Published Friday, March 19, 2010 @ 7:09 am

This time of year, America is officially springing forward with most U.S. citizens trading an hour’s worth of sleep for more evening sunshine to enjoy after work. Yet, Daylight’s Savings Time 2010 means more than additional playtime for you in the daylight hours; it also means it’s primetime for planning a much-needed Spring Break and/or, in many cases, a much-deserved Summer vacation.

If you’ve recently filed for bankruptcy or simply made a New Year’s resolution to overcome your personal credit crunch, you may be wondering how you can possibly enjoy a little rest and relaxation on a vacation without the crutch of credit cards.

While it may sound hard to believe, it’s actually relatively easy to travel without credit with many hotels, motels, airlines and car rental agencies offering “creditless options,” for consumers on a budget.

Planning Ahead to Get Away Credit-Free
While most hotels or rentals will accept debit cards, the true key to traveling credit-free is to plan ahead…and now’s the perfect time.  Make reservations 10-30 days before you plan to travel in order to guarantee you won’t need your credit card to get started with your getaway. This extra time will allow you to research the correct vendors for your credit-less adventure.

Reserving Your Room Without Credit
As you’re probably aware, these days hotels and motels expect you to guarantee your reservations with a credit or debit car. However, what is less well-known is that most hotels have policies regarding credit-less travel that allow consumers like you to circumvent the normal credit-dependent details. In general, these policies can range from prepaying the entire stay (ensuring you aren’t living beyond your vacation means) to simply prepaying your deposit (normally one-night’s stay).  In addition to the benefits of not using high-interest cards to reserve your stay, your pre-pay allows you to travel without carrying a ton of cash. Cash stand-ins like Travelers Checks can also reduce the possibility of losing your hat while enjoying your vacation. To find out the policies of your favorite hotels or those in your intended destination, start by dialing the hotel’s toll-free 800 number and inquiring about their “credit-less policy.” While some hotels have company-wide policies, others decide on a hotel-by-hotel basis.

Renting A Car Without Your Card
In some cases, rental car agencies don’t accept debit cards. However, like hotels and motels, almost all rental companies have policies for credit-less reservations. According to author and financial consultant Paula Langguth Ryan, Alamo Rental Car is an especially consumer-friendly choice when attempting to rent a car without a credit card.  In her book, Bounce Back From Bankruptcy, Paula explains that Alamo built there business on creditless travel and continues this trend by avoiding applications or making arrangements ahead of time, while also allowing you to pay directly with cash. In return for making creditless travel so hassle-free, you must make arrangements a minimum of 24-hours ahead of time, pay a deposit, and provide copies of bills and pay stubs to verify your ability to pay—a small price to pay to avoid the interest of credit and the hassles of contracts.

Catching a Flight without Breaking the Bank
Today, it’s normally routine to purchase tickets using debit cards. Some companies, like US Airways, will also accept payment over the phone using an electronic check transfer, requiring you to not only have the funds beforehand, but also having your checkbook handy when purchasing your flight. Another no or low hassle way to pay your way with the cash you have (either using green backs or debit cards), is to use a local travel agent.

In short, planning your vacation need not be financially painful; you merely need to pick your hotel and car rental and ask for options with “creditless travel;” book your plane tickets through debit, electronic check transfers, or both through the airline or a travel agent; and pack any cash you do take in the form of traveler’s checks—assuring a safe, hassle-free and financial freeing vacation!

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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 Monday, March 15, 2010 @ 6:27 pm

Exacerbated by the recent “Great Recession,” small business owners everywhere are not only facing high employee health care costs and lagging consumer and commercial spending, but also fewer credit options. While loans have always been the lifeblood of the small business, all across our great nation, mom and pop endeavors with even the most solid credit histories face tremendous obstacles in qualifying for much-needed capital.

In a recent McClatchy article entitled “Too small to succeed? Firms still can’t get loans they need,” small businees owners—from California to the Carolinas—share their personal struggles behind the credit crunch.

“Jim Collins, co-owner with his wife Arlene of Quantum Energy Solutions, has been in business in Sacramento, California, since 1974. He has a $50,000 line of credit, backed by the U.S. Small Business Administration, through US Bank, owned by US Bancorp. He has a solid credit history and $30,000 in untapped credit. Yet when Collins approached the bank about borrowing at least $500,000 to expand his 12-employee firm — which retrofits buildings with energy efficient technologies — he was rebuffed, told that his company lacks resources and collateral. US Bancorp declined comment. Collins, 70, can’t get the money he needs to hire five additional workers and ramp up marketing, even as the Obama administration promotes the “green jobs” of the future. ‘The credit crunch is still there. It really impedes our ability to grow,” he said. “I’d put five more people to work tomorrow.’”

Because small business accounts for some 65% of employment in a nation already facing off-the-charts job losses, any squeeze on small firms is a serious matter—with last year’s disconcerting lending figures illustrating just how serious—for the long haul.

According to the Federal Deposit Insurance Corp, the United States economy made 7.4 percent fewer loans in 2009, the largest lending drop since 1942 and marking an estimated $1.5 trillion lending deficit. As McClatchy reports, “corporations are issuing bonds again, and large companies have access to bank loans, but it’s still an uphill climb for the little guy. ‘There’s a big gap in access to credit for small firms now, and it’s a huge problem,’ Karen Mills, the head of the Small Business Administration, told McClatchy. ‘We have a sense that the banks are not back to lending the way that they need to be, going forward.’”

Another victim of the credit crunch—this time on the East Coast—is North Carolina’s Bob Kingery, co-founder of Southern Energy Management in Morrisville, NC. While Kingery’s firm normally makes a good living installing solar photovoltaic panels for businesses throughout the Southeast, “in the past two years, about 15 projects have been scratched or delayed indefinitely as customers scramble for financing options. The tight credit market has tied up about $30 million in business, Kingery calculates.”

Based on last year’s anemic lending figures and the continuing trend of evaporating loans for small business, many mom and pop endeavors are seeking shelter through the benefits of bankruptcy.

The truth remains, if you are no longer able to sustain or expand your business in your current financial situation, filing for bankruptcy may be your best bet. And, in this case, the best move a beleaguered small business owner can make is to consult an experienced bankruptcy attorney who specializes in small business cases. 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 small business bankruptcy. The 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 Wednesday, March 3, 2010 @ 8:10 am

As all American’s attempt to make their way out of their own Great Recessions, there is an old joke about the difference between a recession and a depression that goes something like this: “A recession is when your neighbor is out of work. A depression is when you are out of work.”

Well, the unemployed just got a whole new reason to feel depressed post-national recession.

Now, potential employers throughout the country are beginning to hold credit histories against already underworked and overwrought applicants. In fact, according to a recent survey by the Society for Human Resources Management, some sixty percent of employers said they run credit checks on at least some job applicants, compared with fewer than 42 percent in 2006.

While employers say these types of credit checks provide invaluable information about a job applicant’s “honesty and sense of responsibility,” according to The Huffington Post, lawmakers in at least 16 states—from South Carolina to Oregon—have proposed “outlawing most credit checks, saying the practice traps people in debt because their past financial problems prevent them from finding work.”

One such anti-credit check lawmaker is Wisconsin Rep. Kim Hixson. He drafted a bill in his state shortly after hearing from constituents who have continually struggled to find work. “If somebody is trying to get a job as a truck driver or a trainer in a gym, what does your credit history have to do with your ability to do that job?” Hixson told HuffPost.

Under federal law, these same prospective employers must actually get written permission from applicants in order to run their credit check. Unfortunately, even with these protections in place, many desperate job seekers don’t feel they are in any position to refuse a potential employer’s requests.

Most of the state bills being proposed in 2010 prevent employers from using credit reports when hiring for most positions. According to The Huffington Post’s Kathleen Miller, “The laws contain exceptions in cases where such information could be relevant to the job – for example, if the person is applying to work in a bank or an accounts-payable office.”

Based on a 2008 survey by the Association of Certified Fraud Examiners (ACFE), employers and other credit check advocates argue that the two most common red flags for employees who commit workplace fraud are “living beyond their means and having difficulty meeting financial obligations.” The ACFE report also estimated that U.S. employers lost $994 billion to workplace fraud in 2008.

But in these tough financial times, many believe the economy can’t afford the credit checks.

“We are in the great recession and this creates a vicious cycle,” said Maryland Delegate Kirill Reznik, who drafted a similar bill being considered in his state.  “People lose their jobs, that naturally precipitates them getting behind on bills, their credit scores go down, they are trying to find a job to pay off the bills, and employers won’t hire them because of their credit score.”

In the meantime, consumer advocacy groups are showing their support for legislative bans on these types of credit checks, pointing out that credit reports can also contain inaccurate information.

A qualified bankruptcy attorney can assist jobless citizens with even the worst credit histories 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.

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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 Tuesday, March 2, 2010 @ 10:48 am

While many economists say this decade’s Great Recession ended in the middle of 2009, millions of struggling Americans who are still working hard to find meaningful employment would definitely disagree. And as we are all now well aware, the once thriving middle class is being hit especially hard—with a determination of whether you’re in a recession or recovery based largely on where you live and if you still have a job.

In the new year, the unemployment rate has, in fact, dropped incrementally from its staggering 10 percent highs in December 2009 to 9.7 percent, a small diminishment in the stats that some say exists because the long-term unemployed—the men and women out of work more than six months—have simply stopped looking for work. For these “long-termers,” making up some 40 percent of those collecting unemployment, these tiny changes in stats are far from comforting.

“These people, when you look at their unemployment rate, it’s just off the charts,” Lakshman Achuthan, managing director of the Economic Cycle Research Institute told CBS News Correspondent John Blackstone. “It’s very different from earlier patterns that we’ve seen in recessions.”

“For those who once worked in the auto industry, housing and manufacturing, new jobs could be a long time coming,” Achuthan adds, pointing out that, “Ten years ago, we had 18 million or so people in manufacturing; now, it’s a little over 10 million. So you have 8 million jobs gone and there not coming back, ever.”

In this case, the proof is largely in the pudding, as average Americans struggle to transition from job to job in this era of perpetual unemployment. Hammering this point home, CBS’s Blackstone also spoke with Kelley Novak, who used to own a restaurant in Napa, California, called the No Bad Day Café. In the months since Novak was forced from the restaurant business by falling revenues, she has been trying what is becoming a recession-worthy recipe: cooking up new ways to keep money flowing in at a time when finding a job seems impossible. Now she’s trying to feed folks on a diminished scale via a small catering business. “It’ hard,” she says, “because there’s nothing available and, you know, you just have to get creative.”

As is the case for many small businesses, the economic downturn hit her homegrown eatery especially hard. “We were down 30 percent like everybody else,” Novak told CBS. Not only did she have to close her California restaurant, but Novak was forced to lay off all of her employees. “It was sad. It was really sad,” Novak recalls.

With California’s unemployment pushing over 12 percent, Novak understands it may be a long time before the six people who used to work at the No Bad Day Café can, as Blackstone put it: have “ a good day.” Blackstone found, “Many more may have to follow Novak’s lead and find something they can do themselves – even though launching her catering business has been daunting, especially since she’s doing it on her own. ‘It’s just really frightening,’ says Novak. “But giving up is no answer.”

Novak is right. And another key to rebounding in a recession is knowing who can help. Extended unemployment is not only frightening, but can be fiscally devastating: draining savings, busting budgets, and leaving many bankruptcy bound.

A qualified bankruptcy attorney can assist proud, but jobless, citizens just like you to conquer your 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.

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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 Friday, February 26, 2010 @ 7:15 am

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

Exceptions to the power of a bankruptcy discharge, include:

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

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

For example, in a 2009 bankruptcy filing:

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

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

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

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

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

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

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Published 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 Tuesday, February 9, 2010 @ 11:14 am

You know your creditors: those nice folks who gave you something you wanted — goods, services, or money — in exchange for your promise to pay them back at a later date.  But those same nice folks can turn nasty when you can’t or won’t pay back your debts, hiring collection agencies to hound you every chance they get.  So, in these unfriendly economic times, what can you do when your creditors come calling? Can you keep bill collectors at bay? How should you conquer your collection fears and fight back?

Believe it or not, laws do exist at both the state and federal level to protect average Americans like you and me from harassing debt collectors.  That’s right:  between the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act, many of the actions that debt collectors take for creditors are strictly prohibited.

No one knows that better than Craig Cunningham. As the Dallas Observer reported, the Texas resident understand exactly how to get creditors off his back. Craig sues them.

According to the Dallas Observer, “While most Americans with unpaid bills dread the collector’s call, Cunningham sees them as lucrative opportunities. Many collection and credit card companies, intentionally or not, violate little-known consumer rights laws, and Cunningham’s favorite pastime is catching them doing so and then suing them. In fact, it’s a profitable side job.”

After amassing over $100,000 in debt and becoming the target of creditor calls, this so-called “man with a plan” hired a lawyer from whom he learned the ins and outs of consumer rights. Using this knowledge, he taped creditor calls and saved their repeated and aggressive correspondence as evidence for eventual lawsuits against these same various debt collectors found to be violating national or state consumer protection law. From there, several court settlements followed providing Cunningham with a boon for his new “business.”

“Most collection agencies, it seems, prefer out-of-court settlements (which often involve a statutory fine) to taking a case to trial, since settlements save them money. The Observer notes that Cunningham has thus far earned $20,000 from suits against law-breaking collectors.”

Cunningham’s “collection baiting” turns their aggressive attempts to retrieve creditor’s money into a “financial liability” by hiding behind consumer rights and protections laws. These laws prohibit creditors from performing what might, in this economy, seem normal behaviors, including:

• Calling you repeatedly with intent to annoy or harass;
• Calling you outside of certain morning and evening hours;
• Contacting you directly when you have indicated that you have legal representation;
• Contacting you using certain types of media; and
• Lying about their ability to take legal action against you to collect on a debt.

While many consumers are unaware of their rights against these types of creditors, as in all cases, knowledge is power. For information about your consumer protections, learn more about the  Fair Debt Collection Practices Act (PDF).

And if you’re facing creditors, don’t forget that bankruptcy can be the most reliable way–to avoid the creditor crunch.

In fact, 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 Sunday, February 7, 2010 @ 12:54 pm

In the Bad Ideas for the Bankruptcy Bound series, you’ve received an introductory look at the many reasons why it’s never a good idea to hide, or attempt to hide, a bankruptcy filing from your spouse. In later discussions we’ve seen how to avoid many of the pitfalls and pratfalls of filing for personal bankruptcy, including transferring property, using credit and avoiding creditors. Here, we’ll expand on why automatic bill payments from your checking account can lead to a loss of precious control for the bankruptcy bound.

Without a doubt, the ease and convenience of having recurring monthly bill payments paid through an automatic deduction from a checking account has made the time-saving process a no-brainer for many time-stretched citizens.  From car payments to credit card bills, automatic bill pay seems a trusty deduction process that avoids snail mail send outs, freeing up time, and peace of mind, to move on to bigger and better things.

But many argue that “free time” is precisely the problem for many cash-strapped citizens.

While auto pay allows for other things, it also frees up space for financial matters to go unnoticed. Precisely the same logic applies in credit card spending: you pay for items without the immediate financial repercussions, and pressing conclusions, that you’re spending money you don’t have.

Not thinking about fiscal matters is not only the exact opposite thing a cash-strapped person needs to do, but it also leads to a continuous cycle of avoiding the painful, but necessary, lessons of budgeting funds and reacting to changing financial circumstances: precisely the same denial of dire financial straits that put so many in a poor economic condition in the first place.

Like a credit card, having an automatic debit of a car payment, or gym fees, or house note, taken directly from your checking account, deprives you of the ever-important opportunity to think, however briefly, about the quality (and quantity) of your spending.  The auto pay acts like a thief in the night, taking from your precious and limited funds without concern or awareness for your balances. Too many of these “takings” can wreck monthly finances and take away a person’s power to prioritize each precious payment.

As such, in addition to making budgeting difficult, automatic bill payments from your checking account also take control away from the debtor—removing any option to determine when to pay which creditor and how much. This small fact can have a major impact on basic needs as auto pay can give your gym membership payments priority over that of your mortgage or car notes.  Not only that, but depleted accounts can mean substantial upturns in interest when credit card bills come due unexpectedly through the auto pay process.

What’s worse, if you’re considering bankruptcy, automatic bill payments can be especially inconvenient in terms of losing track of who’s getting what. Long story short, auto pay plus bankruptcy can mean you unwittingly pay out to creditors from whom your debts are discharged. For example, once you file for bankruptcy, non-exempt bills currently paid by auto pay will be discharged—either through a bankruptcy discharge of the underlying debt, or through a Chapter 13 plan to pay back debt incrementally.  Untracked auto payments can mean your creditors get payments they don’t deserve—especially if it takes transactional time to cease the automatic  debits.

So whether you’re filing for bankruptcy or not, begin 2010 by taking control of your personal finances. Pay your bills with your checkbook, confronting your debt head-on.  After all, it’s your money—treat it like you own it, and remember to “check” before you “spend.”

If you are considering bankruptcy, 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 financially 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, February 1, 2010 @ 4:46 pm

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

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

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

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

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

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

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

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

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

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

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

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Published Wednesday, January 20, 2010 @ 11:34 am

In this special series, entitled “Bad Ideas for the Bankruptcy Bound,” we’ll introduce what to avoid when bankruptcy is your next, best step.

Love may move mountains,
but money can crumble the strongest marriage.
– Ron, Lieber, The New York Times

Everyone who’s married knows: money can be a primary cause of marital strife. As a result, in this especially difficult economic climate—full of job insecurity, rising mortgage costs, health care uncertainties and other mounting money woes—many debtors who have accumulated all kinds of debt without the knowledge of their spouse are sometimes tempted to file for bankruptcy “secretly” and avoid sharing the financial “bad news” with their spouse.

Regardless of the fiscal reason, this path can lead to losing it all with your better half. While one petitioning spouse doesn’t mean the other has to file for bankruptcy also, it’s assuredly never a good idea to hide a filing from your husband or wife. Here’s why:

Disclosure of Your Debts is Inevitable
While married people like you have a legal right to file for bankruptcy by your lonesome, what you don’t have readily available is any way to keep the news of your bankruptcy filing from your spouse. When you stop paying your creditors in anticipation of your bankruptcy filing, inevitably these same creditors will begin calling and writing your home—the same space you share with your unknowing spouse.  Remember, the bad news of your insolvency can come from you or them, with a bit less sensitivity from the latter.

You’ll Need Your Spouse’s Support
Married folks who file for bankruptcy must provide information regarding their spouse’s pay, last year’s tax returns, proof of retirement and an array of other information that might require your better half’s information and input.  Keep in mind, your requests for this information will ultimately raise your spouse’s suspicions and the likelihood of your spouse finding out—one way or another.

Joint Accounts Automatically Get Your Spouse Involved
Filing for bankruptcy means that if your spouse’s name appears on any of your debts—such as joint credit cards, mortgages, or the like—they’ll find out the hard way when creditors pursue them for an alternative way to get paid.  In addition, if your spouse is using one of the forms of credit that will be included in the bankruptcy filing, you’ll need to tell him or her to stop using this credit before you file—another reason your spouse will be alerted to your insolvency.

Don’t Risk More Stress in Insolvency
Obviously, hiding your debts from your spouse is dishonest. Hiding your bankruptcy from your spouse, as you’ve seen, is almost impossible.  Both non-disclosures will add unnecessary stress and strife to your relationships. And amid these harsh economic times, life can be tough enough without all of this interpersonal withholding.  The first step to a fresh financial start together, is being honest about your bankruptcy with your spouse. Don’t forget, there is no more ruinous a financial move than a divorce and no greater road to divorce than fiscal dishonesty.

Knowing a qualified bankruptcy attorney can also help lessen the marital stress of bankruptcy, yielding the right kinds of support, information and insights—at a low cost— for a financially viable and secure future.  A good bankruptcy attorney can also dispel the many myths and stigmas of bankruptcy, offering truthful information about this powerful form of debt elimination. 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, January 19, 2010 @ 11:23 am

In the Preventing Foreclosure series, you’ve received an introductory look at how to stay in your home, either through bankruptcy proceedings or via negotiations with your mortgage lender, with later discussions specifically devoted to how Chapter 13 or Chapter 7 bankruptcy proceedings can force creditors to end their collection activities and delay a foreclosure sale.

In Part II of this six-part series, we elaborated on the ins and out of working with your mortgage lender, including timelines, terms, and trends, including forbearance, mortgage modification, loan reinstatement, and the short sale. Here, we’ll expand on the process behind the real estate concept of a  “short sale,” including the ins and outs of this option for homeowners seeking to avoid foreclosure and settle with their lender.

Part V – The Short Sale

If you’re one of many mortgage holders in arrears due to a recent job loss, extended unemployment, medical costs, divorce, or just an adjustable rate mortgage that’s on the rise, you may be facing foreclosure. But, foreclosure can ruin your credit and make it impossible to acquire a new home, leaving you without your biggest and best asset in an uncertain economic climate.

You may have heard of one alternative to foreclosure: the short sale. A short sale occurs when the outstanding loan against your home is greater than what the property can be sold for. For some homeowners, this may be a viable solution. However, for many, it’s just a false glimmer of hope that may leave the homeowner worse off than before the short sale. Here’s a brief overview of the necessary steps of a short sale:

Verify Your Property Value
If you’re using a real estate agent, they’ll provide you with an estimate of market value. If you are selling the property yourself, do your own homework, assessing the market in your area for a proper property price.

Calculate the Costs
Add up all the costs of selling your property, including the closing costs. If you are selling the property on your own, a real estate attorney can help.

Assess the Amount Owed
Determine the amount owed against the property, including all loans, minus the total amount owing against the property from the estimated proceeds of the sale—ultimately a negative number.

Locate Your Lender
Contact your mortgage lender or lenders for their particular short sale procedures. Some lenders are willing to work with you by reducing the amount owed or making other arrangements.

Sell the property
If your lender agrees to a short sale, the next step is hiring a real estate agent—one willing to work for a smaller commission. At the same time, you’ll also need to scale back your own spending as another sign of good faith to your lender. Once a buyer is secured, you can then sell the house for a loss, and, with the lender’s permission, they agree to call it even, with no damage to your credit or ability to procure a new home in the future.

Review the Risks
In addition to the potential that your lender will deny you a short sale, the short sale process does have consequences. Your lender may not be willing to eat the loss, leaving you on the hook for the difference. Make sure they are willing to give you complete forgiveness of the debt, and that they will not hold you personally liable for the difference between what the property sells for and what you owe. Get this in writing. Even if your lender does absorb the loss, the IRS may treat this difference as taxable income, leaving you with a significant chunk to cover come tax time.

As a result, the best alternative is, of course, keeping your home—either by restructuring or reinstating the loan.  Your best bet is contacting a bankruptcy attorney as soon as you start feeling pinched to make the mortgage payment. Chances are you have other unsecured debt that can be eliminated, freeing up more money to pay your mortgage. If you have two mortgages and your home is now worth less than what you owe on the first, a bankruptcy can get rid of the 2nd. That’s right, you may be able to eliminate your 2nd mortgage.

In Part VI, we’ll conclude the Preventing Foreclosure series with a broader look at your bankruptcy options.  And, as always, to learn more about your options, contact the experts at The Law Offices of John T. Orcutt.

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Published Sunday, January 10, 2010 @ 9:08 am

Before filing for bankruptcy protection, it is well worth your time to seek out alternatives. Here are a few you for you to consider:

You know what budgeting is, but maybe you haven’t given it serious thought.  If you are finding yourself squeezed every month as you try to make payments to your creditors, it is possible that some creativity and sacrifice can give you enough breathing room to build and execute an escape plan. Check with your employer to see if the company offers an Employee Assistance Program with financial counseling services, as they can provide guidance about possible options. If some budgeting and perhaps very judicious borrowing could help you pay back your debts within 3 years while allowing you to live relatively comfortable, budgeting could be a good alternative for you.

What does judicious borrowing mean, exactly? Well, for one thing, it means no more loans from predatory outfits like payday loan stores, and it may also  mean no more borrowing from credit cards and banks–these ostensibly legitimate outfits can be as exploitative as anyone.  If you can borrow the money from a family member, or perhaps receive a low interest loan from a credit union or other borrower friendly institution, a loan can give budgeting the necessary punch to make it effective.

There are downsides, however; borrowing money to get your way out of debt is a little like a sale that promises you will save money by spending–  a contradiction in terms. The point of borrowing to get out of debt is to replace your existing debt with lower overall payments and/or monthly payments. If you aren’t saving money, borrowing more is just asking for trouble!

You may not be in a position to do the kind of borrowing that can be labeled judicious; if you are considering bankruptcy, chances are good that your credit is hurting, and low credit makes for bad loans–or no loans at all.  Borrowing from family has downsides, too: what if you become unable to repay the debt, for whatever reason? Financial problems can drive families apart, so it is important to tread carefully.

Another alternative is selling assets. If you have valuable assets, it is possible that filing for bankruptcy could cause you to lose those assets  anyway ( but this does not, of course, include your personal home or car, which bankruptcy can help you save.)  In that case, selling assets might be a good idea. On the other hand, this is just like the judicious borrowing example given above; how likely is it that you have valuable assets sitting around if you are in enough financial trouble to seek bankruptcy protection? Watch out for third party security interests in your assets; some assets may not be sale-able while someone else  (say, a lender) has an interest in the asset, so be sure to check any agreements concerning that asset before you proceed.

Budgeting can also receive a boost from restructuring of your debt; if you are able to refinance your house, transfer credit card balances or seek out other methods, you  may be able free up enough cash in your lowered payments to pay back the principals on your debts. This solution also comes with downsides and caveats, however: you may not be eligible to restructure any of your debts (especially now that banks are being so tightfisted over lending), and sometimes restructuring debt sounds a lot better  than it turns out to be: transferring balances to take advantage of lower interest rates can end up backfiring if you are unable to pay before the grace period ends and if the regular interest rate is higher than the one you gave up. Refinancing can sometimes result in lower payments and less money paid overall, but those savings sometimes end up being passed to third parties in the form of fees or commissions.

As you can see, alternatives are out there, but the drawbacks, caveats and requirements mean that no one solution will act like a miracle cure. Give equal consideration to all your options–including filing for bankruptcy protection.

So…why settle for an alternative? Stuck with what seems like a mountain of bills you cannot pay or get a handle on? Maybe the best ‘alternative’ is to just look into filing bankruptcy. The truth is: It does so much more for so much less that everything else. The fact is that, had the bankruptcy laws not already been on the books, the creditor lobby would surely block their creation. Bankruptcy is just that good. You should check it out and you have nothing to lose. Many bankruptcy attorneys offer a totally FREE initial consultation, just for this purpose. In North Carolina, so does the Law Offices of John T. Orcutt. Just call toll free to 1-800-899-1414 or visit their website at www.billsbills.com . They have offices in Raleigh, Durham, Fayetteville and Wilson.

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Published Saturday, January 9, 2010 @ 8:45 am

By now most consumers know that one of the first things to take a hit when debt problems come knocking is the good ol’ credit score. Sometimes people end up with a bad debt hanging like an albatross around their necks–and dragging down their credit scores–for years. But there is light at the end of the tunnel: negative information can only legally remain on your credit report for so long before it gets wiped away. After 7 years, you can expect a bad debt to be scrubbed from your report; but can you rely on the credit reporting system to ensure you’re not getting a raw deal?

You should check your credit report periodically and ensure that the information being reported about you is accurate. You definitely want to make sure that negative information is being reported fairly; as many debtors have found, negative information not belonging to you can end up on your credit report as a result of mistake or fraud. Even if you are responsible for a bad debt listed in your report, mistake or fraud may have caused some details of that debt to be misreported. Debt “re-aging” refers to a bad debt whose date of expiration, so to speak, has been artificially extended; if you find this kind of mistake on your report, there are steps you can take to fix your report.

Keep in mind that there are three credit bureaus which report credit history. If you believe a debt has been re-aged, you will have to contact all three bureaus to request the removal of the debt from your file. Thus, you want to obtain a report that contains information for all three bureaus. Look at the date of last activity reported on your credit report for the bad debt.  The clock starts at 180 days after the date the debt first became delinquent. If the original debtor has sold the debt to a debt collector, the debt collector may fraudulently move the date forward in an effort to coerce the debtor into paying, either by prolonging the bad effects of the bad debt on the debtors credit history or even just to bring the debtors attention to the debt once more.  However, keep in mind that mistakes happen; sometimes a creditor may simply have received incorrect information about the debt from the original creditor.

When the original creditor no longer appears on the debt, the debt is past the 7 year deadline for reporting. Any debt that you know to be older than 7 years should be contested. If you find a re-aged debt, contact each credit bureau and request the removal of the incorrect information. You may be able to contest the debt online, on each credit bureau’s website, but you may have to  complete a dispute form and mail it in. Include documentation about the debt, for example, information that proves that the reported creditor is not the original creditor, and documentation of the date of delinquency, such as credit card statements. You may also want to include older credit reports that accurately reported the age of the debt. Keep a copy of each letter you send to the credit bureaus.

The credit bureaus have 30 days to remove incorrect information from your file. If the information is not removed, you may want to file a complaint with the office of your State Attorney General. You may also write to the Federal Trade Commission to complain about the creditor, or even attempt a lawsuit against the debt collector. It can be difficult to prove that re-aging was purposeful, but the right kind of pressure can cause a debt collector to respond to your request. Remember that your goal is to get the unfair negative information removed from your credit report, so you can also try to appeal to the bureaus to remove the debt from your report on other grounds.

On the other hand, if waiting for debt to fall off your credit report is not an option, and if what you really need is to get out of debt now, and to get a “fresh start”, consider filing bankruptcy. And if you do, keep the Law Offices of John T. Orcutt in mind, a North Carolina bankruptcy law firm offering a totally FREE initial consultation out of 4 different offices: Raleigh, Durham, Fayetteville and Wilson. Just call toll free to 1-800-899-1414 or visit their website at www.billsbills.com .

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Published Friday, January 8, 2010 @ 8:27 am

It is a good idea to seek out alternatives to bankruptcy when such alternatives are in fact available. As you may have discovered, though, that can be a big “if” to overcome. So what kinds of alternatives are worth the trouble…and what alternatives are not all they are cracked up to be?

Budgeting your money, restructuring your debt, seeking better loans to replace your existing debt and selling valuable assets are all alternatives to consider if they are available to you…but that can be a big “if.” Budgeting your money may be impossible if even basic survival expenses are beyond your means; budgeting is an essential financial skill to master, but in some cases it may be too little, too slow or too late. Restructuring debt by refinancing or other options can also allow you to reap benefits, but you may not have the credit rating or the kind of debt that will allow you to refinance to your benefit. In addition, refinancing savings can sometimes be lost to third party fees and commissions, so that all you are doing in the end is renaming your loan, replacing the lender and not the principal. Finally, selling assets can help you get out of trouble, but you may not have such assets if you are seeking bankruptcy protection. In addition, if you sell an asset and end up having to file for bankruptcy protection anyway, certain sales and transfers could land you in hot water with the bankruptcy court or cause other complications in your filing. (So before you do it, check with a bankruptcy attorney!)

But what about other alternatives? Are any of them worth the trouble? Unfortunately, many debtors have learned the hard way that some of the non-bankruptcy solutions out there are not all they’re cracked up to be. A lot of them may not work at all; some may get you in bigger financial trouble, or cause you to be ripped off. And to add insult to injury, while you waste time with ineffective solutions, you may be delaying filing for bankruptcy protection to the detriment of your case.

You definitely want to think twice before opting to forgo bankruptcy in favor of “credit counseling” or debt consolidation. Government consumer watchdogs and other debtor advocates have been warning the public for a long time that outfits claiming to be able to get rid of your debt by consolidation are often not worth tangling with.  Unfortunately, even organizations claiming to be nonprofits may not have your best interest for their priorities; keep in mind that many have cast their lots with the creditors. Already, from the beginning, they are not on your side!

As you tackle financial problems, it’s better not to mess with your retirement. Reverse mortgages schemes target older folks who are cash-strapped and may make for nasty surprises for the heirs of the estate, as well as taking advantage of retirees to rack up fees and other forfeitures. Younger people may put their retirements at risk if they opt to address debt problems by dipping into their retirement funds, which are normally protected from bankruptcy proceedings. Dipping into retirement funds can also result in increased tax liability.

And speaking of increased taxes, keep in mind that any debts that are forgiven by creditors of all stripes are considered income by the IRS. According to the Tax Code, only debts that are discharged in official bankruptcy proceedings will not be considered income, so even if you catch a break negotiating with creditors, you may pay the price in increased tax liability. Remember also that often taxes are not dischargeable in bankruptcy, so if you end up having to file anyway, a debt forgiven by an unsecured creditor could saddle you with a more permanent type of debt.

Alternatives to bankruptcy are available, and you shouldn’t be totally discouraged just because  each of these solutions carries some drawbacks and warnings; the point is merely that ALL viable solutions to serious debt issues carry drawbacks. Much like you shouldn’t be discouraged to attempt the alternatives because they have drawbacks, don’t be discouraged from looking into bankruptcy protection if that could be the solution for you.

In North Carolina, you may want to check with the Law Offices if John T. Orcutt, a bankruptcy law firm offering a FREE initial consultation and offices in Raleigh, Durham, Fayetteville and Wilson. Just call toll free to 1-800-899-1414 or visit their website at www.billsbills.com .

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Published Tuesday, January 5, 2010 @ 1:52 pm

Foreclosure is a common precursor to bankruptcy. More often than necessary, it happens before a family really knows where to turn for help.

Worse yet, those who lose their home in foreclosure continue to spiral into debt and end up filing bankruptcy long after it could have been used to help save their home in addition to relieving them from the agony of overwhelming monthly credit card bills and other debts. Fortunately for many citizens of North Carolina, a foreclosure prevention program has become a model for the nation and to date has assisted more than 2,500 of us from having to give back the property we worked so hard to obtain.

Called the State Home Foreclosure Prevention Project, this unique effort provides those worried about making their mortgage payment a hot line that provides advice, counseling and insight on how to work with your home’s mortgage lender to avoid having to surrender your deed back to the bank. While it certainly cannot help everyone who calls, two out of every three families needing help are getting it. And, more than 5,000 additional mortgages are still being re-negotiated.

It was originally created to assist those victimized by the sub-prime loan mortgage crisis but has since been expanded to help homeowners who have traditional loans but may be struggling with their house payment as a result of other debt forms or unemployment.

It should be noted that this program is not a debt or credit counseling service. It is designed specifically for those affected by the swath of spiking mortgage rates that resulted in the systemic plague of foreclosures nationwide, decimating the national real estate market and bolstering our economic demise.

Similar federal programs, such as the Making Home Affordable plan rolled-out last year, have not met expectations. North Carolina has managed, proportionally, to create an impact. The state banking commission has estimated that the total number of mortgages saved to date has stopped $218 million in property value and mortgage holder losses. Should those families currently working with the program be saved, the totals could more than double that number.

Yet, there remain a number of pain points in the state’s efforts to stave off foreclosures. Chris Kukla, a high level government affairs adviser at the Center for Responsible Lending, stated that a number of mortgage counseling companies and other private organizations are doing a “horrible job” in loan reorganization. Whether it be not hiring enough people to answer call-in questions or simply not understanding the paperwork process and related legalities, many of the efforts that have erupted on to the market at the height of the recession are too profit driven to provide real service.

The importance of this program to those considering bankruptcy is that it can help you alleviate one of your largest monthly financial headaches. Understand of course, that it does not eliminate your mortgage, but simply re-aligns it in a more reasonable payment plan. With this added stability, a troubled homeowner could arrive at a less pressure-driven decision to file bankruptcy and feel more confident in the outcome.

Remaining in one’s home is one of the most important factors for someone who files for bankruptcy protection, despite the fact that the majority of those who file do just that — stay in their homes. It seems that over the years, perhaps since the 2005 changes to the bankruptcy law, or maybe as a result of today’s hyper-sensitivity to the housing crisis, the fear of foreclosure has permeated the mindset of everyone facing financial trouble. Between programs like the State Home Foreclosure Prevention Project and the expertise of the bankruptcy attorneys at the Law Offices of John T. Orcutt, you have more than enough ways by which to remain safe and sound at home.

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Published Tuesday, January 5, 2010 @ 8:41 am

Wage garnishment is a relatively harsh debt collection practice employed by creditors when other methods of debt collection have failed. Wage garnishment allows a creditor to receive payment on a debt by intercepting wages before a debtor has even received them. A creditor may be able to arrange to receive payments equal to a significant percentage of a debtor’s wages, generally anywhere from 10% to 25%.

Scary thought, isn’t it? If you are seriously behind on a debt, don’t panic yet! Because garnishment is such an intrusive solution, wage garnishment must be court ordered. In order to receive payments in the form of wage garnishment, a creditor must first receive a judgment from the court. As a result, wage garnishment is typically a last resort; many creditors may not even bother with taking a case to court, especially where a relatively small debt is concerned.

If a creditor wins a judgment against a debtor and the court grants him the right to garnish wages, the sheriff will deliver the wage garnishment documents to the debtor’s employer. The debt will then be handled through the employer’s payroll department, which will institute automatic withdrawals (the way income tax and social security are automatically deducted from each paycheck.) An employer will generally be required to provide the employee with documentation regarding the wage garnishment. Because this process involves a debtor’s employer, a  debtor will not often feel he is not only losing money; he is also losing face.

Wage garnishments are more likely to be seen in response to certain kinds of debt delinquency; generally, back taxes, defaulted student loans and missed support payments such as child support and alimony are more likely to trouble debtors with wage garnishment. Still, other kinds of creditors may also be able to win a judgment against a debtor and obtain a court order for wage garnishment.

If your wages are being garnished, there are some steps you can take to make the situation easier to deal with. If your wages are garnished, you may be able to convince the court to lessen the payments by explaining your financial situation, living expenses and efforts you have taken in the past to address the debt. If you are thinking of going this route, you should file a claim of exemption immediately upon receiving the paperwork about the wage garnishment from your employer. Sometimes you will have only a limited time after the court order is entered to file a claim for exemption, and while you wait to be granted a hearing your wages will continue to be garnished; the wait for a hearing could last as much as one or two months.

Wage garnishment for payments such as child support could exceed 25% of a debtor’s income. If your income after the payments are deducted is not enough to survive on, you may be able to petition a court to lower the payments. If this won’t help you, you can also try negotiating with the debt collector to stop the wage garnishment. Once they’ve gone to the trouble of suing for a wage garnishment order, a creditor is not likely to agree to stop garnishing wages unless the debtor agrees to pay more than the amount being deducted from each payment. If you offer a lump sum payment to settle the debt completely, however, the creditor may agree to a much smaller overall amount paid, so it is worth attempting a negotiation if you think you can settle the debt.

Wage garnishment is a major headache; it is best to avoid it altogether. If you find yourself in serious financial trouble, it’s best to take the situation in hand NOW rather than allowing it to spiral out of control. Remember that filing for bankruptcy protection can help you take care of debt by allowing you to discharge it outright. Bankruptcy can also help by freeing up income from dischargeable debts to put towards your other payments. With your situatio in hand, you can prevent wage garnishing from ever troubling you in the first place.

Fortunately, at least if you live in North Carolina, wage garnishment is generally not allowed. There are important exceptions: Wage garnishment is allowed to collect back taxes, alimony, child support and some types of student loans.

Lucky enough to live in North Carolina, but still suffering under a mountain of debt you simply can not get a handle on? Or, need to stop an overly burdensome tax or student loan garnishment that is simply “taking too much”?

You may want to consider filing bankruptcy and when you do, think the Law Offices of John T. Orcutt, an established bankruptcy law firm offering a totally FREE initial consultation out of 4 different offices: Raleigh, Durham, Fayetteville and Wilson. Just call toll free to 1-800-899-1414 or visit their website: www.billsbills.com .

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

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

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

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

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

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

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

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Published Sunday, December 27, 2009 @ 5:31 pm

If the present economic environment wasn’t Scrooge enough, just in time for the holidays, it appears the Obama Administration’s Making Home Affordable foreclosure prevention plan has failed to meet its goal of helping millions of Americans avoid foreclosure.

In fact, according to a recent Treasury Department report, 27 percent of the 650,000 homeowners taking part in the mortgage modification program are now delinquent on their mortgage payments.  Reflecting the mortgage industry’s aversion to permanently modify mortgages, of that number, only 1,711 participating homeowners attempting to avoid foreclosure have been able to convert their modifications to permanent status. Homeowners facing foreclosure and needing help to secure a loan modification were encouraged to visit http://www.makinghomeaffordable.gov.

Crunching these paltry numbers translates into even more disturbing results for many seeking good news about federal mortgage relief and a way to save their homes.  According to Shahien Nasiripour’s recent report in The Huffington Post, results of the President’s $75 billion foreclosure program mean that, for example, out of every 100 homeowners who came to JPMorgan Chase for modification assistance under Making Home Affordable, just 15 have or will likely receive a permanent payment reduction. So, what happened to the other 85? Nasiripour says:

“for every 100 trial plans initiated from April through September 2009 under the Home Affordable Modification Program:

• 29 borrowers did not make all required payments under their trial plan;
• 20 borrowers did not submit all documents required for underwriting;
• 31 borrowers submitted all required documents but the documents did not meet HAMP underwriting standards, due to such things as missing signatures or nonstandard formats;
• 4 borrowers were or are likely to be rejected for undisclosed reasons;
• 1 borrower will not or is not likely to get their payment lowered.”

This Huff Post data comes from the prepared remarks bank officials planned to make before the House Financial Services Committee. The testimony was posted on the committee’s website.

To date, critics say the response of legislators and the Treasury Department to this dire news has been sorely inadequate. While several weeks ago mortgage lenders were threatened with losing access to precious incentives if they didn’t increase permanent mortgage modifications, with millions of homeowners facing foreclosure, failing banks still received billions in bailout money with no real implications for not helping the same struggling borrowers, and by extension communities, avoid the negative impact of foreclosure.  While the Treasury Department has recently extended the modification program, this system on its own appears to have provided few long-term solutions to this continuing housing crisis.

To help homeowners avoid foreclosure in the long-term, industry insiders and other commentators insist legislators will need to force banks to modify mortgages in ways that are affordable over the long-term. Since many the rising numbers of unemployed homeowners are unable to pay their mortgage even with unemployment insurance benefits, one suggested change would be to allow unemployed homeowners a mortgage deferment while they’re looking for work.

Homeowners who are having difficulty making their mortgages may be considering filing for Chapter 7 or 13 bankruptcy protection. Another option for legislators is giving the bankruptcy courts the power to modify these same underwater mortgages during Chapter 7 and Chapter 13 bankruptcy.

As American homeowners languish waiting for more immediate mortgage help, many are turning to bankruptcy to stop foreclosure and other creditor actions. 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, 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 Thursday, December 10, 2009 @ 8:37 am

In Part I of the Preventing Foreclosure series, you received an introductory look at how to stay in your home, either through bankruptcy proceedings or via negotiations with your mortgage lender. In Part II of this six-part series, we’ll elaborate on the ins and out of working with your mortgage lender, including timelines, terms, and what to say when starting this important dialogue.

Part II – Working With Your Lender

The best time to contact your lender is when you’re current on your mortgage and haven’t missed any payments, but you recognize tough financial times are ahead and that this may change in the near future.  Now, more than ever, lenders are willing to negotiate with home loan borrowers, if only to reduce the number of foreclosures they’re currently dealing with. In some cases, lenders are even acknowledging the “borrower blues,” and reaching out to at-risk clients themselves.

For example, Bank of America almost presumes a payment problem with their Home Loan Help website page asking borrowers to choose the statement (and undesirable situation) that most closely describes their own:

• I am current on my mortgage, or I just missed my first payment.
• I think I will have trouble making my mortgage payments soon.
• I have missed more than one mortgage payment.
• I have received a foreclosure notice.
• I want to know more about the federal government’s Making Home Affordable program.

Do it sooner rather than later.

As a result, take advantage of this trend by contacting your lender as soon as your recognize a problem. The sooner you call, the sooner you’ll be able to work out a solution with your lender. Keep in mind, if you’ve already missed several monthly payments, it may be too late, and the lender may move ahead with a foreclosure.

Possible solutions.

Your lender may accept a late payment, partial payments for a several months (though you may have to agree to make up the difference later), or agree to redo the terms of your loan.

What to say when you contact your lender.

Here’s what you should ask for in lender-language. (And by the way, you’ll probably need to get to the right department first — it may have a name like “loss mitigation.”)

Forbearance.

With a forbearance, you make a reduced payment, or no payment, for an agreed-upon period. In most cases, the lender will require you to make up the difference at a later time and is therefore more likely to agree to this option if you can show that you have a bonus, tax refund, or some other extra money coming your way.

Loan reinstatement.

Your lender may agree to allow you to make up your missed (or reduced) payments once your loan is reinstated on a specific date.

Mortgage modification.

Your lender could agree to alter the terms of the loan so that you can better afford the payments. For example, the lender may agree to add your missed payments to your loan balance, to stretch out your loan over a longer term (which will lower your payments but result in more interest over the life of the loan), or to convert an adjustable rate to a fixed rate mortgage.

Keep in mind, however, lenders have so far shown a reluctance to permanently modify your loan. You may have heard of the government’s “Making Homes Affordable” program. The idea behind the program was good in principle. However, the bill gave far too much leeway to lenders. If anything can be learned from the economic crisis that led to the current recession, it’s that if you give bankers too much wiggle room, they will exploit homeowners. And that is exactly what is happening.

As of 9/1/2009, 362,348 homeowners have been approved for “trial” modifications. Of that number, only 1,711 have been turned into permanent modifications. Why would a lender want to put a homeowner in an indefinite trial modification? Because as long as you’re continuing to pay the lower amount, they get a stream of payment. Whats more, the servicer continues to collect servicer fees, which are often elevated for trial modifications. The end result is that your loan is not getting paid down, your house is losing equity, but the banks and their servicers are making out like bandits. For more information on the mortgage modification scam, visit: http://www.billsbills.com/mortgage_modifications.php

For more details on how to conduct negotiations regarding your pending foreclosure or how bankruptcy might be an option, contact 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 Monday, December 7, 2009 @ 7:41 pm

While mortgage companies continue to refuse lower payments to borrowers who can no longer afford their loans, millions are facing delinquency, foreclosure and the loss of their homes. But just because you’re facing tough odds doesn’t mean that you can’t plan ahead to minimize the possibility of foreclosure or mitigate the damage if you find yourself moving toward it. Homeowners just like you can take immediate action, armed with the tools necessary to make the best financial decisions for your future.

In this six-part series we’ll explore how you might stay in your home, the ins and outs of working with your mortgage lender, the pros and cons of a short sale, and various bankruptcy options and alternatives pending foreclosure.

Part I – How to Stay In Your Home

Don’t give up on your home without considering your options. Foreclosure can leave you homeless, hurt your credit rating and make it difficult, if not impossible, to buy another house anytime soon. Your best options if you’re having trouble making mortgage payments include:

Negotiating with your lender
When attempting to stay in your home by working with your lender, it’s important to act quickly. As soon as you realize you’re having trouble paying your home loan, and before you’ve missed any payments, contact your mortgage lender. Now, more than ever, lenders are willing to negotiate with their clients, if only to reduce the record numbers of foreclosures they’re dealing with during this lingering recession.

Filing for bankruptcy
What about if you’re already behind on your mortgage payments? Filing for bankruptcy may help you keep your home, or at least get you out from under looming mortgage debt. With a few exceptions, Chapter 13 or Chapter 7 bankruptcy proceedings force creditors to end their collection activities and delay impending foreclosure sales. Each of these bankruptcy options will be explored in part three and four of this series.

When you file for bankruptcy, the foreclosure process is legally stopped (called an “automatic stay”). Foreclosure proceedings cannot be reinstated until your bankruptcy case closes or the lender gets permission by the court to proceed, thereby “lifting the stay” on the foreclosure process. So, if your plan is to stay in your home payment-free, for as long as possible, bankruptcy can delay the foreclosure auction, and your ultimate move-out date, saving you time (and money) to figure out your next move.

Other options include:

Selling your home yourself
If you simply can’t afford the home you own, you still have power to take control of your financial destiny. If your home has appreciated in value since you bought it, you may be able to sell it yourself. Again, contact your lender, who may let you stop making payments, and stay in your home, until the house is sold. If the proceeds from the sale don’t cover your mortgage and related costs, you might be in a short sale situation. A short sale can be a good option in certain circumstances, but in most cases, it’s best to simply surrender your home in a bankruptcy. The short sale option will be discussed a length later in the series.

Giving your deed to the lender
What happens if no one buys your house? Don’t lose hope. Your lender may agree to a “deed in lieu of foreclosure,” taking on the deed and canceling your debt. Like a foreclosure, the bank can then sell your home. A deed in lieu, like a short sale, is unlikely to erase your personal liability. In this regard, bankruptcy is usually a better option.

For more detailed information on how to stay put in your home pending foreclosure or bankruptcy contact The Law Offices of John T. Orcutt.

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Published Saturday, November 28, 2009 @ 10:58 am

Home foreclosures, job losses, massive consumer debt and health care costs have millions on the edge of financial ruin, struggling every single day even as we’re told by some that the worst economic downturn since the Great Depression is “technically over.”

If you’re affected by any of the above and you’re here, you may be considering bankruptcy. But, as we work towards financial freedom, it’s important to also consider, times are indeed tough for some more than others. And in this economic recession, spurred by downturns in our nation’s financial institutions, the most beloved banks in America are now food banks. And they’ve never been more necessary.

In addition to facing a massive recession, America is now, more than ever, the land of the hungry. Last week, the government (in its 2008-2009 Food Insecurity Report) said 49 million Americans are unsure where their next meal is coming from. For those keeping count, that’s 1 in 6 Americans. Of those, 17 million are children.

So, even if times are technically tight…it’s also holiday food-drive season, and needs for community kitchens this year are growing. In the past year, Feeding America, the nation’s leading food bank network, has seen an average increase of 15 to 20 percent in the number of people seeking help at its 200-plus food banks across the nation.

So what, specifically, do food banks need this year?

The staff of MSN Money provide a few basic guidelines for reaching out to those in need while keeping your money in check. Keep in mind your local food banks might also have specific needs, so you’re encouraged to contact them directly.

For One, Cash is Still King
While you may think your bank account is small, you and those around you can still make a big difference in someone’s holidays with very little money. In fact, some food banks rate their return on a single dollar cash donation at anywhere from 5 to 15 pounds of food. That’s right: five to fifteen pounds for just one dollar. So, if you and everyone in your family, church, office or class were to donate one dollar to your local food bank, you could provide many with more reasons to be thankful following Thanksgiving and heading into the holidays.

Put the “Food” Back in Food Bank
Though cash donations take care of many bulk-food purchases, food donations also play an important role in keeping community kitchens afloat during this economic maelstrom. Food drives can provide more-healthful and higher-quality foods than bulk buys, and provide a greater diversity of foods for the nation’s hungry. Most importantly, food drives provide a nexus between those in need and those willing to feed.

Commonly needed foods in community kitchens include:

• Canned or dried beans and peas;
• Canned fruits; · Canned vegetables;
• Cereal, including oatmeal;
• Fruit juice; · Prepared box mixes;
• Proteins (canned meats such as tuna, chicken or fish and peanut butter);
• Shelf-stable milk (dehydrated milk, evaporated milk and instant breakfasts);
• Soups and stews; and
• Rice and Pasta.

What the Needy Don’t Need
While food bank officials aren’t known to “just say no” to any donations, as a general rule out-of-date and glass items are least desirable for those kitchens seeking easy to serve, and eat, options, including:

• Baby food;
• Homemade foods;
• Noncommercial canned items;
• Perishables; and
• Unlabeled cans.

So, even if times are tight, make a bank deposit that truly counts this holiday season: give to your local food banks and cash in on the gift of kindness.

The Food Bank of Central & Eastern North Carolina needs your help. In Durham, contact (919) 956-2513 to learn how you can contribute. In Raleigh, call 919-875-0707.

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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 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, August 16, 2009 @ 6:41 pm

Fear of foreclosure is certainly pushing many families into bankruptcy. Although there are now many programs, both at the state and federal level, to help homeowners avoid foreclosure, if your lender is unwilling to work with you, bankruptcy may be the only way you can stay in your home.

Unfortunately, if you don’t choose to seek help through a bankruptcy attorney or your lender, there are plenty of criminal actors out there that would be more than happy to assist in escaping your financial woes.

With the rise in bankruptcies and foreclosures across America, thieves are growing more bold in their effort to take whatever belongings, and dignity, from those facing the most challenging of economic circumstances. Perhaps the most rampant perpetrators are fraudulent mortgage modification companies, who take thousands upfront from unsuspecting homeowners, only to disappear into thin air. Don’t ever agree to an upfront fee for a mortgage modification, and don’t ever agree to make your mortgage payments to a third party who promises to forward your payments directly to your lender. If you are working with a legitimate mortgage modification company, stay involved in the process. It’s important to maintain constant contact with your mortgage lender and your loan modification company.

Bogus loan mod companies aren’t the only criminals taking advantage of desperate homeowners. Grifters are moving into what appears to be a more legitimate method of theft: buying houses.

Targeting those in high-foreclosure zip codes, representatives from shell companies are offering to buy houses from those in dire straights. They sell the fear of foreclosure and bankruptcy and offer to make them a clean, easy deal and a quick sale. Heck, they even hand people money for the house. Real money! So it can’t be a scam, right?

First off, they only give you a very small amount of money, regardless of the equity in the home or its market value. Since you’re desperate, it’s a fair number, right? The plan calls for the company to buy the home and rent it, allowing you to move on with your life. However, the rent payments they collect never make it to the mortgage company. In fact, the sale never gets recorded, there’s no legal closing and you are still responsible for the mortgage. By the time it’s all sorted out, they’ve collected months of rent, from most likely planted tenants, and moved on. The hand-written signs on freeway exits and the local Craigslist’s posts that offer to buy and close fast are nine times out of ten the mark of illegal activity.

State regulators believe that there are close to 50 “fast home buy” operations currently working in North Carolina, some of which are perfectly legal with solid reputations. But those companies are easy to recognize. They have sound records with the Better Business Bureau, prominent advertising and established offices. Keep in mind though, in the majority of cases, a fast sale is a bad idea and a short sale even worse. A short sale requires your lender to accept less than the outstanding loan amount. Many times the lender won’t really forgive the deficiency, requiring you to sign a promissory note covering the difference. The tax implications of a short sale can be substantial as well. Any time a creditor agrees to accept less than what is owed, they will report the deficiency as taxable income to the IRS. Not only did you lose your home, but now you owe taxes.

Don’t fall prey to a foreclosure rescue scam just because you were afraid to consider bankruptcy. If you’re facing a foreclosure and your lender is not working with you, a bankruptcy attorney is your best ally. Bankruptcy can keep your family in your home, and if you truly can’t afford the home, surrendering it in a bankruptcy shields you from any remaining personal liability on the loan. Don’t wait another day to call. In North Carolina, contact the Law Offices of John T. Orcutt for a free consultation. 1-800-899-1414.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Friday, June 26, 2009 @ 9:02 am

The sad fact is, these days nobody is immune to financial troubles. This includes people who have worked hard their entire lives, all the while looking forward to reaping the rewards of their hard work in a restful, stress-free retirement. So what happens to seniors when they run into serious financial trouble? The reality is that wherever there are people in trouble, unsavory parties are out there looking to cash in.  With nowhere else to turn to,  many cash-strapped seniors have become the focus for companies looking to hook clients into signing what are called “reverse mortgages.” It’s true that these arrangements can help some people, and some legitimate lenders do help seniors come to mutually beneficial arrangements.  But because this is regrettably not true across the board, it’s important to understand what a reverse mortgage is and the possible risks, before signing up.

A reverse mortgage allows a borrower to receive a loan secured by equity they own in their home. The loan doesn’t have to be repaid until the borrower moves from the home or dies. In order to qualify for a reverse mortgage, a borrower must generally be at least 62 years old. Essentially, these folks are encouraged to cash in the equity they’ve built up in their homes through long years of payments. A reverse mortgage allows a senior to borrow up to some set amount equal to a percentage of the home’s value that is owned free and clear by the borrower. She then receives regular portions of that amount, without having to make any payments on the loan for the time being.

This sounds like a great deal for some folks, and in fact it may well be for a few. However, nobody should rush into signing a reverse mortgage without considering all other options carefully. It’s true that no payments will be made on the loan for the time being, but the loan will have to be repaid eventually. Once the borrower dies, his heirs may be due for a nasty surprise when the lender on a reverse mortgage shows up to collect on the loan. In addition, it’s easy for borrowers to be taken in by unscrupulous lenders who do not adequately explain costs, fees and other liabilities associated with the mortgage. Also, the funds received from a reverse mortgage can affect benefits a senior is normally entitled to, such as Social Security or Medicaid.

Be sure to work with legitimate lenders. Make sure you avoid predatory lenders who target older folks and their home equity; some of these unscrupulous companies even try to trick seniors with tactics like modeling mailings to look like official government agency correspondence. Make sure you are very clear on all fees and terms before signing anything. For more information on this topic, consult the American Association of Retired People. They have excellent information about these “seductive” loan offers on their website: http://www.aarp.org/money/personal/reverse_mortgages/.

If you are struggling because of medical bills or credit card debt, it may make more sense for you to declare bankruptcy. Before you put your house on the line, it’s imperative to consult with a bankruptcy attorney in order to explore whether this option will offer you a better solution. Remember that declaring bankruptcy will often allow you to keep your home, and you may end up much better off having done so. A reverse mortgage could force you to give up some of the protections afforded by the bankruptcy code should you be forced to declare down the line.

Serving North Carolina residents, John T. Orcutt has helped thousands of seniors get real relief from debt. Call today to set up your free initial consultation. 1-800-899-1414.

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

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Published Tuesday, June 23, 2009 @ 1:14 pm

Credit card debt can easily spiral out of control. Credit card companies lure you in with promises of low introductory interest rates and then encourage you to charge as many of your purchases as possible. Then, they discourage you from paying off the balance, by setting a low minimum payment – usually just a touch more than the interest charge.

Even if you’re diligent and try to pay off the whole balance every month, when unexpected expenses come up, it’s tempting – and sometimes necessary – to just make the minimum payment. The interest adds up fast and, if this pattern continues, you can quickly find yourself carrying a high balance you simply can’t afford to pay off any time in the foreseeable future. And things can get really hairy if there’s a hiccup in your income stream, like a job loss, pay cut, or injury that keeps you out of work. Even minimum monthly payments may be too much for you to afford. Unfortunately, more and more Americans are finding themselves in a precarious financial situation because of the combination of a faltering economy and years of credit card debt accumulation.

So what can you do if you’re in this position? Well, you could call the credit card company yourself and try to work out a deal. The biggest problem here, of course, is that the creditor has no obligation to work with you. Even worse, if you tell them you can’t afford the payments, they very well may reduce your credit limit to the current outstanding balance. This could leave you without any credit.

You could also enlist the help of a credit counseling agency to work directly with your creditors to establish a repayment plan or strike debt settlement agreement. You must be careful here too, though. Scammers and fly-by-the-night operations abound, especially now with all the people out there desperate to find a solution for their financial ails. Also, these services come with a cost — often a hefty one — and there’s no guarantee you’ll see any real results. The counseling agencies may be more schooled in negotiating with credit card companies, but, at the end of the day, they have no more power than you do: the fact remains that the credit card companies simply have no obligation to work with them or you. And, if you’re unable to make the payments in the meantime, you can bet the late fees, interest charges, and collection calls will continue.

This is not to say you should completely write off the idea of working with your credit card companies directly or through a counseling agency. But you need to be aware of the limitations of those options. You also need to keep in mind that even if you or the agency are able to convince your creditors to forgive some or all of the debt, that may be not be the end of the story: if your debt is forgiven, you are still on the hook for the tax liability.

Ultimately, bankruptcy is the only sure-fire solution to resolving unmanageable debts. Filing bankruptcy forces credit card companies to stop collection activities, immediately. And, you can wipe out most or all of these debts, for good – without worrying about any potential tax liability. So, if you’re buried in credit card debt, call a bankruptcy attorney today and learn how you can rid yourself of these burdensome debts once and for all.

In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson.

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Published Wednesday, June 17, 2009 @ 12:39 pm

No doubt about it: Times are tough.  You, like so many others, may be looking to grab onto any life-line you’ve got. For many of us, the only major investment we have is our home, so it’s not only a natural place to start, it might look like the only tool in the arsenal. Refinancing a mortgage can serve to staunch the flow in a pinch, or at least, put a band-aid on it; a home equity loan can seem like a downright life-saver when times are tough on your wallet. If you’re feeling a little panicky, it’s a good idea to take a deep breath and have a reality check. Before jumping out of the frying pan, take a look around and make sure you’re not jumping into the fire.

Refinancing seems like a great idea because ostensibly you’re not changing anything about your home ownership situation except for your interest rates. But keep in mind two factors: First, unless interest rates have gone down two full percentage points, you probably won’t save much more than what will get eaten up by closing costs and other fees. Second, make sure you keep an eye on the new terms, particularly if they involve a variable interest rate. These can save you some money early on, but will hit you hard in later years; remember that when it comes to long term investments like your home, the big picture often matters more than immediate relief.

And speaking of immediate relief, many of us are encouraged to solve one instant-gratification problem, namely, credit card bills, by taking on another, in the form of a home equity loan. Before you jump on one of these loans, put the situation into perspective. A home equity loan doesn’t reduce the amount you owe, and it can have some serious repercussions. Lenders urging you to borrow against the equity you’ve built up in your home will point out that unlike credit card debt, home mortgage interest is tax deductible. Lenders will tell you that converting credit card debt by taking out a home equity loan will result in a single, convenient payment, probably lower than what you’re paying on your credit cards, with a lower interest rate. These things might be true, but will they really spell out a long term solution? Home equity loans may have lower interest rates than some credit cards, but these rates are nowhere near those of conventional mortgages. Will the payments really be easier to handle? If you can’t keep up with your credit card payments now, it’s unlikely that you’ll have an easier time making the one BIG payment each month for the home equity loan. What’s more, you will probably end up incurring loan fees and other costs, especially if you end up having to pay fees like pre-payment penalties on your current mortgage or broker’s fees.

Even scarier, if you pay back all your credit cards but end up having to declare bankruptcy anyway, a home equity loan means you’ve converted unsecured debt into secured debt; that means you now have a lien on your property that won’t go away through bankruptcy. Are you really ready to give up the protection bankruptcy can afford you down the line? Make no mistake, home equity loans are all too often more trouble than they’re worth.  Before taking on one of these loans, consult a bankruptcy lawyer. Bankruptcy, unlike home equity loans, can be a true life-line.

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

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Published Saturday, June 13, 2009 @ 8:01 pm

In many circumstances, declaring bankruptcy at the right moment is an important tactical move to rescue a difficult financial situation and it is deployed precisely to avoid a worst case scenario. Still, bankruptcy is a big step and it pays to consider it rationally and strategically. For some people in certain situations, declaring bankruptcy just doesn’t make sense. If your debt is small, for instance: if you owe an amount small enough that you could potentially take care of it, without unreasonable effort, simply by budgeting carefully for not more than 2 or 3 years, then bankruptcy may not be for you. That one is a bit obvious.

But, what if you do have considerable debt, but you also have considerable assets?

This may or may not be a problem. If all of your assets are “exempt”, you can file bankruptcy and lose nothing. That is, exempt assets are all the stuff you get to keep, even if your file bankruptcy. Every state allows you to exempt and therefore keep certain types and amounts of assets. In most states, the amount of stuff you can “exempt” is not insignificant. Since exemption laws vary from state to state, you would be wise to check with a good bankruptcy attorney in your state to find out what you can exempt before you make any kind of a move. And, as in incentive for you to do so, you need to know this: In most cases, people who file bankruptcy get to keep everything they own, and therfore lose nothing.

Seem odd? We understand completely. One of the biggest myths about bankruptcy is that, if you file, you will lose everything. But a myth is myth, as any good bankruptcy attorney can prove to you.

So, let’s say you have checked and now you know what you can and cannot keep if you file bankruptcy. And, let’s say you are one of the few people who happen to have a lot of “non-exempt” assets. What should you do?

You have 2 choices:

It might be a good idea to sell those “non-exempt” assets, especially if selling them could take a big bite out of your debts. Even if you can’t pay it all, if you can make a dent and they are assets you would lose in a bankruptcy anyway, even a small decrease in debt load can sometimes offer considerable relief to a strained debtor.

But what is you need to file bankruptcy but can’t afford to lose those “non-exempt” assets? You may well be able to file what is known as a “Chapter 13″ bankruptcy. A Chapter 13 bankruptcy filing allows you to pay out, over the course of your case, the amount equivalent to the amount your assets exceed available exemption limits.

So what about exempt assets? Should you buy some time by selling those?

Warning! Think long and hard before you sell exempt assets. Do NOT let creditors persuade (read: bully) you into selling these. Here’s a pretty bad worst case scenario: You’re in too much debt, you have a huge monthly mortgage payment, but you have home equity. The home equity is less than the exemption allowed by your state. But you really don’t want to declare bankruptcy, so you put it off for a while, your situation gets critical and in the end you can’t handle it anymore. So you decide to sell the house. Only by the time you do, the housing market is down, you don’t get as much as you thought you would get and what you have left over doesn’t cover your unsecured debt. You end up having to declare bankruptcy anyway, only now you don’t have anywhere to live! Sounds like a last ditch.

Although the law varies by state, most places will let you keep your home (up to a certain value), pensions, 401k accounts, basic home furnishings, your car and other miscellaneous money and property. If you think bankruptcy is looking like a good solution, why would you sell assets that are already protected by exemption laws?

Here’s another worst case scenario: You owe a close relative a lot of money, and you are thinking that if you declare bankruptcy you’ll never be able to pay her back. So you sell some assets, pay the debts, and then declare bankruptcy. If you had consulted a lawyer before going ahead with the sale, he might have warned you about what happens next: your bankruptcy trustee takes the money back and uses it to pay your unsecured creditors! Lose-lose (for you and your relative, anyway.) If there’s a good likelihood of declaring bankruptcy, it’s best to speak with a lawyer who can counsel you about these types of situations. If you’re not there yet but you’re thinking about selling assets to cover debts, make sure they aren’t exempt assets. There’s a reason certain assets are exempt: you will need them to start over.

The bottom line: If the asset is exempt, do not sell it. At least do not sell it, or even put it up for sale, before you consult with a knowledgeable and experienced bankruptcy attorney. Whether you end up filing bankruptcy or not, you need to know how much of what you own can be protected.

In North Carolina, you have available to you such a lawyer. The Law Offices of John T. Orcutt. John and his staff of attorneys have helped over 30,000 families. They may well be able to help you to. The Law Offices of John T. Orcutt offer a totally free and confidential initial consultation at 4 different locations: Raleigh, Durham, Fayetteville and Wilson. During normal business hours, you can set up an appointment by calling toll free to 1-800-899-1414. At night and on weekends, you can set up your own appointment “online” by visiting his website at www.billsbills.com

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Published Friday, June 12, 2009 @ 7:09 am

According to an article in The Wall Street Journal, a man from Texas registered with a debt relief firm to seek help in climbing out from under $15,000 in credit card debt. After paying hundreds in upfront fees and a steady stream of monthly payments close to $250, he eventually found himself $20,000 in debt. Clearly something wasn’t working.

After more threats from creditors and the potential for wage garnishments, he filed bankruptcy, telling the paper, “I wish I had done that to begin with … I’d have been much better off.”

Unfortunately, his story is not uncommon.

Debt relief “companies” are becoming as common as corner coffee shops as the country’s personal debt continues to wear away at our collective economic foundation. Problems arise when people, so distraught over not knowing where to turn, respond to the first pitch that sounds sincere. Problem is, they all sound sincere.

The WSJ article cited a financial resources Web site that tracks complaints about debt-settlement companies as reporting that the rate at which consumers are filing complaints against debt-settlement companies has already doubled since 2007. The problems are becoming so commonplace that the Federal Trade Commission is now involved, having recently held an industry workshop to examine how these companies are doing business.

Credit card companies (not exactly the first place people turn for help with money, either) are reaching their wits end with debt-settlement firms. Some, like American Express, say they will not cooperate with representatives from debt-settlement firms.

Even non-profit firms, that typically appear to more focused on help people, have also become subject to scrutiny. The IRS is finding that an increasing number of non-profit debt relief organizations have direct ties to for-profit entities.

One of the primary areas of concern about the operating practices of so many debt-settlement firms is that any money you could pay ceases to go to your creditors. Instead, you deposit it directly into a special account they arrange. Thus, you are trusting the firm to pay your bills. In the end, you are really just putting someone else in control of your money. And, you rarely learn what creditors are being paid what percentages of the total owed so there is no way to measure if there is any structure to the debt repayment. How can you measure its effectiveness?

State laws are not really helping, according to the WSJ piece. While the rules vary per border, more states are allowing for-profit credit counseling firms to conduct business. An industry trade group, the Association of Settlement Companies, has seen its membership double in a year.

If you are facing some debt trouble, the odds are one of these companies has you in their sights. But if you are reading this, then you are already starting to consider your best option: bankruptcy. There are certainly some very helpful and legitimate debt-settlement companies out there but it’s too hard today to determine which one among the hundreds can do you the most good.

With the assistance of a bankruptcy attorney, you can find your way out of debt the right way. No mystery accounts in which to put monthly payments and no questionable business practices, just an honest approach to using the law to properly face financial setbacks. Don’t be the guy in Florida, make the right choice from the beginning. Call a bankruptcy attorney today.

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Published Thursday, June 11, 2009 @ 5:32 pm

In this age of near double digit job loss, devious credit card practices, multiple industry collapses, and out of control government spending that promises a future of oppressive taxation, it’s a wonder anyone is still able to keep his head above water. More and more people are now realizing that they are at the helms of rapidly sinking ships. What’s astonishing is that amidst all the dour economic predictions, people are still finding the will and strength to try to rise above the bad luck, poor decisions, or whatever put them in dire financial straits and get back on solid footing again.

In looking for solutions, many people turn to individuals and businesses that have recently arrived on the scene to “help” them out of their economic morass, and guide them to safety. Establishments with innocuous sounding names, including words such as ‘solution’, ‘trust’, and ‘hope’, have opened shop promising to help lift the burdens of stressed out, debt-weary consumers. Unfortunately, too many of these organizations are nothing but opportunists, charging high fees and providing shoddy service.

‘Credit Counselors’, which purport to act as a neutral third party to negotiate payment plans with creditors, are often related to or financially supported by the credit card companies, so their interests are completely opposed to those of their consumer clients. Many charge high upfront fees, usually a percentage of the total debt, and often always discourage debtors from filing bankruptcy.

‘Debt Consolidators’ offer to replace a multitude of monthly bill payments with a single affordable payment . The consolidator loans the consumer an amount sufficient to cover the old debts or negotiates lower terms with the creditors. This is a marketing ploy designed to convince people that they can get out of debt by borrowing more money. Some agencies may keep the entire first month of credit payments for themselves, plunging the consumer further into debt and usually causing their accounts to get slammed with late fees and penalty interest rates. The most unscrupulous of the bunch keep all of the negotiated ‘payment plan’ payments and never send anything at all to the actual creditor.

‘Debt Collectors’ often use a bait and switch scheme to get access to the debtor’s bank account information. They offer to ‘settle’ a debt for a lower amount, and pressure the debtor into making a spur-of the moment decision by asserting that the offer is only good if the debtor agrees to pay the lower amount ‘right now’. Once the debtor concedes, and gives the bank account information, the debt collector withdraws more money than they offered to settle for. Beyond this scheme, debt collectors will pretty much tell a person anything in order to collect.

Can’t imagine anyone getting suckered into these kinds of ploys? Well, it’s happening at an alarming rate, and consumer complaints about them have skyrocketed. We’re not just talking about naive or careless spendthrifts here. There are a lot of hardworking, smart, capable people out there who are becoming victims as well. And if they do manage to avoid these pitfalls, deciding instead to accept the protection and relief that bankruptcy affords, they could still find themselves at a disadvantage.

You see, many of these smart, capable people decide to file for bankruptcy without an attorney, thinking that they can avoid paying legal fees. They mistakenly believe that the bankruptcy trustee is there to protect them from the creditors when in fact the bankruptcy trustee’s main responsibility is to collect money from debtor’s assets and use them to pay creditors as required by the bankruptcy laws. It is the job of the bankruptcy trustee to make sure that the creditors get their fair share of the debtor’s money. It is not the job of the bankruptcy trustee to protect the debtor. Bankruptcy judges, for the most part, conscientiously try to balance fairly the interests of both the debtor and creditor. But the bankruptcy judge, is not specifically charged with looking out for the debtor’s interests.

So, who is looking out for you? All of the characters you’ll encounter in the bankruptcy system, as well as the new ‘debt relief’ industry, may act politely and respectfully toward you and each other, but don’t be fooled into thinking they are really on your side. During such a stressful and vulnerable time as this, you need and deserve an advocate whose main concern is your best interest. That advocate is your bankruptcy attorney. Whether you’ve decided to undertake bankruptcy to clear the decks of debt and start over with a clean slate, or whether you’re going to try to ride the storm out alone, a bankruptcy attorney should be the one you trust to advise you and guide you now. Only a bankruptcy attorney is uniquely trained to help people suffering from financial problems. Only a bankruptcy attorney has experience maneuvering the complex bankruptcy system with the debtor’s interests in mind. It IS the bankruptcy attorneys’ JOB to look out for you.

In North Carolina, set up a FREE initial consultation with the Law Offices of John T. Orcutt, offering services in 28 different counties through 4 offices in Raleigh, Durham, Wilson and Fayetteville. During normal business hours, just call toll free to 1-800-899-1414. Or visit our website at www.billsbills.com, available 24/7.

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

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

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

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

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

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

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

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Published Tuesday, May 26, 2009 @ 4:00 pm

Despite the defeat of the mortgage cramdown bill that would have allowed bankruptcy judges more power to renegotiate mortgages on behalf of those seeking relief, the Obama administration is realizing some slow success with its heavily touted foreclosure prevention program.

Mortgages eligible for the program started to be serviced last month and to date, 55,000 home loans have been subjected to modification as a way to alleviate the financial pain caused by sub-prime loan interest rate spikes. Based on the early success, the administration announced that the $75 billion dollar program is being expanded and will offer additional incentives for lenders who participate and to homeowners in need of relief.

The incentives involve the government subsidizing interest rate reductions. The idea is to push the amount of the monthly mortgage payment to less than or equal to 31% of a homeowner’s pre-tax income. Before the rise of sub-prime mortgages and abnormally low interest rates, that percentage was a benchmark for mortgage qualification.

Going forward, the program will encourage short sales in conjunction with loan modification. A short sale occurs when a lender agrees to sell a home for less than what is owed (or for less than market value) to avoid foreclosure. Essentially, the parties arrive at a settlement between what is owed on the mortgage and the price of the property. Many real estate agents have jumped into the short sale market of late and it appears that President Obama’s program will do more to encourage the strategy.

Banks and mortgage service providers have been reaching out to homeowners who may qualify for the loan modification program, which is defined by having a loan of not more than $729,750 that was originated before January 1, 2009 and is currently in default or at risk of default. That risk can be attributed a sudden loss of income or drastic jump in expenses. Given the nation’s current unemployment numbers, the number of homeowners who will be able to qualify should continue to climb.

Even though the program was created to help struggling mortgage holders, there has been widespread reporting of bureaucratic headaches associated with the modification efforts. However, many attribute the delays or poor service to the speed at which the rules and process were put in place. It can be argued though, that timing was critical and that if the administration delayed the program, countless families would have lost their homes. Basically, every day help was not available, the crisis would grow worse. Last month alone, 342,000 homes received a foreclosure filing. As job losses continue to mount, the number of at risk homeowners will continue to increase, putting greater and greater pressure on the program.

A reason for the recent announcement about expansion was to also reassure service providers and those seeking help that changes are being made and that those offering help are being incentivized to be keep things moving smoothly. Given the dire economic situation, there simply is not enough manpower to help everyone immediately. Another possibility is that some servicers may simply be dragging their feet until it is too late for the borrower to get help. However, keep in mind, bankruptcy is always a viable option if modification is simply not working out. A properly planned Chapter 13 bankruptcy will immediately halt a foreclosure and allow you and your family to stay in your home to catch up on your mortgage payments. Contact a bankruptcy attorney today to discuss your options. Serving North Carolina residents, John T. Orcutt’s can help your family in these tough times. Call today to set up a free consultation in 4 convenient locations: Raleigh, Wilson, Fayetteville and Durham.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Tuesday, May 12, 2009 @ 5:20 pm

In a surprising move, the South Carolina Supreme Court on May 5th issued a temporary restraining order against thousands of lenders in the process foreclosing homes in the state. The court was acting in response to a request from Fannie Mae and Freddie Mac, the two federal mortgage giants charged with implementing the new Home Affordable Modification Program (HAMP), which is designed to give certain homeowners an opportunity to modify their mortgages to avoid foreclosure. Fannie and Freddie were concerned that thousands of eligible homeowners in South Carolina would miss the opportunity to apply for HAMP before their homes were sold in foreclosure. Lenders seeking foreclosure in South Carolina have an incentive to move more quickly because the laws in that state allow courts to cancel the process if the lenders take too long.

The restraining order applies to any foreclosure proceedings where Fannie or Freddie is the mortgage holder or where the lender has agreed to participate in HAMP. The foreclosure process is suspended to give the homeowner an opportunity to apply for the program. Real estate figures show that the owners of more than 5,000 homes facing foreclosure in the state could qualify for HAMP. Basically, a homeowner qualifies for HAMP if: the property is a single family, personal residence with one to four units; the mortgage originated before January 1, 2009; the home is not vacant or condemned; and the first mortgage is no more than $729,750.

The South Carolina Supreme Court’s action is unprecedented. Those in other states facing similar problems might be wondering whether their judicial system will step in — and if so, when. But the good news is, you don’t have to wait to find out. If you don’t qualify for HAMP, or if your lender refuses to stop the foreclosure process to give you a chance to apply for the program, consider filing bankruptcy. A Chapter 13 bankruptcy can stop a foreclosure and allow you to repay missed payments through an affordable repayment plan. And, if your home is worth less than your first mortgage, bankruptcy can completely wipe out any second or third mortgage!

Even if you do qualify under HAMP, you should still consider bankruptcy as an alternative. If you’re in this boat, chances are, your mortgage is not the only financial baggage you’re lugging around. If you’re like many of the people caught up in this crisis, you’ve been forced to rack up credit card debt, skip payments to other creditors, or take out high-interest loans in an effort to keep up with ballooning mortgage payments and property tax bills. This means your credit rating is already on the downward slide, and it will just keep getting worse until you regain control over your finances.

Bankruptcy will help you deal with all of your troublesome debts — not just your mortgage. And, at the end of your case, you’ll be able to walk away from most, if not all, of those debts. You can make a completely fresh start and begin rebuilding both your credit and your life. So, don’t wait any longer. Call a bankruptcy attorney today and find out how you can resolve your mortgage problems and start rebuilding your life right now. The Law Offices of John T. Orcutt, serving the Triangle area, also with convenient locations in Fayetteville and Wilson.

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Published Thursday, April 30, 2009 @ 1:09 pm

If your debt problems are beginning to wear you down, like they are for so many people today, it’s important that you remain aware of the fact that there are people looking to further erode your unstable financial position to better their own. Unfortunately, financial “help” begins to show up in many forms, from payday lenders to credit counselors to phony financial counselors. Even though some of the pitches may sound like a great way out, the odds are that if it sounds to good to be true, it is.

In the same manner that so many banks were handing out home loans in the last few years, with a smile and a pat on the back, mortgage relief scammers are becoming all too common. They are happy to help, and even happier to leave with what’s left of your money. Here are some signs to watch for.

First, understand that there are many legitimate and honest professionals that can help you prevent or manage a foreclosure. Nevertheless, the number of scams is growing and will continue to grow as the recession deepens. The best advice is to use your head. Look for signs of business legitimacy, such as office space, general professionalism and evidence that the company appears “permanent.” In other words, even if they have an office, is it furnished with some cheap tables and only a couple of phones? Or, does it convey a sense of stability, with actual desks, offices and multiple employees? It should be easy to tell if its a fly by night outfit.

No legitimate mortgage counselor will ask you to transfer the deed to the house to someone else’s name. What would be the point of them helping you keep it, right? If a conversation you’re having leads in this direction, walk away. This scenario can sound really plausible, but don’t buy into it. The deed is how local municipalities recognize ownership. If it changes hands, it is immensely difficult to reclaim and you’ll have to move out before you have a chance to argue about it.

Also, don’t let anyone talk you into paying whatever mortgage you can directly to them. That’s a sure sign of criminal behavior. The bank is the only entity to which you should ever send mortgage funds. Other mortgage scams will include reasons why you should not consult an attorney or your lender, persuading you that it’s a waste of money and that their service is all you need. Think for a moment why someone would say that. Again, a little common sense is all you will need to avoid something so blatantly felonious.

The truth is, if you are behind on your mortgage, a Chapter 13 bankruptcy is your best bet for keeping your family’s home. A solid Chapter 13 payment plan will catch you up on your missed payments and stop the foreclosure proceedings immediately. Stop waiting around for your lender to come to the table! Speak to an experienced bankruptcy attorney who can save your home now.

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Published Monday, April 6, 2009 @ 3:47 pm

Are you one of the thousands of people across the country who got caught up in the turmoil of the home mortgage meltdown? Are you afraid of losing your home and wondering what to do? First ask yourself whether you want to save your home or whether you are willing to let it go.  Whichever decision you make, bankruptcy can help you and your family with a fresh start.

If You Want To Save Your Home

If you want to save your home, you have a number of options. You can work directly with your lender to renegotiate the terms of the loan to lower your payments. But remember, while it may be in the lender’s interest to work with you, they are not required to do anything. Furthermore, you’ll have to demonstrate some kind of “financial hardship” first– and it could take months to get a final decision.

Bankruptcy is often a better solution. A Chapter 13 can stop a foreclosure and allow you to repay missed payments through an affordable repayment plan.  You’ll be able to get back on track with your mortgage and get rid of costly credit card debt at the same time.   This will free up your finances, making it less likely that you will get behind in the future.  And if your home is worth less than your first mortgage, bankruptcy can completely wipe out that expensive  second or  third mortgage.   How about that?

If You’re Unable Or Unwilling To Save Your Home

If you’re unable or unwilling to save your home, you might be tempted to simply let the property go into foreclosure. Without further action, this can be a costly mistake. In some states, if the property is sold in foreclosure for less than what you owe on the loan, the lender can come after you for the difference. If the lender does not come after you, it will cancel the remaining debt, and this is treated as “income” for tax purposes. The federal government recently passed legislation allowing individuals to exclude such canceled debt from their income, this protection will end with this tax year. And, even if you can exclude it under federal law, your home state must have similar legislation on the books for you to avoid state income tax liability. To date, many states have not passed such laws.

Bankruptcy can help protect you from these potentially devastating consequences of a foreclosure. It will address all of your outstanding debts, instead of just your home mortgage. It will also protect you from any potential liability for a deficiency on the loan, including tax liability. Finally, because a bankruptcy gets rid of your other debts, you can start rebuilding your credit rating quickly and efficiently.

The moral of the story? Don’t just let your mortgage lender foreclose on your family’s home. Call a bankruptcy attorney first.

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