Published Thursday, September 2, 2010 @ 10:39 am

Well, it’s fall. In terms of school, anyway. And if you have a kid heading off to college now or this time next year, it means all kinds of expenses, like dorm supplies, new clothes, a computer and of course, textbooks.

A student’s learning resources have become one of the most underrated expenses of the college experience. Parents today worry greatly about tuition and room and board (as they should) but tend to be quite surprised when another $1,000 is needed just so a student can do the required readings.

For parents in a tough financial spot but who managed to send a child off to college, textbook costs can become a unexpected economical pain-point. Thankfully, there are more options than ever before for saving on the rising costs of books and other published resources.

Apparently, a new law was passed recently (who knew?) that mandates colleges and universities post online the course materials per semester schedule. This means that you have more time to research the best financial avenues to explore for cheaper books because the cost and ISBN (International Standard Book Number, in case you’re curious) will be listed with the course.

Now, let’s get digging.

First—and this sounds obvious but you would be surprised at how rarely it’s used—go to the college library. Most schools buy textbooks for their library collections as well and voila, you have a free book! Sure, it’s going to need to be renewed a few times but hey, the early bird catches the worm.

One of your next best options is to rent your textbooks. Granted, this isn’t the best approach for long-term learning but at least you’ll have time to understand to what extent a professor uses a specific book and then decide, after the course, if its worth purchasing. And if it is not a book for a course in your child’s major, long-term ownership wouldn’t make all that much sense anyway.

Web sites like Chegg.com and CampusBookRentals.com rent textbooks. Be sure to understand their guidelines to avoid late or damage fees. Let’s kid ourselves, course books make great beer mug coasters.

Since this is college in the age of the Internet, don’t forget about the ever-growing collection of e-books. Without all the expensive printing and distribution costs, electronic versions are often substantially less and coincide perfectly with the level of comfort today’s college students have with the Web and reading things from laptop screens.

Web sites for your student to peruse for e-versions of their books include CourseSmart.com and Abebooks.com. There are also options for included course materials that commonly accompany a respective text. Once downloaded, there are a number of additional ways to make highlights and bookmark specific sections that need to be referred to later in the course. There is also a service called iChapters.com that allows for the download of individual chapters of specific books.

Like any expensive product, don’t forget the value of simply shopping around. A $10 difference per book can offer pretty nice savings to college parents on a budget, which includes just about everyone today. Remember that the books get updated quite often, so the ISBN is your friend when it comes to ensuring you have the latest version required for a course.

College costs are continuing to climb every year and the grants and scholarships available don’t seem to be keeping pace. Plus, more and more kids are attending college, so the competition is only increasing. Remember that federal college savings plans can remain intact after a bankruptcy, so plan early and contribute often.

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Published Thursday, September 2, 2010 @ 10:34 am

Baby Boomers and their cohorts born during the middle part of the 20th Century—between the years of 1946-1964—are a generation of active lifestyles, risk-taking rebellions, musical and cultural significance, and, as they come to represent one third of the population of North America, a group making significant demands on the societies in which they live.  But now, Baby Boomers are adding one more superlative to the bunch: they’re also a generation of financial insolvency.

According to a recently-released study from the American Bankruptcy Institute’s ABI Journal, 42 percent of all debtors filing for bankruptcy were between the ages of 45 and 64 in 2007. In addition, these older Americans are filing for bankruptcy at an even faster rate than their younger counterparts.

So, what’s the reason for these rising rates of bankruptcy among our nation’s more mature Americans?  Like so many individuals during these tough economic times, our country’s more Boomer populations are experiencing off-the-charts unemployment, staggering medical expenses, overwhelming consumer debts and credit card bills, underwater mortgages, and the subsequent siphoning of retirement funds.

But all of these terrible conditions—which are difficult at any age—are exacerbated for the Baby Boomer set. For example, with one job for every five people needing one, older Americans must also face age discrimination in an already competitive job market—whether they’ve been laid off or are attempting to re-enter the workforce following a not-so-tranquil attempt to retire in our not-so-fun financial era. With the average duration of Boomer unemployment running weeks or months longer than that of their younger peers, many older jobseekers are forced, more often than anyone, to turn to their remaining retirement funds, credit cards, or loans, just to stay afloat.

What’s worse is that with the loss of their job, Boomers face the loss of their health care insurance, a sometimes devastating scenario for a generation of older Americans often experiencing their first genuine medical conditions, illnesses, injuries and other medicinal needs. But these risks don’t simply relate to physical maladies: living without health insurance can mean financial ruin when an individual is faced with a medical emergency. These emergencies can also force older Americans to turn to home equity or retirement accounts in an attempt to repay lingering medical debts.

By drawing from their savings, retirement, equity, and credit cards, Baby Boomers create a vicious cycle of spending that, in time, can leave them with no nest egg for the inevitable rainy days when they are unable to work, unable to avoid medical maladies, and unable to turn to other sources of income for help. What’s worse is that as they age, these mature men and women are often targeted for payday loans and foreclosure scams that take advantage of their generational desire to carry their own weight and pay off their debts—albeit at unmanageable interest rates.

These scenarios, in which a Baby Boomer’s only recourse is to use their valuable assets or consumer credit to stave off creditors, is precisely why bankruptcy was created.

So, if you’re a Baby Boomer who’s been effected by the economy,  and are now considering new ways to get out from underneath ever-increasing debt, knowing a qualified bankruptcy attorney can help you conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. 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 Thursday, September 2, 2010 @ 10:32 am

Last year, one million people filed for bankruptcy, with 2010 on tap to top even that staggering figure. So what’s behind the big bankruptcy bump? A continuing housing crisis, higher health care costs, and unemployment hovering the double-digits. As a result, many people who have already filed in the past may be facing another round of tough financial times, and considering a second-time bankruptcy. But what considerations are there for someone considering a double-dip in the bankruptcy pool?

Well, under current bankruptcy rules, certain conditions apply for a second bankruptcy. In North Carolina, as is the case in all other states, you must wait 8 years between filing a Chapter 7 case and filing another Chapter 7 case; you must wait six years between a Chapter 13 and a Chapter 7, four years between a Chapter 7 and a Chapter 13, and two  years between subsequent Chapter 13 filings.

Given these limitations, here are five quick tips to consider when contemplating a second bankruptcy filing.

Be Thoughtful

In this era of economic strife, many feel they have nowhere to turn but for the benefits of bankruptcy. A sudden medical expense or lay-off can leave you feeling financially destitute. A lot can happen in the years between bankruptcies. In these cases, multiple bankruptcy filings may feel like the only option. Be thoughtful about a second shot at bankruptcy. Be honest with yourself about whether or not this option is best. And, most importantly, don’t be afraid to use the helping hand that bankruptcy can provide—once or twice— if your home, health, or ultimate happiness are otherwise at risk.

Assess Debts
When you take a cold, hard look at your current debt, is it greater or less than the debts that prompted your first filing? What type of debt is it? Is your debt secured or unsecured? The answers to these questions can determine whether you need bankruptcy (i.e., less debt, more income); the particular bankruptcy that can help you most (e.g., Chapter 13 or 7); or whether bankruptcy can help at all (i.e., consumer debt vs. student loans).

Seek Financial Assistance
Considering multiple bankruptcies may signify a larger problem with spending, accumulating unnecessary debt, or other self-destructive traits. Just like you would seek a doctor for a continuing health problem, repeat brushes with insolvency may be a sure sign that you need the help of a financial advisor. Often, a low cost assessment can provide priceless insight into the persistent problems causing your financial failures.
 

Stop the Cycle of Spending
In most cases, Americans filing for bankruptcy today are merely the victims of the unexpected: layoffs, sudden injury or illness, or the fine print of consumer credit. That’s why, the second time around, it’s always important to look beyond the catastrophic event and to potential budgetary behaviors that may be contributing to the systemic problem. In short, curtail any spending habits that might have led you back to this financial place; shore up any spending on luxuries and non-essentials; and finally, and most importantly, because new bankruptcy laws can limit a third try, make this bankruptcy your last.

Get Good Legal Advice
If you’re considering another bankruptcy it’s time to turn to someone who’s got your back when you’re in the process of bouncing back a second time. That “someone” is inevitably a qualified bankruptcy attorney who can help you to conquer your another round of creditors and face your most recent financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond the 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 Tuesday, August 31, 2010 @ 9:32 pm

The Obama Administration’s Credit CARD Act, meant to tighten the reins on credit card industry treatment of card customers—and thereby assist most average Americans— has slowly (but imperceivably?) begun changing our credit card rates, rewards, the appearance of our statements, and even the number of offers we receive.

But despite these significant changes in credit card law to this point, many Americans are still struggling to pay their bills on time, every time. Some can’t pay because they’ve taken a pay cut; in other cases, they’ve been laid off completely; in most they’ve simply lived beyond their means so long that the credit card interest is working far from in their best interest. If this sounds like you, for whatever the reason, you may be wondering what you can do if you can’t pay your bill on time.

First and foremost, it’s important to understand that you can attempt to work with your credit card company to get a stay on the payment until you can pay—especially if you can pay—only a little late. If at first you don’t succeed, ask for a supervisor. In fact, ask to be put through to the department that is responsible for negotiating debt workout arrangements. Often what one can’t or won’t do, another can (or is even designated to do).

If that doesn’t work, there’s now another light at the end of the tunnel.  In fact, as of August 22, you now have even more solutions available to you if you find yourself late on your credit card payment.  According to the Federal Reserve, if before August 22, you couldn’t pay your credit card bill you might have a late payment fee of $30. As a result, you would pay that $30, whether your minimum payment was $20 or $200. But as financial expert Michele Singletary reports, “Under the newly implemented rules for the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, your credit card company cannot charge you a fee of more than $25 unless one of your last six payments was late — in which case your fee may be up to $35—or the credit issuer can show that the costs it incurs as a result of late payments justify a higher fee.”

What’s even better is that your credit card company can’t charge you a late payment fee that is more than your minimum payment. As Singletary put it, “For example, if your minimum payment is $20, your late payment fee can’t be more than $20. Similarly, if you go over your credit limit by $5, you can’t be charged an over-the-limit fee of more than $5.”

The end of outrageous fees is a bright spot for many facing the challenges of credit card debt during these tough economic times. Because, as everyone now knows at this point, there’s normally a heavy price to pay for playing with plastic. If you too have been effected by the economy and are wondering how to reduce your credit card debt and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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.

Raleigh bankruptcy attorney. Durham bankruptcy attorney. Wilson bankruptcy attorney. Fayetteville North Carolina bankruptcy attorney. Lumberton bankruptcy attorney.

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Published Monday, August 30, 2010 @ 2:23 pm

Think the economic downturn is now only a temporary concern? Well, according to an authority on the history of financial crises—Carmen M. Reinhart, an economist at the University of Maryland—this country’s economy could suffer from super-slow growth and staggering unemployment for a full decade or more. This seemingly unending economic malaise remains a direct result of the collapse of the housing market and the economic turmoil that began some three years ago.

As a recent New York Times report explained, Ms. Reinhart’s paper (co-written with her husband, Vincent R. Reinhart, a former director of monetary affairs at the Federal Reserve) drew upon research she conducted with the Harvard economist Kenneth S. Rogoff for their book This Time Is Different: Eight Centuries of Financial Folly. “The Reinharts examined 15 severe financial crises since World War II as well as the worldwide economic contractions that followed the 1929 stock market crash, the 1973 oil shock and the 2007 implosion of the subprime mortgage market. In the decade following the crises, growth rates were significantly lower and unemployment rates were significantly higher. Housing prices took years to recover, and it took about seven years on average for households and companies to reduce their debts and restore their balance sheets. In general, the crises were preceded by decade-long expansions of credit and borrowing, and were followed by lengthy periods of retrenchment that lasted nearly as long.”

“Large destabilizing events…evidently produce changes in the performance of key macroeconomic indicators over the longer term, well after the upheaval of the crisis is over,” Ms. Reinhart writes. “Misperceptions can be costly when made by fiscal authorities who overestimate revenue prospects and central bankers who attempt to restore employment to an unattainably high level,” she warns.

If you don’t believe Ms. Reinhardt warning of continuing calamity with many financial leaders and policyholders as partly to blame, NYT also points to other economists who believe that consistent drops in inflation are causing economic deflation, a cycle of falling prices and wages, which could impact an already beleaguered economy in 2010.

So, what do these dire economic outlooks, conditions and trends mean for average families attempting to navigate their own uncertain financial times?

It means shoring up your financial foundation for the near (and possibly distant future):

Keep Your Day Job
While this may sound self-explanatory, doing what it takes to hold on to your job can be  essential to keeping your head above water for the long haul. Working harder, longer, and even in multiple roles and jobs, is now the new norm of a not-yet-healthy economy. And, with one job available for every five people unemployed, if possible it pays to do what you can to keep your current paycheck.

Lessen Spending on the Luxuries
With back-to-school spending in full swing, and the holidays only months away, you may be considering some budget-breaking purchases. Take the time to reevaluate the essentials for your family’s budget, as well as more thoughtful gifts that may mean less wear and tear on your wallet.

Cut out Credit Cards
In addition to the traditional advice to stop using credit cards, in a tough economy it can also be a good idea to stop paying them. Spending hundreds, maybe thousands, a month on high interest consumer credit is money badly spent—funds that can’t be used to set up your savings for a rainy day (which in this economy could be “any day.”)

End the credit card cycle by joining the million Americans choosing bankruptcy this year, all to save themselves from another decade of debt. Your first step? Contacting a qualified bankruptcy attorney to help you regain control of your financial coffers, conquer creditors and get back on a better budgetary track—yielding all with the right kinds of support, information and insights during the coming years—come feast or famine.  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 Thursday, August 26, 2010 @ 11:46 am

During the mid-2000s, housing prices reached stratospheric levels with mortgage lenders more than willing to be liberal with their loans, selling the idea of the “home as American Dream” to anyone who would listen—whether they were qualified or not.  But, if the recent housing crisis has taught us anything, it’s that home ownership isn’t always what it’s cracked up to be.

So, after the recent mortgage meltdown, many are wondering: “where do we go from here?”

That’s the very question asked in a recent report by NPR. In it, correspondents found that after two decades of expansions in home ownership—fostered by government mortgage guarantees by the now much-maligned likes of Fannie Mae and Freddie Mac—many policymakers are looking at housing finance reform as a top priority to the nation’s prospects for economic recovery.

“The two mortgage finance giants made astonishing mistakes,’ Raj Date, executive director of a financial policy think-tank called the Cambridge Winter Center, told NPR’s Audie Cornish. Ultimately, Date said it might be time to rethink homeownership as an American ideal. ‘The world we live in today is not quite the world that existed in 1950,” he noted. “The nature of households and the rate at which they dissolve and reform, the nature of work and its transient nature across geographies are all things that suggest that maybe, just possibly, a middle-class American shouldn’t stake themselves to an illiquid, very large, concentrated, leveraged asset —- that is to say, a house.’”

As a result, many are revisiting (and reconsidering) the idea of the “white picket fence,” and turning to rental property as a way to prevent real estate from owning them—at least financially—instead of the other way around.

“Homeownership has gone from being pretty much an unmitigated good — something that would provide stability—and instead has thrown a huge cloud of doubt over the value of homeownership for a lot of people,” Alyssa Katz, author of Our Lot: How Real Estate Came To Own Us told NPR.

Unfortunately, for many Americans, alternatives to home ownership, namely renting property, means relinquishing that long-held sense of success and status that seems almost a birthright for many in this country. And beyond national sentiment, renting can be a precarious living scenario, reliant on landlords and leaseholderss for repairs, renewals and reliability that, in this uncertain economic era, is often a luxury. Between the social and socio-economic stigma and the relative lack of security, even in these tough financial times, renting can be many families’ last resort.

As a result, it’s important for homeowners with dwindling equity, underwater mortgages, or facing foreclosure to consider other options in attempting to save their shelter. Of these options, Chapter 13 bankruptcy can provide a tried and true alternative to moving onward and, in some cases, downward.

Don’t wait for your own housing bubble to burst or become a reluctant renter. Join the millions of American homeowners who have found immediate help to keep their hard-hit homes. If you have been hit  by the hovering mortgage crisis, knowing a qualified bankruptcy attorney can help you conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Thursday, August 12, 2010 @ 10:40 am

Realizing we are in debt is a lot easier than figuring how it happened. Unless you can pinpoint one central reason, like the loss of a job or long-term medical issue, it can be hard to retrace your steps to financial crisis. Plus, who even wants to? The more important exercise is to figure out how to not let it happen again. And that means determining why you overspend so you can change your habits in your life after bankruptcy.

Countless consumer studies have been done about why we spend. From psychological influences to marketing, music and social pressure, there are far too many things impacting our spending decisions. But, you don’t have to go that deep to keep yourself above water. All it takes is the ability to recognize a situation and take control. It’s really pretty simple.

It’s pretty obvious that if you have access to money, you’re going to have an impulse to buy something. Why do you think credit cards are so often at the root of a family’s financial problems? Credit cards grant us access to a spending club into which we would normally never have received an invite. Credit card approvals have become a standard for social acceptance and its chic to have a wallet bursting with different colors of plastic. Yet, here you are, in debt and unable to pay them back. So do you really have a lot of money?

We probably don’t need to remind you, but: don’t use the credit card if you don’t really need to. After your first year or two out of bankruptcy, just use them for an emergency, like a roadside breakdown or major home repair.

Another reason we overspend is music. Odd, right? Well, music plays into the psychology of spending. The right song can make us feel positive, relaxed and okay about spending some money. The next time you stop into a Best Buy or appliance store, stop and listen to what’s booming through the speakers. It’s not as random as you may think. And, even more surprising is the fact that instrumental and classical music have been demonstrated to have more impact on impulse buys than heavy or upbeat music. And in restaurants, music is often used to make you eat faster, which leads to you leaving sooner and thus, another table gets open for another customer. And so on.

Here’s one the folks at Sam’s Club won’t like to hear: buying in bulk can lead to overspending. Yeah, we know: “But I thought buying in bulk was a way to save money?” The facts are there, bulk shopping does indeed lower your per unit cost. So yes, you get more Twix bars per dollar in the warehouse club than you do at Food Lion. However, the mentality of bulk purchasing leads us to buy that extra box of Twix bars, which then pushes the grocery budget much higher than you planned. Sure, you have more, but now you have less. Get it? And once you’re home, you have a lot of candy to eat. And that’s never a good thing.

Want another hint on grocery shopping? Always do it with a list. Going to the store without knowing exactly what you need can lead to guessing, random selections and impulse buys. A list keeps you on track, providing you with a sense of purpose; in turn, allowing you to watch your items accumulate and your list grow smaller. Thus, something as simple as a trip to the store becomes an accomplishment. Just like moving on from bankruptcy.

The experienced attorneys at the Law Offices of John T. Orcutt can help you get a fresh start with bankruptcy so that you can move on to a new chapter of financial responsibility.  Call 1-800-899-1414 to schedule your FREE consultation now.

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Published Thursday, August 12, 2010 @ 10:22 am

If you’re reading this, odds are you may be suffering through  a tough financial time. Yet, what might make you feel a bit better about your current ordeal is the knowledge that you’re not alone. Millions of average Americans just like you are facing a shared financial circumstance as they struggle to stay afloat in the wake of this decade’s Great Recession—facing foreclosure, job insecurity, and, in some cases, insolvency.

In the series, Our Great Recession 2.0, we’ll delve into some of the more unique stories of this decade’s unprecedented economic downturn, allowing you to see familiar faces and dire places people are going in order to handle our collective financial meltdown head-on.

In part four of this ongoing series, we meet the LaRochelles, an average American couple bearing witness to what some are calling an end to the middle class.

A couple of years back, David and Debbie LaRochelle owned a couple of houses: one home in Southern Florida and a mobile home in Georgia, near Debbie’s parents. They both worked full-time with a combined income of $100,000 a year. Things were great. And they were living the middle class dream.

According to The Huffington Post, today times have certainly changed for the LaRochelles. “Two years and a recession later, the 60-year-old couple are both unemployed, have drained their savings and 401Ks, are depending on Social Security, unemployment benefits and COBRA health insurance to stay afloat and are in the process of losing their Florida house in a devastating short sale. Their dilemma is an increasingly common one: they can no longer afford to make their mortgage payments without an income, but they can’t sell their house because they now owe more on it than it’s worth….The LaRochelles are two of the nearly 2.4 million Americans who are seriously delinquent on their mortgage payments, thanks to plummeting property values and lingering unemployment. And according to the Center for Responsible Lending, a nonprofit research and policy group, as many as 9 million homeowners could go into foreclosure in the next two years.”

It turns out the LaRochelles didn’t know their property had dropped in value from 139K to 49K. “It’s been such a nightmare,” David LaRochelle told HuffPost. “I tried to work something out with Wells Fargo, but they wouldn’t even talk to me until I was 30 days past due. We tried a deed in lieu three times because they ‘lost the paperwork’ twice, and then they turned it down because they said we hadn’t advertised our property at fair market value.”

This very type of lender indifference, mortgage delinquency and underwater living is a situation tailor-made for bankruptcy.  If you’re like the LaRochelles: having trouble making your mortgage, living in a home that will never accrue equity, and/or residing in an area that is currently devalued and an eyesore for the foreseeable future, bankruptcy can help get you back on the right side of the tracks.  A Chapter 7 bankruptcy will allow you to surrender your underwater home, negate your personal and financial liability, and move forward financially. Or, if you so choose, keep your home while using Chapter 13 to catch up your delinquency and pay your mortgage through a Chapter 13 plan.

Because it’s all about using all of the tools at your disposal during our own Great Recession.

Bankruptcy could have worked for the LaRochelles. It could work for you too. If you’ve been affected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Thursday, August 12, 2010 @ 10:18 am

If you’re reading this, odds are you’re considering bankruptcy. As such, you have a lot on your plate. Yet, what might make you feel a bit better about being bankruptcy bound is the knowledge that you’re not alone. Millions of average Americans just like you are facing desperate circumstances as they struggle to stay afloat in the wake of this decade’s Great Recession—facing foreclosure, job insecurity, and, of course, insolvency.  In the series, Our Great Recession 2.0, we’ll delve into some of the more unique stories of this decade’s unprecedented economic downturn, allowing you to see familiar faces and dire places people are going in order to handle the financial meltdown head-on.

In part three of this ongoing series, we meet Paul Nawrocki, best known as the “sandwich board job hunter.”

In 2008, amid a crumbling economy, Nawrocki took to Manhattan streets wearing a sign emblazoned with “almost homeless.” Shortly thereafter his mustached face could be seen on news channels like CNN and shadowed by photojournalists, followed by more than 100 television interviews.  Unwittingly, the laid-off toy company executive unwittingly became the face of out country’s economic troubles and a symbol for how even the mighty and well-connected could fall.

And fall he did. As The Huffington Post’s  Samantha Gross reported, “even though the attention faded, his troubles did not. Having the eyes of the world on him didn’t land the then-59-year-old any viable job interviews. His wife was sick, and keeping his health care was a struggle. He began to decide between the doctors and the mortgage.”

Fortunately, the man who was once the face of the economic downturn may once again wield a “sign” that happier days are here again. That’s because last month, after collecting almost two year’s worth of unemployment, Nawrocki found a job. As The HuffPost reported, “He’s not the only one. While unemployment remains high, the nation added 162,000 jobs last month – the first significant job growth since the downturn began. ‘It was good. It felt good,” the Beacon, N.Y., resident told Gross of his first day back at an office – 25 months after he was asked to leave his old one. ‘It felt like all new again because it had been so long.’”

The bad news remains: two years of unemployment still dealt a tremendous blow to Nawrocki’s financial portfolio. He remains behind on his mortgages, and, after months of food stamps, food banks and relying on handouts from family, he and his wife were forced to declare bankruptcy.

Despite the ups and downs of Nawrocki’s experiences, his weeks of joblessness provide many lessons for many of the would-be employed. The former executive didn’t get his new job from his stint in the limelight, but rather “through old-fashioned networking. He went to a toy-industry fair, and a friend introduced him to the man who would become his boss. Nawrocki believes the tales of his sandwich-board days helped him land an interview. His paycheck is nearly half the size; he had made almost $100,000 a year. And his title is a little less grand. But the job still seems a wondrous, unlikely rescue – as though a hand had descended from the sky at the last possible moment. ‘I had reached the limit, the last week,’ he recounted. “And they called and had me start the next week. … Through this whole experience it’s been like that. We get right to the edge, and then …’”

And then…for the long-time unemployed like Nawrocki, it’s all about re-finding our greatness during our own Great Recession.

Bankruptcy helped Paul Nawrocki. It can help you too. If you’ve been affected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Thursday, August 12, 2010 @ 10:07 am

Well, this may come as a surprise: a bank was deliberately charging customers for banking errors they did not make.

Shocker, huh?

Okay, well, maybe that kind of snark is a bit uncalled for. There are plenty of banks out there doing the right thing. But the timing of a California judge’s ruling that Wells Fargo must pay back more than $200 million to customers for egregiously fat-fingering their adding machines when calculating overdraft fees could not have come at a worse time.

News that the economic recovery is slowing (also quite the shock, huh?) and that unemployment continues to punish the nation has only exacerbated the nation’s mood toward the financial industry, largely considered the source of our current economic woes.

United States District Court Judge William Alsup ruled that Wells Fargo used an accounting tactic that literally multiplied one personal banking mishap into several, sometimes even 10. So, a $35 overdraft fee would wind up costing a customer $350 once totaled. What’s worse, the bank actually created a shroud around the practice, hiding it from customers and regulators.

Specifically, the bank would process checks for higher amounts first, regardless of when they were written. That means they would re-order the timeline of entry, resulting in more overdraft fees. In its defense, the bank said that larger checks are often the more important ones, like car payments and mortgage dues.

A banking and finance writer for the San Francisco Business Times described an industry conference years ago where banking executives were told that waiting on larger checks and then clearing them first was a sound way to increase bank revenue through overdraft fees. The speaker even mentioned that the tactic worked particularly well on military bases because customers in that demographic are often “struggling financially.”

All told, customers could have been bilked for much more, considering that the bank collected $1.8 billion in overdraft fees between 2005 and 2007. That’s billions. Now might more people understand the role some banks play in our nation’s personal debt pile?

These sorts of things tend to happen to people on or close to the edge of a serious financial headache. Checking accounts get hard to balance when jobs go away and kids still need shoes. More over, in today’s world of online banking and debit accounts, it has become even harder to track expenses, as some purchases record as debits in our accounts faster than others. We move so fast at check-out counters and Web sites that many people completely forget they purchased something until days later.

Our time is precious, to be sure, so we move faster. But isn’t our financial livelihood precious too?

Without argument, banks are a business. And, there are ways to not have to use a bank. But let’s be honest, the rest of the business world does not make it very easy. However, one would think that a business in the business of saving, growing and handling money would have a higher regard for the value of it to their customers. Perhaps that’s not the case anymore.

A financial analyst with an investment banking firm called FBR Capital Markets, said that Wells Fargo’s “method” of calculating overdrafts fees has been questionable for some time, illustrating that it has been “going on for years.”

With sweeping financial reform making its way around Washington and soon to a bank near you, overdraft fees, ATM charges, late fees and many other banking charges will be handled and disclosed in a much more overt fashion, according to those in the know. Basically, that just means it will become more expensive for you to use a bank.

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Published Thursday, August 12, 2010 @ 10:06 am

As Baby Boomers age into their rightful place at the retirement table, Social Security appears to be running into the red—literally paying out more dollars than it’s taking in—even after decades of prosperity and pay-outs.

According to a recent article in CNNMoney.com, this could leave many who do (and will) depend on Social Security in a rough economic spot during already tough financial times. “For the first time in nearly 30 years, the system will pay out more benefits than it receives in payroll taxes both this year and next, the government officials who oversee Social Security said on Thursday,” reports Annalyn Censky of CNNMoney.com. “And while Social Security cash flow will likely head back into the black for a few years after that, starting in 2015 it looks to stay in the red for the long haul, the trustees said in their annual report.”

As a social program funded by American payroll taxes since its rollout during the New Deal, Social Security encompasses many social welfare and insurance programs, including unemployment benefits, Medicare, and precious payments to the retired, disabled, and other disadvantaged groups. In short, people who work pay in and withdraw when they can’t or don’t.

Yet, as mentioned, according to industry experts, during the next couple of years the Social Security system will reach a tipping point: paying more benefits to dependent Americans than it can collect in taxes, diminishing the fund and benefits for the nation’s neediest people. While the Social Security drain could begin to reverse itself for a few years following 2011, some fear the fund could be depleted by 2037.

What’s to blame then for this severe Social Security shortfall? Like everything else: the Recession. Surging unemployment rates, at near double-digit levels, have meant that fewer Americans can contribute to the Social Security pot, with more people withdrawing in the form of unemployment benefits. In addition to the strain of unemployment benefits, less work means many more Americans are simply foregoing the job hunt for an early retirement, meaning another payment drain on the Social Security gravy train. Finally, stimulus needs have meant higher than usual Fed borrowing from insecure Social Security coffers.

So, you might wonder, what does this Social Security insecurity mean for you? In essence, it’s just another sign that average Americans can’t depend on Federal programs to get them through this lingering financial downturn. As another in long-line of government “in-the-red” red flags—ones that have also included warning signs of dwindling unemployment funding and stagnant stimulus spending—Social Security concerns mean you should avoid depending on social welfare programs as you plan your retirement.  This leaves personal retirement savings and investments as your sole, [guaranteed] source of stability in your later years.

Unfortunately, if you find yourself facing financial insecurity, with no real income, drowning in debt, and/or suffering from a lapse in benefits, it may seem nearly impossible to start saving for your own social safety net. Yet, this is the exact circumstance for which bankruptcy exists: allowing Americans just like you to clean and clear their financial slate to begin putting money where you need it—out of the clutches of your creditors and instead accessible in your own accounts.

Knowing a qualified bankruptcy attorney is the first best step to help you regain your own “social security,” conquer creditors and face these exact financial fears, yielding—with the right kinds of support, information and insights—at a low cost— 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, August 10, 2010 @ 9:53 am

In the wake of the worst economic conditions since the Great Depression, millions of people are finding themselves bankruptcy bound. And with so many people forced to find relief in the protections a bankruptcy filing can provide, gone are the days of societal stigmatization and shame.

Yet, many debtors enduring tough financial times are still stuck in an old mindset that bankruptcy is a measure of last result. This often leads people just like you to wait months and even years after they should have started the bankruptcy process, often wasting endless time and money to just stay current during an unprecedented era of unemployment, rising health costs, and housing woes.

Instead of waiting for things to get better, take your financial future into your own hands with these four easy indicators that you’re ready for bankruptcy—right now.

Creditors are Calling and Lawsuits are Pending.
It’s one thing to occasionally miss a credit card payment. You might pay late or forget altogether, resulting in higher interest rates, calls from your credit card company, and a possible end to your credit line. But, more and more often, people are simply unable to pay their bills at all, handcuffed by joblessness, medical bills, or other unexpected budgetary burdens. In this case, you may be facing creditor lawsuits, whereby your lenders are using the law to win judgments and eventually get the power to seize your assets.  If this is the case, bankruptcy is a clear choice, allowing you to stop these types of proceedings cold and get you on a financial course that will allow you to meet your ongoing obligations and the needs of you and your family.

Creditors are Garnishing your Paycheck.
Wage garnishment is a sure sign that creditors have not only sued you, but the creditors are winning.  Wage garnishment is limited under North Carolina law, but certain entities such as taxing authorities and student loan creditors may garnish your wages.  Other judgment creditors may be able to garnish your wages if your employer’s main office is located outside of the state of North Carolina. Bankruptcy is the best way—and often the only way—to end such wage garnishments, saving your income from creditors, and for the things you need most.

Tax Liens Have Been Levied Against You.
Tax liens are liens imposed by law upon a property to secure the payment of taxes. If you cannot afford to pay your taxes and tax liens have been levied against you, bankruptcy can help. A personal bankruptcy can discharge unsecured debt, freeing up resources to pay taxes, and avoid losing much-needed personal and real property.  In many cases, you may be able to satisfy your tax lien by paying the total amount of equity in all your property to the IRS or state taxing authority through a Chapter 13 bankruptcy plan.

You are Behind on Your Rent Or Mortgages and are Facing Eviction
As you already know, keeping a roof over your head is a priority, and, with millions facing foreclosure in 2010, the potential to lose the security of shelter is real for many Americans. While bankruptcy will not wipe away your requirement to pay rent or your house note for an apartment or home you intend to stay in, it can keep you in your home or apartment and wipe out other debts that might have forced you into eviction in the first place. In the case where your mortgage is untenable, bankruptcy can discharge what you owe, allowing you to walk away from one house to walk into another that you can actually afford.

If you meet any of the above criteria, it’s never been more important to act now, seeking competent and experienced bankruptcy counsel from the very start. An experienced bankruptcy attorney knows the ins and outs of the bankruptcy process and can assist throughout your case.

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, August 10, 2010 @ 9:46 am

A number of good things have emerged from the economic situation of the last several years. Recently enacted credit card reform will hopefully change the way we are treated by the industry responsible for so much of our country’s collective personal debt.

Mortgage modification, even with all its warts and scars, should eventually become an industry with real benefits to struggling homeowners. The quick roll out of federal plans and the pressure on banks to quickly create similar programs obviously led to a lot of frustrations. Still, when things iron themselves out, consumers stand to benefit.

Another recent instance of positive regulation has stemmed from the offices of the Federal Trade Commission (FTC). The News & Observer reported that last week, the organization ruled that as of October 27 of this year, companies operating in the rather unregulated “debt-relief” industry must now be a great deal more clear about to what extent they can actually provide assistance. Specifically, the new law states that any company offering to alleviate your standing debt is not allowed to request payment until the “benefits” of their efforts reach fruition. In other words, they don’t get paid until they do what they said they would. Quite a notion, huh?

The last couple of years has seen a tremendous rise in the number of organizations offering “debt-relief.” From shaky, hand-written signs on the side of the road promising to rebuild your credit to more formal companies with Web sites and 1-800 numbers, the number of ways you can “start over” has exponentially multiplied. Unfortunately, hundreds of thousands of Americans have found that that is not really the case.

Typically, the industry model has been to request fees from customers upon engagement of service, a strategy that hardly seems reconcilable with common sense. To sell this goofy model, companies peddle panic. They target not the completely destitute but the people somewhat close to the edge of a serious financial dilemma, those considering a bankruptcy but still looking for alternatives. This anti-sell tactic works wonders. The practice has sky-rocketed.

More over, many industry players instill confidence by telling customers to cease paying their credit cards. “We’ll handle it,” the operator says with a smile and headset.

The longer you go without paying any obligated debt without formal legal protection (bankruptcy), the worse off you are going to be.

The new guidelines will require companies to tell you how long it is expected to take to realize the results they present to you and a good faith estimate of your total costs. Previously, companies often asked you to create a separate account with them to hold money that you should be using to pay your credit cards as way to ensure they get paid everything they are “owed” after they decide your account is done be serviced.

Come this fall, any money you are asked to set aside must be held in a separate financial institution under your name.

So let’s recap this for a second: Debt-relief companies tell you to stop paying your credit cards so that you will have the money needed to pay us. Moreover, they can make absolutely no promise that your debt will be alleviated or what it is you will need to pay them. And, since they know what it is you owe every month, might their total fee just happen to be close to whatever it was you were supposed to be paying to your credit card debt?

See how that works?

The most certain way to ensure long-term relief from your debts is through filing bankruptcy. It’s not always the answer for everyone but it is certainly far better than what what private “debt-relief” companies are offering.  Call the Law Offices of John T. Orcutt today for your FREE initial consultation: 800-899-1414 

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http://www.newsobserver.com/2010/08/08/618265/ftc-reins-in-debt-relief-practices.html

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Published Monday, August 9, 2010 @ 4:03 pm

Without insult, you should accept the fact that you read at a ninth grade level. It’s okay, four out of five adults do. It doesn’t mean you like the “Twillight” series, it means that the depth of your vocabulary and comprehension skills are at the most efficient level needed to succeed in today’s society. In short, it’s fine. And that’s not really the point of this post anyway.

It should come to no surprise then, that credit card companies create their agreements, notices and paperwork at a reading level on par with the comprehension and reading skills of only one in five Americans. Why do you think they do that? Never mind, you know why.

Roy Peter Clark, a recognized writing skill level specialist and a senior scholar at the Poynter Institute, explains succinctly why the credit card industry does this. “So that the customer will not be able to understand it … I may be cynical, but I don’t think their writing strategies are accidental, the collateral damage of a bureaucratic mindset. I think those writers know exactly what they are doing.”

What else is not accidental is the industry’s overall marketing strategy, which appeals to status and our most base level of wanting, an emotion with which infants can identify. Thus, you have the ultimate bait and switch. They market to us on a broad, simple-to-grasp level but apply rules to their product that are deliberately arcane. To think this contradiction doesn’t contribute to the country’s incredible debt situation would be foolish. But that’s what they want us to believe.

The industry collectively spends billions to learn how the human psyche works so they can get inside it to sell us things and then skirts culpability when, lo and behold, it actually works!

New credit card laws are supposed to make the entire process of overseeing your credit cards a bit easier. The big rules may be in place about interest rate notifications and cancellation options and the like but no hard and fast regulations are in play about making agreements easier to understand. Some companies are trying to make an effort with separate forms that explain clearly the terms of an agreement. However, that sheet is typically coupled with a more traditional version that contains all the fine print and confusion.

In fact, little has changed with the new laws in this regard and in some cases, the sense of simplicity that many assume is now inherent because of the new laws can lead to false sense of confidence that the credit card companies are now on the straight and narrow. Hardly.

One may think that Visa and Mastercard don’t want you to read the fine print. The truth is, that is exactly what they want you to do. The language, terms and figures serve are great distractors. They are textual sleights of hand, taking our eyes away from what really matters, leaving us dumbfounded when the monthly balance sheet arrives. “Did I agree to this?”

Creditcards.com performed an analysis of more than 1,200 credit card agreements that are now required to be made public as part of the new legislation. What they found was an array of vexing terminology and financial language that actually read almost four levels higher than the average citizen.

Among many other astounding characteristics, they found that the Visa and Mastercard agreements for Fifth Third Bancorp contained 20,799 words and is written at a 14.5 reading level. The United States Constitution has just over 4,000 words.

Our Founding Fathers would be so proud.

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Published Monday, August 9, 2010 @ 2:01 pm

In these tough economic times, good news can be hard to come by—especially hard for the economic recovery itself. This remains true at the midway point of 2010, as a major indicator of the strength of the America’s economic machine is showing that we’re still in the throes of our own Great Recession.

According to a report by Daily Finance, the Consumer Confidence Index fell to 50.4 in July, its lowest mark in five months driven by fears about unemployment.  “The consensus of economists surveyed by Bloomberg had been that the closely watched index would dip to 51 in July from a revised 54.3 in June, and 63.3 in May. The index hit a record low of 25.3 in April 2009.  As they did in June, every index component dropped in July, and it was clear what was weighing on the minds of consumers: job market conditions and the outlook for business conditions in the near future. The percentage of survey respondents who said jobs are “hard to get” increased to 45.8% in July from 43.5% in June, while those claiming jobs are “plentiful” was unchanged at 4.3%. The percentage of those expecting there to be fewer jobs increased to 21.8% from 20.1%. Those expecting more jobs to become available in the months ahead declined to 14.3% from 16.2%.  In addition, those expecting an improvement in business conditions over the next six months decreased to 15.9% from 17.1%, while those expecting business conditions to worsen increased to 15.7% from 13.9%.”

So, what do these consumer confidence figures have to do with you? In the real economic world, falling consumer confidence can have many impacts, including:

Retail Sales
As Daily Finance reported, the director of the Conference Board’s Consumer Research Center, Lynn Franco, said the recent drop in consumer confidence could have a negative impact on consumer activity, including back-to-school business. “Consumer confidence faded further in July as consumers continue to grow increasingly more pessimistic about the short-term outlook. Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves,” Franco said in a statement. “Given consumers’ heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season.”

As a result, if you’re a retailer, this news could mean another season of lost sales lower profits, and an overstock of inventory with nowhere to go. More directly, floundering business can mean layoffs, contributing to a ever-more unemployment, and even less consumer spending.

Slow Economic Growth
This endless cycle of no confidence, no business, no jobs, no confidence, doesn’t seem to be changing anytime soon.  As Franco said, “[c]oncerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves.”

And, since consumer spending is one of the most important part of our nation’s economy—accounting for nearly 70 & of the country’s total GDP—a drop in consumer confidence is always a bad sign for America’s economic health. Plus, while experts don’t agree whether this slow growth will lead to a second (or “double-dip”) Recession, the longer the economy languishes the longer American families will likely do the same.

Bankruptcy
As the economy continues its “slow-to-no” recovery and consumer confidence fads, confidence in the benefits of bankruptcy continues to rise. If your own economic house is shaken due to credit card debt, repossessions or foreclosure, it may be time to take your financial future into your own hands.

The first step is knowing a qualified bankruptcy attorney who can help you regain your power, conquer creditors and face your financial fears, yielding—all with the right kinds of support, information and insights—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 Monday, August 9, 2010 @ 2:00 pm

This unrelenting economic downturn has been tough on all Americans—whether they be single, dating, engaged, married or widowed. But, as anyone who has ever been married already knows: money (or lack thereof) can be the main cause of many couple’s marital strife. As a result, in this especially difficult economic climate—full of job insecurity, foreclosures, and slow economic gains—many have been pushed to the brink of bankruptcy, and, along with them, the people who love and wanted to marry them.

So what should you do if you are preparing to marry someone drowning in debt?

While as a general rule, you are not liable for your spouse’s debt, in some cases the debt follows the “I Do’s” and you may end up paying that debt anyway. For example, consider your new spouse (or future spouse) has $70,000 in credit card debts and other unsecured, consumer debts. He/she has an income of $35,000, below average median income levels. Based on his/her income alone, he/she could easily solve his or her insolvency issues with the benefits of a personal bankruptcy through Chapter 7. By comparison, your income is nearly $80,000 and you have no unsecured debts. This second, higher income could “mean” bad news under bankruptcy’s “Means Test.”

Bankruptcy’s “Means Test” is a formula for determining a debtor’s ability to pay back their debts. An inability to pass this test disqualifies someone from Chapter 7 bankruptcy, making Chapter 13 (or 11 for those with extremely high amounts of income and/or debt) the debtor’s only option. Because income for purposes of the “Means Test” includes “family income,” a new spouse’s income must be considered in determining the debtor-spouse’s “Means Test,” even when the new spouse has no stake in, or need to file for, bankruptcy.

In the above example, the new spouse’s relative affluence can make the debtor-spouse ineligible for the benefits of Chapter 7 bankruptcy. Without the option of a liquidation bankruptcy under Chapter 7, as mentioned, the debtor’s only option is now Chapter 13—a peition requiring a three to five year repayment plan.  As a result, the new spouse “marries into” his or her debtor-spouse’s debt, and the higher salary is forced to subsidize repayment of that debt when the Chapter 7 bankruptcy cannot.

Because of this consideration, couples considering marriage, and bankruptcy, should consult with a qualified bankruptcy attorney when determining the timing of either decision. In some cases, filing for Chapter 7 prior to marriage (or prior to a couple cohabitating in one household), can mean a better result for the debtor under the “Means Test.” In other cases, marriage can increase a household size, thereby qualifying the household for Chapter 7. Other considerations include the fact that marriage can act to bind personal property, real property and other financial assets, making them exempt from the bankruptcy process. In short, a little planning before the nuptials, and your bankruptcy, can pay dividends for the beginning of a lifetime together on the road to financial freedom.

If you are considering filing for bankruptcy to strengthen your union, as well as your finances, knowing a qualified bankruptcy attorney can also help you make the right spending decisions, yielding the right kinds of support, information and insights—at a low cost— for a fiscally viable and secure portfolio.  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 Friday, August 6, 2010 @ 12:38 pm

Chapter 13 bankruptcy involves the facilitation of a financial reorganization plan that allows you to pay back your expenses over the course of three to five years. As a result, a Chapter 13 bankruptcy also requires that you look ahead three to five years in order to construct a realistic and sensible plan that can work for you.

Unfortunately for many people who are bankruptcy bound, the future is far from unclear. And, just as many circumstances can occur that exacerbate your financial present and force you into bankruptcy, the same unexpected scenarios—from a job loss to a medical emergency—can cause your Chapter 13 reorganization place to fail.

In part one of this series, we’ll explore why so many Chapter 13 repayment plans fail for one (or several) reasons, including:

Poor Design
A house with a bad foundation can last a while without problems; but the smallest storm, wind, or water can ruin the entire structure. The same is true with a poorly designed repayment plan. A plan that doesn’t take into consideration potential problems over the long-term is destined to fail from day one.  Working with a qualified bankruptcy attorney can help you craft a stronger and more sensible plan that takes into consideration even the smallest obstacles to success.

Unexpected Expenses
Even a good Chapter 13 plan can be stymied by unexpected expenses. Just consider today’s economy, for example: Many experts could not have predicted the record joblessness, housing crisis, and unprecedented economic downturn plaguing much of America for the past three years. Similarly, many debtors entering a financial reorganization plan post bankruptcy will likely face an uphill battle if they do not take into account unexpected medical bills, unemployment, the possibility that they owe more on their home than it’s worth, and other catastrophic changes in their economic well-being during the entire course of their bankruptcy.  If these changes occur, it is possible to modify your plan and keep your bankruptcy alive. It’s important to inform your attorney of any changes immediately so that a timely modification can be made.

Inability to Live Within the Repayment “Budget”
Oftentimes, many consumers fall victim to the same budgeting woes that may have created their financial mess. Instead, our clients are encouraged to use their reasonable repayment plans (emphasis on “reasonable”) as a type of bankruptcy-sanctioned “financial planning,” that allows them to follow a schedule that alleviates debt while providing room to save and spend wisely.

Keeping Your Lawyer Out of the Loop
In what can be considered to be the worst case scenario, one or more of the above reasons is compounded to cause the debtor to get potentially fall behind in their Chapter 13 repayment strategy. What’s worse however is when the debtor fails to alert their bankruptcy lawyer to these facts. It is of the utmost importance to advise your lawyer of this change in circumstances so that the problem can potentially be dealt with before it gets too out of hand.

As a result of the intricacies of a financial repayment plan, it is essential to consult with a qualified attorney before entering into Chapter 13 bankruptcy. A qualified bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests during the duration of your personal 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.

Cary bankruptcy lawyers. Lumberton bankruptcy attorney.

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Published Wednesday, August 4, 2010 @ 6:55 pm

Last year’s Credit Card Accountability Responsibility and Disclosure Act was put into law to improve transparency between credit card companies and consumers, making card issuers not only provide their customers with more notice about increases in their interest rates, but also limiting below-board billing practices that inevitably left many in deep debt. But just months after this historic legislation was enacted to protect Americans, card companies have come up with all-new ways to con their customers.

According to The Wall Street Journal, major card providers from Discover to Citigroup to Chase are working to limit their lost income by working around the new rules—in ways that, in some cases, violate the new Credit Card Act directly—by replacing old, outmoded fees with new ones. As WSJ reporter Jessica Silver-Greenberg wrote this week in her article, “The New Credit Card Tricks,” “[T]he banks are getting aggressive. According to a July 22 report from Pew Charitable Trusts, a nonpartisan research group, the industry’s median annual fee on bank credit cards jumped 18% to $59 between July 2009 and March 2010. At credit unions, annual fees soared 67% to $25. During the same period, the median cash-advance and balance-transfer fees jumped by 33%.”

All of these tactics are meant to wipe out a $390 million a year shortfall in card company fee revenue caused by the Credit Card Act, according to David Robertson, the publisher of industry newsletter Nilson Report.  But, as Silver-Greenberg reports, “some banks may be going too far. In a July 7 letter to the Office of the Comptroller of the Currency, which regulates many of the biggest U.S. banks, a coalition of consumer groups including the National Consumer Law Center, the Consumer Federation of America and Consumer Action flagged several “potential violations of the Credit Card Act.”

As a result, consumers must be ever more vigilant, in spite of new protections the Credit Card Act provides.  Things to look out for include:

Late Payment Fees for Sunday or Holiday Due Dates
The Card Act stipulates that late-payment fees shouldn’t be triggered on a Sunday or holiday, when there is no mail delivery. This is so debtors won’t be hassled when they make a reasonable payment on the following business day. Unfortunately, card companies, especially ones who allow for online payments seven days a week, are using this as a loophole to charge excessive late fees when debtors don’t pay on the exact due date.

Rebate Card Offers
The Card Act also stipulates that card companies can’t hike rates on existing balances unless a cardholder is at least 60 days late. But, as The Wall Street Journal reports, “there is a creative maneuver around that: the so-called rebate card….Rebate-card offers to some of its customers last fall, offering to refund up to 70% of finance charges when customers pay on time. The problem: Rebate offers aren’t governed by the Card Act, and an issuer can revoke them suddenly and hit cardholders with high charges.”

Shortened Billing Cycles
While the Card Act requires companies to provide a window of at least 21 days from when a statement is mailed and when payment is due, it pays to check your statement, as many are finding credit card issuers are being far from compliant, pushing up billing dates and surprising consumers.

In addition to these added credit card costs, the report finds that card companies are reinstating Inactivity Fees, raising Balance-Transfer Fees and pushing for more Minimum Finance Charges.

As everyone now knows, there’s normally a heavy price to pay for playing with plastic. If you too have been effected by the Credit Card Act “fallout” and are wondering how to reduce your credit card debt and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Wednesday, August 4, 2010 @ 6:52 pm

In these tough financial times, finding people with a steady job, much less a job that provides a higher income, can be difficult. As a result, it may be surprising to find a lot of these high-income debtors are currently considering bankruptcy. But in this economic downturn, many of these men and women are suffering from unexpected challenges to their steady income and business, and, as a result, joining millions of other Americans by seeking the safe harbors of bankruptcy to protect what they’ve worked for.

If you happen to be one of these high-income debtors, you may be wondering what bankruptcy can offer and if you’re even eligible. Well, take heart, high incomers, there’s a bankruptcy solution for you, compliments of the Bankruptcy Code.

The Bankruptcy Code seeks to encourage higher-end entrepreneurs to take risks in their business dealings.  To do so, the Code was written in a way that allows individuals with mostly non-consumer debts accumulated during the course of business to be able to discharge their debt in Chapter 7 bankruptcy. In this way, high income individual can receive the same bankruptcy relief as individual debtors seeking a personal bankruptcy to dispense with their consumer debts without fears that they would not pass the “Means test.”

Bankruptcy’s “Means Test” is a formula for determining your ability to pay back your debts. Your inability to pass this test limits your bankruptcy options from both Chapter 7 and Chapter 13, to simply being able to file under a Chapter 13 plan. As a result, while a traditional Chapter 7 personal bankruptcy liquidation may not be available for some high-income debtors, the Code has made allowances so that these same debtors can, in turn, qualify to liquidate their debts if the majority of these debts are non-consumer debts.

The next logical question then is what is non-consumer debt? A couple of examples include:

Credit Card Debts Stemming from Business Purchases
Did you use a credit card to purchase computers, printers or other office supplies for your business? Use plastic for business repairs or additions?  If you’re a high-income debtor and have credit card debt incurred to buy equipment and supplies for your business, you may be able to discharge those debts in Chapter 7 bankruptcy.  Conversely, due to “means test” problems, high income debtors may not qualify to discharge debts from credit card purchases of personal computers, furniture or to remodel their home.

Loans Related to Business Expenses or Inventory
High-income debtors can also discharge debts like personal loans if they are used to purchase inventory for a business or provide for other related expenses.  As before, the means test would prohibit discharge of similar personal loans if they were used to help with a home mortgage or other personal costs.

Don’t wait for your own entrepreneurial bubble to burst. Join the millions of American who have found immediate help to keep their lives on track while retaining their hard-earned cash. If you are a high income debtor who has been affected by the economic crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Wednesday, August 4, 2010 @ 9:01 am

Say you sought the help of a doctor to cure some ill in your life. However, instead of helping you heal, your physician actually makes you sicker. Realizing this, you would likely not only move on to a different doctor, but also report the offending physician—a professional, like many others, whose misconduct could mean malpractice, serious sanctions and a loss of licensure.

Unfortunately, this same kind of accountability hasn’t been as much a part of the debt settlement industry. In recent years, the lengthy recession has delivered to them an abundance of debt-saturated “patients,” suffering from the ills of unemployment and sliding toward the brink of bankruptcy; and until recently no one had really monitored the industry’s activities.

This lack of regulation is shocking considering that settlement companies typically harvest fees reaching 15 to 20 percent of the credit card balances carried by their customers, and they tend to collect upfront, regardless of whether a customer’s debt is actually reduced. State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say the industry’s proceeds come at the direct expense of financially troubled Americans who are fleeced of their last dollars in an effort to avoid bankruptcy. But these same people rarely emerge from debt settlement programs with their credit card balances eliminated and many end up worse off, with severely damaged credit, unending threats from bill collectors and lawsuits from creditors.

Even this week, Illinois Attorney General Lisa Madigan announced the Illinois Debt Settlement Consumer Protection Act, arming Illinois consumers with the strongest protection in the nation against the abuses and unfair treatment from these companies. Madigan said she was prompted by “the drastic increase my office has seen recently in complaints against dishonest debt settlement operators. Since 2009, my office has filed seven lawsuits against firms using abusive and deceptive means to take money from Illinois consumers whom they promised to help through their financial woes.”

Like people in Illinois, customers all over the country have bought into bankruptcy alternatives like debt settlement—and by doing so, face the real possibility that before they know it, they’re paying the company thousands of dollars of non-refundable fees up front. And while customers are told to stop paying their credit cards as the firms negotiate a settlement, often the settlement never actually happens. As a result, Madigan says, “About two-thirds of consumers drop out of these programs before their debts are settled. They not only lose the thousands of dollars in non-refundable fees, they are often deeper in debt than when they started thanks to penalties and late fees imposed by the credit card companies due to the lack of payments.”

In short, debt settlement firms are bad medicine: financial quacks trying to sell their customers a quick and easy cure for the economic ills of our Great Recession. Unfortunately, not all states have enacted protections against these charlatans, leaving many open to the tricks of the debt settlement trade.

So, if you are considering bankruptcy alternatives due to mounting credit card debt balances, it’s advised that you instead address your debt with a knowledgeable attorney and a proven solution to insolvency: bankruptcy. Knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. 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.

North Carolina debt settlement. Durham debt settlement. Fayetteville debt settlement. Raleigh debt settlement. North Carolina bankruptcy lawyers.

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Published Tuesday, August 3, 2010 @ 7:08 pm

Following several years of the worst economic downturn in recent history, economists, commentators and financial experts have recently been heartened about prospects for economic growth and recovery this year as industries increasingly report better profits and the additions of new jobs. Yet, as the economy emerges from the doldrums, consumers understandably remain skiddish—avoiding non-essential expenditures in lieu of financial introspection. In fact, if history is any guide, Americans are likely to spend (no pun intended) the next several years trying to reduce their debt.
But what about those people who want to spend, but spend more wisely?

For them, it might be finding the right credit card for these tough financial times. Unfortunately, a recent online report from msnbc saw a rise  in all types of credit card offers in the first quarter of 2010 alone tells the tale, as banks sent out 481.3 million card offers, according to Synovate Mail Monitor.

With so many options, how should you choose?

As the song goes, “if you’re gonna do it, do it right.” And according to a recent report from The Huffington Post by consumer educator and advocate Curtis Arnold, there are some safer options out there for people who can’t go without credit. These cards, by category, include:

Best Airline Credit Card:
Citi Premier® Pass/Expedia.com Card
If flight is your fancy, Arnold recommends this credit card with a terrific travel rebate program. “Start off with a $100 statement credit with your first eligible purchase. You get awards roughly equivalent to 1% of purchases as credit toward future flights on partner airlines. You also earn one point per dollar spent on the card and one point for every three miles flown. Expedia runs the rewards redemption program, allowing customers to track low fares using points instead of dollars. Earn up to 100,000 points per calendar year with no annual fee.”

Best Travel Credit Card:
PenFed Premium Travel Rewards American Express® Card

If you’re on the go and need a card that can travel with you, Arnold gives the thumbs up to another great travel rewards credit card for members of the Pentagon Federal Credit Union. “PenFed rewards its cardholders with special deals on hotel upgrades and discounted access to airport executive lounges worldwide. Aside from the fabulous rewards, you also get the excellent customer service that credit unions are known for. Enrollment in the National Military Family Association qualifies any American to join this credit union, not just veterans.”

Best Low Interest Rate Credit Card: Simmons Visa® PlatinumR
While many banks hiked card interest rates following the reforms of 2009’s Credit CARD Act, Simmons kept their rates low. So, for those with excellent credit, the Arkansas bank offers excellent customer service along with a regular 7.25% APR.

Best Low Introductory Interest Rate Credit Card:
Citi® Platinum Select® MasterCard®

For many, balance transfer is a delicate game of cat and mouse, often leaving the debtor with multiple cards and high interest payoff. Not so says Arnold of this Citi Card with its introductory 0% APR on balance transfers and purchases for 18, 12, or 7 months, depending on your credit history. “There’s a 3% balance transfer fee, but it’s still a great way to transfer a balance and pay no interest for up to 18 months. Once the introductory period is over, you still get a great rate. The regular variable APR is 9.99 – 19.99%.”

Best Cash-back Credit Card: Chase Freedom (SM) Card
Another card for those with excellent credit is this good cash-back credit option.  As Arnold writes,  “You get 5% cash back in rotating categories such as groceries, gas, and home improvement, and 1% cash back on all other purchases. Another great feature of this card is that you can get 20% cash back when you shop online from selected merchants. And if all that isn’t enough, you don’t have to worry about your cash back rewards expiring or about reaching the spending tiers that some cards have.”

Best Reward Points Card: Citi Forward® Card
If, for you, spending on credit is all about the rewards, Citi’s “Forward,” fits the bill. “Sign up for paperless statements and spend $250 in purchases during the first three months after opening your account and earn up to 8,500 points. Do you enjoy dining out? Get five ThankYou points for every $1 you spend on restaurants and entertainment. And you still get one reward point for every dollar spent on other purchases.” Not a bad way to be green while you’re spending it.

As with all new credit cards, it’s still vitally important to read the entire card agreement before committing, keeping in mind the best offer for your next piece of plastic may come from diligent online research rather than snail mail solicitations.

And, as everyone now knows at this point, there’s normally a heavy price to pay for playing with plastic. If you too have been effected by the economy and are wondering how to reduce your credit card debt and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Friday, July 30, 2010 @ 8:42 pm

It seems that in today’s difficult economic weather, just about everyone is a risk for a lender.

Earlier this month, FICO, Inc. (the company that develops credit risk metrics) reported that America’s collective credit score is at an all-time low. Close to 43.4 million consumers have a credit score at or below 599, which is the risk benchmark for the majority of lenders. This means that more than 25 percent of us are likely to not get a car loan, new credit card (really?) or a mortgage.

FICO arrived at their conclusion through an analysis of April’s consumer credit reports. Historically, only 15 percent of all “credit-active” consumers fell below the 599 mark. That statistic alone should demonstrate the impact of what is currently happening with our economy. In other words, it’s been a long time since our country has been in this type of situation.

One of the reasons for today’s poor credit scores is the widespread availability of credit in the last few years. Quite literally, credit spread like a virus. Neighbors saw neighbors move into bigger houses, buy faster cars and take extended trips and wanted the same. Financial conservation became a virtue of past generations, like butterfly collars and 57 Chevys. In 2007, that’s just how you lived. Equity lines. Sub-prime mortgages. Rewards programs.

In response, personal bankruptcies are continuing to climb, and probably will for quite some time. As we have said in previous posts, often those most in need of bankruptcy code protections don’t file, perpetuating their issues. Our hope is that many of our clients will be in an ideal position to reclaim their financial livelihood when our country gets to a point where economic recovery can be legitimately proven and not just faintly derived from confusing figures talked about on business stations.

In light of this news, we are reminded that we tend to put a lot of pressure on a number. This becomes a recurring topic on the blog because we have been taught that a solid credit report is a sign of success, a mark of “making it.” We’re told we can’t have things and can’t go places. None of which is really true. As we have said numerous times in this space, wealth is relative. Pursue only what you need, and try to need very little. And if your obligations are forcing you to choose between paying back an aggressive creditor and putting food on your family’s table, it’s time to think about bankruptcy. Call the experienced bankruptcy attorneys at the Law Offices of John T. Orcutt for your free consultation. 1-800-899-1414. Call today. Offices in Raleigh, Durham, Wilson, Fayetteville and Lumberton North Carolina.

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Published Friday, July 30, 2010 @ 2:58 pm

More bad news for those facing tough financial times: mortgage foreclosures are likely to top the one million mark in 2010. As The Associated Press reported in the last week, “Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.”

By comparison, according to RealtyTrac, in an average year the United States only sees about 100,000 homes in foreclosure. So, with the country on track to face ten times that amount of foreclosures this year, with 1.7 million U.S. homeowners already getting some kind of foreclosure-related notice between January and June of this year, that means one in every 78 homes is facing foreclosure already.

Given these staggering figures, you might be wondering: Are you one in a million?

Understanding the ins and, most importantly, the outs, of foreclosure can prevent you from being hurt by the lingering home crisis. Here are steps in the foreclosure process, including what causes a bank to repossess your home and what you can do to prevent it:

Step 1: Delinquent Payments: If you are delinquent on a mortgage payment by 30 days or more, your mortgage lenders may send a notice that your house is in foreclosure—the first sign of the foreclosure process.  If missing a payment is unavoidable and you receive notice of a pending foreclosure, your first best step is to notify your bank about your financial situation, followed by a quick call to a qualified bankruptcy attorney who can help stop the foreclosure, not to mention help you to keep your home, through a Chapter 13 filing.

Step 2: More notices and notifications: While procedures vary from state to state, if missing mortgage payments becomes the norm, your lender will likely follow up their initial notice with more contact via phone and mail that foreclosure proceedings are officially under way. In this case, again, it’s best to contact a bankruptcy attorney as soon as possible. Your bankruptcy filing can stop lender harassment and contact, and get you back on the road to financial recovery.

Step 3: Eviction: One of the toughest parts of the foreclosure process is an eviction. Even though it can take more than a year for a bank to repossess your property, an eviction means you’re out in the cold, stripped of a home of your own. Chapter 13 bankruptcy can prevent eviction, allowing you to stay in your abode not only during your bankruptcy, but throughout the three to five year repayment process, and depending on your jurisdiction’s laws, possibly bring your mortgage payment down.

Step 4: Foreclosure auction or sale: Barring a bankruptcy or a modification from your lender, your home will likely be repossessed. The bank then owns your house and is entitled to sell it at a foreclosure auction or using a short sale. As such, any proceeds from these sales remain with the bank, leaving you with no roof over your head and no equity for your troubles.

Don’t wait for your own housing bubble to burst. Join the millions of American homeowners who have found immediate help to keep their hard-hit homes. If you have been effected by the mortgage crisis, knowing a qualified bankruptcy attorney can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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, July 13, 2010 @ 1:25 am

No one likes surprise expenses, especially when we’re already struggling to get by.

Countless bankruptcies can be attributed to the use of credit to handle an emergency, especially when they involve our homes. Sure, emergencies involving the home are why we have home insurance but you still have to pay a deductible and more than likely, there are always extra costs you won’t expect.

Plus, there is a ripple effect to having to take care of major home repairs. What if you have to stay home from work one day to meet contractors but your boss just doesn’t want to hear about another one your personal issues impacting your monthly quotas? Think that doesn’t cost you in the long run? Or, what if the roof damage led to rain and debris in your closet, making that outfit set aside for tomorrow’s job interview look more like a dust rag than a job winner?

While there is very little you can do to combat the Wrath of God being inflicted on your home, you can engage in a number of fundamental tasks to prevent standard maintenance issues from becoming bankruptcy-worthy budget crushers.

Spending money on your home is a tough sell for those experiencing debt problems. There have been a number of studies released recently that suggest when it comes down to choosing what bills to pay when under financial duress, the majority of people opt to pay credit cards before their mortgage. However, since you can almost always save your home in a bankruptcy, it makes great sense to do all you can to preserve its value, especially in today’s market.

For starters, get up on a ladder and clean those gutters.

Gutters? Really?

Clogged gutters lead to more roof and siding damage than fallen trees or other forms of direct weather damage. If water is forced to go elsewhere other than the downspouts, it will carve a path under the fascia and behind the siding. Water will find its way down and when it discovers a new path, it tends to follow it frequently. And in case you’re not convinced of the damage water can do, Google “The Grand Canyon.”

Poor drainage around your home can also lead to pest infestations, as termites and other critters like to be around things that are rotting, like the wood in your foundation, and also corpses. Provided you’re not moonlighting as a coroner, then wet wood under your home should be your primary concern. Even if you have a crawlspace, put on some old clothes and as best you can, poke around under there to just check on things.

You don’t need to be a home inspector to use a broom handle to knock on support beams to check their strength. Get a Maglight and scan under the house for anything that looks unusual. If you do suspect something, then it helps to spend a couple of hundred dollars on an expert’s opinion. And even those with ongoing pest control installations are surprised to learn they have an infestation of some kind, so don’t think a few cans of pesticide around the house make you immune to wood-destroying insects.

It’s important to look for mushrooms, moss or other weed build-up along the sides and corners of your house. If water is collecting, the moisture augments the growth of such plants, possibly indicating poor drainage.

If you’re not afraid of heights and can stay safe, poke around at the vents on your roof for damage, paying close attention to the runner “boots” and seals that surround their base. If cracked, they can become another source of water getting into places where it doesn’t belong.

From the Law Offices of John T. Orcutt. Call today, 1-800-899-1414 for a free initial consultation.

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Published Wednesday, July 7, 2010 @ 8:48 am

For most recent college and post-college graduates, the hot summer months are a chilly reminder that student loan repayment deadlines are mere months away. These impending debts arrive at some of the toughest economic times ever for the newest round of job seekers, as the nation, and especially its youngest workers, continue to face record unemployment and mounting consumer debt. So what happens when poor economic conditions coincide with mandatory payback timelines for budget-busting student loans? Two words: loan defaults. Now, the countdown is on as many recent grads will soon exceed the 270-day window for paying back their educational debts, beginning a bad precedent for staying current in an economy that may or may not be heading into another recession.

As a result, many student loan borrowers are left wondering: can bankruptcy help?

Normally big debts, high interest rates and no job would be the perfect equation for making a new financial start using bankruptcy. Unfortunately, in most cases, student loans debts are exempted from the list of debts absolved during the bankruptcy process. In fact, student loans must be found to create an “undue hardship” in order to be eliminated or reduced in bankruptcy court—creating a high standard for making a dent in a debtor’s often most astronomical debts.

Well, now there’s a little more bankruptcy light at the end of the student loan tunnel. In a recent case, the 8th Circuit Federal Bankruptcy Appellate Panel upheld a bankruptcy court’s decision to discharge $300,000 in student loans. The court in In re Walker found that the debtor’s inability to work due to family circumstances justified a discharge of her student loans. In this particular scenario, the debtor had taken on a large amount of student loans pursuing a bachelor’s degree and several postgraduate degrees while raising five children, two of them with autism. As a result, the student-mom was unable to maintain high-paying employment that would allow her to repay her massive student loan debts.

Ironically, in most bankruptcy cases, the same $300,000, if placed on a credit card or wrapped up in a bad mortgage, could be easily discharged in bankruptcy—automatically expunged under Chapter 7 and significantly reduced in case of Chapter 13 bankruptcy.

However, the liberal decision in In re Walker to forgive the debtor’s student loan debt due to her family circumstances should hearten many recent grads struggling to balance family, low-paying jobs and whopping educational debts. In addition, the tide also seems to be turning at the legislative and executive levels, as the Obama administration and Congress consider making it easier for debtors to discharge private student loan debt.

In short, relieving financial burdens early in your adult life and career can pay dividends later: allowing you to rebuild credit as you build your career and repay your educational loans earlier in the game. As a result, if you too have been affected by the economy and are wondering how to reduce student loan debt—and stress— knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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 Saturday, July 3, 2010 @ 8:27 am

In the recent “Great Recession” more and more Baby Boomers were found to be delaying retirement in order to hold onto few and far-between jobs and hold tight to their incomes. But even in tough economic times some are weighing the pros and cons of calling it a day…and a career.

To help those close to retirement figure out whether now is the time in both age and budget, The Chicago Tribune has put together a list of questions to determine your next best steps. Answer affirmatively, retire away; but if most of the answers are “no,” consider taking a bit more time to firm up your finances and plan for a future unfettered with economic worry and woes—one way or another.

Focus on the following:

If you were to withdraw 4 percent of your retirement portfolio,
would it equal half your annual pay?
If it doesn’t, then maybe you should consider holding off on retirement. Put another way, if you have not saved 12.5 times your current annual salary you might not have enough to live on for the long retirement run. As a rule of thumb you should try to live on 75 percent of your current salary when you retire, with 50 percent coming from your savings and 25 percent from Social Security. If you know you don’t have it now, even for basic expenses, consider waiting.

Have you discussed your retirement with your children and partner?
Kids today…from college-age to middle age, are also struggling, putting aging parents in a precarious position to aid their offspring at, quite literally, their own expense. So, if your children might be relying on your financial help (or vice versa), let them know your retirement plans now. The same is true with your husband, wife or partner. You want the whole family on the same financial page before you turn it.

Have you calculated basic, occasional and catastrophic costs?
While it might be easy to account for basic costs of retirement, the need for a new vehicle, water heater, or a catastrophic medical bill could be right around the corner. Budget for more than the basics to figure out whether your retirement money is for better…and for worse.

Do you understand where your retirement income comes from?
Understanding the risks related to investments for retirement is a crucial part of keeping that cash in your coffers for the long run. Even if you have a financial planner, get acquainted with your retirement accounts so your money can continue working for you…even when you have stopped working for it.

Have you figured how to avoid withdrawal penalties?
As the Chicago Tribune puts it, “If you retire or lose a job in your 50s, it may make sense to leave your 401(k) plan with your employer instead of rolling it into an IRA, because company plans in general allow penalty-free withdrawals at age 55, more than four years earlier than an IRA.” Keep that in mind if your retirement is “forced,” or otherwise earlier than you expected.

Do you have means for health insurance?
While this may be a no-brainer, it’s easy to forget to take care of yourself fully after decades of employer-subsidized care.

Does your plan reflect your true life expectancy?
No one knows what the future brings. You may have budgeted for a medical emergency, but have you accounted for a long, healthy life? According to the Tribune article, retirees tend to underestimate how long they will live. Don’t be one of those people.

Do you have a back-up plan?
The Chicago Tribune also suggests keeping your options open. And in this tough economy, one of those options to keep retirement accounts intact, and creditors at bay, is bankruptcy. Avoid tapping into retirement to stay afloat. If you’re an older American who’s considering new ways out from underneath ever-increasing debt, and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. 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 Friday, July 2, 2010 @ 8:14 am

Bankruptcy Myth #1: You won’t receive credit offers after your bankruptcy.

Don’t be surprised to receive many credit offers following your bankruptcy. Car lenders, mortgage financiers, credit card companies and more, often line up for the chance to provide post-bankruptcy debtors with all types of consumer spending opportunities.

Bankruptcy Myth #2: Taking creditors up on all of their offers is a good thing.

These same lenders and card companies are also coming forward to capitalize on the clean financial slate your bankruptcy provided.  Unfortunately, many of these so-called “helpful” creditors are actually subprime lenders targeting average Americans just like you who are attempting to improve their credit and get back on their financial feet.

As a result, post-bankruptcy beware quick credit offers and avoid subprime lenders by following a few easy tips to stop the cycle of debt and get back on a better budgetary track:

Remain Vigilant About Your Credit Report
It may sound obvious, but in the months following your bankruptcy, your credit report should accurately show that the debts you discharged in bankruptcy are fully discharged. If discrepancies appear in your report, rectify them by contacting your credit bureau and calling attention to the errors. The power of an accurate credit report post-bankruptcy cannot be understated: fewer debts; higher credit scores; attracting higher quality lenders for better credit offers.

Pay Your Bills
Improving your credit post bankruptcy is as easy as paying all of your bills, all of the time, on time. From house notes to car loans to utility bills and more; anything that you kept and continue paying for, on time, post bankruptcy reflects a positive payment history and a better credit report. These small fiscal steps can improve your credit rating and provide more wiggle room to work with better lenders in the long-run.

Be Choosy With Your Credit Cards
In many cases, credit cards are the culprit in necessitating a bankruptcy filing in the first place. Don’t make the same mistakes twice. Seek out a secured credit card that can reflect positively on your payment history and show early signs of responsible credit use. In addition, keep up your credit card payments and keep in mind that credit does not equal cash, but merely a way to keep up appearances that you are an accountable consumer and worth lending to. As such, use credit cards infrequently.

Read Everything
Even infrequent use of credit cards can cause serious financial woes if you don’t read the fine print. To avoid unwieldy interest rates and fees, carefully read all terms and conditions when applying for credit.  While new credit card legislation was enacted to minimize the amount of surprises and confusion when dealing with creditors, it’s important to be your own best watchdog when warding off predatory lenders.

Even if you haven’t been through a bankruptcy yet, , understanding the tips listed above can help you avoid bad lenders and bad debt. If you’ve already succumbed to subprime loans, there’s never been a better time to contact a qualified bankruptcy attorney that can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure fiscal 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 Thursday, July 1, 2010 @ 1:54 pm

Despite the rumors, stigmas and innuendo, there are a number of things you can keep after filing bankruptcy. Your car, for example, is something that you may be able to keep, provided your debt issues running up to your bankruptcy did not result in a repossession and the equity in your car can be protected with available exemptions.

If you were financing (purchasing) a car when you filed Chapter 7 but did not plan to surrender the vehicle in your bankruptcy, and you continued to keep current on the debt through filing your case and afterwards, you will need to fill out and sign something called a “reaffirmation agreement.” This legal document certifies that you will agree to repay all or a portion of that particular auto loan debt since it would otherwise be discharged along with your other debt. Confusing? A little.

Basically, the reaffirmation says that you agree to re-assume the balance still owed on your vehicle.  The reaffirmation is necessary because most auto financing contracts have a clause that enables the creditor to repossess the vehicle because filing for bankruptcy is considered a default on your loan.  Reaffirmation stops the creditor from asking the court to lift the automatic stay in order to repossess your vehicle prior to your discharge in bankruptcy.

Granted, it seems odd that in the midst of filing bankruptcy that you would want to keep some of your debt, but there are a few good reasons, especially when it comes to you car. Primarily, you may need it to get to your job. Sure, public transportation is cheaper but what if you drive a lot for your job? Sales professionals, consultants and real estate agents often need a personal vehicle as much as an accountant needs a calculator. Construction professionals often conduct all of their business out of their truck and need it to visit sites and haul equipment. So, the affirmation agreement allows you to keep the collateral that secures the specific debt you want to keep.

However, reaffirmation is not always a beneficial process. Some lenders get pretty huffy about it. It’s possible that even though you move forward with your payments, they won’t be reported to the credit agencies. Plus, you walk quite a tight rope with the lender.  Fail to make a payment, and that car may end up repossessed before you can get your favorite CD out of the player.  In addition, the creditor almost always has the upper hand in proposing the terms of the reaffirmation agreement.  There is no real negotiation of the terms between the creditor and the debtor, and often creditors demand payment at the original contract terms when the loan balance may far exceed the present value of the vehicle.  The debtor often feels they have no choice but to agree to the creditor’s terms.

One reason to reaffirm a car loan or lease is to help your credit standing with that particular lender. It demonstrates a tremendous amount of good faith on your part to move forward with your obligations with a particular lender who down the road may be much more willing to extend you another loan. Keep in mind that this doesn’t mean you should jump at the first chance to get a new car or accept credit from that particular lender. The fact is you filed bankruptcy. Thus, you are still not going to get the same type of loan terms as someone who hasn’t, despite your reaffirmation.

Ultimately, after your complete and sign the reaffirmation agreement, the court must also decide if the reaffirmation would result in an undue hardship and that it’s in your best interest to reaffirm the debt.

In the Bankruptcy Court in the Eastern District of North Carolina, which includes the cities of Raleigh, Wilson and Fayetteville, the court sometimes will disapprove reaffirmation agreements on the basis that reaffirming the debt would impose an undue hardship on the debtor.  Often, even though the debtor has remained current up to the point of the reaffirmation hearing in court, the debtor really can barely afford to maintain the monthly vehicle payment, and has often squeezed his/her budget to great extremes just to make the car payment.  Under these circumstances, if the debtor and the debtor’s attorney can demonstrate undue hardship to the court, the judge will often allow the debtor to keep the car and continue to pay for it as long as they can afford to do so, and allow the underlying balance of the loan to be discharged with the rest of their debt.  Under this scenario, if something unfortunate were to befall the debtor or the debtor’s vehicle, they would be able to surrender the car to the lender with no consequences.  However, if the court approves the reaffirmation agreement, based upon a finding that the reaffirmation is NOT an undue hardship – that the debtor can afford the liability on the full balance of the auto loan, the debtor will be able to keep the vehicle and continue to make payments, but would owe a deficiency to the creditor if the car were repossessed, damaged, or otherwise surrendered to the creditor.  This is because the creditor sells the vehicle, usually at auction, for a price that is less than what is owed on it.  Whatever the difference between the balance owed on your auto loan and the amount the creditor gets when they sell your repossessed vehicle is called the deficiency. 

Navigating the reaffirmation process requires a skilled bankruptcy attorney.  The Law Offices of John T. Orcutt offers FREE initial consultations to North Carolinians living in the Raleigh, Durham, Wilson, Rocky Mount, Fayetteville and Lumberton areas.  Call 1-800-899-1414 to schedule your free consultation now.  One of their experienced bankruptcy attorneys will review your information to decide whether bankruptcy is the right option for  you.

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Published Thursday, June 24, 2010 @ 9:27 am

You may already understand some of the dangers of debt settlement: the fact that Americans rarely emerge from debt settlement programs with their credit card balances eliminated; the fact that many wind up worse off than when they started their consolidation; and that many emerge from these plans with severely damaged credit, ceaseless threats from collection agents and lawsuits from creditors.

But, you may be wondering, why is bankruptcy any better than debt consolidation?

Well, it turns out there are many reasons.

While debt consolidation and settlement firms have done a great job at selling their side of the bankruptcy alternative story, Chapter 13 bankruptcy needs no sales pitch. In the majority of cases, Chapter 13 completely eliminates your debt, without you having to pay a dime to your unsecured creditors. What’s more, Chapter 13 will allow you to get current on your secured debt, like your mortgage and car payment. There is no debt consolidation or settlement company in the world who can do the same.

Not convinced? Here’s more to make you understand the benefits of bankruptcy:

Bankruptcy is Backed by the Power of the Federal Law

Personal bankruptcies like Chapter 13 are enforced by the Federal Bankruptcy Code. The rule of law. The final word in your bankruptcy filing and others. Debt consolidation firms have no such infrastructure to enforce the legality of their sometimes haphazard and loosely constructed payment plans. They cannot force creditors to cease harassing you, stop them from taking your home or your car, or reduce, forgive or consolidate your debt. Yet when an average American just like you files for Chapter 13 bankruptcy, creditors have no choice: they must automatically “stay” their phone calls, letters, and repossessions and comply with the specific orders of the bankruptcy trustee and judge to accept what you can give.

Bankruptcy is the Comprehensive Choice
Think your debt consolidation will include everything you need to get back on financial track? Wrong. Debt consolidation companies don’t cover things like tax debts, child support or debts such as speeding tickets. While these categories of debt are generally non-dischargeable, a Chapter 13 bankruptcy allows you to repay these debts over time. At the same time, while you repay these non-dischargeable debts through your Chapter 13 plan, your unsecured credit card debt is simply eliminated.  

Bankruptcy Cures Biggest Creditor Woes
As mentioned, bankruptcy is like garlic to vampiric creditors waiting to harass you with late night calls, harassing letters and litigious dispositions. Debt consolidation may leave you high and dry with no legal backing to back up creditor claims against you.

In the alternative, Chapter 13 bankruptcy not only prohibits creditors from contacting you, but imparts severe penalties in the form of sanctions if they violate judge’s orders.

Bankruptcy Gets You a Much-Deserved Debt Discharge
Debt consolidation or settlement plans leave no room for any sort of debt discharge. If some of your creditors don’t agree to settle with you, you could get sued. Bankruptcy forces creditors to accept your Chapter 13 bankruptcy plan. Once you complete the plan, your debt is extinguished, often without you having to pay a dime to unsecured creditors. Try that with a debt consolidation firm.

So think twice before contacting a debt consolidation or settlement company. Knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost. 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, June 15, 2010 @ 2:13 pm

As has been widely reported, whether you feel the country’s moving toward a great recovery or still floundering in a great recession is still largely determined by where you live and whether you can find a job there. And along with the highest rates of unemployment in a generation, current economic conditions are also typified by astronomical levels of long-term unemployment.

According a recent article by the Economic Policy Institute (EPI), “In April, the median length of unemployment in the United States was 21.6 weeks, up from 15.1 weeks in 2009 and well over double the median unemployment spell of 8.4 weeks at the start of the recession in December 2007.” The EPI’s new “median length of unemployment” map reveals “that job searches were taking the longest in Michigan and South Carolina (19.4 weeks), followed by Florida (18.1 weeks), and Rhode Island (17.0 weeks).” North Carolina was among the worst, revealing average job searches topping out at 16.5 weeks. All this despite recent figures finding that some North Carolina cities join Texas towns as rising to the top of the heap in terms of hiring. “States where job searches were shortest include Alaska, North Dakota, and Wyoming, where the median length of unemployment was slightly less than eight weeks in 2009.”

Unfortunately, the April figures don’t take into account the fact that the typical length of unemployment nationwide has increased by five-and-a-half weeks since 2009; as a result, it’s safe to say, that the long and winding road to gainful employment in most states now takes even longer than the EPI figures suggest.

And, if that’s not bad news enough, the EPI reported that a “even in the states with the shortest median length of unemployment, the typical worker is still taking close to two months to find a job. In terms of unemployment duration at the national level, this recession is much worse than any other since at least 1967, the earliest year for which data are available.  The previous peak of 12.3 weeks reached in May 1983 is dwarfed by the April 2010 length of 21.6 weeks, the highest ever recorded. Finally, while the median duration of unemployment represents the typical job search, it also means that the wait is longer for half of all unemployed workers. This suggests that many workers will exhaust their standard 26 weeks of unemployment insurance before finding a job. The American Jobs and Closing Tax Loopholes Act currently before Congress would extend unemployment benefits through the end of 2010, benefiting about five million long-term unemployed.”

Unfortunately, Congress seems to be less empathic and more apathetic than in months past, in some cases scoffing at the notion of extending monthly benefits because of the appearance that these subsidized sums encourage people to exit the job search. As a result, many are taking things into their own hands to address their financial woes and take back their fiscal freedoms to make a fresh start through bankruptcy.

So, if you too have been affected by the economy and are wondering how to reduce debt, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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, June 15, 2010 @ 12:16 pm

In an era of extreme economic downturns and job insecurity, having a car at your disposal has never been more necessary for work, job interviews and providing other basic fiscal needs…even as you consider a personal bankruptcy.   Fortunately, in most places a regular car, as in one single car, is usually exempt from bankruptcy to allow average Americans just like you to get to work, school and make runs for basic needs and necessary family errands.

However, if you do find yourself seeking the financial benefits of bankruptcy, it’s important to avoid putting the brakes on regular car maintenance, including basic car insurance and automobile upkeep.

In short, in bankruptcy, it’s important to keep what you do have intact. So, when you file for a personal bankruptcy, under Chapter 7 or Chapter 13, you are required to keep your vehicle insured even if that personal property is deemed exempt from the bankruptcy coffers; even if the vehicle has been completely paid off; and even if you, as the bankruptcy debtor, do not currently use or drive the vehicle.

Why, you might ask? You must keep your car insured because, upon filing for bankruptcy, your property automatically becomes a part of the larger bankruptcy estate; as such, the bankruptcy estate could be held liable for any claims against you, as the owner of the vehicle; more so, if that vehicle is, you guessed it… uninsured.

In practice, you file for bankruptcy and several days later you find yourself in a fender bender with no car insurance. This triggers a unique situation where the opposing driver can sue you and possibly could sue the bankruptcy estate. And when someone goes after property in the bankruptcy estate it jeopardizes those assets for the purposes of your bankruptcy, creating a situation whereby non-exempt property (property that can be liquidated for the purposes of paying your creditors) could be reduced by a third party and, in the end, reducing the amount of money the creditors receive.

This scenario can trigger a few possibilities.

Stay Uninsured and Face the Consequences
For example, assume you are using a car that you’ve completely paid for with no insurance. You have an accident involving that same car several days after filing for bankruptcy; your part of the property and personal damages is $10,000.  Assume also that your bankruptcy estate is filled with non-exempt assets worth a total of approximately $30,000. In this case, your accident involving your uninsured vehicle could literally cost your bankruptcy estate that same $10k, leaving on $20,000 to pay out to hungry creditors.

Stay Insured and Feel Protected
If, in the alternative, you heed this warning and stay insured throughout your bankruptcy, the insurance can absorb any related damages costs from a car accident, limited your liability both to another driver and the creditors seeking your bankruptcy estate.  In a case where you are willing, but unable, to get the required car insurance, a bankruptcy trustee will sequester that car, and store it,  for the purposes of avoiding any potential liability during the bankruptcy process and repayment plan.

So, to avoid any headaches, hassles or hardships the best rule of thumb is, if you are going to file bankruptcy, do so with insurance…and before your car gets repossessed.

Got more questions about property exemptions in bankruptcy? Well, knowing a qualified bankruptcy attorney can also help you not only conquer your creditors but also keep a much-needed car, yielding the right kinds of support, information and insights—at a low cost— to keep you moving (literally and figuratively) in your fiscally-viable 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 and let these experts take the wheel to so you can start down the road to your next best financial steps.

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Published Saturday, May 29, 2010 @ 8:38 am

In the last ten years, self-storage centers have infiltrated America faster than a bad singer on YouTube. From basic storage sheds with individual bays to climate-controlled multi-story complexes, we have become a nation obsessed with storage. Heck, you can even invest in a garage condo today.

Now, let’s juxtapose our need for storage with the general financial position of so many American families right now. There is really no more proof of our collective love of useless consumer products than the need to pay $100 month just to store it.

And if it’s not in a storage facility, it’s pushing the car out of the garage. Take a walk some evening and glance into some of your neighbors’ garages. Many of them will be floor to door opener in boxes, old bikes, broken furniture, unused plastic playhouses and a healthy collection of old electronics. You may also see a nice clean path that’s been blazed to the house entry. At least, that’s where we hope it leads.

There is little question that in the last number of years, our country has been filing bankruptcy because of what’s in our backyard sheds, garages and expensive storage facilities. We’re well aware that many of you have filed because of unemployment, medical hardships and crushing home debt. However, we do see a good number of folks who simply spent too much on pretty much nothing. Nevertheless, they deserve our help too, and that’s why we’re here.

A big part of your rebound from bankruptcy is learning how to avoid the same mistakes—and the desire to have the latest and greatest of everything is a big one. One way to help rid yourself of the ghost of all those “things” that led you to bankruptcy is to sell all the junk cluttering your life. Thankfully, there are a number of great ways to do it.

Your church is a terrific place to start unloading some of your unwanted financial baggage. The upcoming rummage sale or fundraiser is a great reason for you to clean out your garage.

Ebay can be helpful in selling things but can be cumbersome at times and requires more work than just a simple, outright sale.

Look into Craigslist.org, too. The site is narrowed down by category quite nicely and allows for direct communication. If you have some luck with a buyer, go meet them in a public place with your goods; don’t have them come to you. Use the parking lot of a local fast food restaurant to make the sale and be sure to tell someone where you’re going or bring a friend with you.

Lastly, never forget the old fashioned garage sale. Some people live and die by these weekend rituals and will be at your door before dawn. So be ready early.

Remember, the point isn’t to make money on these items, it’s to simply get them out of your life. If you focus on profit, you’ll find yourself too concerned with price and convince yourself that something is worth more than it is. Before you know it, you’ve shined it up again and stuck it back on the shelf.

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Published Thursday, May 6, 2010 @ 6:06 pm

It was easy to spend money a few years ago, somewhere around late 2005 and into 2006, when the economy was flying, anyone could get a loan and every house in the zip code was appreciating at eight percent a year.

Those who managed to avoid subprime loans and the desire to keep up with whatever the other side of the cul-de-sac was spending turned out to make it through the recession in decent shape, provided the unemployment crisis didn’t catch up with them.

Truthfully, the degree of financial difficulty at which someone finds themselves is no measure of intelligence or social wherewithal. In many cases, the difference between staying above water and getting flushed down the financial torrent is simply a matter of luck. Some people step on a hard-to-see loose stone when navigating dangerous waters and others don’t. It’s that simple.

Lifestyle choices do have a great deal to do with bankruptcy. Sure, many people have to file because of things well out of their control. Heck, that’s why the bankruptcy code functions like it does. Nevertheless, you can make decisions that will either prevent you from getting into serious long-term debt or help you rebuild after filing. It’s a matter of discipline, economic cognizance and common sense.

Key to keeping financial order in your life is to avoid the desire “to own”. Instead of accumulating “things,” accumulate experiences. Focus on staying healthy, emotionally and physically. Deep debt can really take a toll on one’s psyche. It can pull at the edges of a marriage, damage relationships with friends and invoke self-doubt and even depression. Once out of the woods, you should be able to only see things that matter, which will help you avoid becoming stressed over the next bill that arrives. Now you know how to handle it. The money is there and the bill gets paid. Bankruptcy helps you separate money from emotion. Thus, you can focus your well-being on rebuilding not only your credit record but the holes that appeared in your circle of friends and family.

Many studies have demonstrated that eating well impacts mental states and yes, the state of your bank account. It’s no secret that healthy food often costs more. However, the savings show up in reduced health care spending.

We know these tips are easier typed than done. But we’ve been in the bankruptcy business for a long time and hopefully you only have to go through it once. Give it some thought. Stay healthy, and stay wealthy.

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Published Wednesday, May 5, 2010 @ 8:25 am

Even the briefest of hospital stays can result in bills just big enough to tilt a person already precariously balancing their finances over the edge and into a long-term financial abyss. The problem with being able to afford medical care is enough to make many Americans wait until circumstances become dire before heading to the emergency room. Even the well-insured become cautious about co-pays and premium increases.

For college student Samantha Palmer, a one-day lapse in insurance coverage led to a medical debt hassle requiring legal assistance. In the midst of switching medical insurance providers, Palmer found herself suddenly in pain on the one day she was without insurance. Rushed to the hospital, she was diagnosed with a sudden onset of colitis, an inflammation of the colon.

After six hours in the hospital, she left with a bill that on average, charged her more than $1,000 per hour. When her parents saw the $6,662 colitis treatment invoice, they felt a little inflammation in that region as well. “The bill came and I went nuts,” said Samantha’s father Glen.

An in-depth examination of the bill found a number of red flags and questionable charges worthy of dispute. So the Palmers contacted Medical Cost Advocate, an organization that specializes in scrutinizing hospital bills for further verification of their suspicions.

The group is in business for the very purpose of helping people understand why hospitals charge so much and to sometimes show that billing errors are often the cause of people over-paying by thousands.

In a recent speech, the President recently called out the medical community’s reputation for administrative failures and poorly-managed facilities. In Los Angeles, some hospitals are going to begin experimenting with lump-sum pricing because of the ongoing discrepancies in how much certain procedures and processes cost from hospital to hospital.

Starting in August, many of the most reputable medical facilities in southern California are going to try the new billing methods, which, if successful, may offer a glimpse into the future of medical spending.

In the meantime, there are number of costly items to which special attention should be paid when the bill arrives. Namely:

• Repetitive entries for the same procedure, like lab work. In many cases, these may be necessary if tests are inconclusive but sometimes the presence of redundant items could simply be a software error.
• Miscellaneous charges. The vaguely-titled line items could be simply be a collection of very minor items that could have been unnecessary, mistakes in procedure that needed to be done over or add-ons the hospital may be trying to hide. In the case of Samantha Palmer, this category accounted for the use of a television and printing her paperwork.
• Non-itemized Emergency room charges. Even if your condition only required use of a single machine within the ER department, sometimes hospitals will charge for use of the entire facility, as if its doctors were assigned to you for an extended stay.

Medical bill support organizations can help you understand your bill and negotiate settlements for items that may have been found to be excessive or have avenues for reduction.

The fact that a separate industry exists to help the sick understand their medical bills should be all the evidence needed that major change is critical to reducing the tremendous amount of medical debt plaguing our country.

If you’re stuck footing the bills that your insurance won’t pay, consider filing for bankruptcy. A bankruptcy will get rid of your unsecured debt, and put you and your family back in control. In North Carolina, call the Law Offices of John T. Orcutt for your free initial debt consultation. 1-800-899-1414

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Published Sunday, April 25, 2010 @ 8:08 am

With rising foreclosure rates, escalating health care costs, recent credit card company schemes and unprecedented unemployment, most people would think they’ve seen it all in this unprecedented economic downturn.

But wait, there’s more.

In these tough financial times, scam artists are coming out of the woodwork to prey on the most hard hit by this decade’s Great Recession: persons needing the benefits of, or having already filed for, bankruptcy.

First and foremost, scam artists are in the habit of targeting debtors who are willing to do whatever it takes to avoid bankruptcy.  According to the Center for Responsible Lending, common predators prior to your bankruptcy include even legal payday lenders and debt settlement agencies. Most experts agree, even in a financial meltdown, the fastest way to go broke is through payday loans. For example, if you’re like many Americans, you may be facing the economic crisis head-on, and whether that looks like a missed mortgage payment or hovering health care costs, a payday loan might seem like an easy way to weather the storm. But the opposite is true and the reason is simple: exorbitant interest. With interest rates equaling as much as 400%, these types of loans are a recipe for disaster, leaving desperate borrowers unable to repay.

In addition, you also have to mindful of other “credit repair” scams, including debt consolidation scams, mortgage modification scams, and foreclosure prevention scams in addition to outright identity theft through stolen credit cards and identities. Keep in mind, people who are in financial fix and seeking a commensurate “quick fix”—but who have not sought the advice of a bankruptcy attorney—tend to be most vulnerable to these scams and debt payment plans.

Also, many financial experts warn against “Nigerian 419″ scams (email request to help get money from Nigeria into the United States, by accepting money into your own bank account in exchange for a share of the financial rewards) and common “Chain Letter” scams (a modern re-envisioning of a pyramid scheme).

Next, be wary of offers for a “free” credit report. In order to get these predatory reports, you are required to enter your credit card number, which opens the door to identity theft.  Even in cases where an actually credit report is sent, sometimes charges can begin appearing for things you agreed to in the reporting site’s fine print.  Remember, the only truly free reports come from the credit bureaus themselves and do not require a financial placeholder in the form of your credit card.

Unfortunately, you can find scam artists seeking your business  even after your bankruptcy has been filed and fulfilled. These scam artists are often looking to provide benefits that are more difficult to find for bankrupt people. In addition to predatory “credit rebuilding services,” post-bankruptcy scammers will often offer low-balance credit cards to debtors emerging from bankruptcy, sometimes with activation and membership fees that can push borrowers over their credit limits before they’ve even had a chance to use the new card.

To avoid the pitfalls and pratfalls of scammers, the key is knowing resources that can actually help. A qualified bankruptcy attorney can assist proud, to conquer their fears of losing it all.  Specifically, the bankruptcy attorneys 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. We’re here to help.

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Published Saturday, April 24, 2010 @ 8:06 am

In these tough economic times, many families are facing unprecedented financial challenges. This country’s recent Great Recession has dealt, and continues to deal, a significant blow to the budgets of Americans—leaving millions in debt, underwater in their mortgages, perpetually jobless and looking for any means necessary to get back on a financially-healthy track. As a result of this economy, many need loans and are unable to get them without the financial support of a co-signor.

In part one of the series, “The Responsibility of Co-signors in Default and Bankruptcy,” we’ll look at why it’s better to be cautious than to co-sign. Co-signers typically have established credit to help a borrower qualify for the loan. But, if you’re thinking about asking friends, family or business partners to co-sign on a loan, or if you’re a friend or family member who is considering co-signing, it’s vitally important to understand that, unlike giving a job reference, co-signing a loan carries with it a substantial fiscal responsibility and some potentially significant implications—especially when more and more debtors are insolvent and bankruptcy bound these days—as you’re not just vouching for a person’s ability to repay a loan, you’re promising to pay it yourself if they default.

In short, the most important implication to take into consideration in this economy is that a co-signor is ALWAYS responsible for a loan if the principal borrower defaults and files for bankruptcy. The process is explained in greater detail in the Federal Trade Commission (FTC)’s Facts for Consumers publication Co-signing a Loan. As a result, creditors and debt collectors have full legal authority to go after co-signors to pay the note. This fact can be especially painful when the co-signor/co-signee relationship is among family members— allowing the repercussions of debt to spread through several generations or branches on the family tree.

Now I know what you’re thinking. “That’s fine. My (child, parent, extended relative or friend) is in good health, has a great job, and lives within their means. I’m assured they’ll make every single payment.” Or maybe you’re the debtor, and you think, “but I’m responsible.” Yet, while all of that may be totally accurate, it’s also accurate that, in this economy, unexpected things happen everyday. People lose their jobs; cars are totaled; homes go underwater; they get sick or die unexpectedly. And, no matter the reason, good, bad, or otherwise, a co-signor remains liable for the costs, debts, expenses, or difference of the three. And unfortunately, co-signors often pay.

According to the FTC, “studies of certain types of lenders show that for cosigned loans that go into default, as many as three out of four cosigners are asked to repay the loan. When you’re asked to cosign, you’re being asked to take a risk that a professional lender won’t take. If the borrower met the criteria, the lender wouldn’t require a cosigner….In most states, if you cosign and your friend or relative misses a payment, the lender can immediately collect from you without first pursuing the borrower. In addition, the amount you owe may be increased — by late charges or by attorneys’ fees — if the lender decides to sue to collect. If the lender wins the case, your wages and property may be taken.”

As a result, before offering to co-sign or asking family and friends to foot the bills on what sees like overwhelming or insurmountable debt, you should first and foremost, seek financial counsel from a bankruptcy lawyer. Ironically, an attorney can be the best “judge,” of your assets and how dire your situation really is. And, if you do file for bankruptcy, an attorney can help you advise your cosigners so they have plenty of time to map out their strategy for also getting themselves out of your debt.

The bankruptcy attorneys 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 Friday, April 16, 2010 @ 5:31 pm

When President Obama signed landmark health care legislation into law, it meant unprecedented changes for Americans seeking better medical insurance and facing crushing medical debt. For many, these changes can’t come quickly enough. Even amid surging unemployment and a national housing crisis, health care expenses have quickly become the primary budget buster for millions of beleaguered Americans. According to a Harvard study recently reported in the LA Times, medical bills played a role in 62% of personal bankruptcies filed in 2007, up 7% from 2001. Shockingly, 78% of these filers actually had health insurance.

As these staggering numbers reveal, medical expenses are a primary reason many average people just like you end up filing for bankruptcy. While filing for bankruptcy is never an easy option, sometimes it feels like no amount of insurance appears to fully “insure” that bills will be covered in the event of an unexpected injury or illness. And, as many of you already know, medical bills are rarely small, with any preexisting condition exacerbating even the ability to get paltry coverage for these prior and future physical and mental ills.

So, in this already tough economic environment, what’s the best way to attempt to avoid mounting medical costs?

Employer Plans
Well, if you’re fortunate enough to be employed or considering a new career, your obvious first step is seeking coverage from employer sources.  Inquire about what types of health benefit plans exist for employees like you, including health subsidies, co- or partial payments, health reimbursement and savings accounts, and deductibles. While even the most basic employer plans can be expensive, and all insurance seems to have its limits, they can provide much-needed peace of mind for families facing minor illness and injury.  Also, health care reforms will yield more employee-coverage as employers receive incentives for keeping workers insured; and, at the same time, citizens will have more health care options, driving costs down and providing additional and available coverage.

Health Insurance Transition Plans
If you are currently unemployed like so many, today you currently have the option of coverage while in health insurance transition, such as a COBRA plan. While these plans are normally more costly than employer-based plans, they can provide coverage for up to 18 months after being laid off. In addition, recent health care legislation will mandate uninsured citizens to sign up for more available insurance plans, with the strategy that more buy-in will lower costs and help pay for better health care options in the future.

Parental Coverage and Preexisting Conditions
While some of these positive changes are years away, more immediate reforms mean groups long discriminated against for their age, gender, and health, can now brief a bit easier. In the coming months, parental insurance will be extended to young adults (up to age 26), preventing medical bills from taking young people to the financial brink in an especially unfriendly job market for recent grads. And, one of the more groundbreaking reforms is that insurance companies can no longer use preexisting conditions to deny individual coverage or charge higher rates based on preexisting conditions, gender, or other formerly exacerbating factors. Without preexisting conditions standing in the way, many Americans will now have access to insurance like never before, creating one less barrier to affording the very hefty medical bills that would normally lead directly to bankruptcy.

Medical Bankruptcy
However, as mentioned, some of these reforms are months, if not years away. And many insured and uninsured people need more immediate financial help. If you are suffering from illness, injury and out of control debt, and considering filing a medical-related bankruptcy, it is important to understand that medical bills are considered unsecured debt and can be discharged entirely under Chapter 7. If you are instead filing a Chapter 13 bankruptcy, your medical bills can be significantly reduced with a payment plan over time. In either situation, bankruptcy may be just what you need to help you get back on your financial feet again.

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 and let these experts smoke out your next best financial steps.

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Published Thursday, April 8, 2010 @ 3:19 pm

While the current economic forecast is considered by economists to be less dismal than in past months, many of the same economists are predicting unemployment will stay high over the next several years—noting that recession-scarred employers are likely to stay conservative in their hiring practices even as recession-scarred citizens continue their search for a dwindling number of jobs. Recent unemployment figures show that North Carolina unemployment grew to 11.2% in the month of February.

So, what if you’re one of the unfortunate many facing job cuts or recently suffering from unemployment? Here are five easy steps to get you back on track when time is short.

Apply for unemployment benefits
If you lose your employment, now is the time to apply for unemployment benefits. While you may think it’s too late, (and it may be), put the decision in the hands of the unemployment office. And apply as soon as you can. Don’t wait.

Begin Your Budgeting
Initiate an accurate accounting of all necessary expenses, including your monthly debts and other potential income (e.g., part-time jobs, temporary employment, unemployment benefits, child support, etc.). This accurate list of expenses, debts, and capital will give you a new understanding of how much you have, how much you owe, and how much you can afford while you look for a new job.

Forge Ahead with a Forbearance
When you lose your job, it’s normally best to do all you can to “stop the bleeding,” eliminating as many deficits in your monthly budget as possible.  As a result, do what you can to get a forbearance on as many debts as possible by contacting your creditors, explaining your situation, and requesting a stop to your bills. Some may give you at least a 30 day forbearance on your debts, buying you precious time to plan your next best steps. But remember, get any forbearance in writing: it will protect you in the long run if your creditors later cry, “default.”

Drop Anything Considered “Decadent”
While you’re in the process of budgeting for your future and dealing with your current debts, it goes without saying that it is essential to “trim any fat” from your monthly expenditures. Whether it means foregoing major purchases over the holidays or simply passing on that morning latte, losing a job in this economy is easily the best way to simplify for a more financially sound fiscal future.

Sometimes You Can’t Beat Bankruptcy
If you’re a debtor who has lost their job it may be next to impossible to continue paying your debts and a 30-day reprieve ends quicker than you think. Debts mount; bills roll in; expenses remain; and all of this with little to no income infusing the process.

Every week bankruptcy attorneys continue to meet with dozens of people in financial distress due to these very employment woes.  In each case, these same unemployed people come 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 when these same clients leave these offices, they finally feel some sense of relief for the first time since the job recession started; they are reassured that the bankruptcy laws and the bankruptcy system offers them the possibility of a new start—at an affordable cost—and with it a financially viable and secure future. In short, bankruptcy relief ends worry and stress for many jobless Americans living on the financial brink.

If you are in North Carolina and receiving unemployment benefits, call a bankruptcy attorney today. The upfront fees for a Chapter 13 bankruptcy can be as low as $338.00. That’s not much to get rid of all of your credit card debt. For reliable bankruptcy advice that you can trust, contact The Law Firm of John T. Orcutt. And to find out more about your bankruptcy options, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

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Published Monday, March 29, 2010 @ 7:47 am

Dear Consumers,

Just kidding.

Yours,
LifeLock

To follow up on a recent post about the overzealous marketing of credit report monitoring services, we bring you the latest in what can now be called a disturbing trend in financial fear-marketing.

LifeLock , the company that boasted their monthly fee-based privacy system could thwart even the Impossible Missions Force from seizing your identity or accessing your credit is now on the hook for $12 million to the Federal Trade Commission (FTC) for … wait for it … misleading consumers about the nature of its products.

You can’t make this stuff up.

From the Law Offices of John T. Orcutt. Call today for a free and confidential debt consolidation. 1-800-899-1414.

Not long ago, LifeLock had mobile billboards plastered with its CEO’s social security number parading through major metropolitan areas and were blistering radio and television channels with endless pronouncements about the strength of their identity monitoring products. The ads were extremely effective.

The company managed to positively boost its product without literally telling you to run under the bed and hide from all the identity thieves lurking inside your computer and around your trash cans. The understated importance of the CEO’s claim made one think, “Man, I better do something or I’ll be a victim.” Life insurance salesmen were taking copious notes.

The company is also settling with more than 30 states, including North Carolina. In a written statement, FTC Chairman Jon Leibowitz summarized the issue, “While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it.”

Ouch.

The settlement contains language that orders the company to immediately cease making claims that its service can absolutely prevent identity theft and make customer information useless to identity thieves.

The company also has to agree to—this is toughest part of the settlement—protect its customers’ information. Apparently, the FTC investigation uncovered that once under the watch of LifeLock employees, the privacy of customer information was neglected.

According to the FTC, the most misleading component of the company’s marketing plan was the claim it can stop all forms of identity theft. The truth is that it can only prevent a very specific type of theft that is found in a minority of cases.

Very much like keeping track of your credit, you can monitor fraud quite easily on your own. If you have credit cards, you can arrange a number of alerts that pertain to spending habits and frequency. Your bank can do the same for your debit card as well.

This post is not meant to minimize the impact of identity theft. It is certainly a very painful and common type of crime that has lead many people to bankruptcy court. And in many cases, even the most diligent purveyors of their finances have been become victim. However, it is unfortunate that today, in the age of the Great Recession, we have to be as equally watchful of the those who come to us with help, regardless of how often they are put in front of us as heroes.

The LifeLock case has rendered the company’s advertising plan somewhat mute. In response, you may have noticed a few other industry players fighting for the competitive space. LifeLock did right by their investors by placing a very positive spin on the settlement, calling it a step forward for consumers.

Todd Davis, LifeLock CEO, remained front and center in the case, saying, “We welcome federal and state efforts to regulate our industry, because doing so helps to protect consumers from the risks of identity theft.”

Mr. Davis, who else should we be worried about?

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Published Sunday, March 28, 2010 @ 2:30 pm

For all the political uncertainties about health care reform, at least one thing seems clear: when President Obama signed landmark health care legislation into law this week, it marked real changes for Americans facing medical debt.

And, as such, these changes couldn’t come at a better time. Even amid surging unemployment and mortgages underwater, health care expenses have become the primary financial breaking point for millions of Americans. According to a Harvard study recently reported in the LA Times, medical bills played a role in 62% of personal bankruptcies filed in 2007,  up 7% from 2001. Most striking, a vast majority (78%) of these Chapter 7 filers actually had health insurance.

As a result, the Obama Administration is banking on a plan that extends health insurance to 32 million uninsured Americans in order to protect more people from becoming medically bankrupt in several ways:

First, parts of the plan will end co-pays for preventative health services like physicals or mammograms, making it easier and less expensive to ward off injury and illness in the long-run.

Second, other aspects of the plan prohibit lifetime and annual restrictions on benefits, providing unlimited, or, at least, less limited access to cheaper health care when and where you need it.

Third, large businesses are required to insure their employees or face possible fines until they do so.  This added employer coverage may protect many Americans from the perils of being uninsured, including unexpected and acute maladies that can have lasting physical effects and financially devastating consequences for employees and the businesses that rely on them.

Fourth, the legislation will mandate that all Americans citizens have health insurance or they will be forced to pay penalty fees. While this comes as an economic imposition to some, the requirement means that not only will the insured help pay for the new plan, keeping the reforms “budget-neutral” in an already damaged economy, but also this type of comprehensive buy-in can also keep costs down for all Americans—and help keep bankruptcy at bay.

Fifth, children are no longer dropped from their parents’ plans at age 19 or at the end of college. These parental health benefits are now extended until the child’s 27^th birthday; covering even more young adults and preventing medical bills from taking young people to the financial brink in an especially unfriendly job market for recent grads.

Finally, with these reforms, insurance companies can no longer use preexisting conditions to deny individual coverage or charge higher rates based on preexisting conditions, gender, or other formerly exacerbating factors.

Even though many of these reforms will take years to roll out, fortunately, the latter two reforms will go into effect this year.

And while many Republicans argue that this legislation will mean higher taxes for the wealthiest Americans, the plan is being touted as a framework for universal health care in America, giving all citizens a fair shot at avoiding insolvency due to medical matters.

Unfortunately, disease, illness and other health problems can occur suddenly and may not wait for reforms to go into effect. Regardless, health insurance is no guarantee that injuries or illness won’t turn into a bracing financial burden.

If you are suffering from illness, injury and out of control debt, and considering filing a medical-related bankruptcy, it is important to understand that medical bills are considered unsecured debt and can be discharged entirely under Chapter 7 and Chapter 13. Bankruptcy may be just what you need to help you get back on your financial feet again.

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 and let these experts smoke out your next best financial steps.

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Published Wednesday, March 24, 2010 @ 12:59 pm

There was very important bill passed this week in Washington.

No, not that one.

Attached to the monumental health care bill was a significant alteration to the way student loans are handled by the government.

We have covered this topic several times here on the blog (use the search tool), which is critical to those considering bankruptcy because as of now, outside of very special and rarely granted conditions, student loans are not allowed to be discharged.

Arguments have mounted recently about the role private banks have in backing federal student loans. The primary issue is that the government guarantees close to 90 percent return for the private lender who funds the loan. Currently, this is the most popular way Americans pay for college. During the current 2009-10 school year, banks loaned $67 billion that is federally-backed.

The new legislation will turn the tables on private lenders, primarily Sallie Mae, and allow the U.S. government to loan directly to students.

Starting this summer, the bill outlines $500 billion in straight-to-student loans within the first 10 years, drastically increasing the current rate of direct loans. The most common federally-backed loans are Stafford Loans.

Naturally, backers of the private companies’ continued role in the student loan business are citing the move as the proverbial decapitation of their business.

An analyst with a spending research firm in Washington, Teddy Downey of Concept Capital Washington Research, made it clear to the government what the new rules would do to private lenders. “This is bad for Sallie Mae, as it will now be out of the origination business … there is zero chance for student lenders to stay in that business.”

The current law allows private lenders to collect billions on the interest collected from the difference between the rate at which the government provides them the capital and the rate at which they lend it. Additionally, the entire process has gone largely unregulated, allowing private lenders to also issue their own loans.

The proposal is estimated to preserve close to $61 billion in the federal budget over the next decade. A large portion of that figure will flow into Pell Grants, the ubiquitous student loan that has sent millions of Americans to post-secondary education. Because of the recession, college classrooms nationwide need more desks than ever before, seriously impacting the fiscal stability of the Pell program.

The Pell Grant is directly targeted at lower-income and middle-class students and thus, they will benefit tremendously from the new measure. This is especially good news for those who have recently come out of bankruptcy, as it helps provide yet another avenue toward personal re-invention through education, job training and career development.

Proponents of the law are citing stats that show a major cut in loan funding if it is not passed. Supporters are saying that eight million students would feel the impact of a 60 percent decrease in Pell funding and that by 2011, 600,000 students would lose their Pell Grant, forcing them to quickly find another source for college money.

The Obama Administration has set goals for college graduation in America and it appears this is firmly placed rung on the ladder toward that accomplishment. Some financial aid experts are not sure it will help the country get much higher though.

“This bill is not as good as it originally was,” said Mark Kantrowitz, who publishes FinAid.org. “It is difficult to see how President Obama will be able to meet his college graduation goals.”

However, isn’t just a few more still a good thing?

If you are in North Carolina and struggling to stay on top of your student loans, contact the Law Offices of John T. Orcutt. Student Loans are non-dischargeable in bankruptcy, but a Chapter 13 will put your loans in deferral status, allowing you to discharge your other unsecured debt and giving much-deserved breathing room while you position yourself to make your next career move. Offices in Raleigh, Fayetteville, Durham and Wilson. Call today. 1-800-899-1414.

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Published Saturday, March 20, 2010 @ 11:58 am

If you are like most Americans who are out of work today—and there’s a lot you—the seemingly perpetual job search may eventually take a toll on your psyche. There is just so much out of your control.

As soon as that resume leaves your e-mail, it could be weeks before you receive an acknowledgment- if you even get one. Even when you do, it’s probably some automated response promising that “one of our professionals will soon be in touch.” Heard that one before? Every job that seems like a great match just restarts the cycle.

Add to that a boiling personal financial crisis and the job search can seem like a completely fruitless effort. No doubt, it’s tough out there.

What’s making matters worse for this job market is that it is occurring during such a heated political climate. Washington is divided and everyone seems on edge, especially when discussions involve companies or parts of the country that have received stimulus, or “bailout” money. Everyone wants a piece. Or heck, we just want to know it’s helping.

Well, we came across a helpful blog called My Bank Tracker (mybanktracker.com) that outlines some useful tips on how to locate where stimulus money is creating jobs. If you think you can afford a relocation or even if you have the ability to relocate temporarily for work, following the stimulus money could be useful.

The site advises readers to take full advantage of the government’s Web site established to record the use of the stimulus funds. If you visit www.recovery.gov, you can track down recipients of the money, as it contains an large database on grants and funding awards. Then, narrow it down by state. See what North Carolina has to offer. For example, the LED lighting company, CREE, was given a $39 million in stimulus money to create “green” jobs and manufacturing positions. To date, they have hired 375 people.

The most simple way to locate potential employment is under the “Opportunities” menu on the government site. There is a direct link to jobs that allows you to search by phrase and job type, for example, “marketing jobs in Washington DC” or Electrical work in Omaha NE.” Hey, if you have a cousin in an area that’s hiring, it could work for a while.

You can also look under USAjobs.gov for work that is backed by the Recovery Act. However, it is important to note that this site highlights government and public service jobs. Nevertheless, the federal government has been known to pay well, offer great benefits and provide terrific job security. So it’s certainly worth a shot.

As we mentioned, politics have been hampering employment aid. Last week, as we discussed here, it took days of political grandstanding to pass a $140 million bill that would extend unemployment benefits. It’s passing offers the unemployment and potentially bankrupt a small cushion.

Unemployment is directly related to debt problems and thus, the tremendous increase in personal bankruptcies. Maybe, in a couple more years (we don’t want to sound bleak) when unemployment is back at reasonable levels, the government can fund more training programs or maybe use stimulus money to support proactive job growth efforts so we don’t have assemble the dike during the flood.

Look, we want to help as many clients as we can. We just wish there was more we could do before they call us. Good luck, stay positive and call us- we can get rid of your debt while you look for a job, and give your family some well-deserved relief from relentless creditor calls. Call today to set up a free debt consultation- 1-800-899-1414. Convenient offices in Raleigh, Durham, Fayetteville and Wilson.

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Published Thursday, March 18, 2010 @ 6:08 pm

As many people facing significant financial hurdles already know: compulsive spending, like smoking, can often be a difficult habit to overcome. And like chain smoking, spending sprees can have devastating consequences, literally causing people just like you to “shop ‘til you drop”—sacrificing not only cash, but sometimes the ability to keep other possessions, relationships, and even, a healthy financial, emotional and physical future.

Addressing compulsive spending by taking a personal financial audit—admitting you have a problem, creating realistic expectations, using a budget and avoiding temptation—can end your string of endless debt-making and put you back on course for a better tomorrow.

But what if part of your compulsive spending habits relates directly to your other bad habits, like smoking? For some people, these types of small daily purchases on items such as cigarettes can lead to addiction, health concerns, and big financial problems.

If you are a smoker, you’re probably more than aware that smoking is hazardous to your health (according the Surgeon General facts the average smoker started at age 15 and smoked daily by age 18; the average smoker loses more than 13 years off of his life; smoking causes hundreds of thousands of preventable deaths in the US each year; one in five deaths is smoking related).

But what you may not understand is that small daily purchases on vices like cigarettes are hazardous to your wealth.  With the average name brand selling for $ 8.35 a pack, the federal cigarette tax accounts for $ 1.01 of the cost. Each state then adds its own tax.  That’s over $ 8.35 a day to engage in what may be  a relaxing habit, but also humanity’s most respiration-unfriendly vice.

And while it may be easy to dismiss $8 a day for something you enjoy, looking at it from a wider perspective shows the true cost of your daily puff.  Say you smoke only one pack of cigarettes a day…it costs you:

One Day – $8.00
One Week – $42.00
One Month – $168.00
Smoking one pack of cigarettes a day will cost you nearly $3000 per year.

Think for a moment about what you can do with that money. Put it in a savings account for unexpected expenses such as car troubles, medical bills, or even money to get by for several months when facing an unexpected job loss. Heck, that’s even a good down payment for a vehicle; after five years you could even put money down on a new home; and in 18 years, kicking cigarettes to the curb could save you hundreds of thousands of dollars: a pretty penny if you’re also saving for your kid’s college tuition.

And what if you smoke more than two packs, and have a spouse that does the same?  Is that a reason to stop paying for other bills: credit cards, car payments, even a mortgage? In short, are you blowing your financial future like so many smoke rings?

Imagine a couple who are spending almost$ 1,000 on cigarettes each month. Not hard to do if each smoke two packs a day ($8 X 4 packs X 30 days = $ 960 a month). That’s a pretty penny literally “up in smoke” as you attempt to avoid creditors, get payment extensions, or qualify for protections under current bankruptcy laws.

So, to avoid any headaches, hassles or hardships the best rule of thumb is, if you are going to get your financial house in order, or even file for bankruptcy, get your bad spending and personal habits in check.  In short, don’t let your future go up in smoke: 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 and let these experts smoke out your next best financial steps.

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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 @ 11:52 am

As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.  Now, we’re finding that tax time is also yielding it’s own set of challenges for some cash-strapped citizens.

In his recent New York Times article, “Paying the Price for Survival Tactics,” Charles Delafuente reports on how the I.R.S. treats many kinds of written-off debts, some distressed home sales, and many emergency withdrawals from retirement accounts as taxable income.

Debt Forgiven By A Lender
In his timely piece, Delafuente introduces the concept of “phantom income:” an amount a lender forgives but for which the debtor still owes tax. In your case, this taxable amount becomes essentially the difference between what the lender would have received from you and what it will receive under your new agreement. As Delafuente explains, “These taxes are imposed even if only the interest rate, not the amount of principal, is reduced. That happens, for example, to consumers who renegotiate credit card debt. A lender is supposed to issue a 1099-C form reporting forgiven debt, but that doesn’t always happen if the principal is not reduced.”

As is normally true in the tax world, there are exceptions to the forgiven-debt rule. Keep in mind, forgiven debt is not taxable income if it is discharged by bankruptcy, or if you are considered insolvent—whereby your liabilities exceed the fair market value of your assets—when the debt is forgiven.

Mortgage Debt
While recent bailout measures enacted to help homeowners generally won’t trigger the forgiven-debt tax on a principal home, “foreclosures, short sales and other loss-of-home scenarios could bring on capital gains tax.” For example, if your home is worth significantly more than a mortgage and is repossessed and sold by the lender, you are entitled to the difference. As Delafuente explains, “The difference is a taxable profit, which will cause a capital gain. Fortunately for the masses, the first $500,000 on gains on a main home for couples ($250,000 for single taxpayers) may be covered by a tax exclusion. Further, nonrecourse mortgages, in which the lender can’t touch any assets other than the property, generally don’t cause such a gain.”

Retirement Withdrawals
Aside from your mortgage, if you withdraw money prematurely from their retirement accounts because of a job loss or a reduction in hours, you will also face extra taxes.  Holders of traditional I.R.A.’s and I.R.A. rollover accounts must pay 10 percent of any amount withdrawn before they reach 59 1/2 as a penalty on top of the traditional taxes on money taken out, which must be paid regardless of your age.

If you have a Roth I.R.A., you’ll face different rules. Your contributions—but not the account earnings—can be withdrawn without penalty after five years.

If you have an employer-sponsored plan, like 401(k)s and 403(b)s, you face yet another set of rules. For you, withdrawals are penalty-free if you left the employer that set up your plan after you turned 55. However, money rolled over to an I.R.A. from a former employer’s plan is subject to the 59 1/2-age rule.

Most 401(k) and 403(b) plans do not allow current employees to make withdrawals; instead they often have loan provisions. But another tax nightmare occurs if you have an outstanding loan and lose your job. In that case, you must repay the loan quickly or have the balance treated as a withdrawal, making it subject to tax and to the 10 percent penalty if you’re under 55, unless an equal-payment plan is used.

But remember, before borrowing from your retirement accounts, one of the best debt forgiveness plans comes from a personal bankruptcy. In these taxing times, a qualified bankruptcy attorney can help you conquer your fears before losing it all.  Specifically, the bankruptcy attorneys 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, March 1, 2010 @ 7:27 am

No one needs to tell you times are tough.

Too often, Americans just like you, already suffering under the intense strain of rising mortgage costs, consistent credit card debt, mounting medical bills, employment woes, and other blights on your bank accounts, are also looking for ways to further trim shrinking household budgets.

And since the lingering financial downturn has affected all socio-economic sectors of the country—even the upper-middle class and wealthiest Americans—dealing with sudden bills or a loss of income can be even more difficult for people used to a certain lifestyle.

So, whether you’re facing extended unemployment, are bankruptcy bound or just trying to salvage your savings, taking a long, hard look at your family’s budget can make a big difference. And even if you haven’t lost your job, in this uncertain economic era it’s important to explore the financial cutbacks you could make in case you were suddenly land unexpectedly aid off.

The good news is, by cutting a few corners, small changes can save you hundreds per month.

Television.
I know, I know. TV is tough to cut. Especially if you rationalize that by watching television you’re staying home and saving money you would normally spend finding entertainment elsewhere. But, if you currently get a lot of channels, you could conceivably drop to a package with fewer bells and whistles (possibly dropping those 50 plus channels that you didn’t watch anyway?). And if you already have a relatively small television setup, consider contacting your provider for negotiations. You’d be amazed at what a satellite or cable company will offer in terms of lower rates when consumers like you threaten to quit them.

Phone and Internet.
Again, negotiating with your provider (or trying to) is always an option. Plus, downgrading your service or eliminating a landline could be all it takes to save you dough for other basic essentials.

Subscriptions.
You can stay informed and save money. If you keep your Internet, why spend more on newspapers, magazines or a book of the month club? The good news is that most reading materials are, at least for now, available for free online.

Fast Food.
That morning latte, breakfast burrito or fast food lunch may seem inexpensive once a day, but those days quickly add up and can become the fastest way to deplete a monthly budget. Consider taking a brown bag and a brewed coffee with you on the go and enjoy the benefits of a better food choices and a fuller wallet.

Groceries.
Not only cut out eating out, but take in the grocery stores many comparable generic brand. Many store-brands are actually produced at the same factories as the name brands—and come at a significant discount.

Clothing.
As a lot of professionals know, dry cleaning can be incredibly expensive. Try to avoid it. But just because your clothes have a little more wear and tear doesn’t meant you can run out and shop for new ones. Resist the prevalent sales permeating the malls in this tough economy—just because it’s a sale doesn’t mean its less expensive than shopping at one.

Not only does planning ahead like this give you an idea of what steps you’ll need to take in case of a financial emergency, it also provides ways to start saving money quickly.

Yet, if cutting corners just isn’t enough to keep you afloat, knowing a qualified bankruptcy attorney can also help you conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—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 Friday, February 26, 2010 @ 4:19 pm

Everyone—from the halls of Congress to the many channels of media—is paying a ton of attention to those Americans who have lost their homes in the seemingly endless mortgage meltdown. Virtually ignored have been the millions who continue to pay their mortgage every month, even when they really can’t afford to. As a result, most homeowners are losing big on what used to be their biggest investment.

Which begs the question: Is the best solution to stop paying your mortgage?

For homeowners around the country who haven’t skipped their mortgage payments—but are seriously struggling—there are several reasons why homeownership is going less than swimmingly:

You’re Trying to Staying Afloat While You’re Underwater
Many of you are struggling to pay off a mortgage balance that is significantly higher than the value of your home. As a result, selling your home is simply not an option, since you would ultimately have to come up with the difference to settle with your lender.

You’re Drowning in the Deep End of Debt
Many homeowners just like you are spending down their savings, taking cash advances and/or relying on credit cards to buy bare necessities. Why? Because you’re using every actual dime that’s coming in to keep up with your mortgage payments. The result is millions of Americans who are not only underwater on the their mortgages, but who are also drowning in debt.

While staying current on your home commitment is admirable, and very much the American way, it’s also a quick and easy way to drain your savings, retirement, or nest egg, while also accumulating enormous debt, simply to avoid the dreaded “F-word.”

Consider Foreclosure
While it can be scary, this particular “F-word” can be your first, best step to a pair of “F” positives: financial freedom. If you are now hundreds of thousands of dollars underwater and go into foreclosure, your losses are essentially erased. In most cases, your lender can take the house, but not your future earnings with the only real financial consequence being trouble getting a loan for almost a decade (in an era when getting a loan isn’t easy even for those with stellar credit).

Unfortunately, most foreclosure alternatives are simply bad ideas. Let’s take, for example, the short sale. In a short sale, the lender is agreeing to accept less than what is owed to satisfy your loan. Assuming you find a buyer, you will then have run the offer by your lender. Even if they decide to go along with it, you could still be stuck with the deficiency if you’re not careful. That’s not to mention the tax implications of the forgiven debt. Why go through the hassle of a short sale, if it’s just as likely to hurt your credit, and may lead to even more debt.

Another foreclosure alternative, the loan modification, would be an option if lenders were granting permanent modifications. The problem is, most lenders are understaffed, behind on applications, and you’re likely to get lost in the shuffle. As of 9/1/09, over 362,000 loans have been granted a trial modification. Of those trial modifications, only 1,711 have been approved for permanent modifications.

And Then There’s Bankruptcy
If your credit score is going to suffer anyway, why not create a completely clean slate? As a hurting homeowner, knowing a qualified bankruptcy attorney can also help you face your financial fears, yielding the right kinds of support, information and insights—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 Thursday, February 25, 2010 @ 3:09 pm

While many economists argue that the economy is steadily rebounding, whether you’re in a recession or recovery seems to largely depend on where you live, if you have a job, if you can pay your bills, or if you still have your home.

The Huffington Post reported this week that facing an economic meltdown in their personal lives, many formerly middle-class families have had to find “creative ways to cope with the sudden loss of their jobs and homes.” In her article, “Rattlesnake for Breakfast, Wedding rings on Craigslist: Families Cope With Falling Out of the Middle Class,” Laura Bassett describes how the American dream, for many, has turned into a surreal nightmare.

Take Arkansas’s Jeff Falk, 51, for example. After losing his family business selling auto parts, and finding himself no longer able to afford the house he had built for his family, his wife Jill, and their two boys, ages 3 and 8, packed their 40-foot camper and headed to Arizona for the winter.

“Jill found a part-time job waiting tables, and Jeff found occasional work repairing old boats, but they struggled to feed and home-school their young boys. Occasionally, Falk says, he feeds his children rattlesnake that he caught near his camper. While Falk, his wife and his children have managed to stay positive throughout their financial hardships, he says the hardest part of falling out of the middle class is losing the respect of those around him. ‘There are two kinds of people,’ he said. ‘Those that turn and look the other way and don’t even wanna look at you, and those that reach out and help you, and it seems like there’s no in-between.’”

The Falk family isn’t alone. Bassett also found Illinois’s Stephen Mooney.  Laid off in 2008 from a job he had held for 10 years, his severance pay ran out a few, short months later, leaving he and his wife Marianne unable to pay their bills.

“’Our gas was shut off,’” Mooney told HuffPost. ‘We were taking showers with water that we would heat up in the rice cooker and microwave. It was very depressing. Going to a job interview, you may be wearing a shirt and suit, but you don’t feel clean. I looked unkempt all the time, and corporate America’s not an easy place. There were some places where I knew I didn’t have a job as soon as they saw me sitting in the lobby.’ To make matters worse, the Mooneys’ house was recently foreclosed, and they have been asked to leave by March 1. ‘I don’t know how we put all the pieces back together,’ Mooney said. ‘Where do we live? Where does all our stuff go? It’s going to be very strange.’”

As Bassett reports, many families are making similarly difficult decisions just to stay afloat.

Kimberly Rios of Maryland sold her wedding ring on Craigslist last weekend just to cover utility bills.  “‘This is no joke, please be a serious buyer,’ Rios wrote in her ad. ‘It is too cold for us to be without electric and heat so if you have been looking consider my deal.’ She told HuffPost that she sold the ring on Valentine’s Day. She is trying to decide whether to use the money to pay for a few weeks of electricity or to buy a cheap car so that she and her family of six will have a place to go when the foreclosure happens.”

In spite of it all, Rios remains positive about her family’s future: “At least we have each other.”

Unfortunately, in this new era of financial insecurityy, stories like these are common in articles, reports and blogs all across the World Wide Web. Fortunately, no matter how dire your financial situation and how extreme your sacrifice, you can find strength in the numbers of families—all across the country—facing the same tough choices.

Yet, even if major sacrifices just aren’t enough to keep you afloat, knowing a qualified bankruptcy attorney can also help you face your financial fears, yielding the right kinds of support, information and insights—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 Wednesday, February 24, 2010 @ 11:56 am

In his February 20, 2010, article “Millions of Unemployed Face Years Without Jobs,” The New York Times’ Peter S. Goodman paints a dour portrait of what he calls “the new poor” — “people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.”

With little good news for the millions of Americans who remain out of work, out of savings and at the end of their unemployment benefits, Goodman points to holes in America’s social safety net, built for short-term gaps between jobs, further strained in an unprecedented economic environment where work may be scarce for years, even as the American economy shows signs of a rebound.

“Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.

Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed.”

Goodman cites a confluence of unfortunate financial factors—products of both our modern economy paired with the recent recession—as the reason it is now so challenging for the unemployed to “find their way back to their middle-class lives.”

First, there’s a scarcity of jobs. Fewer unions to protect full and temporary employees, the export of formerly American factory and white-collar jobs to overseas competitors, and an upsurge of innovation and automation, have all contributed to a smaller U.S. job pool for millions looking for work.

“Additionally, America has fewer protections for its beleaguered workforce. “Some poverty experts say the broader social safety net is not up to cushioning the impact of the worst downturn since the Great Depression,” writes Goodman. “Social services are less extensive than during the last period of double-digit unemployment, in the early 1980s.”

And then there are the millions of American households, that, due to the employment meltdown, have gone from two incomes, to none. Languishing in a “desert of joblessness,” many families, previously able to simply bounce back after a job loss, pay cut, or disability—are now finding themselves using food banks, charitable giving, and facing homelessness.

While recent reports of the nation’s financial future remain nothing short of bleak, the good news remains that through bankruptcy laws, Americans facing unemployment can take their future into their own hands, stop drowning in health care, consumer and mortgage debt, and begin on the road to a more viable financial future.

Even if major sacrifices just aren’t enough to keep you afloat, knowing a qualified bankruptcy attorney can also help you face your financial fears, yielding the right kinds of support, information and insights—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 Friday, February 12, 2010 @ 5:44 pm

The Making Home Affordable program was designed to be the savior of the crashing real estate economy. People nationwide were taking solace in the President’s effort to save our homes and lead us through the worst economic situation our country has faced in almost 100 years. Hundreds of thousands of homeowners facing foreclosure due to the bubble bursting on a plague of poorly schemed sub-prime mortgages rejoiced in what seemed to be a cooperative effort on the part of the a supportive new Washington administration and the Wall Street.

Unfortunately, the program has landed far from expectations. The foreclosure rate has seen only minor blips in decline and it has become difficult to hear government officials even address the existence of the program, unless to defend it. Additional programs have been introduced to support it but larger menu items are being devoured by the House and Senate and the status of homeowners has been given a backseat. Meanwhile, the numbers of properties in foreclosure and pre-foreclosure continue to grow.

Accepted into the trial HAMP modification program for six months, Bert Carvajal of south Florida was eventually denied full participation in the President’s program. He was also deemed ineligible for any assistance from his lender, JPMorgan Chase. His situation is no different than that of most Americans in trouble with their mortgage. His construction management income was sapped by a declining housing market and he simply fell behind on the payments that keep a roof over his family. He is now behind on property taxes too, so he owes his bank and the county.

Mr. Carvajal’s best option may be to soon file bankruptcy. In Chapter 13, he can catch up on the missed mortgage payments, and pay back the property taxes over a period of up to 5 years.

Jag Bhangu was also recently denied a mortgage modification because he still has equity in his home. However, that doesn’t mean he can afford to pay for it. And, given his position as a mortgage consultant, one would think the bank would by sympathetic to his situation of lost income. In the last couple of years, his income dropped 70 percent from where it was when he was approved for the loan.

Bhangu was granted a trial modification under Obama’s plan for nine months but then declined for permanent adjustment. He continues to speak with people at CitiGroup about another modification but he is not hopeful that it will happen.

If you’re getting the runaround from your mortgage lender, talk to a bankruptcy attorney today to discuss how a Chapter 13 can help you and your family hold on to your most precious asset- your home. Call today. In North Carolina, contact the Law Offices of John T. Orcutt for a free initial debt consultation. 1-800-899-1414. Or visit www.billsbills.com and fill out our debt questionnaire. With offices in Raleigh, Durham, Wilson and Fayetteville, help is just a phone call away.

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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 Saturday, February 6, 2010 @ 12:31 pm

“It’s the same old story,  same old song and dance my friend’ -Aerosmith

Award-winning financial columnist Don McNay recently wrote an online article for The Huffington Post about the perils of overspending, entitled “Like Lottery Winners, Pro Athletes Also Blow Big Money.” In it, the part-time structured settlement consultant who has worked with injury victims, lottery winners and others who receive very large sums of money, has observed that some 90% of them will run through their money in five years or less; within two years of retirement, 78% of NFL football players are bankrupt or under financial stress; and 60% of  NBA basketball players are broke within five years of retirement—all “running through their money faster than a crazed lottery winner.”

In this blog, McNay ponders the question many of us wonder: why are these people so compelled to blow big money?

To answer it, McNay references the Sports Illustrated article entitled, “How (and Why) Athletes Go Broke,” which relays that one reason for the downfall of many pro athletes are the people who are advising them and hanging out with them.  McNay writes:

“You can’t choose your  “friends” by their ability to serve as your Yes-men.  In fact, a true friend will tell you when you are screwing up.  You need friends who like you for who you are, not for your wallet. Professional sports figures attract flunkies for many reasons…. Someone needs to tell sports figures that if a person REALLY wants to be your friend, he doesn’t need to be on your payroll. I have many friends.  But none of them get paid for that ‘privilege.’”

The author also points to a second symptom of this larger-than-life status: an innate overconfidence that the well will never dry up, and that the money will always be there.

“Sports stars also get caught in the same trap that others with big money fall into.  They think the money is going to last forever.  Someone who gets a lottery jackpot or injury settlement is only going to get it once.  As I told one injury victim, “You are only going to get hit by a truck once in your lifetime.  You need to make sure that this money is there for all your lifetime.”

Sports stars often think they will play forever, but the average career of an NFL player is only four years.  The careers end, the money runs out and they are not prepared for the sudden fall.

Sports stars often have an attraction for risk.  A young, professional athlete is the epitome of self-confidence.  Those who make it to the professional ranks were probably stars in grade school, high school and college.  They have never had anything go wrong in their entire lives.

Until they start investing big money. Overconfidence is an affliction that plagues many on Wall Street.  It is the primary reason we are in an economic crisis.  The problem is even worse for sports stars since they generally don’t have the education and experience that the Wall Street crowd has. When overconfidence is combined with lack of knowledge, disaster strikes.”

In these tough economic times, you may be asking why should you care about the downfall of formerly wealthy sports stars and Powerball pickers? The answer is clear: the same principles apply to your money as well as their millions. And no one says it better than McNay:

I would tell a professional athlete the same thing that I would tell anyone….Plan on the money you have lasting for the rest of your lifetime.  Assume you’ll never get another nickel.  Dump all the “friends” and hangers-on.  Don’t be spending to keep up with the Joneses. If they develop and stick to a sound financial game plan, they can avoid being another “same old story.”

If you’re in over your head, consider bankruptcy as way to start fresh. In North Carolina, contact the Law Offices of John T. Orcutt for a completely free debt consultation. Call 1-800-899-1414 today or visit www.billsbills.com.

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Published Saturday, February 6, 2010 @ 8:29 am

As someone facing serious financial difficulty, learning how much money is made by the huge banks to which you owe money can be frustrating. While we understand that we need to be accountable for our decisions, it stings to realize that profit models are often based on customers going into debt. Therefore, we can’t help but a feel a bit had, like the rube who just bought a cure-all tonic from the traveling pitchman selling from a horse and buggy.

CNN.com published an article recently that described what it deemed the “biggest rip-offs” in today’s society. We thought it relevant because knowing how some of these products are sold may encourage you to quit buying, using or subscribing to them and in the process, start saving more money to pay down debt or keep rebuilding after bankruptcy. We’ve summarized a few here:

Text messages
Wow. Rapidly replacing e-mail as the communication tool of choice for everyone under 25, text messaging has seen nothing short of a meteoric rise in usage in just the last 24 months. It’s an entirely new communication vertical, spawning marketing strategies and literally changing the way cell phones are developed and sold.

No doubt you have seen teenagers, maybe even your own, thumbing madly away on their mobile device, ignorant to the world around them. Well, with every OMG and TTYL the cell phone companies are LOL. Really loudly.

Text messages, which are causing cell phone bills nationwide to climb to record amounts, cost wireless phone companies roughly one-third of a cent to deliver. However, they cost you on average up to 20 cents to send and 10 cents to accept. That’s a 6,500 percent mark-up. :(

“Free” Credit Reports
Here’s one that stings. In a time when the nation is collectively reeling from a historic recession, when foreclosures are rampant, bankruptcies booming and no one’s credit rating is safe, several organizations are profiting off of selling you your own personal financial data.

You know the biggest name, Freecreditreport.com. The cheesy songs and redundant commercials sure do hit their target. But what they don’t do is sing honesty. At this site, and others like it, your credit report is not free, it’s simply provided for you in return for a monthly credit monitoring service. It’s like the cable company telling you HD programming is free.

Chances are, if you are worried about your credit report, you can’t afford another $15.00/month. The company is owned by Experian, a credit reporting agency, which means it costs them nothing to give that report to you. Let this sink in: a representative for the company had this to say: “We do realize there are a very small percentage of consumers who genuinely do not understand they have signed up for a credit monitoring service. We work to resolve issues with these consumers on a case by case basis.”

For a truly free report, as provided by law, go to: annualcreditreport.com

Movie popcorn
On the lighter side, it’s no surprise that movie food is expensive. Heck, they don’t even hide it. However, the movie industry is set up so theaters see a very small cut of the ticket proceeds. Therefore, concessions are their true money maker. Popcorn, for example, has a 900 percent mark-up, costing about $.06 to make and around $6.00 to eat. Many theater owners consider themselves to be in the concession business, not the film industry. As the recession continues its grip on the country, watch for more theaters to start offering beer and wine.

If you reserve a night out at the movies for the occasional reward for good financial behavior, skip the concession stand. Sneak in a bottle of water and some gum. Your cholesterol level will thank you.

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Published Friday, February 5, 2010 @ 10:06 am

Try as we might to understand some the esoteric banking principles that contributed to the recession or give the industry any benefit of the doubt, the folks on Wall Street just keep giving us reasons to believe they are, and will forever be, drastically out of touch with the way the rest of America lives.

Last year, CitiBank, one the nation’s major banking services players, announced a plan to provide customers with a truly free checking account, provided some account usage stipulations were met, in an effort to attract new accounts and to do their part in helping us stave off the effects of the recession. However, come November 2009, an announcement was made that additional fees would be applied to individuals that carried less than $1,500 in all accounts.

The fees were going to be applied to “EZ Checking” and “Access” accounts. The products would allow customers who made at least two monthly online bill payments or used direct deposit to not be subject to maintenance fees and per-check charges.

Needless to say, this did not sit well with a lot of people. Nor did it pass the smell test for the New York State Attorney General’s office. Citing that the bank did not make it known within a reasonable timeframe that the fees would kick-in, Attorney General Andrew Cuomo managed to convince the bank to suspend any impending costs for consumers who had signed up for the accounts.

Those who registered for one the “free accounts” can continue to bank free of charge until the end of January of next year. Despite the case being tackled in New York State, customers across the country are eligible to continue using their accounts without being subject to the announced fees.

Cuomo, in a press conference about the settlement, spelled it out clearly for CitiBank customers. “If you signed up for free checking, the bank can’t change the terms and must extend the offer for a reasonable period of time. We are defining reasonable, in this context, to be for one year.”

The practice of surprising consumers with short notice announcements of interest rate hikes or banking fees is exactly what led to the recently enacted credit card reform. Far too many Americans have been subject to incentives that promise free services and discounts only to have them yanked away at the moment it hurts the most.

There is nothing wrong with a company making money. However, doing so with deliberately vague or misleading tactics is an entirely different story. There is not one in the industry that believes CitiBank intended to continually provide its customers with free checking; not in this economy. And sure, their marketing is most likely perfectly legal. But is it ethical?

These tactics can lead those teetering on financial ruin right over the edge and often into bankruptcy. Worse yet, it can severely disrupt the plans of a person emerging from bankruptcy who was seeking affordable checking options.

Consumers continue to be victimized in today’s post recession-landscape. And while Washington is doing what it can to adjust mortgages, ease bankruptcies and fix unemployment, there seems to still be too many sharks and plenty of guppies. Stay on your toes, folks.

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Published Tuesday, February 2, 2010 @ 2:30 pm

Many of our clients automatically assume they will lose their rental property if they file for bankruptcy. Isn’t that the whole idea of bankruptcy? That you give up everything you have, with a few exceptions, in exchange for getting the debt collectors off your back?

Well, no. Many factors come in to play in determining whether or not you will be forced to sell your rental property, including whether you file chapter 7 or chapter 13, how much money you owe on the property and how much income you receive from it.

Let’s start with chapter 7. If you file chapter 7, you get an exemption for the equity in your primary residence – how much depends on the state you live in – but rental property doesn’t qualify for the standard residence exemption. Therefore, you will only be able to protect the property from sale if you can cover it under your available wildcard exemption. The North Carolina wildcard exemption is $5,000.00 per filer- not much. However, your state may have additional protections if you own the property jointly with your spouse. In North Carolina, if you own the property jointly with your spouse, the property is only subject to claims of joint creditors. If all of your debt is in the name of one spouse or the other, the property may be protected- regardless of the amount of equity. Talk to a experienced bankruptcy attorney, who can examine how you hold title and if you have any joint debt.

But what if you don’t have any equity in the house, or minimal equity? What if, for example, the house is worth $100,000 and you owe $120,000, or even $99,000? The trustee’s job is to determine whether or not there is money for your creditors, not to take away everything that belongs to you. He will determine the property’s worth, then subtract the projected sales costs, selling it and paying taxes on the proceeds. If it’s not worth the trustee’s time and effort, it’s unlikely that he will try to sell it.

With Chapter 13, there are additional caveats and concerns. In general, you should be able to keep your rental property in a Chapter 13 filing. In fact, since the rental property is not your primary residence, you might be eligible for cramdown under chapter 13 – meaning that if you owe more than the property is worth, the bankruptcy judge is able to alter the terms of the mortgage to reflect the property’s current value rather than the amount you originally agreed to pay for it. This could lower your monthly mortgage payments, as well as the long term amount you have to pay to the bank for the property. Cramdown isn’t allowed on primary residences, but it is allowed on other secured debts, including rental property.

Do note, however, that rental property can, under certain circumstances, cost you money. The trustee in a Chapter 13 case will look at all the costs associated with the property – your mortgage payments, plus taxes, insurance, upkeep and repairs. If these costs outweigh the income the property brings in, the trustee may object to your plan on the basis that the money you’re spending on the property should be distributed to your unsecured creditors. In such a case, surrendering the property may be your best option. However, this is a very fact-sensitive issue and depends on how your jurisdiction interprets very complex provisions of the bankruptcy code. Only an experienced bankruptcy attorney can advise you on your specific situation. Bottom line- if you’re deeply in debt, talk to a bankruptcy attorney and get the real facts. In North Carolina, call the Law Offices of John T. Orcutt. Convenient office locations in Raleigh, Durham, Wilson and Fayetteville. Call today: 1-800-899-1414 or visit www.billsbills.com for more information.

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Published Tuesday, February 2, 2010 @ 7:49 am

The Triangle is a well-known national business center. With major universities driving innovation and a healthy collection of global technology and pharmaceutical companies touching all of its borders, history tends to be on our side in times of financial worry. Our area is known for entering recessions late and coming out of them sooner.

However, all those big companies, six-figure jobs and our collective entrepreneurial spirit has not done much to curb the rate of bankruptcies in Wake County, the heart of the Triangle.

The Triangle Business Journal reported recently that in 2009, Wake County bankruptcies grew by almost 37 percent during the last year. The total number of filings, both personal and business, is now at its highest level since 2005, when scores of Americans filed in order to avoid strict legislative changes that added a significant number of legal hurdles to the bankruptcy code.

In October alone of that record year, 1,210 bankruptcy filings went on record in Wake County. The total for 2005 was still significantly higher than 2009′s, coming in at 4,036.

The United States Bankruptcy Court for the Eastern District of the state, which counts all areas from Wake County to the coast, reported 2,961 Wake County bankruptcies for 2009. The year prior tallied 2,170. For the entire district, the court reported 11,592 bankruptcies. A little more than half were individual Chapter 13 cases and Chapter 7 filings totaled 4,532.

There were 142 Chapter 11 business reorganization cases. Chapter 12 bankruptcy, a section of the bankruptcy code pertaining to family fishing and farming businesses, saw only five cases.

In Wake County, where growth has always been a concern, the housing market drove a number of current personal and business financial collapses. Developers, appraisal companies, real estate agents, contractors and mortgage brokers were all deeply affected by the reach of the real estate crash. Many neighborhoods around Wake County remain unfinished, showcasing empty cul-de-sacs with “available lot” signs barely visible through knee-high weed creep and vacant streets that lead to long-settled dirt mounds.

The real estate industry has seen a culling of sales professionals like never before. Many Triangle-area professionals who switched careers to latch on to the real estate sales train found themselves catching it right as the market dropped into a seemingly bottomless valley of recession.

Chief Judge of the Eastern District court, Randy Doub, attributes the rise in part to the housing industry. “Much of it is related to the downturn in the home-building industry. The trend in the filings is upward.”

Wake County, which includes Raleigh, is not the only component of the Triangle that experienced a dramatic rise in 2009 bankruptcies. Durham and Orange, which are blanketed by the Middle District, saw increases of 20.5 percent and 44 percent, respectively. Orange County includes the towns of Chapel Hill and Hillsborough.

The numbers are scary. Being on the front lines, we can clearly see that for many of Americans, not much has changed since the recession began. Jobs simply are not coming back fast enough. The more fearsome revelation is that many positions will never come back; instead, they will remain forever lost in the debris of a shattered U.S. economy.

If you’re one of the many North Carolina residents struggling to find your financial footing, you need to speak with a qualified bankruptcy attorney. Call the Law Offices of John T. Orcutt for your completely free, no-obligation debt consultation. 1-800-899-1414 or visit www.billsbills.com. Convenient offices in Raleigh, Durham, Fayetteville and Wilson.

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Published Sunday, January 31, 2010 @ 7:38 am

There is so much we do not know about the things that put us into debt. From credit card fine print to car lease agreements and as the last few years have demonstrated, even the most basic facts about our home loans.

To anyone with the ability to fog a glass, it is more than evident that our collective ignorance on these matters is precisely what causes our country to carry so much personal debt. And despite the government’s best effort, whether in credit card reform or mortgage assistance programs, the only way to solve our financial problems is for the American consumer to educate itself as to the practices, jargon and bureaucracy that obfuscate the critical, debt-inducing rules of credit and loan products.

However, education, specifically student loans, is one of the things helping to add weight to America’s debt anchor. They have caused countless bankruptcies and yet remain a non-dischargeable debt under Chapters 7 and 13 unless you can prove that paying them will cause a substantial hardship on your family. As if the bankruptcy itself was not enough hardship.

Those in the student loan profit circle are hesitant to ever address the debt issue in public, despite it’s prevalence on so many household balance sheets.

In a Wall Street Journal column, an expert on the student loan debt problem cited a 2003 report by the Department of Education with some staggering statistics. It stated that default rates for loans that cover 4-year, 2-year and for profit colleges are 25 percent, 35 percent and 45 percent. In simpler terms, around one in three students default on the loans they accepted to pay for education.

Not sinking in yet? Try this: the student loan default rate is higher than credit cards, sub-prime mortgages and even over the counter payday loans. Yet, the issue is never introduced or addressed in Washington circles, even in the midst of today’s middle class stabilization efforts.

Even though the Department of Education (DOE) created and published the report demonstrating the nation’s difficulty in repaying student loans, it later boasted complete confidence in a full return on every loan it issues plus a 20 percent boost in interest and fees on forbearance, adjustments and default penalties.

Now, mix in organizations like Sallie Mae, who buy, issue and oversee billions in student loans and also own collection companies to track down those who can’t pay, and it’s easy to understand just how much money is being made on the back-end of our college diplomas.

The higher-ups in Washington are in on it too, as a number of very common consumer protections that apply to most loan vehicles, such as the bankruptcy code and truth in lending requirements simply can’t be found in the fine print of your student loan. Thus, the DOE is the lone source of control when it comes to student loans, wielding powers over your wallet and financial stability like no other wing of our democracy.

And it’s only going to get worse.

Reuters is reporting that the rate of student loan growth in the last two years is close to setting records, jumping 29 percent. In total, there are now close to 69 million student loan accounts open in the United States. This is primarily because the recession has put so many people back into the classroom to refresh job skills, obtain additional degrees or change careers. Additionally, with so many parents out of work, more children have to apply for loans to cover their schooling.

In total, the country now owes close to $527 billion in student loans. And just about every penny of it will be repaid. Plus interest.

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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 Saturday, January 23, 2010 @ 7:15 am

You know your creditors: those nice folks who give you something you want — goods, services, or money — in exchange for your promise to pay them back at a later date.  In practical terms, a creditor can be a credit card company, a bank, a hospital, your local dentist, or any person or company to whom you owe a debt.

But, in these unfriendly economic times, [exactly] what happens when you can’t or won’t pay back that debt? What should you do when your creditors come calling? Can you keep creditors at bay or are you bankruptcy bound? Conquer your fears of dealing with your debt and remember the bankruptcy basics necessary to keep you from a creditor crunch.

Remember: Filing a Lawsuit Against a Debtor is not a Creditor’s First Choice
Keep in mind, creditors normally don’t want a lawsuit any more than you do. In fact, a creditor will not normally file a lawsuit against you until after many months and sometimes years of pursuing you for non-payment. Plus, creditors know that even if they file a lawsuit, it can be quickly neutralized by your bankruptcy filing—dispensing with your unsecured, and in some cases, even secured debt.

To Answer or Not to Answer
When you fail to respond to a creditor’s lawsuit, the creditor will gain a default judgment. This judgment will give the creditor the right to take certain collection actions against you, which could include seizing your bank accounts or garnishing your wages. In the alternative, if you respond to a creditor’s lawsuit—providing an “answer”—it can buy you precious time to secure more savings or take an excellent opportunity to file Chapter 7 or Chapter 13 bankruptcy.

The Consequences of Judgment Day
A judgment is a judicial order that, if it is not obeyed, will invoke legal consequences.  In extreme cases, a failure to pay a judgment filed on behalf of your creditors could result in a bench warrant issued by the court for your arrest. Keep in mind, only bankruptcy can help you avoid this type of judgment.

Settling What Constitutes A Settlement
Creditors file lawsuits because they simply want some kind of payment and, in the process, are often willing to settle for a lesser amount for repayment. Yet, while creditors want these types of settlements, it’s important to make sure your settlement offers are in writing.  Additionally, you should also be wary of so-called “debt settlement” firms who claim they can settle your debts for pennies on the dollar. Remember: you don’t need a firm to settle your debts…creditors filing lawsuits often offer settlement amounts; but the forgiven debt may be taxable. In the end, keep in mind that debts settled or discharged in bankruptcy are not taxable.

Worried About Wage Garnishment?
As mentioned, any creditor who wins a judgment against you can also garnish your wages or seize your bank accounts.  Only bankruptcy can stop your wages garnishment or a bank seizure order to raid your valuable accounts.  If a creditor seizes your wages or accounts after you file bankruptcy, you do have legal recourse and it’s even possible to get those assets back.

Knowing a qualified bankruptcy attorney can also help you conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—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 Friday, January 22, 2010 @ 5:58 pm

Recent bankruptcy news includes a headline about industry icon MGM filing a prepackaged bankruptcy, which, relative to the movie industry, may carry as much as impact as the General Motors and Chrysler filings had in Detroit.

However, operating with excessive debt is not a new concept in the film industry. In fact, it’s how most filmmakers get started. One has only to ask the nearest independent movie director how he’s funding his latest effort and your likely to hear the words “Visa,” “Mastercard” and “American Express.”

Today, access to the credit market is slowly changing the small film market. Just a couple of years ago, aspiring directors and producers would have little fear about maxing out their credit cards because of the prospect of a major studio discovering their unpolished cinematic gem and putting it on screens across the country.

Hollywood is rife with stories of how the one-time small-time filmmaker thrived on friends’ couches and ramen noodles while making their “dream project.” With banks squashing credit limits and destroying all but one copy of the vault key, the creative collective in California is afraid that the recession is also hampering the future of film, not just the unemployment rate.

And, for those who took the credit card route to financing their films before the recession tsunami swept ashore, bankruptcy has become their best route back to dry land.

On the eve of the Sundance Film Festival, the crossroads of all things independent and Hollywood, little known movie makers are working harder than ever to see their dreams realized turned into record weekend box office gross. Thankfully, those behind the now red carpet event have found a way to deal with the recession’s toll on the individual director by creating a new category called “Next” that is only for those films made on little to no budget. This year, six pictures were selected.

In 2003, two documentary filmmakers made it to Sundance with a piece about children and spelling bees. They used to the limit 14 different credit cards to pay for the travel and production that went into the movie. One of the filmmakers said in a CNN.com article, “Over the course of several months, we hit the road, using our credit cards to fund the project … Then we’d come home between shooting the film, pay down some of the debt and resume shooting.” Their film, once picked up by a major studio, made $6 million.

In this credit drought, some indie producers are turning to a new loan concept powered primarily by the Internet called “crowdfunding.” One site in particular, www.indiegogo.com, allows filmmakers to propose their idea to whomever comes on to the site. They can include clips, story ideas and other production updates. Donations can be of just about any amount. Currently, the site boasts 2,300 projects and more than $200,000 in funds raised.

Crowdfunding has become a big hit with movie folks because it establishes a fan base early on that could eventually contribute marketability and in the end, butts in seats.

Still, the lack of credit has saved a lot of independent filmmakers from going too far into the hole. David Spaltro, a low-budget filmmaker, amassed $150,000 in debt on a total of 40 different credit cards.

“My credit score looks like a batting average. And that’s being conservative,” he said. The film was finished in 2008 and since then, he has been able to pay off a substantial amount of what he owes.

Wow, talk about a horror show.

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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 Monday, January 18, 2010 @ 6:43 pm

Is there any way to lower your car payments in bankruptcy? The answer, which may surprise you, is maybe. While Congress recently rejected attempts to pass a law that would allow bankruptcy judges to ‘cramdown’ mortgages, there do exist some limited possibilities for revising auto loans.

Basically, debtors who owe more than their car is worth – and who doesn’t, especially if you bought it new? – may be eligible to eliminate the portion of the debt that exceeds the value. In a Chapter 13 bankruptcy, the debt would be divided into ‘secured’ debt (the value of the car) and ‘unsecured’ debt (the excess money on the loan), and the car loan would be revised to repay only the secured portion.

However, this option is generally only available for people whose car loans originated more than 910 days before they declared bankruptcy. Some courts have allowed, in limited form, for the portion of a car loan that was ‘rolled over’ from a previous car loan, to be treated as unsecured debt even in a more recently originated loan. However, note that a recent decision by the US Court of Appeals for the Fourth Circuit – whose jurisdiction includes North Carolina – has determined that this portion of a car loan is included as secured.

On the other hand, some attorneys report that some lenders are willing to renegotiate the loan, even if it originated in the last 910 days. While the law doesn’t require them to renegotiate, it doesn’t prevent them from doing so either. It’s at least worth asking, before you take up your other options.

If your loan originated less than 910 days ago, and your lender refuses to renegotiate, what are your other options as you go through bankruptcy? You can simply surrender the car. Lenders don’t like this option, but if you’re filing bankruptcy, they have no choice. They will take back the car and then sell it at auction. The difference between what you owe and what they sell it for will be entered against you as a deficiency balance. However, even in a Chapter 13, there is little chance the creditor will receive any return on its deficiency balance.

You can also reaffirm the loan. In this case, you agree to continue making the payments on the car even after you file for bankruptcy. Note carefully, though, if you choose this option and then default on the loan, you will be responsible for the deficiency balance, and the lender can sue you for it. Reaffirming your car loan has some advantages though: you get to keep your car, which means you don’t have to look for a new car loan with a recent bankruptcy on your record. Making these payments on time is also a good way to rebuild your credit – just make sure the lender is reporting them to the credit agencies.

As always, remember that the best way to negotiate this maze is with the help of a good bankruptcy attorney.

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Published Thursday, January 14, 2010 @ 11:34 am

It’s 2010, the year we take charge, so to speak, of our credit cards. In only a couple of months, credit card companies will have to fully abide by the provisions of the Credit Card Accountability, Responsibility and Disclosure Act (CARD). Some components of the act have already been in action.

Nevertheless, consumer advocates are expecting a slew of new credit card company tactics to increase, damage and elevate our debt, credit reports and heart rates. This is especially frustrating for those trying to re-establish a sound credit rating after bankruptcy. If more fees and restrictions come into play, it will take that much longer to use a credit card as a reputable credit source. (Remember though, this may not be a bad thing. Charge cards are a good way to use plastic and remain on top of your balance.)

We’ve discussed several times on the blog how credit issuers have started to counteract the measures by pushing interest rates just enough to not warrant any additional legislation yet get as much as possible from those Americans who already carry a significant monthly balance. For those with solid credit who manage a small balance over multiple cards, lenders have seized credit limits, decreasing what’s available and consequently creating marks on credit reports.

(It should be noted that action is underway to prevent those specific initiatives from harming a credit rating.)

Here are a few new methods by which credit card companies will be able to gouge their customers.

• Expect many cards to start charging annual fees. Currently, 80 percent of the available credit cards in the marketplace do not charge an annual fee. For those carrying solid credit ratings, annual charges are rare. Reports are coming in nationwide about some banks delivering notices about annual fees, which can in some cases climb to around $100. Other banks will only charge if you fall below a specific balance, which encourages card holders to not pay off a balance in order to avoid additional costs.
• Your one-time fixed rate card may suddenly shift to a variable rate, leaving you open to rapid jumps in balance. This is actually a byproduct of the law that prevents surprise interest rate hikes. Lenders bypassed it by simply creating credit cards with interest rates that will vary on their own. In other words, your card company isn’t deliberately increasing your rate, the market is doing it. Granted, that means your rate can sometimes go down, too. However, take a look at the markets. The Prime Rate is already as low as its been in a long, long time. It’s only going up from here.
• While the CARD act will prevent sudden rate hikes on existing cards, it does not address rate limits on new cards. Clearly, you don’t have to apply to a high rate card but the practice will make it much more difficult for people to obtain cards and also limit consumer choice.
• Scaring consumer advocates the most is the expected new fee strategy. It is believed that the credit card industry will start assigning fees for an array of membership services and card ownership privileges. You may also see vague charges on your statement, not unlike what’s found on most phone bills. For example, keep an eye out for inactivity or minimum balance fees.

Thankfully, consumers’ use of credit cards is at its lowest point in more than two decades. And it looks as if it may stay that way.

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Published Thursday, January 14, 2010 @ 9:30 am

More than 1.4 million Americans filed for bankruptcy in 2009; surprisingly, a large number of filers were over the age of 65. Senior citizens were traditionally less likely to file bankruptcy for a number of reasons. Until recently, for example, senior citizens held less credit card debt than younger people. They have less time to repair their credit rating after a bankruptcy as well, and may feel that the perceived harmful effects of bankruptcy will haunt them forever. Considering that many myths about bankruptcy are deep-rooted, older Americans may be more likely to hold strong feelings associating bankruptcy with shame and failure.

Nonetheless, bankruptcies among the plus 65 set continue to grow. Between 1991 and 2007, bankruptcy filings among Americans 65 and older went up 125 percent; for those between ages 75 and 84 they increased an astonishing 433 percent. The recession that began at the end of 2007 has hit seniors particularly hard. The crash of the stock market meant that many seniors wound up having far less money to see them through retirement than they had hoped. While younger workers have a couple of decades to rebuild their portfolios and 401k accounts, older Americans, who need to use that money now, do not. Furthermore, many older Americans live on a fixed income – social security payments or pension payments – and they have few options to increase that income. With a national unemployment rate hovering around 10%, jobs are difficult to find for anyone. Given that many companies have a bias – legal or not – against hiring older workers, senior citizens often find it difficult to get work.

While seniors once had a reputation for eschewing credit cards and paying with cash, in recent years, credit card companies have been aggressively marketing to senior citizens. Most doctors and pharmacies now take credit cards for prescriptions and co-pays; many strapped seniors have no choice but to put those purchases on credit. The average senior now has slightly more credit cards debt than his or her younger counterparts.

The good news is that bankruptcy offers seniors the same protections it offers all Americans: a chance to keep your home. Freedom from the incessant calls of creditors. If you’re on a fixed income, chances are good that you will qualify for a Chapter 7 bankruptcy, which will simply discharge your unsecured debt.

Why waste your golden years worrying about credit card debt? See a bankruptcy attorney today, and determine the best course for you, to bring you to financial freedom.

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Published Tuesday, December 29, 2009 @ 6:52 pm

Have the credit card companies ‘jacked-up’ your rates, doubling your payments?

And really stuck it to you and your family?

Now, you’re screwed for sure…right?

Where is the money gonna come from to make double payments?

You can’t just ask your boss for a raise because you need more money…can you?. So, you have to try to pay with what you have.

The problem is that every dollar you pay is a dollar you steal from your family.

And…to make things worse…

Have they lowered your credit limits, putting you “over limit” for no fault of your own, so now they can soak you for outrageous “over the limit” fees?

And, these are on top of the already outrageous “late payment” fees.

All tactics designed to gouge out of you as much money as possible.

What’s fair or right about that?

And…adding insult to injury…have they changed your credit card from a “fixed rate” to an “adjustable rate”?

That’s not right.

What they did might be legal under the law, but just because something’s legal, don’t make it right or fair.

Just because you can…doesn’t mean you should.

But they did it anyway. It’s like the banks are telling you “Screw you. We want more money. So just pay it and shut up.”

Angry? You should be. Real angry?

The only good news is that you are not alone. They have done it to millions, if not tens of millions, of good, hard working Americans.

The only question is “What are you gonna do about it?”

Want to know why they did this to you?

The answer is simple.

Greed….to make as much money off the back of you and your family as they can…while they can.

Congress passed a new Credit Card Reform Bill of 2009. This bill was intended…so they say…to ‘rein in’ the credit card companies, that is, the big banks who issue credit cards to tens of millions of Americans.

For decades, the big banks had been suckering us Americans with the lure of easy credit, full well knowing that we would get in debt and stay there…good news for banks who live off of interest and fees, and all the more so as they more and more jacked up the interest rates, shortened the grace periods, and made a fortune charging higher and higher extortion-level “over limit” and “late payment” fees.

And, everything was working just fine…like the banks planned…until they completely screwed up the financial market and forced Congress to spend our money on huge “bailouts”.

All of a sudden, the banks were in trouble and some Congressmen saw this as a one-time opportunity to try to clamp down on the nasty credit card tactics, a chance to put a stop to some of the now well-known and abusive credit card company shenanigans. As a result, a credit card reform bill was passed and signed into law.

On its face, the credit card reform bill looked great. For example, there are provisions to make it illegal to change your interest rate on existing balances.

Sounds good…right? Wrong!

Long before the bill ever went to the President for signature, it was stuffed full of holes…err ‘loopholes’.

The biggest loophole lies in the fact that the bill does not even go into effect until 2/22/10. This delay provided the big banks more than enough time to do all sorts of things to sidestep the new bill, to protect themselves and to make even more money. In effect, the big banks have turned the credit card reform bill into nothing but a big joke.

One of the things they did was…across the board…to jack up everybody’s interest rates.

How did this happen?

What went wrong? What happened to the credit card reform bill? How did it get full of holes in favor of the big banks it was meant to rein in?

Easy. The banks were able to exert enough influence to get a number of key provisions taken out of the bill and others changed, including the date when the bill would go into effect…2/22/10.

Are you surprised? Don’t be.

The truth is that the big banks have been in control of this country since the Constitutional Convention, when America first became America. They were in control, they are still in control, and they will always be in control. And, being in control, they are, in effect, also in control of Congress.

Unfortunately, the vast majority of Congressmen need bank contributions (read “money”) to pay for election campaigns. But there’s a price to pay for this money. And, that’s where the golden rule comes in: The banks are the guys with the gold and the guys with the gold get to make the rules. The banks have the money the Congressmen need.

And, just to make sure they are heard, big banks spend a ton of money on lobbyists to try to bully some Congressmen, and brainwash others. And that’s just the tip of the iceberg in terms of the influence that banks have over Congress.

The price to pay is that the banks get to help write the rules (read “new laws”)…or in this case…the credit card reform bill.

At the same time, this time around, the big banks knew they had screwed up the entire financial market, and so much so that it forced Congress to spend OUR money to bail them out. But, they also knew that the bailouts were not popular at all with the voting public. And they knew that most Congressmen would be feeling the heat from the bailouts and that, as a result, these Congressmen would be feeling the need to at least put up a showing that the banks were being punished. Not doing so, the big banks knew, these Congressmen would suffer the wrath of the public in the next election.

So…the big banks knew…something had to give, that there would be a price to pay for the bailouts, and part of the price came in terms of the new credit card reform bill.

Or so it would appear to the public. Unfortunately, appearances don’t necessarily reflect reality, and that is exactly what happened to the credit card reform bill.

Even with all the problems the banks had caused to our economy, the big banks still, in effect, had massive amounts of influence over Congress. And, controlling Congress meant that the big banks could get things changed in the proposed credit card reform bill. And, so it came to pass, and the banks got most, if not all, of what they wanted, a bill so watered down with loopholes that it was, in effect, turned into nothing but a joke on the public.

Basically, as it turns out, the new credit card reform bill is just another SCAM by the big banks.

In effect, a lot of the current credit card reform bill was written by the same big banks it was meant to rein in.

Congressmen and the banks both got what they wanted. Congress got to look like it did something to punish the banks, and the banks got a bill that they would work around.

Depressing? Disappointing? Frustrating? I agree.

With the major provisions of the bill delayed until 2/22/10, the big banks got busy changing things necessary to completely sidestep the bill.

And, that’s were the rate hikes, lower credit limits and adjustable rate credit cards come in.

The banks knew that, under the new law, they wouldn’t be allowed to so easily change things in the future regarding credit cards. But, nothing in the bill kept them from doing it now, before 2/22/10, and being the big banks they are, that is exactly what they did…to you and to me.

First, they jacked up your credit card interest rates. Then, they lowered your credit limits, and then, they did other things like changing your credit card contract from “fixed rate” to “adjustable rate”.

The net effect: Passage of the credit card reform bill, instead of helping you, actually hurt you…and hurt you bad.

The upshot was that millions of good, hard working Americans, just like you, quickly received notices jacking up their rates, lowering their credit limits and changing their credit card contracts from “fixed” to “adjustable rates”.

The real bottom line is that if you were just staying afloat before…and just making ends meet…now you were screwed.

Who can have their payments doubled and survive?

What always gets me though….is why so many Americans just sit there and take it?

I am always asking myself: “Why are people not more pissed off? Why isn’t everybody angry at the banks?”

Is it because people feel helpless against the giant bank? I can understand that. Most of us aren’t bankers and we don’t know what to do or if there is anything we can do.

Is it because what the banks are doing is allowed under the contract you signed with them? I don’t know if you have ever looked closely at a credit card agreement, but it you have, you know that it is long and complicated and full of good stuff to let the banks do just about anything it wants to pull the rug right out from under us.

Is it because the things the banks are doing to us aren’t illegal? I would hope not because where I come from, just because you can get away with it, don’t mean it’s right. And, there ain’t nothing ‘right’ about jacking up interest rates, doubling payments, and screwing families.

Or is it because, as Americans, we have gotten so far removed from having to fight for our rights, so tame and domesticated that we don’t even have any fight in us? Instead, like the tame and domesticated farm animals we have become, we depend on a Congress and our President to fix things and protect us. How is that working out for you and your family? As Americans, we hafe been like cows being lead to slaughter.

This has got to stop!

Whatever the reason is, what the banks have done is NOT RIGHT, and the bottom line is this:

What are you going to do about it?

If you answer is “nothing”, you can stop reading right here, right now.

But, if you are as pissed off as I am, and have had enough, and need to make sure your family survives no matter how bad things get (and things will get worse before they get better), and want to fight back,….read on.

The truth is that with hiked rates and doubled payments, many of us will either have to do something or see our families suffer and submerge.

Let’s face it. We only have so many dollars and every dollar we send to the credit card companies is a dollar we can’t spend on our families, and which comes right out of the mouth of our kids.

I don’t know about you, but that is not what I intend for my family…and it just pisses me off.

How about you?

As it is, our grandchildren’s, grandchildren will still be paying for the bank “bailouts” forced on us by Congress, and now… to make things worse… the banks are throwing salt in our wounds by jacking up rates and screwing with us.

I don’t now about you, but I sure as hell don’t intend to just sick back and take it in the face when the credit card companies treat me this way, whether what they are doing is legal or not.

And, to make it worse, the banks aren’t even honest with us. Instead of telling us the truth, they trump up this and that to justify screwing us. And even when we didn’t do anything wrong, they make up stuff, for example, referring to defaults or late payments that never happened.

It makes me sick and it makes me angry. Is it just me, or are you angry too?

Why don’t they just tell it like it is? If they did, it would likely sound a lot like this:

“We are in the business of making money. That’s why we exist. That’s what it’s all about. That’s all there is to it. Nothing personal, but we’re in it for the money and we always have been.

We don’t care about you. We never did. If, on occasion we come across like we do care, we’re only pretending, either because we know that being nice to you will keep you paying or because being nice to you is in our best interest, not yours.

In fact, you are so brainwashed by your moral upbringing that you go on expecting us to act differently. You just never get it. Being fair or just or helpful or honest or putting your best interest first is just not our nature as a bank.

On top of that, you signed a contract with us that lets us do whatever we want to you. In effect, the contract is only binding on you. The truth is that it’s a joke that it’s even called a contract. A true contract would assume that both sides had a hand in coming up with the terms. Instead, it should just be called “Our Rules”. Yeah, the golden rule: We have the gold, so we make the rules.

And, under that contract, we have the right to do anything we want, including raising your rates and screwing you in ways you can’t even imagine.

And, we do it because it makes us more money. Did we mention that it’s all about money, money and more money? It doesn’t matter. We can say it’s all about money and you still don’t get it. You still think our relationship is about honesty and fair dealing. It not. It’s about money, taking your money and giving it to us.

Furthermore, experience has shown us that we can treat you as badly as we want and get away with it every time. To us, you are not human beings or families. You are just numbers and profit. And, since you are just numbers and profit, we can screw you and still sleep at night, just fine. In fact, those of us who make the big decisions don’t even live in your communities, and even if we did, you don’t know who we are. And you think that just because we have people working in your community, that makes a difference. It doesn’t. They do what we tell them. Sure, part of what we tell them is to be nice to your face, but we don’t mean it. We just say it because we make money off of you, lots of it.

Oh, sure, a few of you will stomp and complain and maybe close your accounts with us when we treat you badly, but we have everybody so brainwashed that ‘credit is king’ that most of you will put up with just about anything we do to you if it means that your credit score will be ok..

What’s really wild is that most of you won’t even get mad at us and the few of you who do won’t be able to convince the others to get mad. In fact, you’re so brainwashed that most of you will blame yourselves for getting into debt in the first place. How cool is that? We have spend our careers figuring out how to legally trick you and cajole you deeper and deeper into debt, so much so that you are trapped forever, and still you don’t blame us. Instead, you blame yourselves, and feel so bad about not paying your bills that you will take food out of your own kids mouth and keep making your own families sacrifice on and on and on to keep paying us.

The truth is that we can screw you and we have screwed you, and you won’t do a thing about it.

So, nothing personal, but if we can skirt around the negative effects of the credit card reform bill, even if it screws you and your kids, that is what we are going to do. We’re bankers. It who we are. You’re just too stupid to see it.”

Angry yet?

I hope so because if you get angry enough, there are things you can do to fight back,

….things that speak to the big banks in the only language they understand,

….things that speak to the big banks in the only way that ever really gets their attention: MONEY.

You don’t have to just sit there and take it, and your family does not need to continue sacrificing and suffering.

Are you ready to take control? Are you ready to do something positive? Are you ready to do whatever it takes to make sure your family survives no matter how bad things get?

If so…good!

The first thing you need to do is to stop looking to Congress for help. That ship sailed long before you and I were ever born. You know it and I know it. Instead, we need to do what we can to help ourselves.

Second, stop thinking that big banks care, or will ever treat you fair. It ain’t gonna happen. To them, you are not a human being, much less a human being with kids and brothers and sisters and a mom and dad. You’re just a number to them, a statistic on a computer screen, and that will never change. So, stop wasting time calling them and asking them to be fair.

Next, find a small community bank that’s too small ‘not-to-care’ and move your bank accounts and all your banking business there. It may be that you still need the big bank for your credit card, but not for the rest of your banking business.

Next, if you are one of the lucky ones who can afford to do it, pay off your credit cards in full and stop using credit cards, except where you already have the cash or income to pay the thing off fully each and every month.

If you are not so lucky, and you can’t afford to pay off your credit cards in full, unfortunately, you only have 3 choices:

Choice 1: Go on paying, no matter what.

If you can even afford it, one option is to just go on paying your on your credit cards no matter how much they jack up your rates and no matter how high your payments get to be.

This is what the banks are counting on you to do, and if you do it, they win. The problem with this option is that every dollar you pay them is a dollar no longer available to take care of your family. In these tough economic times, continuing to pay on jacked up credit cards is risky business at best, and more likely, financial suicide for your family.

Choice 2: Stop paying.

In the short run, this will leave a lot of money in your pocket, and that good in terms of taking care of your family, but any credit you do have will be killed of completely, and ultimately, you will still owe all the money, plus interest. And…sooner or later…the credit card companies will sue you, and having gotten a judgement against you, will take from you whatever money or property they can legally get their hands on.

Choice 3: File bankruptcy.

What a surprise. A bankruptcy attorney hawking bankruptcy as a solution.

But the fact is that, if you can’t pay all your bills or, even if you can, but only by making your family suffer, bankruptcy does 2 things that nothing else in the world does:

First, it gets rid of debt and gets rid of it permanently. Results will vary depending upon your situation, but nothing gets rid of credit card debt, for instance, like filing bankruptcy.

And second, if you have no choice and need to file bankruptcy, it gives you a chance to give the banks a dose of their own medicine?

Let me explain. At its core, what bankruptcy does best is that it gets rid of debt. It just erases it, like, “today you owe it”, and “tomorrow you don’t”, like it never existed.

Well, you know who gets hurt when you don’t have to pay. The big banks…at least in terms of credit cards. The very same banks that the government forced you to help “bail out”. The very same banks that just jacked up your rates, doubling your payments. The very same banks that stuck it to you and screwed your family. The same banks that would let your family sink if it means making another buck.

Sick of having your back against the wall?

Need to get your family out of debt and back on track?

Need to put your family first again…instead of last?

And need to do it now before things get even worse?

Want to give the banks a dose of their own medicine for making you suffer and forcing your hand? Is it time to make them suffer the way they have made your family suffer?

If so…Think bankruptcy.

You have the power.

The power of bankruptcy.

Call today for a FREE Debt Consultation and at least find out how all this bankruptcy stuff works. You won’t be disappointed…I guarantee it.

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Published Tuesday, December 29, 2009 @ 6:00 pm

It hardly seems fair.

Those needing help with a bad mortgage that can be blamed on banking industry profit strategies are now faced with the problem of having their credit ratings ransacked as a result of enrollment in a federally-backed mortgage modification program.

The subprime mortgage crisis forced hundreds of thousands of Americans into bankruptcy or foreclosure. As the government realized, despite its public reticence, that it played a tremendous role in the state of its citizens’ bleak checking accounts, it announced the creation of the Making Home Affordable program, a concerted effort to offer banks financial incentives to adjust their customers’ mortgages at more favorable terms to the customer.

In the program’s wake arose countless private organizations and state-run mortgage assistance efforts. However, deep under the surface of the seemingly endless field of good will grows a bitter small seed of realization that your credit rating will experience increased erosion by entering into a mortgage modification plan… As if the impact of missed home payments and additional debt wasn’t already hard enough to swallow.

Jason Axelrod, a Chicago city employee, was one of many Americans who recently realized that seeking mortgage help would lead to negative consequences. He enrolled in a trial modification a number of months ago, at which point he sustained a reputable credit score of 750. With overtime cut and a quick jump in property taxes, it became increasingly difficult for him keep his monthly payments on track. The mortgage modification adjusted his payments by $565.

Trial modifications are generally intended to last a few months while banks and program representatives collect paperwork and gauge the homeowner’s ability to handle the new payments.

Eight months later, Jason remains in a morass of confusing paperwork and has yet been able to provide his lender with the appropriate paperwork to finalize the trial plan into a permanent one. Oh, and his credit score, despite no additional big ticket items or debt troubles, has dropped by more than 100 points. He was recently offered a car loan at 12 percent interest. He had previously enjoyed a low rate of 4.7 percent.

It is during the trial period that industry guidelines require lenders to report information on those enrolled. Specifically, the credit bureaus want to know a borrower’s status before entering the program. And it is in this reporting effort where the less-than-above-board practices of the credit bureau come into play. Essentially, to the folks at Equifax, Experian and TransUnion, the mortgage modification enrollment process is simply another credit checkpoint, supplied by the government, that they use to collect information on consumers. It’s like shooting debtors in a barrel.

A jointly devised coding program was installed to signify a borrower’s status as a “partial payee.” The presence of this code alone is enough to negatively impact credit standing. The full scope of its impact is based on a number of mortgage payment factors, such as number of missed payments before enrolling in the assistance program.

However, according to the Treasury Department, even those who were current on their mortgage could see their credit score cut by 100 points, simply because they chose to enroll in a program offered by the government.

At the start of September 2009, 24,000 people current with their mortgage entered into trial modifications. Just after Thanksgiving, the total number of trial modifications was just under 700,000. That’s a lot of credit reports. And most likely, a lot of frustration.

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Published Thursday, December 24, 2009 @ 7:26 pm

Medical debt is one of the nation’s largest bankruptcy stimulants. Hospital stays, exotic medications and steep monthly premiums have helped fester a plague of debilitating debt obligations that is said to affect millions of Americans.

Today, on what may eventually be considered an historic day for American government, the United State Congress may have found a cure. Or at the very least, it could be argued that the political chemo drip that has been hanging over the country’s head for almost a century has started to have an effect.

On the eve of our country’s most recognized reason to come together with families and to celebrate life’s little importances, like health and happiness, the United State Senate approved a healthcare reform bill that contains some of the most sweeping changes ever introduced to the $2.5 trillion healthcare industry.

In its current dosage, the bill will broaden medical coverage to 30 million citizens currently deemed uninsured. Once in place, 94 percent of the country will be covered. The bill also introduces provisions that will require industry providers to cease denying coverage to people with existing medical problems.

Other highlights include the requirement for most Americans to have coverage, a subsidy program to assist those unable to pay for an entire plan and a system of state-run insurance exchanges in which people can compare potential insurance products.

Every year, more Americans file bankruptcy because of medical debt. Quite often, even those with good coverage find themselves unable to cope economically with the burden of sickness. The American Journal of Medicine reported earlier this year the number of families in debt because of hospital bills is growing quickly. Specifically, the organization’s report cited that 62 percent of all bankruptcies in 2007 were rooted in medical obligations. And that was before the recession’s tentacles were able to fully strangle the country.

Most of those surveyed in the report were college educated and middle class. Here are some more stats:

• Unaffordable bills were directly attributed to 92 percent of medical bankruptcies
• Loss of income due to illness caused 40 percent
• A quarter of all business that provide health insurance benefits cancel them when an employee experiences a serious illness
• An additional 25 percent cancel medical health benefits within a year of onset of an employee’s medical problems

The debate on medical insurance reform is far from over. In fact, it will never end. Today’s measure will ignite an entirely new litany of political diatribes, grandstands, agendas and campaign platforms.

The majority of Republicans are remaining firm on their stance that the bill is an intrusion into the private sector and a government power-grab, arguing also that it will increase the budget deficit and slash a patients’ right to choose how they are covered.

Additionally, with the President’s approval rating far below from where it ballooned just after his election almost a year ago, critics are using the health care bill debate as a pulpit from which to preach about broken promises, expanding government and un-accounted for policy blunders. No doubt the political haggling will slow the bill’s ongoing maturity.

In the end, the bill is about providing American’s with a reasonable shot at being able to financially afford being sick. Sure, there is not much talk about prevention, maintaining personal health or altering the lifestyle habits that contribute to the economic weight of our medical bills. But at least the problem has finally reached its spot in the limelight. And from here, it looks as if the only direction left to go, is up.

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Published Wednesday, December 23, 2009 @ 5:49 pm

Even in these tough economic times, everyone wants their family and friends to have a nice holiday—full of fun, frivolity and festive giving. And, even if you find yourself among the millions considering bankruptcy in the New Year, you may believe, now more than ever, that it’s open [holiday] season to shop for pricey presents using problem credit cards. In fact, many Americans do charge up expensive tabs in the months preceding the Christmas season when anticipating a bankruptcy—hoping to secure some great gifts prior to wiping away these same debts, along with many others, in January or February.

However, it’s never been more important to avoid a holiday spending binge when seeking this fresh financial start. While prudence alone should speak to some of the reasons to avoid abusing bankruptcy for seasonal gains, the Bankruptcy Code itself addresses the issue of this type of credit card debt as well. Section 523(a)(2) exempts from discharge, any debt that was obtained if an individual made material and false representations about his financial condition (i.e. lies on the credit application). Section 523(a)(2)(C) provides that:

1. consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services (luxury goods defined as goods or services reasonably not necessary for the support or maintenance of the debtor or a dependent of the debtor) incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and

2. cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable;

Section 523(a)(2)(a) excepts from discharge money, property or services incurred by false pretenses, a false representation, or actual fraud (i.e. incurring debt that you knew or should have known that you would not be able to repay).

In layman’s terms, this translates into a stern warning against unnecessary, binge spending in the months leading up to your bankruptcy. As a result, if you do decide to charge up hundreds or thousands of dollars in charges in November or December and then try to discharge that debt in January or February, credit card lenders have three viable arguments they can use to object to discharging your debt in a bankruptcy case. This type of “discharge litigation” not only risks hefty exemptions from your debt relief, but it is also costly to defend, adding more expensive fuel to the insolvency fire.

What can be even more expensive is how these holiday spending sprees can create potential delays in your bankruptcy filing. Often, a bankruptcy attorney will advise clients in the New Year who reveal large Christmas credit card statements, to wait four to six months at a minimum before filing for bankruptcy—during which time you must continue to make regular payments on your new, larger holiday balances.

If you are already in debt, credit card or otherwise, or facing a loss of income, it’s essential to fight the urge to use plastic to purchase that big screen television, new game console, latest toy or anything else you can’t afford. And, if you’re bankruptcy bound, but must spend during this holiday season, as an alternative to credit, try carrying cash, checks or debit cards. As a result of using the money you actually have, you may make more thoughtful purchases and spend less this season, and, in the end, spend less time digging yourself out of post-holiday season debt and its inevitable barriers to bankruptcy.

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Published Sunday, December 20, 2009 @ 2:45 pm

The full extent of the new credit card legislation will not kick in until February 22. And since its announcement, many of us have been experiencing the credit card companies’ efforts to remedy the government action.

For example, card companies are quickly pushing interest rates, doubling minimum payments, sneaking in fees and lowering credit limits, even for cardholders with solid credit histories.

Back in August, the first wave of reform took effect, requiring card issuers to provide additional notice of account changes, such as rate changes or fee hikes. In February, the second wave will impart on card companies the responsibility to limit interest rate increases on current balances. Next summer will see the final phases of the law involving reduced fees.

Truthfully, if you have thought about bankruptcy recently but are holding out hope that these new laws are going to fix your credit card debt problems, we have news for you: you need to call us. And quickly. Your bills are only going to continue to mount and could even get worse. Because the folks on the other side of your Visa, MasterCard and Discover statements still have ways to encourage you to spend and at the very least, know how to continue to make additional money off of your monthly balances.

While the new legislation will prevent credit card companies from jacking your interest rates on an existing balance, they will still be able to raise your rate after a late payment or other form of “agreement violation.” And, they can raise those rates by any amount they deem reasonable. Rest assured, their definition of “reasonable” is not the same as ours.

One of the loopholes in the new legislation (called the CARD act) is that it only addresses existing fees and rules. Card companies can create new fees at will. A representative with www.lowcards.com, a Web site devoted to helping consumers understand credit cards, recently stated, “Theoretically, they could create a fee for names that begin with ‘J.”

Annual fees, online access fees, inactivity charges—you name it, could become familiar numbers at the bottom of your monthly statement. Fifth Third Bank starting using a $19.00 inactivity fee if a card is not used for 12 months and Citibank is implementing fees for some customers who don’t spend more than $2,400 a year.

Credit card issuers will also be doubling minimum balance payments and in some cases, by even more. For a person carrying a $5,000 balance, that payment, typically at 2 percent, could be as much as $250, which amounts to 5 percent of their balance. For many, this could be the scariest component of a card company’s profit strategy, as most cardholders use the minimum payment as a benchmark for staying afloat.

Thankfully, Washington has recognized the practices underway in the credit card industry and proposed, under House Financial Services Committee Chair Barney Frank (who else?), the Consumer Financial Protection Agency. The purpose, among many others to be sure, of this regulatory entity would be to approve credit card fees.

Credit card companies might want to exercise caution as they proceed, however. This is the age of the vocal consumer. Viral ground swells of protest can flow quickly via the Internet, especially through social media pathways. A woman recently posted her disgust with Bank of America’s actions relative to a interest rate hike on YouTube. It resulted in her rate being reduced to its original amount.

Does that give you any ideas?

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Published Sunday, December 20, 2009 @ 12:31 pm

Wouldn’t it be easier sometimes to not have to shop for Christmas? It sure would be nice to just enjoy roasted chestnuts, old music and making popcorn strings.

But this is America, and we like to spend. In fact, many experts note that the holiday season is when many of us start our forays into bankruptcy-inducing debt. Or to put it another way, the credit card companies love December.

There is no question that the commercial aspect surrounding the holidays make it exceptionally difficult to not get caught up in the haze of bargain-basement BluRay players and trendy wind-up hamsters. It seems every year the gift list grows by a few more folks. New nieces and nephews, a step-son or two maybe.

If debt is already making you worry about having to pay for holiday presents, don’t be afraid to speak up. The holidays should be fun, not stressful. You may be surprised at just how many of your family members feel the same way about gift buying that you do.

So, have you wondered how much you could save by not buying gifts this year? Well, thankfully the people at Forbes.com put together a brief rundown of how you could probably better spend your debt-earned cash this year.

While spending is expected to be down this year, it will not match the 30 percent decline that happened between 2007 and 2008. According to Forbes, in 2008 we spent:

• $431 on family members
• $119.82 on ourselves
• $94.52 on friends
• $26.70 on co-workers
• $43.50 on miscellaneous items

Grand total? $750.68. Surely that’s money better spent on a Visa balance.

If you wanted to take the anti-holiday spending project to another degree, you could choose to not buy a Christmas tree this year, too. That will net you another $41.50 in savings. Understand, that is only the national average. Every corner stand in the Triangle has several $100.00 fir trees. Figure about $10 per foot.

Since Thanksgiving doesn’t teach us anything about gluttony, despite how loudly we declare to never eat another bite, the subsequent holiday parties and cookie tins continually take their toll. Especially on our checking accounts. An organization called Information Resource, Inc. conducted a poll that found 94 percent of Americans plan to limit spending on holiday food to under $500.00. For beer, wine and liquor, the results showed that 90 percent of us only plan on spending $200.00.

Hate traveling during the holidays? Who doesn’t? a 2008 Maritz poll found that people who make between $35,000-$250,000 a year will average $960.50 on holiday travel. That’s hard to even think about. Try Skype and a Web cam this year. You’re not exchanging gifts anyway, right?

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Published Monday, December 14, 2009 @ 6:00 pm

With millions facing foreclosure, job losses or salary cuts, mounting credit card and medical bills, and other tenuous financial situations during what seems like an unending economic downturn, more and more Americans are considering payday loans as a way to keep their heads above water.  In an earlier post, entitled Pass on the Payday Loans this Holiday Season, we explored why this trend is far from financially desirable over the long term, often leading to payday borrowers becoming slaves to an endless cycle of insurmountable interest, perpetual payments, and, in some situations, leaving many Americans vulnerable to collections actions, judgments, wage garnishments and bankruptcy.

But what if you’re already drowning in payday loan debt? How can you avoid any or all of the above?

One way to escape the cycle of payday loans is a payday loan settlement.  When attempting to negotiate a settlement, your due diligence and research prior to contacting your payday lenders to settle could prove very rewarding.

Here are your best, first steps.

Lining Up Your Lenders
Payday loan settlements are largely a matter of negotiations among you, as borrower, and your lender or lenders.  As a result, whether you’re planning to pay down a couple of payday loans or a couple of dozens, it’s important to “line up your lenders”—writing down all payday loans you have, separated, if necessary, into two primary categories: Internet loans and those received from actual payday lending stores.  For each lender, also account for the amount borrowed and the total amount already paid back, including interest, fees, and any other relevant lending charges. Because online and brick-and-mortar lenders are regulated differently, separating each into these sections will allow you to more easily take the next step in the settlement process: maximizing the effect of your state’s payday lending laws.

Learning Your State Licensing Laws
The next step for a successful payday loan settlement is to verify whether your state’s laws require online payday loan companies to be licensed in your home state or whether they accept another jurisdiction’s licensing standards.  About half of states, as well as the District of Columbia, have passed industry-backed laws specifically authorizing payday lending.  These laws generally require either licensing or registration.  Some specify maximum loan terms and/or amounts.  In order to get this information, check either Internet payday loan state laws or Payday Loan Consumer Information.  This verification of registration and licensure is especially important in the event your payday loans are Internet-based.  Since the large majority of online payday lenders are not licensed anywhere in the country, a licensure requirement in your state of residence gives you a starting point to negotiate the validity and settlement of your debt.

Knowing Your Limits (and Theirs)
Feel like you’ve been paying too much for your payday loans?  Well, your state may agree.  In fact, if payday lenders violate state lending limits, you may have another vantage point from which to begin settling your loans.  Begin by verifying the laws in your state regarding whether rollovers are permitted at either type of duly-licensed payday lender, as well as the maximum allowable interest, fees and loan amount allowed for each.

Settling with CFSA Members
The Community Financial Services Association of America (CFSA) is dedicated to promoting responsible regulation of payday lenders.  Participating members are required to set up payment plans for borrowers drowning in their debt.  In order to get any type of loan settlement with a CFSA member, you must first file a request to settle before you default on your debt, allowing you a means to rearrange your payday loans in a way that can not only help you discharge them but also pave the way to a better financial future.

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Published Saturday, December 12, 2009 @ 7:51 pm

Most of us never see the writing on the wall until conditions have gotten way beyond any conceivable point of return. We never realize how much weight we have gained until our baggy pants are no longer baggy. We also do not realize how fast and far we have managed to get ourselves into debt.

That mocha latte at Starbucks on the way to work adds up over time. The occasional muffin every other trip does too. A few new DVDs and CDs for your collection can’t hurt, right? When you buy a two or three of each a month they do; especially if you buy Blu-ray! Running down to the deli for lunch tends to add up as well. It’s nice to be able to give people nice gifts too; the look on their face can make it all worth it. In time, the lattes, muffins, and everything else tends to add up. Without knowing it people tend to spend a lot more than they realize.

So you like to live it up a little? You work hard; you deserve to play! Can’t be doing too much damage if you are making all your credit card, house, and car payments, right? That could not be further from the truth. Recent mortgages tend to have people pay heavily on the interest at first. So all that time you think you are building equity you really aren’t. As vehicles become more reliable they are starting to cost more, too. With dealerships willing to approve almost anyone (some at more extravagant terms than others) it can be real tempting to get a really nice new ride to go along with your new job.

Credit cards tend to really kill people. If you pay off the balance each month than your okay and don’t really need to be reading this blog. However, if you are like most of you tend to run a balance each month. Chances are you have a few credit cards that you do that with. It doesn’t take long for the interest and fees to add up on most credit cards. Before you know it those four dollar lattes and ten dollar CDs are costing much more than you paid.

Most people tend to believe that just because they are making their bills that they are doing okay. What they fail to realize is that just making the payment is the beginning of the end of your financial security. What if your car breaks down? What if you need surgery? What if you lose your job? Just paying the bills each month is a surefire way to leave you open to future financial difficulties.

If you’re struggling to keep your head above water and are starting to feel the pinch, it may be time to sit down with a bankruptcy attorney. The Law Offices of John T. Orcutt offer a free initial debt consultation. Call today to learn about your options. Don’t wait until it’s too late.

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Published Friday, December 11, 2009 @ 9:15 am

‘Tis the season for holiday shopping, seasonal spending, and, for some, a reliance on payday lenders to take care of both. In fact, with more Americans stuck at the lower end of the income spectrum due to the economic recession’s trademark job losses, lingering unemployment or other reductions in salary, many are forced to rely regularly on consumer credit to pay for their everyday bills, goods and services.  As a result, payday lending has become a fast-growing financial industry throughout the recession, providing these types of lenders with new, low risk opportunities at the [literal] expense of unwary borrowers who will avoid defaulting on this type debt at all costs—just so they can keep this credit in the an uncertain economic environment. But, borrowers beware. As payday lenders thrive, people falling prey to the endless payday lending cycle are struggling to simply keep up…and for a variety of simple reasons.

Going for Payday Loans Means Going for Broke
Most experts agree, even in a financial meltdown, the fastest way to go broke is through payday loans. Now, if you’re like many Americans, you may be facing the economic crisis head-on, and whether that looks like a missed mortgage payment or hovering health care costs, a payday loan might seem like an easy way to weather the storm. But the opposite is true and the reason is simple: exorbitant interest. With interest rates equaling as much as 400%, payday loans are a recipe for disaster, leaving desperate borrowers unable to repay.

To illustrate, let’s imagine you’ve borrowed $800 from a payday lender in order to pay this month’s mortgage payment as scheduled. A payday lender might then charge you $140 for this $800 loan, due on your subsequent payday. As a result, you now owe $940 (the interest plus the principal) to be paid back in a matter of weeks. If you only pay the interest on this initial loan, as most low income people just trying to keep their heads above the financial tide normally do, over the course of three months, you then owe your payday lender $420—in interest alone.

Pay Day Loans Make You a Slave to the Payday System
Payday lenders are smart. They want you coming back each and every month and therefore prey particularly on less affluent borrowers who can’t or won’t pay off their debts over the short term.  As mentioned, not paying off your loans in full means paying excessive interest for a longer period; and shelling out hundreds in interest over a short period doesn’t leave much room for savings to pay your principal (plus whatever interest has accrued) and break from the payday cycle. No savings, living paycheck to paycheck, with massive interest payments to boot, leads many borrowers down a road to financial ruin.

Payday Loans Can Pave the Way to Bankruptcy
In fact, payday loans can lead directly to bankruptcy. Like any creditors swarming their unpaid debt, delinquent payday loans lead to harassment from payday lenders. Borrowers who use payday loans are particularly susceptible to these types of actions when they find themselves unable to repay. Luckily, North Carolina has outlawed storefront payday lenders. However, internet payday lending continues to be a persistent problem, with some North Carolinians having multiple internet accounts, each directly drafting from the consumer’s checking account.

If you’ve already fallen victim to a payday lending scheme, an experienced bankruptcy attorney can end your cycle of endless spending. To get the big picture on how bankruptcy works and how the laws in North Carolina can help you, speak with an attorney at the The Law Offices of John T. Orcutt.

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Published Wednesday, December 9, 2009 @ 6:30 pm

For Americans laboring in long department stores lines, hot off the hunt for holiday deals, the cashier question “would you like to save 10% on your purchase today?” can be as common as a seasonal cold. And for well-known retailers seeking to make a profit this Christmas shopping season—from Target to World Market—pitching a retail credit card with the promise of an initial discount is an innovative way to make them fast money and you financially miserable.

With department stores facing tough financial times, they’re depending on customers just like you to buy more and more during the traditionally consumer-driven holiday season. Normally, these retailers could simply sit back and enjoy your seasonal spending. But, with Americans facing the same economic struggles as stores during this shopping season, and threats of falling spending and paltry sales during a continuing recession, retailers are now going out of their way to provide attractive deals at point of sale that will likely carry over as profits (for them) long after this holiday season has ended.

And here’s how.

Consumers, struggling with holiday purchasing expectations amid an economic downturn are essentially drawn in to what they perceive as a “no strings attached” way to instantly save 10 percent: an equally instant store credit card.  However, retailers also make money on even this initial exchange, earning the retail margin—from cents to dollars—in each of these beginning buys. In addition, stores can make money on the “back end” if they themselves also finance your transaction.

But the retail rip-off doesn’t end there. Even for consumers with excellent credit scores, store credit cards carry exorbitant fees, interest rates and finance charges, most over 20%. Not only do these charges begin the moment you make your initial purchase using the store card, but if you don’t happen to pay the entire balance after the first bill, much less if you make future transactions using their plastic, you may continue to carry the debt—and the charges—signifying more cash for retailers and more debts for you to carry.  Because it’s now in the retailers best interest to have you keep a balance and not pay off your debt, they may also snag your e-mail with the initial card offer, creating a cycle of sending you more deals for any card purchase—all deals, coincidentally, that are less in value than any of the ever-expensive card fees and charges you’ll be paying.

To add insult to injury, a retail card agreement may also contain a security interest, attached to any items that you purchase from their store. As a result, if you face unexpected expenses or losses in your budget, and ultimately don’t pay your retail card debts in a timely manner, the purchased items can legally be repossessed. Meaning you lose-lose situation, no matter how you pay their way.

As a result, it’s important to see this retail trick as just that, fooling you into falling for the quick savings: an emotional and euphoric point of sale offer that is short on details and financing specifics, giving you little time to read the fine print, and that the store knows will ultimately mean more debt for you and a better bottom line for them.

As an alternative, ask yourself: “would I like to save my financial future in spite of this purchase today?” To do so, plan ahead, budgeting your holiday buys before you even enter into the temptations of the retail environment. Then, instead of using personal credit cards or “pie-in-the-sky” retail plastic, carry cash, checks or debit cards this holiday season. As a result of using the money you actually have, you may make more thoughtful purchases and spend less this season, and, in the end, spend less time digging yourself out of post-holiday season debt.

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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 Wednesday, December 2, 2009 @ 4:07 pm

Are medical bills and health care costs making you sick? Join the crowd.

A recent study from the Commonwealth Fund found nearly two-thirds of American adults—an estimated 116 million people—are buckling under the weight of medical bills, going without much-needed care because of cost, are uninsured for a time, or remain underinsured.

As a result, more adults are not only experiencing cost-related delays in getting needed care, but are also struggling to pay unexpected or accumulating medical bills. Currently, forty-one percent of working-age adults, or 72 million people, reported a problem paying their medical bills or had accrued medical debt, up from 34 percent (58 million) in 2005.

Medical debt can take the wind out of anyone’s financial sails. And unfortunately, horror stories are common. Take for example a recent story regaled from the Austin-American Statesman of woman who reconnected with an old high school flame in middle age only to lose him to liver disease a short time later. Struggling to pay his medical bills, she eventually filed for bankruptcy, but not before she lost her home.

Medical bills are a leading cause of financial stress in this country; exacerbated by the fact that most people wait too long before they get help taking a serious inventory of their financial picture. In some cases you can restructure or even settle medical debt before it means losing your savings, your home and a hefty chunk of your financial viability; but you should move fast.

Once your medical bills go to a debt collection agency its much more difficult to negotiate a settlement. If you see that your medical bills are causing you to fall behind on payments for essentials like housing, food and emergency savings, it’s time to seek help from a professional debt counselor.

However, sometimes restructuring or settling medical debt can have a deleterious effect on debtor credit scores, also affecting your ability to obtain home loans or credit cards. An article in the Dallas Morning News shared the story of a man who suffered a heart attack during a lapse in his health insurance. Because of a gap in his insurance, the 59-year-old was hit with medical bills totaling more than $140,000—all of which went to collections when the man could not afford to pay. Eventually, the man was able to pay off his medical debt when the hospital reduced the bill; however, the medical debt’s impact on his credit remained. He paid his debt and his credit score still dropped significantly. Today, he’s having difficulty refinancing his home and is still on the hook for his surgery.

Might bankruptcy have been the better option? Possibly. With millions of Americans suffering from medical debt, much of that debt has gone to collections. Collections action on medical debt remains on a consumer’s credit report for 7 years and many lenders consider the medical debt when determining the consumer’s creditworthiness. And unlike the man from the previous story, most consumers are simply unable to repay medical debt as well as their other mounting financial obligations.

Bankruptcy has the effect of wiping out the obligations to repay unsecured debt, including medical debt, giving the debtor an opportunity for a stress-free financial fresh start. As an added bonus, a creditor might be more willing to lend to a debtor who have discharged his debt obligations in bankruptcy than to a debtor who is still obligated to pay thousands towards medical debt obligations.

For more information regarding the benefits of bankruptcy, visit The Law Offices of John T. Orcutt online.

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Published Tuesday, December 1, 2009 @ 7:35 am

Exacerbated by the recent recession, self-employed or small business owners everywhere are facing fewer credit options, high health care costs, and lagging consumer spending. Those struggling to stay afloat in these tough financial times must ask themselves even tougher questions. Do I have the motivation to continue my business? Could the business prosper if it wasn’t keeping up with old debts? Could my business persevere if it shed equipment, employees or space? Could I sell my business? Could I start another business if I did sell?

If after answering these questions you find you are no longer able to sustain or expand your business in your current financial situation, filing for bankruptcy may be your best bet.

For those business people who no longer have the time, energy or drive to continue their business interests in their current capacity, Chapter 7 bankruptcy liquidates business assets to repay looming debts. A court-appointed agent will sell these assets and pay the proceeds to creditors; beginning with secured creditors first, followed by any unsecured creditors. While this type of bankruptcy normally leads to the demise of the business, it, in turn, provides a quick resolution for individuals and a dependable dissolution for partnerships and corporations.

In the alternative, for business owners seeking solutions to the very problems that led to bankruptcy, Chapter 11 allows for a much-needed financial reorganization. Following a Chapter 11 filing, the court appoints a conservator who, like the agent in the previous example, oversees the business assets to best pay off creditors, while still keeping the business afloat. In short, Chapter 11 stops creditors, allowing the court-appointed conservator to reorganize and optimize business finances for a better future.

The best part for self-employed and small business owners filing Chapter 11 is that they can legally continue operating their business and earning an income as a “debtor in possession,” receiving the benefits of “automatic stay” protection. Debtors in possession are protected from creditor actions such as lawsuits and asset seizures, even if a creditor obtained a judgment before the bankruptcy filing. An added benefit of filing bankruptcy as a debtor in possession is that bankruptcy law allows you to take out more loans that take precedence over all other creditors.

Conversely, like businesspeople filing for Chapter 7, Chapter 11 debtors in possession are bound by specific bankruptcy rules and restrictions, including prohibitions on using encumbered assets as collateral and selling assets without the approval of interested creditors. As a result, the best move a bankruptcy bound small business owner can make is to consult an experienced bankruptcy attorney who specializes in representing small business owners.

While a bankruptcy for your business is sometimes advisable, many small business owners don’t have any assets left and don’t intend to continue the business, or intend to continue under a different name. If so, it may make more sense to simply let the corporation die on its own without a bankruptcy. However, if you’re like most small business owners, you have probably personally guaranteed most, if not all, of your business debt. While a business bankruptcy will effectively hold off creditors from getting to your business, those same creditors can choose to pursue you personally. Whether you are dissolving the business or continuing on, its important to pull your credit report to determine how much of your debt has been personally guaranteed. Your attorney can then advise you how a personal bankruptcy can save you and your family from your business creditors.

Skilled bankruptcy attorneys like those at The Law Offices of John T. Orcutt can get to work early, navigate any uncertain waters of bankruptcy court and work in your best interests during the duration of your business and/or personal bankruptcy. In North Carolina, call 1-800-899-1414 to discuss your situation today. Always a free initial consultation.

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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 Wednesday, November 25, 2009 @ 12:12 pm

Should you try to modify your mortgage before filing for bankruptcy? Bankruptcy will stop foreclosure proceedings; a Chapter 13 bankruptcy will allow you to keep your home, and to develop a payment plan to meet your back payment obligations. But it won’t necessarily lower your monthly mortgage payments. Is it worth it to try to modify your mortgage and secure lower payments first?

The evidence is mounting that it’s probably not worth your effort. A recent report shows that although 362,348 loans have been approved for “trial” modifications, only 1,711 of those trial modifications have been made permanent. Assuming you can even get over the first hurdle of being approved for a trial modification, you’re likely to get stuck in “trial mod limbo”. Depending on your lender’s mood on any given day, you could at any point be dropped from your trial modification, worse off than where you started.

But isn’t the program backed by the government It’s true, the government had high hopes for the Making Home Affordable program, designed to help homeowners who are having trouble making their payments. However, mortgage companies have dragged their feet over it; they make more money off fees when a house goes into foreclosure than they do modifying a mortgage. The government may well say you qualify for MHA, and your lender simply refuses to go along.

Faced with a recalcitrant lender, you might turn to foreclosure consultants. While there are legitimate consultants, be wary of scams. Many consultants will simply charge you a fee and never even bother to contact your lender!

You also have to consider whether or not changing the terms of your loan is in your best interest. For example, you may be qualified to refinance under the Hope for Homeowners program (H4H). However, H4H requires upfront fees and additional mortgage insurance; later, when you sell or refinance your house, you will be required to share between 50 and 100 % of the proceeds with the government.

Some lenders might agree to roll your loan into a 40-year fixed mortgage. In this case, you’d pay less per month, but for a much longer period of time. Depending on your loan amount, the additional money could be tens or even hundreds of thousands of dollars. Plus, of course, you will have payments for an extra 10 years, and less equity in the home if you sell before that. Will the difference in monthly payments make that additional debt worth it? It depends on your circumstances, of course, but possibly not. Remember, once you file for Chapter 13, much or all of your unsecured debt may be erased, freeing up more of your income for your mortgage payment.

The earlier you file for Chapter 13 bankruptcy, the more likely you are to save your home. If foreclosure proceedings have advanced enough prior to your filing, you may not be able to afford the Chapter 13 payment that is required to catch you up. If you’re starting to get behind, call a bankruptcy attorney today.

While modification is still receiving a lot of hype in the press, it’s becoming clear that it’s all just hype. . The best way to sort through these options is with the help of a professional bankruptcy attorney. It doesn’t make sense to spend weeks trying to modify your loan, only to find out it resulted in filing for bankruptcy too late.

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Published Tuesday, November 24, 2009 @ 8:40 am

Most people believe that their credit rating will be ruined for the next 8-10 years if they file for bankruptcy. This could not be further from the truth.
Bankruptcy is not a shiny gold star on your credit report, that is for sure, but it is far from a death toll on your credit. In reality, your credit rating is already pretty darn low from all the missed and/ or late payments you have been piling up prior to filing. While I highly doubt any creditors will actually see things this way, filing is actually you showing that you do want to improve and do better for the near and foreseeable future.

Yes, your credit rating will take a hit. Yes, your interest rates will be a bit higher than the norm for a few years, but you are not in a credit purgatory. Once you have filed, you will find that there will be ample opportunity for you to rebuild your credit rating. Do not be surprised if you are flooded with credit card companies offering to help you rebuild your credit. Car dealerships will jump on this bandwagon as well wanting to give you a loan regardless of the fact that you just went through bankruptcy proceedings.

They do so not out of the kindness of their hearts, but out of the greed in them instead. Car dealerships and credit card companies know full well that you have no other option than to take the outrage offer they give you in order to rebuild. You need them; they do not need you. They take advantage of this by hiking up the interest rates and killing you with annual fees.

It can be tempting here to fall back into old habits. If you have yet to get back on solid financial ground than you would probably be better off doing nothing. It takes activity to rebuild your credit rating, but at least you are not doing anymore damage. If you have student loans that are as yet unpaid either start or continue making those payments once your case is discharged. Making installment payments like with a student loan can help rebuild your credit as well.

Bankruptcy is a scary option to consider when you have already been undergoing some tough financial times. The stigma that it carries is enough to keep some people from filing. For others it is the perceived damage that will be incurred on their credit rating. What they fail to realize is that the damage has already been done. Filing bankruptcy cannot do much more than the last year or years of lackluster financial mismanagement have already done.

In fact, bankruptcy will actually be the first step in getting your credit rating back where it needs to be.

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Published Monday, November 23, 2009 @ 6:49 pm

The Associated Press is reporting that the foreclosure crisis will persist well into next year as high unemployment “pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.”

The latest evidence comes this week in a report from the Mortgage Bankers Association identifying that a rising tide of fixed-rate home loans made to people with good credit are now facing foreclosure, marking a surprising shift from assumptions that only riskier subprime loans are driving the current housing crisis. The report also stated that 14 percent of homeowners with a mortgage were either late on payments or in foreclosure at the end of September 2009, marking another record-high for the ninth straight quarter.

These findings speak to an even more beleaguered housing market than previously thought, bearing the weight of even more home-loan defaults. The main culprit, industry experts say, is rising unemployment, forcing even the most responsible homeowners to fall behind on their mortgages.

As the AP found, many laid-off homeowners might be able to survive on their savings for a while, but “the longer the economic situation stays in place, the less likely they are to hold on,” said Jay Brinkmann, chief economist at the Mortgage Bankers Association.

As Robert L. Borosage, Co-Director of the Campaign for America’s Future, blogged this week, “[o]ne in six workers is unemployed, has given up looking or is forced to work part-time. For young workers aged 16 to 24, unemployment is 19%. For young African Americans, unemployment is at 30%. And as Federal Reserve Chair Ben Bernanke testified yesterday, we’re likely to see — at best — a slow recovery with no new job growth. That exacts a devastating toll in hopes crushed, families stressed, young people stalled, and poverty and hunger spreading.And even if we avoid another downturn, the job picture will get worse. Crippling state deficits — over $260 billion over 2 years — will force layoffs that cost an estimated 900,000 jobs next year if nothing is done.”

As a direct result of this explosion of job losses, this year, more than 3 million foreclosures are predicted, as homeowners are increasingly incapable of paying the mortgage during a brutal recession. As the financial meltdown continues and unemployment surges, the millions that have now slipped into delinquency and foreclosure with only one conceivable way out: bankruptcy.

Homeowners with prime and sub-prime mortgages alike are taking immediate action, arming themselves with basic bankruptcy tools. So, if you’re interested in staying in your home, looking for permanent solutions to foreclosure threats, and ready to quit spending and start saving, there’s never been a better time to consult with a bankruptcy expert. For more information regarding homeowner benefits of bankruptcy filing, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

While recent reports of the nation’s financial future are nothing short of bleak, the good news remains that through bankruptcy laws, homeowners facing foreclosure can take their future into their own hands, stop drowning in mortgage debt, and begin on the road to a more viable financial future.

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Published Wednesday, November 11, 2009 @ 8:49 am

You’ve seen the ads: a circus act of food court commodities are passed around by a mash-up of merchants to the frenetic marching music of patrons efficiently paying for their delicious delicacies with their handy-dandy Visa cards. Like a well-oiled, money-sharing machine, these well-choreographed consumers pay conveniently with a single swipe of credit, serving up little wait in their collective go-go-gadget gaits and emphasizing, with every single swipe, the efficiency and speed of making everyday purchases with a Visa check card over cash or checks. This plastic parade ends abruptly when a lone cash-carrier has the audacity to pull out his greenbacks for one show (and music) stopping dark ages transaction. The record scratches. The cashier looks cranky. And the message is clear: in a world where plastic rules, only a party pooper pays with cash.

More and more, life does take Visa. And Mastercard. And Discovery. And a whole host of other plastic pinch hitters ready to step up to bat when your bank account can’t. This point is not lost on more and more savvy small purchase institutions and organizations. From cabbies to Salvation Army kettles, more and more businesses are getting into the single swipe game, and whether it’s because of convenience or economic circumstances, Americans are taking the bait, at the expense of low credit card balances.

And for those Salvation Army kettles at least, these results are certainly panning out: national Salvation Army surveys show that people give more when they are allowed to donate with credit, sharing 750 percent more when paying with a card.

The science of our single swipe economy supports this trend. Following an examination of the brain and how people feel when they spend, Carnegie Mellon University professor George Loewenstein hypothesized that credit cards take away the pain of spending. From an article summing up Loewenstein’s work in Carnegie Mellon Today it was found that:

“[T]here’s a battle in the brain between immediate pleasure and immediate pain when we’re deciding what to buy. … The subjects in the MRI study weren’t thinking about what benefits they would gain at some later date if they chose not to purchase The Family Guy DVD set now. Rather, they were deciding based on how painful (or not) they thought paying for it would be right now.”

Combining the “feel-good” factor of plastic, the financially-strapped consumer population, and wide-acceptance of credit for cash, this looks like a recipe ripe for a consumer crisis that plays right into the hands of the credit card companies. So what should you do?

Try carrying cash-only.
Foregoing your credit cards for cash and carry—even for a few days—can make a huge impact in the psychology of your spending—bringing back the pain (and the gain) of using only what you have. While we remain disconnected from our spending with plastic, cash-only provides the necessary perspective that leads to healthy budgeting and better buying judgment.

Make room for fewer cards with lower limits.
When you do carry credit, only keep what you need for well-thought-out purchases and emergencies. With fewer cards and lower limits, you’ll rely more on cash, which could help head off budget-breaking impulse buys.

Plan through the pain
If the pain of past spending on plastic is getting you down, Chapter 7 bankruptcy is an option designed to quickly clear credit card debt. Click here for more information about how the bankruptcy experts at The Law Office of John T. Orcutt can help you out of your own personal credit crisis.

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Published Tuesday, November 10, 2009 @ 11:16 am

The number of people filing bankruptcy due to medical bills has been rising every year. A recent study in the American Journal of Medicine shows that more than 62% of people filing for bankruptcy do so at least partly because of medical bills they can’t pay. Many filers have insurance – often they’ve ‘capped out’ their insurance and the insurance company refuses to pay any more bills, leaving them tens or even hundreds of thousands of dollars in debt. In other cases, illness has forced people to lose or leave their jobs, meaning that not only do they have no money coming in to pay their bills, but their insurance coverage has often lapsed as well.

A bill recently introduced in Congress – by Carol Shea-Porter (D-NH) in the House and Sheldon Whitehouse (D-RI) in the Senate – hopes to make filing bankruptcy easier for people in this situation. People who owed either 10% of their income or $10,000, or who had been out of work for more than 4 weeks in the last year due to illness, would qualify as medical debtors. The bill would exempt these filers from the requirement to take credit counseling. More importantly, they would no longer be subject to the means test – all medical debtors would be allowed to file Chapter 7. And the homestead exemption – the amount of equity they could keep in their home after filing bankruptcy – would rise to $250,000 for medical debtors.

Will the Medical Fairness Act pass? It’s hard to say. To some extent, the debate seems to be falling along the same lines as the general health care debate: democrats for, republicans against. At a recent hearing in the Senate, Whitehouse brought in a number of debtors to make the emotional point that they lost everything, including in many cases their homes, due to unavoidable medical bills. Kerry Burns told the tragic story of her son, who died at the age of 4 after a long struggle with cystic fibrosis. She and her husband both took leaves from their jobs. They cashed in their 401K accounts, spent every penny in their bank accounts and had insurance– and all that wasn’t enough to pay their son’s medical bills, which came to over five million dollars.

Republican opponents, particularly Sen. Jeff Sessions (R-AL), seemed unmoved. Sessions seemed more concerned with the plight of the credit card companies, who will likely lose money if more people file Chapter 7. Sessions worried that people would qualify as medical debtors when the ‘real’ reason for their bankruptcy was due to overspending on their credit cards. He called experts who claimed that the study was flawed and the real role of medical bills in bankruptcy is much smaller. Others rebutted both arguments, pointing out that the number of medical debtors may be greater than the study shows, as many people put medical bills on their credit cards.

The Democrats have the votes in both the House and the Senate to pass this bill. But the credit card companies and the medical industrial complex spend an enormous amount of money on lobbyists to protect their interests. The Medical Bankruptcy Fairness Act is a common sense relief for people who’ve incurred enormous bills simply due to their medical problems. Whether or not it passes says more about politics than policy.

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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 Wednesday, October 7, 2009 @ 8:40 am

With the government’s new credit card legislation possibly reaching its stride two months early on December 1, a lot of frustrated credit card users may be breathing a collective sigh of relief. Given the tighter restrictions on credit card issuers, you might want to take the opportunity to be a little more choosy in selecting your new card, as industry players are going to push hard to win customers from competitors, using reward plans and low introductory rates as incentives. However, unknown to many credit card users is how reward plans are handled when payments are missed.

What far too few consumers understand is that not only do credit reports get the news when a payment is missed, so do the third party companies that handle the reward plans. Understandably, most people find themselves worried more about the late fees and interest rate bumps that occur when a balance goes unpaid. However, if you’re counting on the reward points to finance your next vacation, you may be in for a big surprise when they are told that as a result of missed payments, a big chunk of those rewards have been taken away.

A research effort at www.cardhub.com showed that each of the major credit card companies employ rules which revoke reward points when a payment is missed. That list includes American Express, Bank of America, Capital One, Chase, Citibank and Discover.

Discover seems to be a bit more brazen than their competitors. For example, miss your due date for two months and all of your points go away. All of them. (Don’t forget, Discover is “the card that pays you back.” Maybe.) American Express examines situations individually but will seemingly not hesitate to take away what you have earned. With all the other penalties for missing payments, like late fees, interest rate spikes, credit report dings and dinner time phone calls, this is just one more slap in the face to consumers.

Also, remember that the credit card companies can change the terms of a reward program at any time, without notice. Essentially, the lending industry allows points to be accumulated but not necessarily returned. Thus, a consumer may be using a card for a specific rewards program only to find that program is suddenly no longer available. Furthermore, reward programs are marketed as perks, gifts for simply doing business with a specific bank. Yet, that gift can be revoked without notice. Thanks for nothing.

Consumer advocates preach that those looking for a card with a rewards program should choose only those that offer cash back, because it can’t be devalued. Plus, you are more apt to take the cash reward earlier than if it was simply a pile of points accumulating in cyberspace over time for you to “eventually” use for a new mountain bike, kayak or trip to Yosemite.

Remember, if a card’s rewards plan is the main reason you choose to open the account, as it is for more card users today, make sure you understand all of the fine print before you make a decision.

From: The Law Offices of John T. Orcutt, with 4 convenient office locations in Raleigh, Durham, Fayetteville and Wilson. Call us today to set up your free initial consultation. 1-800-899-1414.

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Published Sunday, October 4, 2009 @ 1:27 pm

The current administration would love to perpetuate the common belief that most personal bankruptcies are the result of ruinous medical bills. News articles cite numerous studies and statistics that support this theory. But is it really true?

The “recent” Harvard study that has been bandied about lately as proof that the broken US healthcare system is behind the majority of personal bankruptcies was originally published in 2005, five years ago, and was based on data collected in 2001. The study states that “about half of people filing for bankruptcy said health care expenses, illness or related job-loss led them to do so.” Politicians and the media are fond of attributing the “about half” statistic solely to health care expenses as a cause of bankruptcy, as in “about half of all bankruptcies are caused by medical bills.”

In the study, the actual percentage of respondents who indicated that medical issues were a significant factor in declaring bankruptcy was 46.2. This number included people who had lost a job or income due to illness or injury. Only 27 percent of respondents citing medical reasons for declaring bankruptcy indicated that they had incurred uncovered medical bills exceeding $1,000 in the past two years. This leads one to believe that while medical reasons (illness or injury) may have been a major factor in filing bankruptcy due to the loss of a job or inability to work, only a small percentage of bankruptcies resulted from actual medical bills. Said one critic: “One thousand dollars in medical debt can hardly be considered catastrophic.”

A second category in the survey entitled “any medical bankruptcy” included people who cited addiction, uncontrolled gambling, childbirth, or the death of a family member as a major contributing cause. Only by including this second group in the total number were the authors of were able to increase the total percentage of “medical bankruptcies” to 54.5 percent.

Other factors may well have been in play, and the authors themselves acknowledged that if some respondents had not faced health care problems, they may still have found themselves in bankruptcy court. The authors state: “Many debtors described a complex web of problems involving illness, work, and family. Dissecting medical from other causes of bankruptcy is difficult. We cannot presume that eliminating the medical antecedents of bankruptcy would have prevented all of the filings we classified as ‘medical bankruptcies.’ ”

The 2005 study was roundly criticized for these and other reasons and the authors decided to re-publish it with additional data and analysis gathered in 2007, thus addressing some of their critics and, for good measure, they increased the “medical bankruptcy” statistic from 54.5 up to a whopping 68.8. Bear in mind though, that this figure in the new study still includes people who have lost income due to illness or injury. Undoubtedly the loss of income, regardless of the cause, would be a major factor driving anyone into debt. That’s pretty obvious – no fancy study needed to convince people of this truth.

But the authors of the Harvard study don’t seem to want to put much emphasis on simple observations. They have pages and pages of data which have been carefully teased out of questionaires (not actual official documents) and interpreted to prove the link between bankruptcy and healthcare expenses. Interestingly, the results of their updated study were published anew earlier this year, just before the healthcare overhaul debate hit the fan.

The loss and reduction of health insurance coverage in this country during the past several years has been a national travesty. In some cases, it has sent honest, hardworking people further into debt. For the rest of us, it has made security seem more fleeting and difficult to obtain. For anyone with an overwhelming debt burden, whether it came from medical expenses or other sources, there can be relief. Seek the advice of a bankruptcy attorney to learn about your options.

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Published Tuesday, September 29, 2009 @ 9:44 am

It has been a number of months since new laws were passed to address the aggressive marketing tactics of credit card companies and their downright crooked methods of making money through penalty fees and interest rate hikes. To date, even with some facets of the law intact, few consumers are realizing a positive impact. This is because credit card companies have used the government intervention as an excuse to increase rates and invent new fees before the real teeth of the law come into effect in February of 2010.

Thankfully, it sounds like lawmakers behind the effort have caught wind of the ongoing tactics and are now pushing to enact the laws sooner than expected, as early as December of this year.

Representative Barney Frank, chairman of the House Financial Services Committee and by no means a novice at how to get under the skin of big business, is leading the measure to get the law into action sooner. He is joined by fellow Democrat Carolyn Maloney of New York. The act also prevents credit card companies from raising interest rates unless a customer is more than 60 days late and requires the original rate to be restored after six months of on-time payments.

Aspects of the legislation considered for the proposed December 1 deadline include the requirement that credit card companies apply payments to the cardholder’s highest balance accounts first. The legislation would also put an end to the practice of “universal default” interest rate hikes. This practice allows individual lenders to increase interest rates if their customer defaults on an account with a completely different lender. When this happens, multiple credit accounts set to the default rate simultaneously, greatly increasing the chance for additional defaults and added fees.

Industry card issuers have been primarily pushing fees to address tactics consumers use to avoid higher payments, such as when a customer transfers balances from a high interest card to one that may be offering a much lower introductory rate. Discover Financial Services, which issues the Discover Card, announced an increase in balance transfer fees from three percent to five percent of the balance. On a $5,000 balance, the cost would go from $150.00 to $250.00.

In recent months, American Express, Chase, and Bank of America have all raised interest rates across the board, and have changed many account holders’ interest rates from fixed to variable. A representative from www.lowcards.com stated that their company has tracked more than 50 interest rate, fee and terms changes by eight card companies since January, which is when the bill was starting to take shape in Washington.

Rep. Frank and others in Congress are not pleased with the credit industry’s reaction to the Act, and are looking to put a stop to abusive lending practices as soon as possible. However, even with the changed effective date, consumer advocates fear that credit card issuers will simply raise the interest rates before December 1st, leaving many consumers to deal with unmanageable interest rates at a time when account balances are often at the highest– right after Christmas.

If you’re sick of the interest rate hikes, sick of the penalty fees, and want an opportunity to start fresh, call a bankruptcy attorney today. In North Carolina, call 1-800-899-1414 to set up a free initial debt consultation. Or visit www.billsbills.com, where you can fill out our confidential debt questionnaire and set up an appointment at one of our 4 convenient office locations.

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Published Saturday, September 26, 2009 @ 6:17 pm

One of the greatest benefits of filing for bankruptcy protection is that it allows struggling homeowners a second chance to catch up on missed mortgage payments. For many people, the fear of losing a beloved family home is one of the most stressful parts of their struggle with debt. But is your house really worth saving?

If you find yourself living in an “upside down house,”  it may be worthwhile to consider simply letting the house go. “Upside down” refers to a property where you owe more money than the house is worth. Back when the housing  market was still booming, this situation was almost unthinkable, but now that the bubble has burst, short selling―selling a home for less than what is owed―is all too common. Unfortunately, a short sale leads to all kinds of nasty repercussions: Unless your mortgage lender agrees otherwise, you will still be responsible for the difference between the sale price and amount owed. Second, even if your lender agrees to forgive the debt, you’ll still be hit with the tax consequences.

If you’re a homeowner and considering bankruptcy, now is the time to take an objective look at the big financial picture and make some tough choices. Your equity situation is a great place to start this assessment. If you don’t have any equity in the home, holding on to that upside down house can’t even be justified on the basis that home ownership is a good investment. Just a few years ago a house was a sterling investment―but if you’re continuing to sink in negative equity, you don’t own a good investment, just a bunch of debt. And if you are living in an upside down house, how bad is your situation? In other words, how much more money do you owe the bank than the house is worth? If the difference is only a few thousand dollars, it may be OK to hold on to the house if you can really afford the payments. But if the difference is huge, you may want to consider the idea of surrendering the property in bankruptcy.

Second, take a look at your budget. Why did you get behind on your payments? Were you always struggling to make the payments, always one emergency away from getting behind? If getting rid of your credit card debt doesn’t free up enough money to comfortably make the mortgage payment, bankruptcy won’t help you save the home in the long term. If, on the other hand, you got behind because of a temporary drop in income that has since rebounded, bankruptcy can get you back on track with your mortgage and put your in a better financial position by dumping your unsecured debt.

The costs associated with home ownership go beyond the monthly mortgage payments. Can you afford property taxes? Your homeowner’s insurance? Does the house require a lot of maintenance? What are your utility payments like? These are all good questions to consider as you assess whether it makes sense to hold on to your home. Another thing to keep in mind is the structure of the loan. If you were one of the many unfortunate borrowers who signed on to an adjustable rate or interest only loan, your loan terms will never allow you to get ahead.

The good news is that the depressed housing market means that a lot of places that can’t sell are being offered for rent. Renting can be a good solution for someone seeking to rebuild their financial health, especially in the short term. If you are trying to keep your kids at the same school or are reluctant to leave the comforts of a familiar neighborhood, you may be able to find a good rental in the same area as your house.

Make sure to ask your bankruptcy attorney for advice on this issue. Letting a foreclosure proceed unchecked is not a good way of dealing with the situation. If the property sells for less than the outstanding loan balance, you will still owe the difference.. Surrendering the home in bankruptcy shields you by eliminating any personal liability after the foreclosure sale. If you are facing foreclosure now, contact a bankruptcy attorney immediately to ensure that you remain in control. Your attorney can help you assess your financial outlook rationally and help you make the right decision.

From: The Law Offices of John T. Orcutt. We always offer a free initial one on one consultation. Call today to set up your appointment. If you are in North Carolina, call 1-800-899-1414, or visit www.billsbills.com to fill out our free and confidential debt questionnaire.

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Published Wednesday, September 23, 2009 @ 10:41 pm

Say you find yourself struggling with a mountain of debt. Your paycheck seems to be spent before you even get it, as soon as you pay a bill another one arrives, and you’re starting to wonder how much longer you can deal with the stress of unmanageable debt. To make matters worse, you fall behind on your housing payment and your bank threatens you with foreclosure.

So when your phone rings and a professional sounding individual on the other end promises to stop your foreclosure or even modify your mortgage, you see it as a godsend! After all, the government has been promising to help Americans hold on to their homes. A foreclosure assistance agency may even be part of a government effort to help people just like you. As a matter of fact, nothing the “foreclosure assistance agency” says leads you to believe otherwise. Should you take the leap?

Unfortunately, as all too many have learned the hard way, there are no miracle cures when you have serious debt problems. With so many people struggling to hold on to their homes, it comes as little surprise that scammers are taking advantage of vulnerable homeowners at the worst possible time.

So how do these schemes work? In most of these scams, a company will call a homeowner and offer help in stopping a foreclosure. Some companies are little more than a call center, with no attorneys, accountants or loan specialists employed.. The companies demand a fee upfront, sometimes as much as $3000.00. Desperate homeowners will pay the fee, only to discover–often when it is too late–that the company did nothing at all to help them.  Because of this all too common model, one measure the FTC is considering is a ban on up-front fees for mortgage assistance.

Since April, the government has promised to crack down on “foreclosure assistance” outfits posing as government agencies. Now, a recent meeting of the multi-agency taskforce created by the Obama administration to address the problem of mortgage fraud updated the public on the government’s efforts.The FTC brought civil charges against two companies this week that were running foreclosure assistance scams. This brings the number of such cases this year to 22.

One of the worst aspects of this situation is that many of the companies work to create the impression in homeowners that they represent a government agency. The two companies charged this week were doing precisely that, and the government is working hard to crack down on these wrongdoers in particular. It’s your responsibility as an informed consumer to protect yourself. If you are being asked to pay a hefty upfront fee, it’s a good sign that the modification program is a scam. And remember, bankruptcy is always an option if you are behind on your mortgage. A Chapter 13 bankruptcy will catch up your missed payments over a 5 year plan, and eliminate your unsecured debts. Contact a bankruptcy attorney today to find out more. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. Or visit www.billsbills.com to complete our confidential debt questionnaire.

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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 Tuesday, September 15, 2009 @ 1:10 pm

For so many years people have held the view that an education is one of the best investments you can make, and therefore it is prudent to spend whatever it takes to get the best education possible. It’s true that a college diploma will, on average, result in improved earning power for degree holders, and the improvement is often dramatic. Nonetheless, educations are so expensive that it’s impossible for most people to get one without taking out student loans. Even though the situation affects so many, it seems that nobody is out there is telling the whole truth. If the colleges and universities don’t do it, what could possibly motivate the student loan industry to mess with their own success in an enormously profitable field? It seems that nobody counsels borrowers on the often quite predictable results of their actions.

The simple fact of the matter is, education, on a pragmatic level, isn’t worth the same across the board. An education is a wonderful thing, arguably without price, and not everything we do in life should be about money. Pursuing an education in something you love is a worthy goal to have for yourself. But philosophy aside, many people enter college with the expectation that they will automatically improve their ability to get a job, allowing them to pay back the loan with ease. That simply isn’t the case. If you’re considering going to college or going back for another degree, but you find yourself wavering over the loans, that’s a good thing! Make a realistic assessment of your ability to pay the loans back once you graduate. Are you going into an industry that has growth potential? What kinds of jobs will you be able to get with the degree? And do you really need the degree to achieve your professional or other life goals?

Remember, student loans, unlike most every other kind of unsecured loan, are not discharged in bankruptcy. This is one of the worst aspects of the quagmire students encounter post-graduation; no job, and no ability to get rid of the student loan debt. Even if you find a job, but can’t afford the monthly student loan payment, your wages can be garnished. This is why, even if student loans are your primary problem, it may still make sense to file a Chapter 13 bankruptcy. You can stay in the Chapter 13 plan for as long as 5 years, giving you a reprieve from collection efforts. This will give you some time to get established financially, and will extinguish all other forms of unsecured loans and credit card debt.

If you’re having trouble paying your student loan debts, consider bankruptcy as an option to put your student loan creditors on hold. Call a bankruptcy attorney today to discuss your options. In North Carolina, contact the Law Offices of John T. Orcutt to set up a free initial debt consultation. 1-800-899-1414. Or go to www.billsbills.com to fill out our free and confidential debt questionnaire.

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Published Sunday, September 13, 2009 @ 10:44 am

In July, the number of people who defaulted on their credit cards dropped for the first time in several months, leaving many financial experts to wonder about the cause.

In the midst of speculation that the recession may be turning around, bankruptcy filings continue to climb and many debt management and bankruptcy attorneys cite a rise in the number of people leveraging retirement funds to stay afloat. Additionally, running contrary to the default reports is evidence supplied by some credit card issuers that in July, there was an increase in those who fell behind on payments, but have yet to reach default status.

Most of the major players in the industry, Bank of America, American Express, Capital One Financial and JPMorgan Chase, are in agreement that the number of accounts that ended up in default in July fell. Thus, there was an increase in the number of payments made on time. For some, that can be a sure sign that some aspects of the economy have improved. However, looking closer at the statistics, the correlation between the numbers and the status of the economy is not so clear.

With an estimated 6 million people living on unemployment benefits, many of the aforementioned lenders have eliminated accounts held by those in the highest risk pool. With that demographic completely out of the picture, the number of defaults will obviously decrease. In many instances, lenders are accepting less than the standard monthly minimums, which leads to more on-time payments but puts the consumer deeper in the hole. Perhaps most troubling, many cash-strapped consumers are pulling money from retirement accounts to keep from getting behind.

Overall, few experts will go on record saying that the decrease in credit card defaults is a sign of America’s improving financial health. Basically, it all comes back to unemployment. If jobs are scarce, credit card payments will be too.

There been signs of an improving home sales market. However, that can be attributed to a brief run on low-priced homes, foreclosure investing and wholesalers absorbing large tracts of unfinished or bargain homes at a discount.

Unfortunately, banking experts can cite mountains of data to suggest that in lean times, people use credit cards as cash draws. If unemployment remains a challenge, the country will continue to look to their credit lines for money to bridge months of dwindling paychecks. As summer winds down and the holiday seasons emerge from earlier-than-ever marketing campaigns designed to encourage economic stimulation, consumers are expected to once again overspend and thus tilt the growth in default numbers back to positive early in the New Year.

If the wave of holiday over-spending joins the unemployment headwinds, credit card defaults, credit bureau reporting and most likely, bankruptcies, will once again spike. Currently, bankruptcy filings are at their highest levels since before 2005, when legislation was enacted to cut back on the number of bankruptcies.

If you are behind on your credit card payments, don’t eait another day to speak with a bankruptcy attorney. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414 to set up a free debt consultation.

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Published Sunday, September 6, 2009 @ 1:18 pm

Now that every bit of information about you is digitized, it is easier than ever to use your own data against you.  Scammers know that flashing a little bit of knowledge can disarm an otherwise savvy consumer, so don’t be fooled into falling for the latest scam just because someone knows your address, details from your purchasing history, or even your social security number.

One new scam to be on the lookout for involves fake rebate checks. Basically, scammers send you a check in the mail for a rebate on an item you may have purchased. It’s possible they may actually know that you purchased the item, but it’s also possible that scammers will stick with popular or “hot” items, the kind of stuff you see advertised on TV and magazines, and snag consumers by counting on coincidence; either that you bought the item or that you were planning to buy it. One such program looks like an official check from the manufacturer, complete with a trademark logo, but it’s actually a ploy to obtain your signature…and therefore your consent to sign up for junk you don’t want at prices you don’t care to spend. If you get a rebate check in the mail, be very careful to read all of the teeny tiny print―annoying, but not more so than having to fight a company to recoup money you’ve been tricked into spending.

And here’s another scam, this one involving fake bill collectors―as if the real thing weren’t bad enough! This particular set of bad guys will call you and pretend to be collecting on a bill, making threats and demanding payments for debts you never owed or don’t owe on any more. Reports about this scam are especially unsettling because the scammers seem to have a lot of information at their disposal on the people they are calling.

So how can you tell if the bill collector is the real thing or another scammer on the take? Scammers will often report that they’re employed for agencies that don’t exist, so if you’re unsure about why someone is calling, request information about the company and the caller, explain that you want to look into the situation and hang up. Afterward, do a little research; if you’re satisfied it’s a real company you can always call the number back. Another warning sign are the kinds of threats scammers make; for example, threatening to send people to jail if they don’t make payments. You can’t be sent to jail over debt, so this particular threat is a dead giveaway. Finally, remember not to be fooled just because the person appears to have information about you; don’t confirm that any of the information is correct, since that may be the objective of the call in the first place. Remember that you have the right to demand written proof of your debt, and you should do so at the first sign of trouble.

You don’t have to take abuse from fake bill collectors, but the real thing are no joke either. Unlike the scammers, legit agencies won’t stop calling you until you do something to end your debt problems for good. If you can barely keep your debts straight, making it easy for scammers to take advantage of your vulnerable state, bankruptcy could be the answer for you.

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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 Wednesday, August 26, 2009 @ 10:04 pm

A successful bankruptcy is as much about post-bankruptcy decision making as it is about making the initial decision to file. A lot needs to go into each spending choice, every credit consideration and your personal financial management goals.

Multiple bankruptcies are common. However, if you feel you may be getting close to having to file again and the reason is not the direct result of an uncontrollable emergency, there may be some broader, underlying personal issues that were not addressed the first time around. At the Law Offices of John T. Orcutt, we take pride in preparing our clients for a life outside of bankruptcy as well. While we very much appreciate your business, we hope we only have to help you file one time.

We’ve compiled in this post a few strategies to help keep you on track after you are back on your feet:

• Pay bills on time. Sounds easy, right? Hardly. For even those people who have never even sniffed a financial difficulty, staying on top of a pile of monthly bills takes very sound organization skills. Like most people who begin to have trouble making ends meet, dates become critical. All kinds of dates: due dates, late charge dates, power bill dates, mortgage payment dates and so on, all start to come together into a menagerie of calendar markings and PDA notifications. One way to ensure everything gets paid on time is to use a completely separate calendar for bill dates. And, mark each one due five days before their actual due date. This way, you can avoid hundreds of annual dollars in late fees and prevent nasty marks on your credit report. Be careful with online bill pay services as well. While they offer convenience and scheduling, make doubly sure they are paying on time and that there isn’t some sort of delay that leaves your money dangling in cyberspace.
• Choose expenses carefully. This involves reminding yourself daily about the things you really need. Lifestyle items are for the “old you.” Remember, you don’t need what your co-worker or neighbor has. This is also about paying for things in cash and keeping the new credit card for emergencies, like car repairs or house damage. The reward from knowing you saved up and purchased something cleanly is well worth the wait. Try it and see.
• Balance your checkbook. Seems like another obvious tip, doesn’t it? You would be surprised. Today, banks are tacking on very high fees for bounced checks, overdue settlements of overdrawn accounts and service charges. Not only can you not afford to know exactly what is in your checking account, it’s a poor financial habit to get into. With simple addition and subtraction, you can be sure of how much money is coming in and going out every month. This helps in budgeting and uncovers places where you can save each month. Pay attention to the balance daily as well. Every morning, use the Internet or automated phone lines to get an update on your account. Even if you think you know, it’s always smart to really know.
• Handle setbacks as soon as they occur. Don’t let a disputed expense fester in your monthly balance, where it can gain interest or get lost in the administrative shuffle. And don’t take every little mistake you make as a sign of collapse or failure. Address every question or complication head on and be assertive.

Your financial solvency is a key part of your well-being. Try to stay on top of your finances after bankruptcy and truly take advantage of your fresh start.

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