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Tuesday, January 12th, 2010

Medical Records in Bankruptcy Court

A recent report from the Milwaukee Journal-Sentinel Online describes a potential complication that might arise during a bankruptcy filing. Here’s a look at what happened and what it might mean for other filers.

Your Records in Chapter 13 Bankruptcy

When you file for Chapter 13 bankruptcy, you’re agreeing to the following:

  • Committing to a repayment plan that lasts three to five years and satisfies part or all of your secured debt
  • Completing two courses (the pre-filing credit counseling briefing and the pre-discharge debtor education course) designed to help you improve your relationship with money and credit
  • Making public your records of debts and payments

It’s the last item on this list that has proved problematic. In the case of some Wisconsin bankruptcy petitioners, it seems, debt and payment information in medical bills that became part of the public record included details about doctor’s visits, procedures and medicines they used.

Now, according to sources, several Wisconsin residents have filed class-action lawsuits in state and federal court against Aurora Health Care Inc., the company reportedly responsible for submitting the detailed medical information.

Beyond Embarrassment

Bankruptcy filers who see their medical history become part of public record may have reason for embarrassment, but, according to reports, that isn’t the only reason this lawsuit has gotten attention.

Certain information (for instance, about treatment for past injuries) could prevent a filer from getting hired at a job in the future or pave the way to medical identity theft. And privacy laws often protect the disclosure of such information.

Should You Be Worried?

The good news here is that, while medical records included as part of a bankruptcy filing may have the potential to hurt your career or cause you embarrassment, the odds of anyone besides your lawyer, your bankruptcy trustee and the judge on your case seeing them is slim.

After all, such information appears as part of the loads of paperwork involved with filing a bankruptcy petition – sifting through to find such details would be a daunting task.

Still, this story highlights one more reason why enlisting the help of an attorney when you decide to file for bankruptcy protection can be a crucial element of making sure you receive the protection and fresh financial start you’re seeking.

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Posted in The Bankruptcy Courts | 1 Comment »

Monday, January 11th, 2010

When Others’ Bankruptcies Affect You

Filling for bankruptcy is a major financial decision that can impact all aspects of your finances. But, because of the way bankruptcy protection works, you can also be affected when other people file for bankruptcy, too. Here's a look at how and what you can do about it.

When a Business Files for Bankruptcy

Companies of all sizes file bankruptcy, and that move can affect employees, consumers and the community at large.

A recent article from mlive.com recounts the story of former Delphi employees who were receiving workers' compensation benefits. Since the firm's bankruptcy filing in 2005, though, the group responsible for those payments is in question, meaning that many intended recipients aren't getting their checks.

  • Contact a lawyer. If you aren’t sure about your rights or the benefits you’re entitled to, it may be a good idea to have a bankruptcy attorney on your side to ensure that someone is looking out for your best interest.
  • Know when you still pay. If you owe money to a company (say, for purchases on an installment plan or a store credit card) that has filed bankruptcy, you may still be responsible for that debt.
  • Know when you don't pay. If you bought something like an extended warranty or service plan from a company that has declared bankruptcy, you may be entitled to a refund for part or all of that purchase. It often depends on which type of bankruptcy protection the company enters.

When a Friend Files for Bankruptcy

If a friend or family member files for bankruptcy, you could be affected in a variety of ways, depending on your financial relationship with that person.

  • Cosigners: If you co-signed a loan for a person who files Chapter 7 bankruptcy, you may still be responsible for making payments on that loan. In a Chapter 13 bankruptcy, cosigners are often protected. However, it's important to recognize the financial implications of consigning a loan.
  • Former spouses: If an ex files for bankruptcy protection, you may be responsible for loans that the two of you initiated together; however, your spouse may still be responsible for child support and maintenance (alimony) payments, since these are typically not dischargeable in bankruptcy court.
  • Current spouse: If either you or your spouse decides to file for bankruptcy, it's important to decide whether you'll do so jointly or individually. A local attorney can help you make the final decision, which is usually influenced by factors such as the amount of community property you have and how your debt is allocated.
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Posted in The Truth about Bankruptcy | No Comments »

Thursday, January 7th, 2010

Business Chapter 11 Bankruptcy Filings Up 50 Percent

Business bankruptcy filings are increasing at an even faster pace than the record-setting personal bankruptcy numbers from 2009.

Last year, Chapter 11 business bankruptcy filings increased 50 percent from 2008, according to a Business Week report.

Bankruptcy information, trends and statistics for this year

In all, more than 15,000 business decided to file Chapter 11 bankruptcy. Of these filings, some reorganized an remained in business, some were sold, and others sold their assets and closed shop completely.

But some businesses filed a Chapter 7 bankruptcy, which results in a liquidation of assets. Combined Chapter 7 and 11 filings resulted in a 38 percent increase in business filings for 2009.

The total comes to 89,402 businesses filing bankruptcy in 2009, reports the Wall Street Journal. That's almost 25,000 more business than needed help the previous year.

And, despite some signals that the economy is getting, business bankruptcy filings continued to pick up steam as the year went on. Business filings in December rose 3 percent compared with November, and were 13 percent higher than the same month for the previous year.

Among those business filing bankruptcy were 207 publicly traded companies.  That's the third-highest total since 1980. And these companies also include some of the biggest and richest in the country, holding around $600 million in assets at the time of their bankruptcy filing.

That number is the second most of all time, just behind 2008's monstrous year which included the massive Lehman Brothers bankruptcy.

During the first decade of the 2000s, more than 400,000 businesses will have filed for bankruptcy protection, according to numbers from the American Bankruptcy Institute.

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Posted in Year in Bankruptcy | 2 Comments »

Wednesday, January 6th, 2010

December Bankruptcy Filings Up 33 Percent

Bankruptcy Year in Review
Consumer bankruptcy filings reached 113,274 in December, 2009, an increase of 33 percent over December, 2008, according to data released by the American Bankruptcy Institute, bringing an end to the highest year for bankruptcy since 2005.

The December total was also a slight increase over the 112,152 consumer bankruptcies filed in November, 2009, a sign that even the holiday season could have exacerbated consumers' financial stress.

Ten months in 2009 had total consumer filings top 100,000--only January and February were below that mark.

Bankruptcy Chapters

According to the ABI, 28 percent of consumer bankruptcies in December were Chapter 13 bankruptcy filings, with the majority of consumer filing Chapter 7.

Bankruptcy is often considered a lagging economic indicator, and typically remains high even with other signs of economic turnaround can be seen. The unemployment rate, for example, dropped slightly in November from its October high of 10.2 percent, and is expected to have dropped in December as well.

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Posted in Year in Bankruptcy | No Comments »

Tuesday, January 5th, 2010

A Time for Credit Cards?

For most Americans, the allure of credit cards can lead to a financial trap. Credit cards make purchasing easier—but can make responsibility harder.

Credit card spending often brings freedom today while impacting your future. Whenever you buy with credit, you're promising your future income today. And if you're buying things that don't increase in value, that can be a poor investment.

If you're considering filing bankruptcy, using a credit card may be twice as bad—bankruptcy laws may prevent you from discharging recently racked-up credit card bills.

However, for those who have learned to use credit wisely, the purchasing power of credit cards can bring peace of mind, and even some added perks, while building credit.

Benefits of Purchasing with Credit

  • Protect your money: Identity theft and credit card fraud can be a huge financial set-back. Luckily, most credit card issuers consider users liable for no more than $50 of purchases that turn out to be fraudulent. This protection is generally not available with debit cards, probably because credit cards involve a loan of the company’s money, and debit cards involve only the user’s money.
  • Guarantee your gadgets: A lot of credit card issuers provide warranties for items purchased on credit—another reason that many store-offered warranty packages are a bad investment.
  • Protect your purchases: A significant number of credit cards include clauses that offer refunds for items that are lost, stolen or damaged recently after being purchased on credit.
  • Get reimbursements: Some cards offer users reimbursements if they find a price lower than what they paid for an item; others offer refunds even if they’re against store policy.
  • Milk the rewards: Cash-back bonuses, airline miles and other bonuses can be extremely rewarding, as long as you pay off your balance in a reasonable amount of time.
  • Travel smarter: Some cards provide insurance for car rentals, air travel, cancellations and accidents, which can cost lots of cash to buy during every trip.

The Golden Rules

Before whipping out your wallet and charging up a storm, though, keep in mind the two most important ingredients in making sure your credit card use doesn’t turn into a recipe for disaster:

  • Know the cost. Don’t assume your card offers any of these benefits—read the details of your contract and ask an attorney, trusted friend, or call the company to clarify any muddling points BEFORE using any credit cards.
  • Check your budget. Running up a high balance is never a good idea if you cannot pay it off. Remember that credit cards do not offer additional income; they merely offer an alternative way of purchasing with your existing finances.
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Posted in Your Credit Score | No Comments »

Sunday, January 3rd, 2010

More Info for Subprime Borrowers From FTC and Fed

A joint statement from the Federal Trade Commission and the Federal Reserve Board released in late December announced new rules for lenders who offer some borrowers less favorable loan terms than others.

With active participation from the borrowers in question, this measure could provide an important safeguard against certain predatory lending practices.

Current Mortgage and Home Loan Requirements

As things now stand, lenders are not required to inform individual borrowers whether their loan terms are better or worse than those offered to others.

When the new rules take effect, though, borrowers will receive a notice if they are offered loans that are “materially less favorable” than a significant amount of loans offered to other customers.

Ideally, the new requirement will help people make better choices about their loans. Many people who originally got into subprime loans weren't fully aware how the loans worked or what their other options might be. What many thought were "regular deals" turned out to be trouble.

Facing foreclosure? Learn about your options with a bankruptcy attorney in your area.

Partly because of this current gap in rules - that is, because of the system that leaves borrowers in the dark about where they stand in relation to others - lenders were able to develop the lending “innovations” that led to the subprime lending boom - and eventual bust.

New Rules to Help Home Mortgages

Set to take effect in one year (January 1, 2011), the new rules require the following:

  • Compliance from mortgage lenders: All forms of consumer credit are included in the new regulations, which means that mortgage lenders, auto lenders, student loan issuers, credit card issuers, banks and financing firms will have to comply by notifying consumers when they’re offered unfavorable loan terms.
  • Action from borrowers: The new rules require lenders who offer borrowers less-than-stellar terms on a loan to provide a free copy of a credit report or credit score. Once you get the report, it’s up to you to check that the negative action that the lender claims appears there is, in fact, there. And, if it does appear on your report, you must determine whether it’s correct.

In other words, these rules are good news, but they’re not a cure-all: you must still take the initiative to monitor and correct (if necessary) your credit report.

The new rules are apparently designed to ensure compliance with the Fair and Accurate Credit Transactions Act of 2003, an amendment to the Fair Credit Reporting Act.

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Posted in Miscellaneous News | No Comments »

Saturday, January 2nd, 2010

Cash for Cutting Greenhouse Gases

CNNMoney.com reports that a new proposal before the Senate could mean big news for how energy is bought and sold in the U.S. – and for how much average consumers pay.

Proposed Money Saving Measures

Currently, Congress has made little headway toward passing legislation that would limit production of greenhouse gases, despite various attempts. The new bill offers an alternative to the now familiar cap-and-trade model that could potentially lower energy costs for average Americans.

If successful, the measure would work like this:

  • Permits required: Each month, coal, oil and natural gas companies would be required to buy permits to sell their greenhouse gas-emitting products to Americans.
  • Money comes back: Naturally, higher costs for energy distributors would mean higher prices for consumers, but the proposed measure would return 75 percent of the companies’ fees to consumers. The remaining 25 percent would apparently go to development of sustainable energy sources.

Supporters have reportedly claimed that this cap-and-dividend program, as it’s called, would provide a much simpler way for energy providers to meet new emissions standards than the oft-discussed cap-and-trade proposals would.

Opponents, on the other hand, fear that removing Wall Street investors from the equation would dry up a significant source of revenue that could otherwise be invested in explorations of new technologies.

One of the most easily understandable explanations of the differences between cap-and-trade and cap-and-dividend reportedly comes from an analyst of the energy sector, who noted that this proposed bill would essentially shift money around within the U.S. economy, whereas cap-and-trade could potentially inject new capital.

How Your Energy Bill Could Change

Sources indicate that the rebate part of the bill would likely translate to about $1,100 returned to each household annually. Of course, some of that money would be funneled directly into covering higher energy costs.

But, it seems, as much as 80 percent of the U.S. population would either save money from this proposal or see no change in their expenditures. The other 20 percent, according to CNNMoney.com, would be wealthier consumers who use more energy (in the form of multiple residences, frequent air travel, etc.) and essentially pay for that privilege.

While energy costs are a big part of any budget, these changes shouldn't cause anyone to file bankruptcy.

Because the effects of the bill would vary in each state, you may want to contact your local congressional office for details.

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Posted in Bankruptcy News and Events, Finance 101: Secure Your Future | No Comments »

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