties, said recently that if foreclosure filings continue on their current pace, one million homeowners will lose their homes in 2008, up from 400,000 in 2007.

Recent economic news leaves little doubt that more foreclosures are likely this year. Trouble in the credit markets and falling home prices have made refinancing a home to access equity in order to solve your debt problems all but impossible.

If you are having financial problems and are in danger of losing your home to foreclosure, there are options that will stop the foreclosure process.

Contact an experienced bankruptcy attorney to review your situation and see if Chapter 13 bankruptcy will save your home. Filing bankruptcy will put in place an automatic stay that requires your creditors to cease all collection activities, including foreclosure proceedings.

Under Chapter 13 bankruptcy, you will be allowed to combine any back house payments into the Chapter 13 payment plan. As long as you can continue to make your monthly mortgage payments and make timely payments on your Chapter 13 plan, you will get to stay in your home.

Both the Democratic and Republican presidential candidates have said recently that keeping more people facing foreclosure in their homes should be a top priority. But help from the federal government may come too late to save your home if you are already facing foreclosure.

Protecting your home from foreclosure is essential to your financial future. For many Americans, their home is the largest investment that they have. Hanging on to the equity you may have in your home is central to your future financial stability.

Bad economic news abounds these days. The financial markets in New York are in crisis. Lending sources are drying up. Foreclosure rates are higher than any time since the Great Depression. More and more consumers and businesses are seeking bankruptcy protection in federal courts as they struggle to make payments on the record amount of debt that has been run up in the United States.

The financial crisis unfolding on Wall Street and in Washington D.C. has many people nervous about their futures. If you are facing a financial crisis, the government may not be there to bail you out. Consult an experienced bankruptcy attorney and weigh your options for becoming debt free.

Government agencies are offering lifelines to financial institutions that gambled on risky mortgage loans made during the run up in housing prices. Since the housing bubble burst, homeowners have found themselves in homes that are worth less than they owe on the mortgage in some cases. Some help has been extended to homeowners, but Washington is offering billions of taxpayer dollars to save companies that took bad risks that have left some Americans with no equity in their homes and few options for the spiraling consumer debt they are facing.

According to a report issued by the Federal Reserve Bank in September, consumer debt in the U.S. was over $2.5 trillion, up from just over $2 trillion five years ago.
Unsecured debt accounts for almost 970 billion of outstanding consumer debt as of July, according to the report.

With unemployment on the rise, banks and financial behemoths being taken over by the federal government and foreclosure rates across the country still rising, your financial situation may seem as precarious as those Wall Street firms that you keep reading about. Bankruptcy protection under Chapter 7 or Chapter 13 may be the only hope you have to get out of debt.
Filing Chapter 7 bankruptcy can wipe out most unsecured debt. Chapter 13 bankruptcy can protect your home from foreclosure and restructure your debt under terms that make it easier on you.

President George W. Bush and his administration have sought to calm consumers and markets concerned about the nation’s unstable financial system. The Treasury Department seized control of the largest mortgage finance companies, Fannnie Mae and Freddie Mac, in early September. The Federal Reserve Board authorized its New York bank to provide an $85 billion two-year revolving credit line to insurance giant AIG. In exchange, the government will get an 80 percent stake in the company if they default on the taxpayer backed loan.

In describing the moves that his administration is making to halt the financial crisis; the President said “Significant amounts of taxpayer dollars are on the line.” Even so, he added, “We expect this money will eventually be paid back.”

The Bush administration is working with the Democratic-controlled Congress on a proposal to set up a federal agency to absorb bad debts currently held by U.S. banks.

Similar to the Resolution Trust Corporation started in 1989 by his father’s administration to stem losses in the savings and loan industry, the current Bush administration’s plan to use a similar program to purchase risky mortgage-backed securities held by the country’s financial institutions and free up capital for the stagnant economy.

If this occurs, Democrats in Congress suggest that more help will be available for Americans struggling to keep homes that are worth less than they owe. Until then, you should do everything you can to keep your home. Contact a qualified bankruptcy attorney today.

Stopping foreclosure proceedings on your home should be a top priority. A bankruptcy attorney can help you keep your home and avoid foreclosure. Owning your own home has always been part of the American dream. Sometimes unforeseen circumstances can lead you to fall behind on mortgage payments, including a medical crisis, loss of employment, divorce or death of a spouse or child. Consulting a qualified bankruptcy lawyer can be the first step to stop foreclosure of your home.

Bankruptcy laws were put into place to help consumers who may have gotten in over their head to restructure their debt and get back on their feet. No one wants to lose their home to foreclosure, sometimes events outside their control contribute to situations that lead them close to the edge of the foreclosure precipice. If you are experiencing financial difficulty, you should consider how bankruptcy protections could help you protect your home from foreclosure.

Filing a Chapter 7 bankruptcy temporarily stalls your lender’s right to foreclosure, until it gets permission to go forward with the foreclosure proceedings. It will likely be only a temporary fix to the problem. Chapter 7 bankruptcy protections do not allow for the protection of assets owned by the person filing. It calls for the liquidation of almost all assets in order to pay off the debts owed by the person filing.

Chapter 13 bankruptcy is a much more likely option for property owners who are hoping to keep their home. Under a Chapter 13 bankruptcy plan, it is possible to make up missed payments through the repayment plan submitted to the bankruptcy court.
It is important that once you file your bankruptcy case, all payments due on the mortgage be made by the first of each month following your filing date. All of the arrears will be repaid through the Chapter 13 plan approved by the bankruptcy court.

If you face foreclosure, bankruptcy may or may not make sense, and the advice of an experienced bankruptcy attorney will be helpful for you to make the best choice for you and your family.

The Jefferson County Commission in Alabama has told its attorneys to prepare a bankruptcy filing in case it cannot reach an agreement on how to escape from the county’s over $3 billion of bond debt.

The county, which includes Alabama’s largest city, Birmingham, is prepared to file Chapter 9 Bankruptcy if it cannot reach an agreement with its creditors in order to seek relief from the debt it incurred to build a sewer system.

County officials issued the bonds with interest rates that reset frequently during a time when borrowing money was cheap. The strategy intended to keep costs down as interest rates were declining, but with the credit crunch, interest rates on Jefferson County’s debt has risen to as high as 10% in some cases.

The county has attempted, unsuccessfully, to refinance the debt, according to reports. It recently replaced bankers and advisors with a new law firm to handle the negotiations with its creditors led by JP Morgan Chase.

Bettye Fine Collins, Jefferson County Commission president, recently told reporters that Alabama Governor Bob Riley has also agreed to help the county negotiate with Wall Street on a deal to avert a bankruptcy filing.

No timetable was set for the filing, but an agreement with creditors that provided the county time to work toward a solution expires this week.

If the county reneges on the debt, it would be the largest municipal bond default ever in the United States. It would surpass the Washington Public Power Supply System’s $2.25 billion default in 1983 of revenue bonds sold for nuclear plants.

A settlement reached between Countrywide Financial Corp. and a bankruptcy trustee in Western Pennsylvania could affect an investigation into the company’s mishandling of payments from bankruptcy trustees across the country.

Roberta DeAngelis, acting U.S. Bankruptcy Court Trustee for Delaware, New Jersey and Pennsylvania, filed court papers asking to modify an agreement proposed to resolve allegations that Countrywide lost or destroyed checks and then charged late fees and legal costs to 293 bankrupt Pittsburgh-area home owners.

The company agreed in June to pay $325,000 to settle claims filed by the Chapter 13 Trustee for Western Pennsylvania, Rhonda Winnecour. DeAngelis objects to a “non-disparagement” provision in the agreement that prevents both sides from criticizing each other.

DeAngelis’ office wrote “The non-disparagement provision is over-broad and may impede, impair or otherwise chill witness testimony in the United States Trustee’s ongoing investigation of Countrywide or in current or anticipated litigation against Countrywide.”

U.S. Bankruptcy Judge Thomas Agresti must approve the settlement agreement before it can take effect.

Countrywide has been sued by trustees in other states, including Georgia and Florida, who claim the lender pursued false claims in bankruptcy courts.

The Calabasas, California based mortgage giant was bought last month by Bank of America for $2.5 billion.

In court filings last year, Winnecour sought to compel Countrywide to provide loan histories in 293 cases and asked for sanctions against the company for losing or destroying checks paid by homeowners in foreclosure.

In those filings, Winnecour said she believes Countrywide attached non-permissible late fees and attorneys’ charges to debtors’ bills because of its delay in cashing and posting the trustee’s checks.

Countrywide acknowledged errors in handling some debts, but denied any systematic effort to thwart bankruptcy protections to collect money.

Under the terms of the settlement, Countrywide agreed to reconcile its records with the trustee’s in regards to the amounts owed them by the 293 borrowers. If the figures were not in agreement, Countrywide could either change its figures to agree with Winnecour’s or show reason why her numbers were inaccurate.

Democratic presidential candidate Senator Barack Obama is advocating changes to the current bankruptcy system in speeches on the campaign trail. Senator Obama recently unveiled some of his new bankruptcy ideas which include easing bankruptcy laws for elderly homeowners, disaster victims, military families, and other individuals who have become overwhelmed with debt.

One of Obama’s new provisions would have medical debt forgiven for those individuals who can prove they filed bankruptcy due to those medical expenses. Others could avoid certain bureaucratic steps to filing for bankruptcy by eliminating mandatory credit counseling, or fast tracking certain eligible families by exempting them from the new “means test”. Seniors would also be allowed a homestead exemption that could help them to keep their home. Obama believes these new bankruptcy changes could help families recover financially and potentially retain their homes.

Barack Obama is campaigning against many of the new changes in bankruptcy law established under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Under BAPCPA, many individuals with higher incomes cannot file for Chapter 7 bankruptcy but instead must re-pay some of their debt under a Chapter 13 bankruptcy repayment plan. In addition, all bankruptcy filers must now get credit counseling prior to filing for bankruptcy and additional budgeting and debt management courses to eliminate all debt. Opponents have claimed that the 2005 laws were created for the interests of banks and financial institutions and not with the consumer’s interests in mind.

Many proponents, however, believe the new laws have been successful at stopping the worst repeat abusers of the bankruptcy system who continually generate consumer debt only to file for bankruptcy and have their debt eliminated. Proponents of the new bankruptcy laws also note that the new bankruptcy laws did lead to a dramatic decrease in bankruptcy filings after becoming law in 2005. However, the worsening of the economy and the housing crisis has increased filings over the past two years.

Senator Barack Obama’s willingness to discuss bankruptcy issues runs counter to many candidates’ campaigns in the past, many of whom have steered clear of bankruptcy issues to avoid annoying big-money interests and financial services groups who played a big part in getting the current bankruptcy laws passed in 2005.

Ask why someone might file bankruptcy; many would give reasons like business failure and out of control spending. While those are some valid reasons, there are others such as loss of employment. There is also one other major factor contributing to bankruptcy and foreclosure filings - health care.

Skyrocketing Healthcare Costs

In 2007, the US spent $2.3 trillion in healthcare - more than 4 times 2007 national defense spending. Other studies show 25% of US households had difficulty paying medical expenses. Nor is that statistic restricted to lower and middle income families. 25% of workers who reported having problems paying medical bills or subsequent debt were high-wage earners. In 2005, Health Affairs showed unexpected illness and injury contributed to 350,000 bankruptcy filings. Another study stated, in the same year, someone filed bankruptcy following a serious health issue every 30 seconds.

Foreclosures are bitter pills to swallow

Foreclosure rates are also affected by increased medical costs. A survey by The Access Project show more than 25% said medical debt contributed to their missing a rent or mortgage payment. Health Affairs also reported 50% of all 2005 foreclosure filings were directly related to a disability causes.

Is there anything you can do?

No wonder the Wall Street Journal and NBC’s August 2007 report showed 50% of Americans cited healthcare as their number one financial concern. If you are facing bankruptcy and foreclosure because of high medical costs, you are not alone. Speak with a bankruptcy attorney today to see what options are available to keep your home and relieve your financial burden. Have your case evaluated for free.