Archive for the ‘Bankruptcy’ Category

The Most Common Causes Of Bankruptcy And Why It Does Not Matter

Does it matter why you filed bankruptcy?

Experienced Bankruptcy Attorney Helping with Debt Reduction in Pierce County and Tacoma Washington

1. Medical Expenses

A study done at Harvard University indicates that this is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies. One of the interesting caveats of this study shows that 78% of filers had some form of health insurance, thus bucking the myth that medical bills affect only the uninsured.

Rare or serious diseases or injuries can easily result in hundreds of thousands of dollars in medical bills – bills that can quickly wipe out savings and retirement accounts, college education funds and home equity. Once these have been exhausted, bankruptcy may be the only shelter left, regardless of whether the patient or his or her family was able to apply health coverage to a portion of the bill or not.

2. Job Loss

Whether due to layoff, termination or resignation, the loss of income from a job can be equally devastating. Some are lucky enough to receive severance packages, but many find pink slips on their desks or lockers with little or no prior notice. Not having an emergency fund to draw from only worsens this situation, and using credit cards to pay bills can be disastrous.

The loss of insurance coverage and the cost of COBRA insurance also drain the job seeker’s already limited resources. Those who are unable to find similar gainful employment for an extended period of time may not be able to recover from the lack of income in time to keep the creditors at bay.

3. Excess Use of Credit

Credit companies are aggressive in selling their credit cards, mortgages, and other forms of consumer debt. Credit card bills, installment debt, car and other loan payments can eventually spiral out of control, until finally the borrower is unable to make even the minimum payment on each type of debt. If the borrower cannot access funds from friends or family or otherwise obtain a debt-consolidation loan, which is usually not a realistic option, then bankruptcy is usually the inevitable alternative.

Statistics indicate that most debt-consolidation plans fail for various reasons, and usually only delay filing for most participants. Although home-equity loans can be a remedy for unsecured debt, such a loan turns unsecured debt which can be discharged in a bankruptcy proceeding, into secured debt that must be paid or the home can be lost in a foreclosure.

4. Divorce/Separation

Marital dissolutions create a tremendous financial strain on both partners in several ways. First come the legal fees, which can be astronomical in some cases, followed by a division of marital assets, decree of child support and/or alimony, and finally the ongoing cost of keeping up two separate households after the split. The legal costs alone are enough to force some to file, while wage garnishments to cover back child support or alimony can strip others of the ability to pay the rest of their bills. Spouses who fail to pay the support dictated in the agreement often leave the other completely destitute.

WHATEVER THE CAUSE, those individuals or couples who are faced with a situation where they can no longer pay their bills and still support themselves or their families SHOULD NOT BE ASHAMED. What is done is done, and we are unable to change the past. Neither the staff at WASHINGTON FRESH START, or the bankruptcy trustee, are going to ask you how you arrived at the present situation, as our sole purpose and goal is to help you to obtain a FRESH FINANCIAL START!

Contact a Tacoma Bankruptcy Attorney Today!

STOP WORRYING, call our bankruptcy lawyers today at 253-284-9909, for a free consultation to have all of your questions answered and to determine if you qualify for immediate financial relief.

What Happens at Your Court Hearing?

Bankruptcy Court Hearing Lawyers

Serving all of Tacoma and Pierce County, Washington

When you file for a fresh start under the bankruptcy laws, you, together with your bankruptcy attorney, are required to attend a meeting with the Bankruptcy Trustee. The Trustee is a local attorney who is appointed by the court to review the bankruptcy schedules that have been filed with the court, verify your identity, and make a report to the court as to whether you have any non-exempt property. In most cases, your property is exempt and you are allowed to keep all of your assets.

This meeting is called a Section 341 Meeting of Creditors. “Section 341” refers to the part of the Bankruptcy Code that requires this meeting, and it is called a “Meeting of Creditors” because it is an opportunity for creditors to attend and ask questions regarding your assets or debts. However, in today’s electronic age, creditors rarely attend these hearings except in large business cases.

This meeting is very informal and a Judge is not present. You are required to bring your driver’s license and social security card to your 341 meeting and you will be asked the following standard questions:

  1. What is your full name?
  2. Did you review and sign the documents?
  3. Are you familiar with the information contained in your filing documents?
  4. Is the information true and correct?
  5. Have there been any substantial changes since the filing?
  6. Are all of your assets listed?
  7. Are all of your debts listed?
  8. Do you have a child support or spousal support obligation?
  9. Have you read the bankruptcy information sheet (a handout I provide to you)?
  10. Have you filed a bankruptcy previously?
  11. Are any creditors present?

Although the 341 meeting is usually held at the courthouse in a vacant courtroom, it is not always; in Bremerton the meeting is held in an old shopping center complex; in Everett the meeting is held at the Red Cross Building.

In summary, the 341 meeting of creditors is an informal meeting with the Trustee to verify your identity and to verify that the information in your schedules is true and complete. I, as your Tacoma bankruptcy attorney, will be attending this meeting with you, with a complete copy of your file, to assist you if needed and to answer any legal questions the Trustee might have. These are very routine meetings with your part taking usually less than five minutes.

David Yando is a bankruptcy lawyer in Tacoma and is the founder of Washington Fresh Start.

What Debts Go Away in Bankruptcy?

Bankruptcy and Debts Explained by a Bankruptcy Attorney

Serving Residents in Tacoma and Pierce County Washington

Chapter 7 personal bankruptcy laws allow Americans who are overburdened by bills to have many types of debt legally discharged; they are simply wiped away and you are provided with a fresh financial start. Most debts included in a bankruptcy proceeding can usually be discharged unless they fall under one of the exceptions listed in the bankruptcy code.

UNSECURED DEBTS ARE USUALLY DISCHARGED

Most types of unsecured debt can be discharged through personal bankruptcy. An unsecured debt is one that is not attached to an item of property that guarantees payment through the possibility of foreclosure or repossession. The most common types of unsecured debts that people discharge through personal bankruptcy are credit card bills, personal loans, payday loans and medical bills. These are the most common types of debt that plague most consumers and their discharge allows individuals to live comfortably again without fear of creditors and their collection agencies.

SECURED DEBTS ARE OPTIONAL

Secured debts include items you have financed, such as a car or a house, which were used as collateral to secure financing by giving the creditor the right to take the item back if you stop paying. If you want to keep the collateral, such as your vehicle or home, you have to continue payments and reaffirm the debt in the bankruptcy. You also have the option of getting out of the debt by surrendering the collateral.

TAXES AND STUDENT LOANS

Federal income tax obligations may or may not be dischargeable under bankruptcy, depending upon the status of the tax delinquency and several other factors. In most cases, taxes are not dischargeable under Chapter 7, but may be repaid, usually without interest or penalties, in a Chapter 13 Wage Earner Plan. Student loan debt does not go away in a Chapter 7 unless you can establish extreme hardship due to factors such as disability or other inability to work.

BANKRUPTCY STOPS GARNISHMENTS AND LAWSUITS

Personal bankruptcy will stop any garnishments that result in money being deducted from your paychecks. The underlying debts that caused the garnishment may or may not be discharged, however. Unsecured debts will likely be discharged, while debts arising from unpaid child support or alimony won’t be discharged. Court judgments and lawsuits against you that do not involve intentional infliction of personal injury, intentional property damage, or drunk driving will usually be wiped out by Chapter 7 bankruptcy.

The law surrounding discharge of debts in personal bankruptcy is complicated and each case is unique. For more detailed and case specific information, please contact our Tacoma bankruptcy lawyers at Washington Fresh Start for a free initial consultation.

Despite Better Employment Rate, Why Bankruptcies Remain High

Bankruptcy Lawyer Discusses Why There are So Many Bankruptcies Today

Helping Reduce Debt in Tacoma and Pierce County, WA

 

There is considerable hope and talk about an improving economy. Certainly, let’s hope it gets better. Unfortunately, the number of bankruptcy filings continues to increase so far in 2011.

Consumer bankruptcy filings jumped another 11 percent in Feb. 2011 over the previous month, according to the expert National Bankruptcy Research Center and the American Bankruptcy Institute.

That’s right; another 102,686 American consumers filed bankruptcy in Feb. of this year.

My sense: A still declining housing market and high unemployment are forcing individuals to seek bankruptcy relief.

In 2010, there were more than 1.6 million American consumer bankruptcy filings – the highest level since 2005. The only good news is that bankruptcy filings are fewer by 8 percent in 2011 than they were in 2010.

“Though consumers are striving to reduce their debt burden, high unemployment and a still-poor housing sector continue to fuel new bankruptcies,” said Samuel J. Gerdano, the American Bankruptcy Institute’s executive director in a Wall Street Journal economics blog by Sara Murray.

Recent headlines indicate the U.S. unemployment rate has dropped to 8.9 percent as 192,000 jobs were added in Feb.

However, other published reports indicate a leading outplacement firm states there were another 50,702 in job cuts in Feb. That’s the worst job-cut number in 12 months.

Challenger, Gray & Christmas said the escalation represented a 32 percent increase in job cuts over Jan. of this year. That’s also an increase of 20 percent from Feb. 2010.

The three reasons cited for all the job cuts: Bankruptcies, business closings and cost-cutting.

Now, we have higher gas prices, which could affect employment rolls and the ever-increasing bankruptcy rate.

The bottom-line: Continued high bankruptcy filings are reflective of the stalled economy.

Call us today to discuss your situation with an experienced bankruptcy and debt reduction lawyer in Tacoma.

Major Bank Changing Deficient Foreclosure Procedures after U.S. Probe

Foreclosure and Bankruptcy Lawyer

Helping Homeowners from Tacoma and Pierce County Washington

A major bank has suspended its foreclosures on property owners following a federal investigation for technically deficient reasons.

HSBC Holdings PLC, a Lond0n-based bank, put a moratorium on its foreclosures as the result of a U.S. government probe by two agencies: The Federal Reserve Board and the Office of the Comptroller of the Currency.

This another example of a major bank using “robo-signers” who signed affidavits verifying the accuracy of all loan documents in the foreclosure file, without in fact having done the verification.

Many homeowners have lost their homes in technically deficient foreclosure proceedings, which could have been prevented if they had obtained legal counsel and protected their property rights.

Published reports indicate HSBC halted its foreclosures after the U.S. government reviewed the bank’s procedures. HSBC’s annual report conceded the deficiencies.

HSBC was among the banks investigated last year. They were accused of not being fair to homeowners.

Not only were HSBC’s loan documentation processes criticized, the federal agencies condemned the bank’s evaluation and monitoring of its legal representatives.

HSBC vows to recommence its foreclosures once it corrects its weaknesses. However, the bank concedes its foreclosure rate might be slowed by other state and federal investigations.

The bank also anticipates such investigations will also impact its earnings as a result of possible fines and other penalties.

Despite the slowdown in foreclosures following the U.S. investigation, RealtyTrac reports there were over 1 million foreclosures in 2010.

Read about the investigation of HSBC: http://www.komonews.com/news/business/117248533.html

 

If you are facing a foreclosure in Tacoma or Pierce County, call Washington Fresh Start to speak with a bankruptcy attorney with the experience and expertise to help YOU!

Federal Reserve Study: Bush-Era Bankruptcy Law Helped Cause 200,000 Homeowners to Lose Their Homes

Experienced and Knowledgeable Bankruptcy Law Attorney

Assisting Homeowners in Tacoma and Pierce County, WA

The 2005 bankruptcy law was harmful to homeowners in Washington state and across the nation. It helped instigate more than 200,000 mortgage foreclosures, according to a 2011 study by economists at the New York Federal Reserve. That is also my analysis.

Mortgage defaults increased 15 percent and the increase for high net-worth homeowners was even higher.

The Bush era changes in the bankruptcy laws were sponsored by the banking industry which attempted to restrict the liquidation and reorganization rights of honest, hard working individuals.

The bill, making it more difficult to file for bankruptcy, was signed into law by President Bush after easily passing in Congress – despite strong opposition from consumer groups.

But the study’s economists – Donald P. Morgan, Benjamin Iverson, and Matthew Botsch – point out the law was also harmful to credit card holders. It made it too hard for homeowners to ease their credit-card debt in filing bankruptcy. In turn, that made it impossible for homeowners to pay their mortgages.

The economic study, which totals 11 pages, also concludes that some 116,000 subprime mortgages went into default in 2006.

Additionally, the economists state the foreclosures depressed home prices – below the amounts borrowers owed their lenders. The widespread decreases in home values meant the homeowners found their situations unworkable.

It was a vicious financial cycle. Homeowners could not afford their payments, nor were they able to pay off the bank loans by refinancing and nor could they sell their homes.

“By making it harder for borrowers to avoid paying credit card debt, [the 2005 bankruptcy law] made it more difficult for them to pay their mortgages, so foreclosure rates rose,” according to the study.

On the other hand, the banks benefited from the law.

They were able to increase the amount of consumers’ debt without the approval of cardholders. The banks encouraged the borrowers to increase their debt at low interest rates. But then, the banks launched what is called “retroactive rate increases.” That enabled them to significantly hike the interest rates charged to cardholders on the debt loads.

The banks’ scheme was not disallowed by Congress until 2009.

My conclusions about the 2005 bankruptcy law:

This misguided attempt, together with the Bush administrations’ lack of control over the banking industry, has led to the deepest recession in the modern era.

It turns out that more bankruptcies will be necessary as a result of the banking industries’ gouging of the American economy.

Contact Washington Fresh Start today to discuss your situation and your options with an experienced bankruptcy lawyer.

How Home-Loan Modification Plan Works with Chapter 13 to Relieve Stress, Stop Foreclosure

Bankruptcy Attorney Helping with Home Loan Modifications

Serving Home Owners in Tacoma and throughout Pierce County, Washington

Homeowners have the opportunity to combine loan modifications under the Obama Administration’s HAMP (Home Affordable Modification Program) with Chapter 13 plans that can eliminate or greatly reduce most other debts. This strategy was made much more feasible by recent changes in the mortgage modification program directives that prohibit mortgage companies from discriminating against homeowners who are in bankruptcy cases.

It is sometimes possible to obtain a loan modification before filing a bankruptcy case and then file the bankruptcy, under Chapter 7 or Chapter 13, to deal with other debts. But homeowners can also submit a loan modification request after a Chapter 13 bankruptcy case has been filed, and incorporate the proposed modification into a Chapter 13 plan to be approved by the court once the mortgage company agrees to modification.

A substantial portion of first mortgages are eligible for HAMP relief either as Fannie Mae or Freddie Mac related mortgages (GSE Loans) or as the mortgage servicer has agreed to participate in HAMP (non-GSE Loans).

The filing of the Chapter 13 petition stops any pending foreclosure sale. It is not unusual for non HAMP lenders or other lenders who offer internal modification or workout programs to process those while proceeding with foreclosure at the same time. Homeowners should know that they can continue to seek mortgage modification and file a Chapter 13 to stop a foreclosure. This removes the pressure of the impending foreclosure from the modification process

I often get calls from homeowners who want to file their Chapter 13 petition the next day to stop the foreclosure. It usually can not be done that quickly as there are documents to gather, forms to complete, credit counseling requirements, and fees to pay. Homeowners need to allow adequate time to prepare for a Chapter 13 bankruptcy filing, even if it turns out that it is not necessary.

Contact us today to discuss your debt options with an experienced Tacoma bankruptcy attorney.

Ordeal for Seattle-Tacoma Homeowners – Financial Impacts of Falling Real Estate Values

Does your home have you in financial trouble?

Bankruptcy Attorney in Tacoma Helping Homeowners

A recent Seattle Times article announced what many financially troubled homeowners fear – property tax increases in Seattle and the rest of King County.

The article stated: “Declining property values will bring tax relief to some King County homeowners this year, but for others voter-approved levies and bonds will mean higher taxes.”

My sense is that the article is well-written. I would also include three other important factors in an analysis of the problems associated with falling real estate values.

But first some background — here’s the headline dated Feb. 10, 2011: “King County property tax going up as home prices fall.” The article stated average property taxes are jumping 8 percent in Seattle, 7.2 percent in Bellevue and 4.9 percent in Issaquah.

“In Seattle, where voters last year approved two school levies and construction bonds and home values rose a tad, the tax bill on a typical $453,300 house will rise by $324, or 8 percent, to $4,379,” wrote reporter Keith Ervin.

That’s true. School levies and construction bonds are factors. Again, my sense is that there are other salient reasons, as well, which I will explain a little later.

“Bills are going out as numerous homes are in or near foreclosure and Zillow.com calculates one-third of Seattle-area mortgage holders owe more money than their houses are worth,” Mr. Ervin added.

That’s my experience, too. Many homeowners are under a difficult financial strain. A bankruptcy lawyer can help.

Actually, the troubling percentage of such beleaguered underwater homeowners previously reported is 34.3 percent. (Here’s a full report: A Third of Seattle Homeowners Underwater Means More Foreclosures, Bankruptcies.)

In fact, my sense is that many homeowners face these challenging obstacles:

  • Jurisdictions are raising tax rates to compensate for falling real estate values.
  • Homeowners are paying more taxes for properties with dramatically decreased values.
  • Mortgage modification programs are not helping a significant percentage of troubled homeowners.

Where can individuals turn to in these troubled times – where is their federal bailout program?

The only real sources of relief to troubled homeowners are the federal bankruptcy laws that give individuals or couples a fresh start under Chapter 7 or a chance to reorganize under Chapter 13.

Contact us today to discuss your options with an experienced Tacoma bankruptcy attorney.

A Third of Seattle Homeowners Underwater Means More Foreclosures, Bankruptcies

Bankruptcy Attorney Helping Homeowners Facing Foreclosure

Assistance for Homeowners in the Tacoma and Pierce County Regions of Washington

Unfortunately, there is more bad news for many hardworking homeowners, according to a Seattle Times news article. It reports 34.3 percent of homeowners in Pierce and King counties owe more on their homes than their property is actually worth.

Written by business reporter Eric Pryne, the headline reads: Third of homes in Seattle metro area worth less than what’s owed. His newspaper article on Feb. 8, 2011 quotes data from Zillow.com.

The fact that one-third of homeowners in the Seattle/Tacoma area are underwater on their mortgages will certainly lead to more foreclosures and bankruptcy filings.

For those individuals who owe significantly more on their mortgages than the home is worth, it no longer makes good economic sense to continue paying their mortgages.

This area is catching up on the national trend of homeowners simply walking away from their homes and allowing them to go into foreclosure.

Also, for those individuals with large second mortgages that are not cancelled in a non-judicial foreclosure, bankruptcy may be the only means of relieving their liability for a home they no longer own.

“At the end of 2010, 34.3 percent of all single-family homeowners with mortgages in King, Snohomish and Pierce counties were ‘underwater’ on their homes, Seattle-based Zillow said,” wrote Mr Pryne. “That was higher than the national figure, 27 percent.”

Incidentally, this unfortunate data means an increase of 23 percent in just 12 months.

“This region’s rate of increase over the past year – and especially over the last quarter – also topped the national increase,” wrote Mr. Pryne.

“Negative equity can have a significant impact on both the housing market and the broader economy, especially if the gap between the home’s value and the loan balance is large, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University,” Mr. Pryne quoted Mr. Crellin.

“It increases the likelihood that owners will default — even if they still can manage the payments,” he said (wrote Mr. Pryne in quoting Mr. Crellin).

 

If you are facing a foreclosure on your home, contact us. Speak to a bankruptcy lawyer with the experience and expertise to help you.

Will Washington State’s Tax Amnesty Program for Business Work? For Some, Maybe.

Washington Bankruptcy Lawyer Discusses Tax Amnesty

Serving Clients Across Tacoma and Pierce County

Washington state’s 90-day amnesty program for businesses with delinquent taxes is underway, but it’s not likely to be feasible for most small businesses. The plan to collect overdue taxes would waive penalties and interest.

The tax amnesty program is a great opportunity for small businesses to file and pay past due taxes without penalties. The major drawback, which will limit the usefulness of this program, is that all taxes due must be paid in full by April 30, 2011.

Most small businesses do not have the ability to make the full payment of past due taxes (hence the reason the returns were not filed in the first place) and lending institutions will not approve loans for this purpose.

To be effective, this program should provide that all returns must be filed and then allow an installment payment program, with interest, for amounts due and owing.

Indeed, some 80 percent of the state’s 50,000 delinquent companies will not participate according to estimates by the state’s Department of Revenue. The agency believes it will generate $24.4 million for state coffers and $3.9 million in revenue for local taxing authorities.

Contact us today to discuss Washington’s tax amnesty program with an experienced bankruptcy attorney.