A recent article in The Arizona Republic reports that August bankruptcy filings in Arizona increased 65 percent from 2006 filings. Arizonans filed 1021 bankruptcy applications in August, 2007 up from 617 in August 2006. Bankruptcy filings are also increasing nationwide, up 31 percent from August 2006.

Although the article doesn't get into the specifics of why such a large increase in Arizona bankruptcy filings was seen, I believe it can be largely attributed to the rapid increase in foreclosures seen in Arizona.

According to data compiled by RealtyTrac , foreclosures in Arizona nearly tripled in July from 2006 - the eight largest increase nationwide, putting Arizona into the top 10 states for foreclosures.

I expect that a large number of the Chapter 13 bankruptcies filed where individuals attempting to save their homes from foreclosure by getting the protection of the automatic stay. Filing a Chapter 13 bankruptcy is a viable option that can order a mortgage company to stop the sale of your property and give you up to 3 years to repay any arrearage.

As foreclosures continue to rise in Arizona and many states, I expect it will cause a similar increase in Chapter 13 bankruptcy filings.

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Are You One Injury Away From Bankruptcy?

September 6, 2007 - 17:02 by rwaple

If you have a serious injury or illness you are likely to rack a up a large amount of debt and possibly face a reduction or loss of income. This is a financial combination that usually ends in filing bankruptcy.

In fact, medical bills and illness is the leading cause contributing to bankruptcy filings according to a study published in Health Affairs . The study, conducted by researchers at Harvard Law School and Harvard Medical School, found that medical problems contributed to about half of all bankruptcies. The author of the study, Dr. David Himmelstein commented: "Unless you're Bill Gates you're just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick."

If you are unfortunate enough to incur major medical bills, you can quickly find yourself in huge amounts of debt in a very short period of time, especially if you are one of the 44.8 million Americans who doesn't have health insurance.

Things aren't necessarily much better even if you do have health insurance! The study reported that most people who filed bankruptcy because of medical problems actually had health insurance. Uncovered medical debt averaged $13,460 for individuals with private insurance at the start of thier illness. The combination of high deductibles, co-pays, and exclusions can quickly reduce the amount coverage your insurer will provide. Without the ability to perform the same jobs, many also see a dramatic reduction in income.

This study highlights the fact that bankruptcy is designed for unfortunate individuals who have no realistic way of ever paying off their debt and truly need a fresh start.

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California based United States Bankruptcy Judge Louise DeCarl Adler ordered 42 clergy sex abuse cases against the Catholic Diocese of San Diego to go to trial recently. Judge Adler accepted the molested parties plaintiff attorneys' arguments that trial would likely force the San Diego Diocese to settle and resolve the sex abuse claims made against their priests. In February of 2007, these trials were suspended the day before they were scheduled to begin when the San Diego Diocese filed for Chapter 11 bankruptcy protection.

Thus far, the Diocese has offered to settle with the victims of these heinous crimes for roughly $94 million. This amount is far short of the $200 million claimed by plaintiffs attorneys, who assert that the Diocese can afford more even though they are currently under Chapter 11 Bankruptcy protection. The victim's attorneys also have stated that any less amount than a $200 million settlement would be insufficient to their clients for the damage and harm they have suffered. The trials have yet to be scheduled, but it is possible the first of the claims could begin within the next two months.

Filing for Chapter 11 bankruptcy relief has become a pattern for our nation's Catholic Dioceses. In January 2007, the Spokane Catholic Diocese settled molestation claims against its clergy for $48 million to be repaid through its Chapter 11 bankruptcy reorganization plan. The Archdiocese of Portland, OR, Tuscon, AZ, Spokane, WA and Davenport, IA have also filed for Chapter 11 bankruptcy protection in response to the hundreds of sexual abuse lawsuits against their respective priests and clergy.

--Andrew Partridge, Esq.
--BankruptcyHQ.com

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FreshStartForms Debt Reduction Program

July 20, 2007 - 19:53 by rwaple

Edward C. Sanchez, Debt Reduction Specialist, has developed a debt reduction process to help you break the debt cycle and pay down your debts. The information draws from the knowledge Edward has gained from his extensive experience interacting with individuals considering bankruptcy.

The FreshStartForms.com Debt Reduction program uses the "B.A.M" Process, a unique 3 step process that fundamentally change the way you consume on a daily basis. The steps are 1) Budget, 2) Audit, 3)Monitor.

After completing the B.A.M process you will have established a realistic picture of your complete financial situation. It is critical to have this information to determine if bankruptcy alternatives are available to you.

Visit www.freshstartforms.com to learn more.

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Debts Bankruptcy Won’t Eliminate

July 19, 2007 - 23:24 by rwaple

Credit cards, medical bills, repossessions, utility bills and most other unsecured debts are dischargeable in a Chapter 7 bankruptcy . Secured debts, like mortgages or auto loans, usually can be discharged only if you are willing to surrender the property that was used as collateral. Otherwise, you can typically keep the property if you are current and continue making timely monthly payments.

However, a handful of debts cannot be eliminated in a Chapter 7 bankruptcy. These include Student Loans, some IRS or State Income Tax Debts, Child Support or Alimony Obligations, Government Fines, and some debts ordered by a divorce decree. Congress drafted the bankruptcy laws and in their own interests made it very difficult to file bankruptcy on any government debt.

What bankruptcy options do you have if you are burdened with these non-dischargeable debts?

Individuals who have non-dischargeable debts are also often facing other financial difficulties and are in a cycle of debt that includes credit cards, loans, and other unsecured debts. One option is to file Chapter 7 bankruptcy to eliminate any unsecured debts and legally stop making any more payments to your unsecured creditors; this will free up some disposable income and allow you to focus on repaying any debts that survived the bankruptcy. Although the non-dischargeable debts will not be eliminated, the broad protection of the automatic stay may give you some protection from government creditors during the bankruptcy, absent a court order lifting the stay from the bankruptcy judge.

A second option is to file a Chapter 13 bankruptcy and include your non-dischargeable debts in the court monitored repayment plan. It is possible to repay only a portion of your non-dischargeable debts back while you are in the bankruptcy, but you’ll still be liable for the percentage that wasn’t paid back after the bankruptcy. The advantage is that the bankruptcy laws prevent even government creditors from garnishing your wages or harassing you while you are actively in a Chapter 13 bankruptcy. With a little breathing room from your creditors and the ability to eliminate a portion of your unsecured debts, you have sufficient opportunity to increase your income or make other arrangements for repaying the non-dischargeable debts after the bankruptcy

I recommend Requesting a Free Legal Evaluation from a local bankruptcy attorney to help determine which option is right for your situation.

Attorney Richard J. Waple, www.BankruptcyHQ.com

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Bankruptcy Filings Up 60% in Arizona:

July 19, 2007 - 20:20 by rwaple

The Arizona Republic reports that Arizona bankruptcy filings for the first half of 2007 have increased 60 percent from the number of Arizona bankruptcy filings for the first half of 2006, with 895 bankrutpcy petitions filed in June, the highest monthly total of 2007.

The article cites credit card debt, higher mortgage payments, and medical bills as factors driving the trend.

Many bankruptcy attorneys I have talked with would agree with this and have commented that the current market conditions have lead to the "perfect storm", with adjustable rate mortgages dramatically increasing, credit card minimums increasing, and home equity loans becoming harder to qualify for due to the soft housing market and tighter lending requirements.

The dramatic increase in filings may surprise some people, but the Arizona bankruptcy statistics are misleading. I attribute the increase to primarily be a result of the bankruptcy law change (BACPA), which created a huge rush to file at the end of 2005, artificially depressing the number of bankruptcy filings for the first half of 2006. The bankruptcy law changes have being widely criticized, but most individuals still qualify for either a Chapter 7 or a Chapter 13 bankruptcy.

For more information, you can read the entire article here: http://www.azcentral.com/arizonarepublic/business/articles/0716biz-Bankruptcy0717-ON.html

Lean more about Arizona Bankruptcy Laws
Receive a Free Legal Evaluation from an Arizona Bankruptcy Attorney

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What to Expect at Your 341 Meeting of the Creditors

July 10, 2007 - 22:53 by apartridge

At the filing of either your Chapter 7 or Chapter 13 Bankruptcy , a mandatory proceeding called a "341 Meeting of the Creditors " is scheduled by the bankruptcy court.  Depending on your jurisdiction and the volume of bankruptcies filed, your 341 Meeting will happen anywhere from 30 to 60 days after the filing of your case.  In populated states like California , New York , Texas and Florida , 341 Meetings occur typically 45 to 60 days after filing since these courts often get backlogged.  In less populated states such as Idaho , Iowa , Wyoming and North Dakota , 341 Meetings usually take place closer to 30 days after the filing of a bankruptcy because there are less total bankruptcies being filed.  You will receive official notice from the Bankruptcy Court of your 341 Meeting's date, place and time. 

341 Meetings are supervised by a government-appointed Bankruptcy Trustee.  Your Trustee's duties are to handle the administration of your case and represent the creditors at your 341 Meeting in their absence. (NOTE***Your creditors in a Chapter 7 bankruptcy will rarely ever show for your 341 meeting. There are also no judges present at 341 Meetings in either Chapter 7 or Chapter 13 Bankruptcies.) 

The Bankruptcy Trustee's job at your Chapter 7 341 Meeting is determine whether or not you have the ability to repay your debt based on your income or have any assets that he/she can liquidate to repay your creditors. The Trustee's job at your Chapter 13 341 Meeting is to make sure that you have filed a feasible plan and are repaying the correct amount to your creditors based on your economic situation at the time of filing.  At either 341 Meeting, you'll be required to testify under oath regarding your filed bankruptcy petition schedules, finances and income.  Answer all the Trustee's questions truthfully.  While the Trustee is an adversary in your bankruptcy proceeding, their intention is not to try to verbally trip you up or corner you, they simply want to make sure that your bankruptcy schedules are accurate and that you qualify to file bankruptcy. If you have any additional concerns, make sure your bankruptcy attorney discusses all details of your case with you prior to the filing of either Chapter 7 or Chapter 13 bankruptcy so there are no surprises at your Creditor's Meeting. 

341 Meetings are rather informal and you can dress casually, but try to look presentable.  Where you live will dictate what you need to bring to your Meeting of the Creditors, and your attorney will advise you prior to the Meeting.  As a general rule, you'll need to bring:

1) a valid photo I.D.
2) a social security card
3) your tax returns from the last two years
4) the last two-to-six months of paystubs or proof of income prior to your filing date 

All in all, 341 Meetings move quick and usually only take 5 to 10 minutes to administer.  In Chapter 7 bankruptcies, you will receive your discharge papers roughly 60-90 days after filing.   

Andrew W. Partridge, Esq.
BankruptcyHQ.com

 

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Bankruptcy Required Credit Counseling Failing

June 28, 2007 - 17:47 by rwaple

A recent study by the National Consumer Law Center concluded that the credit counseling and financial education courses required by the new bankruptcy laws (BACPA) have failed to provide significant benefits to individuals seeking bankruptcy protection.

New Burdens but Few Benefits: An Examination of the Bankruptcy Counseling and Education Requirements in Massachusetts, based its review on the implementation of the required courses in Massachusetts. The study cites several problems and proposes a number of recommendations to improve the process.

In my opinion, the required courses are largely ineffective do nothing more than impose an unnecessary expense and obstacle to individuals who need to file bankruptcy.

The pre-filing credit counseling course is designed to provide bankruptcy alternatives, but the individuals who are taking these courses often have explored all other avenues of debt relief and don’t have any realistic alternatives. They have to spend up to $50 for someone to tell them they should file bankruptcy, even if they already had consulted with a bankruptcy attorney and determined that was the best course of action. The requirements have inundated various credit counseling agencies, making it harder for them to provide counseling to individuals who actually good benefit from their services.

There is some value to the pre-discharge debtor education course, which educates individuals emerging from a bankruptcy about budgeting and financing with a focus on avoiding financial difficulties in the future. As the report details, the debtor education course has some problems, but I think it could be refined and made into a valuable education resource.

Isn’t one course enough? Why not eliminate the pre-filing requirement? The bankruptcy court could then focus its efforts on creating a meaningful, uniform, and widely accessible pre-discharge debtor education course.

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Bankruptcy is intended for individuals who honestly cannot afford to repay their debts. In comparison, debt consolidation is intended for individuals who have the necessary disposable income to at repay at least a portion of their debt. Bankruptcy offers many advantages and is often the fastest and cheapest way to eliminate a large amount of debt, but bankruptcy alternatives like debt consolidation should always be considered before making the decision to file bankruptcy.

Unfortunately, the debt consolidation industry contains some unethical companies that don't have your best interest at heart and are driven by a desire to make money off you. Since you are dealing with sensitive financial information, it is very important to find a reputable debt consolidation company that can put together a plan to get you out of debt. A referral from a friend or family member is a great way to make sure you are dealing with an ethical debt consolidation firm, but people often don't like talking about their debt problems and a good referral can be hard.

Searching the internet is another popular alternative to finding a reputable debt consolidation company, but the huge amount of listings makes it very difficult to identify the reputable companies among them. Debtconsoldiationcare.com has developed a solution to this problem by allowing their community members to rate the various debt consolidation companies based on their personal experiences. Individuals can request a free debt evaluation from a company that the other community members rated highly. A debt counselor from one of the highly-rated company then calls you to discus your debt issues and offer possible solutions.

DebtConsoldiationCare.com also has a active community forum with topics covering a wide variety of debt and credit management solutions including, Bankruptcy, Credit Repair, Identity Theft, and Debt Consolidation and Settlement.

More Bankruptcy Alternatives...

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One of the many changes to the Bankruptcy Code in 2005 was the implementation of two mandatory financial education courses that Chapter 7 bankruptcy and Chapter 13 bankruptcy filers are required to take.

The first course, often referred to as the "Credit Counseling" requirement, must be completed within 180 days before the filing of a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. The second course, called the "Debtor Education" or "Financial Management" requirement, must be completed depending on your jurisdiction within 28 days to 60 days after one's 341 Meeting of the Creditors. Recently, there has been a national trend of rulings amongst bankruptcy judges regarding the former Credit Counseling course and effectively preventing "same-day filings".

"Same day filings" occur when a with a client hires a bankruptcy attorney the same day that attorney files their Chapter 7 or Chapter 13 bankruptcy case for them. This situation occurs often when a client has an urgent financial matter. Such urgencies typically include pending real-estate foreclosure sales, vehicle repossessions, body attachments, judgments and garnishments. The bankruptcy judges' ruling that is becoming all-the-more common is the interpretation of the time-frame of when a filer's Credit Counseling course must be completed.

The Bankruptcy Code states that a filer's Credit Counseling course must be completed within "180 days before" the filing of their bankruptcy case. More and more bankruptcy judges are now interpreting this language to mean that a filer's Credit Counseling course must be completed within 180 days literally before the filing of their Chapter 7 or Chapter 13 bankruptcy, and not including the actual day of the bankruptcy filing.

The consequences of filing a case where a Credit Counseling course has been completed on the same day of a bankruptcy filing is in most cases complete dismissal of the filer's Chapter 7 or Chapter 13 bankruptcy. The bankruptcy filing is void as a matter of law, as if it was never filed. Unfortunately, the only practical course of action for the victims of this situation is the refiling of their bankruptcy and the repaying of the requisite filing fee.

In most situations when a client with an urgent financial matter seeking a same day filing walks into a bankruptcy attorney 's office, they have not yet completed their pre-filing Credit Counseling Course because they were unaware they needed to do so. Even with their bankruptcy attorneys' direction to complete their Credit Counseling Course immediately, the fastest a client in this situation could get their bankruptcy filed would be the next calendar day. Often times this can be one day too late.

Andrew Partridge, Esq.
BankruptcyHQ.com

 

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