Published Saturday, March 6, 2010 @ 8:59 am

Just when the credit card industry thought it was safe in Washington, Uncle Sam has decided to keep them over his knee for a few last good swats of discipline in the form of tighter regulations on late fees.

For many who struggle with credit cards, the problem is not always uncontrollable spending—it’s the fees. Late fees, annual fees and over the limit fees can pile up faster than Feburary snow in Minnesota, pushing customers over the edge into an avalanche of additional credit problems.

However, earlier this week the Federal Reserve proposed new limits on how credit card companies apply penalty fees for things like missing a deadline or going over the limit.

The proposal suggests that these new restrictions go into effect in late summer 2010. Earlier provisions in the credit card bill began last May and were phased in over time. The introduction of this latest component of the bill may signal to the credit card companies that they are now an ongoing target in the sights of pro-consumer members of the House and Senate.

The Fed is concerned with the fact that a $5 surpassing of one’s credit limit triggers a charge of $40. The new law is recommending that the penalty be more closely aligned with the dollar amount in question. More clearly, if you spend $5 over the limit, that will be your penalty.

One thing to consider is what impact this will have on those who consistently teeter on the edge of their limit. By lessening the consequences, is there a risk more people will no longer fear the penalties? A penalty needs to send a message.

Other facets of the proposed action include a limit on late payment penalties to only the amount of the cardholder’s current minimum payment. Thus, the $39 late fee average that so many of us see from month to month would be a thing of the past.

One of the more important components addresses multiple fees for a single action. For example, if you are late and over your limit, you can only be assessed one fee. The beauty in this part is that it will include the fees that some banks are now charging for not using your card, called an inactivity fee.

Still, there are some aspects of the bill that may warrant additional debate. It does not prohibit the application of a $39 late fee for someone who has a $70 minimum payment. The new laws that just became active include six month interest rate increase reviews that require banks to review, six months after they increased your interest rate, if the reason for the increase is still valid. However, they can also consider current market conditions, which may lead to reasoning on why the rate should remain higher.

A lot of our readers struggle with credit card debt, which has carved out a deep niche in the financial struggles of us Americans. Thankfully, some of these laws may lessen the credit card companies’ role in our financial problems. The rest of it though, is up to us.

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Published Tuesday, March 2, 2010 @ 10:09 am

Developed to slow the rate of Chapter 7 bankruptcy filings, the Means Test helps determine whether or not someone qualifies to file Chapter 7, and in a Chapter 13 bankruptcy, to what extent you might be able to pay back some of your creditors. It’s become a very frustrating part of the bankruptcy process because it implies, “Hey, you just don’t want to pay your bills.”  Not only that, it also subjects filers to additional frustration, confusion and widens the gap between citizens and the law in place to protect them.

However, there are ways to overcome the restrictions and complications of the Means Test.  Of course, this is where the insight of an experienced bankruptcy attorney is especially beneficial, as it can take some time and expert handling.

Called “special circumstances,” a judge may grant you permission to file Chapter 7 in spite of failing the Means Test. (Failing, in this context, indicates that you have some ability to pay and that you would have to file under Chapter 13 and pay your monthly disposable income to your unsecured creditors through a Chapter 13 plan.)  If you are a member of the Armed Forces and a call to duty dramatically alters your income and there is no reasonable alternative money source, the results of the Means Test can be rendered non-applicable.

You can also be granted a special circumstance for a sudden, serious illness that will take you out of your job or further damage the economic viability of your family.  Job loss, in some cases, can lead to ability to file under the “special circumstance” exception to means test applicability.  However, the job loss would have to be sudden, proven legitimate (you can’t be found to have provoked it) and the income from that particular job itself would most likely have to had been the reason you failed the test.

There are other ways the results of the Means Test can be put aside. However, it is very important for you to understand that these are actual, legal strategies, not encouraged methods by which to circumvent the court. That’s called fraud, and you’ll be nailed for it.

The means test uses an average of your income over the six months prior to filing your case.  That being said, you have the ability to time your bankruptcy filing according to a period in time when your income will be at its lowest. If you know bankruptcy is on the horizon but can sustain a few months without employment, you can file down the road to ensure your last six months of income fall below the state median, which is a major factor in the Means Test.

Additionally, expert bankruptcy attorneys can advise you on a number of ways that you can reduce the amount you will have to pay through a Chapter 13 plan.  This is what bankruptcy professionals call “means test planning.”  Need health insurance? Purchasing a plan for you and your family before your bankruptcy is a good way to add expenses and reduce income. The code allows you to deduct what you pay for health insurance. The same applies for disability insurance.  Been wanting to put away more for retirement?  You can increase your 401(k) or 403(b) contributions through your employer and take the contributions as a deduction against your six-month average income in the means test.

You may not realize it, and in fact, they may be a reason for your having to file, but your rising mortgage and car payment may contribute to your passing the means test. Or, if you are expecting an increase in any of the interest rates on those loans, considering waiting until they kick-in to file.

The term “household” does not mean family. It means, quite literally, how many your “house holds.”  This means relatives, children who have moved back in after the backpacking trip around Europe and even that weird guy that rents the storage loft in the garage. And since the reform act in 2005 bases the median incomes for the means test on “household” and not family, the size of your household can have a serious impact in your favor.  The more people who live in a house, the higher the threshold of income required to qualify for the means test.

It can be scary thing, the means test. It literally changed the benefits of bankruptcy for thousands and thousands of Americans. If you are worried about it or just have additional questions, don’t hesitate to contact us.  We have helped over 40,000 North Carolina families through the process of bankruptcy and our attorneys know the means test inside and out.  Call The Law Offices of John T. Orcutt to schedule your FREE consultation at 1-800-899-1414.

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Published Sunday, February 28, 2010 @ 9:26 pm

Bankruptcy is one of the most important decisions you may ever have to make. It’s not a decision to take lightly, and our office understands that you and your family have a lot of questions. While many of the same laws apply to many cases, rarely is your financial situation the same as another person’s. We all have different reasons for needing to rely on the bankruptcy code and just about every reason is as justifiable as the next.

To assist you in the most direct and non-invasive method possible, we have created three communication vehicles by which you can begin to explore why bankruptcy may be your best way out from under an impending financial crisis.

1. First, you can arrange a face-to-face meeting with us. Our practice serves North Carolina residents in 30 of our 100 counties and we have offices in Raleigh, Durham, Wilson and Fayetteville.

We structure these meetings to be confidential and without obligation. That means you are not encouraged to file bankruptcy or beholden to us in any way. We feel that because financial stress can be such a difficult matter with which to cope, it is best for us to be there for people who have questions. Maybe you’re worried about a collection agency. Or your bank isn’t returning calls about a mortgage modification. Whatever the nature of your debt question, a one-on-one meeting in one of our four offices can help you get it answered.

And best of all, there is no charge for this meeting. The introduction of money to a meeting such as this would only apply undue pressure and in many cases, add to your debt load. That is not what we want.

if you feel a personal meeting is for you, call us at 1.800.899.1414.

2. Another way to get things started or to ask questions is over the phone. If you can’t make it to one of our offices or only have time on your lunch break, maybe a phone call is the best way.

We understand that those in serious debt often develop a mistrust of those who want to help, especially given the ubiquity of shady “credit doctors” and debt settlement programs. Too many people have lost a lot of money to these bogus outfits. Please understand, we’re here to help you get out of debt using the strength of federal bankruptcy law. If you don’t believe us, take a look at our client testimonials at http://www.billsbills.com/testimonials.php. Talk to us in person or over the phone. We’ve helped thousands of families get through the very same financial challenges you’re going through right now.

3. Lastly, you can reach us via the Web. Our site, www.billsbills.com, has an easy form, available here, that you can fill out for us to call you. If you choose too, you can add some basic information about your situation, which will help us get some questions answered before we speak and thus, help you make a decision quickly about the best way to proceed. It won’t take more than five minutes to complete.

Again, we know that making the decision to file for bankruptcy is a serious one that deserves a lot of research. Our goal is to help you clearly understand the nature of your debt and how it can best be settled. If you can think of some additional ways to engage us or have suggestions for us, please let us know.

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Published Friday, February 26, 2010 @ 7:15 am

For most bankruptcy bound individuals, a discharge of all individual debts is considered the Holy Grail of any bankruptcy filing, yielding a permanent injunction that prevents creditors from collecting on debts. However, any good discussion of debt dischargeability also tackles the primary exceptions to look out for when considering any bankruptcy filing.

Exceptions to the power of a bankruptcy discharge, include:

Certain Tax Obligations
Withholding taxes are not dischargeable in bankruptcy, although you may be able to use a Chapter 13 case to pay these over time (notwithstanding any accrued penalties and interest).  Similarly, sales taxes are not dischargeable, but again, Chapter 13 can establish a payment plan for lessening the load and paying this out over the long haul.

The question of whether your income tax can be discharged ultimately depends on how old the tax debt is and when you filed the tax return.  In order to be dischargeable, your tax debt for the tax year in question must meet the following conditions: the due date for filing your tax return is at least three years ago; your tax return was filed at least two years ago; the tax assessment is at least 240 days old; your tax return was not fraudulent; and you are not guilty of tax evasion.

For example, in a 2009 bankruptcy filing:

• Taxes from 2006-2008 are not dischargeable;
• Taxes from 2004 and before are eligible for review; and
• Taxes from 2005 are potentially dischargeable if the return was filed by the debtor on or before April 15, 2006. If the return was filed under an extension, then the 2005 taxes are not eligible for the following review unless the debtor files after October 15, 2009.

Fraud and Certain Credit Usages Before Filing
Fraud is a valid creditor objection to a bankruptcy discharge. To find fraud, a creditor must prove: (1) a statement made under false pretenses; (2) a material fact; (3) designed to deceive the creditor; (4) that does in fact deceive the creditor; (5) the creditor reasonably relies on the statement; and (6) the creditor suffers actual damages resulting from the reliance.

The general rule here is this: if you’re considering bankruptcy it’s best to avoid maxing out (or in some cases simply using) consumer credit, credit cards, or loans. Bankruptcy law now demands that bankruptcy bound debtors like you do not take cash advances or purchase luxury items on credit 90-days prior to your filing bankruptcy. If you do purchase large or luxury items through these means, creditors may challenge you (and these discharging these debts) in Court if they believe that you have acted in bad faith in using credit excessively.

Domestic Obligations
Alimony, child support and spousal maintenance debts are not dischargeable in either Chapter 7 or Chapter 13 bankruptcy. Additionally, the first prong of bankruptcy, the automatic stay, does not act to stop most collection efforts for these claims. An exception to this exception comes in the second type of domestic asset splitting known as equitable distribution. While equitable distribution—a dividing of martial property as a result of dissolution of the marriage—is no longer dischargeable in a Chapter 7 bankruptcy, the same is not true in Chapter 13. Chapter 13 bankruptcy, in what is called as its “super discharge,” can aid a former spouse having trouble paying their bills to eliminate this type of burden. These issues are complex, and it is important that you speak with a bankruptcy expert if you have these types of issues.

Student Loans
In an effort to protect the education lending industry, and allow student loan money for almost anyone who wants it, Congress has made virtually every advance in connection with education non-dischargeable in bankruptcy. To that end, these loans are non-dischargeable “unless excepting such debt from discharge…would impose an undue hardship on the debtor.” While the definition of “undue hardship” is ultimately to the discretion of your bankruptcy judge, if precedent is any “judge,” this is a high hurdle to surmount. As a result, if you’re considering a bankruptcy filing simply to discharge a large student loan bill, don’t lose hope, it may just be best to wait: the tide appears to be turning in Congress to loosen this exemption as the costs of education skyrocket and more and more Americans face insurmountable educational tabs.

Because of the complexities of bankruptcy law, a qualified bankruptcy attorney is a necessary tool in your financial toolbox to help you conquer your creditors and face your fiscal  fears, yielding the right kinds of debt relief—at a low cost— for a viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, February 9, 2010 @ 6:39 pm

If you couldn’t tell by the utter onslaught of tax preparation service ads and the sudden presence of temporary cubicles in that once abandoned retail space at the corner of your favorite strip mall, let us be the first to remind you that it’s tax season.

We take interest in this time of year because tax returns can mean one of two things to our readers: more debt or more money. Since we are all about helping you figure out what to do with your debt, we hope this post will educate you regarding what tax season can mean for your financial well-being.

There are number of tax deductions out there that get ignored by a lot of families. Worse yet, they are not even addressed by many of the “come-and-go” tax return preparation services out there. On that note, we encourage you to take caution when deciding who to work with if you are not someone who handles returns on your own. We should also point out that there is good reason to hire someone to help with your tax returns, primarily to alleviate stress and ensure they get done correctly.

That being said, make sure that the person you hire is an actual financial professional, not someone who was just trained to punch data into a computer program. Ask friends or co-workers if they can recommend a reliable Certified Public Accountant that has a tax service. Yes, it will cost you more money, but not that much more.

If you have no choice but to use a temporary tax shop, ask for the most senior member of the team. Many of these operations do have supervisors on staff with actual accounting and tax experience. Remind them that there are countless shops just like theirs that would prefer your business to encourage the top person to give you appropriate attention.

To further ensure you are getting the service you deserve, remind your tax preparer about the most often missed tax deductions. An article on MSNBC.com highlighted seven of them, which do require you to itemize:

• Home ownership deductions can include mortgage interest, property taxes, fees involving the sale of your home and agent commissions.
• In North Carolina, the personal property tax you pay on your car each year can also be a deduction.
• Always hang on to your receipts for charitable donations, even the bags of clothes you gave to Goodwill. When any charity asks you if you want a receipt, say yes.
• Did you know you can deduct mileage expenses if you use your own car in a charitable effort? You can. Go back and write down when you did and even keep receipts for bus trips to the location of your volunteering. Parking fees and other tolls count, too.
• If you had to travel for work, keep track of any dry cleaning and laundering receipts for clothes you needed on behalf of the company. This only counts if you are required to look the part and don’t try it with the torn jeans you wear on the flight.
• Also related to business travel are the costs of shipping materials or paying for your baggage, which many airlines now require. So hang on to those receipts as well.
• Other miscellaneous deductions related to work include costs for faxes, Internet access or hotel phone calls.  You may also be able to deduct moving expenses. Make sure you provide good proof that the costs you incurred are directly related to the available deduction category.

We would hate to see your tax bills become the reason you have to file bankruptcy.   However, if you have been stuck with a large tax bill from the past, or if you anticipate owing taxes that you can’t pay all at once, you should consider bankruptcy as an option to either discharge taxes eligible for discharge or pay certain taxes that can’t be discharged over a period of several years through a Chapter 13 plan.   If you have any questions about how tax bills are handled in Chapter 7 or Chapter 13 bankruptcy, give us a call, we’ll be glad to help.  Call 1-800-899-1414 to schedule a FREE consultation with an experienced bankruptcy attorney at the Law Offices of John T. Orcutt.

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Published Tuesday, February 9, 2010 @ 6:25 pm

Very few people set out to open a credit card account intent on not paying off the balance.  Those who do are assumed to be criminals, usually identity thieves or some other sort of con artist.

Credit card debt, and all other forms of long term financial drain that lead good people into the need to file bankruptcy, is very often caused by a setback of some kind, like illness or job loss.  And if recent unemployment predictions are on track, we can expect the bankruptcy rate to continue to climb.

The News & Observer published an Associated Press report about the impact job losses are having across the country. The piece also warned of a dire future.

On February 5, the Labor Department will release its January unemployment numbers. Industry analysts expect to read that an additional 800,000 positions have been lost since March of last year. That’s almost 1,000,000 more people out of work. In total, we can blame the loss of almost 8 million jobs on the Great Recession.

The Labor Department’s report will also illustrate the theory that another four years of healthy fiscal growth will be needed to return to the country’s employment figures to stable.

Job reports are notoriously vague, as the report will demonstrate that 5,000 jobs were added to the economy last month. For some, that signifies a positive sign. As does the rise of gross domestic product statistics, which show that this critical metric has climbed for the second quarter in a row.

Nevertheless, that small number is not enough to prevent the national unemployment rate from experiencing a slight increase. When the numbers come out, which are based on unemployment insurance tax figures turned in to state governments by companies, most are expecting to see 10.1 percent of the country’s workforce out of job.

As our economy becomes ever more global and harder to track, the further out of touch those making the important decisions about our country’s financial health become with the everyday workforce. All the statistics, theories and Wall Street rallies do not mean anything to the unemployed parents of four children.

Whether it’s out of fear of new taxes, the expiration of existing tax programs, health care requirements or lack of credit to fuel growth, the fact remains that companies are simply not hiring. Stimulus projects designed to spark growth, like home buyer tax credits, are soon to expire and creating the fear that the faint signs of recovery will dissipate.

Signs of productivity increases can be attributed in part to business practices designed to get more out of fewer employees. It helps that those still holding a job are willing to do more to protect it, now that the realization of the recession has become clear to everybody, not just line workers and cubicle drones.

So what does all this mean for bankruptcy rates? Quite a bit actually. It isn’t difficult to connect the sudden loss of income with the inability to pay bills. Today’s conditions are making it worse though. At one time, jobs were easily found, shortening the time frame a person was without income. In that window of unemployment, people could get by on savings or available credit. With credit limits being reduced, loans hard to come by and savings at all time lows, the need to file for legal protection becomes necessary sooner than ever.

If you are out of work and see the window of financial viability starting to close, maybe it’s time to call the Law Offices of John T. Orcutt at 1-800-899-1414 to explore some options.  Bankruptcy might just be your best way “Out of the Red and Back in the Black.”

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Published Monday, February 1, 2010 @ 4:46 pm

You may have read on the blog, or elsewhere, that many are calling our current economy a “middle class recession.” This is because the numbers are way up on bankruptcies filed by those who make more than $60,000 per year, up 6.9 percent from 2008. Bankruptcies on the whole are up 36.5 percent from this time last year.

So why does it matter how much money a person makes when filing bankruptcy? Well, because bankruptcy is often considered an escape route for the financially unreliable or worse yet, “something poor people do.” It’s just not true.

Today, bankruptcies are increasing among people in the real estate profession, namely developers and agents. When the housing bubble dissolved, so did the incomes for a lot of American families.

There are different types, or “chapters” of bankruptcy for a reason. Basically, some versions are better suited to different situations. Chapter 7, for example, is typically filed by those who may have lost a job or for some reason may not have regular source of income. It wipes out all debts, but also mandates a person dispose of their “non-exempt assets” as a way to repay creditors to whatever extent possible. If you have equity in property beyond available exemption limitations, you may have a “non-exempt asset”.  Many states’ exemptions, as well as the federal exemptions, provide some measure of protection for everything from your home to retirement accounts. It is not often the case that a family has assets beyond what available exemptions can protect.  Even if available exemptions do not cover all of a person’s property, Chapter 13 provides a way to pay the equity above available exemptions to unsecured creditors, so that a person may keep his property, if he can afford to do so.

For those who are still earning a living or at least have a source of money, Chapter 13 creates a three- to five-year payment plan. Your plan payment will largely consist of secured debt, like your car and mortgage payments. Because the plan payment can include your attorney fees, Chapter 13 is an attractive option if you do not have enough up-front money for Chapter 7 attorney fees.

Maybe you’re giving some thought to a debt-settlement firm instead of bankruptcy. Sure, it’s natural for you to want to negotiate your way out of debt. Unfortunately, many of these companies position themselves as an alternative to bankruptcy that will save your credit. More often, however, these debt settlement companies end up doing far more damage to your credit than if you had simply filed for bankruptcy from the start. Remember, just because you’re in a “debt-settlement” program, your creditors will continue to report your missed payments to the credit bureaus. A bankruptcy, while causing an initial hit to your credit score, will stop the negative reporting and allow you to rebuild your credit score faster.

Bankruptcy is an organized, legal process with pre-defined results. Debt settlement firms function under very little regulation and ask for payments before all the debts are settled, therefore the incentive to settle the debt is not as strong as if they were paid based on results or after everything is taken care of.  Thus, your “debt settlement” is by no means guaranteed.

And one more point on debt settlement agencies: the IRS considers forgiven debt as taxable income. In contrast, debt erased as part of a bankruptcy is not taxable.

Another important point about bankruptcy has to do with timing. It’s key that you don’t file too early or wait too long. Start by simply adding up what you owe and making a simple estimate on what it would take to pay it off yourself. If the discrepancy seems impossible to make up, or would force you to sacrifice your family’s needs just to make a dent in your debt load, then consult an experienced consumer bankruptcy attorney.

On the other hand, don’t wait until the car has been repossessed or the foreclosure notices start arriving. Use your head, remain calm, and speak with an attorney. The bankruptcy concept itself is fairly straightforward.  The process however, requires a good deal of legal expertise.  Engage it wisely.  Take time to understand the basics of filing.

From the Law Offices of John T. Orcutt.  Helping families through bankruptcy since 1995. Call today to set up a free initial debt consultation in one of our 4 convenient office locations. Raleigh, Durham, Fayetteville and Wilson.

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Published Monday, February 1, 2010 @ 2:14 pm

One thing you may already know about most court proceedings, is that parties usually have the option to represent themselves without the aid of an attorney. This is called appearing ‘Pro Se’, which, in Latin means “for oneself”. In a bankruptcy proceeding, when money is tight, the thought of saving money by cutting out attorneys and their fees can be pretty tempting. But there are many reasons this is a bad idea.

Bankruptcy can be complicated and bankruptcy judges are a picky bunch. They expect that the preparation of the voluntary petition, schedules, or other documents will be done accurately and on time. A bankruptcy attorney can usually prepare the documents in much less time than it would take for you to figure it out on your own. He or she knows what items of personal property should or should not be included on the petition to avoid a dismissal of your case, and how to apply the Means Test to your situation.

Some courts may give pro se applicants some minor concessions or leeway so that the case can be moved along, but they are careful to avoid crossing the threshold of what may arise to the level of the Court doing the job that a litigant – or his or her counsel – should be doing. Also, many different communications are exchanged between a party and the court, the trustees reviewing the petition, as well as the creditors. Your actions, or lack thereof, during this time, can seriously affect the outcome of your petition, and may even lead to the worst outcome- a dismissal of your case.

Normally, when you retain an attorney to handle a bankruptcy, the attorney will contact creditors on your behalf and attempt to stop any embarrassing, annoying, or even harassing debt-collecting activities. Usually this stops the behavior, even though legally, the creditor still has the right to contact you. He or she can also give you advice on seemingly innocuous activities that could negatively impact your case, such as drawing on retirement funds to pay bills.

Then there is the significant issue of knowing the law. Since there are several sets of rules governing bankruptcy proceedings, trying to navigate all the rules at once can get very confusing. All parties to any bankruptcy proceeding must comply with the Local Bankruptcy Rules, the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. Failure to do so will result in dismissal of the case or other sanctions. Other important aspects of law can come into play at any time during this process as well, such as statutes of limitations, transfer of assets, or tax issues that can have a big impact on your proceedings as well.

Finally, many bankruptcy proceedings are entangled with other legal issues, such as divorce, civil court action, or foreclosure, which could affect the outcome of your bankruptcy proceeding, and vice versa.

Before deciding to gamble with your future, talk to an experienced bankruptcy attorney about it. You will find the cost well worth it.

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Published Monday, February 1, 2010 @ 10:48 am

The decision to file for bankruptcy is never an easy one, especially where married couples are involved. Spouses must settle issues of dishonesty, mistrust, and frustration–and that’s even before any of the complex steps of collecting necessary documents and filing papers.

But the story for insolvent couples does have a caveat: joint bankruptcy protection. Married debtors can file their cases jointly with one trustee, one filing fee, and one total case. Debtors can bring to the table their joint debts as well as debts they hold only in their name. To be a joint case, the debtors need only be legally married.  And they must be a man and a woman.

Sounds simple right?

Well, for thousands of individuals living in America today, the latter designation raises difficult questions—especially in the growing number of states that recognize same-sex marriage or its legal equivalent (“civil unions”). Yet, as the constitutionality of laws and amendments forbidding marriage equality continue to be litigated across the country, same-sex debtors seeking bankruptcy relief  face even tougher challenges.

Because it is generally accepted that the Defense of Marriage Act (“DOMA”) would preclude the filing of a joint bankruptcy petition by a same sex married couple, these folks face two very different options: (1) make two separate bankruptcy filings, or (2) pursue the right to seek bankruptcy relief as would an opposite-sex married couple. 

While the second option would be a precedent-setting endeavor, fulfilling the true meaning of marriage equality, in reality pursuing this groundbreaking goal is largely antithetical to the larger motivations of most bankruptcy bound individuals, gay or straight: getting out of debt.

In practice, a married same-sex couple will need, more than their heterosexual counterparts, the assistance of a qualified bankruptcy attorney to pull together all of their required financial information;  ensure that it is complete and their disclosures accurate; and research and prepare a case that anticipates a variety of motions attacking the joint filing. Regardless of what “party-in-interest” files the case (as defined by the Bankruptcy Code and common law), the filing will likely be challenged, even before a judge reaches such substantive issues as income, assets, liabilities, and creditors.

In this case, like others for same-sex couples seeking right-giving precedents, while the Bankruptcy Code provides one standard, constitutional arguments will inevitably reveal others that need to be briefed and raised.  Same-sex couples must expect that any decision in their favor will be appealed, perhaps more than once to a US District Court, a Bankruptcy Appellate Panel, a Circuit Court of Appeals, or maybe even the Supreme Court of the United States.  For debtors, this type legal wrangling adds ,ore time, more fees and inevitably more stress to what is undoubtedly an already nerve-racking situation.

As a result, for a married same-sex couple facing the need to file bankruptcy, the next steps can mark a tough decision: file singly or fight the system; seek your family’s financial security or a denigrated group’s fundamental rights; moving forward for your family or moving your family forward.  In the end, changing the current state of the law will take either an act of Congress or one or more very brave and very patient married same-sex couples who find themselves drowning in debt and who–in spite of these debts—also feel empowered to fight the good fight.

The state of marriage equality is not yet where it should be in the United States, and this seriously affects the legal rights of same-sex families.  But until the law changes, same-sex couples need expertise in the handling of their cases.

If you live in North Carolina where same-sex marriage is not legal, but are still considering bankruptcy, the bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, January 25, 2010 @ 6:57 pm

Ugh. Debt. These days most Americans are sick of hearing the d-word. And who can blame us? Americans are in more debt now than ever before. Avoiding debt seems impossible…there are so many things you can’t even do without credit cards or loans that we now take debt as a matter of course. Despite our negative feelings about debt, Americans want to repay what we owe. In fact, this noble instinct is what keeps some people from filing for bankruptcy when they desperately need to do just that. Not only are people afraid of having a negative impact on their credit scores (which in fact may already be in the basement), they also feel that the right thing to do is pay back debt.

When it is possible, paying back debt is the right thing to do, no doubt about it, but most people who declare bankruptcy don’t end up in a bad situation because they made negligent mistakes or don’t feel like paying; instead, dealing with the curve-balls life throws at us can prevent us from meeting obligations. By the time people opt to declare bankruptcy, they are not unwilling to pay back debt they simply can’t. The thing to remember is that creditors know that and take these factors into account. This is the reason creditors charge higher interest rates when they extend unsecured credit. If bankruptcy is the right decision, you shouldn’t allow misgivings about not paying certain kinds of debts hold you back.

What many people don’t even consider is that declaring bankruptcy can actually help you pay back debts. Consider this example: Say you are considerably behind on payments that are secured by your home or your car. In such a situation, filing for Chapter 13 bankruptcy can allow you to reach a compromise between what is feasible and what your creditors expect. In a Chapter 13 bankruptcy, a repayment plan could save your home from foreclosure by allowing you to catch up on back payments. Similarly, a Chapter 13 repayment plan can allow you to catch up on back payments for your car, helping you to avoid losing your vehicle to repossession. In both situations, the creditor is receiving payments for the credit they have extended, and you are working with a plan you can actually meet. This also applies to debts that you would not be able to discharge in a bankruptcy, such as child support payments and back taxes owed to the IRS. A Chapter 13 plan can help you make up for missed payments in the past while easing the pressure of being hassled and worried about never catching up. Eventually, with a good Chapter 13 plan, you are more likely to succeed in getting current on all your required payments.

A strategically timed bankruptcy can also help you in those situations where you may be able to pay off all your debts by selling assets, but you simply need more time. With aggressive creditors hassling you constantly, you may end up selling assets for less than they are worth, just to do so more quickly or to avoid penalties. This could land you with debts still to be paid and no assets to boot. A typical example is if your home is foreclosed on. Your home is not likely to sell for what it is actually worth if it goes through foreclosure. This means that you will no longer owe the mortgage company, but you will also lose the value in your home, if any, that exceeded the value of the mortgage. By declaring bankruptcy and forestalling foreclosure, you reap the actual benefit of your investment and potentially pay back everyone you owe.

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Published Monday, January 25, 2010 @ 6:33 pm

It’s tax season. Which means that for most people, it’s time to realize just how much we give to Uncle Sam every year. For some, the prospect of a refund provides a glimmer of hope that some new money is coming in soon to pay off debts.

Just a quick little note on your tax dollars before we get into the meat of this post: it is actually better to owe just a little bit of money after filing because that means that you have used more of our your own money throughout the year instead of giving it all to the government. Sure, a nice windfall come April is a nice thing. But keep in mind that it’s your money—you’re just getting it later. And, when it comes to investing, “money now” is always better than “money later.”

Because it’s tax season, we thought it important to discuss how taxes and personal bankruptcy can relate to one another. It is possible to use bankruptcy as a way to get rid of large, outstanding tax obligations but it’s not as easy as discharging a few grand in credit card debt.

Chapter 13 bankruptcy in most cases requires you to pay back what’s owed within your monthly payment plan and Chapter 7 rarely allows for the complete expulsion of your tax debts. (If you’re not sure of the differences between Chapters 13 and 7, simply do a search on our blog for each.)

There are, however, some precedents set for removing tax obligations as part of a bankruptcy. Although we encourage you to understand that it is a complicated process and the results are not always what you may be hoping for.

(Understand this post is only scratching the surface. Only in person can we provide a full breakdown of taxes and bankruptcy.)

One reason tax debt and bankruptcy tend to get tangled is that past due taxes can fall into all three categories of debt type: Dischargeable, Nondischargebale priority debts, and Nondischargeable priority debts.

Provided you filed your taxes on time, legally and provide no evidence of tax evasion other than legitimately being unable to pay, you can discharge tax debt in Chapter 7 and 13. Still, what’s owed must be more than three years late and assessed more than 240 days before you file. That means that you were officially declared late and in debt that many days before you filed. This ensures the IRS that you are not declaring just to get rid of a recent tax debt.

BUT (you knew there was one), that 240 day window starts only after the last extension expires, not when the original debt was assessed. Other impediments to that three year time-frame include a 90-day addition if a previous bankruptcy case of yours was still open while you were assessed the tax debt; the addition of any time the IRS was prevented from collecting as a result of a court ordered due process hearing plus an additional 90 days; and any time that a debt assistance professional formally asked the IRS to temporarily halt collection efforts.

Basically, any effort you make to delay the collection of tax debt, even if perfectly legal, counts against your ability to discharge tax debt in a bankruptcy.

The key to bankruptcy and taxes, like all things in life really, is to be completely honest and upfront. Any attempt to hide or even coyly plead ignorance will be considered an attempt to obscure or defraud the court and even worse, the IRS. Not being able to pay your taxes, especially after a mid-year job loss, is a common thing. Don’t make it worse.

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Published Sunday, January 24, 2010 @ 8:18 am

Brent T. White, a law professor at the University of Arizona, has a provocative new study out, “Underwater and Not Walking Away.” He points out that as many as 32 percent of all homeowners are ‘underwater’ on their mortgages – they owe more money than their houses are worth. The media has produced a series of articles decrying homeowners who simply stop paying on these ‘upside down’ mortgages as irresponsible and even obscene. In fact, White notes, less than three percent of people whose primary residences are foreclosed on are people who could have continued to pay their mortgages. There are no discernible difference in foreclosure rates in places where housing prices have dropped steeply. Rather, foreclosure rates closely track unemployment rates, suggesting that it’s generally people who lose their jobs and are no longer able to pay their mortgages who lose their homes to foreclosure.

This is true even when it would make more financial sense for people to walk away. Nationwide, housing prices have dropped 30 percent since their peak in 2006; in some cities, drops have been much steeper. Parts of California, for example, have seen drops of 65%. The result is that many people could pay rent on a new house at only a fraction of their monthly mortgage. Homeowners in this situation could save tens of thousands of dollars by walking away. So why don’t more of them do so?

Emotions of fear, guilt and shame come together to encourage people to act against their own self-interests, White argues. There’s a concerted message being put out not only by the banking industry, but also by the government, the media and even non profit consumer counseling agencies that ‘good people’ live up to their responsibilities and don’t walk away from their obligations. That message is allowing the banking industry to shift not only the responsibility, but also the consequences, of the housing crisis entirely onto the shoulders of homeowners.

Certainly there are some negative consequences to society of walking away – foreclosures tend to cluster in neighborhoods, and neighborhoods with a large number of foreclosed homes often become run down and dangerous. But what about the consequences to society of staying and struggling to pay these huge mortgages? Doesn’t that empower a banking industry that made poor decisions and led the economy into this trap?

White points out that in a stable housing market, a house should be about 15 to 16 times the price of a year’s worth of rent. In some markets, the average mortgage being written was 38 times the price of a year’s rent. Shouldn’t the bankers, experts in housing prices, be held to some account for writing these kinds of mortgages and letting housing prices get out of control?

The guilt, shame and fear that White writes about seems to apply only to consumers. We see this echoed in the way people think about credit card debt and bankruptcy. When consumers are unable to pay their debts, they are somehow shirking their responsibilities; when banks can’t pay what they owe, they find themselves ‘undercapitalized.’

This isn’t to say that financial irresponsibility should be more acceptable. However, maybe we need to rethink the way we hold consumers to a higher moral standard than lenders, and instead force the same financial accountability on all parties.

If you’re considering letting your house go, protect yourself from deficiency liability by filing for bankruptcy. For more information, visit our website www.billsbills.com and call to set up your free initial debt consultation. Serving North Carolina families since 1995, the Law Offices of John T. Orcutt.

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Published Thursday, January 21, 2010 @ 11:50 am

The latest chapter in the Obama administration’s attempts to make lenders modify mortgages is to send SWAT teams – no, I’m not kidding, really, SWAT teams – into the call centers of major lenders to try to ensure that they follow the proper procedures and actually modify loans. Seriously, wouldn’t it be a whole lot easier just to pass cramdown and allow bankruptcy judges to modify mortgages than to try to sweet talk, bribe or otherwise convince bankers to do it on their own?

Because they’re not. Making Homes Affordable, the program implemented by the government last May, is designed to encourage banks to modify the loans of homeowners who are having trouble making mortgage payments. Mortgage companies are reluctant to do that, however: they make more money in interest and fees when a mortgage goes into foreclosure, than they make from the government when they successfully modify it. The government had hoped to have 3-4 million mortgages modified by the end of last year. As of mid December, the count was at 750,000 – the vast majority of those were still in the trial stages.

The news reports of lenders dragging their feet are backed up with anecdotal evidence from homeowners, who report that they call the lenders over and over, file and refile the same documents, and then call back, only to be told that no one knows anything about their case. Lenders counter that people don’t send them the requested documents. Really? Desperate homeowner, one last shot at keeping their home, and they can’t be bothered to fax some papers? The lender argument is a little hard to believe.

Hence, the SWAT teams. These are teams of three people, sent into the call centers of the seven largest loan servicers to make sure that the bank representatives are giving accurate information, filing forms properly, etc. Experts are not impressed – many say the initiative is unlikely to work. Some have called for putting permanent government observers in the call centers. They note that private insurers already have their people inside the call center, to help prevent the loans they’ve insured from going into foreclosure.

Unfortunately, neither temporary nor permanent government observers in the call centers seems likely to work. This is another initiative – like the ‘foreclosure hall of shame’ that was supposed to embarrass the lenders into modifying loans – that the banks will evade and ignore until the administration acknowledges it isn’t working and moves on to something else. The fact is, lenders aren’t going to modify substantial numbers of mortgages until they are forced to. Unless an initiative like cramdown is passed, which takes the decision to modify or not and how much out of the bank’s hands and gives it to a neutral party, foreclosures will continue to rise.

Fortunately, homeowners finding it difficult to pay their mortgage may have another option to save their home: bankruptcy. Your bankruptcy attorney will return your phone calls, keep your files organized, and not make you fax documents four or five times. In addition, he or she will help you map out a plan that will lead you to financial freedom. The Obama administration may sincerely want to help homeowners. But as long as they expect bankers to do it out of the kindness of their hearts, you’re probable better off filing for bankruptcy.

Brought to you by the Law Offices of John T. Orcutt. Providing North Carolina homeowners real foreclosure relief since 1995. Is your lender not working with you? Call today and find out how a bankruptcy can save your home. 1-800-899-1414. Convenient offices in Raleigh, Durham, Fayetteville, and Wilson.

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Published Friday, January 8, 2010 @ 8:34 am

Bankruptcy should not be an embarrassing process. It’s bad enough the credit industry has surrounded it with negative stereotypes to make people believe it’s a life-altering decision.

However, for a number of people in Milwaukee, Wisconsin, filing Chapter 13 has become a series of perpetual embarrassments and ceaseless frustration as a result of a healthcare provider making public the medical conditions of patients who have filed for protection when their bills became too much to manage.

A 53-year-old college admissions employee filed Chapter 13 in an effort to clean up a difficult financial period of her life. Susan Dandridge understood that a good deal of private financial information will become public record. However, she did not count on an extensive list of her personal medical conditions being included in the claims filed by Aurora Health Care, a regional medical center to which she became indebted.

When she found out her privacy had been violated, she pursued legal action. In turn, a class action lawsuit was filed as it was revealed that Aurora had done the same thing with other patients’ billing records when submitting bankruptcy information.

This very compelling case not only brings to light once more the role medical bills play in the nation’s personal bankruptcy rate but also introduces the question about what medical information, considered private under HIPPAA laws, can be revealed during the bankruptcy process.

HIPPAA, or the Health Insurance Portability and Accountability Act of 1996, requires strict public protection of an individual’s health history by the entities that handle it, such as insurance companies and hospitals. Essentially, it is in place to protect citizens when medical information is transferred between health care providers or when people switch insurance companies. It is a private entity’s responsibility to protect your medical past.

Unfortunately, in Ms. Dandridge’s case, medical information became very public. Although those specific records have since been sealed, her suit contends they were available for months prior to her realizing they had been exposed. The suit also claims Aurora intentionally disclosed the records because of her inability to pay. Thus, her medical privacy was egregiously violated and, according to the lawsuit, the organization’s actions left her open to medical identity theft.

The lawsuit contends that Aurora could have filed summary information as a way to protect the consumers’ medical background while still adhering to state and federal medical privacy laws. However, the Wisconsin Hospital Association has jumped into the mix, stating that Dandridge’s attorney misinterpreted the law and that such information can be revealed in matters of billing and collections.

The realization that the information was made public came after a separate trustee in a Chapter 7 case noticed the amount of detail in Aurora’s claims and initiated legal action that eventually ended in a settlement. From there, the issue spiraled throughout the community and to those who had financial issues with the organization.

It does not matter whether or not anyone found or used for ill will the medical information revealed in the claims. The mere exposure of them is enough to constitute harm, according to Dandrige’s attorney. He also argues that now that the information is “out there” it is subject to additional exposure by third party companies who scan and archive court records.

It is the hope of Ms. Dandridge and the other class members that the practice of including conditions and reason for treatment in the collections and bankruptcy process be halted on a national level.

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Published Monday, January 4, 2010 @ 12:08 pm

In states like North Carolina—composed largely of rural areas dotted with farmland and abutting the ripe fishing grounds of the Atlantic—Chapter 12 bankruptcy can be exceptionally helpful to working farming and fishing families who might otherwise be bankruptcy bound.

In part one of the four-part series, entitled Chapter 12 Bankruptcy, we introduced the concept of Chapter 12, provided a brief overview of the special rights related to this protection, and shared who (or in some cases, “what”) qualifies as a family farm or family fisherman under the Bankruptcy Code. In this section, we’ll discuss how a Chapter 12 bankruptcy works, from initial petition filing to debt repayment planning.

If you qualify under the Bankruptcy Code’s broad definitions of a “family fisherman” or “family farmer,” a Chapter 12 case begins by filing a petition with the bankruptcy court where you live or the location of the “principal place of business” for your corporation or partnership. A qualifying husband and wife “family farmer” or “commercial family fisherman” may file. Unless the court orders otherwise, the petition includes a statement of your assets and liabilities; current income and expenditures; current business contracts and leases; and a general statement of your financial affairs.  In order to satisfy all of these petition requirements, you’ll need to gather a list of all creditors and the amounts and nature of their claims; the source, amount, and frequency of your income; a list of all of your property; and a detailed list of your monthly farming/fishing expenses, as well as living expenses, including food, shelter, utilities, transportation, feed, fertilizer, etc. In order to completely evaluate your household’s financial position, married individuals must gather this information for each spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing.

Upon filing for Chapter 12, you must pay a filing fee and a miscellaneous administrative fee with the clerk of court. With the court’s permission, and with specific deadlines, these fees may be paid in installments. Failure to pay these fees may result in dismissal of your case.

Filing the petition under Chapter 12 provides an automatic stay that stops most collection actions against you or your property. Under the automatic stay protection (a protection that exists under all forms of bankruptcy), any creditors—public or private—are not allowed to call you or send you collection letters. During the proceeding, they cannot continue any legal action against you, foreclose on your home, or repossess your car and other assets. And–even if a garnishment order has been issued–the automatic stay stops garnishment of your wages. Additionally, a Chapter 12 filing has the added benefit of protecting co-debtors (those liable with the debtor) from eager creditors seeking collection of consumer debts incurred by a personal, family, or household purpose.

When you file for Chapter 12 bankruptcy, an impartial trustee is appointed to evaluate the case and serve as an agent, for collecting your payments and making distributions to your creditors. Following your filing, the Chapter 12 trustee will hold a “meeting of creditors” at which you will discuss your financial affairs and the proposed terms of your repayment plan. From this meeting, parties typically resolve problems and repayment schedules. Afterwards, you, your trustee, and interested creditors attend a hearing confirming your personal Chapter 12 repayment plan.

Whether your bankruptcy is simple or complex, you’ll need an expert attorney to navigate the waters. Contact the experienced attorneys at The Law Offices of John T. Orcutt. Please note that while the Law Offices of John T. Orcutt does not file under Chapter 12, our office can evaluate your personal financial situation and refer your case to an experienced Chapter 12 practitioner if needed. Call us today: 1-800-899-1414.

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Published Monday, January 4, 2010 @ 7:58 am

Did you find yourself standing around at the stroke of midnight on New Year’s night, hard pressed to think of something, anything, that, in the current economy, you could resolve to do when all you currently think about is money? Whether you were in Times Square or a tiny gathering, you probably weren’t alone. Millions of Americans facing foreclosure of their homes, looming unemployment, mounting consumer and health care debt, and other tenuous financial situations during this still unfolding financial downturn are also struggling to start anew despite facing insolvency. Well, in addition to shedding those pounds and quitting those unhealthy vices, get ready to start your latest (and greatest) resolution with four steps to get yourself on the road to financial fitness in 2010.

Act Now and Assess Your Finances
Figuring out your financial future is sometimes as easy as understanding where you stand today in your day-to-day fiscal life. Are you currently unemployed or feel as though you could lose your job soon? As such, do you have enough money for you debts and everyday expenses?  Are you a homeowner facing foreclosure? Do you have substantial healthcare bills or an ongoing medical condition? Do you have multiple credit card balances or mounting business expenses? Have you recently filed for bankruptcy? What other financial circumstances are you facing? The answers to these questions and others can supply the necessary starting points for charting your next solvent steps.

Put Together a Financial Plan
Financial planning doesn’t necessarily mean hiring someone else to assess your portfolio. It can start by simply tracking your personal spending for a month, while keeping in mind your desire to pay down any debt (consumer, mortgage, or otherwise), reduce expenses, increase your income or discharge debt in bankruptcy.  Once you establish a system you’re comfortable with, you can more closely keep track of your current financial situation, including how much money you may be wasting on unnecessary items and interest and how much savings you can accumulate under a new, leaner budget.

Save Up for the Unexpected
If you’re facing unemployment, increased interest on credit cards or mortgages, or high medical costs, personal savings can provide a much-needed security blanket for tough economic times. To avoid hefty hardships from expected bills, start with a target savings of at least three months of income.  This necessary nest egg can be a lifesaver in these uncertain economic times and provide much-needed peace of mind.

Consider a Clean Slate Through Bankruptcy
Once your plan is in place, you may come to the conclusion that that you don’t have enough money to cover your many monthly expenses, pay mounting debts or save for your financial future. At that point, you may want to consider bankruptcy. A bankruptcy filing can discharge debt and allow you to save for your next steps, including a new home, your child’s college fund, and a pleasant retirement.  In fact, every year bankruptcy attorneys meet with hundreds of people in financial distress.  Each time those who have encountered misfortune, bad judgment, or business failure walk into law offices feeling hopeless and at the end of their rope, perceiving no alternatives to their continuing fiscal problems.  Almost every time, however, it seems more and more when these same clients leave these offices, they feel hope, relief and even, resolved, often for the first time in months or years—resolved that the bankruptcy laws and system offers them the possibility of a new start— at a tolerable cost—and with it a financially viable and secure future. In short, on a personal level, bankruptcy relief ends worry and stress of living on the financial brink…a resolution we can all appreciate.

If you’re bankruptcy bound, learn more by visiting The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

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Published Friday, January 1, 2010 @ 5:20 pm

When many people think about bankruptcy, what normally comes to mind is what is represented in Chapters 7 and 13 of the Bankruptcy Code. In Chapter 7, you can discharge all of your debts and, in return, may lose non-exempt assets. Under Chapter 13, you may hold on to your assets, such as their home, but devote income in the near future to repaying your outstanding debts. Under both forms of bankruptcy, there are limitations to what you can do to modify your debts.

However, in states like North Carolina—composed largely of rural areas dotted with thousands of acres of farmland and abutting the ripe fishing grounds of the Atlantic—the lesser known Chapter 12 bankruptcy can be exceptionally helpful to working families who might otherwise be bankruptcy bound. Under the Bankruptcy Code, these protected groups have special rights, not found in the more common areas of Bankruptcy law.

In the special four-part series, entitled “Chapter 12 Bankruptcy,” we’ll introduce the concept of Chapter 12 along with the special rights related to this protection, as well as examine specifically how this process works for farming and fishing families, what you can expect at a Chapter 12 hearing, and the results of this type of bankruptcy discharge.

As mentioned, family farmers and family fishermen have special rights within the safe harbors of the Bankruptcy Code. For instance, a Chapter 12 bankruptcy can be attractive to qualifying parties, because, under this type of protection, creditors cannot file an involuntary bankruptcy petition against a family farmer or fisherman to recover even some of their money.  Additionally, under a Chapter 12 case the debtor is allowed to modify the mortgage lien on a farmer’s home or fisherman’s residence, important to not only stop foreclosure but also modify the terms of the loan.

But, first and foremost, it’s important to understand who (or what) constitutes a family farmer or fisherman.

According to the Bankruptcy Code, a family farmer is:

• a person or married couple (or, in some cases a corporation owned or controlled by a single family) engaged in a farming operation with debts not more than $3,237,000;
• no less than half of these debts (except for the residence) come from the farming operation for either the current year or each of the past two years; and
• the family farmer must be involved in “farm operations” which is a rather broad term. To be eligible for chapter 12, the family farmer must have a regular income, sufficiently stable to be able to make regular monthly payments during the term of the Chapter 12 plan.

Similarly, a family fisherman is:

• a person or married couple (or in some cases) a corporation owned or controlled by a single family) engaged in a commercial fishing operation with debts not more than $1,642,500;
• at least 8% of these debts (except for the residence) stem from the fishing operation for either the current year or each of the past two years; and
• the commercial fisherman must be involved in “commercial fishing operations,” also a broad term. To be eligible for chapter 12, the family fisherman must have a regular income sufficiently stable to be able to make regular monthly payments during the term of the bankruptcy plan.

While North Carolina has many urban areas, plenty of family farms and fisheries still exist throughout the state.  If you are struggling with mounting debts, and believe that bankruptcy may be your lifeline, visit the experienced attorneys of The Law Offices of John T. Orcutt online.

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Published Monday, December 28, 2009 @ 7:10 am

The New Year is a few days away. And without doubt, millions of Americans will welcome 2010 with grand hope, desperate to put 2009 far behind them, the year the Great Recession took hold of our collars and shook us into submission. Unfortunately, many Americans will greet the end of the 2000’s first decade still in debt and financially directionless.

But that doesn’t have to be the case.

Bankruptcy, despite all you may think you know about it, can make 2010 the year you really start over, the year things become as you make them, the year you regain control.

The federal government is reporting that with 2009’s end, so goes the worst national economic era to strike the 50 states in decades. Much of this optimism, unfortunately, has failed to provide security. The talus is simply too loose, the slope too steep and the edge too precipitous for Americans to feel confident in the footholds being provided. Unemployment continues to shroud our workforce in a cloak of despair and frustration. All the positives can be too easily brushed off as temporary, government-designed band-aids that do nothing for long-term care and instead will soon peel off, exposing our credit card cuts and sub-prime avulsions to additional economic bacteria.

However, treatments are plentiful. And bankruptcy is one of them.

The bankruptcy process, when handled by a competent, established attorney, is a very respectable way to handle the stress and prevent the longstanding financial damage that un-attended-to debt can do to a family.

Most people who give thought to bankruptcy quickly brush it off as an escapist’s tool; something the irresponsible do to cover their mistakes. Well, if you were to start asking around, it would take little time for you to uncover that most of those who have filed for protection are professional, educated and careful with their money. You will also find that things like sudden unemployment, medical bills and emergency life expenses do not discriminate. They affect everyone and if we were universally prepared for those types of setbacks, we wouldn’t need the bankruptcy code.

Back in 1934, the U.S. Supreme Court established the need for a federal measure that could assist the honest debtor in repairing their economic wherewithal. That same year, an opinion was written on the matter that said:”(Bankruptcy) gives the honest but unfortunate debtor … a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

A few years ago, the lending industry powered a major revision to the bankruptcy code called The Bankruptcy Abuse Prevention and Consumer Protection Act. Despite its title, it was designed to make filing bankruptcy more difficult. It was meant to perpetuate the stigmas and make people less tolerant of those who have to file.

The law changes included the “Means Test,” which was designed to qualify a person for Chapter 7. If you made too much money, suddenly you are not eligible to file under the same guidelines as others. The questionable constitutionality aside, the law served to make the bankruptcy code that much more tedious and frustrating for people. Without question, it prompted many people to avoid filing altogether and made the protection of our established laws that much more difficult to obtain. But don’t buy into the myths or the hype. For 99.9% of you, bankruptcy is still a valid option. And the Law Offices of John T. Orcutt know how to make the new bankruptcy laws work for you!

If you want 2010 to ring in on a positive note, don’t do what you did in 2009. Let facts drive your decisions, not misappropriated stigmas and half-truths. It’s your New Year, give yourself a reason to make it a happy one.

In North Carolina, contact the Law Offices of John T. Orcutt. 1-800-899-1414.

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Published Saturday, December 5, 2009 @ 3:10 pm

For far too many people in North Carolina, and the country, job loss has been the primary driver of excessive debt. Even those who spend wisely and are conservative with credit can quickly feel the impact of being laid off. Three months of savings may help. But only for three months.

If you are one of the millions of Americans reluctantly contributing to the unemployment rate, it may seem like things are never going to get better. Looking for a job can be a mentally tiring and frustrating endeavor. And if you are facing the additional pressure of mounting debt from credit cards, a mortgage and maybe a couple of car payments, it can be hard to sleep at night. Well hopefully, recent news about positive job growth will help you get some rest. Or not.

According to reports, the number of jobs lost in the month of November has decreased. Payroll processing company ADP stated that companies only cut 169,000 jobs, which signifies the eight consecutive month in which cuts have been less than the previous 30 days.

Employment experts are hopeful that the coming months will continue the trend, but the overall drag on the economy caused by cumulative job losses will continue until 2014. The benchmark for “full employment” is an unemployment rate of 5 percent or less. Given our current conditions, achieving that number looks like a tall order.

We at “Bankruptcy & Your Passage into and out of Debt” do not pretend to be experts on the macro-economic conditions that impact employment, gross domestic product or the price of barley in Argentina. What we are experts on is how bankruptcy can help you. And, for a lot of readers who are out of work, in debt and frozen in financial stress, we understand how reports like this can be frustrating. Minimal positive blips on the job growth radar screen don’t help you navigate a way out of the financial abyss. Without sugar-coating it, we believe this remains a difficult economy in which to make a living.

Compounding the loss of a paycheck for someone out of work is the loss of medical insurance, or at least your ability to afford it. Medical debt is a very large cause of bankruptcy in our country and today’s work conditions are only making it ever more prominent.

In total, companies let go of 1.24 million jobs in 2009, which is almost 18 percent more than in 2008. So what kind of positive should you take from that? We’re not sure, to be honest. That’s what makes employment figures so darn frustrating. While the rate at which jobs are being cut has diminished, the rate of hiring has not increased, suggesting that many jobs simply will not be replaced. This should not be a surprise to anyone, really, given the beyond reasonable rate at which many companies expanded in the last five years.

Truthfully, job reports are becoming ineffective in their ability to communicate any real data to the economic growth equation. In the end, the preservation of one’s economic well-being needs to become insular, self-focused. If bankruptcy is your best option, then ignore the stats and stigmas and screwy metrics. Do what is right for yourself and your family. There is no better barometer for health of the job market than your own situation. You need to act when the time is right for you.

If you’re struggling to keep your head above water, bankruptcy can be just the lifeline you need. Contact the Law Offices of John T. Orcutt today to discuss your options. Call 1-800-899-1414 to discuss your options.

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Published Monday, November 30, 2009 @ 11:03 am

The USA Today recently published an article about the changing face of bankruptcy. In other posts, we have noted that we are going through a “middle class recession.” Well, the evidence for both concepts continues to pile up, as the number of people who either currently, or before bankruptcy, brought home well over six figures in salary before filing continues to increase.

A woman interviewed in the USA Today was making $275,000 a year before investing savings into a new business just before the recession really tipped. Credit card bills suddenly went from manageable to frightening and as sales slowed, so did her confidence that things were going to get better. Eventually, she filed for court protection from her creditors.

This was not a woman who took advantage of a bank’s leniency to run up material goods charges she had no intention of repaying. This was an entrepreneur who didn’t see the recession coming, just as surprised as the thousands of highly paid, well-educated financial experts who worked in the heart of Wall Street every day.

A new study recently published proves bankruptcy is ultimately the domain of the middle-class. The study, completed by two Harvard professors and one from Ohio University, states that even before the current downturn, those who have had to file bankruptcy are largely college educated and own homes.

A book to be published based on the report cites that in every month in 2007, 100,000 middle-class families filed bankruptcy. And, those families were financially more troubled than those who filed in 2001.

Washington is just now recognizing the trend, as the head of the TARP program (which administered and manages bailout money), Elizabeth Warren (one of the Harvard professors behind the report) stated. “The bankruptcy filings are a warning about the risks now facing middle-class Americans. No longer can they count on a college education, a good job and home ownership to protect them from financial collapse.”Warren also pointed out that time honored strategies for wealth-building are no longer holding up. Home ownership, steady investing and the support of a college degree are not enough to guarantee financial stability.

Now that the real estate market has demonstrated volatility few realized was possible, a once relied-upon nest egg is often crushed under the weight of a falling market. Add in something like a sudden medical emergency–even if insured–and few people would be able to handle the economic burden.

A couple in Long Island, for example, used equity in a home they owned for 29 years to take care of some mounting financial issues. Health problems soon emerged and work hours were cut back. Diane Spano had to have a kidney transplant and soon after lost her job because the drug treatment center where she worked closed. Her husband, with a back problem, was down to minimal hours at a local post office. Soon after taking out a home equity loan to keep them afloat, they realized the additional monthly expense was just too much. They filed for Chapter 7 bankruptcy to find the help they needed. Both of them were 66-years-old.

We discuss the stigmas of bankruptcy because all too often, we realize that they become primary reasons why people hesitate to file. “What will our friends and family think? Are we failures?” No, your not. And chances are, they’re in the same boat. But you’re smart enough to not let it sink.

If you are in North Carolina, contact the Law Offices of John T. Orcutt today for a free initial debt consultation. We know every client’s situation is unique and we will take the time to carefully address all of your bankruptcy concerns. Call today. 1-800-899-1414.

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Published Thursday, October 15, 2009 @ 6:06 am

Getting a pay day loan can be ever so tempting. You think to yourself, I only need a “bridge” until my next paycheck; this is a “short term” solution for a “short term” problem; this is an easy “fix”; I can get help without going through the humiliation of a credit check I’m bound to fail. These are the kinds of messages pay day loan companies relay in their advertising, which also goes a long way to generate the impression in you that these companies–unlike the large, impersonal banks who don’t seem to want your business–are run by people who just want to help you. Don’t fall for it–sometimes nostalgia is for the birds!

If you find yourself constantly relying on payday loans, your financial strategies need a drastic makeover―fast. There is no better example of throwing good money after bad; the first loan transaction with a payday loan company is a huge rip off, and every subsequent one is more of the same.

Payday loans rake in a lot of money even though they are lending to high risk customers. So how do payday loan companies make their money anyway? By counting on you to roll over that loan. The company knows, perhaps better than you, what is likely to happen. You are in financial trouble, obviously. You are short on cash, or you wouldn’t have requested the loan in the first place. So what’s going to change in your financial circumstances between now and your next paycheck? Probably nothing. The only difference will be that part of that paycheck will be gone before you get it. Chances are all too good that soon–even as soon as the very next paycheck–you will need to rely once more on a payday loan. Where does it end?

Let’s look at the math. Say something comes up and you unexpectedly need about $500. You can usually spare about $200 out of your paycheck for incidental expenses, so that leaves you with $300 to make up. So you decide you will borrow the $300. You go to a payday loan store and they ask you for a check, postdated for the date of your next paycheck, for $345. This means you are paying 15% interest for a loan that lasts two weeks, or in other words, the equivalent of a 391% APR! This is bad enough, but you’re probably thinking it’s a one time deal. The problem is that your next paycheck arrives, your expenses are the same as they ever where, only now you have a shortfall of $345. Remember in the original example you only had $200 to spare, so where does that extra $145 come from? Most probably another pay day loan.

Luckily for residents of North Carolina, pay day loan companies formerly operating in the state were shut down thanks to the efforts of the state’s Department of Justice. Now “alternative” lenders must operate under state rules, or look to other states for vulnerable customers. However, the danger is still present. Online payday lenders are increasingly available, and can suck your finances dry before you know it. If you are even considering a payday loan or payday advance, filing for bankruptcy protection may be a better option–a lasting, transformative step that can truly form that bridge between the problems of today and the financial security of your future.

In North Carolina, contact the Law Offices of John T. Orcutt and get debt free today. Call 1-800-899-1414 today or visit www.billsbills.com for more information.

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Published Sunday, October 11, 2009 @ 10:09 pm

We can’t stress enough the value of bankruptcy for those who truly need it. Hey, it’s no secret that our business is to help people correctly file and emerge from bankruptcy with a more positive approach to their finances. The truth is that without dependable legal assistance, many Americans would face a very difficult and extremely creditor-centric bankruptcy process.

Need evidence? Just look at 2005’s Bankruptcy Abuse Prevention and Consumer Protection Act, which was conceptualized and heavily backed by the lending industry to ensure they re-gained an upper hand in bankruptcy court. Despite the prevalence of consumer debt problems, compounded by a faltering economy, many Americans operate under several misconceptions about bankruptcy that can often prevent or at least delay the decision to file. So let’s clear up a few things.

First off, bankruptcy is by no means a haven for unmotivated, blameless folks who simply don’t want to pay their bills anymore. Please.

No one hopes to lose their job. No one plans on having their multi-billion global employer (which provides a healthy, well-deserved salary) make shoddy investments and lay-off thousands of employees within weeks. Today’s bankruptcy cases span all levels of income and “social status” and often stem from factors beyond the control of those who need to exercise its benefits.

More over, medical debt has driven a large portion of today’s bankruptcies. How is being suddenly injured or stricken with a hard-to-fight disease an attempt to escape financial responsibilities? Many people who file for protection today are older than 65 and do so as a result of inescapable hospital bills.

In February 2005 a report was released in Health Affairs, a medical policy journal, that stated bankruptcies related to medical bills increased by 2,200 percent between 1981 and 2001. The majority of the cases in the study involved those who had insurance. Scary.

Truthfully, the idea that a person who files bankruptcy is irresponsible has been perpetuated by many of the same entities responsible for pushing anti-consumer legislature. There are simply too many unknown factors behind bankruptcy to ever assume a person is filing simply to get a free ride.

One would think, especially after the push and passage of the 2005 act, that the lending industry would be quite wary about to whom it extended credit. In other words, if they were so concerned with the number of those not paying them back, why did so many industry players provide avenues of credit, such as subprime mortgages, credit cards or lines of credit, to individuals who clearly demonstrated no ability to pay them back?

There is no hiding the fact that the lending world, as it is doing currently, saw an opportunity to quickly increase profits by providing money to those who did not have any. With steep late charges, interest rate spikes and hidden fees backed by exceptionally aggressive, tobacco industry-like marketing, financial industry leaders knew full well that money brought in from these tactics would far surpass that which would be lost in America’s bankruptcy courts. As evidence, note that since 1997, bankruptcy filings have increased by 17 percent at the same time credit card companies have experienced a more than 160 percent rise in profit.

You tell us who’s winning the credit wars.

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Published Friday, October 9, 2009 @ 5:23 pm

Even though we are in the business of helping people through bankruptcy, legally and sometimes even emotionally, we understand that filing is not always the best option for you. However, our greatest fear is for those who should file but decide not to for the wrong reasons, whether it be because of the stigma of bankruptcy, an inability to face financial reality, or opting for a “less than legitimate” credit counselor.

To help in your decision, consider some of the consequences of not filing bankruptcy:

Losing your car
More than likely, you have a car loan. Should that payment be one of the debts that goes unpaid, your car can be repossessed by the lender and sold to pay the loan. But here’s the real pain in losing your car: it rarely covers the amount you owe. So, you could end up losing your car and getting sued for the difference. Bankruptcy stops the repo man, and in many instances, will allow you to repay the loan with much better terms.

Foreclosure
This can be the biggest pain of them all. While the bank can’t simply take your home like a car, they can foreclose on it. The process typically takes a few months. However, this does not mean you should wait until the foreclosure hearing to seek help. If you are behind on your mortgage, a Chapter 13 bankruptcy will allow you to catch up the missed payments over a repayment period of 3 to 5 years. Contact your bankruptcy attorney today, even if you’re only behind a couple of payments.

Student loan collection
In-state tuition for the University of North Carolina system schools is going up every year. Some of the private schools in our state are well over $50,000 per year just for the privilege of attending. Without question, college is getting expensive. And so is the cost of not filing bankruptcy if you have student loans. While many loans start out as federal in nature, a large majority of them are bought by third-party lenders who do not look kindly on your inability to pay them. However, these groups are more than happy to grant you a deferral or forbearance in order to drag out the payment periods to 25 years or more. If you don’t pay your loan, they can garnish your wages and even sue you. While bankruptcy can not get rid of student loans, it will get rid of your other unsecured debt, putting you in a better position to get back on track with your student loan repayment.

You could get sued
You might think that if you simply don’t pay your creditors, they will eventually go away. Not true. Debt buyers, the lowest of all life forms, will eventually purchase the debt for pennies on the dollar. These aggressive hounds will not stop until they have pressured you to cough up a reduced settlement amount. If you still refuse to pay, they can sue you and obtain a judgment lien on your property. Depending on the laws of your state, the debt buyer can then attempt to sell your home, car or other belongings in a sheriff’s auction. Bankruptcy will stop a lawsuit immediately, and stop the creditor from forcing a sale of your property.

If you are falling behind on your monthly payments, talk to an experienced bankruptcy attorney to discuss how bankruptcy can protect you and your family. In North Carolina, call the Law Offices of John T. Orcutt to set up your free initial consultation. 1-800-899-1414.

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Published Monday, September 21, 2009 @ 1:49 pm

Many of us now come into marriage with some debts in tow. Some of us also arrive owning some of our own property. Once married, we incur new debts, jointly or separately; for example, one spouse may finance a car under his name, while both spouses may need to list their income together when they borrow for a new home. In addition, you may have credit cards and checking accounts in your own name, and some held jointly.  Sometimes one spouse will have the legal responsibility for credit card debt, but the other spouse, as an authorized user of the account, has the ability to add to it. A spouse may not have the responsibility for a debt, but may contribute to payment from her income. And then there are the difference in state law, which also adds layers: in the nine community property states, both partners own all property equally, while in the non-community property states (or “equitable distribution” states, such as North Carolina), each spouse owns all of his own property and one half of the property held jointly.

As you can see, marriage can definitely complicate matters when it comes to property and debt! For many couples facing an unmanageable amount of debt together, these different factors may complicate the decision to file for bankruptcy However, there’s no need for alarm. If your marriage is suffering from the pressures of debt, bankruptcy can offer the relief to allow your family to focus on the things that really matter. An experienced bankruptcy attorney will be able to assess your situation and advice you on the best strategy for taking care of your debts while saving your property. Based on the kinds of debt and property your couple has, he will be able to help you choose whether to file separately or jointly. And in some situations, he may advise one partner to file and the other partner not to. Let’s look at some of the factors he’ll weigh in making his determination:

If you file together, all of your separately held debts, as well as all of the jointly held debts acquired during the marriage will be discharged. Filing together is also cheaper than filing two separate bankruptcies, and often times the financial troubles of one spouse are tied to those of the other. If only one spouse files, jointly held debts will be discharged only for the spouse who files; the other spouse will still be responsible for the debt.

However, if one spouse holds most of the troublesome debt in her own name, it may make sense for her to file alone. This is especially true if the non-filing spouse has better credit. Preserving one party’s credit can help the filing spouse recover from bankruptcy faster. The non-filing spouse can co-sign on future accounts, allowing the filing spouse a better chance to rebuild post-bankruptcy.

Don’t let these nuances deter you from the most important point: no matter what kind of debt you have and what kind of property you hold, bankruptcy can offer a life-changing opportunity for you and your spouse to put unmanageable debt behind you. Because you want to approach your filing strategically, it’s an excellent idea to contact an experienced bankruptcy attorney to help you and your spouse make the right choice.

In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414, or visit www.billsbills.com to complete our free and confidential debt questionnaire.

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Published Saturday, September 19, 2009 @ 10:11 am

A thoughtful, measured strategy for your bankruptcy can help you in a number of ways when a divorce seems inevitable or is already underway. A good plan can help ease tension between yourself and your spouse, for example, by reducing fights about who is responsible for this or that bill. Not only is this expensive, aggravating, and likely to sour an already acrimonious process, it may be completely unnecessary. You may find that bankruptcy can get rid of those bills altogether! Thus, there will be no need to assign a bad guy.

If you have already finalized the divorce, bankruptcy is often the best way of getting back on track financially. Chances are, you will emerge from your divorce with a significant amount of secured and unsecured debt. Bankruptcy allows you to let go of those items you can no longer afford with one income. If you simply allow the car to be repossessed, or the mortgage to be foreclosed, you will still be responsible for the deficiency balances after the car or home is sold. This is the worst possible scenario- not only have you lost the car or home, but you’re still on the hook for the underlying debt. Surrendering the home or car in a bankruptcy shields you from any remaining personal liability, and frees you to transition to a new lifestyle.

If you’re still in the preliminary stages of your separation, it may be tempting to postpone thinking about bankruptcy until after the divorce is totally settled; why deal with two stressful legal procedures at once? The answer is that with a good bankruptcy attorney and a good strategy in place, you can make a bankruptcy work for you and your future ex. Even if you and your soon to be ex-spouse disagree on every other issue, try to agree on bankruptcy as the best way to wrap up and dissolve the marital debt. If you are legally separated but not divorced, you can file a joint Chapter 7 petition, receiving your discharge in a matter of months. This can free you to focus on the truly important issues of your divorce, such as custody and visitation. Of course, in some instances, filing and completing the divorce before filing for bankruptcy is the best option, and this is why consulting with an experienced bankruptcy attorney early in the divorce process is important. Only an attorney can assess your unique situation to determine the best strategy.

Both bankruptcy and divorce can be stressful processes, so you should always exercise your power to save yourself aggravation where you can. Don’t make these life events more difficult than they have to be, and remember that only you can take control of your financial future.

The attorneys at the Law Offices of John T. Orcutt have years of experience helping families deal with the financial challenges of a divorce. Call us today for a free initial consultation. 1-800-899-1414.

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Published Wednesday, September 16, 2009 @ 10:06 pm

The four-year anniversary of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) is right around the corner. You might recall all the hype in the months leading up to the enactment of BAPCPA. This was the banking and credit industry’s seventh attempt to get the legislation on the books. They pitched BAPCPA as necessary to curb “rampant abuse” and to restore “personal responsibility and integrity” in the bankruptcy process. With the Bush Administration at the helm of a Congress chock full of conservative lawmakers, the banks and credit card companies finally clinched a large enough sympathetic audience to bring its agenda to life.

BAPCPA called for sweeping changes to the Bankruptcy Code – undoubtedly the most significant overhaul of the Code since it was enacted in 1978. The depth and complexity of the changes caused much confusion, uncertainty, and speculation about what protections would be left for consumers in the new world of consumer bankruptcy practice. This sparked a mad dash to file bankruptcy before the new laws went into effect on October 17, 2005. So what does this new world of bankruptcy practice look like four years after BAPCPA took effect? Did the banking and credit industry get its money’s worth for the billions it spent marketing the legislation?

Well, one thing’s for sure: the new laws did make it more expensive and difficult for consumers to take advantage of the protections that bankruptcy has historically provided. But one of the primary things BAPCPA’s backers hoped to achieve was to force more debtors out of Chapter 7 liquidation and into repayment plans under Chapter 13. The primary mechanism to achieve this goal was a set of eligibility thresholds for Chapter 7 based upon a person’s income – particularly BAPCPA’s now-infamous “means test.” Generally, if your income exceeds the median income for a family of your size in your state, or if your monthly disposable income is more than $100, you’re presumed ineligible for Chapter 7.

BAPCPA’s backers were betting these new rules would sharply reduce the number of Chapter 7 cases, so debtors would ultimately have to pay back more of their debt. But despite the sweeping “reform,” the numbers have remained pretty much the same. Between 1999 and 2004, before BAPCPA was enacted, the average percentage of cases filed under Chapter 13 was 29 percent. Initially, in the first year after BAPCPA, the percentage of Chapter 13 filings rose. But, by this year, the numbers had returned to pre-BAPCPA levels: in fact, during the first seven months of 2009, the average percentage of Chapter 13 cases was actually lower – 27.6 percent.

Here’s another interesting fact: The United States Trustee’s Office reviewed the Chapter 7 filings between October 17, 2005, and June 30, 2006, and determined that 94 percent of the debtors automatically qualified for Chapter 7 under the means test – based upon their income alone. Another 5.4 percent qualified when their expenses were taken into account. That is, 99.4 percent qualified for Chapter 7; only 0.6 percent were presumed abusive filers under BAPCPA’s new rules. This likely explains why the percentages of Chapter 7 and Chapter 13 cases have remained fairly consistent: the vast majority of those who file for Chapter 7 meet the new strict income requirements.

It also appears that BAPCPA credit counseling requirements have had little impact on the number of filings, other than to make the process more expensive and time-consuming. The Government Accounting Office issued a report finding that “by the time most consumers receive credit counseling, their financial situations are dire, leaving them with no viable alternative to bankruptcy.” In addition, the National Federation of Credit Counseling has found that less than four percent of potential filers choose not to file bankruptcy after attending the required counseling.

As far as the overall number of consumer bankruptcy filings, while the total number of filings dropped in the first year after BAPCPA was enacted, they have steadily climbed back to their historic levels. In fact, with the current economic downturn – which kicked in less than two years after BAPCPA came on line – so many people are seeking bankruptcy protection that the filings are beginning to rival the figures we saw during the mad dash to file before BAPCPA was enacted.

Much to the chagrin of those who footed the massive bill to push BAPCPA through Congress, the numbers show that the vast majority of those who need the protection of Chapter 7 will still seek that protection – and qualify for it. The numbers also suggest the backers’ central platform for marketing BAPCPA – that people were routinely abusing Chapter 7 – was groundless, or at least greatly exaggerated.

Bankruptcy is back! – despite the efforts of the banking and credit industry to stifle filings through BAPCPA. With the help of an experienced bankruptcy attorney, you too can use the power of bankruptcy to eliminate debts that have made your life unmanageable.

In North Carolina, contact the Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Wilson, and Fayetteville. The firm offers a free debt consultation, as well as affordable payment plans for both Chapter 7 and Chapter 13 cases. Call (toll free) 1-800-899-1414 or visit www.billsbills.com for more information.

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Published Thursday, September 3, 2009 @ 9:43 am

The economy is so grim right now it’s hard to see the silver lining, but the good news about markets is that they rarely stand still forever. Even now, economists are slowly and cautiously becoming more optimistic about the situation, and consumers are gradually gaining back confidence. The housing market, for example, posted a quarterly rise in prices for the first time in three years, which may indicate a stirring of recovery. Still, there are a lot of homes out there not worth half what they were recently, and new construction has ground to a halt for the time being. Is there a silver lining in this one for you?

Well, there may be if you are not a homeowner and not looking to become one immediately. With so many properties sitting empty while the market waits for buyers to return, people who are not homeowners can enjoy a renter’s market. Suddenly there are many options for housing–nicer places at must lower prices. In some areas of the country, it is actually cheaper to rent than to buy at the moment.

If you are considering or already preparing to file for bankruptcy protection, you may be worried about your ability to rent a home, since so many landlord applications now require a credit check and/or ask about past bankruptcies. Don’t let such questions dissuade you from pursuing a rental you really like. Because this is a renter’s market, landlords may soften some of these requirements. Most landlords will be more concerned with your payment history with past landlords than whatever happened with your credit cards. If you have a good history with someone, ask him if you can use his name for a reference and offer to provide it for the new landlord when you apply. Other times you may be able to bargain with the landlord by offering to pay a slightly larger security deposit or providing other assurances of payment. Remember that as much as you need a place to live, landlords need tenants to make money from their real estate investments―or in this market, just to minimize losses!

Home ownership has some real advantages, and many people feel that it’s a waste of money to pay rent that will never translate to equity. However, home ownership comes with its own host of troubles, and renting can be a good solution, even if just in the short term. Home ownership is a big step, and you may want to allow yourself some breathing room (and an opportunity to rebuild your credit) before taking the plunge. If so, you might as well take advantage of a renter’s market!

If you already own a home, but are having trouble with the monthly payments, bankruptcy is a great option to get caught up on the missed payments. Unfortunately, some people wait until it’s too late to take advantage of these protections, and by the time they accept that bankruptcy is their best option, it may be too late for bankruptcy to help. That’s why it’s important to contact a bankruptcy attorney early in the process, before your finances are beyond repair. If you have conceded that it not financially feasible to keep your home, bankruptcy acts as a shelter from the after effects of a foreclosure, such as tax liability and deficiency judgments. Further, if foreclosure is imminent, a bankruptcy will stop the foreclosure from proceeding, even if you intend to surrender the property in the foreclosure. This strategy can buy your family some time to transition to a new living arrangement.

These are strange days for homeowners and those considering home ownership. If you have doubts about your future financial viability, it may be best to wait out the recession before plunging into the real estate market. If your income is already stretched to the max by debt payments, consider speaking with a bankruptcy attorney. A properly planned bankruptcy can put you in the best possible position to rebuild your damaged credit and pursue home ownership in the future.

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Published Tuesday, September 1, 2009 @ 1:30 pm

When your debt problems get to be more than you can handle, an experienced bankruptcy attorney can be a real life-saver. Financial problems can split up spouses, fracture families, and generate a vicious cycle of stress that leads to greater financial problems that in turn lead to more stress–and so on, and so on. It’s important to know about bankruptcy and how the process can help you recover your life, but how will it work exactly? Every case is different, but the role of the attorney will be similar in each case, and understanding what a good bankruptcy attorney can do for you may help you understand how powerful bankruptcy law can be.

The role of the attorney as expert is more nuanced than you may realize. Some people hear about friends or relatives who attempt to file or actually complete a bankruptcy filing on their own, but understanding what a good bankruptcy attorney’s expertise is all about reveals why this isn’t a good idea. First of all, every state in the United States has different laws. This means that buying yourself a generalized “How To” guide won’t be enough. Not only does a good bankruptcy attorney know and understand the local laws as they appear on the books, he will also understand how they function in practice. Who are the trustees? What is the local bankruptcy judge like? A bankruptcy attorney with experience will know the answers to these questions. Make sure to seek out an attorney who is a personal bankruptcy specialist, who has handled many cases in your area, and who is actually licensed to practice in your state.

In addition, keep in mind that bankruptcy laws, which were already complicated, became even more so with the system reforms Congress passed in 2005. In the United States, laws are made both by the legislative body that enacts them and by the judges who interpret them. Because these reforms are recent, there are many areas of the bankruptcy law that are still being settled, your attorney’s practice should be limited to bankruptcy. This is the only way to ensure that your attorney has a finger on the pulse of this constantly changing area of law.

A bankruptcy attorney with experience will know how to be supportive to his clients. He will be able to anticipate problems and propose solutions before filing your case. The attorney you choose should have an accessible support staff that responds to you before and after the filing of your case. At your initial consultation, ask lots of questions and make sure you feel comfortable working with the attorney and his staff.

Don’t be afraid to ask how much the attorney will charge you for his services. Remember that you get what you pay for. With so much at risk, it’s certainly worth the extra money to make sure your bankruptcy goes smoothly. Remember that the attorney knows you are in financial trouble–that’s why you’re calling him! Law offices that handle lots of personal bankruptcy cases are more attuned to the concerns of individuals filing for bankruptcy protection and will be better prepared to work with you to fit legal services into your budget. Don’t forget, in a Chapter 13, the majority of your legal fees will be paid through your plan, minimizing the up-front costs.

In order to pick a good attorney, it’s a good idea not to wait until the last minute. Making life altering decisions on the fly is risky for obvious reasons, so it’s a good idea to get in touch with a bankruptcy attorney sooner rather than later. If you can’t keep up with your debts, the time to call is now.

The attorneys at the Law Offices of John T. Orcutt know bankruptcy inside and out. With over 50 years of combined bankruptcy experience, we are the preeminent North Carolina bankruptcy firm. But don’t take our word for it, see what our clients have to say at www.billsbills.com.

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Published Wednesday, August 19, 2009 @ 9:19 pm

Back in May, President Obama pushed for new legislation to prohibit some of the business tactics of credit card companies. Namely, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 will require lenders to notify card holders of rate and fee increases 45 days before they take affect. Until August 20, they only need 15 days of notification.

The small timelines credit card companies use to alert consumers of rate hikes is considered a primary driver of high personal debt because they are timed with a person’s spending habits. In other words, if a new television or other large expense was put on a card, a consumer would have about two weeks to pay it before the rate jumped, substantially increasing the overall cost of the item.

The 45-day window will allow consumers to be more proactive in alleviating their balance, whether through balance transfers to cards with lower interest rates or by simply putting more money toward the balance. Washington economists believe that a more lenient credit card industry will contribute to lower personal debt and hopefully, fewer bankruptcies.

The best part of the new legislation? A cardholder can refuse the rate increase or late fee and agree to close the account and pay off the remaining balance within five years. This component of the bill was a big win for consumer advocates, as it provides consumers with a solid opportunity to assess their spending and make changes before allowing it to spiral out of control.

It also creates competition within the industry because consumers will have additional time to shop for a new credit card. This will eventually force the industry to be more consumer-centric.

When the law hits tomorrow, credit card users who have suffered from late fees will also feel some relief. The act states that statements must be mailed 21 days before a due date to allow the lender to charge a late fee. And, that fee can only be applied after an additional 14-day notice period.

More provisions will take effect at different times over the next year. For example, the law states that any credit card applicant under 21 must have an adult co-signer. It also disallows any retroactive rate increases, which had previously been a tremendous money maker for card lenders. This allowed them to apply higher fees to expenses incurred by the cardholder months prior to the notice of an increase being sent out, resulting in exponentially larger balances.

Unfortunately, credit card companies are still actively implementing new strategies to increase revenue streams before the full brunt of the act takes effect in 2010. Annual fees, balance-transfer fees and assorted other monetary upticks are being assessed to cardholders nationwide. People are seeing interest rates double without notice.

If you are consistently carrying a balance on your credit cards and can’t seem to get a handle on your debt, speak with a bankruptcy attorney today to discuss your options under bankruptcy law. A properly planned bankruptcy can eliminate your credit card debt and give you the fresh start you deserve.

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Published Tuesday, August 11, 2009 @ 6:00 pm

Believe it or not, there are some situations when credit cards can be a benefit. They are often the only option when making travel reservations, and can come in handy in the event of genuine emergencies. A credit card can also help you build good credit, or rebuild credit after bankruptcy.

Yep, so that’s about four reasons. The reasons NOT to use credit can fill a book, but here are just a few situations in which using plastic seems like a good idea, but you’re much better off just saying no!

Department store credit accounts: notoriously high interest rates are just one great reason to avoid department store credit accounts. But did you know that sometimes proprietary credit accounts from merchandisers allow the seller to take an interest in the things you buy on credit? This means that should you find yourself in a financial emergency down the line and unable to repay them, they could be entitled to take your stove or washing machine back. North Carolina law offers some protection against these disguised secured debts, but it’s best to just to avoid them altogether

Paying your taxes with your credit card: Taxes are not necessarily dischargeable in bankruptcy the way unsecured debt is…and your credit card debt won’t be either if you used the card for non-dischargeable debt! This will apply to other non-dischargeable debt as well, so be careful about putting payments to , for example, student loans, on your charge accounts. But note that only the part of the credit card debt you use to pay non-dischargeable debt will itself be non-dischargeable.

Balance transfers: A classic  marketing strategy of the credit card industry is offering lower interest rates on balance transfers. They way they sell this nonsense is to make you believe that it will be cheaper for you in the long run. But the situation isn’t as simple as they’d like you to believe. If you do a balance transfer, you’re taking on new debt. Unless you’re committed to shutting down the first account for good, you’re exposing yourself to the temptation of more debt. Many people believe they will be able to play this game successfully, and the credit card industry has made billions by playing on this belief.

A balance transfer could also force you to delay filing for bankruptcy, because if you do one just prior to filing, it may be viewed as a preferential transfer.

Big purchases right before bankruptcy: Speaking of charging up just prior to bankruptcy, you definitely want to avoid anything that could look like fraud. If the credit card company can convince the court that you made purchases on the card with the intention of filing for bankruptcy, the debt may become non-dischargeable, and you may be putting your whole filing at risk.

Living off credit to avoid filing for bankruptcy: This is an absolutely TERRIBLE idea. All you’re doing is creating bigger and bigger problems for yourself. If your situation cannot be managed without credit–if you find yourself taking out credit to pay for prior credit, it’s past time for you to consider bankruptcy as a lasting solution to your financial problems.

In North Carolina, call the Law Offices of John T. Orcutt to set up a free initial debt consultation. Convenient office locations in Raleigh, Durham, Fayetteville and Wilson.

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Published Friday, August 7, 2009 @ 8:44 am

This may come as a surprise to some, and huge relief to others: bankruptcy can be filed by one spouse without the other. The big question is: SHOULD you file without your spouse? Like most aspects of bankruptcy, the answer will depend on your particular situation.

Resorting to declaring bankruptcy can be a source of nervousness, fear, and you may be genuinely concerned about keeping your filing private. Many people contemplating filing want to be reassured that their bankruptcy won’t be published in the newspaper, that their employer won’t have to know, that in-laws won’t be informed, their kids don’t have to know, their kids’ teachers, their pet groomer, their neighbors … etc. But once a person finds out that it is possible to file without joining his or her spouse, what if they wish to keep even their spouse completely in the dark?

While, theoretically it might be possible to completely hide a bankruptcy from your non-filing spouse, it probably isn’t a good idea ethically, or even as a practical matter. What will the spouse think when mail starts arriving at the house from the United States Bankruptcy Court? Or when you have to ask for his or her past pay stubs? Or when you are wandering around with a pad and pen listing the contents of the house?

And then there are the financial concerns. While a bankruptcy filing by one spouse does not automatically bring the other spouse into bankruptcy, neither does the bankruptcy of a spouse give the non filing spouse the full protection of the automatic stay or the bankruptcy discharge for debts on which they may be joint debtors. In that case, the bankruptcy of one spouse does not relieve the other of paying the debt. Upon a bankruptcy, the creditor may look to the other spouse for payment.

Generally, marriage alone doesn’t make both spouses personally liable for a debt. Only those who signed loan documents or credit applications are liable for the debt. But if you have any joint debts, your bankruptcy will likely be noted in some way on your spouse’s credit report even though they weren’t made a party to the bankruptcy. Filing a joint tax return makes both spouses liable for the total of the tax due. And if you and your spouse own property together, that property may be included in the bankruptcy estate and be made available to pay creditors to whom you owe a joint debt.

If you still think it would be better to exclude your spouse from a bankruptcy filing, know that your bankruptcy filing will have some effect on the credit worthiness of your spouse in the future if they apply jointly with you for a loan someday. The lender will often consider both of your credit ratings in making a lending decision.

Financial implications aside, the circumstances leading to the bankruptcy are often indicative of far more serious issues happening within the relationship such as loss of employment, illnesses, emotional problems, or addiction. Failing to talk about the real issues and hiding a bankruptcy doesn’t help the bigger issue–whatever caused the financial difficulties is better worked on out in the open, together with your spouse. If the problems in your marriage have become so large that you have or are considering divorce, it is still wise to reveal your bankruptcy intentions to your spouse and your respective family attorneys, since it can have implications on how property and debts will be allocated in divorce proceedings.

A bankruptcy attorney can point you towards a path of financial stability but ultimately you are the one who must walk on that path….and it is usually better to have the full support of your loved ones. Before taking on the entire burden of filing bankruptcy alone, talk with your attorney, and, more importantly, your spouse.

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Published Tuesday, August 4, 2009 @ 6:20 am

Sometimes life throws you the unexpected. If you’re living paycheck to paycheck, all it takes is one unanticipated expense to put you on the path to a truly disastrous financial scenario. It’s often the unforeseen emergency expense which starts the ball rolling. Soon you’re 2 or 3 months behind on the car payment, and repossession of your car or foreclosure becomes a very real possibility. That’s why it’s so important to talk to a bankruptcy attorney the moment things start to get out of control.

But even if your debt problems have sneaked up on you and now you’re facing an imminent repossession, a quick bankruptcy filing can put the brakes on the repo man. If your situation is critical, you can file what’s called a bare-bones or skeletal filing with a court to prevent imminent action against you; for example, if your vehicle is being repossessed or you are facing foreclosure, the court will allow you to file an emergency bankruptcy petition.

In a bare-bones filing, the court allows you to file your bankruptcy petition with only a minimum of the required set of documents. After this minimal filing, you will be given a set amount of time to gather the remaining documents. The amount of time can differ, but generally you will have up to 15 days to complete your petition. Once your petition is filed, you enjoy the benefit of the automatic stay, which stops creditors’ collection efforts in their tracks. This allows you to keep the car, stay in your home, and put the creditors back in their place.

The emergency petition should be filed only if absolutely necessary. If you can avoid doing so, it’s probably a good idea to give yourself and your attorney time to carefully file your case. This approach allows you to develop the best bankruptcy plan to help you out of your financial trap and into a fresh start. If you’re facing foreclosure, for example, you will have ample time to contact an attorney before the foreclosure sale. In these cases, don’t wait until the last minute! Car repossessions, on the other hand, can develop much more quickly and often necessitate quick action to prevent irreversible consequences.

If an emergency situation has caused you to get behind on your car or home, talk to an attorney early. An experienced bankruptcy attorney knows how the repossession process works and can best advise you on how to best protect your interests. Don’t wait another second, call today.

Durham bankruptcy. Raleigh bankruptcy. Fayetteville bankruptcy. Wilson bankruptcy.

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Published Monday, August 3, 2009 @ 10:45 pm

Marriage is a partnership, and it works much better with each partner pulling his or her own weight. To avoid problems down the line, it’s a good idea for each partner to establish and maintain a separate credit identity. As a matter of fact, that is how the law will see it in all but the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.) This means that if your spouse takes on a financial responsibility without you, you will not be legally liable for it, and vice versa. But it also means that good financial behavior on the part of your spouse won’t necessarily reflect on your credit report, even if you share in the actual payments. Here are a few tips to help you create and maintain your personal credit identity, apart from your spouse’s.

• Keep separate checking accounts. When people get married, they often choose to combine their checking accounts into one account both can access. This is certainly easier, logistically speaking, for maintaining a household. However, this exposes you to trouble if your spouse should turn out to have less than great habits with ATM withdrawals and checks. A better idea is to keep separate accounts, and also open a joint account for household use.

• Don’t take out joint credit card accounts or personal loans. This is another step many people take when they get married, but it’s a bad idea for some of the same reasons separate checking accounts are a bad idea. Besides, remember that in a bankruptcy filing, credit card debt can be fully discharged, and with separate credit card accounts, one spouse can file for bankruptcy without involving the other. In states which recognize tenancy by the entirety or similar forms of marital ownership, a judgment obtained by a creditor against one spouse will not become a lien against jointly owned property. However, if the credit card is a joint one, a judgment will attach to the property, possibly enabling the creditor to sell your home by sheriff’s execution sale! Talk to your bankruptcy attorney to determine how your spouse’s assets will be affected during bankruptcy.

• Understand how creditors are permitted to consider your spouse’s credit. When applying for credit in the non-community property states, a lender is not allowed to make a determination based on your marital status. Thus, he cannot ask to see your spouse’s information, unless her income will be  a basis for repayment of the debt.

• Make sure joint accounts with good records are reported on both credit reports. If you’ve been building good credit together on joint accounts like your mortgage or car loan, you want to make sure that the information is being reported under both names. If you find out it isn’t, you can write to the creditor and request that they report to the credit bureaus about both of you.

With tightening credit markets, having a separate credit identity is crucial to maintaining your family’s financial viability. If you or your spouse are overwhelmed with debt, talk to a bankruptcy attorney today to find out how a properly planned bankruptcy can help your marriage and your finances.

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Published Sunday, August 2, 2009 @ 10:02 am

You know it and we know it: There’s a lot of stigma behind the word bankruptcy. We’re here to tell you: If you’re considering bankruptcy, there is nothing to be ashamed of and don’t let anyone tell you differently. Bankruptcy has helped millions of families and businesses emerge stronger, especially in tough economic times.

The federal bankruptcy code has long been a carefully negotiated, well-thought out safety net to catch the financial pratfalls so many Americans take on occasion. It’s an outstanding testament to the state of cooperation, foresight and spirit of assistance that characterizes our country. Despite the pervasive stigmas, there is very little collective impact to the nation’s economic well-being as a result of individual bankruptcy filings outside of a number of Americans becoming once again financially stable and viable contributors to society. The collective impact of bankruptcy is a positive.

There is no doubt that America has poor communities. There are people struggling today–and there always will be. But the bankruptcy code helps to significantly prevent more Americans from ending up on the street. And no, that comment is not a stretch. With careful planning, you can emerge from bankruptcy in relatively good shape emotionally and financially.

Think about it for a moment: bankruptcy allows you to keep the things you really need: your home, retirement accounts, life insurance assets, college funds, and even your car. If you have those items intact after a bankruptcy, you remain in far better financial condition than the large population of indebted Americans who never file for bankruptcy. Why keep taking the hits on your credit when bankruptcy can immediately stop the hemorrhaging?

A quick search of the blog will produce a number of posts about life after bankruptcy. There is a reason for that: studies show that, without careful guidance, those who file for bankruptcy can end up in the same situation again in the future. Our goal is to help you before, during and after your bankruptcy so that you emerge from your bankruptcy with a solid financial footing.

It is interesting that people still feel a certain amount of discomfort about the idea of bankruptcy. One should wonder if that sort of stigma wasn’t fostered, or at least perpetuated, by the credit industry. Given the practices of collection agencies and credit card phone reps, it’s easy to understand how miserable they can make a person feel about missing a payment. Despite all of the misinformation you’ve heard from the credit industry about bankruptcy, it is still the best financial safety net for you and your family. If you’re struggling to pay the monthly minimums or getting behind on your mortgage payments, don’t wait another day. Call an experienced bankruptcy attorney and learn about your options. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414 to set up your free initial debt consultation. Offices conveniently located in Raleigh, Durham, Fayetteville & Wilson.

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Published Friday, July 31, 2009 @ 9:38 am

Bankruptcy is a terrific way to take care of many kinds of debts. But you may have heard that not all debts will be discharged in a bankruptcy. As a result, and depending on the kind of debt you have, you may be worried that declaring bankruptcy would not really help you. What you may not know is how bankruptcy can help you with your debts, even the ones you can’t discharge outright.

Support obligations fall in this category of debt.  They include things like alimony and child support payments. Because these are priority debts, you will not be able to discharge them outright with a Chapter 7 bankruptcy, and, in addition, the automatic stay will not prevent collection efforts on past due support obligation payments.

Nevertheless, a Chapter 7 bankruptcy will help you get caught up and stay caught up on your support payments. First of all, when your unsecured debt is discharged, all the money you were spending on things like credit card payments will be freed for use toward your support obligations.

The protected status of support payments can be a good thing in the event that your case is a Chapter 7 asset case. In this rare kind of case, some of your assets will be liquidated to pay creditors. You probably would rather see the proceeds of your liquidated assets go to something like child support, rather than sending it all to unsecured creditors. In that case, your attorney should file a proof of claim on behalf of the support recipient, and this will ensure that most of the proceeds from the liquidated assets will be put to use toward your support payments.

A Chapter 13 bankruptcy will be even more helpful to you when it comes to past due support payments. Say you are really behind on your alimony payments. Your ex is pestering you all the time about the past due amount and you need some relief.  A Chapter 13 filing will allow you to work these payments into your repayment plan and allow you to catch up over the course of a 3 to 5 year repayment plan. Note that you must be careful to keep up with your ongoing post-petition payments; failing to make the new payments as they become due can put your case in jeopardy. However, with the help the repayment plan, you buy yourself time to manage old debts and therefore keep up with the new ones.

If you’ve been struggling to catch up on your child support payments and alimony, bankruptcy can help you get back on track. Even debts that won’t disappear in a bankruptcy can at least become manageable after a successful bankruptcy. You are probably aware already that unpaid support obligations can have very serious consequences; you could face hefty fines, problems with professional licenses, or even jail time, in addition to some very aggressive collection efforts. Besides all that, many people really want to make good on their support obligations, but their financial circumstances simply don’t allow for it. Because of this, it’s important not to wait until it’s too late to be pro-active about solving your debt problems. Talk to a bankruptcy attorney today before the situation gets out of control.

From the Law Offices of John T. Orcutt. Helping families with real debt solutions since 1995. Call today to set up a free initial debt consultation at one of our convenient office locations in Raleigh, Durham, Fayetteville or Wilson.

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Published Saturday, July 18, 2009 @ 11:56 am

You may have heard that, even if you file for bankruptcy protection, you will not be able to discharge income taxes. This is simply not true. If the taxes are old enough, you may be able to discharge all or most of your tax debt. In many cases, tax liability will not be dischargeable because the debt is too new, as explained below, or because the taxes owed are in one of the categories which cannot be discharged according to the Bankruptcy Code.

As you may have discovered, the government has some powerful means to collect on taxes owed. Apart from taking tax refunds in order to apply them to taxes owed, the government can garnish your wages, place a lien on your assets, or even seize property like your bank accounts, your house, or your car. What’s more, the longer you let past due taxes lie, the harder it will become to pay them back, since the government may continue to add to the debt through interest and penalties. Understanding what past due taxes you will be allowed to discharge through bankruptcy can be tricky, so it is a good idea to speak to a lawyer about past due taxes in order to understand when and how bankruptcy can help you. Basically, you will be allowed to discharge those tax debts that meet certain conditions specified in the bankruptcy code.

The first condition is that the tax must have been due three years before the bankruptcy filing. Taxes for 2007 which were due on April 15, 2008 will satisfy this requirement in a bankruptcy filed on April 15, 2011 or later. But what if you receive an extension on the taxes? In that case, the three year period will date from the extension, not from the original due date. Thus, in the previous example, if you received an extension on your 2007 taxes until April 15, 2009, the taxes would not become eligible for discharge until April 15, 2012.

The second condition is that the tax return must have been filed two years before the filing of your bankruptcy. In reference to this rule, note that if you file an amended return, the two year period begins from the date of that amendment.

Third,  the tax assessment must predate the bankruptcy by 240 days.  Tax assessment is not always straightforward; it will generally depend on the practices of the relevant taxing authority. Generally, for federal taxes, the tax assessment will be around the date you filed the return if you file on time. In order to determine the exact date, you may obtain a copy of your tax transcript.

Another condition is that the tax return you filed must not be fraudulent. Finally, in order for a tax liability to be discharged, you must not be found to have attempted tax evasion.

If your past due taxes meet all these conditions, filing for bankruptcy can act as a powerful tool to tackle a difficult tax liability situation. A bankruptcy lawyer will help you take into account your possibilities for discharging tax liabilities. If you have significant tax debt, don’t rule out bankruptcy. Talk to an experienced bankruptcy attorney today to find out if you can discharge your tax liability once and for all.

If you are in North Carolina and have tax debt, call the Law Offices of John T. Orcutt today to discuss your options. Call 1-800-899-1414 to set up

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Published Wednesday, July 15, 2009 @ 4:11 pm

Ah, the student loan: so easy to get now, so eager to overstay its welcome later. Student loans are notoriously difficult to shake. Defaulting on student loans is no joke: how’s this for a laundry list of potential consequences? You won’t be able to get any more student loans. Your credit will suffer as the lender reports missed payments. You could have your wages, up to an amount equal to 15% of your income, garnished (that is, the loan holder can go straight into your paycheck without bothering to pass through “Go”, i.e. you, before they collect $200). You can have your tax return money, both state and federal, intercepted. You will have fees added to cover the collection effort (up to 25%!!!) You could have late fees added on. You could be sued.

Yikes! So what can you do if your student loans have you backed into the corner? You can’t even count on the statute of limitations to bail you out the way some people did in the past, because the statute of limitations essentially no longer exists for student loans. Can bankruptcy help you out? Unfortunately, bankruptcy does not allow you to discharge student loans, absent a showing of undue hardship. Undue hardship is extremely difficult to prove. You will have to show that you are under extreme financial hardship and paying the loans will prohibit you and your family from living at even a minimal standard, that your difficulties are likely to persist, and that you have tried in good faith to pay back the debt. That said, there are some ways that bankruptcy can at least put a stop to collection.

•    While in a Chapter 13, you will not have to pay on your student loans. This can give you some breathing room to address whatever issues have caused you to fall behind.. Perhaps you only need some time to advance in your career. Maybe you need to address medical issues which might have put you behind. A Chapter 13 bankruptcy will stop the collection efforts, stop the phone calls, and stop a garnishment. You can stay in the Chapter 13 for up to 5 years, giving you time to put your finances back in order. However, keep in mind that on the other end of the repayment plan, you will still be responsible for the total amount of the loan, and interest will continue to accrue for the duration of your repayment plan.

•    Bankruptcy can help you take care of those debts that ARE dischargeable, and this frees up your cash flow to address debts, such as student loans, which aren’t dischargeable. If you have a significant amount of other unsecured debt, wouldn’t it be great to unload that burden and focus on paying down those student loans?

As you can see, bankruptcy won’t get rid of the student loan altogether, but it can buy you some time. If you’re suffering with student loan debt, talk with a bankruptcy attorney today to discuss your options.

In North Carolina, call 1-800-899-1414 to discuss your options. The Law Offices of John T. Orcutt has convenient office locations in Raleigh, Durham, Wilson and Fayetteville.

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Published Tuesday, July 14, 2009 @ 11:51 pm

There comes a time when you realize bankruptcy is your best option. That moment is not always the easiest to determine but look for it right around the time you decide it’s safe to ride out the financial monsoon. Chances are, if you are chest-deep in the flood waters and still think you can swim to safety, it’s time you hope for a life raft.

It is quite easy for those within your social circle to paint a picture of social disenfranchisement and shame when you tell them that bankruptcy has become a reality. But ignore it. Do you seriously want to further endanger the well-being of your family because of something a not-very-understanding friend believes?

Today, the bankruptcy decision is often rooted in a far broader swath of rationale than it once was. Medical bills, layoffs, mortgage rates and student loans are affecting the middle class like a bad flu. It is no longer 1950. It is monumentally more difficult to support a family of four on a single-salary auto shop job or teacher’s take-home. Houses cost more. Dependable transportation probably requires financing and few companies offer solid health plans. The bottom line is that a reasonably comfortable lifestyle demands a good amount of money. In this economy, that’s not easy to come by.

Industry analysis shows that most families put off filing for bankruptcy much longer than they should. The constant struggles to stay afloat and avoid the stigma do rarely more than simply delay the inevitable while substantially augmenting household stress levels. At that point, the entire family circle is at risk of a meltdown. Additionally, many families lose assets along the way that could have been used to kick-start things after bankruptcy. Thus, it is critical to recognize your situation and own up to it. Perpetual denials of the benefits of bankruptcy only negate the law’s very purpose, which is to stop the feeling of uneasiness, the lack of productivity,and downward slide of your self-confidence. And, it’s about starting over.

Remember too, that bankruptcy is about preservation. It uses the legal system to empower you from losing everything. It can be a powerful tool to keep those essential items, like your home and auto, while shedding your unsecured debt. This puts you in a better financial position to stay current with your mortgage and your car payment.

Maybe you’re recently unemployed. Bankruptcy can put a freeze on the debt collection calls, and let you focus on what is most important: Finding a job and keeping food on the table.

Don’t let this be a time to cash in your retirement. Almost all experts agree that using retirement accounts to pay small amounts on large bills is foolish. Your IRA and 401k are completely protected under bankruptcy law. Don’t waste your future financial security just to make a monthly credit card payment.

Remember, file bankruptcy when you still have something left to protect. Like your family. And your sanity. It’s simply not worth waiting until the bow of the ship is in the water to fire a flare.

In North Carolina, contact the Law Offices of John T. Orcutt to discuss your bankruptcy options. 1-800-899-1414. Free initial debt consultation with offices in Raleigh, Durham, Fayetteville and Wilson.

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Published Saturday, July 11, 2009 @ 8:07 am

Chapter 11 bankruptcy is in the news a lot these days. Like individuals, more and more large corporations are struggling to weather the current economic downturn. Just think of GM, Chrysler, Lehman Brothers, and the like. Chapter 11 bankruptcy essentially does for corporations what Chapter 13 does for individuals: it allows them to reorganize their debts into an affordable repayment plan.

With all the talk about large corporations, you may think Chapter 11 bankruptcy is reserved just for them. But individuals and small business owners can also file under this chapter. You might be wondering why someone would ever do so. Well, in most cases, it’s because there’s no other choice.

Chapter 7 “liquidation” bankruptcy is a powerful tool for individuals, because it lets you completely wipe out a host of unsecured debts. But you have to satisfy the “means test” to qualify, which means your income can’t exceed a certain level — typically, the median income for a family of your size in your state.

If you can’t satisfy the means test under Chapter 7, or you want to keep certain property that would otherwise be subject to liquidation in a Chapter 7 case, Chapter 13 bankruptcy can be a great alternative. You can reorganize your debts into an affordable repayment plan and, at the end of the plan, the remaining amount on the debts is generally discharged. But there are limits to the amount of debt that can be included in a Chapter 13 plan. The figures change every few years, but right now there is a cap of $336,900 for unsecured debts and $1,010,650 for secured debts. (As of 5/23/09)

These limits don’t pose a problem for most people. For some debtors, though, the ceiling just isn’t high enough. Think of people of high net worth who suffer a major financial blow, or people carrying substantial debts tied to a small business on the verge of collapse. These individuals probably make too much to qualify under Chapter 7 and owe too much to qualify under Chapter 13. While these cases have been historically rare, with the boom-bust economic cycle we’ve experienced over the last several years, this scenario is likely to become more and more common.

This is where Chapter 11 bankruptcy can help. In Chapter 11, the debt limits of Chapter 13 go out the window. There are other advantages too. Unlike under Chapter 13, there is no five-year time limit for the repayment plan. Also, instead of having to make monthly payments like you would under Chapter 13, you can make the payments at different intervals — such as quarterly or biannually — if that would be more convenient. In addition, the court does not appoint a trustee to represent the creditors; the creditors deal directly with you. This can give you a greater degree of control over the process. On the downside, Chapter 11 bankruptcy is generally more complicated – often requiring a lot of time and effort on the debtor’s part — and significantly more costly.

The gist is, if you think you might not qualify for bankruptcy because of too much debt, or too high of income, it is crucial to seek the advice of an experienced bankruptcy attorney before ruling out bankruptcy. It could be that you really do qualify under Chapter 7 or 13 and it’s just a matter of understanding exactly what goes into the calculation when determining your income and your debts.

Call a bankruptcy attorney today to discuss your options. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson.

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Published Thursday, July 9, 2009 @ 11:23 am

But you must resist!

You’ve caught on to the fact that certain kinds of debts are “better than others.” Knowledge is a good thing, but don’t get confident that you’ll be able to pull a fast one by trading off a non-dischargeable debt for a dischargeable one. The consequences simply aren’t worth it. Here again is another great reason to count on an experienced bankruptcy attorney when filing your case; he will help you act strategically to maximize the benefits of bankruptcy while helping you avoid the pitfalls and mistakes.

Most loans are unsecured and will thus be discharged altogether in most Chapter 7 cases, and discharged after successful completion of the payment plan in a Chapter 13 bankruptcy. With this knowledge, some people get the bright idea to, for example, take out a new credit card, max out the cash advance, and use that to pay some non-dischargeable debt. They then file for bankruptcy hoping nobody will catch on. Huge no-no.

If you file for bankruptcy and the person who made that loan to you can prove that you were already contemplating the bankruptcy, he can petition the court to have the discharge denied on the basis of fraud. Even worse, he may be able to persuade the court to deny discharge altogether, not just for his debt but for all your debts. A Chapter 7 or 13 bankruptcy can be outright dismissed on bad faith grounds if the creditor can prove what you did.

To prove a fraud claim, the creditor will need to show that, at the time you took out the unsecured loan, you did not intend to pay it back, so obviously the court is going to consider things like the interval between the loan and your bankruptcy filing. This is a huge headache you don’t want for your case.

Yet another reason you want to avoid one of these shady deals is that some of the debts you are trying to pay off may be priority debts, and if left unpaid, they could help you pass the means test. In other words, by paying down the priority debt with an unsecured line of credit, you might make yourself ineligible for a Chapter 7 altogether or make a Chapter 13 much more costly than it needs to be. Examples of priority debts include taxes, child support, alimony or personal injury claims arising from driving under the influence.

You might also want to keep in mind that the trustee can take back payments made to non-dischargeable unsecured creditors made within 90 days of the bankruptcy. So let’s say you take out a cash advance, use the money to make a big payment on your non-dischargeable student loan, and then file for bankruptcy. If your trustee decides to take the payment back, you still owe the original creditor, PLUS now you owe a new guy you took out the cash advance with. What a waste!

Trickery looks inviting, but it can land you in big trouble. Play it safe and stay away from anything that looks like fraud.

If you’re in North Carolina and considering filing for bankruptcy, contact the Law Offices of John T. Orcutt today. With convenient offices in Raleigh, Durham, Fayetteville and Wilson, call 1-800-899-1414 to set up your free initial debt consultation.

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Published Wednesday, July 8, 2009 @ 2:14 pm

Even though it completely runs in opposition to the intended goal, many states allow creditors to seize your wages should you not be able to pay a debt. The contradiction is easy to see: how can you pay your debts if your income is diminished?

Evidence is now on the table that bankruptcies are filed at a much higher rate in every state that empowers creditors to reach into your paycheck directly to get their money. The impact stems from the fact that if a creditor seizes funds directly under such a state law, they limit a person’s ability to pay other creditors as well. So while one company may get paid back, all the others to which money is owed have substantially less chance of being paid. Simply put, garnishing wages only serves to severely weaken an individual’s economic wherewithal.

The news of the connection between wage garnishment and bankruptcy stems from a three-year study by the Associated Press, which tracked millions of bankruptcy records across all states by using an “Economic Stress Map.”

Thankfully, North Carolina prohibits the practice (except in extreme cases of child support neglect and tax delinquency) and as result, the Tar Heel state has only a third of the bankruptcy filings as Tennessee. South Carolina, Pennsylvania, Florida and Texas are other states that do not allow or limit a creditor’s rights to take money directly from your paycheck. However, in North Carolina, your wages may be garnished for such debts as student loans, child support, or back taxes. If your wages are being garnished for any reason, it’s important to realize that bankruptcy can put an immediate stop to the garnishment, and put you back on the track to financial freedom.

Although most courts limit the amount of money that can be seized, for just about everyone facing financial problems of that magnitude, the slightest reduction in monthly income can create serious turmoil. More over, it can quickly lead to increased stress in an individual relative to their money woes, leaving them to feel powerless and invaded.

Making matters worse are reports that the level of aggression relative to wage garnishment is on the rise in the states that allow it. Basically, creditors are seeing more competition for money that’s owed and as a result, want to be first in line. The approval to garnish wages is often the winning strategy.

A woman in Alabama had been in a relatively sound financial position until debts incurred from assisting a former roommate came back to haunt her. Able to afford her mortgage and recently paying off thousands in credit card debt, she was suddenly over-burdened as a result of her roommates inability to pay. Once the wage garnishments started, she couldn’t adequately handle any of her debt and filed bankruptcy to protect herself.

Thankfully, North Carolina is one of the five states where judges rarely allow wage garnishment. However, this won’t stop a creditor from suing you and attempting to collect in other ways, such as attempting to levy a bank account, or worse, attempting to sell your house through a sheriff’s execution sale. If you are facing overly aggressive bill collectors, contact a bankruptcy attorney today. Bankruptcy will stop the bill collector calls, stop a lawsuit, and put you back on your feet in these tough economic times. Call a bankruptcy attorney today.

The Law Offices of John T. Orcutt, with offices in Raleigh, Durham, Fayetteville, Wilson. Call today to set up your free initial debt consultation. 1-800-899-1414.

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Published Monday, July 6, 2009 @ 11:47 am

Are you hopelessly behind on your mortgage payments and wondering what to do about it? People in your shoes typically do one of three things: (1) try to convince the bank to just take whatever the property can fetch on the market (a “short sale”); (2) just let the bank foreclose; or (3) file bankruptcy.

Many people see filing bankruptcy as the “last-resort” of these alternatives. This is a mistake. Being seriously delinquent on your mortgage carries significant, long term risks that run far deeper than just losing your home. In many cases, filing bankruptcy will actually be the best and most efficient way to manage these risks and get past this difficult episode in your life.

Consider this: if you try to convince the bank to take a short sale or if you simply wait for it to foreclose on the property, you’ll likely have to wait months and months for anything to happen. These days, banks are just sitting on their duffs when it comes to the delinquent mortgages on their books. They’re swamped with past-due accounts and have little incentive to act since they’re just going to take a loss at the end of the day. While the bank sits around doing nothing, you’ll continue to be stuck in a frustrating financial limbo. As the months drag on, the delinquent payments, late fees, and compounded interest will keep growing – along with your sense of desperation – and your credit rating will sink further and further down the tubes.

What’s more, if you go the foreclosure route, the bank may be able to sue you for the remaining balance on the loan after the foreclosure sale. And, even if the bank cancels the debt, the saga may still continue. Canceled debt is normally treated as “income.” While the federal government has amended the federal tax laws to allow people to exclude such debts from their income through 2010, many states have not followed suit. If you live in one of those states, you’ll likely have to pay income tax on the amount of the canceled debt. The same situation applies in the context of a short sale – the debt the bank cancels after the sale is considered taxable income.

Now let’s consider what filing bankruptcy can do for you. If you file under Chapter 13, you could actually save your home. Your missed payments will be spread out over a 5 year repayment period. As long as you continue making your plan payments, the lender can not proceed with foreclosure. And, if you owe more on the home than it’s worth, you may be able wipe out those burdensome second or third loans that make the property “upside down.” While a Chapter 7 bankruptcy can’t stop a foreclosure, the automatic “stay” against collection activity will at least temporarily remove the threat of foreclosure, giving you more time to work out an alternative.

Even more, whether you file under Chapter 7 or Chapter 13, you’ll address all of your outstanding debts – not just your delinquent mortgage. Chances are, you’re dealing with other unmanageable debts – like credit card debt that you’ve been forced to rack up in your efforts to pay the unaffordable mortgage. Bankruptcy can wipe out these debts – for good. It will also protect you against liability for any deficiency on the loan, as well as tax liability for any canceled debt. And, as soon as your case is over, you can start over with a clean slate.

So if you’re dealing with a seriously delinquent mortgage, don’t just wait around hoping the bank will do something. Act now, and take control of the situation. Call a bankruptcy attorney and learn how the bankruptcy laws can help you resolve all of your unmanageable debts. The sooner you file, the sooner you can start rebuilding your credit, and your life.

In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Tuesday, June 30, 2009 @ 8:30 pm

Many of us encounter purchase-money security interests when we buy a car or perhaps shop at department stores. This is the situation where a lender gives you money to buy a specific item (a car; a tv, a bedroom set, etc.) and in exchange you give him a lien on the property, allowing that property to secure the debt as collateral. The other kind of consensual lien, the non purchase-money security interest, apart from being a mouthful, is somewhat less common. You’re likely to come across it if you’ve been given a small loan from a store front lender such as American General or Beneficial. These lenders will secure the loan by getting you to sign over a lien on your household goods. So what happens if you run into problems and can’t afford to pay back the loan? Will bankruptcy help in these situations?

The short answer is: Yes. When you signed over that lien to your household goods, you mostly gave the lender leverage. You see, he doesn’t actually want your stuff. That’s that the nature of our personal belongings; they’re usually worth a lot more to us than to anyone else. The most “valuable” thing the guy has is the ability to make you fear that he can take your stuff away. That’s really all they’ve got.

Under provisions of the bankruptcy code, you will be able to remove a non purchase-money lien from household goods. The definition of household goods include, among others items, your clothes, your household furnishings, household appliances, kitchenware, linens, some household electronics, medical equipment, personal effects including wedding rings, and one personal computer with its attachments. Any non-purchase money security interest in these items can be avoided and the underlying unsecured debt will be discharged with the rest of your debts.

Let’s say you’ve offered items as collateral which are not included in the above list, such as expensive electronics or antiques. In these situations, the non-purchase money security interest can be avoided to the extent which it impedes an exemption you would otherwise be entitled to under state law. Depending on what the item of collateral is, if it is exempt under state law, the lien can likely be avoided.

Even if the property is not a household good, and not otherwise exempt under state law, your options in bankruptcy are far better than continuing to pay the debt outside of bankruptcy. First, you can pay the lender for the yard sale value of the items (which is often much less than the loan amount). In a Chapter 7 you’ll have to do it in a lump sum, while the Chapter 13 will allow you to pay out the value over the course of your plan. This is a pretty good solution for you: you will get to wipe out the debt you owe by paying a much smaller amount.

And what if this doesn’t work? Then you still have one more option: call the creditor on his bluff. You should leave this one for last, but think about it: is he really going to show up at your house to extricate the nonexempt items from the exempt ones? Well, theoretically, legally, it’s entirely possible. Realistically? That’s looking a whole lot less likely. These guys might be holding your stuff hostage contractually, but enforcing that contract will likely be more trouble to him than it’s worth. If you find yourself at the mercy of a store front lender, contact a bankruptcy attorney immediately.

In North Carolina, contact the Law Offices of John T. Orcutt to set up a free initial debt consultation. Call 1-800-899-1414 today.

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Published Monday, June 29, 2009 @ 7:04 am

So it’s more than half way through the year now. You might be wondering how things are looking in the economy. Last year, many had predicted that the downturn would continue through the first quarter of 2009, but then we’d start to see stabilization in the second quarter and maybe even a return to growth by the summer. Well, we’re already into the third quarter, and a turnaround is still nowhere sight. The three major indicators of the economy’s condition are the rates of unemployment, bankruptcy filings, and home foreclosures. Here’s the rundown on those numbers, and it’s not pretty.

The overall unemployment rate was 9.1 percent at the end of May. Earlier in the year, some economists expressed concern that the rate might surpass 10 percent in 2009; it looks like that’s inevitable now. The unemployment rate in numerous states has already passed this benchmark figure. In fact, several states are now seeing record numbers of people without jobs. Michigan currently has an unemployment rate of 14.1 percent – the highest in the country, and the highest in that state since November 1982. South Carolina, Oregon, and Rhode Island are all dealing with a rate of 12.1 percent – the highest those states have ever seen. Other states seeing the highest unemployment percentages on record include California (11.5%), Nevada (11.3%), North Carolina (11.1%), and Georgia (9.7%).

With these sort of unemployment figures, it’s not surprising that bankruptcy filings also continue to be on the rise. In May alone, the number of consumer filings averaged 6,020 per day; the average was 5,854 in April. The number of business filings was 7,514 – an increase of 40 percent over May of last year. Since the recession took hold 18 months ago, more than 100,000 businesses have been forced to seek bankruptcy protection. At the current pace of filings, the number of consumer and business bankruptcies could hit a total of 1.5 million this year – up 400,000 from last year’s total of 1.1 million.

And then, of course, there’s the dismal housing market. Most experts agree that a turnaround in the economy is not likely, or even possible, until the housing market stabilizes. For this to happen, the rate of new mortgage delinquencies must drop sharply and the market has to purge itself of the existing delinquent mortgages. But this just isn’t happening.

As jobs disappear and ARM interest rates continue to reset, people continue to default on their mortgages. There’s also a backlog of about one million seriously delinquent mortgages that banks haven’t even dealt with yet. These days, lenders are dragging their feet for months and months before foreclosing on properties with seriously delinquent mortgages. This is partly because they’re having trouble keeping up with the high volume of accounts in default. But it’s also because they just don’t want the properties back. Banks often have little incentive to move quickly in such cases. Foreclosure is a costly process that just brings the bank a big loss at the end of the day. But these delays will simply prolong the recovery of the housing market.

So the condition of the economy continues to look bleak, and the recovery seems further and further off in the future. If you’re one of the countless Americans caught up in this turmoil, consider doing what millions before you have already done: filing bankruptcy. The bankruptcy laws were designed to help people bridge the gap in times like these. You can eliminate your unmanageable debts, take back control over your life, and make a fresh start.

In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Sunday, June 28, 2009 @ 8:45 pm

Planning for your retirement early is extremely important, yet appreciating this point can be difficult for people who aren’t looking to retire soon. It’s even harder to remember the importance of planning for retirement when it remains years or even decades off…all while the harsh realities of the economy are here today. Credit card companies compound the problem, advertising instant gratification while minimizing focus on long term financial stability. As the credit markets tighten, it’s tough to resist cutting back on retirement contributions. For those with a significant nest egg, it’s very tempting to cash out now and rebuild later.

Unfortunately, many of us approach bankruptcy as a last resort, an option to be avoided at all costs in the interest of our future financial soundness. In order to avoid bankruptcy, we make serious mistakes that betray the security of our financial futures. Those kinds of mistakes are precisely what this blog is intended to highlight and discourage. Before you make a mistake you may regret years if not decades from now, just to avoid declaring bankruptcy, make sure you have the facts straight. One classic mistake people make in a misguided effort to avoid declaring bankruptcy is dipping into― yep, you guessed where this is going― their retirement funds.

But it’s your money, so why is spending it such a bad idea, especially if it may save you a lot of trouble or help you avoid bankruptcy? An important clue can be found in the status of retirement funds in bankruptcy law. Did you know that in most states, your creditors cannot touch your retirement unless your actions enable them to do so? 401lks, IRAs, 529 plans- all protected by state and federal exemptions Even your rollovers are protected. Generally, a creditor will only be able to call in money from your retirement funds if you withdraw the money or take out a loan and fail to repay. For this reason, it is very important to avoid taking withdrawing any money from your retirement. Bankruptcy protection can’t protect you unless you allow it to!

What if you have high credit card debt, and you are thinking about borrowing against your retirement in order to chip away at those payments? This is exactly the kind of move you want to avoid and exactly the kind of situation where you need to think of bankruptcy as the next step, and not a last resort. Bankruptcy protection can allow you to discharge unsecured debts like credit card debt while keeping your retirement funds safe for the time they’re meant to be used: retirement. You may also be creating a whole new host of problems for yourself by borrowing against your 401k, even if you are able to address some issues in the short term.

What if you borrow against your retirement but then can’t repay it on time? You will likely face some serious tax consequences; remember, recent tax liabilities are one area where bankruptcy protection won’t be able to help you. Or what if you borrow against your retirement funds, but then you lose your job? You may be responsible for repaying the loan almost immediately, and this will naturally be difficult if you are out of work. As these scenarios illustrate, dipping into the well of retirement funds can be more trouble than it’s worth. Bottom line, if you’re thinking about withdrawing from your retirement to deal with your debt, it’s time to call a bankruptcy attorney. Protect your financial future, file bankruptcy now!

From: The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

Raleigh bankruptcy. Wilson bankruptcy. Apex bankruptcy. Durham bankruptcy. Fayetteville bankruptcy. Sanford bankruptcy.

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Published Tuesday, June 23, 2009 @ 9:46 pm

How can you be certain that considering bankruptcy is the right course of action for you? Are you concerned that you might still be able to work your way out of your cycle of borrowing, paying interest-only on loans, and then borrowing again? Ask yourself if you’ve experienced some of the following situations to help you determine whether there is a problem you need to address.

High Interest Loans:

Are you taking short term, high interest loans to try to give you enough cash to pay the minimum on other loans? Once you’ve maxed out your existing sources of credit, are the new ones you’re trying to get coming at a higher and higher interest rate?

Late Fees:

Anyone can miss a payment deadline from time to time. However, are you incurring late fees as you juggle minimum payments from one creditor to another? Do you ask yourself ‘who can wait to be paid this month’ as you frantically move cash from one account to another?

Payday Advances:

Have you become a regular user of payday advances? Sure, they’ll loan you money ahead of your paycheck but how much do you owe them for the privilege? And how much of your paycheck will be left once you’ve repaid the loan?

Pawn Shops:

Pawn shops are sometimes called ‘the poor man’s banker’, because they can help you bridge a tough time by lending you money with few questions asked. But how long can you borrow against your TV or jewelry before you’ve paid what it’s worth and more back just trying to keep your possessions ‘in hock’ and off the show room floor?

Family and Friends:

Do your family and friends avoid you because you’ve borrowed money from them? Or worse, are you avoiding them because you’re embarrassed that you can’t repay or even make a down payment on what you owe them? Is losing your personal support network worth it to keep prolonging your cycle of debt?

Gambling:

Do you risk what little cash you have on ‘long shot’ chances to pay everything off at once? Whether you’re spending money on the lottery, the horse or dog track, or casino gambling, the odds are against you getting that big score. That’s why the call it ‘gambling’ and not ‘debt service’.

Anger, Depression:

Does dwelling on your debt cause you to be constantly worried, short with your family, out of contact with your friends?

If any or all of the above situations seem familiar to you, you’re probably in over your head. But relief is just a phone call away! A qualified bankruptcy attorney can review your situation and help you decide how the legal protection of bankruptcy can help you regain control of your life by wiping out your overwhelming debt. You can have a fresh start.

You are not alone. Many people in situations just like yours have filed for bankruptcy and emerged financially stronger on the other side. Take advantage of their collective experience by calling a qualified bankruptcy attorney today.

Brought to you by The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Thursday, June 18, 2009 @ 11:44 am

If you have spent some time on this blog, then you should understand the value of working with a bankruptcy attorney. Not only can a dedicated legal representative be your best asset in a courtroom, they offer the emotional confidence that everything will be all right in the end. It can be trying and frustrating at times, and that is exactly why you should hire an attorney.

That being said, there are some things you can do on your own to prepare for meeting with a bankruptcy lawyer that will not only help you get a better idea of where you stand but it will help your attorney do an even better job for you.

For example, prepare as best as possible a breakdown of any income taxes that you owe, regardless of when they were due. Your mortgage is also a crucial component of your preparation, so it will help for you to find out what your home is worth, which can be ball-parked by looking at online county tax records. Know that tax value (the number on which your property taxes are based) and market value (the number at which an agent can sell it) are much different. In Wake County, for example, you can see a record of recent sales around your address. This is a solid enough breakdown for your purposes.

Find the value of your automobiles and determine what is owed and how far behind you may be. Then, create a total for all monthly bills. This can include utilities, credit card payments, home phone and cell phone, Internet, gym memberships, movie rental clubs or subscriptions of any kind. Be as thorough as possible; if you send a check somewhere each month, document it.

You should also consider gathering copies of the following documents:

• * pay stubs for the last 60 days
• * all mortgage documentation
• * most recent income tax returns
• * any court papers relative to current lawsuit or legal action in which you are involved
• * divorce decrees, martial settlement agreements, etc.
• * paperwork of any kind accumulated from a credit counselor or financial assistance program

In order to help you, an attorney will need to be as comprehensive as possible when learning about your individual economic situation. The answers to their questions are critical to your bankruptcy success, so it will only help if you know as many of the answers as possible ahead of time. Don’t worry, it’s not a test, just a way to make sure you get as much assistance as you deserve. You may be asked:

• * What is your marital status? Or, is a wedding or divorce pending?
• * How long have you lived in the state?
• * Are you considering foreclosure?
• * What is your general living situation? Renting? Homeowner?
• * Is there any indication that you will be seeing a spike in medical expenses in the near future?
• * Have you spent more than $500 in the last 90 days with a single creditor?

You get the idea. These questions are rather general in nature but the answers to them will help ensure that initial meetings with your bankruptcy attorney are as beneficial as possible. Remember that once you have made the decision to move forward, you need to keep moving forward. Don’t delay your future.

Brought to you by The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

Raleigh bankruptcy. Durham bankruptcy. Wilson bankruptcy. Fayetteville bankruptcy.

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Published Thursday, June 11, 2009 @ 4:44 pm

Some 330,477 people filed bankruptcy between January and March of this year. Do the math. That’s an average of more than 110,000 filings per month, 27,500 per month, and just shy of 1,000 per day. These numbers are up ten percent over last quarter, and 35 percent from a year ago. Indeed, more than 1.2 million people filed bankruptcy between March 2008 and March 2009. The spikes in filing rates are the highest since the fourth quarter of 2005, when record numbers of Americans rushed to file bankruptcy before Congress enacted tougher bankruptcy laws. California saw the worst of it this past quarter, weighing in with a total of almost 43,000 filings. Florida took second with almost 21,000 filings.

The second quarter of 2009 appears bound to be worse. Between April and May of this year, 250,456 people filed consumer bankruptcies. At that pace – over 125,000 per month – more than 375,000 Americans will file this quarter, an almost 15 percent increase over the first quarter. Business bankruptcies are also way up – 64 percent this March over last. This should come as no surprise: the news is littered with daily reports of corporate behemoths tumbling under the current pressures of the recession: GM and Chrysler – the biggest of the biggest – are in the midst of wading through the largest bankruptcy filings the U.S. economy has ever seen.

So what gives? Well, nothing new, really. It’s more of the same story we’ve seen over the last year and a half: a continued downturn in virtually every major area of the economy. Unemployment is sky-rocketing around the country. An overall jobless rate of 10 percent is right around the corner at this pace, and several states are already up over this benchmark: in Michigan, the current rate is 12.9 percent; in Oregon, 12 percent of the workforce is without a job; California’s dealing with an 11 percent jobless rate; and North Carolina is right there at the top of the list too, with a jobless rate of 10.8 percent.

Foreclosure rates also continue to climb all over the country. Nevada holds the current record: statewide, one in every 76 households is in some stage of the foreclosure process. Looking at metro areas, Merced, California tops the list with an astonishing rate of one in every 59 households. These problems are certain to continue in the coming months, as many more homeowners are still holding adjustable rate mortgages that have yet to even reset. And, of course, these do not include the thousands of other inevitable mortgage defaults and foreclosures that will result from the continuing job losses around the country.

The point is, we’re in for a long and difficult ride before this recession is over. The downward pressure on the economy continues to build every month, pushing the recovery further and further out into the future. Some blame the increase in bankruptcy filings for deepening, or even creating, these problems. But, in most cases, it’s just the opposite: the worsening conditions in the economy are forcing people to file bankruptcy, because their debts have become unmanageable for reasons largely beyond their control. And they certainly can’t be blamed for invoking the protection of the bankruptcy laws to bridge this gap: that is exactly what bankruptcy was designed to do.

If you’re dealing with unmanageable debts, it’s time to learn how bankruptcy can help you weather this storm. Call a bankruptcy attorney today. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Tuesday, June 9, 2009 @ 11:10 am

As you are probably well aware, bankruptcy is an important decision that should not be taken lightly. If you are eligible to file but hesitate to do so, you stand to lose more than you may guess. Dithering too long can ruin the strategic advantage of timing; deciding not to file at all could cause you to lose everything.

Take for example your car: if your car is securing a debt and you decide not to file for bankruptcy, a creditor may proceed with repossessing your vehicle. You may think you’re ready to lose your car should it come down to repossession, but consider this: the proceeds from the sale of the car undoubtedly will not cover the entire secured debt. This means you’ve lost your car―and you still owe the difference between the auction sale price and outstanding loan! Bankruptcy allows you to control the situation, by allowing you to safely surrender the vehicle without risking a costly deficiency claim after the car is sold. If you want to keep the car, Chapter 13 allows you to catch up with missed payments, putting you in a better position to keep the car while eliminating the risk of a deficiency claim if you decide later that you can’t afford the payments.

If you stand to lose your home, the steps a mortgage company can take won’t be as dramatic as waking up one day and finding your car gone. Sure, a foreclosure takes more time, usually at least three months. Still, the possibility of keeping your home is one of the excellent benefits of filing for bankruptcy protection. A solid Chapter 13 plan can catch up your missed payments and stop a foreclosing lender in its tracks.

The sitting duck strategy is pretty terrible for most every kind of debt. There are some debts that a bankruptcy won’t discharge, so you may think that declaring bankruptcy won’t help you anyway, so why bother. But letting a bad situation spin out of control while you take no action is a recipe for disaster. Take student loans for example, Congress has abolished the statute of limitation for student loans, so you can’t just wait those out. If you are delinquent long enough on your student loans, the government could garnish your wages without even going to court. By eliminating other dischargeable debt in your bankruptcy, you can be back on track to start repaying your non-dischargeable student loans.

If you owe money for support obligations, your state may have a program to revoke professional licenses, or worse, a divorce court could even send you to jail. You’ll also end up in the slammer if you were ordered to pay money as a result of a criminal proceedings. So now you may be thinking, these all sound pretty scary, but a bankruptcy won’t discharge them, so what’s the point? Remember that declaring bankruptcy can help you discharge some kinds of debts, freeing money up to pay those not eligible for discharge. This is a heck of a lot better than waiting around for the worst to arrive. If you are in trouble, don’t wait: call a bankruptcy attorney and get to work.

With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can help you get a handle on your debt. Call today to set up your free initial consultation: 1-800-899-1414.

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Published Sunday, June 7, 2009 @ 8:59 am

As any experienced bankruptcy attorney will tell you, knowing your rights and defenses against creditors is key to leaving behind a troubled financial past and making a fresh start. There are a host of things you should know. One of them is that there are specific limits to how long your creditors can chase after you trying to claim an unpaid debt.

Every state has a “statute of limitations,” which is a law that prohibits a creditor from suing you on an unpaid debt after a certain period of time has elapsed. Evidence gets lost or destroyed, and memories tend to fade, over time. This makes it more difficult to prove or defend against a claim, which ultimately makes it harder for the legal system to reach the right result. So, the statute of limitations is designed to encourage creditors to act within a reasonable period of time, by barring their claims if they fail to do so.

The amount of time a creditor has to act depends upon the nature of the claim and the state where you live. In North Carolina, for instance, the statute of limitations to sue is: three years for contracts (written or oral) and “open-ended” accounts (a revolving line of credit with a varying balance); four years for sales of goods; five years for promissory notes (e.g., loans); and ten years for judgments.

On open-ended accounts, the statute of limitations starts running from the date of the last activity on the account. This means the clock starts over with each new payment on the account. For contracts and promissory notes, the statute generally begins to run from the date of the breach or default. The distinction can be important when dealing with credit card debt. In some states, like North Carolina, credit card accounts are considered open-ended accounts. In others, they’re considered contracts. Where credit card accounts are considered contracts, the clock usually starts running from the date of the last payment.

Certain events can “toll” (stop) the clock on the statute of limitations. Filing bankruptcy is one of them. In the event of your death, disability, or incompetence, the clock stops running until such time as a personal representative or guardian is appointed.

The key point to remember is that if the statute of limitations has run, the creditor has no right to sue on the debt. This an absolute defense to any lawsuit filed against you. And, threatening to sue on time-barred debts violates the Fair Debt Collection Act.

Nevertheless, you may still get hounded about the debt. In fact, some companies thrive on buying up old debts and trying to collect from unwary debtors. This is why it’s so important to seek legal advice before responding to these types of claims. By entering into repayment agreement on a time barred debt, you may have re-started the statute of limitations for that claim, bringing the debt “back to life”.

So, if you continue to be hounded about debts from years ago, or if you’re contacted out of the blue about a debt you had long since forgotten, don’t admit liability and don’t agree to any payments. Talk to an experienced consumer rights or bankruptcy attorney today, and learn how federal law can stop debt collectors in their tracks.

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Published Saturday, June 6, 2009 @ 2:32 am

You’veprobably heard about the marked decline in the overall credit card debt levels since this recession took hold. You might find this a bit odd. Maybe you expected just the opposite at a time like this. Well, you’re on to something there. True, credit card debt is on the decline. It has tapered off six months in a row, by $5.4 billion last month alone. But these figures don’t prove as much as one might think. They don’t signal a turnaround in the economy. They don’t reflect a change in Americans spending habits. And, they don’t even show that people are struggling less with unmanageable credit card debt.

First, let’s consider the reasons for the decline in credit card debt levels. People are buying less, that’sfor sure. But why? Because they’ve decided to buckle down and pay off their credit cards? A noble pursuit, for sure. But in an economy where hundreds of millions of people are losing their jobs every month, few people will make paying off credit card debt a top priority; nor should they when they have more important expenses to cover, like rent, car payments, and utility bills. Indeed, the delinquency rate for credit cards was 5.56 percent in the fourth quarter of last year; the highest rate on record.

More likely, people are just charging less and because they have no choice. Those dealing with pay cuts and job losses have had to cut back their spending in general to absorb the blow. And those willing and able to use credit are having a harder time getting it. Banks have become stingy in issuing new credit. You’ve probably noticed a significant drop-off in the number of credit card offers you’ve received in recent months (a nice breather after having your mailbox stuffed with these obnoxious things for years, huh?) In other words, people haven’t abandoned the plastic; it’sjust becoming harder and less feasible to use.

Second, and perhaps more significantly, people are filing bankruptcy in droves=specifically because of unmanageable credit card debt. Let’s remember that, despite the precipitous decline of late, the overall credit card debt is still no measly sum. It remains a staggering $945.9 billion. Over a million people filed bankruptcy last year, and the filings so far this year show that number will swell even more in 2009. This has forced the credit card companies to literally wipe out billions and billions of dollars in credit card debt over the last couple of years.

What’s more, it is quite apparent that Americans are still carrying a very high level of credit card debt compared to their incomes. In Charlotte, North Carolina, for example, the average household spends more than 14 percent of its income solely on credit card debt. This figure is particularly troublesome given that Charlotte’s unemployment rate was 11.4 percent in March. And the picture is even more troublesome in other cities around the country. The average household in Orlando and Los Angeles owes more than 16 percent of its income to the credit card companies. In Tampa, it’s more than 17 percent. And in Miami, where the recession has taken a particularly heavy toll, debtors fork over 22.61 percent of their income for credit card debt every month.

The point is, regardless of the overall debt levels, credit card debt remains a significant problem for millions of Americans. If you’re struggling with these types of debts, it’s time to consider bankruptcy yourself. Stop throwing your money down the drain with interest payments! You can’t afford it. And you don’t have to. Bankruptcy was designed to help people break free of unmanageable debts and make a fresh start. Call a bankruptcy attorney today.

In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Wednesday, June 3, 2009 @ 9:46 am

There is no questioning how critical a role the state of our economy has played in the debt problems Americans are experiencing today. From lost jobs to increased consumer costs, the economy has caused a lot of pain for all Americans.

It’s clear that our economy will continue to be a source of worry for much of America. If you’re thinking about filing for bankruptcy, you may be worried that the economy has gotten so bad, bankruptcy relief may not be enough to help. In these troubled times, it’s best to reflect on your individual financial situation and to look a little into the future, as clearly as possible, to hopefully get some insight into where we’re all headed.

Despite recent signs of improvement, unemployment numbers continue to mount, with little evidence that employers are ready to start re-hiring. The odds are very good that you, or someone close to you, is out of work. If have you ever thought about additional training, more education or a new career, now might very well be the time to pursue those goals. Your aim should be to make yourself as marketable as possible in a very competitive environment.

It is hoped that banks have learned a lesson from years of irresponsible lending. With tighter lending guidelines, expect much tighter restrictions on loans in the next several years. This leaner lending environment may keep growth at a minimum in the near term, but hopefully will prevent any future financial catastrophes. Over time, like building back from bankruptcy, our economy will strengthen and lending will return to more balanced practices.

Wages will likely continue to decline, all while the dollar decreases in value. The government has flooded the market with trillions of dollars in the last half-year, which will set us up for very measurable inflation, meaning your dollar will not be worth nearly what it once was. The decline in the value of the dollar will continue

The secondary financial market will most likely have to correct itself as well. This may mean that we’ll see a big drop in the number of esoteric, behind-the-scenes investment practices that led to so many of our problems today. While it’s tough to point out the one broken bolt in a machine the size of our national economy, it’s safe to say that Wall Street’s malfunction was responsible for a lot of down time. More than likely, the repairs needed will come from Washington as well. That may or may not be a good thing. Only time will tell.

Our nation is certainly in a rough spot. The events of the last several months are a nice, collective example of how financial issues quickly ramp up into emotional and social dilemmas, adding even more sinkholes to the recession morass.

It’s very important in these times to what you can to take care of your family’s economic position. If you’re struggling, consider bankruptcy as a strategic option to stay above water in tough economic times. When the economy begins to rebound, you and your family will be best situated to rebound with it. With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can help you get rid of debt. Call today to set up your free initial consultation: 1-800-899-1414.

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Published Monday, June 1, 2009 @ 5:30 pm

People have been struggling with debt problems since ancient times, and for the same reasons that many of us continue to experience them today: loss of income, disability, or some other unforeseen event that prevents us from being able to pay our debts. But it’s only been in recent times that the laws have provided real protection for people caught up in such circumstances. In Ancient Greece, if you couldn’t pay your debts, you were imprisoned, forced to work as a slave for your creditors, or, worse yet, maimed or even murdered. And, these practices continued for centuries.

Finally, in 1570, England passed the first law establishing the bankruptcy process – largely because the debtors’ prisons were getting overcrowded. But the purpose of the law was to provide relief for creditors, not debtors. Only creditors could commence a bankruptcy, and only against merchant debtors. If you were an ordinary citizen, you were out of luck. What’s more, the forced sale of your property was not enough. You were still on the hook for any unpaid debts remaining after your property was liquidated. And, if you failed to make due, you were hauled off to prison, your ear was cut off, or you were nailed to a public pillory — by your ear.

The year of 1705 saw a glimmer of hope: England passed a new law, which created the right to discharge debts in bankruptcy. But to actually have your debt discharged, you had to “cooperate” with the liquidation process to the satisfaction of your creditors, and failure to do so could result in death. The next version of the law in 1732 was a bit more enlightened. It cut out the possible death sanction. But you could still only get a discharge if you “cooperated” and only if two-thirds of your creditors agreed to it.

During colonization, most of the American states followed the English laws in dealing with bankruptcy. Our Constitution specifically included a provision allowing Congress to pass uniform bankruptcy laws. But the first American bankruptcy law, which was passed in 1800, largely paralleled the 1732 English law. And, it was repealed just three years later because it was considered unjust to creditors. In fact, it wasn’t until 1833 that the federal government finally abolished debtors’ prisons. 1841 saw an improvement in the law: for the first time, debtors could file a bankruptcy case. But this law was repealed just a few years later – again because of a perceived injustice to creditors. The same thing happened a couple of decades later: in 1867, a new law was passed expanding the rights of debtors, but it was repealed in 1878 because people thought it went too far.

Finally, the Bankruptcy Act of 1898 was passed. This law recognized the right of “unconditional discharge” — the right to financial relief without creditor consent or court permission. And this also meant a discharge was really a discharge – your debts were wiped out, once and for all. For the first time, the law recognized that bankruptcy is not just about helping creditors clear their balance sheets; it’s really about helping everyday people, like you and me, deal with unmanageable debts – because allowing them to reestablish themselves as financially stable is the best thing for them and society.

While the bankruptcy laws have changed over the last century, these basic principles have stayed the same. It took awhile, but the law finally caught up with reality, and it is here to help you make a fresh start. So, if you’re struggling with debt, call a Raleigh bankruptcy attorney today and see what the law can do for you. With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can help you get rid of debt. Call today to set up your free initial consultation: 1-800-899-1414.

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Published Wednesday, May 20, 2009 @ 11:12 am

After living with the stress of debt for a while, it’s very possible to become accustomed to it. Maybe you think that financially, things are just always going to be that way. “I’ll owe more than I make and somehow, I’ll just manage to get by every month.” Serious debt is an emotionally trying and socially problematic complication of life and unfortunately, almost like an illness, many of us learn to accept the pain and find a way to live.

But it simply doesn’t have to be that way.

Living with the sleepless nights and monthly frustrations of just scraping by is not your lot in life. You deserve to rise above it, and bankruptcy can make that happen. A healthy financial management tool, bankruptcy can cure your financial ailments and offer you the chance to start things over. And when you make that decision, you’ll begin to realize how stable your life can be without creditors being a part of it. You will also learn how to spend wisely and that true wealth is relative.

As you begin to consider the many benefits to bankruptcy, start to reflect on what habits contributed to your financial situation. More importantly, take action to correct those habits. Ask yourself, “What in my life is really necessary?” From people to junk, look around your house and social circle and assign a value to everything and everyone around you, because if it’s in your life now, it had a role in your current situation. Do you have friends that, maybe innocently, convince you to buy things you do not really need? Are there items in the closet that looked great in the store but still have tags? Cleanse yourself of things that equate to your debt, mentally and physically. The process of minimalizing can be a great step toward mental comfort because as the saying goes, “the more you have, the more you have to lose.” Sell, donate or throw away things you don’t use. Be brutal about it.

This de-cluttering process may even mean forgiving debts owed to you. It’s very possible money you have lent is a direct contributor to you filing bankruptcy. If so, let it go. It is only perpetuating your concern about money. Let whom ever owes you out of their obligation. Free yourself of seeking money owed to you and think only about changing your situation. Again, if that money helped create your position, eliminating its role in your life will only help you move forward.

A substantial portion of financial wisdom comes from self-discipline. Thus, try to stop concerning yourself with money; don’t let it be all encompassing. Even years after your bankruptcy, keep your income, financial prosperity and approach to handling money private. Don’t brag about windfalls, a good salary or a successful investment. Always be above it. Understand too, that people who always talk about their money, are usually those who don’t have any.

Consider bankruptcy as a way of finally taking control. All the bills, phone calls, late notices and empty checking accounts are things you think you can’t control. They have power over you. But you can seize that power and be the one to take charge. That is what bankruptcy is all about.

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Published Friday, May 15, 2009 @ 12:35 pm

Bankruptcy is a tool to be used strategically. Part of the reason you should consult with a bankruptcy lawyer is precisely to work out that strategy. A smart bankruptcy is timed judiciously; you don’t want to wait until it is too late and you have lost too much, but you also don’t want to file if waiting a little is to your benefit.

A good bankruptcy attorney will review your situation and help you decide if the time is right. Because so many people view bankruptcy as the ultimate stigma, they wait too long to file―until they’ve suffered unreasonably long or lost too much in the battle with debt. If you are considering bankruptcy seriously, chances are the time is right. Actually, it was probably right quite some time ago. Nevertheless, some financial circumstances or life situations call for postponing bankruptcy until the best moment.

One important consideration is maximizing your exemptions. If you are expecting a considerable tax return, you should probably wait to file until after you have received the refund. When you get the money, you can use it toward essentials that will be exempted and then file; if you file before you get the return, it will be put to use toward your debts.

Another consideration is anticipated debt. If you are facing some serious medical bills in the future, you may want to wait to file until after that happens. You will not be able to file a Chapter 7 for another eight years, four for a Chapter 13, so if you get in over your head you may be out of luck. You should time your bankruptcy so that you can get the maximum protection; sometimes you have to wait to ensure that you will be able to discharge all credit purchases and as much tax as possible.

Certain recent activities on your part can count against you in the process, so if you’ve engaged in them you may consider delaying your filing. One example of this is if you have recently repaid considerable personal debts owed to family members or friends. A trustee can recover this money from your family members or friends, and you surely want your loved ones to hold on to that money. You also want to delay filing if you have recently acquired a large amount of debt or have purchased luxury items. For the former, your creditors may be able to prevent you from eliminating those recent debts by claiming fraud; for the latter, the trustee may be able to set the purchases aside. If you transfer property fraudulently or to avoid handing it over to creditors too close to the bankruptcy, the trustee can set these aside or the court may dismiss your case.

You may also want to wait to file until you can pass the Means Test. Because the Test is based on your average income over a six month period, a month or two of greatly reduced income may allow you to pass where a big paycheck didn’t. That doesn’t mean you should go out and quit your job! However, if you have lost your job recently but wouldn’t pass the Means Test right away because of a large paycheck, delaying the filing might be a good idea.

Think over your options carefully, but don’t wait too long or take stabs in the dark. If you’re unsure about your circumstances, you should consult with a bankruptcy attorney to strategize the timing of your bankruptcy so that you can get the maximum protection filing can afford. Raleigh bankruptcy attorney John T. Orcutt has helped thousands of families plan for bankruptcy. If you are in North Carolina, call our office today to set up a free initial consultation. Offices in Raleigh, Durham, Wilson and Fayetteville.

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Published Thursday, May 14, 2009 @ 12:55 pm

The shrinking job market is squeezing college graduates in record numbers as the number of student loan defaults has not been this high since 1998. Suddenly, today’s college graduates don’t have much of a reason to toss that mortar board in the air.

Adding a few more demerits to the situation is the fact that employers have also cut back drastically on benefits packages that historically included reimbursement for continuing education. What makes the jump in student loan defaults so troubling from the national perspective is that they are difficult to get included in bankruptcy plans.

Understandably, the situation can create a lot of pressure for the youngest, and hopefully most energetic, component of our workforce. In times like these, when fresh minds, new skills and workplace creativity can benefit the business world, it is more important than ever to engage young talent. However, if they are saddled with debt and unable to confidently move forward in a career, or even find a job, the financial dominoes begin to tumble quickly. If student loan defaults keep growing, the odds are good that their credit cards, car loans and ability to secure mortgages will also be severely affected.

While there are a number of legislative efforts underway to help struggling borrowers of other forms of money, government action on student loans can cause sweeping changes in the graduate education world. According to industry professionals, if student loans are granted leniency in bankruptcy plans, then they become a greater risk to lenders. In turn, that will create jumps in the cost of education, as it will simply be more difficult to secure the money needed to attend law school, study to be doctor or get an MBA.

However, an expert with the Institute for College Access and Success said that even with the federal protections in place, student loans have not become any cheaper.

FinAid.org, a Web site dedicated to information on student financial aid, reports that two-thirds of undergraduates turn their tassels every year under the oversight of a creditor. Given that a typical private undergraduate education costs more than $25,000 per year and graduate programs range from $27,000 to $114,000 and that student loans have more than doubled in the last decade, it appears the growing academic debt issue is not going anywhere soon.

It may be surprising some to learn that gambling losses can be discharged in a bankruptcy but to seek protection from federal student loan debt, a person needs to attempt to convince the court of an “undue hardship,” a rule that was put in place by Congress more than ten years ago. Then in 2005, the same provision was made legal for private student loans as well. Meeting the hardship discharge standard is extremely difficult and relief is unlikely to be granted except in the rarest cases.

The bright side is, while you are in a bankruptcy, your student loan payments are deferred. Once you emerge from the bankruptcy with your unsecured debt completely wiped away, you will have a better chance of making a dent in your student loans. In North Carolina, call the Law Offices of John T. Orcutt to set up your free initial bankruptcy consultation.

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Published Wednesday, May 13, 2009 @ 6:00 am

You may be thinking, just like so many people do, that bankruptcy is a last-ditch effort, a last resort, a drastic step undertaken when there are no other options. Stop right there―this is not a good way to approach the very beneficial protections of federal bankruptcy law.

Creditors want you to feel shame about bankruptcy, and they’ve paid millions of dollars to lobbyists in an attempt to make the process more complex and intimidating for hardworking people in dire straits. The media doesn’t help either. With the economy in a historic slump, the news channels are eager to sensationalize stories about the latest company to declare bankruptcy. “Last-ditch” and “effort” seem to go hand in hand in these stories, and there is an overwhelming impression that bankruptcy is the ultimate failure. Do not make the mistake so many people make. Don’t let these facts discourage you from filing for bankruptcy protection if it is the best option for you, and don’t wait until you are in an absolute crisis to take advantage of this important right. By the time you are forced to realize that, however unpalatable to you, bankruptcy is the only option available, it may be too late. You may have lost too much and bankruptcy may not protect you at all.

Unlike a company, your life is not about making profit, with any sign of trouble making stockholders run for cover. Unlike a company, you may have faced serious personal problems like illness or divorce, and unlike a company, serious financial problems don’t have to spell demise. A personal bankruptcy is not a failure― it is a chance for a new start.

This doesn’t mean that bankruptcy should be undertaken lightly. There are definite drawbacks to filing for bankruptcy protection, and you will face some life changes and certain financial disadvantages after filing. If your situation does not call for a solution like bankruptcy, then you should certainly seek other options. If, however, filing for bankruptcy is the smartest financial decision to be made― if you compare the pros and cons of filing and the pros column is leading―bankruptcy is a tool a financially savvy person will wield when the time is right, just like hiring an accountant or refinancing a mortgage.

If you decide not to file, or delay until the absolute last minute, you will probably lose much more than you would if you have filed a carefully planned bankruptcy. Barely making minimum payments or worse, missing payments, is unhealthy both for you and your finances. But there are worse things than a low credit score. If you don’t file, your car could be repossessed, you may lose your home, your wages may be garnished, you may face lawsuits and your resources may be stripped by the IRS to pay for back taxes. What point is there salvaging a credit score that has already taken a significant hit because of minimal or late payments?

Declaring bankruptcy can actually help you take care of debts, catch up on payments and improve your credit. As a matter of fact, many people are actually considered a better credit risk after they’ve filed. That is why you have to think of bankruptcy as a tool―the very tool, in fact, that may keep you from hitting rock bottom. One of the worst parts of that drowning in debt feeling is that you are not able to see your options rationally. Bankruptcy will help you clear your debt and clear your head. Take a deep breath, look at your options, and make the right decision by calling an experienced North Carolina bankruptcy attorney today. With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can be your first step toward financial freedom.

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Published Tuesday, May 12, 2009 @ 5:44 pm

The bankruptcy system, from the federal chapter designations to helpful attorneys, to the courts, is designed to assist people and businesses in handling an overwhelming fiscal dilemma.

Still, there are alternatives to bankruptcy. And while seeking legal guidance for bankruptcy has proven to be a very beneficial course of action, credit counseling can also be a viable route toward financial stability in less severe situations.

It’s important though, that you give serious consideration to choosing the right counseling organization because unfortunately, a person’s financial frustrations have proven to be fertile ground on which less than upstanding groups can farm opportunities. Desperation can lead to poor decisions, so look for the following when choosing counseling over bankruptcy:

Seek out organizations that are connected professionally to a national effort or foundation that has a track record of supporting people facing economic trouble. These types of groups mandate that their members or partners abide by strict guidelines, are subject to annual audits and have a consistent track record of successful case studies.

How is the counseling group structured, from a business standpoint? Are they an actual for-profit corporation? Are they really non-profit or only masquerading as such? Do they have a board of directors with qualified, financial professionals? Also, look for evidence of annual reporting, quarterly performance reports and community involvement. The idea is to find proof that they are clearly dedicated to helping individuals with their credit problems and not just out to better their own bottom line.

Think for a moment about how you found out about the prospective firm. Were they recommended by a co-worker or professional you trust, or did you see a hand-written sign on the freeway exit ramp that promised “credit repair?” If you found them on TV, likely they are a “for profit” company, perhaps only marketing themselves as “non-profit”.

Remember that it’s your credit at stake and if you want an alternative to bankruptcy, it’s critical that you make a good decision about who can help you. Professionalism matters, so demand it.

Along those same lines, seek an organization that offers an array of services. Simply calling creditors to negotiate settlements is not “credit counseling.” Can they help you with other important issues, such as budgeting, home ownership issues, reverse mortgages and re-establishing credit after bankruptcy? Keep in mind that a “reputable” credit counselor will also offer services to help you after bankruptcy as well.

One of the more important characteristics to look for in a credit counseling organization is price structure. First off, are they upfront about what it costs? If there is a plan of repayment involved, how do they get paid? Are they upfront with you about any “kickbacks” they get and the inherent conflict of interest this causes? If you feel uncomfortable about a certain aspect of the costs, communicate your concern. Again, the best agencies will work with you and be honest about it. If you get the idea that something is being hidden or that a surprise fee is imminent, it may be time to look elsewhere. You shouldn’t have to get in more debt to get out of debt.

Of paramount importance, can you afford any plan they offer? Most credit counseling outfits make their money by offering you what is known as a “Debt Management Plan”. This is nothing more than a plan of repayment cobbled together using the current “deals” offered by various credit card companies. This type of plan can provide you some real savings. However, you must be honest with yourself. If, in reality, you cannot afford their plan, however much money it saves you each month, you can easily do more harm than good to your family and your future.

The problem is that the credit counseling outfits make their money from “kickbacks” they receive from the credit card companies they collect for. Naturally, this presents a very real conflict of interest. Since they get paid by the credit card companies based on how much they collect from you, it only makes sense that the credit counselor suffers from a strongly divided loyalty to you, the customer, on the one hand, and, on the other hand, the credit card companies which kick back to the credit counseling outfit the money necessary to keep them in business. Just so you know, they don’t call it kickbacks. They call it “fair share”. A rose is a rose by any other name.

Since there is no “kickback” if the credit counseling outfit does not sign you up for a debt management plan, the last thing the credit counselor wants to do is to perform a complete and honest analysis of your budget, if doing so would reveal the fact that you really can’t afford their plan. So, buyer beware.

What you need to remember is this: A plan you really can’t afford is no solution at all. So, when you look at your budget to see what you can afford, include every expense you have. Otherwise, all you are doing is fooling yourself and setting your family up for a fall.

Credit counseling can be a great solution, assuming you can find a reputable organization and you can really, really afford their plan. If not, bankruptcy may be your only option, as well as your best solution.

Unlike a credit counseling plan, which only lowers your interest rates a little here and there, the federal bankruptcy laws can actually get rid of the underlying debt. For many people, getting rid of a significant amount of debt is the only way to really get their budget back under control. Call a Raleigh bankruptcy attorney today for more information.

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Published Monday, May 11, 2009 @ 11:53 pm

To file or not to file bankruptcy is one of the most difficult decisions you’re ever going to make. It involves more than just money and the debts you’re struggling to repay. Bankruptcy has its own set of emotions attached to it. You may ask yourself:

‘How did I get into this situation?’
‘How have other people worked their way out?’
‘What will my friends and family think?’

As you work through these difficult questions, understand that there is an attorney waiting to help you work through your financial problems and give you the facts you need to make an informed decision.

Bankruptcy is there for people like you, honest, hardworking people, who for reasons beyond their control, need the chance to start fresh in their financial lives. It can help you break free from overwhelming credit card and medical debt, and help you catch up on missed mortgage or car payment. Bankruptcy is indeed the “play” button for a life on pause.

There are two different kinds of bankruptcy which your qualified bankruptcy attorney can help you choose.

Chapter 7 bankruptcy is an option for individuals who pass a certain test of their disposable monthly income, as determined by median income figures for your state. While both Chapter 7 and Chapter 13 offer an opportunity for a fresh start, a Chapter 7 discharge can be obtained quickly- in about 6 months from filing in most cases.

If you are behind on your mortgage or car payment, Chapter 13 is your best option to get caught up and save your property from foreclosure or reposession. Your missed payments can be repaid over the course of a 3 to 5 year repayment plan. If you have disposable monthly income above the Chapter 7 threshold amount, Chapter 13 is also an option to get a handle on your unsecured debt.

A qualified bankruptcy attorney can help you determine which version of bankruptcy will be best for you. Using the federal protection of the bankruptcy code, you can begin to tackle your financial problems and shut out the bill collectors forever. You can restructure or eliminate your debt, keep your personal property, and begin your financial life again.

There may be one or many reasons why you’ve been placed at bankruptcy’s doorstep. Understand that there is professional help available, and that the benefits of bankruptcy probably outweigh many of the downsides. With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt will help you get back on your financial feet.

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Published Monday, May 11, 2009 @ 9:48 am

If you’re getting regular calls from collection agencies, chances are, you’re already in over your head with unmanageable debts, your credit rating has already been marred, and things will just continue to get worse unless you find a way to cut yourself loose. Bankruptcy is the best solution. The moment you file your bankruptcy petition, the calls will stop. The only kind of creditors who use bill collectors are unsecured creditors, like credit card companies, and those creditors are forbidden by law from continuing their collection activities while your bankruptcy case is pending. Even more importantly, by filing bankruptcy, you’ll be on your way back to financial freedom, because when the case is done most – and possibly all – of your bad debts will be gone, forever.

Maybe you’re still on the fence about bankruptcy. Or, maybe you’ve made your decision, but the petition has not yet been filed, and you are still receiving threatening calls from the collectors. In either case, it’s important to know your rights under federal law so that you can reduce some of the hassle of dealing with bill collectors.

The federal Fair Debt Collection Practices Act (FDCPA) prohibits bill collectors from using abusive and harassing collection practices. Under the FDCPA, bill collectors can’t: (1) call you before 8:00 a.m. or after 9:00 p.m., or at any unreasonable time or place, without your permission; (2) use a false name in communicating with you; (3) make your debt public (though they can contact your spouse, guardian, or attorney about your debt, or other people to get your contact information); (4) threaten to take any action against you that they have no legal right to take and no true intention of taking; or (5) use any other harassing, abusive, oppressive, or deceptive tactics.

The FDCPA also provides that a bill collector must stop communications with you upon your written request. Just send a letter simply stating that, under the FDCPA, 15 USC § 1692c(c), you request the collector cease communications with you regarding the account at issue. It’s best to send the letter certified mail, and to send copies to the original creditor and the Federal Trade Commission. Once the bill collector receives this notice, it can only contact you to advise that collection efforts have ceased or that the collector or the original creditor willing be taking a specific action against you, such as filing a lawsuit.

If a bill collector violates any of these rules, you have the right to sue and collect damages. It is important to note that the FDCPA only applies to third party collection agencies; it does not apply to original creditors. However, most states have companion laws that extend to original creditors, prohibiting them from engaging in the same sorts of collection activities. For example, the North Carolina Debt Collection Act applies to all collectors, including the original creditor. You can find out more about the laws in your state by contacting your state attorney general’s office or consumer protection agency.

While the FDCPA and similar state laws are certainly important in curbing abusive collection tactics, if you’re a regular target of bill collectors, these laws will only treat the symptoms of a much larger problem: unmanageable debts. The problem won’t go away, but will continue to spiral out of control until you take action to cut yourself loose from the bad debts — once and for all. Bankruptcy is the answer. It will treat the problem and give you the fresh start you need to take back control over your life. Contact the Law Offices of John T. Orcutt today, with offices in Raleigh, Durham, Wilson and Fayetteville.

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Published Monday, May 4, 2009 @ 8:39 am

Last year saw stratospheric numbers of bankruptcy filings. Almost 1.1 million people filed for bankruptcy in 2008. That was a 33 percent increase from 2007, when around 800,000 people filed, and even more from the year before, when some 590,000 people sought bankruptcy protection. During the first 10 months of 2008 alone, an average of more than 4,000 people per day filed cases. This spike in filings was in direct response to the current economic downturn, which has landed on the doorstep of millions of hardworking individuals doing their best to make ends meet.

The downturn continues and is working its way deeper and deeper into the economy. Through most of 2008, the fallout could still be largely blamed on the crash of subprime housing market. But now, businesses are folding every day, people are losing their jobs left and right, pension and retirement plans are evaporating into thin air, all while the costs of goods and services increase. This has placed severe downward pressure on the entire economy, and more and more people are in need of bankruptcy protection. Senior citizens are one of the groups at greatest risk right now. In fact, over the last decade, the filing rates for individuals 75 to 84 years of age has increased over 400%. For those between the ages of 65 and 74, the rates doubled during this time. In September 2008, almost 700,000 seniors (about 28% of all homeowners) were delinquent on their first mortgage, in the process of foreclosure, or had already lost their homes.

The current economic conditions have led experts to believe that the filings in 2009 will easily eclipse last year’s numbers. In fact, some experts are predicting that 2009 will see upwards of 1.5 million bankruptcy filings, and the same — if not more — in 2010. And this does not even account for the possible impact of the Obama administration’s proposed legislation that would grant bankruptcy judges unprecedented powers to modify home mortgages. If that becomes law, experts expect another dramatic surge in filings – potentially pushing the totals over 1.6 million – or even higher — for the year.

People are turning to bankruptcy in these troubled times for the same reasons they always have: for the opportunity to make a fresh start. In bankruptcy, you can wipe out most, if not all, of your unmanageable debts, or restructure them into an affordable repayment plan. If you’re one of the many Americans struggling with debts you simply can’t afford, call a bankruptcy attorney today. The sooner you can get your debt situation under control, the sooner you can begin rebuilding your life.

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Published Saturday, May 2, 2009 @ 10:48 am

If you’ve considered filing bankruptcy anytime in the last few years, you’ve probably heard of “the means test” as a new requirement for Chapter 7 bankruptcy. This test is a major part of the 2005 “Bankruptcy Abuse Prevention and Consumer Protection Act.” The credit card companies fought long and hard for the restrictions contained in this Act, spending ten years and millions of dollars convincing Congress the law was necessary to curb perceived “abuse” of the bankruptcy process. The good news is, despite the efforts of the credit card companies to exclude millions from qualifying for Chapter 7 protection, it remains available to many, if not most, of the people who would have qualified under the old law. There’s just more red tape now.

So what is the “means test” anyway? Well, the test uses a set of objective factors to assess your ability to pay the unsecured debts that would otherwise be discharged in a Chapter 7 bankruptcy. The reliability of these factors in determining a person’s actual ability to pay is up for serious debate.

First, if your income is less than the median income for families of your size in your state and county, you’re in. This is the easiest way to qualify; it’s just a question of whether your income falls below this figure. You lawyer will have the median income figures for your county. The real task is figuring out what your “income” is under the law. This is your gross monthly pay over the last six months before you filed bankruptcy. You must include income your spouse earned during this period too – even if you and your spouse did not file a joint petition – unless you’re legally separated. Also note that you need not include social security derived pay as part of your income.

If, like many people, you don’t qualify under this test, don’t despair. You just have to dig a little deeper. Instead of just looking at your gross income, you have to compare that against your expenses over the same period. Your housing and living expenses are based upon a set of pre-determined figures that are supposed to accurately reflect the expenses of most people with your gross income living in a family of your size — again a subject ripe for debate. You can also include other necessary expenses, such as taxes, payroll deductions and child care expenses. The result of this calculation is your disposable income – how much money you have after the bills are paid. So long as this figure doesn’t exceed a certain amount – $100 in most cases – you pass the means test.

The third way to satisfy the test is to qualify for an exception to it. Even if you don’t pass the test, the court can accept your Chapter 7 petition if you can show “special circumstances” make it impossible for you to qualify. For example, maybe your income was fairly high for most of the past six months, but then it was suddenly cut off or reduced because you lost your job or became disabled in an accident.

So, what’s the upshot? Yes, now you need to jump through more hoops to file a Chapter 7. But, chances are, if you’re struggling with unmanageable debts, you can satisfy the means test. And, even if you can’t, you can still qualify for Chapter 13 bankruptcy. Call a Raleigh bankruptcy attorney today to see what the new law can do for you.

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Published Friday, May 1, 2009 @ 2:45 pm

Constant calls. Late notices. Penalties. Late fees. Compound interest. Being buried under a mound of unaffordable debts can leave you feeling pretty helpless. And that’s because, on your own, you really are helpless: your creditors will keep calling, keep sending you threatening letters, and keep you and your family in fear. And they eventually will act on their threats, by suing you, taking your property, or even garnishing your wages. You remain at their mercy until you pay up – which, of course, you can’t afford to do!

Enter: bankruptcy’s automatic stay. This is your hammer against the harassing creditors. If you file bankruptcy, your creditors are forbidden by law from continuing their collection activities against you while your case is pending. You are no longer defenseless. Once your case is filed, you can finally tell your creditors to “Back off!” – and this time, they have to listen.

If you’re at the mercy of unmanageable debts, the importance of the automatic stay in helping you get a fresh start cannot be overstated. But, it is good to understand the ultimate reach of the stay – exactly what it does and does not do.

If — like many people up against the ropes in the fight with their debts — the bulk of your financial problems stem from unsecured debts, the automatic stay is nothing sort of a godsend. When it comes to unsecured creditors – like credit card companies and medical care providers – the automatic stay shuts them down. They can’t sue you. They can’t even threaten to sue you. They just have to leave you alone, like it or not.

When it comes to secured debts, the automatic stay offers protection against repossession. If you are behind on a home, car or other secured property, the stay will immediately stop the creditor from repossessing your property. This will give you time to catch up on missed payments in a Chapter 13 payment plan.

Some of things a stay cannot do: The stay won’t stop criminal prosecutions, divorce proceedings where no property is at issue, or proceedings to revoke professional licenses. If you’re facing eviction, the stay might stop the proceedings, but not if your landlord has already gotten a judgment for possession and the time to reinstate the lease has expired under the law of your state. Talk to your bankruptcy attorney immediately if you’re in this boat, because timing is everything.

Finally, if you’ve had a bankruptcy case dismissed within the last year, special rules or limitations may apply before the stay kicks into full effect. Your bankruptcy attorney can go through these rules with you and explain how they might affect your case.

The automatic stay is a powerful tool in getting a handle on creditors. It represents the beginning of the end of most, if not all, of the unmanageable debts in your life. It is the start of a new chapter. Your bankruptcy attorney will make sure you get the most that the stay – and the entire bankruptcy process – has to offer you. So, if you haven’t already, call a bankruptcy attorney today to stop the harassment and move on with your life.

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Published Wednesday, April 29, 2009 @ 2:55 pm

If you’re heavily in debt and behind on your payments, you know full well what your creditors want: they want you to pay up – and now. They don’t care where or how you get the money; they just want you to pay. And they’ll do everything they can to get it. A popular tactic is to make it sound like you have no choice but to pay up or suffer irretrievable disaster. They threaten that they’ll sue you, take your property, garnish your wages, or forever destroy your credit rating. However, you have the power of federal bankruptcy law on your side. The bankruptcy laws were designed to give you a chance to start over again, by allowing you to wipe out all of your unmanageable debts and save your home and/or car.

The bankruptcy process can be intimidating. The rules and procedures are technical. You’ll hear foreign words and phrases, like “the automatic stay,” the “means test,” “exempt property,” the “341 meeting,” and “reaffirmation.” You’ll have to deal with a bankruptcy judge — when you may have never been involved in the legal system before. And you’ll also have to deal with someone called a “trustee.”

To set your mind more at ease, it’s useful to have an understanding of the basic lingo and the role of your creditors, the trustee, and the judge in the process. The “automatic stay” kicks in the moment you file your bankruptcy petition, and it means your creditors must immediately cease all collection activity against you. The “means test” is an evaluation of your income and expenses to see if you qualify for Chapter 7 liquidation bankruptcy. An experienced bankruptcy will be able to successfully maneuver the complexities of the means test. “Exempt property” is protected property you get to keep; your creditors can’t touch it. The majority of debtors are able to exempt all of their property, including their home, cars and household goods. The “341 meeting” is where you meet with the trustee and your creditors (if any show up to the meeting) to discuss your assets and liabilities. “Reaffirmation” means that you agree to repay a debt that would otherwise be wiped out in the bankruptcy – something you wouldn’t normally do.

As for the players involved, the “trustee” is an individual appointed to oversee the administration of your case. In a Chapter 7 case, the trustee is in charge of distributing the proceeds from any non-exempt assets to your creditors. But remember, most debtors can fully exempt all of their assets. In the unlikely event that your assets are worth more than exemption limits, Chapter 13 allows you to pay out your “equity above exemption” over the course of a 3 to 5 year plan. Under a Chapter 13 repayment plan, the trustee collects your monthly payment, and divvies the payment between your creditors. Essentially, the trustee represents the interests of your creditors. The judge acts as a neutral arbiter, resolving any disputes or questions of bankruptcy law.

Your lawyer is the person on your side in this process. He or she will make sure you understand the process, get to keep as your exempt assets, and don’t get swindled into reaffirming a debt that should be discharged. So, don’t be intimidated by the bankruptcy process; take advantage of it. You don’t have to suffer with unmanageable debts and endless creditor harassment. The very purpose of bankruptcy is to help people in your situation. With an experienced attorney by your side, you can be confident that you’ll get the help bankruptcy has to offer: You will able to “talk the talk,” stand up to your creditors, and take back control over your life. Call an experienced bankruptcy attorney today, and stop the creditors in their tracks.

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Published Monday, April 27, 2009 @ 12:05 pm

If you’re one of the many people right now struggling with unmanageable debts and planning to seek bankruptcy protection to regain control of your life, now is the time to take a close and honest look at your finances – the money coming in, the money going out, what you own, and what you owe. This is useful for a number of reasons. First, it will force you to gather information you’ll need to provide your attorney in connection with your filing. Second, it will force you to closely evaluate your spending habits. This, in turn, will help you prepare for a financially stable life during and after bankruptcy, because you’ll inevitably end up crafting a more affordable budget for yourself.

To start with, take a sheet of paper and divide it into two columns. On one side, list and add up the money you have coming in the door on a monthly basis. This includes all of your incomes sources: your net pay from your job; child or spousal support payments; government assistance; etc. Note that you may need to prorate some of the income figures to make them fit into a monthly budget calculation.

Now that you’ve got a picture of what money you’ve got coming in each month, it’s time to take a look at where it’s going. On the other side of your sheet, list and add up all of your monthly expenses. You should consider not only your basic fixed expenses, such as housing, real estate taxes, utilities, gas, food, student loans, credit card payments, etc., but also your discretionary spending. Think about how you spend your money on daily or weekly basis. Do you buy lunch out? Is a fancy coffee from Starbucks part of your morning routine? These little things can add up fast.

Once you’ve assembled a basic balance sheet of your monthly income and expenses, make a similar accounting of the property you own versus the total debts you owe. This will help you get a clear picture of where you stand in relation to your debts. If you own a home, try to come up with a figure that you think best represents its current fair market value. \Do the same for your other property: furniture; jewelry; cars; appliances; equipment; computers; etc. Then list the total debts you owe: your mortgage; your car loan; credit card balances; etc.

Pay particular attention here to your level of credit card debt. If your payments on these accounts make up a large percentage of your monthly expenses and a large percentage of your total debts, bankruptcy is probably your best option indeed. Not only are these debts overwhelming your life, you’re simply throwing money down the drain in a futile effort to keep up with the unaffordable payments.

Well, now you’ve gathered the basic information you need for your bankruptcy filing, and you’ve made an honest assessment of your financial situation. You’re well on your way to paving the road for financial success in the future. Call your bankruptcy attorney and put your plans into action!

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Published Saturday, April 25, 2009 @ 7:14 am

So you’ve got a pile of bills and not enough money to pay them. This has been going on for some time now and you’re getting further and further behind on your payments: 30 days on some, 90 days on others, and even six months on a few. So what can you do? You could just do nothing. Maybe you’ll finally hit the jackpot this month with your “Cash 5” lotto ticket and you’ll be able to pay off all your debts. If you don’t happen to run into a pot of gold, you could turn off your phone, ignore the late notices, and hope your creditors will just give up after enough time goes by. They can’t really do anything to you without filing a lawsuit, right? And isn’t there a limit to the period of time that they can file suit anyway? Maybe they’ll just forget about you and the time will expire.

Well, the trouble is, your creditors won’t forget about you, they don’t necessarily have to file a lawsuit to collect on the debts, and even if they do, the chances are almost 100% that they’ll file before the statute of limitations expires. The fact is, if you’ve got debt piling up that you can’t afford to pay off, filing bankruptcy is probably your best – and maybe your only – real option. This will stop further collection activity, and give you the chance to take back your financial life.

Just consider for a moment some of things that could happen if you fail to take any action. If you have a home and are behind on your mortgage payments, the lender could foreclose on the property. And, if you owe more on the loan than the lender recoups in the foreclosure sale, you could be on the hook for the difference. Even if the lender cancels the remaining debt, your problems won’t necessarily be over: you may have to pay taxes on the canceled debt (it’s considered “income” believe it or not) – at the federal and the state level, depending upon where you live. And what about your car? If you’re behind on your car payments, the lender could repossess the car. This could be quite inconvenient – not to mention embarrassing – because the lender could show up any time and just haul the car away. Also, if you have federal student loans and you’re past due on the payments, the government can garnish your wages – without even going to court. This means it can take money directly out of your paycheck (sometimes up to 10%), before you ever see it! The government also has the power to seize your property to pay off back taxes you might owe.

You also should consider the emotional side of things. Having to fend off constant high-pressure calls from creditors is exhausting. It takes time away from your family, and can cause real emotional distress. What’s more, your credit rating will continue to get worse and worse every month as you continue to carry these unmanageable debts. Bankruptcy can stop the downward spiral, and give you a chance to make a fresh start. Stop the cycle! Call a bankruptcy attorney today; you can’t afford not to.

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Published Thursday, April 23, 2009 @ 3:06 pm

Like so many others right now, you’re struggling to pay your bills, falling further and further behind, and wondering what you can do about it. Maybe you’ve heard about the benefits of bankruptcy: the ability to wipe out your unmanageable debts and save your home from foreclosure. But maybe you also think you don’t qualify for bankruptcy protection, because it just so happens that you’re not actually a U.S. citizen. Well, the good news is you can file bankruptcy, under certain circumstances.

To qualify as a “debtor” under the Bankruptcy Code, you only need to reside in the United States, or have a place of business or property in the country. There is no citizenship requirement for filing. Technically, you don’t even need to actually live in the United States. The courts vary in their interpretations of what constitutes “property in the United States.” But in some U.S. jurisdictions, it may be enough that you simply keep a bank account there. Others may require that you demonstrate an intent and ability to become a permanent resident in the future. This could mean you have to have a permanent visa or a “green card.” The key point is that you may be eligible to take advantage bankruptcy protection, regardless of your non-citizen status.

Keep in mind that while filing bankruptcy generally will not affect your immigration status or naturalization application, if you’re currently residing in the United States, the information you provide in connection with the case may affect your right to stay here. You are required to be truthful in your disclosures regarding your financial situation. This includes the income you’ve earned, the taxes you’ve paid, the specific debts you owe, and any transfers of money or property you’ve made in the months leading up to your filing. If you’ve been paid “under the table,” evaded income tax, used credit cards in other people’s names, or transferred property to hide it from creditors, this will inevitably come out in the bankruptcy filing process. The Immigration and Naturalization Service may consider these actions as crimes of “moral turpitude,” exposing you to potential deportation.

As long as you haven’t engaged in these sorts of actions (or been convicted of certain criminal offenses), and you approach bankruptcy with honest intentions, the bankruptcy filing should not create any immigration problems. If you’re a non-citizen struggling with unmanageable debts, and you live or work in the United States, call an experienced bankruptcy attorney in your area today, and learn how bankruptcy can help you fight back against debt.

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Published Tuesday, April 14, 2009 @ 9:56 pm

Chapter 13 bankruptcy (sometimes called the “wage-earner’s bankruptcy”) is designed to allow you to restructure your past due financial obligations into an affordable repayment plan. The repayment plan will include secured debts (such as mortgages and car loans). In some circumstances, it can include repayment of some of your unsecured debt (such as credit cards and personal loans). However, in the majority of Chapter 13 plans, your unsecured creditors receive little or no payment- the unsecured debt is simply discharged.

If you are behind on your home mortgage or car loan, a Chapter 13 bankruptcy is your best option to avoid foreclosure or repossession. By filing bankruptcy, you can stop a foreclosure or repossession immediately! The plan will allow you to catch up on missed payments, and put you in a a much better position to keep your home and car. Once your plan is filed, all creditors must cease collection efforts. This “automatic stay”, stops your unsecured creditors dead in their tracks, freeing up more money so you can successfully complete your Chapter 13 plan.

Depending on your unique situation, the Chapter 13 plan can be structured to pay your secured debts and catch up missed payments over a period of time, usually between 3 and 5 years. So long as you continue making the plan payments, you are protected from any collection efforts for the duration of the plan. At the end of the repayment plan under Chapter 13, all unsecured debt is discharged. You can then resume making your secured debt payments directly to your mortgage or auto lender, just as you did prior to filing bankruptcy.

The eligibility requirements to file a Chapter 13 bankruptcy are fairly straight-forward. You must be United States resident some form of income (yes, unemployment benefits are considered income). You must also receive credit counseling from an approved credit counseling agency. If you’ve filed for bankruptcy before, you may file again under Chapter 13, but there are some limitations. If you previously filed under Chapter 7, you may file again under Chapter 13, if it’s been at least four years since your previous filing. If you filed under Chapter 13, you may file again so long as it’s been at least two years since you filed your previous case.

Because of its ability to stop foreclosures and prevent car repossessions, Chapter 13 can be a very powerful tool to help you keep your home and car during these turbulent economic times. If you are facing a foreclosure or repossession, don’t wait until its too late. Speak with an attorney now! A Chapter 13 bankruptcy may be the help you need to get back on your financial feet.

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Published Sunday, April 12, 2009 @ 3:00 am

Are you struggling with debt and considering bankruptcy? It helps to know that you’re not alone. According to the National Bankruptcy Research Center, almost 1.1 million people filed for bankruptcy in 2008. That’s up 33 percent from 2007, when around 800,000 people filed, and even more from the year before, when some 590,000 people sought bankruptcy protection. In fact, during the first 10 months of 2008, an average of more than 4,000 people per day filed cases. And the number of filings is expected to increase even further in 2009. This spike in filings over the last few years is in direct response to the current economic downturn, which has landed on the doorstep of millions of hardworking individuals who had been doing their best to make ends meet.

As the downturn continues to work itself deeper into our economy, more and more people are going to find themselves up against the ropes – fending off demands from credit card companies, trying to save their homes from foreclosure, worrying about having their cars repossessed, etc. If you’re one of these people, it’s time to call a bankruptcy attorney. There’s no shame in seeking such help. Bankruptcy was designed for times such as this, to help people like you. Just look at the number of filings over the last few years: you are not alone – far from it. Millions of people around the country have gotten caught up in this mess, many through no fault of their own.

So why are so many people turning to bankruptcy to get them out of this mess? It’s simple: bankruptcy allows you to take control over your life again and to make a fresh start. If you qualify for it, Chapter 7 bankruptcy can wipe out most or all of your unsecured debts (e.g., credit card debt or medical bills). Chapter 13 bankruptcy can help you reorganize your debts into an affordable repayment plan and can save your home from foreclosure or your car from repossession.

Filing bankruptcy is, of course, a serious thing, and it will have negative consequences for your credit rating. But, chances are, your credit is already on the downward-slide from late or missed payments to your creditors. And, wouldn’t it be nice to save some of that money you keep losing every month to never-ending interest payments? The sooner you can get your debt situation under control – by eliminating debts in Chapter 7 or setting up a repayment plan under Chapter 13 – the sooner you can begin rebuilding your credit again and, even more importantly, your life. Millions of people have gone before you. Call a bankruptcy attorney today and learn what bankruptcy can do for you.

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