Published Wednesday, September 1, 2010 @ 10:07 am

In an era of meteoric unemployment rates, looming layoffs and job uncertainty, income can be a tough thing to talk about these days.

But for those men and women seeking the priceless protections of a bankruptcy—many for the same unfortunate economic reasons listed above—talking about income is at the very core of a successful bankruptcy filing.

Under current bankruptcy law, debtors just like you who are seeking bankruptcy must complete what is known as a Statement of Financial Affairs. On it, you are asked to disclose all earned income: from average employment pay to profits from the operation of a business. In addition, you must also share any income coming from other sources.

To clarify all of the sources that must be disclosed to the bankruptcy court, here’s what you should keep in mind when filling out your personal Statement of Financial Affairs to better assure an informed and effective bankruptcy:

Three Year’s Worth of Income
When considering a comprehensive disclosure for the purposes of your Statement of Financial Affairs, keep in mind you must reveal all income received during the year of your bankruptcy filing, as well as all income accrued two years prior to your bankruptcy filing. In this situation, if you were to file for bankruptcy this month (September 2010), in addition to providing income information for 2010, you would also need to share your earnings for the years of 2009 and 2008. In come can be proven by providing your tax returns, or what’s known as a profit and loss statement for those who are self-employed or own their own business.

The non-filing spouse’s income
If filing jointly with your spouse, both of your incomes will be included when determining your eligibility. If your spouse is not filing, you will probably need to provide some information about the non-filing spouse’s income. This is to make sure that your spouse’s contribution to the household, if any, is included in the total monthly income. If your spouse keeps his/her finances completely separate, it will be necessary to know exactly how much of the household expenses the spouse pays separately for items like mortgage payments, utilities, groceries, etc. Don’t let this easy requirement deter you. Even if you keep your finances completely separate, your attorney should be able to help you make a determination your spouse’s contribution.

Social Security and Child Support Payments
Income in the traditional sense isn’t the only “income” necessary for the purposes of the Statement of Financial Affairs. In addition, you must also include all income—even amounts that would normally be considered exempt for the purposes of your bankruptcy. For example, you must disclose Social Security and child support payments, as well as   any cash or income considered “under the table” for the purposes of traditional personal income. In short, all incoming money should be considered fair game when consulting with your attorney about your personal bankruptcy filing’s Statement of Financial Affairs.

As a result of the intricacies of a Chapter 7, 11, or 13 bankruptcy—especially in a case where there are multiple parties’ incomes at issue—it is essential to consult with a qualified bankruptcy attorney. Your bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests during the duration of your bankruptcy. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

Raleigh bankruptcy. Durham bankruptcy. Lumberton bankruptcy. Wilson bankruptcy. Fayetteville bankruptcy. Cary bankruptcy.

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Published Thursday, August 26, 2010 @ 11:54 am

So, like a very large number of Americans today, you think bankruptcy is your best route out of the financial doldrums.  After all the credit counselors, self-help books and Craigslist charlatans, it’s likely that you’ve grown tired of the debt cycle. We understand. That is what brings a lot of clients to our offices.

However, how do you go about filing bankruptcy? And furthermore, is an attorney really necessary? Well clearly, we believe our role in the process is essential to people getting the most benefit possible out of filing. But sure, that’s our job, and we do get paid for it. Nevertheless, it doesn’t mean we are not sincere in wanting to help. Truthfully, today’s Bankruptcy Code is a tough one to navigate alone. The financial industry—the people to whom, generally, you owe money—have gone to great lengths to plant the trail to financial freedom with booby traps of legal jargon and pitfalls of prickly requirements.

Is it legally mandated that you hire a bankruptcy attorney? Nope. Is it wise to have one at your side? Absolutely. Here’s why:

The Bankruptcy Abuse and Consumer Protection Act of 2005 changed the entire landscape of personal bankruptcy, instituting, among other things, the Means Test, a standardized way to determine if you have enough “means” to qualify for a Chapter 13 instead of a Chapter 7. The difference, on a general level, between the two being that in a 13 filing, you pay your creditors a set amount each month for five years until the debts are reasonably settled.

By lobbying for this section of the reform bill, companies who lend credit were able to get government backing for getting paid. It also gave them additional freedom to more aggressively market credit products because they knew that after the bill’s passage, more people would be legally obligated to keep paying them. Even though most credit card companies have potential losses to bankruptcy and default built into their business plans, the new law meant fewer people could “abuse” (in their eyes) the bankruptcy system by running by large bills and egregiously refusing to pay them.

As you can imagine, the Means Test carries with it a host of paperwork and processes. An experienced attorney can walk you through it, explaining what it all means and how it fits into the overall plan. And truthfully, the entire legal system—lawyers and judges—still have trouble figuring out aspects of the 2005 reform. It’s largely considered a poorly-written bill that was largely crafted by financial industry lobbyists and executives, not lawmakers.

Before 2005, it was “easier” to file on your own. But still not highly recommended.

There are, without question, bad lawyers out there. We know a lot of them. In many cases, a person would be better off going with a “free” street service than a bad attorney. Given our longevity in the industry, which can be easily proven and supported, we like to think we’re not like many of the “other guys.”

A good attorney is willing to listen first, as not all cases fit all firms. So ask for a few minutes on the phone and don’t feel pressured by a hard sell. Also, don’t let yourself get bounced around from one paralegal to another without progress. You will deal with them, sure, but after you have entered the process, if you begin to feel less important than when you originally called, maybe it’s time to move on.

We can name a number of reasons why using an attorney is the best way to experience a healthy bankruptcy. But in the end, that’s up to you to decide. Look at our Web site, ask around and make a few calls. We hope we can help.  If you decide that you’d like to know whether bankruptcy is the right choice for you, please give us a call to set up your free initial consultation at 1-800-899-1414.

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Published Tuesday, August 10, 2010 @ 9:53 am

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

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

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

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

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

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

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

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

The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, August 9, 2010 @ 2:00 pm

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

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

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

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

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

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

If you are considering filing for bankruptcy to strengthen your union, as well as your finances, knowing a qualified bankruptcy attorney can also help you make the right spending decisions, yielding the right kinds of support, information and insights—at a low cost— for a fiscally viable and secure portfolio.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, July 30, 2010 @ 8:42 pm

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

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

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

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

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

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

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Published Friday, July 30, 2010 @ 8:38 am

Given the popularity of channels like HGTV and all of those televised extreme home makeovers , it’s more than apparent that America is a nation full of  “do-it-yourselfers:” people drawn to the idea of going it alone in order to get it done right—their way, the first time.

As a result, it’s not surprising that in this self-supported culture there are so many services available online and offline that, for a fee, offer any DIY inclined consumer the opportunity to file their own bankruptcy. In fact, in these tough financial times, DIY bankruptcy petition “farms” are becoming increasingly popular for cash-strapped debtors who know that they need bankruptcy protections but don’t believe that they can afford an actual bankruptcy attorney.  Using these services could spell trouble for your self-perpetuated petition and your already beleaguered budget.  Here’s why:

Lack of Adequate Information
When you begin a DIY project for the first time like installing a light or fixing a leaky faucet or even building a home addition, it’s often helpful to have someone there to do more than just sell you the materials. A little instruction can go a long way in making the project a success. The same is true in bankruptcy. Unfortunately, many DIY bankruptcy mills advertise self-serve bankruptcy forms that a debtor may purchase with no instruction manual on how to fill in the forms, much less get the most out of their bankruptcy petition. In the end, mistakes in the bankruptcy forms and filings can cost already insolvent debtors more time and money, including problems with keeping creditors at bay in the future, and possible criminal action if you have omitted an asset or mis-categorized a transaction.

Not Taking Earned Exemptions
In addition to confusion about forms and filings, a lack of instruction can lead to debtors missing out on much needed bankruptcy exemption—often the difference between saving your precious property or losing it to a circling creditor. When dealing with a bankruptcy trustee or creditor claims, a bankruptcy attorney’s experience can be invaluable in determining which of your remaining assets are exempt from their ongoing demands and how to properly claim exemptions.

No Protections From Creditor Attacks
If you’re trying to save your home or car, your bankruptcy petition can be that much more important. However, debtors that go it alone for DIY petitions, face an uphill battle in enacting and enforcing automatic stay protections that help end creditor harassment, foreclosures and repossessions. In the alternative, a personal  bankruptcy filing that is accurately filed as Chapter 7 or Chapter 13, and closely monitored by an experienced bankruptcy attorney can quickly and easily save real and personal property that would otherwise be at the mercy of a trustee anxious to pay off debt and creditors anxious to reclaim what they claim to be theirs.

As a result of the intricacies and nuances of a modern bankruptcy filing, it is essential to consult with a qualified attorney. In most cases, the up front fee for filing is minimal, as little as $338.00. Why go through the headache of doing this on your own? A qualified bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests during the duration of your personal bankruptcy experience. 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 Wednesday, July 14, 2010 @ 5:12 pm

For many people, divorce can cause a huge financial strain in already tough economic times. In others cases, it’s the crushing weight of debt that leads to the dissolution of a marriage.  Whatever the ultimate cause, and effects, when considering bankruptcy amid a divorce it’s important to know a few basics.

Divorce Decrees and Bankruptcies
Because your bankruptcy only includes debts in existence at the time of your bankruptcy filing, a subsequent divorce decree (i.e., a divorce decree following the date of your bankruptcy petition) remains intact and won’t be included in the debt dispensed by your bankruptcy. While few attorneys would urge you to continue in a bad relationship for money, some good advice might be to time your bankruptcy filing so that it follows (and includes) the divorce decree or separation agreement.  Keep in mind that only Chapter 13 bankruptcy discharges debts and equitable distribution obligations, as long as they are not considered alimony or child support or in lieu of either kind of domestic support.  Sometimes, obligations to pay the other spouse’s attorney fees related to the separation or divorce might sometimes be considered domestic support obligations and therefore non-dischargeable. 

All obligations under a separation agreement remain intact and enforceable after a Chapter 7 bankruptcy, as Chapter 7 does not afford the debtor a discharge of any separation or divorce-related obligations.

Preparing for Property Divisions
When a divorce court awards you property or other assets, it remains your property even if your ex-spouse files for bankruptcy. However, in a case where the divorce court orders property transferred to you but your ex does not follow through with the transfer prior to his or her bankruptcy, your ex may be able to evade that debt through bankruptcy. As a result, timing is of the essence and incredibly important to keep in mind—especially if you are considering divorce at the same time your spouse is considering bankruptcy.

180-Day Rule
Short and sweet: if you are entitled to a part of the property divided between you and your ex-spouse, within 180-days of your bankruptcy, you may be forced to forfeit it to the bankruptcy trustee.

Bankruptcy Courts Trump Divorce Court Considerations
A bankruptcy court looks at your actual financial situation and makes determinations about your ability to discharge any and all of your debt.  As a result, obligations that may be deemed non-dischargeable debt by a state court or your spouse (or even you) are not necessarily binding in your bankruptcy result.  Ultimately, the bankruptcy judge will decide who owes what and when post-bankruptcy.  As mentioned before, Chapter 13 discharges most non-domestic support obligations that are part of a separation agreement or divorce order.  A Chapter 7 will not discharge any obligations incurred as part of the separation or divorce.

Spousal Support Remains Exempt Even When Property Does Not
As mentioned, if you’re in the midst of a divorce and are awarded property in the divisions, it is possible that some of the property you are entitled to receive won’t be exempted when creditors come calling following your bankruptcy.   A good bankruptcy attorney will help you with exemption planning – finding legal ways to protect your property with available state law or federal exemptions.  Conversely, if you’re entitled to spousal support when you file, most, and possibly all of that cash, is off-limits to creditors clamoring to take what they can get in your insolvency.

When considering the balance of divorce and bankruptcy, it is essential to let good timing, and better temperament, prevail. If debt does you part, remember to plan ahead and reduce tensions between you and your soon-to-be-ex-spouse; work toward a settlement that is in both of your best interests, including those of the bankrupt party; and explore your financial obligations now—to avoid complicating your divorce with arguments over child and spousal support, insurance, retirement accounts and attorney’s fees.

Most importantly, if you have been affected by the financial downturn, are facing a divorce or separation and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors, the costs of your marriage dissolution and face any other financial fears, yielding the right kinds of support, information and insights—at a low cost. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, June 21, 2010 @ 2:30 pm

While those that analyze esoteric financial trends and market conditions seem to think that the recession is easing, a large portion of the country aren’t so quick to agree. With foreclosures still prevalent and personal bankruptcies at a level close to that of 2005’s pre-code change flood, there are plenty of reasons for Americans to still be on edge about their finances.

A recent survey by the Associated Press and its polling partner Gfk indicated that 46 percent of families are still not confident in the status of their economic situation.

The sense of financial stability in the country can be compared to the local weather forecast. With the heat and humidity here in North Carolina, an actual temperature of 90 degrees could actually feel like 96. The “real feel” temperature they call it. And in the end, isn’t that the only thing that matters? After all, the numbers are subjective, just like economic stats. If a person doesn’t have a job and is on the verge of bankruptcy, what difference does a spike in the consumer confidence index make? In fact, what the heck is a consumer confidence index? Who comes up with this stuff?

What is clear is that the job market still stinks. Compounding the job issue is the foreclosure epidemic. The two factors are tightly bound to one another. And the statistics in the housing market are just about as confusing and erratic. New home starts are up but sales are down. Agents keep talking about how great a market it is to buy but fail to mention how difficult it is to secure a mortgage. Man, lots of conflicting information about there, huh?

Ultimately, polls like the one conducted by AP-Gfk are as equally nonsensical. A person’s outlook on the economy is completely independent of the condition of the country as a whole. There are many people who have found a way to succeed in this economy and are making more money than they ever have. Therefore, a poll is going to find them fairly confident about their odds of avoiding bankruptcy and the economy in general. Heck, pretty much anyone who has a job right now is going to respond positively.

There are some benefits to the ongoing fear of the country’s economic status: more people are remaining aware of the pitfalls of long-term debt. Penny-pinching is becoming chic and credit cards are no longer yanked out of wallets like a six-gun sidearm.

Nevertheless, people are still pretty worried about what’s going on out there. If you’re having trouble keeping your head above these troubled economic waters, talk to a bankruptcy attorney today. A Chapter 7 bankruptcy will help you eliminate all of your unsecured debt, freeing up your money for more important things. A qualified bankruptcy attorney can also discuss whether a Chapter 13 bankruptcy might be a better option. A Chapter 13 can help you get caught up on your house and car, and keep you out of foreclosure. In North Carolina, John T. Orcutt has the experience you need to get a fresh start. Call 1-800-899-1414 today to set up your free initial consultation, or visit www.billsbills.com to fill out our debt questionnaire. Don’t wait another day.

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

There was very important bill passed this week in Washington.

No, not that one.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Friday, February 26, 2010 @ 4:19 pm

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

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

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

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

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

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

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

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

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

And Then There’s Bankruptcy
If your credit score is going to suffer anyway, why not create a completely clean slate? As a hurting homeowner, knowing a qualified bankruptcy attorney can also help you face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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

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

Exceptions to the power of a bankruptcy discharge, include:

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

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

For example, in a 2009 bankruptcy filing:

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

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

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

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

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

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

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Published Sunday, February 7, 2010 @ 7:43 am

Facing foreclosure.

Escalating medical costs.

High interest credit crunch.

Rising unemployment.

And that’s just January 2010.

While times are admittedly tough for everyone—with the poor getting poorer and even the recently rich and famous falling on hard times—a truly unique phenomenon of the recent global recession and continual economic downturn is how catastrophic it’s been for our country’s middle class, driving many in the majority further and “further from the American Dream” and, in some cases, “directly into poverty.”

As The Huffington Post reported this week in Laura Bassett’s insightful article “Middle Class No More, Families Struggle to Fight off Homelessness,” those in power are not blind to the desperate bind of average Americans: “President Obama, in his remarks to Senate Democrats on [February 3], pointed out that the middle class was hurting even before the recession. ‘Part of the reason people are feeling anxious right now, it’s not just because of this current crisis — they’ve been going through this for 10 years. They’ve been working and not seeing a raise. Their costs have been going up, their spouses going to the workforce — they work as hard as they can. They’re barely keeping their heads above water. They’re trying to figure out how to retire. They’re seeing more and more of their costs on health care dumped in their lap. College tuition skyrockets….They are more and more vulnerable, and they have been for the last decade, treading water.’”

As part of Huff Post’s Bearing Witness 2.0 project, the online aggregator has culled a host of local stories of formerly middle-class folks who are now “struggling to stay afloat.” If you or someone you know is similarly situated, you’re encouraged to e-mail your story.

One such troubling tale is that of construction worker Troy Renault who, along with his wife and five children, has been forced from their 1900 square foot home in Lebanon, Tennesse into a donated 215 square foot trailer nestled in a local campgrounds. The cause of their “slide into homelessness?” Renault lost his job two years ago and the family was forced to make difficult choices. As Renault told Mike Osborne for Voice of America News, “You wind up starting to think to yourself, ‘Okay. Do we go ahead and make the house payment and keep a roof over our head but have no lights and no water, or do you go ahead and keep those utilities on and forego the house payment, and hope that you can get it caught up?’ And it just kept going where it got further and further behind until we wound up losing the home.” Osborne writes: “Tammy Renault says her family is getting a crash course in what it means, socially, to be labeled homeless. ‘It’s being called names. It’s being ridiculed. It’s running into people that have seen you in your highest and are not even speaking to you anymore because they’re too afraid for where you are and don’t know what to say.’

Stories like the Renault’s are made more difficult with the onset of winter, as many former middle class citizens, and now, newly disenfranchised, are forced to make decisions of life or death.  As Steve Neavling reports in the Detroit Free Press, Michigan area middle classers can barely afford heating bills that would keep their families warm in another brutal Midwest winter. “Unemployed and unable to find work, 42-year-old Jim Lowe received a shutoff notice at his home last week and says he’s unable to pay the $174 that’s overdue. ‘It’s definitely a wake-up call,’ Lowe told Neavling. ‘We’re three months behind on all of our bills. I just pray this gets better soon.’ State and local agencies estimate an unprecedented 150,000 metro Detroiters are at risk of having their heat shut off if they don’t receive help paying their bills. The number of people seeking state assistance so far this winter jumped 30% over last year at this time, according to the state Department of Human Services.”

And yet while unemployment, arrears in a mortgage, and other unexpected challenges for members of the middle class may be life-altering, they need not be life-threatening. Bankruptcy provides, in the form of Chapter 13 and Chapter 7,  an undeniable array of options for those with mounting debt and facing foreclosure.

The key is knowing who can help. A qualified bankruptcy attorney can assist proud, but struggling, citizens to conquer their fears of losing it all.  Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button. We’re here to help.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sounds simple right?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published 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 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 @ 9:30 am

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

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

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

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

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

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Published Thursday, January 7, 2010 @ 12:27 pm

Are you putting off declaring bankruptcy because you’re afraid you’ll never be able to rent an apartment again? Have you heard horror stories from friends or relatives about how they got turned down for a rental because of their bad credit? Relax. Having a bankruptcy on your credit report won’t prevent you from finding a great place to live.

It’s true that some places – particularly apartment complexes – do check your credit, and do accept or deny your application based on the results. If you have your heart set on living in a place like this, do yourself a favor: call them up beforehand, and ask what their requirements are. Be specific. Ask if they refuse to rent to anyone with a bankruptcy on their record. Find out your credit scores in advance, and ask the apartment manager if your scores sound like they’re in the right range. If not, you’ve just saved yourself the $40-50 application fee. If the manager says, “well, they’re a little low,” offer to bring documentation showing your reliability: pay stubs from work, bank statements, savings accounts, rental history, letters of recommendation. Some apartment complexes will rent to people with lower credit for an additional deposit.

Remember, too, not every apartment owner will check credit. Many individual owners don’t do a credit check. Even those who do are likely to listen to your story about what happened, and why you declared bankruptcy. Be brief but honest; most importantly, explain how your situation has changed. Make sure they understand that the bankruptcy means you owe less (or no) money now, and are therefore better placed to make the rental payments. Again, bring documents to support your story. You can also point out that since a person can’t declare bankruptcy for another seven years, you are actually, in some ways, a better risk than someone who hasn’t declared bankruptcy – if you stop making payments, they could take you to court and you wouldn’t be able to discharge those debts. Be careful with this argument though: although it’s both true and valid, some landlords might consider the fact that you’re bringing up the possibility of not paying rent as a bad sign.

Another suggestion is to look for places to rent that are less strict. Some rentals will advertise: no credit check required. Check out apartments that are offering specials: one month free if you rent by June 1st, for example, or no deposit required. Generally, this indicates a place with low occupancy, and owners who can’t afford to be quite as picky.

Finally, once you get established in a new apartment, do everything you can to maintain the path to financial stability you started by declaring bankruptcy. Take steps to rebuild your credit. Begin to establish a nest egg so that you have some savings in case of emergencies. Most importantly, pay your rent on time every month. If you need to rent another place in the future, having a solid record of making monthly payments could be invaluable.

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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 19, 2009 @ 10:10 am

Back in 2005, credit card companies were convinced – or at least tried hard to convince everyone else – that there was a bankruptcy crisis in the United States. Bankruptcy rates had doubled since 1980, they pointed out. ‘Shopaholics’ were charging everything under the sun and then declaring bankruptcy, forcing the credit card companies to eat their debt. They then had no choice but to pass these expenses on to consumers in the form of higher fees and interest rates.

In 2005, the major banks spent tens of millions of dollars lobbying Congress to make it harder for consumers to declare bankruptcy. Despite protests from lawyers, judges and law professors working in the system, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. Insiders pointed out that the law was essentially written by the credit card companies; a single law professor and four credit industry lobbyists actually wrote the legislation.

Nearly everyone agrees that the laws made filing for bankruptcy more burdensome for debtors. Perhaps the most pernicious element, and the one the credit card companies fought hardest for, is the means test. The means test looks at your prior six months of income to determine whether you qualify for Chapter 7 bankruptcy. If your income is too high, you may need to increase certain expenses which qualify as deductions (much like tax deductions). If your income is still too high, you may need to file for Chapter 13 bankruptcy, which offers the same relief as a Chapter 7, but requires a payment plan. The Chapter 13 payment plan can last anywhere from 15 months to 5 years, depending on your particular jurisdiction.

A boon for the credit card companies and consumers who pay their debts, right? Well, certainly the credit card companies did well for a while– their profits rose thirty percent between 2005 and 2007. However, the decline in interest rates and fees they promised would accompany this never happened – in fact, interest rates and fees increased over this period. Things got so bad that Congress finally passed another bill last May, this one regulating industry practices: they set limits on credit card fees and interest rates and will require lenders to be transparent in their communications, starting in July of 2010.

More importantly, recent studies suggest that the new bankruptcy law may have contributed to the rise in foreclosures – costing the banks billions of dollars – and to the housing crisis in general. Now that many consumers mistakenly believed that bankruptcy was not an option, in many cases they simply walked away from their homes instead of declaring bankruptcy and continuing to make their mortgage payments. Feeling that they couldn’t make both their mortgage and credit card payments, they may have opted to make neither. As foreclosure rates rose, slumping housing prices feel even further. Neighborhoods with a number of foreclosures went into deep decline. Banks lost money, the country slid into recession.

Does this mean that the bankruptcy law caused all of this? No, of course not. Many factors contributed to the recession, included the derivatives trading on Wall Street, the government trying to finance two wars without raising taxes, etc. However, it is clear that the idea that banks would pass on savings to consumers was unrealistic. It’s also clear that removing consumer options resulted in financial decisions that ultimately hurt the banks as well as consumers. (Other studies argue that stringent bankruptcy laws discourage risk and entrepreneurship; it’s no accident that many countries in the EU are loosening their bankruptcy laws during this recession.) The obvious conclusion is that Congress, and not the banks, should write laws. And that they should listen to the experts – in this case, the lawyers and judges involved in bankruptcy proceedings – instead of lobbyists with an agenda.

The good thing is that, in many jurisdictions, judges have construed the new law in favor of debtors. The means test is not bullet proof, and Chapter 7 is still a viable option for most consumers. And with the rising tide of delinquent mortgages, Chapter 13 bankruptcy remains the best way to save your family’s home. Contact a bankruptcy attorney today and get the truth about bankruptcy. And visit http://www.billsbills.com/truth_bankruptcy_book.php for more of the truth.

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Published Friday, December 18, 2009 @ 7:21 pm

Last Friday, the House of Representatives passed a wide-reaching swath of financial reforms, designed to reign in the worse excesses of the banking industry. Democratic lawmakers are hailing the bill as a huge victory for consumers. However, one important provision failed to pass: cramdown.

‘Cramdown’ would allow bankruptcy judges to reduce the principle balance of the mortgage on a primary residence in a Chapter 13 bankruptcy, resulting in lower monthly payments for the filer. It’s important to note that bankruptcy judges are already allowed to practice cramdown for a variety of debt, including boats, cars, vacation homes and family farms. In fact, prior to changes in the bankruptcy laws in 1978, they were able to cramdown residential mortgages as well.

Support for cramdown began gaining strength last spring, when the drop in housing prices caused a rise in foreclosures and a spike of people ‘under water’ in their homes. As the recession got worse, more people became vulnerable. Many Democratic lawmakers argued that cramdown was a necessary provision that would allow more people to stay in their homes. The banking industry countered that it would raise costs for everyone and divert capital from the mortgage market at a time when it desperately needed more, not less funds. Observers pointed out that banker’s fears were unrealistic; banks already eat the loss in a foreclosure, so how would this law upset the whole system?

Meanwhile, the Obama industry introduced housing reforms, notably the Making Houses Affordable, a program designed to encourage mortgage companies to voluntarily modify loans and keep people in their homes. While the program does offer some financial incentives, industry observers note that mortgage companies make far more money from the fees involved when a homeowner goes foreclosure.

In April, the House passed cramdown, but it stalled – badly – in the Senate. Twelve Democrats joined with every Republican to defeat it.

This fall, nearly everyone agrees that the MHA program has been a failure. Far fewer loans have been modified than the administration hoped; foreclosure rates continue to rise across the country. It’s hard not to see the lack of cramdown as a pertinent factor. Cramdown would offer the homeowner some leverage. If mortgage companies refused to modify loans, the homeowner could have filed bankruptcy and the decision to modify or not would have rested with an independent party, the judge. As it is, judges are unable to modify the loans, which leaves the entire decision in the hands of the mortgage company.

That’s why Democrats in the House included cramdown again, in the package of regulatory reforms they voted on last Friday. However, this time – under some pressure from small banks and credit unions – the measure failed to pass even the House.

What’s the future for cramdown? It doesn’t look good. Without some radical change somewhere, it doesn’t look like cramdown will even come up for a vote again. This is too bad; this provision would not only be very helpful to many individual homeowners, it has the potential to send ripples through the housing market as well.

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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 Tuesday, December 1, 2009 @ 7:35 am

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

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

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

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

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

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

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

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

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Published Sunday, November 29, 2009 @ 2:48 pm

Americans young and old, hit hard by the recent economic meltdown, are turning to any available income, accounts, or other resources to pay down today’s mounting mortgage debt, crushing credit card rates and high health care costs. One such resource—liquidating a registered retirement account like a 401(k)—might appear to be a quick and easy fix to pay down looming expenses or even to avoid filing for bankruptcy.

In reality however, it’s better to “stay away” from 401(k)s, leaving these and other retirement accounts untouched and intact in times of financial distress—even for those bankruptcy bound.

Why, you ask?

Retirement Accounts Like Your 401(k) Are Exempt From Bankruptcy
First and foremost, it’s important to understand that your 401k is safe—even in bankruptcy. Assuming your registered retirement accounts, such as IRAs, 401(k)s, and pension plans, have not been used to secure loans, they’re considered protected assets. And recent amendments to the Bankruptcy Code have made these exemptions available in all states. In the alternative, cashing out a 401(k) automatically means losing your hard-earned savings, higher taxes, and potential delays in any bankruptcy filing.

Cashing Out a 401(k) Means Paying [More] Out In the Long Run
Using retirement savings to pay creditors can create new debt in the form of income taxes and early withdrawal penalties. In fact, considerably higher taxes are the norm if you cash in valuable retirement assets like your 401(k). This heavily taxed income also cannot be discharged in bankruptcy for years and may prevent other qualifying deductions. As a result, this expensive option creates even more economic troubles for families struggling with already weighty debts and considering the benefits of bankruptcy.

401(k) Liquidation May Provide a Substantial Burden to a Productive Bankruptcy
In terms of burdening your bankruptcy proceedings, liquidating your 401k to pay creditors could mean significant delays in productive bankruptcy results. Any cashed out 401(k) funds will be counted as income and considered when evaluating your economic status pending bankruptcy. Therefore, any withdrawals from 401(k)s should be disclosed to your bankruptcy attorney immediately.

401(k)s Fund Your Future
Just as bankruptcy provides a much-needed stopping point for those drowning in debt, maintaining registered retirement accounts, such as IRAs, 401(k)s, and pension plans—even in tough times—provides a comparable and essential starting point for your family’s viable financial future.

So, before you consider liquidating any retirement accounts, such as IRAs, 401(k)s, and pension plans, talk to the skilled bankruptcy attorneys at The Law Offices of John T. Orcutt.

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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 Sunday, November 15, 2009 @ 12:37 pm

Are you a married couple, but only one of you earns income and holds assets? Or maybe only one of you has acquired debt during your marriage? If you’re married and considering a bankruptcy, you might be wondering whether you and your spouse both have to file bankruptcy.

The answer: while you and your spouse do not both have to file bankruptcy, usually, if a bankruptcy is necessary for one spouse, both spouses will end up filing.

If, for instance, both you and your spouse are liable for a debt and only one of you files under Chapter 7, the creditor may later attempt to collect the debt from the non-filing spouse, even if he or she has no income or assets! In other words, the creditor will simply demand payment for the entire debt from the spouse who didn’t file. So in this case it makes sense for you both to file.

If, however, only one of you has incurred debt during your marriage, only the spouse with the debt needs to file bankruptcy. In states like North Carolina, which is not a “community” property” state, even if you are married—if you did not sign for the debt, you do not owe the debt, and you do not necessarily need to file bankruptcy.

What if you just got married and most of the debt belongs to just one of you? As long as you didn’t sign for your spouse’s premarital debt, only the spouse with the debt has to file bankruptcy.

And what about a Chapter 13? If you both qualify for a Chapter 13 and if you are both liable for any significant debts then you should file jointly under Chapter 13, even if only one of you has income!

Whether you’re considering Chapter 7 or Chapter 13—if you’re married and considering bankruptcy then both of you should consult with one of the attorneys at the Law Offices of John T. Orcutt to ensure that both of your best interests are carried out. Visit us at www.billsbills.com or call us at 1-800-899-1414.

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Published Friday, October 30, 2009 @ 6:15 am

Making it harder for overburdened debtors to file bankruptcy in the middle of our biggest financial crisis in living memory may not be the best policy idea to come down the beltway, but it is exactly what Congress set in motion in 2005. Here is why:

If you have been looking into filing bankruptcy, then you have heard about the ‘Means Test’. The Means Test was created by Congress to determine eligibility for consumer bankruptcy in 2005 when it reformed the Bankruptcy Law. The idea was that a debtor should only get as much bankruptcy relief as he or she really needed. So Congress developed a formula to determine which bankruptcy filers would qualify for Chapter 7, which offers an immediate discharge of debt, and who should file Chapter 13, which requires a lengthier payment plan.

Along with its creation of the means test in 2005, Congress provided for automatic updates of state median incomes, upon which the means test is based. The state median income figures are periodically updated by the U.S. Census and the Executive Office for U.S. Trustees (EOUST) publishes a table that is used in the bankruptcy courts.

As more workers lose their jobs, the median income, unsurprising, can drop as well. If the median income figures for a state drops, it lowers the bar for debtors who will be subjected to the means test and the possibility of being denied help in Chapter 7 bankruptcy. In North Carolina, the unemployment rate rose to 10.8% according to the US Dept of Labor figures reported for August 2009. Similarly, the post-November 1 EOUST table, cites the median annual income in North Carolina for a family of three fell by several thousand dollars. The irony is that even though the number of people needing bankruptcy has risen, the means test makes it more difficult for them to qualify for Chapter 7.

None of this news should discourage you from seeking bankruptcy relief. Even if you are one of the small percentage of people who don’t qualify for a Chapter 7 bankruptcy, Chapter 13 has essentially the same effect of a Chapter 7- a discharge of your unsecured debt. Additionally, some means test deductions which are not available in a Chapter 7 are available as disposable monthly income deductions in Chapter 13. The Chapter 13 disposable monthly income test measures how much disposable monthly income you must devote to your Chapter 13 payment plan. Even if you are deemed to have substantial disposable monthly income, some pre-petition planning will help bring the number down. As always, talk to an experienced bankruptcy about your options, you’ll be amazed at how beneficial a a properly planned bankruptcy can be.

In North Carolina, contact the Law Offices of John T. Orcutt. Call 1-800-899-1414 for a free initial debt consultation. Or visit www.billsbills.com to fill out a free and confidential debt questionnaire.

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Published Sunday, October 25, 2009 @ 11:26 pm

In the past 24 months, the American suburban landscape has been ravaged by personal bankruptcies. Expanded credit limits, inflated home prices and a false sense of security in everything material contributed to one of the worst financial landslides since the 1930s. Needless for some to say, a lot can be learned from the way so many of us treated our credit reports in the last few years.

To that end, the Institute for Financial Literacy (IFL) recently shared their thoughts on what our society can take from the thousands of bankruptcy petitions filed in 2008.Surprising the IFL was that this time around, people in higher education brackets were greatly affected by the downturn, as were those in higher income brackets. Self employed individuals have also taken a disproportionate hit. Thus, many are starting to deem this a “middle-class” recession.

From a demographic perspective, more white people have filed for bankruptcy than blacks, as have more people of Asian descent. The most alarming metric occurred in the Asian population, as their rate of filing increased by an entire percentage point within one year. Given their presence within the entire U.S. population, one percent is considered a significant jump. One theory states that the Asian increase may be related to the number of small business owners hit particularly hard by this recession.

An interesting trend arose relative to home ownership. It seems that the desire to keep the family own in lieu of financial stability proved that having a house in America has become a seriously emotional issue. People have been pushed into believing that owning a home is the best sign of one’s financial wherewithal. In turn, it has created an unreasonable connection to a material asset that is now more unaffordable than ever.

The IFL made a note about the role a dependable bankruptcy attorney can have in separating a client from the material mindset, showing them that in the long run, sometimes the loss of an asset can be beneficial. Sure, the family home holds great intrinsic value. However, is it really worth the tight budget it requires? Are you cutting back on the necessities such as food and medical, just so you can hold on to a home you can’t afford?

The report also discusses the hazards of those trying to file on their own, given that one can only file for bankruptcy once every eight years. If things do not go right the first time, a person can face a very long-term financial struggle until they are eligible to file again.

It seems that almost any discussion about bankruptcy today involves the 2005 legal reform and the means test it spawned. Creditors are simply not seeing the return from that effort, given the personal credit bedlam that this current economic maelstrom has washed ashore. Unemployment numbers of this magnitude could not have been predicted. It’s not like the majority of those filing bankruptcy are choosing to not pay what they owe–with unemployment remaining near 10%, paying the bills is simply not possible.

The IFL also used their findings to reveal a few misconceptions about bankruptcy. Specifically, many people believe it is grounds for termination from your job. Even though credit reports are reviewed in some job application processes, the federal bankruptcy code prohibits employment discrimination based on a bankruptcy filing Also, the stigmas that those who file are “irresponsible” people is relaxing. These are difficult times and people from walks of life are being impacted.

Bankruptcy is a real option for many people. If you’re facing financial difficulty, don’t think of it as a last resort. A properly planned bankruptcy can help you keep the family home or car, and can get rid of all of your credit report. There’s not a better time- call today. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. Or visit www.billsbills.com to take our free debt questionnaire.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

You tell us who’s winning the credit wars.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published 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 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, August 7, 2009 @ 8:44 am

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

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

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

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

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

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

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

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

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Published 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 Monday, July 13, 2009 @ 1:05 pm

Sometimes debt collection can have a humorous side. Usually, it shows itself when the collection is happening to someone else. Schadenfreude aside, here are some collection agent slip-ups that AOL gathered from a number of their users. See if you can’t relate to some of their situations.

• A family who runs a retail business was disputing an invoice that showed they owed double their original order for supplies. Turns out, a sales rep had inadvertently doubled their order. The timing was terrible, as the rep soon after left on maternity leave and the company stated only she could repair the mistake. Regardless, the company sent the bill to collections while the family had thought it was being held for later reconciliation. When a collections agent reached the family’s seven-year-old daughter, the agent told her, in no uncertain terms, …”Because of your daddy, you are not going to be able to live in your house anymore, or have Thanksgiving with your family.” Nice.
• Collections activity was started on a couple whose car payment was only 10 days past due. When the family couldn’t be reached, the agency repeatedly called their daughter in-law, leaving messages with her to call about the late car payment.
• This is a good one relative to credit reports: One AOL user had a credit score of 750. When his wife entered graduate school, their debt to credit ratio increased. Once they reached about 45% after her graduation (when you can begin reducing it), American Express dissolved their $25,000 credit line, which had a zero balance. Thus, their percentage of credit to debt jumped to 60%, thus lowering their credit score substantially. Other creditors soon fell in line and their score dropped yet again.
• Another AOL customer received a phone call about a credit card bill that was delinquent 15 years ago for $300. At that time, the credit card company charged it off, citing it would be a mark on her credit. She accepted that. Well more than a decade later, they’re back, asking for $600 or it will be back on her credit report.
• Beware of “official documents.” One user included a story about a collections company that sent paperwork meant to look as if it was coming from an official city court office. Upon smartly following-up, she learned the court knew nothing of the action against her and had no record of her for anything.
• Here’s one surely driven by the commission structure collection agencies offer their employees for what they collect over the phone: When a woman was late with a credit card payment by more than a month, she admitted her mistake to the phone representative, saying she would hang up and pay it online immediately. The rep responded harshly, saying it could only be paid over the phone. Politely disagreeing, woman proceeded with paying online. This did not sit well with the phone rep, who promptly assigned the woman’s phone number to the collector’s auto-dial system which called every 15 minutes for the next two days.
• This sounds like a Hitchcock tale. When a woman’s ex-husband’s insurance company was slow to pay some medical claims, a collections agency began harassing her because they could not find her husband. Despite not seeing him in eight years, they began to wait outside her house to serve him with papers. One day, while roofing her house, she spotted someone behind a hedgerow with binoculars. The police had no problem putting a stop to the situation.

Do you have any stories like this? Speak with a bankruptcy attorney today. Bankruptcy can stop the collection calls and you may be entitled to damages for harassing creditor conduct.

In North Carolina, call the Law Offices of John T. Orcutt to set up your free initial debt consultation and find out for yourself how to stop the creditors for good. 1-800-899-1414.

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

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

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

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

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

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

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

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

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

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Published Friday, July 10, 2009 @ 8:10 am

While details of super-sized corporate failures, like GM and Chrysler, are being splashed across front pages of newspapers and websites, grabbing our attention and garnering an inordinate amount of debate, the reality is that the vast majority of commercial bankruptcies are filed by entrepreneurs and small-business owners. The first five months of this year have shown a 52% increase in the total number of commercial bankruptcy filings. On average, during the first six months of 2009, some 350 commercial enterprises file for bankruptcy daily — an increase of 240% from 2006, the first year after the bankruptcy law was changed.

Today’s economic landscape has proven to be especially toxic to small business owners. Factors such as higher gas prices, lower consumer discretionary spending, and the credit squeeze have all put a strain on small businesses. Ironically, the bankruptcies of the very large companies can also contribute to the pain. “When you have the GMs of the world filing for bankruptcy, they are canceling contracts and discharging debts that they owe to their suppliers,” says B. William Ginsler, a bankruptcy lawyer in Portland, Ore. “And those are small businesses that are less solvent than larger corporations.”

The decline of the transportation industry, which includes the auto and airline businesses, has been the biggest trigger in small-business bankruptcy filings, according to new data from an Equifax bankruptcy study. Downturns in the construction, manufacturing and retail industries are also contributing to the increase in filings.

These days, small businesses are working harder than ever to stay viable. But more and more are finding that the economy is an obstacle too onerous to overcome. Many small businesses owe so much money to creditors that there is no future. Bankruptcy is still the only option for many small-business owners who are hanging by a thread.

Bankruptcy doesn’t always necessarily mean that the company must stop operating. In many cases, the business may continue or be sold as a going concern after a Chapter 11 filing. Larger bankrupt companies, such as Six Flags, use Chapter 11 of the Bankruptcy Code to “reorganize” its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court. But bankruptcy reorganization under Chapter 11 requires significant time on the part of the owners and managers, and expert legal counsel.

Other small business owners may choose to file for Chapter 7 bankruptcy and shut their businesses for good. Under Chapter 7, a trustee is appointed to “liquidate” (sell) the company’s assets and the money is used to pay off the debt, which may include debts to creditors and investors. Often, a small business owner’s personal finances are so intertwined with those of the business that he would be left open to personal liability under Chapter 7. In fact, in most small business cases, the owner has personally guaranteed most of the business debt. In these cases, it makes more sense to shut the business down and file for personal bankruptcy under Chapter 7 or Chapter 13.

If you are concerned about your business in these tough economic times, it’s time to speak to a bankruptcy attorney. In North Carolina, contact the Law Offices of John T. Orcutt. Call 1-800-899-1414 today.

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

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

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

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

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

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

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

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

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

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Published 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 Tuesday, June 30, 2009 @ 4:45 pm

In an ironic twist of fate, a company’s whose claim to fame was helping people “avoid bankruptcy” has invoked bankruptcy protection itself. Debt Relief USA, a credit counseling agency based in Texas, filed Chapter 11 bankruptcy on June 18th. And it shut down all operations. According to its bankruptcy petition, DRU is currently saddled with $5 million in debt and has only $4.65 million in assets. At the same time, the company’s business practices are under investigation by state and federal authorities.

On June 24th, the bankruptcy court converted DRU’s filing to a Chapter 7 case. In other words, the company will be liquidated. Numerous clients who had hired DRU to assist them in resolving their debt problems still have money tied up in the company. DRU’s website simply says clients will receive “information” by mail about their cases. DRU’s attorney has stated the company intends to refund client deposits, subject to the bankruptcy court’s approval.

Unfortunately, getting their money back is just the start of the trouble for the clients that DRU’s bankruptcy has left hanging out to dry. They hired DRU to take of a problem, a serious problem: resolving their unmanageable debts. That won’t happen now. What’s worse, while these desperate folks were waiting around for some results, their financial condition could have only gotten worse: debts would have just kept piling up and creditors would have just continued collection efforts – only deepening their sense of despair.

The unfortunate fate of the displaced DRU clients is a prime example of the trouble with relying upon credit counseling agencies to resolve debt problems. These agencies promise to cut a deal with your creditors. But the industry is rampant with fraudulent, fly-by-the-night operations, who do nothing but take a hefty fee and then disappear. DRU itself is under investigation for questionable practices. And, even if you find a legitimate counseling agency, there’s no guarantee you’ll see any real results.

The counseling agencies may be more schooled in negotiating with creditors, but, at the end of the day, they have no more power than you do: your creditors 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. You also need to keep in mind that even if the agency is able to convince your creditors to forgive some or all of the debt, that may be not be the end of the story: forgiven debt is generally considered taxable income.

Ultimately, bankruptcy is the only sure-fire solution to resolving unmanageable debts. Filing bankruptcy forces creditors to stop collection activities, immediately. And, you can wipe out most or all of your unmanageable debts, for good – without worrying about potential tax liability. So, if you’re buried in 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. 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 Monday, June 29, 2009 @ 7:04 am

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Sunday, June 21, 2009 @ 9:35 pm

Bernie Kosar is a household name, known for his star football career during the 1980s and 1990s. Kosar quarterbacked for the University of Miami and led the team to its first national championship in 1984. After college, Kosar jumped right into the NFL and played as a successful quarterback for the next 12 seasons. Kosar spent most of those years with the Cleveland Browns, from 1985 to 1993, where he became a favorite of team fans. In fact, Browns fans were enraged when former coach Bill Belichick replaced Kosar with Vinny Testaverde; soon thereafter, Belichick was replaced himself.

Kosar went on to play for the Dallas Cowboys, and is credited with helping them win an NFC championship against the San Francisco Giants. He played his final season with the Miami Dolphins in 1996. Kosar devised the famous “spike play” that Marino used so successfully against the Jets that season.

Kosar retired to the posh Windmall Ranch Estate in Fort Laurderdale, former home to Dan Marino. Kosar moved into a 9,900 square foot home with seven bedrooms and seven-and-a-half bathrooms. The home sits on an acre lot and has an estimated value of $3.5 million.

Kosar stayed active in football after his retirement. He became president of the Cleveland Gladiators, an Arena Football League (AFL) team. Kosar led the Gladiators to the semi-finals in 2008, their first season. Unfortunately, the team reportedly lost $2 to 2.5 million along the way. During this time, Kosar also reportedly borrowed $725,000 from Jim Ferraro, the team’s owner. The AFL has suspended play this season, for the Gladiators and the rest of the league.

Kosar’s struggle with the Gladiators is one of several setbacks he’s experienced over the last few years. In 2007, his wife, Babette J. Kosar, divorced him. This led to a dispute over some of their combined debts. In a statement to The Plain Reporter around this time, Kosar said: “Divorce is difficult enough as it is, especially for someone who wasn’t really looking to do that.” So, who owes what and all of that becomes hard, but whatever I owe, obviously I would pay.”

But things quickly went downhill from there. Kosar’s major business and real estate investments collapsed as the recession took hold. Last November, his steakhouse restaurant in South Miami folded. Earlier this year, Florida Bank foreclosed on two apartment buildings in Florida that Kosar owned as commercial property through private companies. In connection with those proceedings, Kosar’s companies were hit with a combined judgment of more than $6 million. Florida Bank has also commenced foreclosing proceedings on another of Kosar’s commercial properties in Florida.

This was all just too much, and Kosar filed Chapter 11 bankruptcy this past Friday. In the petition, he listed his assets as between $1 million to $10 million, and his debts as between $10 million to $50 million. As part of this debt, Kosar owes $1.5 million in unsecured claims to his former NFL home team, the Cleveland Browns. He also owes almost $10 million total to Florida Bank, his commercial real estate lender. On top of this, Kosar owes: $3.1 million to Key Bank National Association of Cleveland; $3.04 million to his ex-wife, Babette J. Kosar; $725,000 to Jim Ferraro (a debt Kosar now reportedly disputes); more than $300,000 in federal tax liens for unpaid personal income taxes; and almost $60,000 in unpaid property taxes on his Weston home.

Kosar’s bankruptcy is a sign of the times, as millions and millions of Americans struggle with financial setbacks. Indeed, Kosar is just the latest in a long list of professional athletes and celebrities to fall on hard times and need the protection of the bankruptcy laws.

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

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

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

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

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

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

You should also consider gathering copies of the following documents:

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

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

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

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

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

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

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Published Monday, June 15, 2009 @ 12:05 pm

“CONGRATULATIONS! You’re eligible for a new mortgage modification program we’re offering exclusively to homeowners in your area. We can save your home from foreclosure, cut your mortgage payments, and even reduce your principal! And you don’t have to do anything! We’ll negotiate directly with your lender. Our team of experienced loan modification consultants are here to help you. Call right now!”

If you’re behind on your mortgage payments, you’ve undoubtedly received offers like this from various companies making pie-in-the-sky promises to fix your troubles. You’ve probably tossed out most of them, thinking they’re too to be true – and rightly so. Occasionally though, you might find yourself chewing on one of these offers. Maybe you opened it right after opening another late notice from your mortgage company – which has been giving you the cold shoulder in your efforts to work out a deal to avoid foreclosure. You do need a solution, and you want to believe there’s one out there.

But be wary. By and large, mortgage modification offers really are just too good to be true. With millions of people vulnerable from the crash in the housing market and the general downturn in the economy, the scam artists are coming out of the woodwork. And fraudulent “loan modification” programs are their favorite tool right now. Bestowing themselves with titles like “loan modification consultants,” these scammers claim they wield herculean negotiation powers that will bring your lender to its knees. Some can be pretty convincing. Indeed, the perpetrators are not just run-of-the-mill con-artists dipping into a new pool of potential victims; some are former real estate agents and brokers who can draw upon sophisticated knowledge and experience to make themselves sound legitimate.

Of course, the goal of the scam artists is to bilk homeowners out of as much money as possible. They usually do this by charging exorbitant up front fees and then giving their “clients” the run-around for weeks until eventually disappearing altogether without having done anything. State attorneys general have been flooded with complaints about such schemes over the last year. The Attorney General’s Office in California and New York are currently pursuing numerous mortgage modification companies for fraudulent practices. The feds have also gotten involved. Earlier this year, Treasury Secretary Timothy Geithner announced the government intends to crack down on these practices, and the FBI has launched more than 2,000 investigations since.

Here’s something else to consider about “mortgage modification” companies: even if you can find a legitimate one, it won’t necessarily be able to do much for you. Mortgage consultants may have more experience negotiating with lenders, but, at the end of the day, they have no more power or leverage than you. Your lender simply has no obligation to work with them or you. Your lender’s incentive to voluntarily modify the loan or forestall foreclosure is the same regardless of who is doing the negotiating; if your lender won’t work with you, they probably won’t work with a modification company. And, the longer this futile “negotiation” process goes on, the deeper into debt you’ll sink, and the more hopeless you’ll feel.

You really should consider bankruptcy as an alternative. Unlike the powerless mortgage modification consultants, the bankruptcy laws actually do have the power to stop foreclosure and help you get caught up on your missed payments. Bankruptcy can also help you deal with other unmanageable debts, giving you the chance to revamp your entire financial portfolio and make a completely fresh start. So, before you hire a mortgage modification company to do the same thing you can do – with no guarantee of a different result – call a bankruptcy attorney.

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

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Published Saturday, June 13, 2009 @ 12:58 am

In January 2005, a dream came true for the Harper family of Lake City, Georgia: they received a brand new home, courtesy of ABC’s “Extreme Make-Over – Home Edition” reality TV show. In a nationwide broadcast, a construction workforce 1,800 strong descended upon the family’s neighborhood and spent the next six days demolishing their ailing, humble abode and building a 5,500 square foot comparative palace – complete with four bedrooms, decorative rock walls, a three-car garage, four fireplaces, and a solarium. The home was valued at $450,000. It was, at the time, the largest and most ambitious home remodeling project the TV show producers and their builders had ever undertaken.

Undoubtedly thrilled about their new home and its future potential as a long-term investment, the Harpers did what so many other homeowners were doing at the time: they took out an equity loan on the home, probably thinking the value had nowhere to go but up and up. What followed over the next few years, however, is also an all-too-familiar story: the Harpers fell on hard times financially and defaulted on the loan. The lender initiated foreclosure proceedings. The home was scheduled to be sold this coming August. In response, the Harpers filed bankruptcy under Ch. 13, which halted the sale. It remains unclear, however, whether they will be able to sustain the payments under the Ch. 13 plan and ultimately save the home.

Teresa Rose Evans of Fairmont, West Virginia, understands the situation the Harpers face. She too was one of the lucky ones chosen for an “extreme home make-over.” The new home – a 2,800 square foot colonial house with four bedrooms and three bathrooms – was completed in December 2007 and replaced Evans’s crumbling 600 square foot property. The new home has a value of at least $400,000. But Evans fell on hard times herself and, just 10 months after the home was built, she filed Ch. 7 bankruptcy. The bankruptcy trustee intends to go after the home to pay off Evans’s creditors.

Some homebuilders and contractors who’ve sponsored make-overs for the show have run into their own financial troubles of late. Monarch Homes of Wisconsin LLC – a luxury homebuilder featured on the show in 2006 – filed Ch. 7 bankruptcy in May of this year. The Stone Artist, Inc. – a masonry business which did decorative stone work for a house featured in 2007 – filed Ch. 11 bankruptcy in September of last year.

The point is, no one is immune from financial struggles or the effects of the current economic downturn. The homeowners featured on ABC’s reality show were the envy of millions. But ultimately, they were just ordinary Americans – who were, in fact, already struggling with difficult life circumstances when they got their homes. Once all the dust settled and the fanfare was over, they were on their own again. And, in today’s economic climate, it’s not surprising some of them didn’t make it. Same with the homebuilders: their sponsorship of the show – and the extraordinary advertising and P.R. value it brought them – undoubtedly made them the envy of their competitors. But that wasn’t enough to protect them from the disastrous effects of the housing bust. The fact is, the economic realities of the day are tough, and we’re all feeling them in some way.

If you’re one of the millions of people right now who’s struggling to stay afloat financially, contact a bankruptcy and learn how the bankruptcy laws can help you weather this storm. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Friday, June 5, 2009 @ 12:03 pm

Chicago Bulls fans recently had a unique opportunity to own a significant symbol of the team’s successful history – NBA championship rings from the Bulls’ 1996, 1997, and 1998 seasons. This was the era of the legendary trio – Michael Jordan, Scottie Pippen, and Dennis Rodman – who, together, formed one of the most powerful starting lineups the NBA has ever seen.

Jordan, Pippen, and Coach Phil Jackson all received championship rings those years. But they weren’t the only ones recognized this way. Randy Brown also received a ring each of those years. Brown was a back-up guard, but proved himself vital to the strength of the lineup. In fact, Brown is credited with helping the team achieve its best record to date: 72 wins and 10 losses during the 1996 season.

After his successful career in the NBA, Brown went on to act as assistant coach for the Sacramento Kings. But, unfortunately, he recently fell on hard times financially – and was dismissed from his coaching spot to boot. He filed Chapter 7 bankruptcy late last year. And that’s how the Bulls championship rings ended up on the market. Early this year, the bankruptcy judge in Brown’s case ordered Brown to sell his rings. The minimum bid required? $19,000. The rings actually appraised at $40,000 and ultimately fetched even more than that. Last month, an anonymous buyer paid $58, 833 for the set of rings – which contained nearly 200 diamonds combined – outbidding Jordan’s former publicist, Estee Portnoy, who had offered $40,000.

Brown was, understandably, unhappy about having to part with the rings, given their obvious sentimental value. Brown joins a long list of professional athletes who’ve run into financial trouble and had to take cover under the protection of the bankruptcy laws. Mike Tyson, Bjorn Borg, Tony Gwynn, Dorothy Hamill, Joe Louis, Lawrence Taylor, and Johnny Unitas have all been there. So have many other rich and famous folks: Abraham Lincoln, Kim Bassinger, Burt Reynolds, MC Hammer, Marvin Gaye, Willie Nelson, Samuel L. Clemens (Mark Twain), Donald Trump, and Wayne Newton – to name just a few.

Riches and fame aside, Brown’s situation is reminiscent of the plight many average Americans are struggling with across the country today: unmanageable and unaffordable debt. Whether it’s a job loss, pay cut, or an “upside down” mortgage, millions of people are falling prey to the current economic turmoil and sinking into a hole financially. Bankruptcy was designed to help people in this situation, by giving them the opportunity to make a fresh start.

So if you’re currently struggling with unmanageable debt, or think you might be heading for this kind of trouble, call a bankruptcy attorney today and learn what bankruptcy can do for you. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Thursday, June 4, 2009 @ 8:39 am

Nestled within the vast expanse of the ocean waters, hundreds and hundreds of miles off the Pacific coast, the islands of Hawaii probably don’t bring to mind thoughts of unemployment, foreclosures, bankruptcies, or the other recession-related concerns of the day. Hawaii’s geographic isolation makes it seem insulated from the difficult realities here on the mainland – economic and otherwise.

Indeed, that’s what Hawaii’s all about, right? It’s the land of “Mahalo,” where everyone is on “island time,” wears shorts all year long, and doesn’t worry about tomorrow. And, you may be thinking, what do Hawaiians really have to worry about anyway? With such beautiful environs, an endless array of recreational activities, and luxurious accommodations, the tourism business alone should be enough to sustain a bustling and robust economy, right?

Well, that’s the problem, actually. Tourism is the bread and butter of Hawaii’s economy. But the pressures of the recession have forced people to tighten their belts. Across the board, Americans are cutting back on their consumption of all sorts of goods and services, and luxuries like vacations are some of the first things to get the axe – especially trips to expensive, far-off destinations like Hawaii.

After a couple of years of this dwindling tourism, the hard times have now hit paradise. Hawaii has seen a explosion in bankruptcy filings in the last year. Chapter 7 filings were up 54 percent this April over last. Chapter 13 filings were up almost 73 percent. This means the overall increase in filings was almost 58 percent. And it looks like the numbers from May will be even worse: at last check, the filings in May were up more than 60 percent from a year ago. This is the seventh month straight that Hawaii has seen at least 200 bankruptcy filings. In fact, 270 cases were filed in the month of March alone – the highest number since October 2005. Included among these cases is the Chapter 11 filing of Hawaii Superferry, Hawaii’s first inter-island car and passenger ferry service.

With the number of bankruptcy filings, it’s not surprising that Hawaii is experiencing its highest unemployment rate in three decades: right now, it’s almost seven percent. And, there’s been a spike in foreclosures, which is also predictable. But the actual figure may surprise you: foreclosures are up nearly 217 percent from a year ago this April.

As alarming as these figures may be, this sort of picture – dramatic spikes in the unemployment, bankruptcy, and foreclosure rates – is a common theme across the country. The unfortunate fact is, Hawaii is simply experiencing the harsh realities of the day and likely will continue to struggle until the economy turns around and Americans are willing and able to open up their wallets again for that big vacation.

Remember, if you’re one of the millions of Americans caught up in the current turmoil and struggling to manage your debts, call a bankruptcy attorney today and learn how bankruptcy can help you get back on your feet again. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Wednesday, June 3, 2009 @ 7:15 am

The “The Credit Card Holders’ Bill of Rights” has passed both the House and Senate and was signed into law on May 22 by President Barack Obama.

Coupled with regulations recently issued by federal bank regulators, the “Bill of Rights” makes sweeping changes to the credit card industry beginning in July 2010. The idea is to make the process of applying for, and using, credit cards more transparent, while at the same time curbing unfair and unscrupulous practices in the industry.

For example, credit card companies will be required to give you 45-days’ notice before raising your interest rate, and then must give you an opportunity to opt-out of the increase before it takes effect. No more sudden interest rate hikes without notice. You will also have the right to set a maximum limit for your credit line. Hopefully, this will stop those sneaky over-the-limit fees that can cost you big bucks before you realize the problem.

One of the biggest changes is that credit card companies will no longer be able to judge you based upon your payment history with other creditors. They will only be allowed to consider your payment history with them. The days of “universal defaults” will be over.

Credit card companies will also have to consider your payment timely so long as it is received by 5:00 EST on the due date, and you will be entitled to get your bill at least 25 days before it’s due. This will make it a lot easier to avoid the traps the companies have set up to catch you in a late payment.

Another important change is that the credit card companies will no longer be able to simply apply your payments to the balances with the lowest interest rates. Some of your payment will have to be applied to the higher interest rate balances.

Not surprisingly, the credit card companies are not happy about these developments. In fact, over the past several months, as the bill moved through the House and Senate, many banks declared open season on consumers. Credit card companies have increasingly become more aggressive with borrowers: raising interest rates, cutting down credit limits, and taking away other benefits when payments are just a few days late.

Case in point, Bank of America — one of the largest and most powerful credit card issuers — recently raised the interest rates for 14 million of its customers. And, it’s not that these 14 million people suddenly turned delinquent. BOA applied the rate hike to customers who have never been late in their payments – to BOA or any other creditor – and who have great credit scores. Apparently, BOA decided to institute a hike across a broad base of consumers, regardless of their actual creditworthiness.

These sorts of moves may help the banks pad their pockets in the near term before the new regulations go into effect. But on the flipside, they create an even higher risk of default for borrowers — many of whom are already struggling to maintain the status quo in tough economic times.

The much-needed change in the credit card industry is coming. In the meantime, you can expect credit card companies to keep taking advantage of the current loose regulations. The good news is, if you’re already drowning in credit card debt, relief is available right now. Call a bankruptcy attorney and learn how you can get rid of these burdensome debts and make a fresh start.

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

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Published Tuesday, June 2, 2009 @ 4:28 pm

Scam artists sure are brave. Well, there are probably more accurate ways to describe those who deliberately take aim at people in dire financial straits. They just are not fit to be published.

Turns out the Federal Trade Commission has spotted a series of deceptive Internet advertisements that claimed to lead browsers to the “official” Web site of the recently introduced Making Home Affordable program, a national effort that provides free mortgage loan assistance and encourages banks and lenders to help homeowners stay afloat. The actual official Web address is http://www.makinghomeaffordable.gov/

The FTC promptly filed a court order to halt the misleading ads that were popping up on some of the most popular search engines, such as yahoo.com, msn.com and altavista.com.

Many people facing bankruptcy today are dealing with unreasonable mortgage loans as a result of aggressive and poorly vetted loan programs.

The ads took advantage of Web searches for mortgage assistance and the federal program. The ads would lead to a site that offered loan modification programs for a fee. Previous posts on the blog have mentioned the government program, which is worthwhile in principle but is facing some communication hurdles. For example, since it is not marketed particularly well, the opportunities for scammers to take advantage are fairly prevalent. There simply hasn’t been enough education about the program. However, many American home owners have benefited from its initiatives.

Those named in the complaint are accused of using “sponsored links,” or paid search results, that boldly displayed the official Web site. However, clicking on the ad lead to Web sites of private mortgage assistance programs that charged fees and were in no way associated with the free services available through the government.

But that’s not the end of it.

The misleading approach would be somewhat easier to accept if these Web sites were associated with legitimate loan modification companies simply being too aggressive in their marketing or that didn’t realize to what extent they could affiliate themselves with the Making Home Affordable program. However, it appears that those behind the pixelated solicitations are nothing more than common criminals seeking to swipe identities. The Web sites asked for extensive financial information and, wait for it … social security numbers! Not only that, some of the sites boasted that they only refer people needing help to yet another loan modification service, which is simply an effort to take your information and further distance themselves from the crime.

The examples of Web-based fraud and below-the-belt assistance scams are becoming more and more prevalent. In light of the ever growing shadows over exactly who can help and what service is best, people facing financial difficulty are best served by speaking to a reputable attorney that specializes in bankruptcy law and helping people navigate the choppy economic waters caused by storms of mounting debt.

Be careful out there.

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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 @ 10:18 pm

The bankruptcy process can be confusing, stressful and even a little scary sometimes. Thankfully, there are an array of exceptional financial professionals out there, the most helpful being your reputable bankruptcy attorney, all of whom can help you navigate the choppy waters and put your life back on track.

It pays to understand for yourself as much about the bankruptcy process as possible. The more knowledge you gain, the easier it will be for you to comprehend how to help those you are helping you. Since bankruptcy is a legal process, it will involve the courts. And courts mean judges.

So, exactly what role does a bankruptcy judge play in your case? It can vary, depending on the complexity of your case and whether someone (such as a creditor or the trustee) objects to your bankruptcy.

In probably 98% of all cases, there are no objections and your case will proceed to discharge with no direct involvement by the bankruptcy judge. However, there is an exception to every rule.

One exception is where the court gets involved to determine whether or not you took a credit card company’s money with absolutely no intent to pay it back, thereby working a fraud on the credit card company. If this can be proved, the credit card company can avoid having its debt wiped out in bankruptcy.

Thankfully, many judges have grown weary of hearing credit card companies claim that they are the victims. The aggressive marketing pitches, ceaseless trail of direct mail and high-value television ads that claim all it takes to lead a charmed life is a credit card number and a dream are starting to catch up with them. While some judges are recognizing the impact credit card companies’ “lifestyle marketing” has on consumers, they are not automatically going to grant you leniency because in almost all cases, you obviously played a significant role in the accumulation the debt.

If the creditors had their way, your mere use of their credit card and your inability to pay it back would be tantamount to fraud. Judges have roundly found this argument unpersuasive. Using a card will imply an “intent” to pay it back. However, courts recognize that, for the most part, there is little, if any, relationship between intent to pay and your actual “ability” to pay. As a result, in the vast majority of cases, courts have refused to find wrongdoing merely based upon the inability to pay.

As a consequence, in those rare situations where a credit card creditor wants to claim fraud, the creditor is left with no easy task. To prevail, the creditor must present to the court a convincing series of facts and events that would leave the court with only one conclusion, that you never intended to the debt back, and that, in turn, you committed fraud. In legal terms, these facts and events are referred to as the “badges of fraud”.

For example, judges will look to see if there was a flurry of charges very close to the date bankruptcy was filed. This would demonstrate that perhaps you made the decision to file bankruptcy and purposefully intended to increase your balances with senseless purchases as quickly as possible, with absolutely no “intent” to pay for them. If so, a judge could rather easily side with your creditors.

The court may also use your dealings with a bankruptcy attorney as a measure of intent to pay. Namely, did you make more charges after you met with your attorney? Clearly, simply meeting with a bankruptcy attorney to learn about options and ask questions does not directly translate into proof you meant to defraud the creditor. More than likely, this will not become an issue, as any reputable attorney will advise you cease credit card spending, whether or not you file.

Bankruptcy judges will also give consideration to your financial state when you made significant charges. If you were clearly in economic high water when that new plasma television was backed into the driveway just before the Final Four, it may not look good in the eye of the court. Still, if a new job was promised or an influx of cash was expected and then evaporated, a judge may be a bit more compassionate.

When using a credit card, regardless of how chronologically adjacent it was to when you filed bankruptcy, you should practice good judgment and sound financial discipline. Do not simply temporarily change spending habits based on your current situation. Like eating well and other lifestyle choices, smart credit card usage should be a discipline you practice consistently and always in respect to how it impacts everything, and everyone, around you.

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Published Thursday, May 28, 2009 @ 3:45 am

A number of reports have surfaced in recent weeks offering predictions of a return to growth in the economy by the end of this year. No one disputes the value of positive thinking, especially in troubled times such as these. But positive predictions made prematurely, or based upon an incomplete set of facts, can create false hopes and unrealistic expectations, which can actually be counterproductive. Unfortunately, the recent predictions of an impending turn-around in the economy appear to be of this sort.

Just look at the unemployment rate. It has been steadily on the rise for months now. Last month alone, some 539,000 jobs disappeared. This sent the jobless rate up to a disturbing 8.9 percent – the highest it has been since 1983. These figures reflect a loss of 5.7 million jobs since December 2007, the greatest total job loss on record since the Great Depression. The Labor Department currently projects that the month of May will round out with more than 630,000 additional jobs in the tank. The total number of people collecting unemployment benefits across the country has set records for 15 weeks straight. At the moment, that number stands at more than 6.5 million people.

And the economy is just beginning to feel the effects of the current woes in the auto industry. Chrysler recently filed bankruptcy, and GM appears poised to do the same any day now. The layoffs from Chrysler alone will inevitably place a significant additional drag on the economy. On May 1st, the auto manufacturing giant stopped production at its 22 plants around the country. Together, those plants employed almost 27,000 hourly employees. Think there’s a chance Chrysler’s moves will have a trickle-down effect on other businesses? You betcha – and it will likely be a significant one at that. Production at Chrysler plants is the lifeline for scores of businesses – from auto parts manufacturers and suppliers to car dealers and auto service centers.

With Chrysler’s production halts around the country, many of the employees at these businesses will be hung out to dry too, at least for the near term. And how about GM? Record layoffs and production halts appear to be just around the corner for this auto giant as well. And when they happen, many of the thousands of GM employees – as well as those who work for business that rely on GM’s continuing vitality – will likely find themselves standing in the unemployment lines too.

Growth by the end of this year, they say? Under these circumstances? Not likely. It will probably take until the end of the year before the full effects of the fallout in the auto industry even become apparent – much less begin to dissipate.

Remember, if you’re one of the thousands of Americans facing financial turmoil as a result of this downturn in the economy, call a bankruptcy attorney today and learn how you can make a fresh start. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Wednesday, May 27, 2009 @ 8:07 am

Bankruptcy, unemployment, and foreclosure rates have always said a lot about the condition of the economy at a given time. It doesn’t take a statistician to figure out that these rates bear some relationship to one another, especially in the current climate. If you lose your job, you’re going to have trouble floating your bills, especially steep ones like mortgage payments. Even if you don’t lose your job, you might still be facing foreclosure or need bankruptcy protection. If you’re one of the millions of Americans who got talked into one of those adjustable rate mortgages during the housing boom, your interest is unpredictable, stretching your budget to the extreme. And, as lenders continue to keep a choke hold on available credit, it is becoming increasingly more difficult to find ways to make ends meet when facing financial crises.

Well, now there’s some real math behind the relationship among these economic indicators. The Associated Press recently teamed up with Tony Smith, an expert statistician at the University of Pennsylvania, and unveiled the “Economic Stress Index” (ESI). Based upon Smith’s formula, the ESI measures the condition of the economy through a comparison of the bankruptcy, unemployment, and foreclosure rates in each county across the country. The data begin with the rates in October 2007, and the AP plans to continue tracking the rates each month as the recession wears on.

The ESI formula translates into a numerical figure of 1 to 100 for each county; the higher the number, the higher the chance that a given person within the county is unemployed, facing foreclosure, or in need of bankruptcy protection. So, for example, an ESI of 20 means there’s a 20 percent chance that a random worker within the county is facing one of these problems.

The overall findings of the ESI to date come as no surprise, as they reflect the sharp downturn we’ve all seen going on around us in recent months. The decline began in isolated areas but quickly spread, gripping most of the major regions throughout the country. In September of last year, over 3,000 counties around the country had an index score of 10 or higher. By February of this year, just five months later, that figure soared to an index of 40.

But, the county-by-county findings are the most illuminating aspect of the ESI. They put a face on this recession, showing where the downturn has hit the hardest and which areas have managed to remain relatively stable. The worst hit areas include those counties along the coasts, particularly in the Southeast and Southwest regions. For instance, in counties with more than 25,000 residents, Imperial County, California has highest overall index number. Fifteen of the twenty hardest-hit counties are concentrated in just six states: North Carolina, South Carolina, Tennessee, Ohio, Michigan, and Indiana. Within this group, Burlington, North Carolina and Myrtle Beach, South Carolina are struggling with particularly severe unemployment rates. Areas that have remained relatively stable so far include the Great Plains region and counties with a large number of government jobs.

The AP has plotted the ESI statistics onto an interactive map. To check them out, go to the website below:

http://hosted.ap.org/dynamic/files/specials/interactives/_national/stress_index/index.html?SITE=YAHOO&SECTION=HOME

Remember, if you’re one of the millions of Americans caught up in the current turmoil and struggling to manage your debts, call a bankruptcy attorney today and learn how bankruptcy can help you get back on your feet. 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 Tuesday, May 26, 2009 @ 11:45 am

You’re ready to seek professional help from a qualified bankruptcy attorney.. Now what? What should you do to prepare for your first meeting with your prospective attorney?

Step One: Quit Digging

You know the old saying about how to get out of a hole; the first step is to stop digging. Your decision to consider bankruptcy should not be accompanied by a last minute spending spree. If nothing else, this period can be a good time for you to practice a financially conservative mode of living.

Step Two: Document Your Debts

Call your prospective attorney and ask for a pre-interview questionnaire. If the attorney has any experience in bankruptcy law, he will provide a questionnaire containing numerous questions about your debts, income and assets. Answering the questionnaire will force you to take an honest inventory of all of your outstanding debts. There’s nothing to be ashamed of or worried about in cataloging who you owe money to. Your attorney needs to know the extent of your debt in order to decide the best course of action.

Step Three: Document Your Income

Just as your detailed accounting of your debts is important, so is the amount of money you’re bringing in. Also provide details about changes in your employment, such as a recent layoff or reduction in hours. This will help your attorney understand the big picture of your financial life, and how you can make the most out of bankruptcy.

Step Four: Document Your Assets

Make a list of everything you own which might be a potential source of income if sold. For example, list any large items such as your home, car or boat which you either own outright, or if you have a loan, list how much the payoff amount is. Then consider any other unusual property items which might be of value, such as antique collections, artwork, expensive tools, or livestock.

The purpose of listing your assets is not because they will be sold in the bankruptcy. In most cases, any assets you own are probably worth less than state exemption allowances, and so they will not be at risk in the bankruptcy. By informing your attorney of the full extent of your assets, you can be fully advised what might be at risk, as well as what steps can be taken to protect even non-exempt property.

Step Five: Get Ready to file

With the information detailed above, you’re ready to move forward with your bankruptcy. Understand that you are not alone in the process. Your attorney will help guide you step by step so that you can make the most of your fresh start. Serving North Carolina residents, the Law Offices of John T. Orcutt has helped thousands of families get back on track. Call today to set up your free initial consultation. 1-800-899-1414

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Published Tuesday, May 26, 2009 @ 8:38 am

It looked like the high tech industry was going to dodge this economic downturn. Industry hot spots like North Carolina’s Research Triangle (the Raleigh, Durham, and Chapel Hill area) and Northern California’s legendary Silicon Valley remained fairly secure throughout most of last year. While other major regions around the country saw big declines in every sector, the high tech areas continued to see job growth and stable housing prices. They were, it seemed, “recession proof.” Until the fourth quarter, that is.

Growth in the high tech industry came to a screeching hault in the fall of 2008. The problem? The major players in the industry had pretty much spent all of their venture capital funds. A few years ago, it seemed venture capitalists were clamoring to fund new research and development projects in the tech industry. Not anymore. Given the current state of affairs in the economy, venture capitalists – like most people – are holding back and waiting for these things to restabilize before making more investments.

Without the necessary investment funds, the high tech areas were quickly swept up into the financial turmoil wreaking havoc around the country. The rates of bankruptcy, foreclosure, and unemployment spiked in the fall, and have continued to climb since. By now, those rates are some of the highest in the country.

For example, in North Carolina, the unemployment rate has doubled since this time last year, to a record of 10.7 percent. In raw numbers, this figure means almost 200,000 people have lost their jobs. Twenty percent of those losses came out of the Research Triangle. In Santa Clara County (the situs of Silicon Valley), bankruptcy filings shot up 59 percent over the last 12 months, and experts predict the rate will continue to climb. The once-booming high tech neighborhoods of Boston are also getting a hard dose of the current economic reality: the number of foreclosures in the area has tripled since last summer.

And you’d probably be surprised to hear that the layoffs are coming from industry powerhouses, like Microsoft, Apple, Yahoo, Intel, Sun, Hewlett Packard, and . . . yes, even the once apparently-infallible Google. Indeed, things have taken such a dramatic turn for the worse that community service centers in Silicon Valley are literally handing out food to people who used to earn six-figure salaries and live in million dollar homes.

It took a while longer for the high tech industry to feel the effects of the current downturn, but it happened, and now the industry is caught up in the full grips of the recession. Fortunately, those caught up in the industry’s current woes have the same relief available to them as those whom the recession hit much earlier: bankruptcy protection. Bankruptcy has already helped millions of people weather this storm, as it always has in times of economic turmoil.

In fact, those living in the Research Triangle area have a preeminent bankruptcy resource right in their own backyard: The Law Offices of John T. Orcutt is the largest consumer bankruptcy law firm in the state of North Carolina. The firm has helped tens of thousands of people — from all walks of life — use the bankruptcy laws to solve their financial problems and make a fresh start. It has convenient office locations in Raleigh, Durham, Wilson, and Fayetteville. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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Published Sunday, May 24, 2009 @ 6:42 pm

Whether you file bankruptcy under Chapter 7 or Chapter 13, pretty much everything you own at the time you file the petition becomes property of the “bankruptcy estate”. Sounds bad, right? Wrong! Just because property is included in the bankruptcy estate doesn’t mean your creditors can get their hands on it. Many, if not all, of your assets will be considered “exempt,” meaning your creditors can’t touch them. The rest are considered “nonexempt.”

Understanding the difference is very important in both Chapter 7 and Chapter 13 cases. In a Chapter 7 case, nonexempt assets are subject to liquidation; the trustee can take the property, sell it, and distribute the proceeds to your creditors. In a Chapter 13 case, the amount you have to pay your creditors is generally equivalent to the value of your nonexempt assets. In other words, if you have $10,000 in nonexempt assets, you’ll have to pay at least that much over the life of the repayment plan.

So what is considered “exempt”? Well, the Bankruptcy Code sets forth a list of various types of property and assets that debtors can keep. Each state also has its own list of exemptions. Thirty-four states have opted out of the federal exemptions. Debtors in those states must use the state exemptions. The other states allow debtors to choose between the federal and state exemptions. Fortunately, the federal exemptions and those of each state allow you to keep most of the property that you need and value the most.

For most people, the two most important assets are their home and their car. The exemptions for these types of property generally turn on the amount of equity a person has in the property. Equity is the extent to which the value of an asset exceeds what you owe for it. If you don’t have any equity in your home or car, there’s no issue; you get to keep it, end of story. If you do have equity, you can exempt up to a certain amount of that equity. To the extent your equity exceeds that amount, it is considered nonexempt. In a Chapter 7 bankruptcy, this means the trustee could sell the property to recover that equity, or you may have to pay the difference if you want to keep the property. In such cases, Chapter 13 bankruptcy may be the better option for you.

The exemptions avaliable in North Carolina, which has opted out of the federal exemptions, are a good example. North Carolina provides a “homestead exemption,” which allows you to keep up to $18,500 of the equity in your home. You can also exempt up to $3,500 of equity in your car. For household goods (furniture, appliances, clothes, etc.), you get to exempt up to $5,000 in value, plus an additional $1,000 for each dependent you have (up to $4,000). You can exempt up to $2,000 for professional books and tools particular to your trade.

Additional exemptions in North Carolina include: life insurance proceeds; personal injury awards; retirement accounts and annuities; all IRA accunts; public benefits (e.g., social security and unemployment payments); up to $3,500 in professionally-prescribed health aids; all alimony and child support payments; and up to $5,000 toward any other property, to the extent you haven’t used all of your homestead exemption (the “wildcard” exemption).

There is also an unlimited “tenancy by the entirety” exemption to protect any and all real property you have. In North Carolina, real property bought in the name of husband and wife is deemed to be a “tenancy by the entirety”. The only drawback is that this exemption cannot be claimed against creditors where both you and your spouse owe the debt. Where that is not a problem, this exemption can be a lifesaver, to protect your home as well as other real property.

The really good news is that, in North Carolina, every person gets to claim a full set of these exemptions. For example, if you and your spouse decide to file bankruptcy together (called “jointly”), you get a full set of exemptions and so does your spouse. In effect, this doubles the amount of stuff you and your spouse can keep and protect.

Understanding and correctly applying the available exemptions is crucial to ensuring you get the maximum benefit bankruptcy has to offer you. That’s why it is essential to retain an experienced bankruptcy attorney who can walk you through this process. In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson.

P.S. Want to know the “really, really good news”? Most of the time, with proper planning, clients of The Law Offices of John T. Orcutt get to keep everything and lost nothing. That’s right…file bankruptcy…and lose nothing.

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Published Tuesday, May 19, 2009 @ 10:11 pm

Most recessions are punctuated by spikes in the rate of unemployment and the rate of credit card debt charge-offs. In that sense, this recession is no different. The unemployment rate is steadily on the rise. It’s now hovering at 8.9 percent, as another 539,000 jobs disappeared in the month of April alone. Many economists predict the rate to hit – or exceed – 10 percent before it’s all said and done. And, these figures say nothing of the millions of Americans struggling with other hard-hitting employment-related ails short of an outright job loss: pay cuts, higher employee contributions to health insurance premiums, and retirement plans in jeopardy.

At the same time, the rate at which banks are charging off bad credit card debt is soaring. In 2008, banks wrote off an average of 6.3 percent of their credit card balances – to the tune of $45 billion. As high as this is, economists expect dramatically higher charge-off rates over the next couple of years. For example, Chase Card Services charged off 7.7 percent of its credit card balances in the first quarter of this year. American Express, Bank of America, and Capital One charged off about 8.5 percent of their balances. Citigroup wiped out a whopping 10.2 percent.

And, this appears to be just the beginning of the charge-off frenzy. Bank “stress tests” released last week indicate that the 19 largest U.S. banks will wipe out a combined total of almost $84 billion by the end of 2010. This estimate is actually on the conservative end. Others figure this total could reach $141.5 billion, and $186 billion for the entire credit card industry. If the unemployment rate hits 10 percent or more, American Express and Capital One are expected to charge-off 20 percent of their credit card balances over this year and next; Bank of America, Citigroup, and JP Morgan Chase will likely wipe out 23 percent of their balances during this period.

These figures are what make this recession different: In past recessions, the rate of unemployment and the rate of credit card charge-offs have closely tracked one another. In other words, the jobless rate said a lot about the level of charge-offs one could expect to see during a recession. But with the direction this recession is heading, the rate of charge-offs will outpace the rate of unemployment, and by a significant margin. The reason for this difference? For starters, the crash of the housing market. In past recessions, those who lost their jobs had the option of taking out home equity loans to weather the storm. With plummeting home prices and banks pulling in the reins of available credit, that’s not an option for most people these days. Consumer confidence levels are also at record lows, as people hold on to what they have and wait for another day to buy that new car or home.

These conditions come at a bad time for those dealing with job losses, pay cuts, and the like. In fact, right now the average American household is carrying an average of nearly $8,400 in credit card debt. With few alternative sources of income available in the tightening credit market, millions more Americans will run into financial trouble over the next couple of years. Fortunately, there is another alternative: Bankruptcy can wipe out unmanageable credit card debts. If you’re in this situation, call a bankruptcy attorney today and learn how you can make a fresh start.

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

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Published Monday, May 18, 2009 @ 9:46 am

Every day, we hear more about the effects of the faltering U.S. economy: companies are collapsing at alarming rates; unemployment is soaring; corporate and personal bankruptcies abound; home prices keep tumbling; and new credit is harder to find and more expensive to borrow. State and local governments are raising property and sales taxes to save themselves from going belly-up too, putting even more strain on the budgets of people already struggling to make ends meet.

As disturbing as it is to watch our economy come apart at the seams, the underlying problems run so deep that the rippling effects have led to a worldwide financial epidemic. The Asian markets are a prime example. Japan – some 6,000 miles off the east coast of the U.S. – is dealing with its worst economic fallout in decades. Corporate bankruptcies have been on the rise for the last 11 months in a row, up 9.4 percent from a year ago. Sixteen publicly traded companies have folded this year already, and 33 shut down last year – a record. The corporate collapses last month alone left more than 11,000 people without a job. Pioneer Corporation — the former electronics powerhouse with its headquarters in Tokyo – is teetering on a dangerous precipice itself: it forecasts a loss for the sixth year in a row and plans to cut 9,800 jobs this year.

As a result of this fallout, Japan has seen its fastest increase in the unemployment in 40 years. Like the U.S., the government has responded with massive infusions of cash into the private industry. Nonetheless, more companies are expected to fold and more people are expected to lose their jobs — prolonging and deepening the recession.

The picture in China doesn’t look much brighter. The number of consumer bankruptcies there shot up 56 percent from a year ago this April: 1,490 people filed bankruptcy last month, compared to 957 last April. And, 1,872 people filed in March of this year, a six-year high. South Korea is feeling the pressure too: its corporate bankruptcy rate hit a three-year high in the fourth quarter of last year. There are also signs of trouble just across the Atlantic from us. In England, personal bankruptcy filings are up seven percent and corporate bankruptcies are up 13 percent.

The point is, the economic downturn we are experiencing in the U.S. runs very deep. It has not just created significant problems at home; it has contributed to — if not directly caused — similar problems abroad. And, the downturn in the effected countries will surely to slow the pace of our own recovery. The bankruptcy laws – here and abroad – were designed to help people in these kinds of times; hence, the rise in filings around the globe. If you’re caught up in this crisis and struggling with unaffordable debts, call a bankruptcy attorney today and learn how you can regain control of your financial life, even in these troubled times.

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 Friday, May 15, 2009 @ 12:35 pm

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

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

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

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

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

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

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

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Published Friday, May 15, 2009 @ 8:30 am

Just about everyone carries some debt whether it’s a mortgage, car loan, student loan, or just an outstanding balance on a credit card here and there. Debt, by itself, is not necessarily bad. In fact, borrowing money to buy things is not only necessary in many cases; it’s smart. Not many people can plunk down $350,000 for a house, $75,000 for a four-year degree, or $25,000 for a car. And when it comes to mortgages and student loans at least, the long-term benefits often outweigh the cost of carrying the debt.

But there comes a point at which the benefits of credit evaporate, leaving nothing but burdensome debt. For some, this happens over a period of time as they slowly accumulate more and more debt. For others, it happens suddenly, because of a tragic unforeseen event that cuts off their regular stream of income: death, divorce, job loss, etc. Either way, the person is left in a financial lurch that he or she simply doesn’t have enough money to pay the bills. Over time, the problem just gets worse as the debts grow, the late notices roll in, and the calls from creditors pick up in frequency and intensity.

If you’re in this position, you’ve undoubtedly experienced some degree of stress and anxiety about your plight. This is, of course, quite natural. You’ve borrowed money that you now can’tpay back and your creditors are playing on your sense of moral responsibility and your fears of losing everything in a lawsuit. This would cause anyone to fret and worry.

But what you might not know is that this kind of stress can lead to major health problems if it continues unchecked. The Associated Press recently teamed up with AOL to survey the relationship between debt levels and health problems. The AP-AOL Health Poll surveyed more than a thousand adults and asked various questions about their health condition over the last year. It then compared the answers of those who reported having a low amount of debt with those who reported having a high amount of debt.

The results of the survey were alarming. Compared to their low-debt counterparts, almost twice as many high-debt carriers suffered muscle tension (51% vs. 31%), almost three times as many suffered migraines (44% vs. 15%), and more than seven times as many suffered severe anxiety (29% vs. 4%). Also, more than three times as many high-debt carries dealt with ulcers and digestive problems (27% vs. 8%), almost six times as many struggled with severe depression (23% vs. 4%), and twice as many had heart attacks (6% vs. 3%). Those struggling with high stress related to debt also reported suffering problems with concentration, sleeping, and irritability much more often.

This should serve as a wake-up call to those struggling with unmanageable debts. If you’re in this situation, it’s time to take action. The practical, everyday problems of dealing with this situation are enough. You’re already stretching yourself too thin financially as you try to make ends meet, and you’re already dealing with the inevitable stress and anxiety that comes with this lifestyle.

You don’t have to continue spinning your wheels in a fruitless effort to appease your creditors. The emotional and physical toll simply isn’tworth it. Bankruptcy was designed to help people like you. Call a bankruptcy attorney today to learn how you can rid yourself of this unhealthy baggage and make a fresh start!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Friday, May 8, 2009 @ 2:17 pm

The Federal Reserve recently announced sharp declines in the level of credit card debt Americans are now carrying. “Revolving debt” (mostly made up of credit card debt) shrank by almost 10 percent in February, the most rapid rate of decline in more than 30 years. In terms of raw numbers, revolving debt fell by $7.8 billion. Essentially, this means almost $8 billion in credit card debt vanished in one month alone.

These numbers have been on the decline for some time now. In October of last year, Americans’ credit card usage stayed flat. In November, it dropped 3.4 percent. In December, revolving debt shrank at an annual rate of 8.2 percent. The total debt remaining is still no small figure, mind you. At the end of this February, consumers owed a combined total of more than $2.5 trillion, not including real estate debts. To put this into perspective, when the total was only $973.5 billion in November 2008, this translated into $3,186 in credit card debt per person, or $8,282 per household. Using the current figure, those numbers would more than double.

Nonetheless, some in the financial industry are saying this trend shows that people in debt are spending less, not seeking new forms of credit, and paying down their credit card debts in earnest. While this would certainly be a good thing for people struggling with debt, it’s probably not realistic to think this is happening in significant numbers.

Scores of people are losing their jobs every day. Those who still have their jobs are dealing with pay cuts, rising costs of goods and services, reductions in benefits, and retirement pensions in jeopardy. And, there is no reason to think people aren’t seeking new forms of credit; those juggling unaffordable debts will always be looking for other ways to make ends meet until the debts are gone. What’s worse, with less traditional types of credit available to them, they might be turning to other riskier types – like payday loans and cash-checking services.

How many of these people are really going to take whatever cash they have at the end of the month and send it to a credit card company to pay off some extra interest? Probably not too many. Indeed, the delinquency rate for credit cards was 5.56 percent in the fourth quarter of last year. That’s up 4.54 percent from the year before, and stands as the highest delinquency rate on record.

What a lot of people are doing, however, is filing bankruptcy to get rid of credit card debt. Almost 1.1 million people filed for bankruptcy in 2008, and even more are expected to file this year. In fact, filings under Chapter 7 this February were up 37 percent over last year. This has led to massive charge-offs, as creditors have been forced to wipe their balance sheets clean of billions of dollars debtors have discharged in bankruptcy. Figures from 2008 show creditor charge-offs rose to $6 billion, up from $3.6 billion a year ago. And the recent spike in bankruptcy filings undoubtedly played a significant role in the $7.8 billion in revolving credit that disappeared this February.

If you’re in this boat, it’s time to consider bankruptcy yourself. With vital interests at stake – like your income, health benefits, retirement plan – you can’t afford to just keep throwing money down the drain with interest payments to credit card companies. And you don’t have to. Bankruptcy was designed to give people like you a fresh start. Call a Raleigh bankruptcy attorney today, and join the millions who have gone before you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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