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

In this tough economy, it may seem like your creditors are an ever-present part of your life…showing up where and when you least expect, or need, them.  You’re not alone.  It turns out that millions of Americans have fallen behind on paying their bills, and an unfortunate result is that debt collection law firms are now heading to court in record numbers in order to collect.

In addition to this tough economy making past-due debtors out of many Americans, the rise in unprecedented debt collection cases is also being blamed on the wonder of automated debt collection.

According to a new The New York Times article by Andrew Martin, many debt collection law firms are now relying on “computer software to help prepare its cases. While many of the cases represent legitimate claims, critics say the lawsuits are too often based on inaccurate or incomplete information about the debtor or the amount owed.”

In response, state legislators and judges have attempted to rein in collection lawsuits, and on Monday, the Federal Trade Commission issued a formal report on the need for reform in debt collection litigation and arbitration, finding the current system for resolving disputes over consumer debts to be broken and in need of “significant reforms.” With debt collection topping its list of consumer complaints, the commission is proposing that states mandate collection services to provide more transparency in the debts owed, including the current debt balance, interest and fees; and discourage defaults by encouraging debtors to defend themselves in court.

Yet, while much of the FTC’s report appears to put the responsibility of limiting collection litigation on the debtor, Martin reports, “The litigation boom has been propelled by fundamental changes in the way debts are collected, particularly for credit cards. In recent years, credit card companies have increasingly sold off debt they have considered uncollectible to debt buyers, usually for 5 cents or less on the dollar.  The debt buyers, in turn, may try to collect the debt themselves using traditional practices like sending letters or making phone calls to a consumer to try to arrange a payment plan. Increasingly, they are choosing to sue instead.  Collection law firms are able to handle such large volumes of cases because computer software automates much of their work. Typically, a debt buyer sends a law firm an electronic database that contains various data about consumers, including name, home address, the outstanding balance, the date of default and whether interest is still accruing on the account.”

This automation can means more errors, abuses and more litigation; none of which is good for debtors already facing tough economic times and an endless array of economic challenges.

In this environment, it’s important to keep in mind that bankruptcy can be your best weapon against these kinds of debt collections. Bankruptcy can stop secured creditors cold, as well as unsecured creditors, the ones at the bottom of the proverbial food chain, who are more likely to be the ones contacting you via phone, sending you letters, and generally harassing you for cash, any cash, where and when they can.

If you too have been effected by the economy and are wondering how to reduce debt and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, August 6, 2010 @ 12:38 pm

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

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

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

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

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

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

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

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

Cary bankruptcy lawyers. Lumberton bankruptcy attorney.

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Published Wednesday, July 28, 2010 @ 6:16 pm

It may come as no surprise that long-term unemployment has a greater effect on layoff victims compared with shorter spells of joblessness. What you may not know is that this impact has far-reaching implications for family, friends and feelings about oneself.

According to a new Pew Research Center survey, more than four in ten (44 $) of people out of work for six months or longer said unemployment had led to “major changes” in their lives, compared with 31 percent of people jobless for less than six months. Forty-three percent of long-term unemployed said they lost contact with close friends, and 38 percent said they lost some self-respect. “Few significant differences are evident between workers who were unemployed less than three months and those who were jobless for three to five months,” according to Pew. “But among those unemployed for six months or longer, experiences with emotional problems increased dramatically.”

Pew’s employment data illustrates how lengthy periods of joblessness –not unusual during these tough economic times—can “strain household budgets, test personal relationships, force changes in career plans and erode self- confidence.” The analysis includes the following trends:

Reduction in Finances
Not surprisingly, more than half of people surveyed (56%) who were unemployed six months or longer say their family income has declined during the recession, compared with 42% who were jobless less than three months and 26% of adults who have not been unemployed since the recession began nearly three years ago. Overall, the long-term unemployed are also more likely to say they are in worse shape financially now than before the recession.

Frayed Relationships With Friends and Family
Think high unemployment rates only affect the people who are unemployed? In truth, almost half (46%) of the long-term unemployed say being unemployed has put an increased strain on their relationship with family, compared with 39 percent of those who were out of work for less than three months. Even friendships have been affected as 43 percent of those unemployed more than six months say they have fallen out of touch with even close friends.

Bad Feelings
Nearly four- in-ten (38%) long-term unemployed report they have lost some self-respect while out of work, compared with 29% who were jobless for shorter periods of time. The long-term unemployed also are significantly more likely to say they sought professional help for depression or other emotional issues while out of work (24% vs. 10% for those unemployed less than three months).

Career Changes
More people appear to be thinking of jobs, even ones they’ve never had, as their unemployment continues. In addition to 43 percent of the long-term unemployed say the recession will have a “big impact” on their ability to achieve their long-term career goals, more than 70 percent of long-term unemployed say they changed their careers or job fields or seriously thought about doing so.

Job Dissatisfaction
For many in this current economic environment, new jobs pay less and have worse benefits than  old ones, with 29 percent of long-term unemployed saying their new job is worse than the one they lost, compared with only 16% of re-employed workers who had been jobless for less than six months.

Pessimistic for New Work
Pew reports that “among adults who are currently unemployed, those who have been jobless for six months or longer are significantly more pessimistic than the short-term unemployed about their chances of finding a job as good as the one they lost.”

If you feel pessimistic about finding a job anytime soon, knowing a qualified bankruptcy attorney might be the first best step to help you regain your power, conquer creditors and face your financial fears, yielding—all with the right kinds of support, information and insights—at a low cost— for a more viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, July 20, 2010 @ 10:10 am

Are you buying forecasts of an economic recovery? Don’t believe a “Third Depression” is possible? Just ask Nobel Prize winning economist and New York Times columnist Paul Krugman. On the heels of the G-20 meeting in Toronto, where world leaders pledged to cut their country’s deficits in half by 2013, Krugman warned that worldwide austerity will curb the necessary stimulus needed to encourage economies and deter another downturn.

As Krugman wrote, “We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost—to the world economy and, above all, to the millions of lives blighted by the absence of jobs—will nonetheless be immense. And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting—governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.”

And Krugman isn’t the only one threatening more economic troubles for a world of struggling nations. Joining the columnist’s analysis, The Wall Street Journal noted that “members of the Federal Reserve are in private planning for the possibility of a double-dip recession in America—a concern shared by MarketWatch’s in-house economist.”

All of this news comes as long-term unemployment is skyrocketing; unemployment benefits have stalled in Congress during election year wrangling; and consumer spending flags. As a result, Krugman argues that economies all over the world, in various stages of collapse, are trying to balance job support and creation with the competing goal of decreasing deficits. But trying to reduce deficit spending to the detriment of those trying to find work, Krugman argues, will actually work to the detriment of “tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.”

You heard right: “never work again.” So, if you are already struggling financially and fear the further economic impacts of a third depression or double-dip recession, now is the time to take on your financial woes and take back your fiscal freedoms by making a fresh start through bankruptcy. Discharging personal debt through bankruptcy now is, in some cases, the only solution for so many jobless Americans—especially unemployed workers facing years without steady income, and, now, exhaustion of government unemployment benefits—to keep their personal lives financially afloat and creditors at bay. In short, what policy makers can’t do for you, you can do for yourself.

As Krugman writes, “It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.”

Don’t be defeated. If you already find yourself in dire straits as America faces another economic downturn, knowing a qualified bankruptcy attorney is the first best step to help you regain your power, conquer creditors and face your financial fears, yielding—all with the right kinds of support, information and insights—at a low cost— for a viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Wednesday, July 14, 2010 @ 2:54 pm

Everywhere you look it seems there are people affected by Congress’s failure to authorize and extend unemployment benefits to jobless Americans. And everywhere you turn there are reports of politicians accusing laid-off laborers of resting on their laurels and depending on these federal same governmental subsidies instead of following through with their job searches. As a result, millions of unemployed workers might be wondering how to pay their debts as Congress tries to trim the deficit during an election year.

Despite Congress’s current apathy to the plight of the unemployed, voters appear to be feeling much more sympathetic as illustrated by two national polls (ABC News and CBS News) released just this week showing that registered voters believe it to be more important to help the unemployed than to reduce the national debt.

More than half of voters (52%) participating in the CBS News poll said that Congress should extend unemployment benefits “even if it means increasing the budget deficit.” A greater margin (62%) of registered voters told ABC that Congress should extend benefits despite concerns that doing so “adds too much to the federal budget deficit.”

According to The Huffington Post, “During the past several weeks, Democrats in the Senate have been unable to muster the 60 votes they need to break a Republican filibuster, failing by just one vote in the most recent attempt. Senate Majority Leader Harry Reid (D-Nev.) said Wednesday that Democrats will try again on Tuesday, after the swearing-in of a replacement for the late Sen. Robert Byrd (D-W.Va.). The poll results suggest that most voters agree with economist Mark Zandi, a former adviser to Sen. John McCain, who has argued that helping the unemployed is more important than deficit reduction in the short-term, and that nickel-and-diming the unemployed now could jeopardize the economic recovery.”

Are you personally feeling nickel and dimed during this tough economic time? Are you out of work and looking for a way to make ends meet despite a devastating amount of debt? Well, instead of hoping that the halls of Congress will provide a much-needed monetary lifeline, it might be time to take your economic matters into your own hands and join the hundreds of thousands of people who have already found financial relief in Chapter 7 or Chapter 13 bankruptcy this year.

By discharging personal debt through bankruptcy you could solve many of your most pressing financial problems—problems that are an ever-present worry for so many jobless Americans, including those facing months and even years without a steady income and no federal assistance in sight.

A personal bankruptcy through Chapter 7 or 13 bankruptcy will automatically stay creditor action and harassment, including those annoying collection letters, phone calls and repossessions; as well as dispense with much, if not all, of your secured and unsecured debt, either via an exchange of collateral, property or other assets, or through a personally-tailored repayment plan.

It’s your choice: cast your vote for a better tomorrow. Help yourself with a fresh financial start through bankruptcy.

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

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Published Thursday, June 17, 2010 @ 10:15 am

Following the last several years of the worst economic downturn in recent history, economists, commentators and financial experts have recently been heartened about prospects for economic growth and recovery this year as industries increasingly report better profits and the additions of new jobs.

Yet, as the economy emerges from the doldrums, consumers aren’t the only ones feeling hesitant.

Federal Reserve Chair Ben Bernanke said warned Congress recently that the economic recovery “won’t feel terrific.” That may be because, as The Huffington Post reports, “there’s still a significant risk of America falling into a second recession. According to the Wall Street Journal, the latest round of economic news has raised concerns among the Federal Reserve’s board of governors that the chance of a double-dip recession is increasing.”

The Wall Street Journal echoes this dismal news with more bad news from the Fed on the unemployment front.  “I would be surprised if the national unemployment rate were to fall below 9% before the end of 2010 or below 8% by the end of 2011,” Narayana Kocherlakota, Minneapolis Fed president, said Friday. And with May 2010 marking the first monthly decline in retail sales since last Fall, “CNN Money spoke to a handful of market insiders, all of whom agreed that the chances of a double-dip were rising. The experts put the chances of a double-dip recession between 20 and 30 percent.”

So how do you plan for a so-called “double-dip recession?”

Savings
While advice to “save more” may sound obvious, in a financial meltdown it can be tougher than you think to put money away and tighten your belt. According to US News and World Report, “During the worst days of the recession, Americans boosted their savings to about 5 percent of their disposable income, as they built (or rebuilt) nest eggs and rainy-day funds. But the savings rate has now fallen to 3.4 percent, and that’s not high enough. Economists believe the savings rate needs to be somewhere between 6 and 10 percent, for several years, for the nation to rebuild all the wealth lost in the housing and stock market busts. That might sound high, but the historical average after World War II was about 12 percent. Few households today can match that.”

Side Income and Connections
In this tough economy, there’s no excuse for not harnessing the entrepreneurial spirit. In order to shore up your savings or make a backup plan for your business, try accruing side income and professional connections via freelance or consulting work, starting an online business, or putting together a website showcasing your marketplace acumen. A little hard work now can pay dividends in a “double-dip.”

Self-Sufficiency
As federal deficit balloons and Congress become more reluctant to spend, there will be a lot less aid from government coffers to spurn the economy and help Americans, including fewer tax breaks, unemployment benefits, stimulus-sponsored jobs, or other government aid. As such, the quicker we realize we’re on our own the easier it’ll be to make preparations for an uncertain future: save more; work harder; and plan better…for rainy days and beyond.

Consider Bankruptcy
Knowing a qualified bankruptcy attorney can also help you to save money, time, and make you more self-sufficient in an uncertain future, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, June 17, 2010 @ 8:17 am

Just when you thought it was safe to call it an economic recovery, the American Bankruptcy Institute (ABI) pointed to a continuing recession with reports last week that personal bankruptcy filings for the month of May 2010 have increased compared with a year ago (May 2009). In this data also reveals figures finding that total bankruptcies dropped slightly in May 2010 versus the previous month of April 2010.

According to the ABI findings, in May 2010, 136,142 personal bankruptcy cases were filed, a nine percent increase from May 2009, when 124,838 cases were filed. May’s total marked a six percent drop from April of this year, when 144,490 cases were filed. Of the cases filed, 26 percent were under Chapter 13 of the U.S. Bankruptcy Code, and most of the remaining 74 percent were under Chapter 7. Based on figures collected so far in 2010, most sources estimate that personal bankruptcy filings this year will total about 1.6 million, a 10 percent increase over the 1.44 million filed in 2009.

While May marked a decline in filings from the previous month, the ABI data is still illustrative of a severe economic crisis—especially the recent year-to-year increase in insolvency.

While the reasons for the rise in personal bankruptcy, and specifically Chapter 7 bankruptcy, aren’t always clear, other economic forecasts in recent months shed some light on the ongoing issues.

First and foremost, an increase in total bankruptcy filings from this time last year could be one of the offshoots of consistent borderline double-digit national unemployment. This persistent joblessness means many average Americans who have been out of work for several months to a year or more are now exhausting their savings and turning to bankruptcy to get a better economic foothold. In addition to pushing people into bankruptcy, unemployment seems to responsible for the fact that Chapter 7 cases outnumber Chapter 13 cases nearly two to one. This data reveals that widespread unemployment may mean many people have too little money coming in to even consider a Chapter 13 bankruptcy repayment plan. As a result, Chapter 7 may be their only hope in an uncertain economic environment.

And there appears to be no help on the home front for those in over their heads and underwater in their mortgages. In addition to long-term unemployment affecting bankruptcy filings, mortgage costs may be pushing more filers toward Chapter 7. As has been well reported, despite efforts from the Obama Administration’s Home Affordable Modification Program (HAMP), millions of Americans with astronomical mortgages and facing foreclosure have not been able to have their loans modified and still owe more than their homes are worth. Stuck with expensive home loans that they can’t afford, many are willing to walk away from the underwater lifestyle using Chapter 7 (versus salvaging their homes through Chapter 13).

So, if you’re one of the millions struggling with unwieldy debt, long-term unemployment, or an unmanageable mortgage, bankruptcy can work for you as it has for so many this year, and last.

Knowing a qualified bankruptcy attorney can also help you to save money, time, and make you more self-sufficient in an uncertain future, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.” The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, May 14, 2010 @ 8:20 am

Don’t call him a repo man. But if you are behind on the house payments, he’s coming for your keys.

In what can only be considered a sure sign that the current housing crisis is unlike any other, banks are now deploying professional “mediators,” to visit struggling homeowners to negotiate a settlement, which usually ends up with the homeowner accepting a check and the bank changing the locks. In the same day.

Long the route taken by banks to seize cars from owners who, for one reason or another, could no longer make the payments, repossession is now a strategy being used by mortgage lenders across the country.

While car repos are often done surreptitiously under the cover of night by shadows darting in and out of garage-mounted motion lights, those sent to take back your home come in the light of day. In suit and tie with hands crossed, they appear on doorsteps like harbingers of future financial doom. It’s a doorbell ring that will often be the last one a family hears in their home.

Joseph Laubinger is a home taker. He comes to settle the final details for exiting the home in a legal but relatively hassle-free way. “Here is your check,” he may say. “Now, can I have your keys?”

Banks employ Mr. Laubinger to run the middle ground between forgiveness periods and foreclosure. In other words, after everything has been said and every step taken before the inevitable, he shows up to smooth things over.

However, he doesn’t just come to hold the door open while you and some friends carry boxes of china out the curb. He is often sent in the early stages to talk to families about their options and to explore early alternatives before things escalate. When sitting at the kitchen table, he often gets the same question. “People ask me how much time they have left,” he said.

And he has been getting that question a lot lately.

Currently in America, more than four million households nationwide are “severely” delinquent in their mortgages. Industry experts report that the first quarter of 2010 has seen more mortgage failures than at any other time during “the crisis.” Close to 250,000 homes have been taken over by their lenders since the start of the year. Laubinger’s job is to make the exit process a bit easier for everyone.

Foreclosure is an expensive option for banks—and they don’t like it. Families that meet people like Laubinger don’t have to accept his offer, but as one might imagine, it’s often a hard one to refuse.

Many homeowners are becoming more brazen in the defense of their homes. They know there is no legal grounds on which they can be evicted until the foreclosure process is made formal. Thus—out of spite in most case—people can hang around just to tick off their mortgage lender.

In the majority of cases, bankruptcy can save a debt-stricken family’s home. In a Chapter 13 bankruptcy, the mortgage lender must accept the terms of a 5 year repayment plan. By also getting rid of your unsecured debt, a Chapter 13 bankruptcy can put you in a better position to succeed after bankruptcy.

Laubinger’s company is expanding rather rapidly. He has moved tables and chairs into his garage as a makeshift office to train a couple of new employees. He currently roams the Midwest, working for Fannie Mae (the government) and regional banks. But don’t think he, or folks like him, won’t be making headway to North Carolina in the near future. Just listen for the doorbell.

If you’re behind on your mortgage, call the Law Offices of John T. Orcutt today. In North Carolina, call 1-800-899-1414 for a free initial debt consultation or visit www.billsbills.com for more information.

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Published Tuesday, May 4, 2010 @ 8:22 am

In this tough economy, it may seem like your creditors are an ever-present part of your life…showing up where and when you least expect, or need, them. But creditors with real teeth (i.e., car lenders, mortgage holders, and landlords) don’t need to make harassing calls or threaten you in order to get what they want. They can just take your stuff: cars in default, homes in foreclosure, rentals in eviction. While bankruptcy can stop secured creditors cold, in the alternative, unsecured creditors, the ones at the bottom of the proverbial food chain, are more likely to be the ones contacting you via phone, sending you letters, and generally harassing you for cash, any cash, where and when they can.

So what are you to do when these sneaky solicitors become too much?

In this four-part series, “Creating a Barrier to Bill Collectors,” we’ll debunk unsecured debt collecting strategies, explain how to use Federal law to stop the harassment, explore the limits of when creditors can contact you, and finally, show you how bankruptcy can solve everything.

We’ll start with a basic understanding of how much (or little) creditors can actually hurt you.

Unlike home, car and other secured lenders, unsecured creditors and their hired goons, the collection services, only have vague threats “to take further action” if you do not pay your bills. These actions could include, canceling your account, reporting you to credit unions, or threatening to get a judgment against you.

In actuality, (and the more likely scenario in this tough economy where defaults are the norm, not the exception), your creditor may already have canceled your account, already reported you to a credit bureau and is likely telling you they’re considering legal action. None of this is necessarily bad news or should cause you to worry.  There are worse things than having an unsecured account, like a credit card, canceled—especially one that you couldn’t afford to pay in the first place. Once your account is canceled, your interest rates don’t rise and you can begin the work of paying down your bill or getting the debt expunged with bankruptcy. Assuming they’ve already reported you to the credit agencies, that removes one more piece of leverage for getting you to pay. And, finally, keep in mind that debt collectors may threaten lawsuits, but are always looking for the cheapest way out…and that’s to harass you for your money, not hiring a lawyer. So, don’t give in, or give up.

What debt collectors can’t do is report your delinquency to your employer or otherwise publish your debt to the public; nor can they take your property prior to suing and obtaining a judgment against you.  Regardless, the process of gaining a judgment is complex, time-consuming and costly, leaving many lenders using traditional, aggressive tactics to try and get back at you and your money.

In short, it’s better to give bill collectors nothing than even a small amount that will keep them coming back for more. You can always square your debts directly with your creditor or consider your other options; coming up in this series we’ll discuss how to use federal law to keep bill collectors at bay, the ways to call collectors on their intrusive practices, and using bankruptcy to not only erase unsecured debts, but also the hassles of debt collection.

If you too have been effected by the economy and are wondering how to reduce debt and get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Wednesday, April 28, 2010 @ 8:23 am

While millions of struggling Americans still working hard to find meaningful employment might disagree, economists are heartened about prospects for growth this year as industries increasingly report better profits and add new jobs, though they still expect the recovery to remain slow, a new survey shows.

As The Huffington Post reported this week, 70% of those recently surveyed by The National Association for Business Economics believe real Gross Domestic Product (GDP)—the measure of our country’s overall economic output— will “grow by more than two percent this year, up from 61 percent who said the same in January. Twenty-four percent are predicting real GDP will grow by more than 3 percent in 2010, up from 14 percent earlier this year. ‘Industry demand moved higher compared to results in the January 2010 report, pointing to stronger growth in 2010,’ said William Strauss, a senior economist at the Federal Reserve Bank of Chicago. ‘After more than two years of job losses, job creation increased in the first quarter of 2010, suggesting a better outlook for hiring over the next six months.’ The NABE forecast…shows fewer jobs are being shed, more are being created and more companies are making money.”

Similarly, HuffPost said that recent growth is said to be at its fastest pace in 10 months.  “American employers March added 162,000 jobs, the most in three years. Wages and salaries also are improving. Respondents reporting higher pay more than doubled to 26 percent, while those reporting a decline in wages slipped to 6 percent from 7 percent in January. The net reading for wages and salaries – planned increases minus planned cuts – was 20, the highest reading since January 2008. Higher salaries would bode well for the recovery, since consumer spending accounts for as much as 70 percent of U.S. economic activity.”

More jobs and higher wages were met by rise in bankruptcy rates last month. In fact, March 2010 marked the highest amount of personal and commercial bankruptcies since 2005. According to data compiled by the Automated Access to Court Electronic Records, there were 158,141 bankruptcies petitions filed this past month—an increase of 20 percent from March 2009.
Thus far, these figures represent the highest number of reported Chapter 7 bankruptcies since 2005, when new laws, including the “means test,” caused a dramatic reduction in bankruptcy cases.

With jobs and wages rebounding in 2010, the record filings are being attributed to the lingering housing crisis, responsible for millions of underwater mortgages, in which the homeowner owes more than the home is now worth. As has been well reported, many are simply allowing banks to foreclose on their houses and filing Chapter 7 in the process, considered the quickest and most common of all bankruptcy, especially for allowing one to “walk away,” from looming debt.  Many are using recent tax returns to sweeten the deal, paying experienced attorneys to help them begin on a path to more a healthy financial future.

If you have been effected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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

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

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

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

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

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

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

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

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Published Friday, April 9, 2010 @ 7:27 am

While many economists say this decade’s Great Recession ended in the middle of 2009, millions of struggling Americans still working hard to find meaningful employment would definitely disagree…and now, the figures do too.

According to the latest U.S. Bureau of Labor Statistics employment report, more than 40% of the nation’s 14.9 million unemployed workers have been out of a job for at least 27 weeks, with an average member of this beleaguered club having been unemployed for 29.7 weeks. For those keeping count, that’s nearly seven months.

And with each passing month, it becomes more and more clear that finding new jobs isn’t getting any easier, with leading economists speculating that not only is the nearly 10% unemployment rate not likely to fall anytime soon, but also that the actual number of workers seeking full-time jobs is on par to grow. As Matthew Scott reported for AOL’s DailyFinance.com, “in the worst-case scenario, more than 26 million people could be battling each other for the few available jobs.”

A Shift in American Industry Yields No Available Jobs

The reason: a general decline in certain American industrial mainstays such as construction and manufacturing that may never return. Add that to the fact that few industries will likely be in a position to pick up the slack from these hard-hit construction and manufacturing sectors, unable to accept large numbers of new workers in the next few years, with all signs pointing to more unprecedented joblessness during that time.

More facts and figures are against us when you consider that many of the job cuts companies made during the recent economic downturn may remain permanent unless any purported recovery leads to genuine expansion in American industry—not, as Scott reports, “just the moderate 3% to 4% annual growth that has been projected through 2012.” In short, if job cuts become permanent, it could cause real upheaval in some industries, forcing many workers to retrain when they can to find work in different industries where they can.

A Shift in Part-Time to Full Time Yields Few Openings

Even when hiring does begin to pick up, the unemployed have to compete against an unexpected pool of qualified applicants: part timers. As Scott reported, “Employers have been filling full-time schedules with part-time workers until companies feel more confident about their future growth prospects. People in those part-time positions will likely be hired full-time before employers look at other workers.”

Even when part timers become full timers, Scott says, “the 2.5 million workers who are discouraged and have stopped looking for work — and as a result don’t show up in the unemployment statistics — will begin returning to the labor market. Add them to the 14.9 million unemployed already counted and the part-timers, and that’s at least 26.4 million people potentially looking for work. The nation would need double-digit gross domestic product growth to absorb that many workers.”

A Shift in Perception Yields Positive Growth in New Fields

But it’s not all bad news on the homefront. Some predict that within the next eight years, millions of job openings could appear in education, health care, government and nonprofit.

In the meantime, qualified bankruptcy attorney can assist proud, but jobless, citizens just like you to conquer your fears of losing it all. If you are in North Carolina and receiving unemployment benefits, call a bankruptcy attorney today. The upfront fees for a Chapter 13 bankruptcy can be as low as $338.00. 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, March 24, 2010 @ 8:00 pm

In this economy, qualifying for a bank loan or line of credit can feel impossible—even for people with perfect credit—and much more so if you’re trying to bounce back from a recent bankruptcy. But a bit of patience (targeting smaller community banks rather than large corporate banks) and a bit of help (getting others to vouch for you) can improve your odds tremendously—even in this uncertain economic climate.

As Robert C. Seiwert, senior vice-president of the Center for Commercial Lending & Business Banking at the American Bankers Association told Businessweek,  “A bankruptcy can hurt your chances of getting new credit for at least seven years. What gets damaged in a bankruptcy is the view of your character. A banker wants to know, even if you have the money to repay a debt, will you? If you get into trouble, will you work with the bank or walk away?”

As a result, the key is doing a bit of little local legwork: finding community banks who will see you for more than just your credit score. “The bulk of community banks evaluate your application by sitting down and talking with you, looking at your specific collateral and your cash flow,” Seiwert told Businessweek.

So what do you do when you find a bank community or small regional bank? Rule one when approaching your friendly neighborhood loan officer: be honest. Explain what happened leading up to your bankruptcy; how you’re back on financial track; and exactly what you need to keep moving. “If you can show that you did your best to make good on your obligations after the fact, or that you intend to pay back that loan now that you’re profitable again, that will go a long way to restoring that chink in your character that the bankruptcy suggests,” Seiwert told Businessweek.

Rule two is to play the financial field. Talk to multiple bankers, evaluating which of the local banking bunch seemed most welcoming to you and your business—even if they initially turn you down. “Stay in the loop with those bankers. Contact them occasionally and let them know about your progress,” Seiwert said. “It’s absolutely critical that you keep following up” to improve your chances of getting a line of credit in the future.

Rule three, is to start off small. Gradually work your way up to a larger loan or credit line as you improve your credit score. If you pay your loan on time for a series of years, your local bank will be more inclined to offer you more.

Another rule of the financial road is to seek nontraditional partners. In addition to depending on the kindness of banking strangers, turning to your businesses’ customers or colleagues to make an introduction for you at a bank to help you get your foot in the financial door. If either is willing to co-sign on your loan, or loan money directly to you as well, all the better. And never forget that people with excellent credit make for great business partners in this process, convincing banks to accept your risk to work with them.

So, if you’re bankruptcy bound and seeking solutions for continuing your business, the bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button and let these experts smoke out your next best financial steps.

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

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

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

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

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

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

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

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

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

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

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

So, to avoid any headaches, hassles or hardships the best rule of thumb is, if you are going to get your financial house in order, or even file for bankruptcy, get your bad spending and personal habits in check.  In short, don’t let your future go up in smoke: The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button and let these experts smoke out your next best financial steps.

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Published Monday, March 15, 2010 @ 6:27 pm

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

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

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

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

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

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

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

The truth remains, if you are no longer able to sustain or expand your business in your current financial situation, filing for bankruptcy may be your best bet. And, in this case, the best move a beleaguered small business owner can make is to consult an experienced bankruptcy attorney who specializes in small business cases. Skilled bankruptcy attorneys like those at The Law Offices of John T. Orcutt can get to work early, navigate any uncertain waters of bankruptcy court and work in your best interests during the duration of your small business bankruptcy. The attorneys at The Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, March 5, 2010 @ 4:30 pm

Life after bankruptcy is beautiful thing. Your stress levels go down and you become more confident with money. Now that things are back on track, maybe it is time to take a whole-life approach to changing the way you live. For some, it’s a new, but smaller, home; a more economical car; or a strict monthly budget. For others, re-starting your life may include relocating. Boy, that sounds like a big decision, huh?

So if you have a new financial outlook on life and think it’s time to move, where would you go? Thankfully, our friends at Forbes.com have researched a list of the best cities in America for “getting ahead.” Their research was based primarily on areas that have good job growth and income growth and a relatively affordable cost of living. Call U-Haul, because here are some of your options, in no particular order:

Like Winter? Well, if so, point the GPS toward Delaware County, Ohio. The home county of Columbus has a three-year income growth of 11 percent and is the fastest growing county of the state. Forbes tells us it has a wide variety of jobs and a number of grounded, family-oriented neighborhoods that help prop-up a stable workforce.

If you don’t mind the rooting for the Texans over the Cowboys, Fort Bend County, Texas, outside of Houston, realized 10 percent job growth between 2007 and 2008 and added just under 6,000 jobs since the middle of 2007. A large portion of employees can be found working in energy companies but it’s diverse enough for people to find opportunity in education and hospitality. Many members of Forbes’ 400 Best Big Companies reside in Fort Bend County.

Another relocation is near Frank Sinatra’s kind of town. No, not Vegas. Chicago. Outside of where the wind blows is Kendall County, an area that experienced a 90 percent population increase from 2000 to 2008 and as a result, a seven percent jump in income. You can find another attractive option near Chicago in Will County, Ill., which in 2007 and 2008 saw its residents’ income climb by seven percent.

A bit north, you can settle in balmy Carver County, Minnesota where income jumped by five percent for the same two years. Carver is close to Minneapolis, one of the Twin Cities along with St. Paul which are consistently present in many “Best Places to Live” lists.

If the Midwest or Lone Star State do not appeal to you, head just north of the Triangle to Hanover County in Virginia, an area which saw its per capita income also grow by five percent.

Drive by an ever-expanding government, other regions in Virginia that made the list include Loudon and Alexandria Counties. However, even with the income growth, these areas are very expensive in which to live. Thus, their presence on the list is somewhat questionable because for the most part, to get ahead in Alexandria County, you need to already be ahead.

Relocating can be an expensive endeavor. If you are lucky enough to have a new employer cover some costs, then terrific, you are already on your way. The key is to start planning early and do not rush. After all, it’s not like the real estate deals are going anywhere.

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Published Monday, March 1, 2010 @ 11:15 am

Overworked? Underpaid? Join the Club: The Middle Class

This week, a money-themed CBS Sunday Morning featured Cary, North Carolina’s SAS, a business software company–featuring subsidized on-site daycare, gyms, and health care–as an example of a corporate aberration in the these tough economic times. As CBS reporter Jim Axelrod pointed out in his cover story “The Great American Paycheck Squeeze,” the reality is, “for more and more Americans in these recessionary times, SAS might as well be Disney World. The fact is, most workers feel overworked, under-appreciated and–most of all–under-paid.”

What’s your work experience in this decade of decline? Overworked? Underpaid? Or just happy to be here? Regardless, it’s a tough time to be almost anyone in the work force.

“We’re living through one of the worst times for wage growth ever,” Larry Mishel, an economist with the Economic Policy Institute, a non-partisan, non-profit Washington think tank told CBS. “From 2002 to 2007, the hourly compensation of a typical college graduate or a typical high school graduate went up zero – didn’t grow at all.”

Mishel says for most American workers, wages haven’t been keeping up with productivity for some 40 years.

“If you’re in manufacturing, there’s pressure from overseas,” he said. “We’ve weakened the ability to have and keep a union, we’ve introduced privatization, we have a much lower minimum wage, in many industries, we’ve deregulated them.”

And then enter this decade’s Great Recession, marked by rising foreclosure rates, escalating health care costs, recent credit card company schemes and unprecedented unemployment.
“We’ve seen the steepest and longest rise in unemployment since the Great Depression,” Mishel told CBS’s Axelrod. “This has a tremendous downward pressure on wages. Employers have all the leverage; they don’t have to give you more money to get you accept a job.

“In a Great Recession, you don’t have songs that say, ‘Take this job and shove it!’” Mishel said.

Specifically, the economist points to the fact that from the 1940s until around 1970, “as workers became more productive, their salaries grew accordingly. But around 1970, things changed, and for the next four decades, as productivity skyrocketed 70%, hourly wages hardly budged, rising a mere four percent.”

And what happened to all of those profits?  Mishel points to the upper echelon of business leadership. “Between 1989 and 2007, before the Great Recession, of all the income growth that was generated, the bottom 90 percent [of Americans] got only 15 percent of it. The upper one percent got 55 percent. And the upper tenth of the upper one percent, the one out of 1,000 households, got about a third of all the income growth.”

In other words, a third of all income growth went to one tenth of one percent of people, leaving the middle class with little to show for all of the country’s purported economic growth.

“We know that CEOs in large companies make 270 times that of a typical worker,” Mishel said. “It used to be around 20 times, 30 times, back in the ’60s and ’70s. Now the fact is, you don’t have to pay someone that much to get out of bed and go to work and be productive.”

The economist also challenged anyone who says we’re actually better off now than 40 years ago. “It’s really a low threshold to say families are a little better off than 30 years ago, when the pie grew by 70%,” Mishel said. “They should be far better off.”

Which brings us back to the story of SAS, and what co-founder and CEO Jim Goodnight is trying to do: redefine the concept of “fair wage.”

“You know, I always use the phrase, ’95 percent of my assets drive out the front gate every night, and it’s my job to bring ‘em back,’” Goodnight said to CBS.

And for anyone trying to grow a business in this economy, Goodnight’s view is that these fringe benefits are just “the smart thing to do.”

“The point of the benefits is to keep people,” said Goodnight. “And if you keep people and make your people happy, they’re going to make your customers happy. And if your customers are happy, they’re going to make the company happy. So, it’s sort of a triangle there that you have to always keep in mind.”

So, if you’re reading this and wishing you too could work for SAS, take heart. Even in these tough economic times, the company is hiring. But apply now . . . not surprisingly last year SAS received nearly 40,000 resumes.

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Published Wednesday, February 24, 2010 @ 1:03 pm

While the current economic forecast is considered less dismal than in past months, the Federal Reserve released a forecast this week predicting unemployment will stay high over the next two years—noting that recession-scarred employers are likely to stay conservative in their hiring practices even as recession-scarred citizens continue their search for a dwindling number of jobs.

According to The Huffington Post, in the Fed’s late January meeting, the central banking system left rates at a record low—near zero—“to help nurture the recovery and drive down unemployment. And it pledged to hold rates at ‘exceptionally low’ levels for an ‘extended period.’ Fed Chairman Ben Bernanke, in remarks last week, suggested the Fed is still months away from raising rates and draining money out of the financial system. The recovery is still fragile and unemployment, now at 9.7 percent, is high. In its economic forecast, Fed policymakers said it will take “some time” for the economy and the jobs market to get back to normal. They did not spell out how long that would be. Previously, they suggested it could take five or six years for economic conditions to return to full health. A ‘sizable minority,’ though, said they thought it could take more than five or six years for the economy and the job market to return to normal. The Fed said the unemployment rate this year could hover between 9.5 percent and 9.7 percent and between 8.2 percent and 8.5 percent next year. By 2012, the rate will range between 6.6 percent and 7.5 percent, it predicted.”

These forecasts have apparently changed very little from the projections released by the Fed towards the end of 2009. However, what is noteworthy is the fact that these numbers suggest unemployment will remain higher than normal unemployment rates (between 5.5 percent and 6 percent) just as the country heads into this year’s midterm congressional elections and the 2012 presidential election. Unless things change dramatically soon, this is bad news for incumbent members of Congress, and possibly the current administration, and bodes well for newcomers to the political scene willing to challenge their tenured counterparts on “The Economy, stupid.”

As the Huff Post reports, “Fed policymakers ‘expect that the pace of the economic recovery will be restrained by household and business uncertainty, only gradual improvement in labor market conditions and a slow easing of credit conditions in the banking sector,’ according to the forecast.

Against that backdrop, the Fed expects the economy will grow between 2.8 percent and 3.5 percent this year. Growth will pick up to between 3.4 percent and 4.5 percent next year and log similar growth in 2012. The economy would need to grow by at least 5 percent a year to make a dent in the unemployment rate, analysts say.”

Further forecasts into the Fed’s view of (and moves in) the current “up and down” economy, as well as its strategy for curtailing stimulus money, will likely come at next week’s House Financial Services Committee hearing. Wednesday’s meeting will feature Chairman Bernanke delivering the Fed’s twice-a-year economic report to Congress—a report that will likely show growth, just not enough for the millions of unemployed Americans.

Every week bankruptcy attorneys continue to meet with dozens of people in financial distress due to these very employment woes.  In each case, these same unemployed people, having heard no signs of relief from the government, come into law offices feeling hopeless and at the end of their rope, perceiving no alternatives to their continuing fiscal problems.  Almost every time, however, it seems when these same clients leave these offices, they finally feel some sense of relief for the first time since the job recession started; they are reassured that the bankruptcy laws and the bankruptcy system offers them the possibility of a new start—at an affordable cost—and with it a financially viable and secure future. In short, bankruptcy relief ends worry and stress for many jobless Americans living on the financial brink.

For reliable bankruptcy advice that you can trust, contact The Law Firm of John T. Orcutt. And to find out more about your bankruptcy options, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

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Published Saturday, February 13, 2010 @ 1:09 pm

In what can be considered the best example of the current state of the nation’s commercial real estate industry, the largest residential real estate investment in United States history is facing bankruptcy. As a result, the current owners of the Stuyvesant Town/Peter Cooper Village are handing the property over to its primary financial backers after the recession and overall plunge in global real estate values decimated the complex’s value to a third of where it was upon its 2006 purchase.

Bought for $5.4 billion by Tishman Speyer and BlackRock Realty, the largely middle-class development in New York city housed 11,227 apartments and provided homes to close to 25,000 individuals, a population larger than many small cities. The entire development actually consists of two separate apartment complexes.

Originally built to house soldiers returning from World War II, it is now estimated to be worth around $1.8 billion.

The owners chased down the massive deal at the absolute height of the real estate bubble, eager to undergo massive renovations to convert it to higher-end units and change the neighborhood’s reputation as a run-of-the-mill urban New York City address into a live and play destination.

They also fought hard to assess tenants for additional funds through rent increases and projected they could turn portions of the area into luxury condos.

However, tenants were quick to protest what would amount to a $200 million door-to-door collection when all was said and done. A New York State judge sided with the residents when the issue made it to court, leveling the owners’ redevelopment plans. The pending economic crash did not exactly help their cause, either.

Since November of last year, the group has been working to restructure close to $3 billion in outstanding loans.

The critical breaking point for the partnership, which is exactly what continues to erode the stability of our nation’s commercial real estate industry, was their inability to make their most recent loan payment of $16 million. With credit no longer readily available, owners of commercial property are collectively facing billions in expiring mortgage loans with no way to refinance.

Commercial landlords are doing everything possible to lure and keep tenants in their buildings. Rents have dropped substantially and months of free rent are handed out with little negotiation as high-end office property owners are watching their rent rolls shrink. Larger commercial real estate companies and ownership groups are filing bankruptcy, laying off brokers and shopping mergers as the United State government scrambles to prevent what many on Wall Street are calling “the other shoe” from dropping on our already trembling economy.

With the announcement of the Stuyvesant/Cooper complex’s trouble, the commercial real estate industry has sustained another serious blow across the chin. You can only hang on the ropes for so long.

The lenders on the property, a group that includes The Church of England and the California Public Employees’ Retirement System (as if they could use another reason to worry about money), now have to figure out the best way to handle one of the nation’s most massive housing developments. One option, of course, is foreclosure.

Many in the industry challenged the purchase as a major risk, given the difficulty of dislodging rent control standards in New York and the fact that high cost of the property left little room for error. Since income property is essentially the purchase of a revenue stream—rent—its value falls when tenants are not able to provide that revenue. Plus, when the tenants won the case against the rent increases, the coffin nails met even less resistance.

Brought to you by the Law Offices of John T. Orcutt. Call today for your free debt consultation. If you’re in North Carolina, call 1-800-899-1414. Durham, Raleigh, Fayetteville and Wilson offices.

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Published Saturday, February 13, 2010 @ 8:08 am

In this era of extreme homeowner hardship, mounting medical bills, and surging unemployment, most people use their credit cards—for better or for worse—just to get by. But, as everyone knows, there’s a price to pay for playing with plastic, including, over recent years, soaring interest rates, diminishing card disclosures, and a general lack of lender and credit card company transparency.

Well, now a hint of positive consumer news is just on the horizon. In addition to a few provisions enacted in August 2009 signifying a new era of consumer protection law, as of February 22, 2010, even more sweeping changes are set to occur in an effort to right several of the most basic wrongs credit card companies have increasingly imposed upon card holders.

The all-new Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), signed into law by President Obama on May 22, 2009, is poised to protect consumers from unexpected and massive changes to their credit card terms—terms that have previously led to financial hardship for an overwhelming amount of American families.

As of February 22, 2010, major changes include:

Death to the “Default Clause”
Credit card issuers will be unable to increase interest rates on existing credit card balances unless you, as borrower, are a minimum of 60 days late on your card account. This provision eliminates the universal “default clause” whereby card companies could simply your increase interest rates and fees based on defaults on other debts.

Clear and Present Disclosure &  Standard Promotional Periods
Credit card companies must provide clear disclosure of account terms before you open a credit card account. Additionally, if the account is pitched with a promotional interest rate period, that rate must last a minimum of six months.

Interest Rates Remain In Check
Issuers cannot raise interest rates on your new credit cards during the first year of your account, unless the you are 60 days late on a credit card payment.

Overcoming Over Limit Fees
Credit card issuers cannot charge over-limit fees without your prior consent to accept and process over-limit transactions. If your consent is obtained, the card issuer cannot then charge more than one over-limit fee per billing cycle. Also, the issuer may not charge an over-limit fee if interest charges or fees are the reason the account is over its limit.

Packing Up Those Penalties
Credit card issuers must not charge penalties for receipt of payments by mail, phone, electronic transfer, or any other method, unless the payment is processed through an expedited service processor.

Avoids Taking Advantage of Younger Borrowers
These new rules make it much more difficult for credit card companies to target and issue cards to borrowers under age 21 without a co-signer, unless it is shown that the borrower has sufficient income to repay the card amount.

Atone for the Holidays
If an account due date falls on a weekend or holiday, the credit card company is forbidden from penalizing payments that are received on the following business day. In addition, any account payments received by 5 PM must be credited to the same day.

Down with Double Billing
Some credit card companies have used the previous month’s balance to calculate interest charges for the current month. These provisions forbid this type of “double-cycle billing.”

Payment Where Payment is Due
Card companies are required to apply any payment above your minimum amount due to your highest interest balance first.

Subprime Bargain
At the time the account is opened, subprime credit cards will have fee limits totaling 25% or less of the credit limit.

Disclosure Is In Demand
Credit card issuers must provide a written explanation of how long it will take to pay off your card’s existing balance and the total cost in interest fees if you pay only the minimum amount due, as well as the total cost in interest to pay off the balance within 3 years.

Terms You Can Live By
Credit card companies must also make account terms and cardholder agreements available to you online.

While provisions like these mark a major victory for consumer protection, this major overhaul is causing some unpredicted aftereffects, including demanding credit approval checks, a reduction in credit card limits, and, in some cases, the sudden closure of these cards by your cardholder.

Despite any good news, if credit card debt and demands have still got you down, an experienced bankruptcy attorney can be a useful resource. Visit the website of The Law Offices of John T. Orcutt for the latest advice and up-to-date information for creating a better financial future.

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Published Saturday, January 23, 2010 @ 7:15 am

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

According to the Bankruptcy Code, a family farmer is:

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

Similarly, a family fisherman is:

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

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

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Published Monday, December 28, 2009 @ 4:40 pm

Student loans are the source of many an American’s debt woes, especially in today’s down economy. If you have ever looked into discharging your student loan debt through a bankruptcy filing, you have discovered that, while not impossible, discharging student loans in bankruptcy is extraordinarily difficult.

Student loans are not dischargeable in bankruptcy unless continued payment of those loans poses an “undue hardship” under Bankruptcy Code Section 523(a)(8). While the term “undue hardship” is not defined in the statute, in practical terms, the “undue hardship” standard has been applied extremely strictly. Speaking in broad terms, student loans cannot generally be discharged unless the debtor in question is physically unable to work and is unlikely to be able to obtain gainful employment anytime in the future. In fact, one federal judge has referred to the “undue hardship” standard as the “let’s make it as tough as humanly possible to discharge a student loan” standard.

The federal government actually made it harder for debtors to discharge student loans in bankruptcy in 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed into law. Prior to BAPCPA’s passage, privately funded student loans, as opposed to federally funded and federally guaranteed student loans, could potentially be discharged in a Chapter 7 bankruptcy proceeding. Under BAPCPA, the “undue hardship” standard applies to all student loans, whether federal loans or private loans.  

In one recent case, Educational Credit Mgmt. Corp. v. Bronsdon, a court ruling on the bankruptcy proceeding of a particularly luckless recent law school graduate chose not to make things any easier for her. Denise Bronsdon was sixty-one years old when she entered the Southern New England School of Law in 2002. Although she graduated in the top half of her class, she was unable to pass the Wisconsin bar exam upon her graduation in 2005, After failing the exam three times and finding herself unable to pay to take the exam again, she worked some temporary jobs, but was unable to find full-time employment and filed for bankruptcy. 

Ms. Bronsdon succeeded in convincing a Massachusetts bankruptcy court that her loans constituted an undue hardship. Her lender, however, appealed to the United States District Court for the District of Massachusetts. The District Court then ruled that the bankruptcy court erred when it failed to include the fact that Ms. Bronsdon chose not to participate in the D. Ford Direct Loan Program’s Income Contingent Repayment plan in its undue hardship analysis. The bankruptcy court concluded that the loan repayment assistance program should not be part of the analysis because her participation in the program could have resulted in serious tax liability, but the District Court held that the bankruptcy court’s conclusion as to Ms. Bronsdon’s future tax liability was overly speculative. 

The District Court remanded the case to bankruptcy court and instructed the court to consider the loan repayment assistance program in its undue hardship analysis. In related news, the Supreme Court of the United States recently heard argument in United Student Aid Funds, Inc. v. Espinosa, a case in which a lender sued to challenge the confirmation of a debtor’s Chapter 13 bankruptcy plan years after its approval by a bankruptcy court because the bankruptcy court did not apply an undue hardship analysis in ordering the discharge of interest owed on the debtor’s student loan debt. The Court will decide whether an undue hardship analysis was necessary for the bankruptcy court’s approval of the debtor’s bankruptcy plan and its subsequent discharge of his student loan debt to be valid and final. 

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Published Sunday, December 27, 2009 @ 10:10 am

A common practice for many businesses and individuals is to make charitable contributions that can then be used as a tax deduction. Whether the motivation be a tax benefit or true philanthropy, many organizations depend on these contributions.

The contributions that Joe Kimmel has made to two local universities in western North Carolina are likely to come to an end soon as the philanthropic business man has filed for personal bankruptcy protection as well as protection for his company, Kimmel and Associates. Kimmel is the sole owner of Kimmel and Associates, a company that specializes in executive searches for the construction industry. Exactly how the two bankruptcy filings will affect the donations he has pledged to two universities remains to be seen.

Kimmel has pledged a combined $9 million to the University of North Carolina at Asheville and Western Carolina University. A new basketball arena was to be constructed in Asheville and a new construction college at WCU.

He made his pledge to Western Carolina University back in December of 2005. He was supposed to be donating $6.92 million to go to the construction of the Joseph W. Kimmel School of Construction Management, Engineering and Technology. The donations were to be spread over an eight year time frame.

Information has yet to be obtained about the $2 million Kimmel donated to the University of North Carolina in Asheville. The convocation center for the Center for Health and Wellness at the University is set to be named after Kimmel.

While Kimmel and his business will likely come out of the bankruptcy court in good shape the same may not be said for the construction projects already underway by both universities. It is almost a certainty that any future contributions will be out on hold as Kimmel and his company regain their financial footing. None of the nearly hundred employees of Kimmel and Associates are expected to lose their jobs.

At least three of the payments to Western Carolina have already been made. Bankruptcy law permits a Trustee to recover amounts contributed to a charity if the contributions were made with an intent to defraud creditors. While the true motivation of Kimmel’s contributions are probably not of a fraudulent nature, it is certain that no future contributions will be made. This will leave the school scrambling to obtain additional funding to complete the projects.

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

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

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

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

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

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

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

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

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

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Published 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 Thursday, December 3, 2009 @ 6:11 am

The American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center, reports that more than 135,000 consumers filed for bankruptcy in October 2009. The industry group estimates that this represents a nearly 9% increase in filings from the previous month. ABI Executive Director Samuel J. Gerdano commented that the increase in consumer bankruptcy filings in October, together with a reported 7 percent increase in business cases, “demonstrates the sustained stress on the U.S. Economy.”

The American Bankruptcy Institute further predicts that by year’s end, total bankruptcy filings will be up 30% over 2008. In fact, as of October, bankruptcy filings were up 22% over the same period in the previous year, with roughly 950,000 filings, as compared to roughly 700,000 in the same period in 2008.

Of October’s filings, the American Bankruptcy Institute estimates that roughly one-third of consumer bankruptcy filings were Chapter 13 filings. As discussed before on our blog, a Chapter 13 bankruptcy filing, also known as a “wage earner’s plan,” provides a flexible means for individuals to work out a payment plan with creditors, in particular when those individuals do not have incomes low enough to qualify for a Chapter 7 liquidation bankruptcy filing, or where the individuals wish to retain particular property after filing for bankruptcy.

A Chapter 13 filing allows an individual with a regular income to create a plan with the bankruptcy court’s approval to pay on outstanding debts. After the payment period established under the plan, the remaining balance of the debts is often discharged. The duration of the repayment plan varies. For wage earners with monthly incomes below a particular median income (determined on a state-by-state basis), the standard period for a repayment plan under Chapter 13 is three years. For those with incomes above the applicable median income, the standard period for a repayment plan under Chapter 13 is five years. Depending on your locale, however, the time you spend in your bankruptcy plan can be less than 3 years. Talk to an experienced bankruptcy attorney about this issue.

Please note that as of May 2009, the amount of debt that may be discharged under a Chapter 13 bankruptcy filing is limited to $336,900 or less of unsecured debt and $1,010,650 of secured debt. These amounts are recalculated periodically to account for changes in the consumer price index.

If you are considering filing for bankruptcy, the evidence is abundantly clear that you are not alone. Many American consumers are concluding that filing for bankruptcy is an effective way to resolve outstanding debt issues and move on with their lives.

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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 Monday, November 30, 2009 @ 11:03 am

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

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

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

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

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

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

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

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

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

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

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Published Tuesday, November 24, 2009 @ 8:40 am

Most people believe that their credit rating will be ruined for the next 8-10 years if they file for bankruptcy. This could not be further from the truth.
Bankruptcy is not a shiny gold star on your credit report, that is for sure, but it is far from a death toll on your credit. In reality, your credit rating is already pretty darn low from all the missed and/ or late payments you have been piling up prior to filing. While I highly doubt any creditors will actually see things this way, filing is actually you showing that you do want to improve and do better for the near and foreseeable future.

Yes, your credit rating will take a hit. Yes, your interest rates will be a bit higher than the norm for a few years, but you are not in a credit purgatory. Once you have filed, you will find that there will be ample opportunity for you to rebuild your credit rating. Do not be surprised if you are flooded with credit card companies offering to help you rebuild your credit. Car dealerships will jump on this bandwagon as well wanting to give you a loan regardless of the fact that you just went through bankruptcy proceedings.

They do so not out of the kindness of their hearts, but out of the greed in them instead. Car dealerships and credit card companies know full well that you have no other option than to take the outrage offer they give you in order to rebuild. You need them; they do not need you. They take advantage of this by hiking up the interest rates and killing you with annual fees.

It can be tempting here to fall back into old habits. If you have yet to get back on solid financial ground than you would probably be better off doing nothing. It takes activity to rebuild your credit rating, but at least you are not doing anymore damage. If you have student loans that are as yet unpaid either start or continue making those payments once your case is discharged. Making installment payments like with a student loan can help rebuild your credit as well.

Bankruptcy is a scary option to consider when you have already been undergoing some tough financial times. The stigma that it carries is enough to keep some people from filing. For others it is the perceived damage that will be incurred on their credit rating. What they fail to realize is that the damage has already been done. Filing bankruptcy cannot do much more than the last year or years of lackluster financial mismanagement have already done.

In fact, bankruptcy will actually be the first step in getting your credit rating back where it needs to be.

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Published Sunday, November 22, 2009 @ 12:37 pm

Does anyone else find it just a little ironic that the two most commonly used bankruptcy options are lucky number 7 and the unlucky number 13? You have to wonder just a little bit if that is fates way of trying to send you a little message…

There are actually six different types of bankruptcy which a person or corporation can file: 7, 9, 11, 12, 13, and 15. More often than not most people will just be looking at filing for either 7 or 13. The tricky part can be in figuring out which one is right for you.

The figuring out part is what you pay your lawyer for, but for something like this you are better off having enough knowledge to be considered dangerous- meaning you know enough to pose the right questions to your lawyer and understand what he or she is saying.

Both Chapter 7 and 13 allow you to get rid of your unsecured debt, meaning all those credit cards you have been living off of will be history. A Chapter 7 is a more immediate bankruptcy discharge, while a Chapter 13 will take a few years to complete The trick there is figuring out whether or not you make more or less than the state average income for a family of the same size. If your income is substantially above the median income, you may have some trouble qualifying for a Chapter 7. If, however, your income is more modest, and you simply need to unload your unsecured debt, Chapter 7 might be the best option.

If you do not qualify for 7, Chapter 13 may still be a great option. A Chapter 13 allows you to get caught up on missed mortgage payments, which can help you stay in your home. It also allows you cram down on undersecured car loans, substantially lowering your monthly living expenses. If you have more equity than can be protected under state exemption laws, Chapter 13 lets you keep the non-exempt property (not possible in a Chapter 7). If high income disqualifies you for a Chapter 7, your disposable monthly income will be determined by the bankruptcy code. After crunching the numbers to see how much money you have left after expenses, the court will decide how much you have left to go towards unsecured creditors. Keep in mind, the majority of Chapter 13 filings do not require any repayment of unsecured debt.

It all depends on your unique situation. If you are like I was and drowning in debt without much of anything to show for than Chapter 7 will be the thing for you. Starting over is probably what you need anyway. If you are still treading water, trying to keep up with your secured debt, than you may want to consider filing Chapter 13. This will get you back on track with your mortgage, and may bring your car payments down. A Chapter 13 also gives you breathing room from debts that won’t go away, such as non-dischargeable student loans, putting them on hold until you complete your plan period.

Talk to an experienced bankruptcy attorney today to discuss your options. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. Always a free first consultation

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Published Thursday, November 19, 2009 @ 10:33 am

While credit card debt may not always be the reason a person files bankruptcy, it is a significant factor in many cases. There are myriad reasons why those balances become so unruly. Impulse purchases, for example. However, a lot of that debt can also be attributed to deliberately confusing contract agreements.

Any graphic designer or communications professional would agree that if you don’t want your audience to get the message, present it in multiple pages of minuscule, light-grey type on a white background and scramble it with a liberal dose of intimidating legal context. Talk about a page turner! Or more realistically, a page shredder.

It isn’t like we don’t understand the concept of hidden messages in “fine print.” We scrutinize the heck out of car salesman, don’t we? They never get the benefit of the doubt. Yet, we agree to credit card agreements like we would to, well, free money. And that’s what Visa, MasterCard and American Express love about us.

A brief study by CNN asked 13 credit card holders to review a standard, five-page credit card agreement. A total of four people were able to find the annual percentage rate.

The argument on behalf of the credit card industry is that it needs such extensive language to remain protected. That argument alone should tell us a lot.

However, we would be remiss to not credit Bank of America with taking a step in the right direction. They will soon be sending credit card agreements with a simple, one-page breakdown of fees and rates. They will continue to fold up the longer-version into their approval mailings but the new approach should enable the customer to understand the most critical components of their agreement. This is a good thing.

The U.S. Government is already underway with devising legislature to limit the length and complexity of credit card documentation. The effort will be one of many, to be sure, to emanate from a proposed “consumer protection agency,” which would be a conglomerate of the Senate Banking, Housing and Urban Affairs Committee and the House Financial Services Committee.

Many of the credit card issuers cite banking laws as the reason for so much superfluous content, referring all questions from the CNN article to the American Bankers Association (ABA). The ABA promptly pushed blame on to government regulation and corporate pencil-pushers.

The ABA, in conjunction with the U.S. Chamber of Commerce has made it known it will debate any serious legislative effort to alter their methods on the grounds that it will limit consumer choice. It even went so far as to say that “vulnerable groups” should be protected but those who manage money well should be afforded the respect of free choice.

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Published Friday, September 11, 2009 @ 8:53 am

My parents filed bankruptcy when I was about fourteen. I remember being worried and a little frightened by the word “bankruptcy” and the unknowns surrounding the concept. But I also knew that it was not something my parents were entering into lightly and that every other option had been considered. It was the first time I really took notice of financial issues concerning our family.

They had bought a small business that seemed to be a melding of their passions and the promise of some freedom from the ‘rat race’ and anonymity of employee-hood. While they had a passion for the business, they were not very business savvy, and ended up being taken advantage of by many people they thought were loyal to them.

I wish I could say that my parents’ bankruptcy had no discernible impact on me, a shy, awkward teenager, and my siblings, but that isn’t true. There were big changes in our lives. In most cases, a bankruptcy filing will allow a family to continue living in their home by staving off foreclosure proceedings. But since the house my family lived in was located on land owned by the business, we ended up moving. We changed schools and made new friends. My parents went back to being employees.

Now, before you conclude that this is a sad story and that your kids would be emotionally or socially scarred for life if you filed bankruptcy, I should tell you about all the positive things that came of my parents’ bankruptcy. First, we moved to a nice neighborhood where I met two of my best friends. Before moving, our home had been very isolated and we spend a lot of time alone while our parents worked their business. Afterward, our home was filled with kids from the neighborhood.

Second, while my parents did return to being employees, they found better jobs than before and worked regular hours. When you run a small business, the lines between working and not working are blurred. The business becomes a 24 hour occupation. Third, the constant stress and anxiety that my parents were subjected to from trying to keep a sinking business afloat was gone. The fear, anger, and feelings of despair finally left our home and we were finally able to function like a normal family again.

Aside from the positive benefits bankruptcy affords by removing the financial strain that may be adversely impacting your family, here are a few more things to consider when you are thinking about bankruptcy and kids:

Bank Accounts: If you’ve opened a bank account for your children’s birthday money, gift money from relatives, or money they’ve earned, it’s important to make sure this account is set up correctly. If the account is just under your name or if you’ve drawn money out to pay your own bills, this account could be jeopardized by your bankruptcy filing. Of course, any 529 college savings plans are completely protected under North Carolina exemption laws, and the funds contained in those accounts will not affected by a bankruptcy.

Opening accounts under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) can help protect these assets. The idea behind these two methods is that the “giver” remains custodian of these accounts until the minor reaches majority. Once the money is transferred into these custodial accounts, it can’t be taken back. The child is the true owner of the asset, and therefore the money does not come into the bankruptcy estate.

Child Support Payments. Debts resulting from child support will not be discharged by bankruptcy if you or an ex-spouse files for bankruptcy. In a Chapter 7 bankruptcy filing, child support obligations become top priority when assets are being liquidated. In a Chapter 13 bankruptcy filing, child support payments will be structured within the agreed repayment plan.

This bankruptcy protection for children applies whether or not a debtor is behind on support payments. The good news is that ex-spouses may find it easier to fulfill their child support obligations once the bankruptcy alleviates a majority of their other debt burdens.

If you’ve been wondering about whether your child’s future could be jeopardized by bankruptcy, a bankruptcy lawyer can examine all the details and clear any confusion. Remember, your family’s future is dependent on your financial viability. If you are buried beneath a burden of debt, protect your family by filing for bankruptcy.

The attorneys at the Law Offices of John T. Orcutt have helped thousands of families seek debt relief. In North Carolina, call 1-800-899-1414 to schedule a free initial debt consultation today.

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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 21, 2009 @ 5:49 pm

The last installment of the hugely successful Terminator franchise was widely regarded as anemic―except at the box office , where it grossed a healthy $370 million. That’s a pretty good return on the film, and it hasn’t even been released to DVD yet. So with that kind of success, you’d think the franchise owners would be laughing all the way to the bank, right? Well, not quite. This is another case that perfectly illustrates how complicated finances can be―and how bankruptcy protection is an important strategic tool for individuals and business owners, even apparently successful ones . The L.A. Times reported that franchise rights owners Victor Kubicek and Derek Anderson have filed for Chapter 11 bankruptcy protection for three of their companies. The two producers filed with the Los Angeles Bankruptcy Court on the same day they filed lawsuits against their largest investor and a former employee of the company.

Kubicek and Anderson’s company, Halcyon Co., has only produced one film―Terminator Salvation―but they are no strangers to legal disputes. Their current troubles involve a debt owed to a California hedge fund, Pacificor, which financed their purchase of the Terminator franchise rights. The hedge fund initially loaned the pair $30 million, then followed up with two more loans totaling a further $9 million. Halcyon Co. has reportedly paid in $15 million of the total $39 million owed, but they are having trouble paying up the remaining $24 million in capital…and that’s before counting the interest that has accrued on the loan. In their lawsuit filing, the two producers allege that Pacificor put an illegal lien on another one of their companies, Dominion Holdings. It’s through this company that Kubicek and Anderson receive payment as producers of the film, payments which are reported to be the greater of $5 million or 5% of revenue. According to Halcyon’s attorney, the allegedly illegal liens on Dominion Holdings compromised the liquidity of Halcyon and caused the pair’s current struggle to make payments. Citing between $50 and $100 million in both assets and debts, Kubicek and Anderson’s attorney nevertheless express confidence that the company would make it through the bankruptcy filing and emerge from the process with a sound business able to meet all of its legal obligations.

Some media sources jumped the gun and reported Halcyon’s list of creditors as a star-studded event, but a Halcyon spokesperson has since stated that many of those reported were not in fact creditors. Previously reported erroneously as creditors were, among others, Christian Bale, Arnold Schwarzenegger, Warner Bros, Universal Studios, and the law firm Latham & Watkins. The pair does in fact owe on some hefty bills from several other top industry law firms, including Greenberg Traurig, Glasser, Weil, Fink, Jacobs Howerd & Shapiro, and O’Melveny Myers.

Even as news of these developments breaks, Kubicek and Anderson are reportedly working in the beginning stages of a fifth installment of the Terminator franchise, which adds another layer to the already complex legal battle between Halcyon and Pacificor. The hedge fund’s loans were secured with the franchise rights as collateral, which means that if the pair cannot meet their payment obligations, Pacificor could end up owning the franchise rights. Kubicek and Anderson would not be able to produce a fifth film, which could spell the end of a franchise that began in 1984 with the first Terminator film (starring a certain governor you may be familiar with.) Meanwhile, McG, the director of the fourth film, has told some media sources that he is actually planning a trilogy, of which Terminator Salvation was only the first installment. So what will happen with the now 25 year old franchise? For now we’ll have to wait until the bankruptcy court settles the company’s Chapter 11 filing to see whether Kubicek or Anderson will utter another “I’ll be back.”

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Published Sunday, August 9, 2009 @ 5:13 pm

The economic recovery packages rolled-out by the federal government are providing a lot of people in the midst of rebuilding their financial livelihood a chance to get back on track even faster. For those who are underway with getting back on their feet after a successful bankruptcy, today’s housing market, in conjunction with the First Time Buyer Tax Credit, is offering home ownership opportunities not seen in a long time.

Here’s a breakdown of how the homebuyer tax credit shakes out:

You are eligible for the tax credit if it has been three years since you owned a home. This is ideal for those who may have lost a home through foreclosure or decided to sell to reduce their monthly mortgage commitments before bankruptcy. You must close on the home before December 1 of this year. (However, there is very good chance the government will extend that deadline.)

The amount of the tax credit is based on 10 percent of the home’s purchase price to a maximum credit of $8,000. It is important to understand that there are limits on income, too. This means that you need to make less than $75,000 individually or $150,000 if filing jointly to be eligible.

In the tax credit’s current form, it does not have to be repaid. This makes it different than the tax incentive that was in place during 2008. The credit is claimed on your federal income tax return, specifically form 5405. Since we’re not accounting professionals, it would be best to consult a tax expert to understand the specifics relative to the paperwork. However, it seems that for once, the IRS has made that component of the process pretty simple.

Here is a quick tax lesson: A tax credit differs from a tax deduction. A credit is a dollar-by-dollar decrease in what you owe. A tax deduction is a figure taken away from the amount of income that is taxed.

You may have heard that the department of Housing and Urban Development (HUD) has announced that it will “monetize” the tax credit. This entails the ability to apply the maximum credit for which you are eligible to the home purchase right away instead of waiting until your tax return to claim the refund. This requires you to borrow with an FHA-insured mortgage, however. Don’t let that dissuade you though, as FHA-insured mortgages are very common.

If you choose to take advantage of the credit in this manner, nonprofit lenders and others that are FHA-approved will be allowed to offer up to the $8,000 limit as a short-term loan.

Another nice advantage of the first time homebuyer tax credit is that you can apply it to your 2008 tax returns. The law says that a home purchase in 2009 can be treated as if it was bought in 2008, meaning that your income from 2008 will be used to determine eligibility and that it accelerates when the credit can be claimed.

The tax credit seems to be creating a real boost for the economy as a whole, as home buying has bounced back in the last couple of months. The IRS stated that close to 1.1 million people have applied for the tax credit through amended returns and more should do so come April of 2010.

As mentioned earlier, your best source for the real nitty gritty on this tax credit is a certified tax professional. We believe it help a number of clients get a leg up on their life after bankruptcy.

From the Law Offices of John T. Orcutt. Call 1-800-899-1414 for a free debt consultation and get on the fast track to real financial recovery.

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Published Friday, July 31, 2009 @ 2:46 pm

The Tribune Company, which owns the iconic Chicago newspaper of the same name, has almost completed the process of relinquishing ownership of another Chicago icon. To the tune of $900 million, the Chicago Cubs, famously consistent losers and one of baseball’s most beloved clubs, is being purchased by Tom Ricketts, who had won exclusive negotiating rights as early as January of 2009. The Ricketts family founded the company that eventually became the discount brokerage TD Ameritrade. The Tribune Company’s sale of the team comes as no surprise, as Tribune Company owner and CEO Sam Zell had announced his intention to sell the team since he acquired Tribune Company in December 2007. The Tribune Company owned the team for 28 years; in 1981, it purchased the team and Wrigley Field from the Wrigley family for $20 million.

The Tribune Company filed for Chapter 11 bankruptcy in December 2008, after sustaining third quarter losses of $124 billion. Struggling with more than $13 billion in debt and only $7.6 billion in assets,Tribune Company is expected to emerge from Chapter 11 bankruptcy by the end of 2009. The sale of the Cubs was expected to help Tribune Company complete the process. Most of the Tribune Company’s enormous debt was incurred when Sam Zell led the effort to take the company private in 2007.

The company’s financial quagmire was compounded by the widespread troubles of the print media industry. As the medium competes with others in a time when readers have a huge range of news options, advertising revenues for the industry are in a free fall. Tribune Company’s Chicago Tribune is the 8th largest newspaper in the United States by circulation, trailing another Tribune Company holding, the Los Angeles Times. In addition to the sale of the Cubs, Tribune Company has announced or undertaken the sale of the L.A. Times building in Los Angeles, the Tribune Tower in Chicago and Newsday.

The sale of the Cubs has been considered to be in the final stages for some time, merely pending approval from Major League Baseball. Because the Cubs are an MLB franchise, other MLB owners have veto power over the sale. Before the sale could be completed, it needed approval from 23 of the 30 club owners. As many as 10 other buyers, all offering $1 billion, have been in the running since Zell listed the club and Wrigley field for sale.

In mid-July, several sources reported that the company was considering filing a separate bankruptcy for the Cubs. In order for the bankruptcy to go through, the Tribune Company would have to work out an agreement with the buyers, with Tribune’s creditors approving the sale before the deal went before a judge. This is known as a prepackaged bankruptcy. Many were startled to hear this news, given the popularity of the Chicago Cubs, but the bankruptcy would not necessarily result from financial difficulties faced by the team. Instead, the bankruptcy was characterized as a legal maneuver. A bankruptcy sale would give the new owners clear title, and would not need to be revisited once the judge had given his approval. According to one Bloomberg source, it was believed that Zell had used to team as collateral for some of the company’s debt.  A bankruptcy filing for the Chicago Cubs would not interfere with the day to day operations of the club.

The Cubs have won 11 of 14 games since the All-Star break and currently hold first place in the NL Central. Holy Cow!

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Published Monday, July 20, 2009 @ 11:01 pm

The automatic stay is one of the greatest benefits that filing for bankruptcy has to offer. However, it is important to note that there are some exceptions to the applicability of automatic stay rights.  You will not be protected from criminal prosecution, divorce proceedings, government regulatory procedures (except for efforts to collect on pre-petition debt–these will be barred) and efforts to collect on child support and alimony, or even modifications of the support orders.  Regular deductions for payments of a loan against a retirement plan may also continue even after the stay.

One of the most commonly encountered exceptions to the automatic stay relates to purchase money security interests. “Purchase money security interest” in plain English refers to loans that are used toward the purchase of some item while immediately conferring interest in the item to the lender.  The most typical example of this is a car loan. Another example is where you charge a purchase to some department stores. If they have purchase money security interest in the item, they can repossess the item if you fail to pay what you owe on it, and an automatic stay may not protect you from such an action.

Even if you are current on your secured debt, the creditor may still petition the court for relief from the stay– if they can show they have “good cause.” This usually refers to a situation where the secured creditor has “inadequate protection” as a result of the stay or where the stay puts their interest in some property in jeopardy. One example of inadequate protection is failure to maintain auto insurance.

One final category of exceptions to the automatic stay involves prior bankruptcies. If you filed for bankruptcy within the previous year and it was dismissed for some reason other than failing the Means Test, the automatic stay will still be automatic, but it will only last 30 days unless you convince the court otherwise. If you have had more than one bankruptcy dismissed, the automatic stay is not so automatic: you can only get it through a special request to the court.  Finally, there is no automatic stay for bankruptcies that are dismissed for misconduct (like ignoring a court order), or for those dismissed on request of the debtor because relief from a stay was granted to a creditor.  These last two will apply to bankruptcies dismissed within the prior 180 days (half a year).

Some of these exceptions have come into play because of the 2005 bankruptcy law reform. Don’t let a few exceptions to the automatic stay leave a sour taste in your mouth–the automatic stay is absolutely a wonderful benefit and a powerful tool at your disposal despite the credit card lobby’s efforts to change the fact. If anything, take these exceptions as proof that hiring a lawyer is a good idea when you file for bankruptcy. Your lawyer will help you read the legal landscape and prepare you for a successful bankruptcy.

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

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Published Tuesday, July 14, 2009 @ 8:21 am

We all make mistakes, but some are more costly than others. So how costly is it if you forget to list a debt in your bankruptcy paperwork? There’s no need to panic; forgetting to list a debt isn’t the end of the world. However, depending on what kind of bankruptcy you file, it can cause some problems in your bankruptcy. Here’s a quick rundown of the different scenarios in which you might forget to include a debt and what the consequences might be if you’re not able to fix the problem.

Let’s look at Chapter 7 first. If you’re like 96% of people who file for bankruptcy under Chapter 7, your case is a no-asset case. This means that you don’t have any non-exempt assets that will be liquidated to pay off creditors. Basically, your creditors aren’t going to get any money anyway, so it doesn’t really matter to them, practically speaking, if you list the debt or not. Thus, most courts will simply say that the debt was discharged, too, along with all the others, although you forgot to list it. However, this is no reason to give your attorney incomplete information. If you’re going to file for bankruptcy protection, it pays to do it right, so don’t count on a flexible rule like this one to clean up after you.

One important benefit of getting everything right is that you’ll have a straightforward set of paperwork to deal with the credit bureaus and new creditors in the future. If you forget to list a debt, it won’t appear in your bankruptcy schedules, which is what you will need to send to the credit bureaus once you’re ready to re-establish your credit.  Having to iron out the issue in post-bankruptcy will only case you unnecessary trouble, not to mention potential lawyer’s fees. Another reason to to get the list right is to allow you to take advantage of the 60 day bar rule, should it apply to your case.

What if you are in that rare 4% of Chapter 7 filers with asset cases? This one is a little trickier. In order to have the debt discharged, you will have to prove that the creditor knew or should have known that you were filing for bankruptcy, and that he had adequate notice to prepare a proof of claim for his share of the liquidated assets. Creditors usually have 90 days after the 341 meeting of the creditors to file a proof of claim. As you can see, this is a bit more involved than a no-asset case, so you want to be especially careful to track down all your debts and list them; otherwise you might get stuck with a debt even though your bankruptcy filing went smoothly otherwise.

As for Chapter 13 cases, if you don’t correctly list the debt, it won’t get discharged. For this reason, it is extremely important that you provide your attorney with a complete and accurate list of all of your debts, even those you don’t agree that you owe. If it’s not listed, it doesn’t get discharged, and the creditor can come after you to collect on the debt even after you have completed your Chapter 13 plan.

It pays to be careful with your bankruptcy filing and to work with an expert who can help you catch mistakes. Make sure to work with an experienced bankruptcy attorney who will help you make bankruptcy the smartest financial decision of your life.

The Law Offices of John T. Orcutt have helped thousands of families with bankruptcy relief. Call 1-800-899-1414 for your free initial debt consultation.

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Published Monday, July 13, 2009 @ 2:59 pm

If you have declared under Chapter 13, you may be eager to refinance your home. In doing so, you should pay close attention to what the mortgage companies are proposing and whether you will actually benefit from refinancing.  It is a good idea to research companies offering refinancing during Chapter 13 and analyzing their track records with consumers. You can do this through debt advocacy organizations and state agencies that act as business watchdogs.

If you are finished with repayment under your Chapter 13 and have received your discharge, the refinancing process will resemble the process following a Chapter 7. You should work patiently to rebuild your credit with tried and true strategies and patience so you can get the best possible rate. It may pay off to take some time and slowly rebuild your credit before submitting any loan applications.

If you are still making payments under a Chapter 13 plan, refinancing a home is a bit more involved. First, there are three main categories of mortgage companies and financial services companies that will work to refinance homes for people still making payments under Chapter 13. The first kind of company works in the Chapter 13 process. The second type of company specializes in loans for “buying out” Chapter 13 bankruptcies. The way these buy-out specialists operate is by refinancing your current mortgage to pay the balance owed under your bankruptcy. The third kind of company operates by having your bankruptcy under Chapter 13 dismissed. Once that happens, the debt remaining is rolled into a new amount for a mortgage loan.

Generally speaking, all three types of company will require at least one year completed under the Chapter 13 plan, with only timely payments for all accounts. They will also take into account your financial situation at the moment, the amount of debt included in your bankruptcy, and the amount of equity available in the property. As a guideline, you should expect that a good company will only propose to buy out your Chapter 13 bankruptcy if your payment history has been good since the Chapter 13 repayment plan began, if the buyout will yield considerably lower monthly payments for you, and if you have at least 25% to 35% equity in your home.

It’s important to proceed carefully when seeking refinancing in the middle of a Chapter 13 bankruptcy. Make sure you know what the mortgage company is actually proposing to do; are they going to work around your Chapter 13 bankruptcy? Or will they be dissolving that bankruptcy? Do you understand what that will entail? Ask the mortgage company to spell out, in writing, how the refinance will work with your Chapter 13 plan- get it in writing.

Generally the companies will most closely scrutinize the 12 months prior to your refinance application to calculate your rate of interest. In order to get the best rates, try to wait until you have a good 12 month period where your mortgage payments are as current as possible. If your credit is not good enough to allow for favorable loan terms, wait some time and take steps to rebuild your credit. With a little time and effort, you can put yourself back in position to get a great refinance loan.

From: The Law Offices of John T. Orcutt. Call 1-800-899-1414 today to set up your free initial consultation.

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Published Friday, July 10, 2009 @ 5:34 pm

While bankruptcy can provide you a haven from financial insecurity, it will not automatically change for you the habits that may have led to your decision to file.

It’s important for you to understand that you are not the only person who has ever overspent. Money was good, credit was easy and why shouldn’t you live the lifestyle you deserve? Well, no one is telling you that you can’t. However, it is important that you gain that lifestyle using reasonable financial judgment and the discipline to spend within your means. To do that, especially after bankruptcy, taking time to assess your spending habits is a critical exercise. You never know, a simple look at the numbers may reveal some recurring trends of which you were not aware that could lead right back down the spiral.

First and foremost, accept the fact that a in-depth look at your spending practices will reveal that you are probably wasting money unintentionally. And again, everyone is. Even those who you may believe are “rich” are wasting money. So, when perusing the monthly expenditures, keep an eye out for the little things. For example, the amounts spent on a lunch out here and there, the extravagant coffee, trendy soft drinks, packaged snacks or check-out aisle impulse buys. (Did you really need extra batteries just to put in the kitchen drawer?)

What about the extra channel cable package that you agreed to a few months back? At the time, the incentives were great. More channels! Less money! Well, the three-month promotion is long over and the only thing you are watching are dollars fly out of your checking account. Not exactly “appointment television”, huh?

How many other promotional time periods have expired you may have forgotten about? Try looking at your credit cards. Credit card issuers make their profits on surprise interest rate adjustments. Even if you think you are still paying 6%, the odds are pretty good that some random expenditure or momentary spending milestone has triggered a double-digit spike in your interest rate or added a monthly fee. Be wary.

In this exercise, mindset is everything. Remember that wealth is relative. A salary of $100,000 per year is outstanding for some and paltry for others. The idea is to create a lifestyle around what you earn. And yes, there are a lot of societal pressures to have more, to buy this, to be seen in that. Take time to consider the real importance of material things. Seriously think about the value or benefit you get from buying a new car for $25,000, financed for seven years, versus the benefits of a buying a solid used car for $8,000 that you saved for or could pay off in under a year?

Think of buying cars as an investment. The point of investing in something is to receive a return on your asset. Well, cars are depreciating assets. And there is nothing worse than debt on a depreciating asset. In other words, you lose money on a new car. From that perspective, buying a reasonably priced, dependable used car for less money makes you a smarter investor.

Like your over-priced car, seek other things around the house that you could sell or replace to not only relieve debt but to alleviate your lifestyle from the need for “stuff.” While it sounds a little bohemian, learn to be happy with less. And a good, in-depth analysis of where your monthly dollars are heading is the best start.

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

Cary bankruptcy. Apex bankruptcy. Greenville bankruptcy. Rocky Mount bankruptcy. Angier bankruptcy.

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Published Wednesday, July 8, 2009 @ 9:10 am

So you have decided that it is time to file bankruptcy. Next, it’s time for you find the right kind of help to get you through the maze of paperwork, aggressive creditor tactics and into the court system.

Clearly, a bankruptcy attorney is your best option. But not all attorneys are the same.

Bankruptcy practices that hold membership in the National Association of Consumer Bankruptcy Attorneys (NACBA) can boast belonging to the only formal organization that is dedicated solely to the support of consumer debtors and the law professionals that guide them. The value of such an organization is that it remains constantly in focus with the laws, practices and trends of the very court decisions that affect your ability to file and emerge successfully from bankruptcy.

The NACBA was established in 1992 and today has members in every state. It is a group consisting of real change-makers in the world of bankruptcy law that have played significant roles in high profile cases, all the way up to the Supreme Court. It serves its members in countless ways but has found its best route for bettering bankruptcy practices through continuing education, conferences, publications and workshops. It is in these efforts where the industry takes shape, powered by the unique bankruptcy situations of people like you that generate discussion and often materialize as real-life methods for providing better service for those who are at odds with their debt and need to draw a line in the sand.

In a short time, the NACBA has become a firm presence in Washington that can be seen standing tall in Congress and the court system on your behalf. Many of the group’s members are considered national experts in the field of bankruptcy law and procedures and are often called upon to offer expertise in a variety of legal and congressional venues.

Most notably, the NACBA consistently challenges the tactics of the consumer credit industry that is behind a tide of anti-debtor legislation making waves throughout our government. As an advocacy group for the people, the NACBA is often the only voice of people who are in financial dire straits that can be heard within the Beltway. Again, it is the individual situations of those who need bankruptcy laws to work in their favor that NACBA members work with personally every day. Thus, there is no better representative for the rights of people struggling with debt.

For decades, before bankruptcy was recognized as the sound financial strategy that it is today, there existed no advocacy group for those who practiced bankruptcy law. With the establishment of the NACBA and its 4,000 members, there is real change being enacted on behalf of financially troubled Americans.

Keep in mind that choosing the right attorney is perhaps your most crucial decision along the road back to fiscal stability. Be wary of hype and cognizant of inexperience. Judge an attorney based on their experience in court, ability to relate to your situation and caseload of successes. Above all else, you need to be comfortable sharing with them the challenges you are facing as a result of your debt. The NACBA is in place to help the best attorneys be better at what they do. Look for membership in the National Association of Consumer Bankruptcy Attorneys. You’ll be glad you did.

The attorneys at the Law Offices of John T. Orcutt are proud NACBA members. In North Carolina, call 1-800-899-1414 to find out how the power of bankruptcy can help you.

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Published Monday, June 29, 2009 @ 10:13 pm

Well, Chrysler’s bankruptcy fire sale is done. It was finalized on June 10th. Now, three main players hold the bulk of Chrysler’s “good” assets: the Italian car-maker Fiat, the United Auto Workers’ retiree healthcare trust, and the federal government. And, the majority of Chrysler’s secured creditors got 29 cents on the dollar for their debts. You’ll recall that this deal was not without controversy.

The bankruptcy judge who oversaw the case approved the deal, finding it was necessary for Chrysler to avoid liquidation. But the heads of two Indiana pension funds – the Indiana State Police Pension Fund and the Indiana Teachers’ Retirement Fund – and Indiana’s Major Moves Construction Fund appealed the judge’s order to the Second Circuit U.S. Court of Appeals in New York. The Indiana groups sought to block the sale, because it would wipe out the bulk of the $42.5 million in secured debt that Chrysler owed them collectively. The Second Circuit upheld the order of the bankruptcy judge.

The Indiana groups took their challenge to the Supreme Court, urging the court in an emergency petition to hear the case and postpone the sale. Justice Ruth Bader Ginsburg stayed the sale while the court decided whether to hear the case. The Obama Administration, through the Solicitor General’s Office, urged the court to let the sale proceed. Solicitor General Elena Kagan wrote in a brief to the court, “As an economic matter . . . blocking the transaction would undoubtedly have grave consequences.” The court’s decision didn’t take long. The day after the Indiana trio filed their petition, the high court denied it, clearing the path for the sale to go forward.

And the deal is done. The assets have changed hands and the creditors were paid according to plan. The Indiana funds got $12.3 million on their $42.5 million bill. But this may not be the end of the saga. Indiana Treasurer Richard Mourdock wants the sale invalidated. Mourdock is seriously considering filing another Supreme Court petition, asking the court to determine whether the sale was legal. The funds will argue that the government could finance the bankruptcy sale process only with congressional approval. They will also argue the sale should be overturned because the government and the UAW – two of the three purchasers – had conflicts of interest, because they were creditors before the sale.

Mourdock’s bid is, no doubt, a long shot. The Supremes grant only a tiny fraction of the petitions for review they receive, making any petition a Hail-Mary effort. Even if the court does grant review, the deck is stacked against the Indiana funds, since the Second Circuit already rejected their claims.

Mourdock has already spent $2 million of the state’s money to fight this battle. Tom Lauria, the funds’ hired counsel, promises to work pro bono on the case should it go forward. Still, Indiana’s Solicitor General’s Office will also work on the case, which means even more state funds will be invested into this campaign. And, some of Mourdock’s constituents have opposed his agenda from the get-go, because they would have been among the many who would have lost their jobs had the sale not gone through.

Mourdock admits he is motivated, at least in part, by principle: he thinks the government just shouldn’t meddle in the affairs of private sector with “bail outs” and deals that give Uncle Sam an ownership stake in private businesses.

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

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Published Friday, June 26, 2009 @ 3:45 pm

By this time of year, the flu and cold season is usually behind us. The windows are open, the jackets are packed away, and the cold medicines are shelved, as we get ready to enjoy the freedom that the warmth of summer brings us. But it’s different this year. The “Swine Flu” (the H1N1 virus) is upon us. Schools are shutting down when a student turns up with the disease. People who contract it in a foreign country are being quarantined there. And health officials are warning everyone to be wary of the airborne virus. Worldwide, the Swine Flu has killed more than 230 people and infected more than 52,000 – and it continues to spread everywhere.

The government is scrambling to get a vaccine produced and distributed to the public as soon as possible. It has contracted with a number of pharmaceutical and biotechnology companies to get this done before winter, when the colder temperatures will make it even harder to contain the spread of the virus. Just last week, the government awarded one of these contracts to Protein Sciences Corp. – a small biotech company working with cutting edge technology that promises to speed up production of a vaccine. It’s a five year, $150 million deal.

But there’s a problem: The day before Protein Sciences received this generous contract, its creditors filed an involuntary Ch. 7 bankruptcy petition against the company, seeking to force it into liquidation. Emergent BioSolutions (EBS) is the largest of the creditors, claiming $11.5 million of the $11.7 million in debt that the petition says Protein Sciences is currently carrying. EBS is another biotech company involved in H1N1 vaccine production. The competitor had hoped to take over Protein Sciences, and it almost did. Last year, Protein Sciences agreed to let EBS acquire the company in exchange for around $80 million. In connection with the agreement, EBS lent Protein Sciences $10 million, secured by company assets. But the deal fell through, and EBS later sued Protein Sciences for fraud and breach of contract.

Both companies blame the other for the fall-out. Dan Adams, the chief executive of Protein Sciences, says EBS has been trying to push his company around and is using the bankruptcy in an attempt to leverage a cheap buy-out of its rival. Denise Esposito, EBS’s senior counsel, says Protein Sciences is the bad guy here. In a statement, Esposito said, “Protein Sciences . . . committed fraud by encouraging us to lend them $10 million without ever intending to proceed with the asset purchase agreement. This is not a scheme to purchase the company for less than fair value. There’s no way to protect the collateral except with court oversight.” EBS says it gave Protein Sciences numerous opportunities to pay back the loan before filing the bankruptcy petition.

It’s difficult to say what will happen next. The government could try to pull out of its contract with Protein Sciences because of the pending bankruptcy petition. That’s not likely, though. Despite the numbers in the petition, the Health and Human Services Department conducted extensive audits of Protein Services and concluded the company was stable enough to proceed with the vaccine production program. On the other hand, the executives at EBS may feel pressured to back off because of the government contract; it probably isn’t good PR for EBS to force into bankruptcy a company that’s running a government-backed project to produce a vital vaccine.

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

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

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

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

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

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

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

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

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

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

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

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

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Published Sunday, June 14, 2009 @ 6:45 am

You’ve probably heard by now: if you want to file bankruptcy, you have to go through “credit counseling.” This new requirement is part of the “Bankruptcy Abuse Prevention and Consumer Protection Act,” which became law in 2005. The idea is that those filing bankruptcy should get “educated” on how to manage their money. This, of course, carries with it a sweeping assumption: those who file bankruptcy do so because because of financial carelessness.

If you’re like the vast majority of people who seek bankruptcy protection, you might find this insulting. Rightly so. In reality, 99% of people who file bankruptcy do so not because they’re reckless spenders, but because they’ve suffered a life-changing event, like illness, death, job loss, or divorce. It is the reality of life’s unexpected events, not bad decision making which has brought you to the point of filing bankruptcy.

The notion that bankruptcy filers are irresponsible is an idea the credit card companies sold to lawmakers over a ten-year, multi-million lobbying campaign to get a “bankruptcy reform act” on the books and make it more difficult for people to obtain bankruptcy protection. One of the big problems with this requirement is that it may deter those who need bankruptcy protection the most.

So, we’ve established that the counseling requirements are unfair and likely counter-productive in most cases. But, at least for now, credit counseling is still a requirement. The bottom line, however, is that the credit counseling requirement is easy to satisfy, won’t take much of your time, and you might even learn something.

The pre-bankruptcy credit counseling normally lasts 60 to 90 minutes and can be conducted in person, over the phone, or online. It usually costs about $40, but you can ask for a waiver of the fee if you can’t afford it. The program will discuss your financial situation, alternatives to bankruptcy, and a budget plan.

The post-filing debtor education course can last up to two hours. The cost is nominal, and can be waived if necessary. The course can also be conducted in person, over the phone, or online. You’ll discuss developing a budget, managing money, and using credit wisely.

How do you find a credit counseling or debtor education organization in your area? The U.S. Trustee’s Program oversees the administration of bankruptcy in all states, except North Carolina and Alabama, and it decides which organizations may conduct these courses. If you’re in North Carolina or Alabama, court officials called “Bankruptcy Administrators” approve the eligible organizations. Your bankruptcy attorney can give you the information you need to find a reputable organization.

In North Carolina, the pre-bankruptcy credit counseling can be completed entirely over the internet. As a result, you can complete this requirement for less than $40. In North Carolina, the hands down best organization to use is Hummingbird, available “online”, 24/7 for a cost of $34. This cost is per case, meaning that you pay $34 total, whether you file by yourself or with your spouse. Need to get your pre-bankruptcy counseling done? Hummingbird can be accessed at www.hummingbird.org.

But be careful. The counseling is only good for 6 months. If you wait longer than that to file, you will have to suffer through it again.

Lastly, beware. A cottage industry of illegitimate counseling organizations has cropped up. Before signing up with a particular organization, check with your attorney to make sure it has been approved and one that your attorney has had good experience with.

So those are the basics of the new counseling requirements. Don’t buy into the false assumptions and perceptions the counseling may create. With a good attorney at your side, you’ll be able to wade through this and the rest of the red tape the new laws have created, and make your fresh start.

In North Carolina, set up a FREE initial consultation with the Law Offices of John T. Orcutt, offering services in 28 different counties through 4 offices in Raleigh, Durham, Wilson and Fayetteville. During normal business hours, just call toll free to 1-800-899-1414. On nights and weekends, you can make your own appointment “online” by visiting our website at www.billsbills.com, available 24/7.

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Published Monday, June 8, 2009 @ 5:46 pm

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

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

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

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

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

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

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Published Monday, June 8, 2009 @ 11:50 am

Many people own a home before they file for bankruptcy protection, and once they are ready to start over and lay down that solid financial future, they will want to refinance their home loans. Refinancing a home can result in excellent benefits for a home owner.  By refinancing, you may be able to improve your cash flow by lowering monthly payments and reduce future risk associated with variable rates. The steps toward this process will differ depending on the type of bankruptcy filed and certain other factors. For both Chapter 7 and Chapter 13 bankruptcies, a common and crucial first step after bankruptcy is to carefully rebuild credit. Home refinancing is one area of your financial life that will benefit from undertaking this important task, and it is one where the benefits can be appreciated tangibly and relatively quickly.

If you have filed for bankruptcy under Chapter 7 and want to refinance your home, you want to allow some time to elapse after filing before pursuing refinancing. If you try to refinance too soon, before you’ve had a chance to rebuild some credit, your interest rate will probably be too high, and refinancing will be of little help. Depending on your credit rating prior to filing, it is preferable to wait at least six months, but a year is better, and two years better still.

Two years after your debts are discharged under Chapter 7, you will be considered an excellent risk by lenders for refinancing if you have no negative reports since your debts were discharged and you have positive information from three or more good references. Opt for a major credit card that reports regularly, as well as loans like car loans or creditors for medical services that will provide steady references while helping you take care of life essentials. Student loans are not discharged in a Chapter 7 bankruptcy, so these can also serve as a good credit reference. For revolving credit, keep your balances low, or even pay in full every month when you can. For all kinds of credit, remember to always pay in full and on time.

Once you’ve put in the work of building good credit post bankruptcy, and you are ready to refinance, make sure to shop around by calling several mortgage brokers. Let them compete for your business―you’ve earned this privilege through your hard work. Don’t opt for those brokers who specialize in mortgage refinancing for bad credit; with strategy and patience you should be able to get a decent broker to work with, and you shouldn’t settle. And remember not to let any brokers charge you for a consultation; a mortgage broker should get paid from the loan. Brokers specializing in  “bad credit refinancing” are especially likely to try to pull this trick.

The lesson here is to be patient and methodical about refinancing your mortgage loan. After a Chapter 7 bankruptcy, your immediate focus should be on rebuilding your credit so that you are in the best possible position to refinance as soon as possible. Talk to a bankruptcy attorney today to get the honest truth about bankruptcy and your credit. Serving North Carolina residents, the Law Offices of John T. Orcutt provides a free initial debt consultation. Call (toll free) 1-800-899-1414, to set up your appointment. Visit www.billsbills.com for more information.

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

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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 Thursday, June 4, 2009 @ 2:55 pm

A very troubling trend that potentially affects millions of Americas is going unnoticed. Don’t make the mistake too many people make when it comes to arbitration. There’s a good chance that you have conceded to arbitration already, probably unwittingly. That’s because more and more of the big companies that touch our lives on a daily basis, such as software developers, banks, web based services and of course, credit card companies, are writing arbitration clauses into their terms.

You know about those, right? The masses of tiny print below the box you check so you can get to the download screen, or the pages and pages of tiny print that accompany your shiny new credit card? Did you read them carefully? Probably not! Who has the time, legal expertise or eyesight for that? Not many consumers―big companies are counting on it.

Arbitration is an alternative form of dispute resolution, and it is often touted by its supporters as a welcome alternative to an over-clogged court system.

Don’t buy the hype; arbitration appeals to big companies because it allows them to call the shots. Instead of resolving disputes before the courts, which balance the needs and interests of all parties, arbitration allows one party to a contractual relationship to potentially take a decisive advantage. (Kudos to you if you guessed that it’s the party that writes the contract.)

A common example concerns what’s called forum selection; ordinarily, if you have a dispute with someone, the place where the dispute will be settled legally must have some connection to the parties at odds or the disputed events. Arbitration and forum selection clauses allow companies to select the forum―and it’s not going to be your local courthouse. If you don’t respond to an arbitration notice or attend the meeting, which could be thousands of miles away, the company essentially wins by default.

And it gets worse: the courts have consistently enforced arbitration judgments. When you accept the terms of a contract with an arbitration clause, which you do when you activate your credit card, install a computer program or even open the box it comes in, you agree to be bound by the findings and judgments of the arbitrator.

Why would courts enforce such seemingly unfair provisions? The answer is that the “freedom to contract” means that two parties to a contract are presumed to be walking in with open eyes and equal bargaining power.

This is absurd, of course. Usually a consumer has much less bargaining power than a big company with a legal department and a near monopoly on the market.

Many credit card companies are now working with an organization called National Arbitration Forum instead of going through the court system. Settling through arbitration allows these companies to get expedited judgments against consumers, often totally unchallenged.

If you get a notice of an arbitration proceeding against you, DO NOT ignore it. Read the notice very carefully and make sure that they are not claiming a bigger debt than you owe them. Study the stipulated procedures for disputing claims. In addition, require that they prove even those debts that you believe to be accurate.

If you’re already working with a bankruptcy lawyer, show him or her the arbitration notice so your attorney can help you understand your options. Make sure to dig up any notices you received and ignored in the past; these can affect your bankruptcy proceedings.

And in the future, watch out for arbitration clauses in contracts; if you are choosing between two companies that are in all other aspects equal, treat an arbitration clause as a deal breaker.

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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 Monday, June 1, 2009 @ 3:00 pm

You’ve probably seen ads for companies that claim they can repair your credit. Sounds great, right? Who wouldn’t pay a few hundred dollars in exchange for a better credit score? Resist the temptation to believe in easy fixes. If it sounds too good to be true…well, you know the adage.

Most of these companies are scams, preying on people in vulnerable positions. Many claim to be non-profit, with the implication that they’re here to help you, but a tax category does not a social service make. Credit repair companies are not selflessly working to help people like you; quite the opposite. Although there are some legitimate companies out there, they are few and far between. In fact, these companies have become such a problem that Congress passed the Credit Repair Organizations Act to help vulnerable consumers. The purpose of the law is, in the words of the act, “to protect the public from unfair or deceptive advertising and business practices.” Guess what these companies are notorious for?

There is no legal way to stop negative information from appearing in your credit report for seven years. A company that tells you they can make information vanish from your report is lying, so you should immediately take that as a warning sign. Another important warning sign is if a company asks you for a large sum of money up-front. Think about it: if you call a plumber to repair a leak, do you pay him a large sum of money up front? Of course not―you wait until he’s done the work to your satisfaction. A legitimate credit repair company will not ask for money until after you’re satisfied with their efforts and they will also probably not ask you for a lot of money. There are no quick-fixes here, so don’t believe anybody promising a miracle.

That’s not to say that a credit repair company can’t fix your credit–for a while, anyway. These companies employ tricks like disputing negative information; by law, a disputed item will be removed from your report until it is investigated. Don’t think that the company is going to remove it and then forget about it; they will investigate, receive confirmation from the creditor, and put it right back on your report. Another trick is telling clients to apply for new credit under a new Social Security number, perhaps one that is close to your real number so the credit bureau won’t catch on. The illegality of this one should be obvious.
In sum, watch out for these warning signs that a credit repair company may be a scam:

• They tell you they can remove negative information from your credit score
• They try to loan you money
• They ask for a lot of money upfront
• They advise you to employ fraudulent means
• They share your information with other companies

If you watch out for these signs, you should be able to identify which companies are out to defraud you and which ones are more likely to help you. If you’ve already dealt with a company that has engaged in any of these practices, or which has done anything else you suspect is illegal or unethical, you can help fellow consumers by reporting the company to the Federal Trade Commission. If you’re in the market for one, chances are the benefits of a properly filed bankruptcy would far outweigh any benefit you might receive from a credit repair company. Bankruptcy will wipe the slate clean and allow you to rebuild your credit by putting you back in control. Serving North Carolina residents, the Law Offices of John T. Orcutt can help you get back on your financial feet. Call today for your free consultation: 1-800-899-1414.

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

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

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

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

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

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

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Published Monday, June 1, 2009 @ 10:42 am

Filing bankruptcy is all about getting back to your feet, socially and financially. When it’s time to start rebuilding your credit history, one of the best ways to do so is through the use of a secured credit card.

A secured credit card is just like a regular credit card. The only difference is that instead of the bank granting you credit, your credit line is based on an actual cash deposit you put into a savings account. This way, you have all the benefits of a traditional credit card and reap the benefits of a new, maturing credit history.

While it’s important to select a card that has what you need and will overlap with your spending habits, for a person looking to rebuild their credit worthiness, it is critical that your first card have:

A 25-day grace period

It was typical at one time for creditors to offer 30-day grace periods, which meant you would receive one bill every month. Recently, the grace period was reduced to 25 days, translating into 14 bills per year. Many now have gone a step further to a 20-day grace period, meaning 18 bills per year. Since so many of us plan our credit card payment based on a monthly cycle, like all other bills, it is very understandable that when faced with 18 bills a year, a person can get behind on payments.

The best possible interest rate

It helps to understand how credit cards calculate their interest rates.

A flat interest rate is as straightforward as it sounds but they can be fairly high, like 17 to 21 percent. Sometimes, a flat rate is only temporary or can increase after a specified time period so make sure to read the small type. The federal discount rate plus a set flat rate means that the card is based on the “primary credit rate,” which is the rate at which the Federal Reserve charges your bank and can be found in the Wall Street Journal online or in the paper’s “C” section. The added set flat rate is just that, a flat rate added to the primary credit rate.

Prime rate plus a set flat rate adds a flat rate to the rate that the nation’s 30 largest banks charge corporations when they borrow money. The “bank prime rate” can also be found in the Wall Street Journal. These rates can get high because the bank rate is often a bit higher than the primary credit rate.

LIBOR, or The London Interbank Offered Rate plus a flat rate is a term you’ve probably seen a bunch of times but never understood. Don’t worry, few people do. This method of charging interest is based on the average rate that the five largest London banks charge other banks. There are a number of different LIBOR rates to make things even more confusing. More often than not, the three month rate is used. You can monitor LIBOR at www.bankrate.com.

So while the terms and acronyms can be confusing and very often misleading, the important lesson in this blog post is that when rebuilding your credit, it is best to select a credit card that has at least a 25-day grace period and the lowest possible interest rate. Keep in mind also, you will receive plenty of unsecured credit offers post-bankruptcy. Be extremely careful with these new lines of credit. Your post-bankruptcy credit habits should be narrowly tailored to safely rebuild your credit- This means keeping a low balance, and paying it off at the end of the month. You can rebuild your credit after a bankruptcy. Talk to an experienced bankruptcy attorney today to find out how.

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Published Thursday, May 28, 2009 @ 12:31 pm

As if we didn’t have enough things to worry about, it seems like every day another TV commercial, pop-up ad or credit card offer is telling you to worry about your credit score and pay someone to look at it.  Unfortunately, these messages, while pesky, are partly right; credit scores are now an important tool in the arsenal of an informed consumer.  Based on the way these offers are phrased, anyone might think that simply looking at your credit score is going to somehow fix it. Your credit score is information–important information, it’s true. But once you have it, what will you do with it?

If you’re considering bankruptcy, chances are your credit score is hurting. You’ve probably heard that your credit score will be negatively affected by declaring bankruptcy, and this may be holding you back from taking an important step to solving your debt problem. In the long term, bankruptcy will actually help your credit score–but before you can understand why, there are some facts you should know about credit scores.

A credit score is essentially a report card on your debt history. Much like a report card, it will not encapsulate you, but companies will use it as short-hand to evaluate your “creditworthiness”– how risky it will be to lend to you. Credit bureaus (companies that collect information about consumers) calculate your score based on information from your debt history. The exact formula they use is a trade secret, but the factors in rough order of importance are:

• Your payment history: missed payments is the top factor 
• Your outstanding debts: the ratio of your debt to your credit card maximums as well as the total amount you owe
• How long you’ve had credit: the longer, the better
• New credit: can hurt you
• Types of credit you already have: certain kinds of credit are more favored than others

Thus, if you are falling behind on payments, you are doing serious damage to your credit score, and companies will be less willing to lend to you, or impose more stringent rules on the debt (for example, higher interest rates).  If you have too many credit accounts, or owe too much on each account relative to the limit, this will also weigh heavily against your score. When you apply for new credit, you generally will authorize the creditor to access your report; if you have too many inquiries, this can also reflect badly on your score.

Americans are entitled to one free credit report every 12 months, but that is different from a credit score–usually the companies that provide the free credit report will offer to sell you the score for a fee. Watch out for this hook; looking at a credit report is important because it may reveal that the companies have incorrect information about you, but you many not gain much more from looking at your credit score. The report is free once a year, but the score will cost you. You’re also entitled to a free report (but not a score) within 60 days of being denied credit or favorable credit terms.

The good news is that a credit score is not set in stone–in fact, it changes all the time. The bad news is that if you’re missing payments or opening new credit to pay for old credit, a good score can quickly become a bad score. The lower your score dips, the higher your interest rates will climb–even on accounts you already have! Thus, the more your debt problems increase the more money you’re paying out in interest, which long term is a terrible bet. Because scores change, bankruptcy can help your credit score in the long term by allowing you to cut off the debt default cycle.

If your debt is unmanageable now, your score is already beyond your ability to repair. Bankruptcy will help by wiping the slate clean and allowing you to rebuild your credit from the ground up. It will take time and effort on your part, but properly rebuilding your credit after a bankruptcy can be the key to future financial success. Contact a local bankruptcy attorney today and find out the truth about bankruptcy and your credit score. Serving North Carolina residents, the Law Offices of John T. Orcutt have convenient offices in Raleigh, Durham, Fayetteville and Wilson.

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

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

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

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

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

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

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

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

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Published Wednesday, May 20, 2009 @ 5:20 pm

For some people who are ready to file for bankruptcy, the prospect of going through the “341 meeting” looms dauntingly. The meeting gets its name from the section of the bankruptcy code that outlines the requirement, 11. U.S.C. 341, but you may hear it also called the “first meeting of creditors.”  Within ten days of your filing, the court will send notice to your creditors, and one purpose of this notice is to set the date for the 341 meeting. The meeting itself will generally occur between 20 and 40 days of your bankruptcy filing.  The meeting is supposed to be attended by you, your attorney, the trustee, and creditors, if any decide to show. The meeting is open to the public.

With this recitation of facts about the meeting, it’s no wonder that people dread the event. Rest assured―the meeting is not worth your worry. First of all, if you have hired a bankruptcy lawyer (and you really should) he will attend the meeting with you and will prepare you for the meeting beforehand. The meeting will probably only take a few minutes, and it is highly unlikely that your creditors will be present.

You may be asked for certain documents during the meeting. These may include bank statements, income tax returns, car titles and other financial documents, but your attorney should have asked you for these documents already and will likely come to the meeting prepared with copies. You will also bring a photo ID and proof of your social security number, and the meeting will begin with an oath to tell the truth and a statement of your name and current address for the record. The trustee may ask you to verify that you you have seen your bankruptcy petition, read it, and that you actually signed the documents.

In a Chapter 7 meeting, the trustee will ask you about information listed in your petition, including questions about your assets and nonexempt property that might be sold to fulfill debts. A non-exempt asset in one which you have more equity than can be protected under state or federal law. Less than 5 percent of all Chapter 7 bankruptcies contain any non-exempt assets. In the highly unlikely event that you have non-exempt assets, the trustee will usually ask you if you will keep them by paying for the value of the asset. Another option is to simply convert to a Chapter 13, in which case you can pay out the equity value over the course of your Chapter 13 plan.

Your trustee may also inquire about things like your pension plan and the value of your car and home; the purpose of these questions is to establish whether these items are exempt under state or federal law. Once again, your lawyer will have already worked through these issues prior to the meeting.

You should listen to your lawyer’s advice about what to say at the meeting, and in the very rare case that a creditor actually shows up, be guarded about what you say. Overall, don’t worry- The meeting will probably wrap up in a few minutes, nobody will be confrontational, and at the end of the day you’ll be one step closer to your Chapter 7 discharge. Serving North Carolina residents, the Law Offices of John T. Orcutt has helped thousands of residents file for Chapter 7 and Chapter 13 relief. Call today for your free consultation. Convenient offices locations in Raleigh, Durham, Wilson, and Fayetteville.

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

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

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

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

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

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

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

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

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Published Tuesday, May 19, 2009 @ 10:46 am

Recent credit card legislation may prove to be a big relief for many Americans who have trouble keeping up with the rapid interest rate changes, hidden fees and aggressive collection efforts. Or not.

Many industry watchdogs believe the bill, currently alive in both a Senate and House edition, will not meet its original expectations. Citizens who have been watching the bill’s progress with hopes of instant relief may want to start paying even closer attention. It should be noted that true debt relief will rarely come as the result of government action alone and that in the end, the best solution for a reprieve from the pressures of mounting debt is to seek legal advice from a reputable bankruptcy attorney.

One of the facets of the bill that will benefit burdened card holders is the reinstatement of grace periods. As you may know, credit card companies have become overly serious about their due dates. Granted, a deadline is a deadline, however, many companies apply late fees even if your bill arrives on time but spends a few days being processed through their bureaucracy.

This tactic alone creates a chain reaction of profit for the creditor. In order to avoid a steep penalty, you may be forced to send in any amount, maybe even less than the minimum payment. Thus, your debt perpetuates, as very little of that small payment goes to the principle. However, if you had another couple of days you can afford to send in more and actually make a dent in the amount owed. Credit card companies understand this psychology and are very skilled at leveraging it.

Both versions of the bill have grace period language that ranges from 30 to 60 days.

Card holders can also expect some help from time periods applied to interest rate increases. If you miss a payment and your rate jumps, the reform bill says that the rate must remain intact for only a few months. If you pay on time for six months (as the current version of both versions state), then your rate must return to the original, lower percentage. And, if you are able to pay more than the minimum amount owed, the credit card company must apply the overage to whatever charges are subject to the higher interest rate, such as cash advances. Previously, they would apply overages as they saw fit.

The problems with the legislation start with its timing. To no surprise, credit card companies are mounting the argument that they will not be able to implement changes until well into 2010. Actually, the government is not helping matters much, as they also agree that most changes won’t take effect until 2010.

Additionally, and almost sickeningly, credit card companies are currently increasing fees across the board to get as much money as possible before the government action comes bearing down on them. And the reform bill is powerless to prevent it. Card lenders are also hurrying to get underway with standard-setting consumer research studies to learn as much as possible about everyone who holds and applies for a credit card. That data will surely be used to create new, even more cleverly-positioned marketing pitches down the road that will surely find a way to circumvent the results of the reform actions.

Lastly, they will simply start to deny people credit and raise rates on those that do qualify, which will do nothing but delay the recovery in consumer spending. Anything to make a buck.

But hey, membership has its privileges, right?

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Published Monday, May 18, 2009 @ 4:30 pm

We see the commercials, hear the clever tag lines and are inundated with information about how to receive our credit report. So while a goofy guy singing catchy tunes about the perils of not knowing what’s on your credit report certainly has its marketing merits, his chorus doesn’t say much about what to do when you find something on your report that doesn’t ring true.

First, make sure that your report is indeed your report, as many of the mistakes found involve the most basic information, such as your name, social security number or birth date.

Look for items that are older than seven years, which signifies that a report item must be removed. Watch for accounts that are reported more than once or any indication that you were part of a lawsuit. Some potential creditors may believe that to be a sign that you owe part of a settlement and therefore may not be a worthy credit risk.

There is a reason why your credit report will arrive with a dispute or investigation request form: you have to take care of reporting any errors. Credit reporting agencies are not at all proactive about investigating mistakes not brought to their attention; it’s simply too tall a task. Therefore, your first step in taking care of any error is to complete and submit the form. It helps a great deal to include a personal letter identifying the particular issues in more detail.

Next, contact each of the organizations involved with an error notifying them of the mistake and asking for an official receipt that includes the account number in question, their reasoning for the dispute and all accompanying information related to the account. Be firm but professional in your letter and demonstrate that you will continue to follow up and pursue the matter indefinitely until it is solved.

Should your efforts return positive results and your report is corrected, don’t just sit back and assume the best. It is not at all uncommon for deleted information to re-appear. Remember that somewhere amidst all the computer-generated data and automated financial reporting, there is a person in front of a computer. Order another report a few months after you believe the errors should have been corrected and if you do spot the same mistake, send yet another letter with the evidence you gathered the first time around, demonstrating their recognition of the error.

Remember that if a creditor believes their dispute is valid, the information will stay on your report. Continue your efforts of paper-based contact with the creditor to create a provable record of your persistence. Should the creditor come around and finally confirm the fault is theirs, you should forward that confirmation to the credit bureaus as soon as possible to ensure the mistake is removed.

Credit report errors can do some real damage if not taken care of quickly. Paperwork, forms and phone calls are all part of it, so be patient but persistent and always remember that it’s your good name on that report. And remember, if you are in over your head in debt, bankruptcy is often the most efficient solution to rebuilding your credit. Talk with a bankruptcy attorney to find out how to take control of the debt collectors now. Serving North Carolina residents, contact the Law Offices of John T. Orcutt today for a free bankruptcy consultation.

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Published Monday, May 18, 2009 @ 12:47 pm

One of the big myths in the minds of people who are in debt and happen to be married is that bankruptcy leads to divorce. Yes, along with medical bills and job loss, divorce can be considered a leading contributor to bankruptcy, since it can put one or both ex-partners in a significantly more fragile economic position, and ultimately lead to a perilous situation that can be remedied no other way. That situation can happen after a divorce, but the idea that an otherwise happily married couple that files bankruptcy will inevitably land in divorce court is just false.

There is absolutely no doubt that financial problems put stress on a marriage. Well, we already know that financial troubles can have a negative effect on just about every other aspect of a person’s life. You may be experiencing your own personal version of that fundamental truth right now. And just like your credit, reputation, self esteem, and other personal relationships, you could one day wake up to find your marriage in trouble or on the verge of being ended if the financial situation isn’t improved quickly and effectively.

We must realize, when this happens, that filing bankruptcy isn’t the problem – it’s the stress of not being able to pay the bills that’s the problem. It’s the uncertain future, the fear of losing a home, it’s the debt collector harassment, and other emotional financial baggage issues that cause, or contribute to the marital discord, not the bankruptcy. In fact, in otherwise healthy marriages, bankruptcy almost always helps a marriage rather than causing divorce, because it’s designed to stop stress and help people get their finances organized.

Bankruptcy can reduce the stress, buy some time, stop the harassment and uncertainty, and help couples develop a plan to restore their financial stability and progress. Having a plan helps a married couple work as a team to overcome their obstacles. It will stop the cycle of blame and guilt, and help your family grow in a positive direction toward financial freedom.

Once the burden of indecision about the financial situation is resolved, couples often return to supporting each other and move forward with their lives together. Bankruptcy is a legal process, and it isn’t always easy to make the decision to file or to experience. Talking with a bankruptcy attorney can help you decide if it’s the right decision for you. And when it comes to marital conflict caused by financial stress, bankruptcy can be the best remedy, because what it’s really about is moving forward in life.

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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 Thursday, May 14, 2009 @ 12:55 pm

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

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

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

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

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

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

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

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

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Published Friday, May 1, 2009 @ 11:13 pm

The Law Offices of John T. Orcutt has 4 convenient office locations, including a Raleigh office only 30 minutes from Holly Springs. Call 1-800-899-1414 to schedule your free initial debt consultation. Or visit www.billsbills.com to fill out a confidential debt questionnaire. Relief is here! Call today.

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Published Friday, May 1, 2009 @ 7:31 pm

People often have a hard time coming to grips with the decision to file for bankruptcy. Many feel that is morally wrong to do so; that we have an obligation to pay the debts off that we incur during our lifetimes. We are taught that there are consequences to our actions; that if we do ‘A’ that we will have to deal with ‘B.’ For some, bankruptcy flies right in the face of a concept that we all grew up with- taking responsibility for our actions.

There are actually two verses that refer to the concept of debt forgiveness, and much in the way that they are dealt with now. In Nehemiah 10:31b the bible state:

“Every seven years we will let our fields rest, and we will cancel all debts.”

Then also in Deuteronomy 15:1-2:

“At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release.”

People often feel an intense shame in admitting that they can no longer meet their bills, their responsibilities. Many folks will even do away with some basic necessities like adequate food and clothing in order to try and meet those obligations. Marriages have fallen apart over the stress that comes with serious financial trouble. People have even been known to take their own lives because of the intense shame and despair their financial woes bring.

Since the Bible is the moral compass for most people than they should consider what it says in reference to debts. Yes, the Bible does expect us to take responsibility for our actions and pay our debts. However, as the two previous passages have shown, the Bible says that it is okay not to repay your debts if circumstances make it impossible for you to do so and you must file for bankruptcy. The Bible also shows that there is no need to be ashamed of filing for bankruptcy either, as long as you really cannot pay them.

That is why we have the court system and law that we have; to make sure that you are not just trying to ditch your bills and that you really cannot pay your bills. Basically, the legal system has taken care of the mechanics of bankruptcy and the Bible the morality of it. So if you feel that you might need to file for bankruptcy than feel no shame and do what you need to take care of you and your family.

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