Published Tuesday, June 1, 2010 @ 8:10 am

While millions of struggling Americans still working hard to find employment might disagree, economists are heartened about prospects for growth this year as industries increasingly report better profits and add new jobs.

In fact, job growth is said to be at its fastest pace in 10 months.  In recent surveys, American employers were found to have added 162,000 jobs in March 2010, the most in three years. Wages and salaries also are improving.  And, obviously higher salaries bode well for the recovery, since consumer spending accounts for as much as 70 percent of our nation’s economic activity.

So, are you still looking for work? Well you’ve come to the right place. Or, at least, the place where you can find the best “places” to find work as The Milken Institute, a nonpartisan economic think tank, released its annual Best Performing Cities Index earlier this week.

And where are these bastions for hiring and employment boom towns? Would you believe deep in the heart of Texas?

The 2009 top 10 performers (with 2008 rankings) of the 200 largest metros:

1. Austin-Round Rock, TX (4)
2. Killeen-Temple-Fort Hood, TX (13)
3. Salt Lake City, UT (3)
4. McAllen-Edinburg-Mission, TX (7)
5. Houston-Sugar Land-Baytown, TX (16)
6. Durham, NC (21)
7. Olympia, WA (9)
8. Huntsville, AL (5)
9. Lafayette, LA (14)
10. Raleigh-Cary, NC (2)

Yep, that’s right, the Lone Star state as it happens made up four of the top five cities in the Milken report. In it, the index editors suggested that these large Texas towns rose to the top of the employment heap, along with a notable pair from North Carolina, due to their resources and technology sectors, in addition to the “state’s favorable business climate and its ability to attract jobs and corporations away from higher-cost states”:

“Regional economic factors also strongly influenced the rankings this year, with the oil and gas sector, technology and alternative energy providing stability among metros in Texas, North Carolina, Washington and Louisiana, which also benefited from low dependence on housing/construction. Austin in particular has been helped by its strong tech industry. It is the first metro to ever be ranked number one twice on the index, the last time being in 2000.”

For many of the cities, rising to the top of the rankings was a matter of not losing ground, and, as The Huffington Post put it “sidestepping the worst pitfalls of the recession in order to maintain the status quo.”

As the Milken reported found:

“‘Best performing’ sometimes means retaining what you have,” said Ross DeVol, director of Regional Economics and lead author of the report. “In a period of recession, the index highlights metros that have adapted to weather the storm. As we move forward in a recovery that still lacks jobs, metros will be further tested in their ability to sustain themselves.”

Cities in the index were also ranked based on how well they create and keep jobs, illustrating reflected both long- and short-term measurements of employment, wages, salaries and the aforementioned tech growth. But whether you’re in Texas or the Tar Heel state, these rankings aren’t definitive….and, in this lingering economic recession, neither is job certainty.

In tough times, why not turn to something that is definitive: a smart move to a better financial future through bankruptcy. 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 Tuesday, May 18, 2010 @ 10:17 am

Just two months ago, the Obama administration reworked its troubled $75 billion foreclosure prevention plan. The revamped Home Affordable Modification Program (or HAMP), put into play an attempt to help those hardest hit by the housing crisis, targeting homeowners who were unemployed or underwater in their mortgages (owing more on their loans than their homes are worth).

While only 170,000 homeowners to that point had completed loan modifications under the President’s plan—out of 1.1 million who began the government’s HAMP last year—the current effort was designed to help a total of three million to four million homeowners avoid foreclosure by the end of 2012.

But new data released this week shows that more than twice as many homeowners were kicked out of HAMP just last month as were granted permanent relief.

According to The Huffington Post’s translation of the data by reporter Shahien Nasiripour,  “More than 123,000 homeowners were bounced from the administration’s Home Affordable Modification Program in April versus about 60,000 who were offered five-year plans of lowered monthly payments. This is the first month since the administration started reporting cancellation figures that the number of canceled modifications outpaced the number of new permanent modification offers. The number of canceled modifications skyrocketed 82 percent in April compared to March.”

The data shows that more homeowners were booted from the program in April, merely one month after the new “improvements,” than there were new permanent and trial modifications combined. According to the Treasury Department, cancellations were approximately 27 percent higher than the number of new trial and permanent modifications.

“I think it’s great to take these numbers in context… with the broad efforts to stabilize the housing market,” David Stevens, chief of the Federal Housing Administration told The Huffington Post, pointing out that home prices and the number of new foreclosures have started to level out with news of the economic recovery. Steves credited President Obama’s continued support of keeping interest rates down with more homeowners being able to refinance their mortgages into lower rates, as well as lower payments, and less folks in the throes of foreclosure.  In the meantime, trial modifications have been offered to more than 1.2 million homeowners during the program’s year-long run.

“You know, while enabling eligible homeowners to modify their mortgages is vital to addressing the housing crisis with HAMP, it’s also extremely important to keep this in context that this is just one part of the administration’s comprehensive approach to assisting homeowners and stabilizing the housing market,” said Stevens.

“We don’t claim that the housing market is totally out of the woods, but it’s certainly showing signs of stabilizing,” Herbert M. Allison Jr., assistant secretary for financial stability at the Treasury Department reported to HuffPost.  Allison cautioned that “perhaps” more mortgage holders would be kicked out of HAMP before it gets better, allowing new rules to level the current home ownership playing field.

As American homeowners search for more immediate and steady mortgage help, many are turning to bankruptcy to stop their impending foreclosure and other creditor actions. If you too have been effected by foreclosure, 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 Sunday, May 9, 2010 @ 8:28 am

As we’re all aware, this decade’s Great Recession has dealt, and continues to deal, a significant blow to the budgets of many American families, leaving millions in debt, underwater in their mortgages, and looking for any means necessary to get back on a financially-healthy course.  Now, in the weeks following this tax season’s deadline, important financial news abounds for many cash-strapped citizens and the struggling states they live in.

Looking for good news amid the bad? Take a gander at the latest economic outlook and what it might mean for you.

Our Great Recession Continues (Or Not)
Last week, the Business Cycle Dating Committee of the National Bureau of Economic Research, a group responsible for determining official start and end dates for recessions based on analysis of financial indicators, announced that it cannot yet officially declare an end to the recession. The report indicates that, though many economic indicators have improved in recent months (including mortgage defaults, hiring and retail sales), it is still too soon to say whether or not the recession has come to a close. But the news isn’t all bad….In contrast, one member of the committee disagreed with the  final decision, issuing a memo citing the following two indicators as primary reasons why he believes the recession has already ended, including the fact that Real Gross Domestic Product (GDP), the measure of our country’s overall economic output in a given year, has reportedly improved since June of 2009; and that Real Gross Domestic Income (GDI) has also apparently improved.

To corroborate this evidence, The Huffington Post reported this week, that 70% of those recently surveyed by The National Association for Business Economics believe real Gross Domestic Product (GDP) 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.”

Hiring Up, and Congress Extends Unemployment Benefits
Similarly, HuffPost revealed that recent hiring growth is said to be at its fastest pace in 10 months.  “American employers in 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.”
Despite the increase in hiring, unemployment remains close to 10 percent, meaning that millions of American families may not feel the recession’s end for a while. But everything’s not lost for families suffering from extended joblessness. According to the New York Times the Senate has voted 60 – 40 in favor of extending unemployment benefits. Were it to pass both houses of Congress, the measure would apparently cost approximately $18 billion—a hefty stumbling block for fiscally-conservative Senate Republicans.

Tax Time 2010 Was One of the Best It’s Been

According to Newsweek, we’ll “look back on April 15, 2010, as the day we got of cheaply.”  Due to a staggering national budget deficit and an aging American populace living off (and depleting) Social Security, all signs point to tax increases on the horizon—another good news/bad news scenario that should have us enjoying the “good times,” while we can.

If the financial news from your household is less than good, it may be time to turn to bankruptcy. If you, and your family, 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 Thursday, May 6, 2010 @ 6:06 pm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published 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 Thursday, April 8, 2010 @ 9:18 am

This blog talks at length about savings strategies and offers a great deal of consumer spending advice. Our goal is to create an all-encompassing approach to helping readers, clients and potential clients be financially successful after bankruptcy.

Having a healthy savings account should be the goal of anyone rebuilding after bankruptcy. But after the great bank fallout of the last two years, it’s becoming hard for a lot Americans to trust some of our nation’s largest financial institutions. Not only are the rate of return on these accounts very low, it seems every day banks are surprising account holders with a sudden fee or reduction in service.

If you remain skeptic and trust your tech-savvy, Web-based banks offer a number of attractive reasons to earn your savings account business.

Online banks can limit fees and offer higher interest rates because they do not have expensive overhead to cover, like hundreds of brick-and-mortar branches, thousands of employees and millions in advertising budgets. It also costs them less to service the customer because the means by which they do it—typically e-mail and instant messaging—costs much less than a person standing behind a counter.

Many online banks do offer phone service, so you can speak to someone when necessary. Another way they can limit fees—and this is a good thing—is by limiting access to your cash. No, not in a negative, “you can’t have it” kind of way but more so by not having ATM machines or again, physical branches.

Since everything is set up electronically, you can establish a line of connection between your online savings account and a local branch where you maintain a checking account. So yes, you may still have to deal with the big guys to some extent. In that respect, look around for a regional bank with only a few branches. Many of these institutions still do business like they used to, with neighbors working behind the desk and managers who remember your name.

Many online banks also limit the number of transfers you can arrange in a given month. Again, a good thing. Savings accounts are not meant to be accessed like a checking account. Unless you need it, it’s best to let the money sit. It should be noted though, that the transfer limit is set by federal law, not the banks.

Lastly, these banks are experts in user studies, creating Web sites that are very easy to use, navigate and set up. Thus, you don’t need to be a Web genius to online and start saving. If interested, do some comparisons. A site with current comparisons can be found at: http://moneyning.com/online-savings-accounts/.

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

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Published Tuesday, March 30, 2010 @ 9:50 am

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

In part two of this ongoing series, we meet mother of two, Lisa Lewis.

Lewis, who shared her plight with The Huffington Post’s Heather Hollingsworth, worried about how to pay for her son’s school lunches. The 37-year-old works part-time at a Kansas daycare, earning just minimum wage. With her part-time job she attempts to support herself, her unemployed husband, her stepson and her 11th-grade son. “I sometimes cry myself to sleep wondering how I am going to keep my family fed and things like that,” Lewis told Hollingsworth. “I’m making it but barely.”

Fortunately, Lewis qualified government assistance to pay for her youngest son’s meals with her older son already a part of the subsidized lunch program. As Hollingsworth writes, “In the midst of a blistering recession, more families are flocking to the federal program that gives students free or reduced-priced lunches. During the 2008-2009 school year, about 19 million students received free and reduced lunches, which is 895,000 more than the previous year – a jump of nearly 5 percent and that greatly outpaced the overall increase in school enrollment, according to the U.S. Department of Agriculture’s Food and Nutrition Service. Typically, the increases are about 1 to 2 percent each year. To qualify for the mostly federally funded school meal program, a family of four can earn no more than $28,665 for free lunch and $40,793 for reduced-cost lunches of no more than 40 cents. The guidelines are different in Alaska and Hawaii, where families can earn more and still qualify.”

As more and more children qualify for subsidized lunches, many beleaguered school districts are having a tough time providing free or reduced lunches with the money allotted by the federal government. These same districts are siphoning from other areas of their budgets simply to make ends meet for their students.

As Hollingsworth puts it, “For all, it’s a stark example of how the recession is hurting families. And when life is not stable at home, everything changes.” Topeka, Kansas, Superintendent Mike Mathes, told Hollingsworth that one of the most heartbreaking stories he has come across is 11 students from three families crowded into a rental home and a trailer parked outside. “The number one priority in those kids’ lives isn’t school, it’s surviving,” Mathes said.

For families like these in Kansas, it’s all about riding out their own Great Recession.

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

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Published Thursday, 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 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 @ 7:27 am

No one needs to tell you times are tough.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Published Wednesday, February 24, 2010 @ 11:56 am

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

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

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

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

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

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

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

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

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

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

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

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Published Wednesday, February 24, 2010 @ 9:50 am

We sure do like to shop in America.

Despite the rise of Internet browsing, there are still few environments more attractive to a modern-day capitalist than a shopping mall during the holidays. Even in down-times, like the last two major holiday periods, just about any mall appears packed with people as diverse as the brand names on the bags that dangle from their wrists. Despite two years of serious recession, it’s still hard to find a place to park.

So, as we try figure out who exactly is being pained by the Great Recession when we visit a mall (we know who is), the bigger question that looms is about on how on earth can the owner of one of these Great Pyramids of commerce can possibly go bankrupt? Well, it happens, and it did last year to General Growth Properties, one of the nation’s largest owners of malls and retail centers.

As we previously reported last year on this blog, the publicly-traded REIT (Real Estate Investment Trust) that had owned part or all of more than 200 shopping centers in almost every state, needed to restructure $27 billion in debt and filed Chapter 11 bankruptcy to help with the process. The company owns properties in North Carolina, including Durham’s The Streets at Southpoint and Valley Hills Mall in Hickory.

The company actually did not file a pre-packaged bankruptcy like so many other large companies have done during the last number of months. Since it has filed, the company has been courted by a number of buyers and as they get closer to exiting, the suitors are lining up.

In order to exit bankruptcy alone, General Growth needs to convince bankruptcy Judge Allan Gropper that they can pay off nearly $7 billion in unsecured debt. They would plan to do that with a good portion of it coming from stock. Problem is, their stock price may not be sufficient.

The Wall Street Journal is reporting that the company’s best strategy to exit alone will be to convince Judge Gropper that creditors’ acceptance of stock would be a reasonable settlement. That of course also depends on to what extent General Growth can convince their creditors that its stock is valuable enough.

In the last several days, competitors to General Growth, like Simon Properties, the nation’s largest mall owner, has caught wind of the company’s challenges and like any other understanding, cash-rich corporate entity who smells blood, submitted their own takeover bid.

Simon has put a $10 billion bid on the table that includes the creditors’ payoff in cash, a much preferred currency than the stock of a company in bankruptcy. Thus, the Simon plan is winning over critical parties to the transaction. General Growth’s board, not surprisingly, is not overly thrilled.

General Growth ultimately is hoping for a old fashioned bidding war over its assets. Enter Brookfield Asset Management, Inc., which announced it will outbid Simon and allow General Growth to exit bankruptcy on its own. Brookfield would become the company’s largest shareholder, despite just exiting bankruptcy itself. Based in Canada, Brookfield publishes Reader’s Digest and already owns a significant amount of General Growth stock.

Other potential bidders for the mall owner include Westfield Group and Vornado Realty Trust. If no bids get the approval of the court, a hearing will occur in which General Growth will need to convince Judge Gropper that they should be allowed to continue conceptualizing a reorganization plan, at which point the story will begin to get quite a bit longer.

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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 Tuesday, January 19, 2010 @ 2:48 am

The holidays are now officially over. The New Year has begun in earnest. And ‘tis the season for tax time. If you believe you’re bankruptcy bound in 2010, that definitely means it’s also time to get your 2009 returns in order.

Thinking About Chapter 13 Bankruptcy?

Chapter 13 bankruptcy helps restructure your debt into a more manageable payment plan—allowing you to pay back what you owe over time, often at a percentage of the cost. If you’re considering this type of bankruptcy, it’s important to remember that tax returns should be provided in Chapter 13 cases.  You must file all tax returns for all tax years – including returns for 2009.  Bankruptcy Code Section 1308 provides:

(a) Not later than the day before the date on which the meeting of the creditors is first scheduled to be held under section 341(a), if the debtor was required to file a tax return under applicable non-bankruptcy law, the debtor shall file with appropriate tax authorities all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition.

(b) (1) Subject to paragraph (2), if the tax returns required by subsection (a) have not been filed by the date on which the meeting of creditors is first scheduled to be held under section 341(a), the trustee may hold open that meeting for a reasonable period of time to allow the debtor an additional period of time to file any unfiled returns, but such additional period of time shall not extend beyond–

(A) for any return that is past due as of the date of the filing of the petition, the date that is 120 days after the date of that meeting; or

(B) for any return that is not past due as of the date of the filing of the petition, the later of–

(i) the date that is 120 days after the date of that meeting; or

(ii) the date on which the return is due under the last automatic extension of time for filing that return to which the debtor is entitled, and for which request is timely made, in accordance with applicable nonbankruptcy law.

In plain English, this verbose section of the Bankruptcy Code means that if you’re a Chapter 13 filer, you must file your tax returns before the creditor’s meeting to assess your ability to repay your debts.  If you have yet to file, your bankruptcy trustee (appointed to evaluate the case and serve as an agent for collecting your payments and making distributions to your creditors), may continue the meeting until it is filed, up to 120 days.  After this 120-day window, your case can be dismissed.  As such, it’s best to be proactive, avoiding any reliance on an extension.

What About Chapter 7?

If you’re considering filing a Chapter 7 bankruptcy in order to dispense all of your unsecured debts, the tax implications are a bit different.  In this case (as in a Chapter 13 case), it is vital to alert your bankruptcy attorney if you expect that you will owe taxes pending the filing of your 2009 return.

On the other hand, if you expect a refund, like the majority of Americans, based on where you live and other considerations, this financial return (or a portion of it) may be considered an asset of the bankruptcy estate, and, as such, will only be protected to the extent you can protect it with state exemptions (up to $10,000.00 for a married couple in North Carolina).

If you’re considering bankruptcy in 2010 and are concerned about the tax implications, including when to file, whether you can keep your tax refund, and any other factors in your personal circumstances that might require consideration, it’s important to speak with an experienced bankruptcy attorney who can competently guide you on the right path to the best result.

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

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Published Friday, January 15, 2010 @ 8:44 am

Will California become the first US state ever to default on its bonds in 2010? Last year, Governor Arnold Schwarzenegger spent most of the year haggling with the state legislature to try to come up with a balanced budget. In May, they warned they might go bankrupt if federal government help was not forthcoming – the Obama administration declined to help them out and they went back to the drawing board. Last summer, they issued IOUs to some vendors in lieu of checks. As of December 1, the state had almost 84 billion dollars in long term budget debt.

Just last Friday, Schwarzenegger revealed a new state budget that includes an additional 6.9 billion dollars of federal assistance – assistance the federal government has not yet agreed to give. Schwarzenegger claims that if it’s not received, the state will respond with already decided-upon spending cuts. Those cuts will come on top of deep slashes California has made in its state budget over the last year: hundreds of thousands of workers have been laid off or forced onto unpaid leave, health care for poor children and the elderly has been gutted. These cuts affect millions of people as the poverty rate across California increases: poverty in Los Angeles is now estimated at 20% of the population.

What’s caused this frightening state of affairs? The recession, for one thing. California rode the wave up during the housing boom, with some of the highest housing prices in the nation – it’s now suffering the depths as prices fall. In the town of Merced, for example, housing prices have fallen 70%. 25% of homeowners whose houses are ‘underwater’ – worth less than they owe on the mortgage – live in California. Increased unemployment and decreased revenue lead to lower amounts of taxes – and at 12%, California has one of the highest unemployment rates in the nation.

But California has some problems of its own making too. Ballot initiatives allow the population to vote spending mandates, then leave the legislature to find the money to pay for them. At the same time, one of these mandates requires that 2/3 of the legislature approve any tax increase. Since just over a third of the legislature is filled with Republicans who campaigned on ‘no new taxes’ promises, this is virtually impossible.

Like many people facing finances spiraling out of control, California’s reaction has been: deny, deny, deny. Last spring, voters rejected 5 out of 6 measures to control spending. Republicans blame high waged unions and claim illegal immigrants soak up resources. Democrats point out that there are people paying $600 of taxes per year on property worth millions of dollars, and that corporations, not individuals, have been the biggest beneficiaries of the Proposition 13, the 1978 ballot initiative to keep property taxes low.

So should California declare bankruptcy? Well, no. States aren’t afforded the protections individuals receive in bankruptcy, and there are no exemptions. Equally importantly, it’s a lot harder for a state to rebuild its credit rating than an individual. If California’s bonds get downgraded to junk, its interest rates will soar – leaving even less money to provide services to its population. The people of California are the ones who will suffer.

But what California can learn from bankruptcy is this: states, like people, deserve a fresh start – and sometimes they need it, too. What California should do is convene its first constitutional convention in over a hundred years and draw up new rules. Abolish ballot initiatives that mandate spending. Make it easier to raise taxes. Negotiate with the unions. Then, like anyone coming out of bankruptcy knows, they’ll have a fair chance at a healthy financial future.

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

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

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

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

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

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

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

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

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Published 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 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 @ 4:18 pm

One would think that with the country going through the worst economic downturn since the Depression years that the government would be a bit more concerned with people trying to commit fraud when they file for bankruptcy. Yet in the last fiscal year (ending September 30) the government had conducted the fewest number of fraud investigations since 1986.

In the last fiscal year the number of people filing for bankruptcy has increased by approximately 30 to 35%; nearly 1.4 million people filed in fiscal 2008. This increase comes on the heels of two years (2006 and 2007) in which there was a decrease in filings. That was due to laws being passed in 2005 making it more difficult for people to file and be approved for bankruptcy (with the aim of decreasing the number of people trying to file). As economic times worsened that number was bound to come up like it did.

With such a dramatic increase it would seem logical that the government would increase the number of agents involved in investigating bankruptcy fraud cases. Instead that number has seen a reduction. Ever since the terrorist attacks on 9/11 the government has been dedicating more resources to national security. This has inevitably led to fewer agents available to investigate white collar crimes. Since there are fewer agents, they have been forced to prioritize their efforts.

White collar investigations have been geared towards larger criminals than potential fraudulent bankruptcy filers. The focus has been more towards stopping securities and mortgage fraud and the next Bernie Madoff from getting away with $65 billion of honest peoples’ money. Whenever the FBI has been able to assign more agents to white collar crimes it is typically for securities or mortgage cases. Bankruptcy fraud does not even register in the top five as far as investigation priorities go according to the section chief for financial crimes in the Washington FBI office, Sharon Ormsby.

For the fiscal year ending September 30, the government had investigated 82 cases which they looked upon as bankruptcy fraud. There could possibly be other cases involving bankruptcy fraud, but that would be where the bankruptcy fraud would be secondary to a larger crime, i.e. securities fraud. Numbers from 2003 estimated that a potential 10% of cases filed were fraudulent to some extent. It would be hard to tell right now with such limited resources whether or not that number is any better or worse.

Some judges have found it a little frustrating. Whenever they are suspicious that fraud may have been committed in a case they can recommend that the FBI investigage, but clearly there are not enough resources directed toward the problem.

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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 Monday, November 23, 2009 @ 6:49 pm

The Associated Press is reporting that the foreclosure crisis will persist well into next year as high unemployment “pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.”

The latest evidence comes this week in a report from the Mortgage Bankers Association identifying that a rising tide of fixed-rate home loans made to people with good credit are now facing foreclosure, marking a surprising shift from assumptions that only riskier subprime loans are driving the current housing crisis. The report also stated that 14 percent of homeowners with a mortgage were either late on payments or in foreclosure at the end of September 2009, marking another record-high for the ninth straight quarter.

These findings speak to an even more beleaguered housing market than previously thought, bearing the weight of even more home-loan defaults. The main culprit, industry experts say, is rising unemployment, forcing even the most responsible homeowners to fall behind on their mortgages.

As the AP found, many laid-off homeowners might be able to survive on their savings for a while, but “the longer the economic situation stays in place, the less likely they are to hold on,” said Jay Brinkmann, chief economist at the Mortgage Bankers Association.

As Robert L. Borosage, Co-Director of the Campaign for America’s Future, blogged this week, “[o]ne in six workers is unemployed, has given up looking or is forced to work part-time. For young workers aged 16 to 24, unemployment is 19%. For young African Americans, unemployment is at 30%. And as Federal Reserve Chair Ben Bernanke testified yesterday, we’re likely to see — at best — a slow recovery with no new job growth. That exacts a devastating toll in hopes crushed, families stressed, young people stalled, and poverty and hunger spreading.And even if we avoid another downturn, the job picture will get worse. Crippling state deficits — over $260 billion over 2 years — will force layoffs that cost an estimated 900,000 jobs next year if nothing is done.”

As a direct result of this explosion of job losses, this year, more than 3 million foreclosures are predicted, as homeowners are increasingly incapable of paying the mortgage during a brutal recession. As the financial meltdown continues and unemployment surges, the millions that have now slipped into delinquency and foreclosure with only one conceivable way out: bankruptcy.

Homeowners with prime and sub-prime mortgages alike are taking immediate action, arming themselves with basic bankruptcy tools. So, if you’re interested in staying in your home, looking for permanent solutions to foreclosure threats, and ready to quit spending and start saving, there’s never been a better time to consult with a bankruptcy expert. For more information regarding homeowner benefits of bankruptcy filing, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

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

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

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

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

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

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

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

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

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

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

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

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