Peddling Relief, Firms Put Debtors in Deeper Hole

NY Times, By PETER S. GOODMAN

PALM BEACH, Fla. — For the companies that promise relief to Americans confronting swelling credit card balances, these are days of lucrative opportunity.

State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say the industry’s proceeds come at the direct expense of financially troubled Americans who are being fleeced of their last dollars with dubious promises.

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By Jeff Curl

With the continuing economic turbulence, underwater properties and struggles to keep homes show no signs of slowing.    As of May 2010, California had 412,605 foreclosure sales on the market.  Judging by the clients walking through the doors, it’s not getting better anytime soon.

My job is to help clients keep their homes and belongings, and get rid of the debt.  For clients with homes, I have lost count of how many clients that are attempting to obtain a loan modification.  Many have given up by the time they get to me.  After Bank of America or Wells Fargo loses their paperwork for the fifth time, they just can’t go through the process again.  Or my favorite is where the bank gives the homeowner a “trial period” where the homeowner pays the agreed amount in a Continue Reading »

By: Jeena Cho

If you have fallen behind on your car payments and can’t afford to make up the missed payments, Chapter 13 may be a solution to keeping your car. Contrary to popular belief, bankruptcy is about restructuring your debt and helping you keep those secured property you can afford to keep.

Let’s take an example:
Suppose your monthly payment on a car is $500 and there is 30 payments left on it.
You are 3 months behind on your payment.
Current interest rate of 8%.

By filing for Chapter 13, we can restructure the debt as follows:

Stretch out the payments to 60 months, hence reducing the monthly payments.
Reduce the interest rate to approximately 4-5%.
Make up the missed payments over the course of 60 months.

By filing for Chapter 13, it’s possible to reduce the monthly payment to less than $250 per month over 60 months, hence (hopefully) making the vehicle affordable.

If you Continue Reading »

The truth of the matter is that there is nothing that a debt settlement company will be able to do for you that you probably could not do yourself. In order to settle your debt, you need cash. I frequently meet with clients who does not have any disposable cash that insist on settling their debts. Before you spent what little cash reserve you have, or liquidate your assets, sit down and plan out an exit strategy. Ask yourself, “how much debt do I have?” and “how much can I possibly save to get out of debt?”

NYT article by: By RON LIEBER
Published: June 4, 2010

If you run up big credit card bills buying a new home theater system and can’t pay it off after a few years, bankruptcy judges can get rid of the debt. They may even erase loans from a casino.

Read more.

By Jeff Curl

“Can I get rid of my Small Business Administration (SBA) loan?” I get asked this question a lot from small business owners exploring bankruptcy.  The short answer is “yes.”

But you must be aware of the terms of the loan.  The SBA typically does not give a loan without obtaining some type of personal guarantee in exchange.  At the very least, this means that the loan – and the liability for that loan – extends beyond the business to you personally.  If you own property at the time of the loan, it is common for the SBA to require as a term of lending the money, that you permit the SBA to take an interest in your property such as placing a lien on your home.

This goes to the heart of whether it is the business and/or the person behind the business that files bankruptcy.  Continue Reading »

By Jeff Curl

I have seen my fair share of clients that spent many hours researching bankruptcy before coming in for a consultation.  They come across the numerous articles and blogs about something called the “means test.”  Sometimes they even find online means test calculators where they attempt to plug in their own numbers, but they are not sure if they did it right. 

Let me stop you right there.  I was at a conference recently where I sat in a room with over 1,000 other bankruptcy attorneys.  Judges, trustees and experienced attorneys discussed (and disagreed about) the means test for several hours.  It’s far more complicated than it looks.  The laws constantly change as to what can be deducted as an expense, and what must count as income.  Moreover, local custom and practice varies greatly.  Doing your own online calculation may Continue Reading »

By Jeff Curl

Occasionally I get the call from a client that forgot to list a creditor in his or her bankruptcy.  They received the discharge, but want to know if they are now responsible for the omitted debt.  This raises a few issues.

Was the Debt Dischargeable?

It first depends upon the type of debt.  Debts in bankruptcy are either dischargeable (you can get rid of it) or nondischargeable (you’re stuck with it).  Typical dischargeable debts include medical bills and credit cards.  Typical nondischargeable debts include student loans, child support and recent taxes.  If the debt omitted was something you could not discharge in the first place like student loans, you are stuck with it no matter what.

Was it a Chapter 7 “No Asset” Case?

But what if it was dischargeable?  What if you forgot about the $8,000 credit card you have not used for a year or two?  Continue Reading »

Many student loan lenders prey on students who are probably too young to understand the consequences of borrowing from the future.

By: Jeena Cho

When I was in law school, they opened a Starbucks in the student union. Instantly, I was addicted. Every break between classes, I would wonder over and order a venti soy Mocha Frappuccino. It was just the “cool” thing to do. After about a month of this bad behavior, I noticed two things. 1. I didn’t have money for groceries and 2. I was craving more Frappuccino. Initially, I thought someone had stolen money out of my account because the bank balance was much lower than where it should have been. After a little investigation, I was horrified at the fact that I had wasted my precious grocery money at Starbucks! Even at 2 cups a day at $4.75, that’s $285 a month!

I spent the next month tracking every dime I spent. Not just money I spent on Starbucks but on food, eating out, entertainment, clothing, Continue Reading »