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Archive for April, 2009

Thursday, April 30th, 2009

Sad Day for Many Homeowners: Senate Slaps Down Anti-Foreclosure Bill

The Senate voted 45-51 against Dick Durbin's anti-foreclosure bill. Twelve democrats opposed the bill.

We were hoping the Senate would help deal with the massive foreclosure epidemic and pass the bill, which would have allowed bankruptcy judges to adjust the terms of mortgages of people who were facing foreclosure, among other things.

Obama made public statements saying the bill was an important aspect to helping the economy; however, it's been speculated that he didn't throw in 100% support because banks  opposed to the bill's passage.

Here's a quote from the Associated Press article posted on the Kansas City Star on Obama's support or lack thereof:

"Obama long has backed the proposal to give debt-ridden individuals the option of turning to bankruptcy to save their homes. He cited that support last fall as he privately lobbied skeptical Democrats to back the $700 billion Wall Street bailout. And once he was president, he had promised, he would push for its passage."

If your home is in danger of being taken away, learn how bankruptcy may stop pending foreclosure.

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Posted in Legal Info, Mortgage Foreclosure | No Comments »

Wednesday, April 29th, 2009

Helping Families Save their Homes in Bankruptcy Act Up For Vote

We wrote about Illinois Senator Dick Durbin's bill when it was first being considered.

Now, the measure that would potentially stop foreclosure for millions of Americans by allowing bankruptcy judges to change the terms of a mortgage - including interest rate and principal owed - is up for a vote.

However, the vote is going to be very close.

If you want to stand up and help keep people in their homes and protect Americans going through difficult financial times, contact your Senators and Congress people today.

You can visit http://www.congressweb.com/cweb4/index.cfm?orgcode=nacba&hotissue=1 to find a simple form that will allow you to contact the Senator in your home state.

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Posted in Mortgage Foreclosure | No Comments »

Monday, April 13th, 2009

Action on the Credit Card Bill of Rights

A subcommittee of the House Financial Services Committee voted last week to approve a bill called “The Credit Cardholders’ Bill of Rights”.

If the bill succeeds in the rest of the House and the Senate, good news could be in store for borrowers.

Unfair and Deceptive Practices

Since the current recession was so heavily fueled by subprime lending and similar questionable practices, lawmakers’ attention has been drawn to the rules governing lending in the U.S. Of chief concern to many consumer rights activists:

Universal Default: If you default – that is, fail to make timely payments – on one account, other creditors can penalize you with higher interest rates or monthly payments.

Transparency & Disclosure: Explaining all the terms of use of credit cards – like interest rates, late fees, penalties, etc. – is already required by law. But some activists worry that the presentation of credit card agreements (pages and pages of fine-print) allows many companies to hide unpleasant features.

Introductory & “Teaser” Rates: Often, credit card issuers advertise low initial interest rates boldly, and only mention in small type that these rates are only valid for a limited time.

Fees for Phone & Online Payment: Some cards charge service fees to consumers who choose to pay their bills by phone or on the Internet, a practice that has been cited as problematic by members of the Financial Services Committee.

The Opposition

If the Credit Cardholders’ Bill of Rights becomes law, some of these issues may be addressed, which is good news for consumers.

Banks and other card issuers, on the other hand, are reportedly less than thrilled with the idea of new restrictions on their lending.

At a time when banks are struggling to build capital and pull themselves out from the weight of bad investment decisions, revenue from credit card fees and high interest rates could provide a substantial source of income – as it does now.

Just the Beginning?

Some analysts suggest that credit card legislation could be the beginning of new regulations for the banking and lending industry.

While legislative restrictions to market and lending action may be unwelcome by some players, many democrats see the lack of regulation as a key factor that contributed to the nation’s current financial stress.

If successful, the bill will likely offer card issuers around one year to adopt new policies.

Are you knee-deep in debt? Consider filing bankruptcy.

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Posted in Credit and Bankruptcy | No Comments »

Thursday, April 9th, 2009

After Filing Bankruptcy: Attempting to Collect Discharged Debts Is Illegal!

When you receive your bankruptcy discharge, you are legally excused from responsibility for any debts that have been discharged.

Unfortunately, some unscrupulous creditors count on people filing bankruptcy not knowing how far their protection extends and attempt to collect on debts after the court has excused them.

Don’t Pay What You Don’t Owe

The fresh start granted to you by the court protects you from the following.

  • Mail contact from creditors: Letters indicating that payment is due are prohibited; if you receive any, show them to your attorney.
  • Phone calls from creditors: Again, you have no obligation to pay discharged debts. Contact from creditors asking you to do so is forbidden. Record the time and date of any such calls.
  • Lawsuits from creditors: Because you no longer owe money on discharged debts, creditors have no legal recourse to collect them.
  • Failure to update your credit report: Creditors that threaten to continue reporting a discharged debt as unpaid to scare you into paying it are breaking the law. Be sure to check your credit report for accuracy and note any wrong information you see.

Why Creditors Attempt Collection

Put simply, creditors stand to make money by attempting to collect on debts you don’t owe.

If you pay them, they get cash they otherwise wouldn’t have.

In some cases, the people or groups attempting to collect aren’t even your original creditors! Here’s why:

  • Say you owed one credit card company $1,000, but the debt was discharged in bankruptcy. You now owe the company $0, which is how much they can legally collect from you.
  • A third party collector may offer to buy your debt from the credit card company for, say, $10 for the privilege of “owning” the discharged debt. The credit card company may agree, since $10 is more than $0, so they technically make a profit.
  • The collector can then hound you about paying the debt, even though you no longer have any legal obligation to do so. If you end up paying, they make $990. If not, they only lose $10.
  • Because enough bankruptcy filers are unaware that they don’t have to pay these debts (or feel somehow guilty about not having paid them), many pay. This makes the illegal debt collection profitable even when some people refuse to pay.

Contact a Bankruptcy Lawyer

If any of your creditors tries to collect on this “zombie debt,” you have the right to contact a bankruptcy lawyer.

You have rights and can take action to protect them – that’s what the fresh start is all about!

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Posted in Post-Bankruptcy Debtor Education | 3 Comments »

Wednesday, April 8th, 2009

Assert Your Rights As a Consumer

Unfortunately, a recent report from the FBI suggests that cyber crimes increased as much as 33 percent last year.

This means that, as a consumer, you need to take steps to protect yourself and know what you can do if you’re victimized by online fraud.

Fair Credit Reporting Act

This law gives you the right to access your credit report for free and to challenge any incorrect information you see there.

Staying abreast of the information on your credit report is one of the best ways to make sure you aren’t victimized by identity theft and other cyber crimes. Just follow these steps:

  • Go to www.annualcreditreport.com and request a free credit report from Equifax, Experian and TransUnion once every year. (You may want to request one every four every four months, or all three at once.)
  • Check the information against your own records. If you notice any inaccuracies on your report, contact the agency immediately.
  • Be sure you file all complaints in writing and persist until the matter has been handled appropriately.

Incorrect information on your credit report can harm your overall credit rating – when you apply for loans or credit cards, you may be offered higher interest rates than you would have been otherwise or even be denied a loan entirely.

Truth in Lending Act

This law is designed to protect consumers in credit transactions.

Lenders are required to disclose specific information about loans (including interest rates, payment periods, late fees and more).

When lenders don’t comply with the terms of this law, your rights have been violated and you may want to take action.

Fair Debt Collection Practices Act

Creditors must adhere to strict rules when trying to collect money from you: they’re limited to calling between certain hours of the day, prohibited from certain types of contact altogether and forbidden to deceive you in order to collect money.

How to Know If You’ve Been Victimized

Besides these two acts, the government has outlined housing acts, credit reporting acts and others to make sure you get a fair shake in the world of credit. But how can you be sure you’re taking the right steps?

Consulting with a bankruptcy lawyer familiar with the laws in your state can be an effective way to make sure your rights as a consumer are recognized and, if they aren’t, to take appropriate legal action.

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Posted in Financial Literacy | No Comments »

Tuesday, April 7th, 2009

When Businesses Are Filing Bankruptcy

As the economic tumult continues, news stories about businesses considering filing bankruptcy continue.

So what does it mean when a major company seeks the protection of the bankruptcy court?

Like personal bankruptcy, it depends what chapter the business files under.

Chapter 11 Bankruptcy

Chapter 11 is almost exclusively used by businesses in financial difficulty.

Like Chapter 13 bankruptcy for individuals, Chapter 11 allows businesses to reorganize their debts.

As with individual filings, the automatic stay protects companies during the process.

Notable differences between Chapter 11 and Chapter 13 bankruptcy include:

  • If a company is worth less than it owes - that is, its debts exceed its assets - ownership of the company reverts to the creditors after bankruptcy reorganization. This means that the company’s “owners” exit bankruptcy owning no part of their company.
  • A company can be in Chapter 11 for as little as a few months or as long as several years – it depends on the complexity of the plan agreed upon by interested parties.
  • Stocks for a company are generally delisted after a Chapter 11 bankruptcy filing. This means that shareholders are left with valueless stocks.

When a company is filing bankruptcy under Chapter 11, it can usually still conduct business, and, as a consumer, you may not notice too many differences in day-to-day operations.

Chapter 7 Bankruptcy

As with personal filings, Chapter 7 bankruptcy for companies take the form of liquidations. This means that the court-appointed bankruptcy trustee sells off a company’s assets to raise money to pay off creditors.

Unless the company’s trustee opts to continue daily operations, many companies shutter their doors after filing under Chapter 7.

Notable differences between Chapter 7 for individuals and Chapter 7 for businesses include:

  • Businesses do not receive a Chapter 7 discharge. Once the bankruptcy case is over, the businesses still owe any debts not satisfied by liquidation (until statutes of limitations expire).
  • After completing a Chapter 7 case, businesses are dissolved, meaning that they no longer exist as they did before filing.

Chapter 7 bankruptcy is typically used for companies with serious debt, but a company’s filing doesn’t necessarily mean that the company’s employees will all lose their jobs – in some cases, entire units of operation are sold as part of the liquidation sale.

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Posted in Bankruptcy and the Economy | No Comments »

Thursday, April 2nd, 2009

Credit After Filing Bankruptcy: Steps to Success

Credit traps are dangerous to everyone, but they can be especially damaging to those trying to rebuild credit after filing bankruptcy.

As you work your way to financial health, make sure you steer clear of these common post-bankruptcy pitfalls.

  1. Failing to Plan: When you receive your bankruptcy discharge, you’ll likely be debt-free; but that will only last as long as you spend less than you make. It may sound simple, but many people forget that continued financial health depends on continual, conscious planning.

Solution: Make sure you develop a budget and stick with it.

  1. Slipping into Old Habits: If you’re like most Americans, you needed bankruptcy protection because some crisis (like divorce, death, layoff, injury or a lawsuit) pushed you over the edge; but you may have also had financial habits that left you unable to weather a storm: over-reliance on credit cards, use of payday loans, having little or no savings, etc. After bankruptcy, it’s more important than ever to avoid such costly sources of credit.

Solution: Take advantage of the tips offered in the financial management course you’ll take during your bankruptcy – they’re designed to help you stay out of debt!

  1. Credit Repair Scams: Solutions that promise to wipe out bad credit, erase your credit history or achieve any other feat that seems too good to be true should be avoided. There’s no quick way to improve your credit and most offers of this type will likely cost you money and hurt your credit.

Solution: Take the slow-and-steady route to better credit: pay off your bills every month, don’t open more credit cards than you need and stick with your budget. Over the course of a couple years, you should see your credit improve.

  1. Picking the Wrong Plastic: As you rebuild your credit, you’ll want to open a credit card account. But be wary of the offers you receive in the mail. Your post-bankruptcy status may mean you’ll have to pay higher interest rates or fees than a borrower with stronger credit, but don’t settle for shoddy terms. Know which credit cards to avoid.

Solution: Consult with your bankruptcy lawyer if you’re not sure about the terms of a credit card agreement and consider visiting a site like bestcreditcards.com to see the variety of options available to you.

With some planning, discipline and perseverance, YOU CAN rebuild your credit after filing bankruptcy.

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Posted in Post-Bankruptcy Debtor Education | 1 Comment »

Wednesday, April 1st, 2009

Preparing for Retirement After Filing Bankruptcy

As you begin to develop savings and investment strategies for your after filing bankruptcy, it’s important to remember to develop a strategy for amassing money for your retirement.

  1. Consider the changes. Before doing any math, try to figure out how your expenses will differ after retirement: you won’t have commuter or business wardrobe expenses, but you may travel more. Also, consider mortgage payments – will you own your home by the time you retire?
  2. Determine what you’ll need. Then, figure out how much money you’ll need per year to live once you’ve stopped working. Many experts suggest that 70% or more of your salary should cover your retirement needs.
  3. Figure out where it will come from. Many retirees receive pensions or Social Security benefits. Others find that working part-time enriches both their free time and their budgets. If you can expect to have income after retirement, you don’t need to save quite as much right now.
  4. Consider your employer’s offers. If you have a retirement account through your job, you should take advantage of it, especially if your employer matches any percentage of your contributions. This is a great way to save for retirement because it forces you to put the money away before you’re tempted to spend it.
  5. Crunch the numbers. Once you know what you’ll need to live comfortably and how much you can expect to make after retirement, you’ll need to determine how much to save from each paycheck.

Staying the Course

Retirement may seem like a distant dream right now, but you’ll have to start saving now to set yourself up. Even if a bankruptcy filing left your savings hurt, you can still take care of yourself in retirement.

Especially if you can only set aside a little money from each paycheck, you need to start saving as soon as possible to meet your goal.

If you have trouble disciplining yourself to hang onto money, be sure to ask your employer about automatic savings programs.

And try to get an account with compound interest so the money you put away can work for you.

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Posted in Setting the Record Straight about Bankruptcy | No Comments »