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

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

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

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

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

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

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

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

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

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

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

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Published Tuesday, March 2, 2010 @ 10:48 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 Sunday, February 28, 2010 @ 9:26 pm

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

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

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

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

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

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

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

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

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

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

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Published 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 Friday, February 12, 2010 @ 5:44 pm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And it’s only going to get worse.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Tuesday, January 19, 2010 @ 3:02 pm

So you’re drowning in debt and desperate for a way out. A friend or relative asks if you’ve considered a 401k loan. “They’re quick, simple to qualify for, and here’s the best part: you’re paying the interest to yourself.” Sounds like a brilliant solution, right? Why pay 25% interest to a credit card company when you could be paying 6% interest to yourself?

Stop. You want to think long and hard before you take out a 401k loan, especially if you’re already in debt.
Fayetteville debt relief,
The most important thing to know is that, in bankruptcy, your retirement savings – 401k accounts, pensions, 403b accounts, traditional IRAs, Roth IRAs and even plans for small business owners and the self employed – are protected from your creditors. That bears repeating. If you declare bankruptcy, you keep all the money in your retirement accounts.

If you’ve taken the money out in the form of the loan, however, your creditors can take that money.

Moreover, failure to pay back a 401k loan comes with serious drawbacks. If you lose or change jobs, you have to pay back the entire sum within 60 days. If you’re unable to make payments on the loan – or the lump payment in the case of changing jobs – you’re required to pay all taxes on the outstanding money, plus a 10% penalty.

In addition, recent court cases have determined that because you’re paying the money to your own account, a 401k loan cannot count as debt, and is not part of the Means Test. This means that you could be tipped into a Chapter 13 plan even if you’re spending significant amounts of money repaying a 401k loan. If you’ve already borrowed the money, though, don’t despair. It’s true that it might bump you into filing Chapter 13 rather than Chapter 7. However, while the Means Test is very similar to the disposable income formula in a Chapter 13 bankruptcy, there’s one important difference and that’s the 401k. You’re allowed to both contribute to your 401k in a Chapter 13 plan, and to repay your 401k loan, and take both as a deduction on the means test. This means your plan payment may actually be lowered if you are making a 401k repayment.

There may be times when 401k loans aren’t a terrible idea, even if you’re facing bankruptcy. It might make sense, for example, to take out the loan in order to catch up with mortgage payments before you file bankruptcy. But this is a situation where you should really discuss the pros and cons of your actions with a bankruptcy attorney before undertaking the loan. One important rule of thumb: it doesn’t make sense to take the loan out to repay unsecured debt, debt that will most likely simply be dismissed in bankruptcy.

One final note: not every 401k plan permits loans for any reason. Some plans restrict them to specific purposes, such as first time home loans, medical expenses, college tuition or mortgage payments. Before even considering this option, you need to make sure it’s available to you.

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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 Monday, January 18, 2010 @ 6:43 pm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It hardly seems fair.

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

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

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

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

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

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

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

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

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

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

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

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

But that doesn’t have to be the case.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Saturday, December 12, 2009 @ 11:25 am

Most people who have filed for bankruptcy understand the feelings of angst and dread that accompany the weeks and months before you make the decision to file.

Eventually, the walk to the mailbox becomes an exercise in personal bravery and the sound of the phone is like a bomb going off inside your psyche, sending shards of guilt-shrapnel into your chest. It can be a painful, daily challenge that can wreak as much physical damage as mental.

The feelings caused by severe debt, generate stress hormones in your body, similar to the “fight or flight response.” (Which is why you often become so angry at collection agents.) As the stress accumulates, it can actually cause damage to the heart, immune system, your memory and digestive tract.

A scientist-led phone poll determined that people who carry a higher level of debt-related stress have a much greater chance of suffering severe headaches and migraines than those with far lower levels of financial worry. The rate of difference was 44 percent.

Ulcers and increased nausea are also factors indicative of high-levels of debt related stress.

What can also lead to physical health problems is the way people eat when stressed. Fast food restaurants, where low prices meet high calorie counts, become proverbial therapy centers for the financially distraught. And, in the midst of a difficult, historic recession, the largest food chains are doing all they can to attract the budget conscience and food-weary, sending the value menu message across the airwaves, billboards and magazine stands of America as quick as you can say “Super-size it.”

But thankfully, it appears as if America isn’t getting the message. Analysts have found that fast food sales are sliding into the fryer as more of us stay at home, out of work and focused on family. In fact, grocery store chains are seeing increased profits because, as one industry analyst put it, people are “turning on their ovens again.”

Shopping for and planning meals is one of the best ways to ensure your health and save money in the midst of a financial crisis. The more time you take to consider what you are consuming, the more conscious you will be about it how it affects your system.

Nevertheless, the fast food giants will be working hard in the New Year to earn back your Kroger money, for example:

• McDonalds will be unrolling the Mac Snack Wrap, which is essentially a Big Mac in a tortilla. It will also push $1 Sausage McMuffins and 12-ounce coffee. (It should be noted that it’s about time we got back to the $1 cup of coffee.)
• Despite a lawsuit from franchise owners over the profit-depleting $1 double cheeseburger, Burger King will continue to sell it until further notice. It is also testing in some markets something called The Little Enormous Sandwich, a breakfast option with egg, sausage, cheese, hash browns and … wait for it … bacon. It’s also dishing out a $1 chicken sandwich and will go after it’s biggest rival’s EggMcMuffin with the $1 BK Breakfast Muffin.
• Oh, and Taco Bell, whose ignorance of the food pyramid is almost stunning, will unveil an 89-cent Beefy 5-Layer Burrito and then the Five Bucks Box with four food items and a medium drink. It also has several breakfast (Taco Bell in the morning!?) items for under a $1.

We can certainly understand the lure of a cheap meal when the money just isn’t there. But there is simply no dollar amount that can match the value of your well being, especially when your family needs you most. The combination of terrible food and debt-related stress will only lead to you filing for bankruptcy because of medical debt instead of just credit card debt.

Take care of yourself, physically and financially.

Brought to you by the North Carolina bankruptcy experts: The Law Offices of John T. Orcutt. Call 1-800-899-1414 to schedule your free initial debt consultation today. Offices in Raleigh, Wilson, Fayetteville and Durham.

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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 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, December 5, 2009 @ 3:10 pm

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

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

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

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

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

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

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

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

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

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Published Friday, December 4, 2009 @ 12:15 pm

We’ve all heard that money problems are the leading cause of marital problems. If you’re reading this article, chances are you’re experiencing both problems. In this economy, with unemployment, foreclosures, and debt at record highs, you’d be hard-pressed to find couples who don’t fight about money!

Financial problems can wreak havoc on your marriage, leading to constant arguing, blame-laying, and even divorce. In fact, when the economy suffers, couples are far more likely to consider divorce as a solution to their problems.

Some couples might think this solution sounds reasonable, even tempting. No more fighting about—you guessed it—money. No more seething tension fueled by bills, debt, and money worries. No more arguments and accusations over who spends more, who earns less, or who should pay the bills.

But is divorce necessarily the solution when it’s your debt that’s to blame?

What if you could eliminate your debts and save the personal property you and your spouse have worked so hard to accumulate? What if you could stop fighting about money?

What if you filed bankruptcy?

Would the fighting end if you and your spouse got a clean slate? A fresh start? What if you got the chance to re-establish your financial goals, make new plans, and move forward with your life together? Imagine the marital peace that could result from financial peace of mind!

You do have options other than divorce. An experienced bankruptcy attorney can help you salvage your marriage and rebuild your life by reducing, restructuring, or eliminating the debt that’s at the center of your marriage problems. For those who qualify, a Chapter 7 bankruptcy filing can erase your credit card debt, your personal loans, and your medical bills. It can erase the cause of most of your marital problems!

Whether your financial problems are due to job loss, the downturn in the stock market, an increase in your adjustable rate mortgage, medical bills, or rising credit card rates and fees, you don’t have to let your financial problems ruin your marriage! Financial stress can quickly build to the breaking point. But if you could save your marriage, wouldn’t you?

Save your marriage. Save your home, your car, your property, your family. Call the Law Offices of John T. Orcutt at 1-800-899-1414 or visit www.billsbills.com.

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Published Wednesday, December 2, 2009 @ 4:07 pm

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

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

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

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

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

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

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

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

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

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

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Published 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 Wednesday, November 11, 2009 @ 8:49 am

You’ve seen the ads: a circus act of food court commodities are passed around by a mash-up of merchants to the frenetic marching music of patrons efficiently paying for their delicious delicacies with their handy-dandy Visa cards. Like a well-oiled, money-sharing machine, these well-choreographed consumers pay conveniently with a single swipe of credit, serving up little wait in their collective go-go-gadget gaits and emphasizing, with every single swipe, the efficiency and speed of making everyday purchases with a Visa check card over cash or checks. This plastic parade ends abruptly when a lone cash-carrier has the audacity to pull out his greenbacks for one show (and music) stopping dark ages transaction. The record scratches. The cashier looks cranky. And the message is clear: in a world where plastic rules, only a party pooper pays with cash.

More and more, life does take Visa. And Mastercard. And Discovery. And a whole host of other plastic pinch hitters ready to step up to bat when your bank account can’t. This point is not lost on more and more savvy small purchase institutions and organizations. From cabbies to Salvation Army kettles, more and more businesses are getting into the single swipe game, and whether it’s because of convenience or economic circumstances, Americans are taking the bait, at the expense of low credit card balances.

And for those Salvation Army kettles at least, these results are certainly panning out: national Salvation Army surveys show that people give more when they are allowed to donate with credit, sharing 750 percent more when paying with a card.

The science of our single swipe economy supports this trend. Following an examination of the brain and how people feel when they spend, Carnegie Mellon University professor George Loewenstein hypothesized that credit cards take away the pain of spending. From an article summing up Loewenstein’s work in Carnegie Mellon Today it was found that:

“[T]here’s a battle in the brain between immediate pleasure and immediate pain when we’re deciding what to buy. … The subjects in the MRI study weren’t thinking about what benefits they would gain at some later date if they chose not to purchase The Family Guy DVD set now. Rather, they were deciding based on how painful (or not) they thought paying for it would be right now.”

Combining the “feel-good” factor of plastic, the financially-strapped consumer population, and wide-acceptance of credit for cash, this looks like a recipe ripe for a consumer crisis that plays right into the hands of the credit card companies. So what should you do?

Try carrying cash-only.
Foregoing your credit cards for cash and carry—even for a few days—can make a huge impact in the psychology of your spending—bringing back the pain (and the gain) of using only what you have. While we remain disconnected from our spending with plastic, cash-only provides the necessary perspective that leads to healthy budgeting and better buying judgment.

Make room for fewer cards with lower limits.
When you do carry credit, only keep what you need for well-thought-out purchases and emergencies. With fewer cards and lower limits, you’ll rely more on cash, which could help head off budget-breaking impulse buys.

Plan through the pain
If the pain of past spending on plastic is getting you down, Chapter 7 bankruptcy is an option designed to quickly clear credit card debt. Click here for more information about how the bankruptcy experts at The Law Office of John T. Orcutt can help you out of your own personal credit crisis.

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Published Tuesday, November 10, 2009 @ 11:16 am

The number of people filing bankruptcy due to medical bills has been rising every year. A recent study in the American Journal of Medicine shows that more than 62% of people filing for bankruptcy do so at least partly because of medical bills they can’t pay. Many filers have insurance – often they’ve ‘capped out’ their insurance and the insurance company refuses to pay any more bills, leaving them tens or even hundreds of thousands of dollars in debt. In other cases, illness has forced people to lose or leave their jobs, meaning that not only do they have no money coming in to pay their bills, but their insurance coverage has often lapsed as well.

A bill recently introduced in Congress – by Carol Shea-Porter (D-NH) in the House and Sheldon Whitehouse (D-RI) in the Senate – hopes to make filing bankruptcy easier for people in this situation. People who owed either 10% of their income or $10,000, or who had been out of work for more than 4 weeks in the last year due to illness, would qualify as medical debtors. The bill would exempt these filers from the requirement to take credit counseling. More importantly, they would no longer be subject to the means test – all medical debtors would be allowed to file Chapter 7. And the homestead exemption – the amount of equity they could keep in their home after filing bankruptcy – would rise to $250,000 for medical debtors.

Will the Medical Fairness Act pass? It’s hard to say. To some extent, the debate seems to be falling along the same lines as the general health care debate: democrats for, republicans against. At a recent hearing in the Senate, Whitehouse brought in a number of debtors to make the emotional point that they lost everything, including in many cases their homes, due to unavoidable medical bills. Kerry Burns told the tragic story of her son, who died at the age of 4 after a long struggle with cystic fibrosis. She and her husband both took leaves from their jobs. They cashed in their 401K accounts, spent every penny in their bank accounts and had insurance– and all that wasn’t enough to pay their son’s medical bills, which came to over five million dollars.

Republican opponents, particularly Sen. Jeff Sessions (R-AL), seemed unmoved. Sessions seemed more concerned with the plight of the credit card companies, who will likely lose money if more people file Chapter 7. Sessions worried that people would qualify as medical debtors when the ‘real’ reason for their bankruptcy was due to overspending on their credit cards. He called experts who claimed that the study was flawed and the real role of medical bills in bankruptcy is much smaller. Others rebutted both arguments, pointing out that the number of medical debtors may be greater than the study shows, as many people put medical bills on their credit cards.

The Democrats have the votes in both the House and the Senate to pass this bill. But the credit card companies and the medical industrial complex spend an enormous amount of money on lobbyists to protect their interests. The Medical Bankruptcy Fairness Act is a common sense relief for people who’ve incurred enormous bills simply due to their medical problems. Whether or not it passes says more about politics than policy.

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

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

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

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

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

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

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

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Published Wednesday, October 7, 2009 @ 8:40 am

With the government’s new credit card legislation possibly reaching its stride two months early on December 1, a lot of frustrated credit card users may be breathing a collective sigh of relief. Given the tighter restrictions on credit card issuers, you might want to take the opportunity to be a little more choosy in selecting your new card, as industry players are going to push hard to win customers from competitors, using reward plans and low introductory rates as incentives. However, unknown to many credit card users is how reward plans are handled when payments are missed.

What far too few consumers understand is that not only do credit reports get the news when a payment is missed, so do the third party companies that handle the reward plans. Understandably, most people find themselves worried more about the late fees and interest rate bumps that occur when a balance goes unpaid. However, if you’re counting on the reward points to finance your next vacation, you may be in for a big surprise when they are told that as a result of missed payments, a big chunk of those rewards have been taken away.

A research effort at www.cardhub.com showed that each of the major credit card companies employ rules which revoke reward points when a payment is missed. That list includes American Express, Bank of America, Capital One, Chase, Citibank and Discover.

Discover seems to be a bit more brazen than their competitors. For example, miss your due date for two months and all of your points go away. All of them. (Don’t forget, Discover is “the card that pays you back.” Maybe.) American Express examines situations individually but will seemingly not hesitate to take away what you have earned. With all the other penalties for missing payments, like late fees, interest rate spikes, credit report dings and dinner time phone calls, this is just one more slap in the face to consumers.

Also, remember that the credit card companies can change the terms of a reward program at any time, without notice. Essentially, the lending industry allows points to be accumulated but not necessarily returned. Thus, a consumer may be using a card for a specific rewards program only to find that program is suddenly no longer available. Furthermore, reward programs are marketed as perks, gifts for simply doing business with a specific bank. Yet, that gift can be revoked without notice. Thanks for nothing.

Consumer advocates preach that those looking for a card with a rewards program should choose only those that offer cash back, because it can’t be devalued. Plus, you are more apt to take the cash reward earlier than if it was simply a pile of points accumulating in cyberspace over time for you to “eventually” use for a new mountain bike, kayak or trip to Yosemite.

Remember, if a card’s rewards plan is the main reason you choose to open the account, as it is for more card users today, make sure you understand all of the fine print before you make a decision.

From: The Law Offices of John T. Orcutt, with 4 convenient office locations in Raleigh, Durham, Fayetteville and Wilson. Call us today to set up your free initial consultation. 1-800-899-1414.

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Published Wednesday, September 23, 2009 @ 10:41 pm

Say you find yourself struggling with a mountain of debt. Your paycheck seems to be spent before you even get it, as soon as you pay a bill another one arrives, and you’re starting to wonder how much longer you can deal with the stress of unmanageable debt. To make matters worse, you fall behind on your housing payment and your bank threatens you with foreclosure.

So when your phone rings and a professional sounding individual on the other end promises to stop your foreclosure or even modify your mortgage, you see it as a godsend! After all, the government has been promising to help Americans hold on to their homes. A foreclosure assistance agency may even be part of a government effort to help people just like you. As a matter of fact, nothing the “foreclosure assistance agency” says leads you to believe otherwise. Should you take the leap?

Unfortunately, as all too many have learned the hard way, there are no miracle cures when you have serious debt problems. With so many people struggling to hold on to their homes, it comes as little surprise that scammers are taking advantage of vulnerable homeowners at the worst possible time.

So how do these schemes work? In most of these scams, a company will call a homeowner and offer help in stopping a foreclosure. Some companies are little more than a call center, with no attorneys, accountants or loan specialists employed.. The companies demand a fee upfront, sometimes as much as $3000.00. Desperate homeowners will pay the fee, only to discover–often when it is too late–that the company did nothing at all to help them.  Because of this all too common model, one measure the FTC is considering is a ban on up-front fees for mortgage assistance.

Since April, the government has promised to crack down on “foreclosure assistance” outfits posing as government agencies. Now, a recent meeting of the multi-agency taskforce created by the Obama administration to address the problem of mortgage fraud updated the public on the government’s efforts.The FTC brought civil charges against two companies this week that were running foreclosure assistance scams. This brings the number of such cases this year to 22.

One of the worst aspects of this situation is that many of the companies work to create the impression in homeowners that they represent a government agency. The two companies charged this week were doing precisely that, and the government is working hard to crack down on these wrongdoers in particular. It’s your responsibility as an informed consumer to protect yourself. If you are being asked to pay a hefty upfront fee, it’s a good sign that the modification program is a scam. And remember, bankruptcy is always an option if you are behind on your mortgage. A Chapter 13 bankruptcy will catch up your missed payments over a 5 year plan, and eliminate your unsecured debts. Contact a bankruptcy attorney today to find out more. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. Or visit www.billsbills.com to complete our confidential debt questionnaire.

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

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

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

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

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

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

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Published Thursday, September 17, 2009 @ 7:27 am

Most people understand that wage garnishment is basically what happens when a court order requires your employer to withdraw a portion of your paycheck for the repayment of a debt. If you are already up to your ears in debt and barely able to make ends meet each month, one wage garnishment, be it by the IRS or another entity, can be the straw that breaks the camel’s back.

Although any kind of debt can eventually result in garnishment of wages, the most common types include back child support, unpaid court fines or judgments, defaulted student loans, and the biggie: delinquent taxes owed to the IRS or any state government.

The good news, which may come as a surprise to some, is that tax debts are dischargeable in bankruptcy (within certain parameters).

Just so you know, if a debt is “dischargeable”, that means you can get rid of it permanently by filing bankruptcy; and that means you never have to pay it back.

Six Rules to Discharge Income Tax Debts

If the income tax debt meets all six of these rules, then the income tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy cases.

Note: Each of these rules must be applied separately to each year’s tax debt.

1. First, the tax debt must be “income” tax debt. That is, the debt for which you are required to file an IRS 1040 form. Other types of tax debts, for example employer tax withholding and sales taxes, are never dischargeable.

2. The “due date” for filing your income tax return (for the particular tax involved) had to have been at least three years prior to the bankruptcy.

3. The tax return had to be actually filed at least two years prior to the bankruptcy.

4. The tax assessment must have occurred at least 240 days prior to the bankruptcy. “Assessment” basically means the date when the IRS billed you for the tax.

5. The tax return was not fraudulent.

6. You are not guilty of tax evasion.

The bottom line is that tons of income tax debt gets relieved as a result of filing bankruptcy.

Caveat: In some situations, you may have to pay back a part of even a discharged debt. For example, where the IRS has filed a “tax lien” for the debt in question, in which case some of your property ends up serving as collateral for the payment of the debt. As a practical matter, however, even though there may be a tax lien on file, that does not mean the IRS will. Certain types of property, like household goods for example, are protected. Certain types of property are not worth enough for the IRS to bother with. And certain types of property are untouchabable by the IRS, as a practical matter, for more or less political reasons. However, if there is a tax lien filed against you, you have to be careful. We suggest you check with a good bankruptcy attorney to find out what, if any, of your property is at risk.

Got a lot of older income tax debt? Got the IRS bugging you and trying to grab your income, your bank account or other stuff? You may be able to do something about it.

The one thing that trumps the IRS is the bankruptcy laws. You may want to check with a good bankruptcy attorney.

In North Carolina, you have one. The Law Offices of John T. Orcutt, with offices conveniently located in Raleigh, Durham, Fayetteville and Wilson. For a totally FREE, initial consultation, call toll free to: 1-800-899-1414.

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Published Tuesday, September 15, 2009 @ 1:10 pm

For so many years people have held the view that an education is one of the best investments you can make, and therefore it is prudent to spend whatever it takes to get the best education possible. It’s true that a college diploma will, on average, result in improved earning power for degree holders, and the improvement is often dramatic. Nonetheless, educations are so expensive that it’s impossible for most people to get one without taking out student loans. Even though the situation affects so many, it seems that nobody is out there is telling the whole truth. If the colleges and universities don’t do it, what could possibly motivate the student loan industry to mess with their own success in an enormously profitable field? It seems that nobody counsels borrowers on the often quite predictable results of their actions.

The simple fact of the matter is, education, on a pragmatic level, isn’t worth the same across the board. An education is a wonderful thing, arguably without price, and not everything we do in life should be about money. Pursuing an education in something you love is a worthy goal to have for yourself. But philosophy aside, many people enter college with the expectation that they will automatically improve their ability to get a job, allowing them to pay back the loan with ease. That simply isn’t the case. If you’re considering going to college or going back for another degree, but you find yourself wavering over the loans, that’s a good thing! Make a realistic assessment of your ability to pay the loans back once you graduate. Are you going into an industry that has growth potential? What kinds of jobs will you be able to get with the degree? And do you really need the degree to achieve your professional or other life goals?

Remember, student loans, unlike most every other kind of unsecured loan, are not discharged in bankruptcy. This is one of the worst aspects of the quagmire students encounter post-graduation; no job, and no ability to get rid of the student loan debt. Even if you find a job, but can’t afford the monthly student loan payment, your wages can be garnished. This is why, even if student loans are your primary problem, it may still make sense to file a Chapter 13 bankruptcy. You can stay in the Chapter 13 plan for as long as 5 years, giving you a reprieve from collection efforts. This will give you some time to get established financially, and will extinguish all other forms of unsecured loans and credit card debt.

If you’re having trouble paying your student loan debts, consider bankruptcy as an option to put your student loan creditors on hold. Call a bankruptcy attorney today to discuss your options. In North Carolina, contact the Law Offices of John T. Orcutt to set up a free initial debt consultation. 1-800-899-1414. Or go to www.billsbills.com to fill out our free and confidential debt questionnaire.

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Published Sunday, September 6, 2009 @ 1:18 pm

Now that every bit of information about you is digitized, it is easier than ever to use your own data against you.  Scammers know that flashing a little bit of knowledge can disarm an otherwise savvy consumer, so don’t be fooled into falling for the latest scam just because someone knows your address, details from your purchasing history, or even your social security number.

One new scam to be on the lookout for involves fake rebate checks. Basically, scammers send you a check in the mail for a rebate on an item you may have purchased. It’s possible they may actually know that you purchased the item, but it’s also possible that scammers will stick with popular or “hot” items, the kind of stuff you see advertised on TV and magazines, and snag consumers by counting on coincidence; either that you bought the item or that you were planning to buy it. One such program looks like an official check from the manufacturer, complete with a trademark logo, but it’s actually a ploy to obtain your signature…and therefore your consent to sign up for junk you don’t want at prices you don’t care to spend. If you get a rebate check in the mail, be very careful to read all of the teeny tiny print―annoying, but not more so than having to fight a company to recoup money you’ve been tricked into spending.

And here’s another scam, this one involving fake bill collectors―as if the real thing weren’t bad enough! This particular set of bad guys will call you and pretend to be collecting on a bill, making threats and demanding payments for debts you never owed or don’t owe on any more. Reports about this scam are especially unsettling because the scammers seem to have a lot of information at their disposal on the people they are calling.

So how can you tell if the bill collector is the real thing or another scammer on the take? Scammers will often report that they’re employed for agencies that don’t exist, so if you’re unsure about why someone is calling, request information about the company and the caller, explain that you want to look into the situation and hang up. Afterward, do a little research; if you’re satisfied it’s a real company you can always call the number back. Another warning sign are the kinds of threats scammers make; for example, threatening to send people to jail if they don’t make payments. You can’t be sent to jail over debt, so this particular threat is a dead giveaway. Finally, remember not to be fooled just because the person appears to have information about you; don’t confirm that any of the information is correct, since that may be the objective of the call in the first place. Remember that you have the right to demand written proof of your debt, and you should do so at the first sign of trouble.

You don’t have to take abuse from fake bill collectors, but the real thing are no joke either. Unlike the scammers, legit agencies won’t stop calling you until you do something to end your debt problems for good. If you can barely keep your debts straight, making it easy for scammers to take advantage of your vulnerable state, bankruptcy could be the answer for you.

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Published Wednesday, August 26, 2009 @ 10:04 pm

A successful bankruptcy is as much about post-bankruptcy decision making as it is about making the initial decision to file. A lot needs to go into each spending choice, every credit consideration and your personal financial management goals.

Multiple bankruptcies are common. However, if you feel you may be getting close to having to file again and the reason is not the direct result of an uncontrollable emergency, there may be some broader, underlying personal issues that were not addressed the first time around. At the Law Offices of John T. Orcutt, we take pride in preparing our clients for a life outside of bankruptcy as well. While we very much appreciate your business, we hope we only have to help you file one time.

We’ve compiled in this post a few strategies to help keep you on track after you are back on your feet:

• Pay bills on time. Sounds easy, right? Hardly. For even those people who have never even sniffed a financial difficulty, staying on top of a pile of monthly bills takes very sound organization skills. Like most people who begin to have trouble making ends meet, dates become critical. All kinds of dates: due dates, late charge dates, power bill dates, mortgage payment dates and so on, all start to come together into a menagerie of calendar markings and PDA notifications. One way to ensure everything gets paid on time is to use a completely separate calendar for bill dates. And, mark each one due five days before their actual due date. This way, you can avoid hundreds of annual dollars in late fees and prevent nasty marks on your credit report. Be careful with online bill pay services as well. While they offer convenience and scheduling, make doubly sure they are paying on time and that there isn’t some sort of delay that leaves your money dangling in cyberspace.
• Choose expenses carefully. This involves reminding yourself daily about the things you really need. Lifestyle items are for the “old you.” Remember, you don’t need what your co-worker or neighbor has. This is also about paying for things in cash and keeping the new credit card for emergencies, like car repairs or house damage. The reward from knowing you saved up and purchased something cleanly is well worth the wait. Try it and see.
• Balance your checkbook. Seems like another obvious tip, doesn’t it? You would be surprised. Today, banks are tacking on very high fees for bounced checks, overdue settlements of overdrawn accounts and service charges. Not only can you not afford to know exactly what is in your checking account, it’s a poor financial habit to get into. With simple addition and subtraction, you can be sure of how much money is coming in and going out every month. This helps in budgeting and uncovers places where you can save each month. Pay attention to the balance daily as well. Every morning, use the Internet or automated phone lines to get an update on your account. Even if you think you know, it’s always smart to really know.
• Handle setbacks as soon as they occur. Don’t let a disputed expense fester in your monthly balance, where it can gain interest or get lost in the administrative shuffle. And don’t take every little mistake you make as a sign of collapse or failure. Address every question or complication head on and be assertive.

Your financial solvency is a key part of your well-being. Try to stay on top of your finances after bankruptcy and truly take advantage of your fresh start.

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Published Monday, August 24, 2009 @ 11:52 am

Think that only credit card companies and gym memberships get passed off to collection agents? Think again.

In recent years, and now more than ever given the economy, local governments are selling overdue property tax accounts to private companies to gain immediate access to the money needed to supply public services. The downside is that these firms, called tax lien investors, can charge very high penalties and double the normal interest rates.

Housing and consumer advocates across the country are beginning to get wind of the tactics and have started calling for regulation. Although, municipalities have a strong argument for the raising of money this way because, like property taxes, it gets used to build roads, schools and supply public services. Not only that, tax lien investing has become big business, with many Wall Street brand names directly involved.

The demise of the real estate market in the last two years has left hundreds of thousands of unfinished houses on quiet cul-de-sacs in half-built neighborhoods across the country. It has also left in its wake millions of struggling homeowners. Should an overdue tax bill become property of a tax lien investor, suddenly the mortgage bill is not the only envelope instilling fear in the checkbook of its recipients.

Normally, governments do charge interest and late fees. Although, they do so at very reasonable rates. Why? Because they have no interest in seeing their communities becoming foreclosed ghost towns. Under the thumb of a private tax lien company, people are very likely to end up in foreclosure much faster. And, based on recent stats, a much more likely candidate for bankruptcy.

Tax lien investors have minimal concern for the preservation of towns and villages in which they have no role. Their stance is focused on collecting debts they purchased, not the building of schools or a playground. The underlying intention of their efforts, in essence, does not serve the community.

Private investors can move to foreclosure quickly, often taking priority over the mortgage holder because they “own the taxes,” (taxes are required to be paid first in the event of a foreclosure) and also stack on 18 percent interest rates on what is owed. People subject to tax lien investment companies across the country are reporting immense increases in fines and interest that often end up pushing them over the edge.

The head of the National Tax Lien Association, Howard Liggett, was rather bold in a recent statement, saying that his industry’s investing practices, ” … beats the heck out of any certificate of deposit.”

In other words, tax lien investing makes a lot of companies a lot of money.

Overdue taxes are indeed a form of debt. And they need to be dealt with, just like your car payment and student loans. However, you enter into the agreement with your local government under the auspices of being treated as part of the community. Thus, it’s easy to understand how the practices of tax lien investment firms could make an already financially challenged family feel even more abandoned by their community. And as a result, less likely to pay what’s owed.

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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 Friday, August 14, 2009 @ 2:55 pm

The news sure sounds exciting, especially for those rebuilding after a bankruptcy or perhaps teetering on its edge. Economic statisticians, those in colorful bold boxes on morning stock report shows and even the country’s newspapers, long considered a haven for everything depressing, are reporting that the worst of the recession is over. Many are going so far as to say that we’re on our way up again.

Honestly, the numbers don’t lie. But they don’t tell the whole truth, either.

The last couple of months have seen the fewest number of jobs shed, according to those in Washington. National savings rates are holding steady and business productivity has climbed to its highest level in six years. Impressive.

Still, the impact of those numbers, where the results really count, has yet to be felt in the cul-de-sacs, unemployment offices and youth soccer field sidelines across the country. People are still struggling and bankruptcy filings are still on their way up. If you were to probe a bit deeper into the primetime diatribes or stumble upon the e-mail trains chugging back and forth between Wall Street and Washington, you would find a good deal of evidence that most of America remains quite scared about their financial future and that the recovery will take another year or so to materialize at home.

The last thing we want to do is give people a reason to be pessimistic. Our job, day-to-day, involves helping people put things into perspective by showing them a route out of economic uncertainty. However, in order to do that, we need to be honest with clients and others we advise. No one benefits from a skewed truth. We still see people cashing in retirement savings to pay bills. College funds are being depleted and houses being sold at deep discounts because of foreclosure fears. All of these things continue to go on in the midst of statistics that indicate we don’t have to do those things anymore. The sun is rising, they say. The new dawn is coming.

We just want to advise you to remain cautious and to continue to do what is responsible. If you have made the decision to file bankruptcy but now harbor indecision because of things you heard on the news, stay honest with yourself. Trust in your decision and compare what you read and hear with reality. Is your situation really changing?

The July jobs report showed the unemployment rate dropped slightly. The numbers don’t show, however, the fact that 400,000 people have dropped out of the labor force and were not counted as unemployed. Compounding that skewed stat is the fact that the number of people out of work 27 weeks or longer–a key benchmark in determining the rate at which people find new jobs–reached 5 million, a record.

The last 18 months, hopefully, have taught people how to save better and conserve more. Still, more saving means less spending, which translates to weaker retail, slower shipping channels and minimal economic growth. That’s a tough concept for the country to balance. Unfortunately, tilting things in the favor of saving is rising unemployment and bankruptcy figures. With those numbers on the rise, the longer consumer spending will take to rebound–dates and numbers that the statisticians don’t put in blogs and press releases.

If you’re staring a pile of bills with the hopes that the economy is going to turn around tomorrow, you may be in for a rude awakening. Creditors across the nation are stepping up their collection efforts and turning up the heat on delinquent consumers. Consider bankruptcy as a real option to survive these tough times. Make the call today. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414.

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

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

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

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

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

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

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

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

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

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

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Published Saturday, August 8, 2009 @ 8:47 am

We hear plenty about the dangers of gambling addictions. Perhaps this is because the compulsion to gamble doesn’t make sense to a lot of people, and it is always easier to vilify from a distance.  Or maybe it’s that gambling addictions seem dangerous because a gambler could lose everything in an instant.

By comparison, indulging in little purchases here and there seems rather tame. But even little purchases add up, and when you get a rush from spending, chances are you’ll spend more money and spend more frequently to continue to experience that comfort. Just like someone addicted to gambling, you could lose everything; it may not happen in an instant, but little warning signs ignored for years will add up and catch up eventually.

Compulsive spending and shopping addiction are very serious problems that don’t get as much attention as they ought to. As a result, there are likely many out there suffering in silence. If you suspect you are a compulsive spender, that bad news is that you may be right–but at least you’ve recognized that there is a problem that you want out of your life. Admitting you have a problem is, as they say, the first step. If you think you may have a problem with your spending, take a moment to run through some of the items that frequently appear on compulsive spending checklists:

Is pressure from debt affecting your home life? Is it affecting you on the job?

If you are constantly having fights with your loved ones over your spending, or if you find yourself unable to work because of worrying over your debts, these are classic warning signs of trouble.

Is debt changing how you perceive yourself? How others perceive you?

If you are constantly getting down on yourself over your debt, or if you are afraid for people to find out about your spending, these too are warning signs of trouble. Sometimes people with spending problems justify their behavior by telling themselves that they deserve the things they are acquiring because they are better than other people. If you catch yourself in this kind of rationalization, take it as a warning sign.

Do you play fast and loose when it comes to creditors?

If you’ve ever provided false information in order to obtain credit, or made totally unrealistic promises to your creditors, these may indicate a problem with compulsive spending.

Does spending or taking on debt feel better than it ought to?

Sure, everyone enjoys getting something new, and if you really need a loan and it comes through, it’s natural to experience relief. However, if you live for the thrill of spending, or if getting a loan makes you feel like everything is guaranteed to work out no matter what, your relationship to debt may be a poor one.

Does debt affect your health?

If you can’t sleep, if you drink or use drugs to avoid thinking about debt, your spending could have serious, lasting effects on your health, and that’s nothing to gamble with.

Luckily, more and more awareness of this problem is starting to reach the public. Organizations like Debtor’s Anonymous (www.debtorsanonymous.org) are out there to help people dealing with spending addiction.

If you have been struggling with spending addiction problems for years, you may find yourself drowning in credit card debt. If this is the case, keep in mind that bankruptcy can help you take care of your debts for good. Second chances are rare in life, but bankruptcy can provide that for you. If you have a problem, it’s time to take decisive action, and to get your life back on track.

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

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

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

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

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

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

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

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

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Published Monday, July 27, 2009 @ 9:10 pm

The team here at the Law Offices of John T. Orcutt is certainly qualified to help you put things in perspective and as smoothly as possible, help you through the tough financial times. Nevertheless, the impact of bankruptcy can be quite emotional, regardless of how professionally it is handled. Thus, we hope it helps you to read a little about some of the more interesting stories happening in the world of bankruptcy today. Here’s a brief recap:

• From Wall Street to Main Street
  Not far from Louisville, KY in southern Indiana, the town of Georgetown has decided to file bankruptcy, sparking a debate in the state capital about a municipality’s ability to seek legal protection from debt. Apparently, a 1994 update to the federal bankruptcy code granted authority to state governments to decide whether or not individual cities and towns can file bankruptcy. Town executives see no other way to pay its debt, a large portion of which is attributed to an overdue sewage treatment facility. An attorney for Georgetown said that the community passed an ordinance that would grant itself authority to declare bankruptcy under the Home Rule Act, an Indiana law that grants local governments the ability to perform any legislative action not specifically prohibited by the state. Naturally, attorneys for the state are countering with the notion that federal law trumps the Home Rule Act.

  Municipal bankruptcies are not very common, despite the substantial number of designated local governments throughout the country. However, not unlike personal bankruptcies, the number of community governments filing for protection spiked in 2005 at 11.

• Even in Hollywood
  We all like to know just how similar we are to those who live in Hollywood. Well, you can add “financial difficulty” to the list of things a lot of us have in common with actors and actresses. Last week, one of the Baldwin boys, Steven, filed bankruptcy in New York, citing well over a million dollars in debt. Despite denials to the contrary, it was reported that Baldwin was going to auction his house in order to pay off its mortgage. The actor stated he is simply renegotiating the mortgage with his lender. According to documents filed, credit card debt is also an issue.

We hope this brief foray into the bankruptcy news arena helps you better grasp just how common bankruptcy is across the country. To that end, always remember that you are not alone in this fight and that others, even celebrities and entire towns, have the same questions, concerns and worries about money that you do.

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Published Sunday, July 19, 2009 @ 4:08 pm

Gambling, not at all unlike compulsive spending in department stores, can often lead to serious financial pitfalls. Despite the prevalence of gambling addictions in America, debts incurred by too much betting were at one time non-dischargeable in bankruptcy. While the specifics of dischargeability with any type of debt should be explored with a bankruptcy attorney, it is important for you to know that if you count gambling losses as one of your reasons for bankruptcy, the odds are in your favor that it can be discharged.

Bankruptcy research suggests that close to 10 percent of all filings are connected to gambling. If you are already considered a “compulsive” gambler, then you may be one of the 20 percent who eventually file bankruptcy. If that is the case, know that the bankruptcy court is going to view your gambling debts much like it does other debts. That is, was the debt incurred with the intent to repay? For a compulsive gambler, that question is up in the air and where the answer lands depends heavily on how the money to gamble was obtained.

Not surprisingly, credit cards play a role in gambling debt. For those who walk in to a casino with a wallet full of positive cash and leave with it empty, no real debts have been incurred. The problem arises when a person uses a credit card for a cash advance. As you might imagine, the majority of bankruptcy lawsuits relative to gambling involve credit card companies.

Again, like most debt, a judge is going to use other facets of your financial history to determine your intention to repay the credit card company for the cash advance. Prior to filing, your attorney will want to know everything about your gambling habits, including how much of your debt was gambling related, how recent your gambling-related debt was incurred, and whether you reasonably believed you would be able to pay back your creditors. If there is an objection to your bankruptcy discharge, the court will thoroughly examine your gambling history to determine whether you acted with an intent to defraud your creditors.

Las Vegas may still be the world’s gambling mecca but one does not need to go far to find a casino. Whether on a riverboat, Indian reservation or just across our northern border, the opportunities to double down are plentiful. Thus, gambling losses are a common cause of bankruptcy.

Again, it’s important to understand that like the eligibility for discharge of other kinds of debt, a bankruptcy judge is going to weigh a number of factors in your financial history. First and foremost, if gambling is the primary driver of your reason for bankruptcy, it’s possible you have a problem. Your first stop then, should be getting help to put the brakes on your gambling.

Next, contact a good bankruptcy attorney. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414. We can help you put into perspective your gambling debts and get you on the road to a more healthy financial future. You can bet on it.

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Published Friday, July 17, 2009 @ 6:12 am

A Chapter 13 bankruptcy plan is a powerful financial strategy that allows you to systematically repay creditors under a court-approved schedule. It gives the thousands who file bankruptcy under this chapter every year a sense of empowerment, enabling them to satisfy debts and remain financially viable.

Nevertheless, it’s very possible that even with your new start, you can falter along the way. It is not uncommon for an emergency, whether related to health, employment or family, to derail you from the monthly payment plan. If that happens, you do have plan modification options, which include deferring a payment, lowering your monthly payment, requesting a hardship discharge or converting to a Chapter 7 bankruptcy.

Please note that if you are facing a situation like this, contact your attorney as soon as possible. There is a list of legal parameters that coincide with altering your Chapter 13 plan. It’s important to discuss your situation and let your attorney determine the best strategy to deal with it.

First, understand that if you miss a payment to the trustee, the court can dismiss the case, allowing creditors to begin contacting you again. And, you may not be able to file again within 180 days. However, some courts may rule that the inability to make payments does not constitute an intentional attempt to avoid a court order. But it varies, which is why you’ll need the consistent oversight of a bankruptcy attorney.

You can ask the trustee for a suspension of payments. They are often amenable to this in the face of sudden unemployment or medical emergencies. The payments you miss during the suspension are not forgiven, they are simply added on later. However, since a Chapter 13 can’t last for more than 60 months, the suspension may cause you to have to modify the plan.

In a Chapter 13 modification, you will typically see a reduction in near-term payments but an increase as the plan continues. A judge is going to examine your case carefully and make a decision based on what he or she sees as a reasonable amount for the next term of payments. The court will take a renewed look at your income vs. expenses to determine if a modification is in your best interests. A modification also brings up the issue of value of non-exempt property, which was assigned when the first plan was approved. If the value increases, your new payments may very well have to reflect that.

A “hardship discharge” stops the Chapter 13 plan completely and eliminates the remainder of your scheduled payments. This sort of action will require some handiwork on the part of your attorney and you must prove in court that your inability to make payments is out of your control, a modification plan is not feasible and that you have made payments on nonexempt property based on their value on the date of the original petition. Generally speaking, you will need to prove some catastrophic circumstance, such as a massive personal injury, or some other uncontrollable event that has made it impossible for you to continue your Chapter 13 plan.

When a hardship discharge will not work, you can attempt a conversion to a Chapter 7 bankruptcy. One advantage to conversion is that debt incurred after you filed your Chapter 13 can be discharged, which is not possible in a hardship discharge. You need to be wary of how this may look to the court, however. If you attempted to file Chapter 7 first and failed the means test, a judge may see your attempt at conversion as a way to circumvent the law. As you can imagine, most judges will not be very sympathetic to this tactic.

If you’re having trouble with your Chapter 13 plan payment, it’s crucial that you discuss your situation with an attorney as soon as possible to avoid a dismissal. Don’t wait until it’s too late.

From the Law Offices of John T. Orcutt. Helping thousands of North Carolina families every year get back on their feet. Call 1-800-899-1414 to find out how bankruptcy can help you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Wednesday, July 8, 2009 @ 11:11 am

So you’ve had a few mishaps lately in your financial life– like just about everybody else in America. And you’ve been working really hard to keep up the juggling act: spread the minimum amount of money around to the maximum number of creditors to appease them until you finally get a break. But that pesky mortgage payment is mucking up your system. It’s so much larger than the rest of your bills, and, therefore, so much easier to fall behind on. The merciless late fees aren’t helping the matter. Before you know it, you find you’re four months behind and the prospect of ever catching up with the missed payments seems like a pipe dream.

It has become obvious that the juggling act just isn’t working anymore. The pressure by your mortgage company is mounting, and the severity of the situation hits you like a ton of bricks: you will lose your home if you don’t do something.

Since it is a secured debt, a mortgage comes with the risk that the lender will foreclose and actually have you and your family removed from the home. Few people ever imagine this could happen on the happy closing day when they signed that phone-book-sized stack of papers. But now, more than ever, many Americans are learning a lot more about foreclosure than they ever wanted to know.

In general, there are two types of foreclosure: ‘judicial’ and ‘nonjudicial’ foreclosure. A judicial foreclosure begins when the lender files a lawsuit against you. A nonjudicial foreclosure only requires the lender to file documents with the county clerk or another local official and mail copies to you.

After all of the requisite paperwork and notices are filed, a public auction, also known as a ‘foreclosure sale” is held and members of the public have the opportunity to bid on the foreclosed property. Once the sale is complete, the successful bidder can evict the borrower from the premises.

If you are at the precipice of foreclosure and the idea of standing at the curb with your personal belongings strewn around you is not a scenario you ever wish to find yourself in, you may want to look into filing a Chapter 13 bankruptcy. The Bankruptcy Code recognizes the importance of home ownership and the need to protect what is usually a family’s largest and most important asset.

Chapter 13 can help you catch up on back mortgage payments. Immediately after a Chapter 13 filing, the mortgage lender will be stayed (prevented) from foreclosing during the bankruptcy procedure. You may live in the home as the details are worked out and a plan is put in place for you to repay the arrears on your mortgage. The repayment plan includes past due principal and interest, and penalty fees, and usually lasts for a period of five years. The bankruptcy trustee may be able to challenge excessive fees and penalties imposed by lenders. This will put you in a better position to get current on your mortgage and keep your house.

During this time, you must also make the normal mortgage payments that are due, but remember, that Chapter 13 will increase your ability to pay by discharging some or all of your unsecured debt. It is often the unsecured debt– the medical bills, the credit card debt—that was at the root of the homeowner’s failure to keep current on the mortgage payments in the first place.

It is essential to contact a lawyer as soon as possible after foreclosure procedures are threatened. If you do not file a Chapter 13 before the foreclosure sale is imminent, you may also be tagged with additional fees for the foreclosure proceedings on top of everything else. Remember, Chapter 13 will not eliminate your responsibility to pay your lender what you owe under your mortgage contract, but it will give you breathing room to stave off foreclosure and save your home.

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Published Thursday, July 2, 2009 @ 9:42 pm

On the eve of Johnny Depp’s latest film about infamous Depression-era bank robber John Dillinger, a new kind of bank hold-up is being executed with unfortunate regularity around the world. Apparently, the rise of interactive online gaming has spawned virtual outlaws who literally rob businesses in their game’s virtual world and sell the loot to other players for the real thing.

In many online gaming environments, people gain power and social status very much the same way they do in the real world: with money. In the most recent case, which has helped establish the practice as a more common act of criminality, an Australian man arranged a scheme through a “black market” Web site for this very thing, to swap virtual dollars for thousands in real cash to cover a growing list of debts.

In this instance, the world was within EVE Online and the player, who is only identified as Richard, was the CEO of EBank, one of the game’s most recognized financial institutions. In these gaming environments, regular players who build solid reputations as trustworthy executives, quickly rise to respected posts within the community and just like on the real Wall Street, become purveyors over everyone else’s money.

A spokesman for the company that developed the game, which has more than 300,000 subscribers each paying at least $15 per month, described the crime in blunt terms. “Basically this character was one of the people that’s been running EBank for a while. He took a bunch of (virtual) money out of the bank, and traded it away for real money.”

The virtual amount was $200 billion interstellar credits. With current exchange rates, Richard received a little over $5,000 actual U.S. dollars. Like all criminals, those with whom he arranged the heist were simply seeking to get as much game credit as possible without having to earn it.

Since players use real money in exchange for virtual money while playing the game, a lot of real people got swindled as a result of Richard’s back-door dealings. Gamers can also earn virtual money by simply playing, accumulating wealth along the way by means of capturing space pirates or staking mining claims on errant asteroids.

The Eve Online gaming community was shocked at the news that someone so widely respected in their world turned out to be someone else. However, he was pushed into the crime to help pay for medical bills for his son and a house deposit. Apparently the health insurance crisis is even affecting the virtual world.

Real problems aside, had Richard’s antics been left only to the virtual world, he would have been able to remain a member of the community. Since he took the virtual into reality, he broke a coveted rule of the game and thus, his account has been terminated. Looks like it’s back to just playing Space Invaders for a while.

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Published Thursday, July 2, 2009 @ 5:18 pm

It may sound a little silly, but do you know who your student loans came from? And do you know where they are now? Arriving at the answer is often not so easy as providing the name of your school or simply answering “the federal government”― even if all of your loans came from the federal government’s lending program. Apart from these two entities, a number of private lenders are also involved in the federal student loan game. In the federal student loan program, private lenders provide what are called Federal Family Educational Loans (FFEL), the schools provide Perkins loans, and the government, via the Department of Education, provides Federal Direct Loans.

What happens if you can’t afford to pay your loans? Thousands if not millions of students are graduating with thousands of dollars in debt, and the job market isn’t exactly waiting with open arms. A majority of the people (three fourths of them) who default on their student loans do so after dropping out of their program, but there’s still a chunk of people left over who finished their degrees and still couldn’t cope with student loan payments beyond their means. It’s hard to say which is worse: taking on a huge amount of debt with no degree to show for it because you were forced, for one reason or another, to drop out? Or going through the hard years of work, earning the degree, only to find that it can’t help you find an adequate salary?

If you don’t pay your loans, the account eventually goes into default. Default happens on your student loans after 270 days of non-payment. Student loan providers are sometimes quite open to helping students get back on track with payments, especially when your lender is the school, so don’t be afraid to try some simple negotiating for more time if you’re falling behind. It used to be possible to wait out a student loan and hope that the lender didn’t do anything until the statue of limitations had passed; many people employed this strategy for a time, and it required conscious non-action on your part and perhaps a little bit of luck with the lender. Now there is no statute of limitations for student loans, so you’re on the hook for life.

Once you’re in default, it gets trickier to pin down the lender. It could be any of the three parties already discussed―the school, the government, or a private lender ― or it could be a collection agency hired by one of these parties to pursue the loan’s repayment. Often, a private lender will sell your loan to a lender who specializes in student loans, and any of the lenders can hire companies that handle billing and collection. Many loans are backed by state guarantee agencies which will pay off the lender whose loan has defaulted. The state guarantee agency will then try to get you to repay, and if they can’t they, in turn, are paid off by the federal government. The federal government then renews efforts to collect, often through those dreaded bill collecting agencies. The cycle never ends

If you get a collection letter for your student loan because you’ve defaulted on the loan, the first thing to do is find out who holds the debt. To do so, try contacting the Federal Student Aid Information Center and ask them to identify the holder. Their website provides a lot of information about application, repayment and default and is located at :  http://studentaid.ed.gov

Defaulting on student loans has serious consequences; it’s better not to get to that point at all. Before your financial situation spirals out of control, consider bankruptcy as a possible means to get a handle on your student loans and other debt. Contact a bankruptcy attorney who can help you get your life back on track.

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

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Published Wednesday, July 1, 2009 @ 8:05 am

Credit card balances, medical bills, mortgages and student loans make up a lot of America’s debt. In this recession-plagued economy, relief from any one of those financial obligations can be a tremendous benefit.

The White House has championed a bill to curb credit card company billing tactics and its mortgage modification program is expanding despite some early setbacks. And, the health care debate is reaching crescendo with the hope for many that an affordable, if not fully-supported, government medical plan will soon take shape.

Student loans, however, have not been subject to the broader economic sweep-up strategy that Washington has employed to fix the economy. That is, until now.

As of July 1, those holding federal student loans may be eligible for a program orchestrated by the Department of Education (DOE) that will cap monthly student loan payments based on the debtor’s income. A more aggressive component of the program calls for the dismissal of all student loan money that has been outstanding for more than 25 years.

The Department of Education is employing a job incentive, as well. In some cases, it will completely waive a person’s debt, after 10 years, in exchange for work in the public sector. Many of the most standard student loan arrangements call for a 10-year payoff. However, since so many young professionals struggle to find work after college, or at least work that will also cover student loan payments, the vast majority of student loans extend well beyond that ten year window.

A person’s ability to qualify for the effort, loosely called “income-based repayment” or IBR, will be determined by income and loan size. A calculator has been set up at its Web site, www.ibrinfo.org.

Ultimately, the IBR plan is part of the DOE’s College Cost Reduction and Access Act that was signed in 2007. Given current national economic conditions, the timing was right for its larger unveiling. It is meant to cover Federal Family Education Loans and any direct loan from the Stafford and graduate PLUS programs. And, any type of federal loan issued by a private lender is also subject to the reduction plan.

For most people who take advantage of an IBR plan, they should expect to see student loan payments be reduced to at least 10 percent of their income. However, anyone making more than $16,000 annually may see the loans reach 15% of their income. Anyone making less than $16,000 will not have to make monthly payments. The government is assuming that at least 1 million people will enroll.

Keep in mind that even though any reduction in monthly expenditures initially sounds great, there are drawbacks. Extending the period of the loan, which this program does, accrues more interest and could ultimately increase its overall cost. And if you realize a salary increase after being below the $16,000 benchmark, you’ll be responsible for the payments. It’s important for anyone considering enrollment to understand how a sudden new monthly payment impacts the capacity to cover other bills.

If your college loans are a large part of your monthly debt-load, than this program may provide you a little breathing room. Combined with a well planned bankruptcy to discharge your other unsecured debt, you’ll be well on your way to building your financial future. Struggling with student loans and other debt? Call the Law Offices of John T. Orcutt to set up a free initial consultation. Call 1-800-899-1414 today.

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Published Friday, June 26, 2009 @ 12:32 pm

If you have spent some time on this blog then you’re probably giving some consideration to filing for bankruptcy. It’s not an easy decision, which is why this blog exists. We understand that it helps to understand what others are dealing with and similar stories about accumulating debt can better help you grasp where it is you stand financially. Well, maybe the story of Mary Uhazi will help.

Originally written about in an MSNBC article, Ms. Uhazi built up $60,000 in credit card debt and just recently suffered a salary reduction. If it sounds familiar already, read on.

Like so many of Americans struggling under the strengthening pressure of consumer debt, Ms. Uhazi admits than in the end, after spending all that money, she had “…nothing to show for it.”

Extreme credit card debt starts, and often ends, with the best of intentions, especially when you have a good job. Ms. Uhazi started with a gas card to avoid stopping for cash every time she needed to fill her tank. In commuter heavy Sacramento, where she lives, that is a great reason to have a card. However, the collection of cards continued to build and what was once an easy amount to pay in full each month became a regular balance. And when that balance is spread among a number of cards, it doesn’t take much for things to spiral out of control.

Ms. Uhazi’s debt load was built over time and didn’t include what most would consider large, impulse purchases. It was simply some presents for Christmas here, a dinner with friends there and a few weekend trips. Also, a major car repair popped up, which is probably one of the best reasons to use a credit card.

Thus, the story of Ms. Uhazi’s debt accumulation is very common. Today, almost every major consumer product retailer–department stores, home improvement chains, book stores–have a branded credit card with their own litany of benefits. For those with good credit, the lure of an immediate 20 percent discount is often too enticing to resist. Rewards, cash back and free merchandise are constantly used as bait for access to your good credit rating. The more you spend, the more offers for cards you receive.

Everything was fine for Ms. Uhazi until she let a single payment deadline slip. Then things began to crumble.

Enter California’s historic budget crisis. Ms. Uhazi was notified that she would be required to take unpaid days off from work so the state could alleviate its own debt problems. With less money to pay the minimum balances, lenders pulled back credit limits and as if on cue, raised her interest rates. The perfect storm began to rage and when she sat down to get an idea of her debt the credit card balances totaled more than $62,000. Just two of her minimum balance payments were close to $2,000.

Ms. Uhazi took control of her situation by contacting many of the retailers and card issuers to negotiate lower balances but even the small reconciliations made in that effort carried a cost. For example, her creditors would lower rates on store purchases but increase them on cash advances. Despite the progress and new approach to spending that she now employs, Ms. Uhazi remains uncertain about where her economic future is headed. She is considering bankruptcy.

If you see any of yourself in Ms. Uhazi’s story, know that there are many more just like you. You are not alone in this economy and you certainly not the only person who has experienced bad things as a result of good intentions. Keep in mind that just by consulting with a bankruptcy attorney, you may realize that filing is often the most reasonable solution.

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

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

High Interest Loans:

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

Late Fees:

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

Payday Advances:

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

Pawn Shops:

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

Family and Friends:

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

Gambling:

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

Anger, Depression:

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

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

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

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

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Published 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 Saturday, June 13, 2009 @ 9:07 pm

You know it as the faceless organization behind all those numbers subtracted from your paycheck, but for those who are considering bankruptcy, it pays to understand just what impact the Internal Revenue Service could have on you.

The IRS is a party to more than 40 percent of all bankruptcy cases, primarily because past due taxes are fairly common. If the collection of last year’s taxes is the only reason they are listed as a creditor, then everything should work out just fine. However, those who have attempted to bury assets to avoid tax obligations in conjunction with a bankruptcy typically lose more than a decent credit standing. They lose their freedom. For example:

• In May of this year, just a few weeks ago, a San Diego man was sentenced to 10 months in prison and four months in a residential re-entry center and three years of supervised release because of bankruptcy fraud in 1999 in conjunction with tax evasion from 2000-2002. In addition, the court ordered him to pay more than $500,000. This gentleman eventually admitted in court that he deliberately omitted from his bankruptcy petition the fact that he filed state and federal tax returns before filing bankruptcy. He was expecting a refund of $8,000. And, he failed to declare close to $800,000 in taxable income in 2000.
• A father and son team in West Virginia are serving 57 months and 24 months, respectively, for trying to defraud the government of tax income and multiple counts related to filing bankruptcy on behalf of their pipeline contracting company. These two basically ran the gamut of corporate criminality, healthcare benefit schemes, charging millions in personal expenses to the company; issuing bogus payroll checks; obstructing tax investigations by hiding records; re-issuing expense checks to employees that were actually portions of their current salaries and eventually, hiding from the bankruptcy court the fact that profits from the sale of company-owned oil wells (presumably to the benefit of the bankruptcy plan) simply went back into another shell company they created and tried to disguise.
• In a much simpler case in California, a chiropractor is now in jail for 11 years for simply hiding assets from the bankruptcy court. He decided that it would be easy to hide the fact he owned an airplane, a truck and a profitable interest in a 220-acre ranch. He also bent over backwards to hide the majority of income he received from selling his business by providing the bankruptcy trustee with a forged contract for substantially less than for what the business was sold.

There doesn’t need to be any sort of real moral to these stories, as the message is pretty clear: trying to defraud a bankruptcy judge is one thing; trying to sneak by the IRS is something completely different. There is simply no sense in adding federal charges to what may be a common and very helpful bankruptcy process.

While tales of bankruptcy fraud may sound like something out of a crime novel, the truth is that people who undermine the court do a terrible disservice to the benefits of bankruptcy. Not only do such actions initiate additional laws that could further hamper a person’s ability to file for financial protection, they simply perpetuate the stereotype that bankruptcy is something we should stay away from at all costs. Which isn’t true.

Maybe there is a lesson here. Perhaps its about being open and honest with yourself about spending, the occasional mistake (we all make them) and the ability to admit we need help.

Are you a good, honest, hardworking person, simply strapped with too much debt? Get a checkup and, if need be, a bankruptcy tuneup with an experienced bankruptcy attorney. Whether you end up filing bankruptcy or not, it pays to know your rights, all your options, and what you can and cannot do legally. You’ll be surprised…in a good way.

In North Carolina, you have available the experience you need. The Law Offices of John T. Orcutt have helped over 30,000 families get out of debt and back on their feet. They serve 28 counties in North Carolina and offer a free consultation out of 4 different locations: Raleigh, Durham, Fayetteville and Wilson. Make an appointment. You’ll be glad you did. During normal business hours, just call toll free to 1-800-899-1414. At night and on weekends, you can set up your own appointment “online” by visiting their website at www.billsbills.com.

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

It took almost five years after legislation passed to make it more difficult to file, but bankruptcies in the United States are at their highest number since 2005. It should not come as a surprise to anyone, given the extent to which job losses, tight credit and the housing market have bludgeoned our economy.

Between the first of the year and March, there were 330,477 filings, an increase of 35 percent from the same quarter of last year. In the face of such daunting numbers, it’s difficult not to come to grips with the pain being caused by the recession. Thankfully though, the bankruptcy courts are there to assist those in the most serious trouble with finding a route back to financial solvency.

There is a direct correlation between states with the highest number of filings and those hit hardest by the housing crisis. California experienced the most, and then Florida. Both states, along with Nevada, have been decimated by dropping home values.

However, and in thanks in part to the federal government, banks and creditors are trying to help where they can by lowering interest rates, halting fees and modifying mortgages. At least that’s the plan (read: hope). That help comes with a mixed message though, as many credit card companies are scrambling to add costs before recently-passed legislation that limits their ability to charge more and raise rates goes into effect sometime in early 2010.

Good news on the economy is starting to surface, however, according to federal officials throughout the United States. A report by the Federal Reserve said that signs of economic contraction were leveling off but that any sort of significant recovery will not be fully visible until after 2009. The increase in home sales has helped to put some areas, to a small extent, back on track.

If you plan to file bankruptcy this year, it is critical for you to consider the benefits of a bankruptcy attorney. The road to the bankruptcy court can be a bumpy one if you’re not able to keep it between the lines. From reading through this blog to picking up books to seeking references, the more knowledge you have about the bankruptcy process, the more prepared you will be when it’s time to officially file.

Bankruptcy attorneys can leverage the legal system in much more effectively than most credit counselors. While learning to spend more wisely and negotiate interest rates are certainly worthwhile efforts, the odds are that you already understand what mistakes you made. Many experts on the subject believe that people in financial trouble get into even more while trying to decide whether or not to file bankruptcy. Problems arise when a person continues to spend or make unwise decisions for a few weeks while waiting to call a bankruptcy attorney or begin their research, as if simply telling yourself you plan to file makes it happen.

When it’s time to file bankruptcy, like more than 330,000 people have already this year, it’s a time for action. Move forward quickly and get your life back on track because as the saying goes, “the sooner the better.”

Live in North Carolina and need a good bankruptcy attorney? Consider the Law Offices of John T. Orcutt, serving 28 counties out of 4 different offices located in Raleigh, Durham, Fayetteville and Wilson. This lawfirm offers a totally free and confidential initial consultation and is dedicated to making sure you know all your options, bankruptcy and otherwise. Need an appointment? During normal business hours, call toll free to 1-800-899-1414. At night and on weekends, you can make your own “online” appointment by visiting their 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 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 Monday, June 8, 2009 @ 5:46 pm

After you file for Chapter 13 bankruptcy, the court will set what’s called a 341 meeting. The 341 meeting in a Chapter 13 bankruptcy is similar in many respects to the Chapter 7 meeting, but they will not be identical. The 341 meeting, like some other parts of your bankruptcy process, will have some variations depending on your local jurisdiction, which is why it is a good idea to hire a bankruptcy attorney who practices in your area and is familiar with local procedure. In addition, because a Chapter 13 case is structured differently, it should come as no surprise that the 341 meeting will run somewhat differently.

Before the 341 meeting in a Chapter 13 bankruptcy, you will need to send copies of your federal income tax returns to your attorney, who will provide them to the trustee and any creditors who request them. During the 341, the trustee will ask questions and look over the documents you have submitted to try to determine whether you are capable of making the monthly payments and whether the plan is fair to all creditors under federal bankruptcy law. 

The possible presence of creditors at the 341 meeting should not intimidate you; remember that your lawyer will prepare you for the meeting beforehand and that he will be with you during the meeting. You are not there to apologize to anyone or to be berated. You can expect everyone at the meeting to be professional, polite and brief; creditors are not allowed to be rude to you in any way or harass you, and the trustee will probably have a lot of other cases to get to.

The confirmation hearing is a separate meeting where the court decides to approve or reject your plan for repayment. Unlike the 341 meeting, which you must attend, you are generally only required to attend a confirmation hearing if the trustee or one of your creditors objects to your repayment plan. If this turns out to be the case, you will probably be able to submit a modified plan, to be reviewed at a new confirmation hearing. Alternatively, your lawyer may decide to attend the meeting and argue that the objections are meritless, or she may negotiate with creditors and attempt to reach a compromise.

Another kind of meeting during a Chapter 13 is the valuation hearing. Secured creditors may object during the hearing if they believe they are being treated unfairly by your plan. Your lawyer will be key during a valuation hearing, as he will probably be able to negotiate with creditors.  The ultimate decision will rest with the judge.

The Chapter 13 meetings will go smoothly and routinely for most people, and hiring a good bankruptcy attorney will go a long way toward assuring that you make it through this part of the process as painlessly as possible. There’s no need to be intimidated by the process; remember that almost all the players will have significant bankruptcy experience and there is no reason for them to pick on you or your case. With a good attorney, these meetings should be a breeze.

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Published Sunday, June 7, 2009 @ 1:10 pm

Inside a typical house in a pretty ordinary neighborhood, a husband and wife sit at their kitchen table well after dinner, staring stoically at one another. Scattered in front of them is an array of half-torn envelopes and perforated slips of paper with bold red type. Words like “urgent” and “past due” and “collections” stand out like blood on snow. While outside, a person casually strolls into their driveway and stops at the family minivan. A key is inserted into the lock. Moments later, the couple notices headlights wave across the kitchen and the confused silence is broken by the sound of them hurrying through the house to see what’s happening outside. In the driveway, where their van was parked, remains only a child safety seat, a few CDs and coffee mug with a heart on it.

While this situation may sound like something from fiction, it is hardly made up. People facing financial hard times often see them magnified by the loss of a vehicle through repossession. However, there are protections in place to prevent people from losing their cars in this manner. And unfortunately, even many of the creditors who hold car loans don’t know the rules.

Most states do allow creditors to repossess cars once in default but it needs to be stated clearly in the payment agreement. At any point, if you changed your payment date to potentially improve your ability to pay, it’s possible the terms of the original contract no longer apply. Thus, get any changes or agreement alterations in writing so you can establish a solid paper trail of your dealings with that organization.

Even though a “repo company” can come on to your property to get the vehicle, generally, they are not allowed to cause any sort of disturbance that could be considered a “breach of peace.” This means that physical force, threats of any kind or entering a secure area, like a garage, is not allowed. Additionally, should that violation occur, you may be due compensation for any damage the repo company causes. A breach of peace also puts you on solid ground should the creditor attempt to sue for a deficiency judgment. This sort of judgement seeks to reimburse a creditor for the difference between what you owe and the price for which they can sell the vehicle.

If the creditor decides to sell the vehicle instead of keep it for compensation, some states require them to alert you to the sales date so you can have the opportunity to buy it back, whether at auction or in a private sale. You may also have the ability to redeem the vehicle directly from the creditor for the full amount you owe.

Personal property left in the vehicle is yours, so a creditor is not allowed to claim it as part of what is owed. Depending on the state, they may be required to let you know exactly what they found and let you get them back. This aspect of a repossession can quite often escalate into additional legal issues, as a vehicle often changes hands a few times during a repossession. Some things may get lost along the way and yes, even stolen.

As with almost all issues related to serious debt problems, it can be immensely beneficial to sit down with a bankruptcy attorney to understand your rights. While credit counselors can help sometimes, an attorney is going to be a much better resource for addressing the state by state legalities of vehicle repossessions.

Filing bankruptcy can stop repossession and allow you a chance to get current over a period of months or years. Stopping repossession is one of the things that bankruptcy does best.

Need to stop a repossession or a foreclosure or just get more time to pay? Whether or not you end of filing bankruptcy, you need to find out how this option works. You will be surprised. Bankruptcy is powerful and it does not work the way you think. Find out more. 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 Thursday, June 4, 2009 @ 11:33 am

A psychology professors at Maastricht University in the Netherlands published a study about what it takes to find true happiness. Or at least, the psychological make-up of happiness. As it turns out, yes, money does have something to do with our level of happiness. But so does uncertainty.

In a recent New York Times column on the professors’ work by Daniel Gilbert, author of “Stumbling on Happiness,” it was published that indeed, money can buy happiness. Although, not to the extent most people believe. It doesn’t take private jets and multiple homes on palm-lined beaches for us to be content. It does take shelter and food, though, along with a sense of security. Not physical security really, but mental security, a sense of comfort.

In their studies on happiness, the psychologists found that people were less anxious about a bad thing happening to them (in this case, a healthy jolt of electricity) if they knew it was going to happen. The study involved telling some people that in a series of 20 shocks, three of them would be quite strong and would come at random times. The other group was told exactly when the stronger shocks would occur. It was the latter group that, according to heart rate and other physical monitoring, was less nervous about being electrocuted.

Let’s apply this university study to your financial situation. When you are in debt, serious debt, the fear of the next emergency that will require money you don’t have, the fear of the phone ringing with a collection agent on the other end or the fear of not knowing if you’ll be able to pay your mortgage, becomes a major contributor to your unhappiness. After a while, that fear of not knowing what lies ahead turns a financial situation into an emotional one. And when we’re distraught, our spending decisions can get even worse.

When you make the decision to file bankruptcy, you become the second group in the study. You know what lies ahead of you now. Sure, parts of the process may be uncomfortable at times, but for probably the first time in a long time, you can see through all the financial uncertainty. You can pick up the phone with hope that it’s going to be a friend or family member. You will be able to ask questions to your bankruptcy attorney about your home and investments. Bankruptcy can provide you clarity when the clouds of debt have blocked your future.

Even though the study showed that yes, material things can create happiness, it also showed that we need a great deal more, too. When it comes to knowing something bad is going to occur, the study showed that we absorb the event and then move on. We are less apt to point fingers or hold on to bitterness or claim the victim. The same can be said for bankruptcy. Once you make the decision, you’ll feel that weight lift. It will be tremendous.

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Published Wednesday, June 3, 2009 @ 12:15 pm

Our blog sure does cover a lot of ground about bankruptcy. Which is a good thing. We want to be sure that you understand all the processes, terms, principles and philosophies that factor into such an important decision. We even throw in some recent news about bankruptcy to help provide additional “real world” perspective on how bankruptcy laws are interpreted and applied.

All that being said, it’s always good to get back to the basics. So let’s talk about some common mistakes people make when considering or starting the bankruptcy process:

• Borrowing money from family to pay creditors: This will only make things worse. Even if your venture capitalist brother is more than willing to lend a dollar, don’t do it. Every dollar that comes from a family member will gain more emotional interest in the coming years than the debt relief was worth. There is no sense in spreading financial stress and discomfort when its not necessary. The problem is compounded if you repay the relative prior to filing bankruptcy. A bankruptcy trustee can sue friends or relatives who have received more than $600 in repayment during the year prior to your bankruptcy. Regardless of your family’s outlook on your financial situation, see your own way through it.
• Hiding assets: This sounds like a simple enough rule to follow, doesn’t it? You may be surprised at how many people try to transfer ownership on prized items that they know will look pretty attractive to the trustee overseeing your case. This is about not making things worse. Oh, and its about looking good in court. The last thing you want is a bankruptcy judge under the impression you tried to pull one over on him or her. Always be upfront and honest about what you own.
• “Selectively” listing your creditors: Be very thorough when providing contact information and names of creditors to whom you owe money. Take the time to get it right from the beginning. Your bankruptcy attorney can certainly help but some folks have decided that maybe one or two groups called a few too many times or may have been a bit harsh in their collection efforts that just maybe, you can sneak one past them. You can’t. Again, don’t hide anything; get it all out as soon as possible.
• Cashing in retirement accounts: This is never a good idea, whether you are filing bankruptcy or not. No expense is worth putting off the rest of your life. Remember, your bankruptcy dealings will pass well before it’s time for most people to retire. More likely than not, any retirement funds are fully protected because of acts passed in 1974 and 2005, as discussed in a previous post. Plus, the tax penalties will prevent you from being able to use all of the money.
• Use your home equity line: Once more for the people in the back row: You can’t borrow your way out of debt. Do not put your home in trouble when its not necessary. If you have managed to keep that equity line in check while building other kinds of debt, let it be. That money is better used for home-related expenses and tax benefits when you are on solid financial ground.

To recap, keep browsing the blog for all things bankruptcy and keep the above points in mind so if you do decide to file bankruptcy, you can get off on the right foot.

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

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

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

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

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

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

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

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

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

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Published Monday, June 1, 2009 @ 12:30 pm

Your “Golden Years” are supposed to be the best time of your life. You shouldn’t be worrying about bills, going to work, or holding an “upside-down” mortgage. These years are supposed to be the fruit of your life’s labor, and you should be able to enjoy them – or least not have to juggle the kinds of responsibilities and concerns you did in your 20’s and 30’s. Until recently, with a modest amount of planning and investment toward retirement, this was a reachable goal for most Americans.

Sadly, the economic conditions of the last 10 to 15 years have increasingly strained the budgets of seniors. Most people in their retirement years are on a fixed income, determined some years before they actually retire. But the cost of goods and services keeps rising, and the rate of those increases has outpaced the earning capacity of most seniors. This has meant that people who had planned to have their mortgages paid off are still left with a high principal balance at retirement. In addition, the medical services seniors need as they grow older keep getting more expensive every year, often causing a pile-up of unexpected (and unaffordable) medical bills.

This situation has forced many seniors to rely on credit cards to pay for things – including simple necessities. While in the past they may have been able to draw from the equity in their home to cover their expenses. However, with the housing bust, this is no longer an option for many. Continuing to work beyond retirement age is becoming more common. But in an increasingly brutal job market, seniors are often the first to be laid off, and the last to find new employment, Accordingly, seniors are slipping further and further behind. According to a September, 2008 AARP study, almost 700,000 seniors (about 28% of all homeowners) were either delinquent on their first mortgage, in the process of foreclosure, or had already lost their homes.

Filing bankruptcy is often the best option for those suffering with these sorts of financial problems. Indeed, the bankruptcy filing statistics show many seniors have begun taking advantage of the bankruptcy protection. Over the last decade, the filing rates for individuals 75 to 84 years of age has increased over 400%. For those between the ages of 65 and 74, the rates have doubled during this time. In 2007, 23% of those who filed bankruptcy were 55 years or older. And, as the economy continues to decline, and our nation’s elderly population continues to grow, bankruptcy protection will increasingly be utilized to protect the assets and livelihood of senior citizens.

Don’t struggle to make ends meet one more day. If you are a senior worrying about your debts, call a bankruptcy attorney now and learn how bankruptcy law can protect you and your retirement.

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Published Sunday, May 31, 2009 @ 9:03 pm

“Identity theft won’t happen to me, I don’t buy anything off of the Internet.”

Sounds familiar, right?

Well, last year, there were millions of Americans who said that and turned out to be dead wrong.

Identity thieves do not need to access your computer hard drive to run up debt in your name. Many of them just need an unattended garbage can, an over-trusting relative on your end of the phone or just the United State Postal Service. Whether it happens electronically, through the mail or in the county dump, identity theft is all about getting access to your money. And when your money is in the hands of someone else, so is your credit.

Thousands and thousands of identity theft victims have found themselves facing the decision to declare bankruptcy as a way to start fresh after identity theft has cost them too much to handle. In fact, many victims of identity theft discover that the perpetrators have filed bankruptcy for them when the official notices show up in the mail, which further hampers the victim’s ability to pursue the case and creates greater legal distance between themselves and the crime.

Identity thieves are filing bankruptcy in their victims’ names at an alarming rate. Apparently, the lure of the “automatic stay” is what prompts them to take their crime to the next level. The automatic stay is an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against a debtor the moment a bankruptcy petition is filed. When the individual filing bankruptcy, in this case, the victim of fraud, fails to appear for the bankruptcy hearing, the case is then dismissed. However, the bankruptcy filing remains on the victim’s credit report.

Those to whom this has happened will only find out about the bankruptcy when they, under innocent pretenses, apply for a loan or other form of credit. This not only significantly harms the credit and financial wherewithal of the victim but severely damages the positive intentions of a legitimate bankruptcy process, associating it with crime and wrongdoing.

A large number of bankruptcy cases are associated with identity theft. Some examples include:

• Filing for bankruptcy under the name or identification (SSN#) of another person. This often entails ex-spouses, estranged family members or former business partners.
• Getting into debt under a false name, filing for bankruptcy and then discharging the debt.
• Transferring the deed, or ownership, of property to another and then filing for bankruptcy with that person’s name to avoid foreclosure. In today’s discouraging housing market, this is becoming more common.
• Putting property under the name of a random person who is in the middle of a pending bankruptcy case, which will stop the foreclosure on the criminal’s property once the victim is recognized as an owner.
• Using a created or existing social security number to petition for bankruptcy.

This type of identity theft, like all forms, can be severely damaging to a person’s credit and in many cases, can lead to the victim having to file a legitimate bankruptcy. In today’s information age, and even more so in an economy that can perpetuate desperation, it is more critical than ever that we all monitor our credit and finances as closely as possible.

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Published Sunday, May 31, 2009 @ 6:49 pm

The decision to file bankruptcy is more often than not driven by your willingness to accept the fact that you need help. Chances are, you are fully aware of the practical reasons: late bills, consistent calls by creditors, job loss, unseen medical expenses, stress, denied credit. However, getting over the psychological barriers can be the most difficult corner to turn in a person’s road to financial recovery.

Don’t worry, you are not alone.

Almost everyone has the same fear before going into bankruptcy. The idea that you will never again be able to own a home, buy a car or get reasonable credit can be overwhelming. Unfortunately, there are a lot of creditors out there who encourage customers to think that way. It creates a sense of fear that forces a person to believe that credit is everything, that you can’t have the lifestyle you want without it. That fear is what attracts people to applying for credit, the fear of a “below-average” lifestyle.

Having credit is a powerful thing. Personally and socially, it can make you feel confident, successful and financially comfortable. And clearly, having available credit is something everyone should strive for. But only to an extent. It’s not something you should ever use to define yourself.

When dealing with your credit after bankruptcy, do all you can to remind yourself of your old spending habits. Or, if it wasn’t bad spending decisions that led to bankruptcy, try to instill some lifestyle changes that are contrary to what you did prior to bankruptcy. Whether it was a health-related issue, divorce or other social misfortune, always be honest with yourself and the people around you. Don’t hide from your bankruptcy. After all, the important thing is you made the decision to improve your life, make changes and get yourself back on track. As earlier posts on this blog have stated, bankruptcy is not a scarlet letter, it’s simply a financial management tool.

Once your credit is re-established and you feel confident about your financial wherewithal, be wary of the lure of credit offers. Even your past creditors will happily place you on their direct mail list, sending you offers of low interest rates and annual reward catalogs laden with gifts and trips and discounts. All you have to do is spend. And spend some more.

However, you can outsmart the aggressive credit marketers by creating limits for yourself, playing credit card companies against each other when seeking interest rate reductions and account benefits and by paying your bills on time, in full, every month. And always remember, don’t count available credit as income or available savings. Also, don’t fall into the trap of believing you need a credit card for emergencies. Cash is always king, and once you use it to buy something, you’re paying for it only once, not every month.

Remember that one of the key reasons for filing bankruptcy is to make change in your life. It’s key that you take that change to another level and integrate that discipline into your personal, social and professional life. You made the right choice to file bankruptcy when you did, now make that change permanent.

Think you need to file. Find out for sure. In North Carolina, contact the Law Offices of John T. Orcutt. The initial consultation is FREE. Offices in: Raleigh, Durham, Fayetteville and Wilson. Call toll free to 1-800-899-1414 today.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Wednesday, April 22, 2009 @ 1:48 pm

One of the worst aspects of having debt troubles are the calls from bill collectors. Who doesn’t dread those mean phone calls after you miss a couple of payments?

Recognizing the damage that bill collectors can inflict on people in debt and their families precisely when they are most vulnerable,  Congress passed the Fair Debt Collection Practices Act (FDCPA) in 1977. Many consumers are unaware of their rights under this act and bill collectors count on this fact to maximize their intimidation tactics.  Bill collectors will make you feel like a criminal when in fact, because of their dirty tricks and bully tactics, they are the ones breaking the law.

First, you should know the difference between creditors and bill collectors. Creditors are the people you owe money to, while bill collectors are people your creditors hire to bully you into paying. Your creditors can continue to call you, but under FDCPA , a third party hired by a creditor to collect debt must comply with the federal law. This includes attorneys hired by a creditor to collect the debt; if a debt attorney contacts you and tries to intimidate you, make sure to tell him that you understand your rights under FDCPA. Hopefully he’ll know that if he messes up, you may have grounds to sue him!

What Bill Collectors Can Do:

Bill collectors CAN report negative information to the credit bureau, close your account, or sue you to get a judgment. Once a judgment is obtained, the collector can then force a sheriff’s sale of any non-exempt property you own, such as your car or home.

Bill collectors may contact your spouse or your guardians; they may call your parents only if you are a minor; they may also contact your lawyer, as well as any other creditors you owe.

What Bill Collectors Cannot Do:

Bill collectors CANNOT call your employer, your neighbors, or any other third party, publish your name or information about your debt in anyway, or threaten legal action that they can’t or don’t intend to follow through. They cannot contact you in any place where such contact may cause you trouble or embarrassment: for example, at work. They can’t call you at unreasonable hours. In fact, bill collectors can’t call you at all once you write them a cease-and -desist letter. Bill collectors cannot threaten to seize your assets or to have you arrested. They cannot ask for more money than you actually owe, except under very narrow circumstances and with legal authorization. They must respond to a request for confirmation of the debt in writing. They cannot threaten your safety, threaten you with any of the forbidden conduct, or use abusive or profane language.

In addition to FDCPA, your state probably has a law addressing abusive bill collectors. These laws may offer you further protections, so you should make a point to look them up before dealing with any bill collectors.

Always tell bill collectors that you understand your rights under FDCPA and that you will report any misconduct to the Federal Trade Commission.  If there is misconduct, don’t hesitate to file a complaint in writing to the FTC. Check out the FTC website for instructions on filing a complaint.

If bill collectors are wreaking havoc on your peace of mind, it may be time to consider a lasting solution like bankruptcy. Bankruptcy will stop the phone calls, stop the lawsuits, and give you some much needed breathing room during these tough economic times. Get a handle on the bill collectors and call a Bankruptcy attorney today!

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Published Saturday, April 18, 2009 @ 6:16 pm

How many people enter into marriage these days totally debt-free? Probably fewer than you would think. Debt might have been accrued from the often inevitable student loan, through inexperienced or irresponsible spending, or even by footing the bill for a once-in-a-lifetime wedding and honeymoon extravaganza. For those taking the plunge for a second or third time, the debts could come from a myriad of sources. Regardless of where it comes from, premarital debt is going to be a consideration for couples contemplating marriage more often than not.

The fact is, only a very fortunate few couples have the luxury of starting out their new life together debt-free. If you’re one of them, count your blessings! If not, well, what to do?

Well, first, don’t ignore the fact that you or your fiancee has premarital debts. This could lead to serious consequences during your marriage. But don’t call off the wedding just yet.

Second, you need to get some facts about how this debt will affect you. Will you become individually legally liable for his or her pre-marital debt after the wedding?

A third consideration, which most people don’t want to consider, but wish they had after it’s too late, is how to protect yourself from becoming responsible for a spouse’s pre-marital debts in the sad event of a divorce. And, what will happen to those premarital debts in the event that bankruptcy becomes inevitable?

These are questions that an attorney, specifically a bankruptcy attorney, can answer for you, based on your specific circumstances. As a general rule, however, debts incurred wholly by one partner prior to the marriage will belong to that partner individually during the marriage and are considered as such in the event of a divorce. The same holds true for most debts incurred during the course of the marriage (in States like North Carolina).

The biggest exception is where you live in a State governed by “community property” laws. California, for example. Generally speaking, in community property States, debts incurred during the marriage are deemed owed by both spouses, regardless of who signed on the dotted line.

Don’t live in a “community property” State? Good! Then, in most situations, even if you are married…”If you did not sign it, you do not owe it”.

So, unless you signed on your spouse’s premarital debt, or signed on the re-finance of that debt during the marriage, you shouldn’t worry that you will be required to shoulder your fiancee’s pre-marital debt.

However, such debt could have dire implications upon the health of your marriage. Shaky finances can put tremendous stress on a marriage and this stress often is a major reason that many marriages fail.

If, prior to marriage, one partner is overwhelmed by debt, you should talk to a bankruptcy attorney to help you decide if filing for bankruptcy prior to the marriage will allow that partner to move forward and reconstruct his or her financial health. This step will bring long-term benefits to the union, and also facilitate the marriage to get started out on solid footing.

The decision to get married should be a joyful and momentous event in your life. Don’t let these moments be overshadowed by your or your fiancee’s debt burden. And don’t feel like your only option is to postpone the wedding until you are both completely debt-free. Often that just isn’t realistic. If you are concerned about the affect of debt on your future spouse or your marriage in general, please contact a skilled bankruptcy attorney who can help guide you during this crucial time.

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Published Wednesday, April 15, 2009 @ 10:22 pm

Credit is undoubtedly a powerful tool. In fact, it is in most cases vital to make some of the most significant purchases and investments you need and want to make in life, such as buying a car or a home. Using credit for your every-day purchases can also be beneficial, because you can hold on to more of your monthly cash flow and take advantage of “rewards” programs and other incentives credit card companies offer.

While the potential value of credit is indisputable, it can become a trap for the unwary. Overuse or misuse can have serious, long-term consequences. To assess whether you’re headed down a potentially dangerous path in your use of credit, it is helpful to consider your actual purchasing activity and the way you view that activity.

Your Activity

Regarding your actual purchasing activity, ask yourself whether any of the following describes your situation:

• You have no little or no savings
• You make minimum payments on your credit cards
• You have credit cards that are maxed out or close to maxed out
• You charge inexpensive items or necessities (such as food)
• You use cash advances
• You transfer old balances from one credit card to another to get better rates
• You don’t know how much your total debts really are
• You have been denied credit, or need a co-signor to get a loan
• You have made late payments, are past due on your bills, or have bounced checks
• You live paycheck to paycheck

Regarding your views about your purchasing behavior, consider whether:

• You hide things from your spouse or family about your spending habits
• You feel embarrassed talking frankly about your financial situation
• You charge things that you could not or would not buy if you had to use cash
• You believe it is appropriate to use credit cards to maintain a certain standard of living beyond your actual means
• You believe it is okay to just keep making minimum payments on credit cards, regardless of how long it will take to pay them off
• You are reluctant to open bills or return calls from creditors

If any of these factors describes your situation, chances are, you’re already struggling with serious debt problems related to your use of credit. At the least, you’re at risk of running into such problems with debt in the future. The good thing is, you have options. Consider contacting a bankruptcy attorney, who can evaluate your financial situation and explain these options to you.

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Published Monday, April 13, 2009 @ 12:28 pm

Life happens. If you’re like many of us, you’re going to encounter your share of financial ups and downs. You’re treading water, financially, making enough to get by but not enough to get ahead. And then, wham, something extraordinary happens to upset the financial balance in your life, and you find yourself rapidly piling up debt.

Maybe you had a run of bad luck at your job, didn’t get the bonus you were expecting, or maybe you didn’t get the tax refund you were counting on to ‘catch-up’. You end up using high interest credit or paycheck advance services to cover your current bills, hoping something will come along to make it up on the other end.

However, in today’s economy, many people like you don’t have something coming in at the other end. In fact, many folks find out that the money shuffle simply leaves them further and further behind, piling up debt on credit cards and at high-interest payday loan stores, in a cycle that seems impossible to break. You can feel your financial health slipping away, and there doesn’t seem to be anything you can do stop the skid.

You’re like most people when it comes to the term ‘bankruptcy’. It seems final, like a defeat, a loss, tossing in the towel. Many people would only consider going bankrupt as a last resort, after there’s nothing left. However, you may be surprised to learn how much a properly executed bankruptcy can give you in terms of a new start in your personal financial life. It’s a great chance to break the debt cycle and start clean, for you and your family.

With the advice of a good bankruptcy attorney, you’ll find that you can negotiate these troubled waters successfully and wipe your debt slate clean, leaving you ready to resume your life, provide for your family and prepare to start your next financial venture on a solid foundation.

Take a look at these simple examples and see if they happen in your life day to day. If they do, a professional bankruptcy attorney may be able to help you get that clean break you deserve, backed by the strength of our federal bankruptcy laws.

Do you:

• Live paycheck to paycheck?
• Have multiple credit cards?
• Move money around from account to account to cover debt?
• Pay only your minimum amount due?
• Pay debt out of savings since your earnings are exhausted?

If you can say yes to the statements above, or similar conditions, you may be a candidate for bankruptcy.

Bankruptcy remains a viable option. Discussing your situation with a qualified bankruptcy attorney will help you make that decision wisely and in a timely manner. Remember, you aren’t alone and bankruptcy law is there to help people in your situation get that fresh start that we all deserve.

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Published Monday, April 13, 2009 @ 7:02 am

We have all seen the loan offers in the mail, the banner ads online and even the commercials that air on late-night television. Even though we all scoff initially, knowing what’s in store if we call, your outlook changes quickly when the realization hits that you too are saddled with mounting debt.

But easy-to-get loans with high interest rates and hidden fees are not the solution to your debt problems. All too often, the opportunity to get that money so quickly, certain you will not be the one who gets snagged by the fine print, is sometimes too appealing an opportunity to pass up.

Predatory lending has become one of the most common contributors to America’s debt problems. By targeting individuals, like yourself, who are already beginning to feel that stomach pit grow in unison with the number of bills that land on the kitchen table every week, fast money lenders have been able to expand their presence substantially, popping up on corners across the country like common neighborhood diners.

But it’s not just the street corner franchises that are taking advantage of those seeking financial relief, it’s also our banks. Our trusted, professional financial institutions that help us with mortgages, checking accounts,CDs and small business loans. There was a time when a man in a suit with an outstretched hand and warm smile was a symbol of trust and goodwill. And while many, many banks remain filled with welcoming, customer-oriented financial experts, a stigma of mistrust has filtered into the banking industry. Unfortunately, some of it is well-deserved.

It is critical then, especially for those seeking relief from their financial challenges, that you avoid the hard money lenders at all costs. Watch for signs of predatory lending like unreasonable fees that can be worked into the monthly payment. Since they are broken up into small pieces and only add a few dollars per month on to your payment, they seem reasonable. Be careful though, because over the life of the loan, these fees can end up totaling more than 10% of the loan cost.

Prepayment penalties (yes, a penalty for paying early) can be substantial in a predatory lending situation. With a high-interest loan, you are always best served to pay as much as you can as often as you can. However, less than professional lenders will charge you a fee for doing so–yet another example of why getting a loan to pay off other loans is a bad idea.

If you see signs of or are given sales pitches for added products, like insurance plans, you can be fairly confident it is not a good alternative. The costs for these products will be gladly added on to your loan payment each month, further hampering your ability to pay it back.

Be extremely cautious of any loan that offers “mandatory arbitration.” This means that you are not allowed to seek court assistance to pay back the loan if your financial situation worsens. This can be a very complicated matter and will simply augment your stress and frustration.

The truth is, getting more debt to pay off debt is not the answer for anyone with serious financial concerns. The most beneficial remedy for relieving serious and chronic financial pain is to file bankruptcy. If you are at the point where payday lenders, car title loans and street corner financiers seem like your best solution, then it’s time to start fresh. Don’t repeat the cycle; seek real help, not more debt.

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