Thursday, May 31, 2012

What should you look for in a bankruptcy attorney?

When selecting a bankruptcy attorney, not all are equal. The costs especially can be very different. Look for an attorney who discloses all of their fees and costs upfront. Some attorneys will not disclose their costs and fees on their website, but when you go in for a consultation you will find out they are much higher than the competition. Most attorneys advertise a "flat fee," but does that flat fee include phone calls, emails, copying, court appearances, initial consultation? I do not charge extra for phone calls, emails, copies, appearing at the 341 Meeting of the Creditors, and consultations. Some attorneys advertise a flat fee but reserve the right in certain circumstances to charge extra. One large law firm in town advertises $995 for Chapter 7, but when you go in for a consultation, informs you that it is only if you are on assisted living. I charge $995 for every Chapter 7, regardless of your situation. The only extra costs you should see with me are the two mandatory courses you must take, which can be found online for as inexpensively as $5 and $12.50.

Some bankruptcy attorneys advertise generous payment plans, like "no money required up front" and "payment plans available." I also offer that, but I would not characterize it as such. Here is why: Let's say you need to file bankruptcy ASAP, in like two days, in order to avoid foreclosure on your home or garnishment of your paycheck. You will need to pay your attorney the filing fee ($308 for Chapter 7) and the bankruptcy fee BEFORE filing, otherwise you sort of become a creditor in the bankruptcy. I do not know of any attorneys who will let you pay after you file. So the "payment plan" and "no money down" is really not much of anything, you need to come up with the full amount in two days. Of course, if you're not in any hurry to file, you can just sit around and come up with the money gradually.

Finally, check out your bankruptcy attorney thoroughly. How many years have they been practicing law? What law school did they attend? This information should be disclosed on their website. You can look that information up on the Arizona State Bar website at myazbar.org. You can look up the ranking of their law school at the US News & World Report's website.

Tuesday, May 29, 2012

Will I owe taxes on a short sale or foreclosure?

I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and frequently deal with client issues involving short sales, foreclosures and mortgage loan modifications. One situation that arises frequently is whether clients will owe taxes on a short sale, foreclosure, deed in lieu or foreclosure, or loan modification. Even if the lender doesn't come after them for the difference in value, will the IRS, labeling it as income that must be taxed? To deal with the impending real estate crisis, Congress passed the Mortgage Forgiveness Debt Relief Act in 2007. It exempts from taxation certain debt forgiveness involved with losing your home - but not all. The home must be your primary residence (you must have lived there for at least 2 consecutive years within the past 5 years), and the loss must have been for buying, building or improving your home. Home equity loans or cash-out mortgage refinancings only qualify if they were used to make improvements. The maximum amount that may be forgiven is $2 million for a couple or $1 million for a single person.

If you don't qualify for the exemption, filing bankruptcy will eliminate the IRS debt. If you're seen as insolvent, the IRS cannot impute income to you.

For more information, click here and here.



The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor.

Tuesday, May 22, 2012

$599 bankruptcy: Too good to be true?

I am a bankruptcy attorney ($995/Chapter 7) and frequently see all too many bankruptcies advertised at super low prices turn into much more than advertised for. When you shop around for a bankruptcy attorney, you need to ask them up front what that flat fee includes. When you add up all the extra costs, you could be looking at paying $3950 total! We saw that happen to someone today in a bankruptcy hearing.

It doesn't have to be that way. When you find a bankruptcy attorney, ask them up front before hiring them what the flat fee includes. Generally, the only extra costs should be the court filing fee ($306) and the 2 required financial courses (which can be found online as cheaply as $10). With rare exceptions (which have never come up for any of my clients), there should not be any additional expenses.

Here is a list of additional expenses that we do not charge extra for. Be sure to ask any attorney advertising for a super low price whether they charge extra for these. Then figure out how much the real amount will be. Is it still a good deal?

1. Attending the mandatory 341 Meeting of the Creditors. One attorney friend of ours charges an additional $400.
2. Responding to emails.
3. Responding to phone calls.
4. Pulling a credit report ($30-$50 and even more if marked up)
5. Any additional meetings with you.
6. Any additional meetings or court appearances required by the bankruptcy court.
7. Any additional motions or filings required, including adversary proceedings.
8. Copies.
9. Helping you get a loan modification on your home.

You should also ask how much you will be dealing with the attorney, or will you be mostly working with a secretary or paralegal. We've seen far too many cases go to the 341 Meeting of the Creditors where the attorney is not prepared because someone else in the firm actually did the bankruptcy.



Saturday, May 19, 2012

How to Pump Up Your Credit Score

ONE prescription for avoiding another real estate bubble is that banks tighten up mortgage requirements. Now, a new Federal Reserve report indicates that lenders have indeed been doing just that. For news and features on real estate, follow @nytrealestate. A majority of banks are less likely to offer loans to people with a FICO credit score of 620 and a 10 percent down payment than they were in 2006, according to the report. Lenders were also less likely to do so even for those with a score of 720. Such stricter standards have drawn the attention of Ben S. Bernanke, the chairman of the Federal Reserve, who last week told a bankers group that “current standards may be limiting or preventing lending to many creditworthy borrowers.” For those with lower credit scores, the math is stark: A borrower with a credit score of 720 can expect a rate of 3.70 percent on a 30-year, $300,000 fixed-rate mortgage, according to myfico.com, while someone with a score of 620 to 639 can expect a 5.07 percent rate — or an extra $242 per monthly payment.

Read the rest of the article at The New York Times

Wells Fargo Foreclosure Leads Man To Commit Suicide

Norman and Oriane Rousseau were one more couple pushed by a huge, greedy bank to the brink of homelessness. On Sunday, desperate and with nowhere to go, Norman Rousseau shot himself. This is the story of what happens when an average couple is up against a giant, wealthy, powerful bank. Unfortunately the result is what the result always is when people are on their own against the wealthy and powerful: the bank ends up with all of their money, takes their house to sell and throws them out onto the street. In this case the bank is Wells Fargo.

Read the rest of the article at The Huffington Post

Foreclosed Americans Find Way Back to Homeownership

When Jennifer Anderson's family could no longer afford their mortgage and lost their home, she expected many years to pass before they would again become property owners. But less than two years later, in March, they purchased a $297,000 house outside Phoenix, Arizona, after qualifying for a loan backed by the U.S. government. They joined a small but growing number of Americans who are making a surprisingly quick return to homeownership after defaulting on their loans or being forced into short sales that cost their banks money. "We didn't really expect it," said Anderson, 40. "We were resigned to the fact that we were going to be in a rental property for a while."

Read the rest of the article at Fox Business

Foreclosures Fall...And That's a Bad Thing?

A new report came out this week with a curious headline: "Foreclosure Activity Declines, Hurting Investors." I read it twice. You would think declines in foreclosure activity would be a good thing, that is, would help, not hurt. Not in this bizarre housing market. The report is from Foreclosure Radar, a foreclosure sales and analytics website. Foreclosure starts, the first stage in the foreclosure process, fell in April in the hardest hit states of California, Arizona and Nevada, according to Foreclosure Radar. California saw the steepest slide, with Notice of Default filings down nearly 16% from a year ago and nearly 70% from the peak in March of 2009. Foreclosure sales (sales of these properties at the courthouse steps, not sales of already bank-owned, or REO, properties) also declined, as the investor share of these purchases soared to a record high. "Nevada investors purchased more than 50% of foreclosure sales for the first time at 50.7%," according to the Foreclosure Radar report. "The low number of sales, combined with a record percent purchased on the courthouse steps, left very little to become Bank Owned (REO). This further depletes the inventory of Bank Owned homes, as REO sales continue to outpace the addition of new inventory."

Read the rest of the article at The Street

Foreclosures down, short sales up. Are banks getting smart?

The number of foreclosures in April fell to their lowest level since 2007 – and one reason is that lenders are getting smart. Instead of foreclosing on people, a costly and lengthy process, they're increasingly using short sales to move people out of homes they can no longer afford. Short sales are not only faster than foreclosures, they often turn out to be cheaper. By forgiving part of the loan up front (a loss they would take anyway during foreclosure, lenders can get possession of a house faster and sell it before it has had time to deteriorate. Homeowners get to shed their mortgage debt faster – and with less damage to their credit rating. Short sales began outpacing foreclosures in some states late last year. Six states saw more preforeclosure sales – typically, short sales – than foreclosures in the fourth quarter, according to RealtyTrac, an online marketplace for foreclosure properties based in Irvine, Calif. In preliminary first quarter data for 2012, that total jumped to 12 states, including traditionally big foreclosure states like California and Arizona, RealtyTrac reported Thursday.

Read the rest of the article at Christian Science Monitor

Study: More Than Half Of U.S. Bankruptcies From Medical Bills

In an economy where many Americans are living paycheck to paycheck, imagine a $10,000 medical bill or even $50,000. That is at the low end of the medical bills some patients are piling up. A study in the American Journal of Medicine says most Americans are just one major illness away from bankruptcy. The report reveals that 62% of all bankruptcies are credited to medical bills. It's a sad reality, especially for people who appear seemingly healthy and suddenly find out they have a terminal illness - as Sharon Ferrell did. The then 40-year-old woman had a routine health check up in 2010. In two years, she has gone from being a preschool teacher to homeless. These days all she has to her name are medical bills.

Read the rest of the article at DigTriad

Will Bankruptcy Eliminate All Of My Debts?

If you’re thinking about bankruptcy in Arizona, you should understand the different chapters of Arizona bankruptcy available to determine which type is best for you. Determining which type of bankruptcy to file generally depends on the kind of debt you have. The two types of debts are secured and unsecured. Secured debt is tied to collateral or a specific asset, such as home loans and vehicle loans, while unsecured debt is mainly credit card debt. An Arizona chapter 7 bankruptcy will eliminate almost all debt, including credit cards and wage garnishments. If you had a vehicle repossession, any deficiency debt the lender demands you pay is also dischargeable. A chapter 7 bankruptcy in Arizona will not eliminate secured debt however unless you agree to surrender the property that secures the debt.

Read the rest of the article at JD Supra

Contrary to popular belief, bankruptcy may help your credit score

Have you heard that bankruptcy will ruin your credit for 10 years? This is a common misconception. The correct information is that the notation of bankruptcy may stay on your credit report for up to 10 years, but your credit score will not suffer that entire time because of it. In fact, in many cases bankruptcy can help improve your credit score faster than paying off a large amount of credit card debt over time or settling accounts one by one. Filing bankruptcy can cause your credit score to drop 100 to 200 points right away, depending on what your score was prior to filing. However, after about a year from filing bankruptcy, even without doing a thing to “rebuild” your credit, your credit score will increase on its own. After two years, it should be back up to pre-bankruptcy numbers, if not higher.

Read the rest of the article at Ahwatukee Foothills News

Ask the Attorney: Debt Management or Bankruptcy?

Q: I am up to my neck in credit card debt and don’t know where to turn. I keep hearing all of these commercials for debt management programs that make bankruptcy sound like the worst thing ever. What’s the deal?

Read the answer at Canon-McMillan

LightSquared Files Bankruptcy After Network Blocked

LightSquared Inc. filed for bankruptcy, saying it will seek to resolve the concerns of U.S. regulators who thwarted the company’s plan to deliver high-speed wireless to as many as 260 million people. LightSquared, based in Reston, Virginia, listed assets of $4.48 billion and debt of $2.29 billion as of Feb. 29 in a Chapter 11 filing yesterday in U.S. Bankruptcy Court in Manhattan. The filing followed intense negotiations with creditors, who had requested that the company’s backer, Philip Falcone, step aside. Falcone and the current management team will remain with the company, Terry Neal, a LightSquared spokesman, said yesterday. Bankruptcy “is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network,” Chief Financial Officer Marc Montagner said in a statement. Reaching agreements with U.S. agencies may take as long as two years, he said in court papers.

Read the rest of the article at Bloomberg

Octomom's Bankruptcy Rejected

On Wednesday Octomom's Bankruptcy Rejected was a top story. Here is the recap: (TMZ) You can't get un-pregnant, but apparently you can go un-bankrupt -- because TMZ has learned Octomom's bankruptcy papers were not filed properly and have been rejected by the judge ... leaving her creditors free to come after her in full force. As TMZ first reported, Octo filed for Chapter 7 on April 30 ... the most serious form of bankruptcy.

Read the rest of the article at Anti-Music

Silver Legacy Resort files for bankruptcy

The Silver Legacy Resort Casino has filed for Chapter 11 bankruptcy, but its owners said it won't affect the ongoing operations or any of the 1,800 employees at one of the largest hotel-casinos in northern Nevada. Company officials announced the filing for protection against creditors Thursday while seeking reorganization of a $142.8 million debt. Gary Carano, the CEO of the Circus and Eldorado Joint Venture, said the operation still has a positive cash flow but has been challenged by the financing markets and sour economy. He told the Reno Gazette-Journal the property's largest bondholder has agreed to continue restructuring negotiations until June 1 and expects to ultimately "emerge as a stronger company." Meanwhile, Carano said it will be "business as usual" for guests and workers at the 1,700-room high-rise in downtown Reno.

Read the rest of the article at Manteca Bulletin

Watchdog Asks To Stub Pot Grower’s Bankruptcy

The feds are burned out with a medical marijuana grower that it suspects isn’t quite taking its bankruptcy case seriously. A federal court watchdog wants a judge to dismiss the Chapter 11 bankruptcy case of Denver-based CGO Enterprise LLC, arguing that the company shouldn’t be allowed to reorganize its finances in a way that would allow it to continue profiting from criminal activity. U.S. trustee Richard Wieland, who patrols bankruptcy cases for the Justice Department, pointed out that CGO Enterprise executives would likely have to reorganize its operations around sales from its primary asset: $130,000 worth of unharvested marijuana leaves listed on the bankruptcy petition filed May 1 in U.S. Bankruptcy Court in Denver.

Read the rest of the article at the Wall Street Journal

Theft and fraud by crews push airline towards bankruptcy

THEFT, fraud and abuse of perks by pilots and crew has set India's national carrier on course to bankruptcy, the aviation minister has claimed, with staff caught stealing whisky and caviar, and being chauffeured in limousines to five-star hotels. In eight years Air India, knownas the "Maharaja" for its turbaned cartoon mascot, has fallen from profit to an estimated $10 billion (£6.3 billion) in debt. In frustration, Ajit Singh, India's aviation minister, has said the country does not need a national carrier. Air India is investigating 161 cases of theft, fraud and abuse of perks, he told MPs. One catering officer was caught stealing caviar worth around £300, while a purser was discovered walking away with more than 370 spirit miniatures.

Read the rest of the article at New York Daily News

Wednesday, May 16, 2012

Filing bankruptcy can save your home from foreclosure

I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and one additional way I am able to help my clients is to save their homes from foreclosure. Did you know that the instant you file bankruptcy, generally your home becomes protected under the automatic stay and your lender cannot touch it until your bankruptcy is discharged?** A typical Chapter 7 bankruptcy takes around 4-5 months to cycle through, giving you 4-5 months of protection. During that period of time, most lenders become more willing to negotiate with you and give you a loan modification to lower your monthly payments. Because they realize you will have fewer bills so you will be better able to make your mortgage payments. Rep. David Scheikert and other members of Congress have been very helpful to our clients acting as a liaison to their lenders to help them obtain loan modifications.

But don't wait until the night before your home goes up for foreclosure to meet with a bankruptcy attorney. They may not be able to get your bankruptcy ready in one day. For example, you are only allowed to have $150 in your bank account on the day you file. If you take out thousands of dollars the day before filing bankruptcy, the trustee will likely want to know what happened to that money and could seize it back from you. You are better off setting up a free consultation well in advance to analyze all of your options and future possibilities. After you have gone over all of the contingencies and scenarios with your attorney, then you can decide whether or not it is a good idea to put off filing until somewhat close to the foreclosure date, in order to maximize the amount of time you have protecting your home.

**Each state has a certain homestead exemption that protects up to a certain amount of value in a home. In Arizona, the limit is $150,000. This only applies to equity. So, if you own a home worth $400,000, but owe $250,000 on it, your home will be protected. If you own a home worth $160,000 and owe nothing on it, it may not be protected so be sure to talk to a bankruptcy attorney.


Monday, May 14, 2012

Wells Fargo Now Refusing To Waive Deficiency Rights On Freddie Mac Short Sales

Good old Wells Fargo is up to their tricks again. Only this time, they may be playing with fire. If you haven’t already heard, Wells Fargo instituted a policy that went into effect on 5/1/12. From now on, they are refusing to waive any deficiency rights for their Freddie Mac short sales. This, despite the fact that Freddie just instituted a policy on 2/15/12, specifically barring any lender/servicer from requiring deficiency language in their short sale approval letters. The new policy reads “Reinforcing the requirement that the Servicer, for itself and on behalf of Freddie Mac, must waive all rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie Mac Mortgages that have closed in accordance with the Guide”. So, what did Wells Fargo do with this requirement? They basically gave Freddie Mac (and distressed homeowners) the proverbial “middle finger”, and instituted a policy that REQUIRES that ALL Freddie Mac mortgages will have the following language in the approval letters they issue: “With the exception of a Home Affordable Foreclosure Alternative (HAFA) closing, nothing in this Demand Statement or in the release of the mortgage shall waive the right to seek a deficiency under the loan documents or any of its other rights thereunder, and the obligations evidenced by the note shall remain in full force and effect until paid in full“. Houston, we have a problem!

Read the rest of the article at For Sale Phoenix Homes

Saturday, May 5, 2012

When is foreclosure right for you?

Great piece over at Prescott eNews analyzing when you should consider foreclosure. Generally, short selling is always better. Not only do you walk away free and clear here in Arizona, but you might even get $3000 or so back. I recommend Will Wright if you are considering short selling, he is excellent at it.

William Wright
Eagle First Realty
Associate Broker
480-216-6882   direct
Will@WilliamWrightRealty.com

Thursday, May 3, 2012

Filing bankruptcy in Arizona: Can I hide any of my assets?

I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and frequently clients ask me if they have to report everything they own. One potential client came in for a free consultation and asked us if he had to report $200,000 in cash he had hidden in a closet. Another client did not want to report her separated husband's vacation homes, since he was not filing for bankruptcy. A third client did not want to report that he may have some money coming to him in lawsuits and a patent on an invention.

I told every one of them that not to disclose assets in bankruptcy is a felony. Yes that's right, it's not just a no-no, it's a a felony punishable by huge fines and possibly even jailtime. Now some potential clients may choose to walk away, maybe even find another attorney and not disclose those assets to him/her, and hope to make it through the bankruptcy without the court ever finding out. I strongly advise against this. The federal bankruptcy courts have started cracking down recently, scrutinizing debtors very closely. The trustees have ways of finding property you have not disclosed. And it could be discovered in ways you never thought of. For example, what if you have cash hidden in a closet. The trustee decides to investigate your situation thoroughly, and asks to speak to your accountant. Your accountant, who may be put under oath, may disclose the cash to the trustee. Or the trustee may ask to speak to your separated non-filing spouse, who may disclose the cash, possibly not realizing you were trying to hide it.

There are ways to protect assets and that is why you should always consult with a bankruptcy attorney and disclose ALL of your assets to him/her. If you have a lien on your property, it is less likely the bankruptcy court will seize it during the bankruptcy. If you invest your cash in an exempt asset such as one house, or an educational savings account for your children, it will most likely be protected. If you are legally separated from your spouse, you probably do not have to disclose his separate property.

Do not lie to your bankruptcy attorney either! It is better to get everything out in the open right away so he/she can help you figure out how to protect your assets, rather than let your assets be discovered midway through the bankruptcy when it is too late to protect them.

The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com

Tuesday, May 1, 2012

Income cap for filing Chapter 7 bankruptcy has dropped

I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and one of the changes made to federal bankruptcy law in 2005 was to put in income eligibility caps. If you make more than the median income in your state, you cannot file for bankruptcy. There are some exceptions however, if you have children or certain types of expenses you may still qualify. The income cap changes year to year depending on your state's median income. Until today, the median income in Arizona was about $44,000. It has now decreased, obviously due to the recession, and is at $42,691. For a married couple, it is $55,479. It jumps higher if you have children; a family with four children has an income cap of $68,787 in order to be eligible to file.

Set up a consultation with us and we can determine whether or not you can fit into a Chapter 7. Child support alimony, taxes, insurance and health costs can all count as expenses that lower your income. If your income is still too high for a Chapter 7, you may still be eligible to file Chapter 13 bankruptcy. Although it does not discharge all of your unsecured debt, it will reorganize it and reduce it, making it into realistic payments that you can afford over the next 3-5 years. 

The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com