Los Angeles Bankruptcy Lawyer Blog

For most students, getting by on Ramen Noodles and cheap housing is the only way to make it through four or more years of college. Credit card lenders know this, and their predatory lending practices are coming under fire. Now even the universities are getting in on the action.

At the University of California at Los Angeles, Forbes.com reports that students will be charged a 2.75 percent processing fee starting Aug. 1 in order to bring in more money to the school's coffers. On top of that, the university has banned the use of VISA because it doesn't allow institutions or merchants to charge a percentage-based user fee.

With public institutions and municipalities feeling the budget crunch brought on by the Great Recession, they are looking to make money anyway they can. In this case, it appears that they are using the students to do that. But it's the same way for predatory lenders. They often seek out people struggling with debt and offer perceived lifelines that can bring them closer and closer to default. Bankruptcy in Los Angeles can actually improve credit scores and lead to a healthier financial future. Los Angeles Bankruptcy Lawyers have helped countless consumers bounce back from bad debt and lead productive lives after the process has ended.

According to the article, the university reports that it costs $6.5 million per year to process credit cards and it will be passing that directly onto students.

The article states that 79 percent of students pay education expenses with credit cards and switching to a different pay system may pose big problems on campus. On top of the new fees, students are already expecting an 8 percent hike in tuition fees, which could make things very difficult for students.

Many college graduates are feeling the crunch of the economy and for some, filing for bankruptcy may be a good option. Graduating with high student loans and having to rely on multiple credit cards can leave recent grads with few options. With high interest rates and a low possibility of getting a job after school, they can be forced to make tough decisions.

But while bankruptcy sometimes gets a bad reputation, it can be very beneficial to those struggling with debt. Be able to clear out debt and start fresh, not having to deal with creditors calling and trying to garnish wages or take away a house are all benefits afforded consumers by bankruptcy protection.

Job loss, medical bills and high credit card debt are the three most likely reasons for filing bankruptcy. Here are some tips to fix and improve credit:

• Budget and save
• Avoid bouncing checks
• Pay bills on time
• Prevent any collection agency action
• Check your credit report at least once a year
• Clean up your credit report
• Avoid "credit repair" scams
• Start borrowing small and visit local lenders
• Get a secured credit card with money you have saved
• Apply for a loan with a co-signer

Continue reading "Los Angeles Bankruptcy Watch: UCLA Students Penalized or Banned for Using Credit Cards on Campus" »

Credit scores are always on people's minds and a new law that recently went into effect mandates that lenders who deny credit must provide a reason, Forbes.com recently reported.

The sweeping Dodd-Frank Wall Street Reform and Consumer Protection Act changes many aspects of consumer spending, but one of the notable differences is now lending institutions must provide a reason for denying credit and not just send out a form-letter denial.

Los Angeles Bankruptcy Lawyers understand that maintaining a good credit scores is important to most consumers. They believe that without good credit, they won't be able to borrow money needed to make large purchases or get by day-to-day. But for those drowning in debt, unable to get by and worried about paying back the money they owe, bankruptcy in Los Angeles can offer the peace of mind that comes with a fresh start.

Forbes reports that the new law not only applies to those who are denied credit, but also those who are "adversely approved," meaning they get the worst possible rates. But the article points out that the act doesn't apply to all credit situations. Utility, telephone and insurance companies, who often use their own scoring systems, are exempt. If denied because of a low FICO or VantageScore, the lender must provide the score and general information for the denial and how to obtain your credit report.

Everyone should be aware of their credit score because scores are not only used to determine whether or not a person can obtain credit, but the score can also be used to determine access to jobs and housing.

Some quick tips that can help your score:

• Clerical errors can hurt a credit score, but a dispute report can be submitted to clean it up
• Payment history is the largest impact, so if accounts are in arrears for 30 to 60 days, bring them up
• Creditors aren't required to remove collection accounts, but some are open to negotiation
• Try to pay down balances and if that's not possible, at least pay the minimum
• 0 percent APR is typically an introductory rate that will expire, so make sure you know when it does

Some people believe that filing for bankruptcy will kill their credit score, but what most don't realize is that if they are behind on house payments, have thousands or tens of thousands of dollars in credit card debt and aren't making payments, their credit scores are likely already in trouble.

What bankruptcy in Los Angeles does is allows consumers to get rid of that debt -- have it cleared off the table -- and restore their financial stability. After the bankruptcy process is finished, most consumers will get new credit card offers and be allowed to apply for loans with more reasonable interest rates because of the lack of debt. It provides a fresh start for those who are struggling and it will very quickly begin to improve a person's credit.

Continue reading "Denied Los Angeles Credit Applications Must Now Come with a Credit Score" »

Lawmakers in the U.S. Senate and U.S. House of Representatives have introduced legislation that would make it easier for student loans to be forgiven inLos Angeles Bankruptcy.

Los Angeles Bankruptcy Lawyers believe this is welcome news to people who are struggling with student loan debt, which can lead to higher credit card debt and a lower quality of life for those struggling to make repayment. Filing for bankruptcy can eliminate debt and give consumers a fresh start; our firm has helped countless people get out from under debt and to make a fresh start.

According to U.S. News & World Report, the law would seek to restore the ability to discharge commercial student loans in bankruptcy proceedings, reversing a 2005 change to the law for borrowers who find themselves unable to make payments on their loans. Some 6.7 percent of loans in California go into default, according to the U.S. Department of Education.

That's probably because college tuition continues to climb and graduates are having an increasingly difficult time finding work. The John J. Heldrich Center for Workforce Development at Rutgers University recently reported that only 56 percent of 2010 college graduates have been able to find work, compared to 90 percent from the classes of 2006 and 2007.

And an increasing number of "for-profit" universities are nothing more than predatory lenders hiding under the guise of higher education.

Three senators and four representatives, including George Miller (D-Calif.) recently introduced parallel bills that would change how bankruptcy laws look at student loans. Currently, getting a bankruptcy judge to eliminate student loans requires proving the loans are an "undue hardship," which can be difficult to prove unless a person is unable to work and can't make money. As a practical matter, most student loans cannot be discharged under today's bankruptcy laws. But that's not to say bankruptcy can't help; by eliminating other debt, consumers can focus on paying down college loans and climbing out of what seemed a bottomless hole.

"Before changes were made to the bankruptcy code in 2005, only government issued or guaranteed student loans were protected during bankruptcy," said Sen. Dick Durbin (D-Ill.) in a press release. "This protection has been in place since 1978 and was intended to safeguard federal investments in higher education. Today's bill would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005, so that privately issued student loans will once again be dischargeable in bankruptcy."

These lawmakers understand the benefits of filing for bankruptcy and that's why they are trying to make it easier for consumers who are burdened by debt. That's why consulting with an experienced Los Angeles Bankruptcy Attorney is the first step toward financial freedom. A free consultation will allow us to assess the situation and provide advice about what the best options are, based on the client's specific situation and needs.

Continue reading "Federal Lawmakers Propose Measure That Would Allow Student Loan Relief in Los Angeles Bankruptcy" »

Many celebrities have been in the news lately because they have had to file for bankruptcy or because a home they own has ended up in foreclosure.

Many people in the public would assume that a celebrity losing a mansion to foreclosure is a sure sign of mismanaged funds, but that's not always the case. If a neighbor loses their home to foreclosure, you may not assume the same thing. Job loss, medical bills that can cost hundreds of thousands of dollars and credit card debt are the top three contributors to bankruptcy filings in the United States. More and more often, people are finding themselves in serious trouble because of bad real estate debt.

And Hollywood isn't immune. There have been many celebrities and public figures who have used bankruptcy laws to their advantage. Celebrity bankruptcies range from Willie Nelson to Donald Trump to Thomas Jefferson. The laws are designed to help consumers get back on track financially and that includes when a foreclosure is in the works.

According to a recent article in Business Insider, there have been several celebrities who have had a house foreclosed on in 2011.

Mel Gibson: He has already sold two properties for well below the list price and may be losing several other properties, including his church and home in Malibu. He was sued by a construction company for $12,000.

Nicholas Cage: The actor lost his Los Angeles home to foreclosure in the last year. He bought the house for $6.5 million in 1998 and after putting in renovation work, tried to sell it for $35 million in 2006. Unable to sell, the house went into foreclosure in 2010 and failed at auction in April. the property is on the market for $10.5 million, well below the 2006 asking price.

Octomom Nadya Suelman, who gave birth to octuplets and starred in a reality television show, has been delinquent on mortgage payments several times and recently the bank went forward with foreclosure. Her father bought her a $565,000 house in 2009, but she has been served with eviction papers on the La Habra house.

Actor Timothy Busfield, best known for his role on The West Wing and Thirtysomething bought his Malibu home for $1.2 million in 2003 and after a divorce put it up for sale in 2008 at $2 million. After delinquent payments, the foreclosure process began and eventually he lost his home.

When someone files for Chapter 13 bankruptcy in Los Angeles, creditors must stop calling and a foreclosure, however far into the process it is, stops immediately. Los Angeles Bankruptcy Lawyers have helped many people save their homes through use of the bankruptcy laws.

Chapter 13 requires setting up a reasonable payment plan over three to five years that allows creditors to get a portion of the money back that the consumer owes. But, it also would be a significantly lower payment than what the consumer currently is paying to collection agencies and lenders.

Chapter 7 is slightly different, but is the most popular form of bankruptcy. Nearly 70 percent of bankruptcy filers use this chapter of the bankruptcy code, which essentially provides a fresh start to consumers who have a large amount of debt.

Continue reading "Hollywood Stars Not Immune From Foreclosure and Los Angeles Bankruptcy Can Help" »

A recent New York Times article states that bankruptcy filings took a dive in June compared to May, but experts still believe that 1.5 million Americans will enjoy the protection provided by bankruptcy in Los Angeles and elsewhere.

Los Angeles Bankruptcy Attorneys have seen a record number of people seeking bankruptcy protection because of piling debt brought on by job loss, medical bills, bad real estate debt or credit card debt.

As the experts acknowledge, a drop in bankruptcy filings doesn't necessarily mean the economy is improving. What it likely means is that banks and credit lenders are extending limits on credit at a higher rate than in years past right now. When people rush to file for bankruptcy, it's is because creditors won't extend loans and there's a credit crunch. In the short term, creditors now are offering more credit than when the Great Recession first began.

According to the article, there were 120,623 filings in June, an average of 5,483 a day. That was actually down 6.2 percent from May, when 122,775 people filed for bankruptcy, an average of 5,846 a day. However, there was an extra day to file in June compared to May, which skews the per-day numbers.

Unemployment and foreclosures play a role,but the availability of credit is a large factor, experts believe, in the short-term. In the long haul, consumer debt tends to trigger bankruptcy filings.

"There is a lot of mythology about what drives bankruptcy rates," said Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy. "But consumer credit appears to be the most significant indicator."

Lawless said he expects there to be 1.46 million filings in 2011, which would be down from 1.56 in 2010 and 1.45 in 2009. Filings surpassed 2 million in 2005, when people rushed to file because of law changes that made it more difficult and more expensive to file, the article states.

So far this year, 70 percent of bankruptcy filings are Chapter 7 bankruptcy, in which consumers have their debt forgiven and are given a fresh start.

Chapter 13 bankruptcy filings accounted for 27 percent of filings. Chapter 13 is an area of law that allows for people with large assets, such as a home, to make reasonable monthly payments in order to keep their house and pay off most of their debt.

Some people may believe that creditors opening up more lines of credit for consumers is a good thing, but it can only lead to these predatory lenders seeking high interest rate loans that cripple consumers. Seek help that doesn't include falling deeper into debt. Consulting with a Los Angeles Bankruptcy Lawyer today can help solve your debt problems to give you a new beginning.

Continue reading "Filings Take a Dip, but Many Californians Aided By Bankruptcy Protection" »

The Obama administration will allow some unemployed homeowners to miss a year of mortgage payments without the threat of foreclosure while they seek employment, after the President admitted he hasn't done enough to help the slumping real estate market, the Los Angeles Times reports.

While this is a nice reprieve for people who can't find work and can't make house payments, it doesn't solve the problem. A year really isn't a long time to find work, so homeowners may very well find themselves in the same position in 2012 -- jobless and unable to make house payments.

The only sure way to stop a foreclosure is by filing Chapter 13 bankruptcy in Los Angeles. By filing for bankruptcy through our Los Angeles Bankruptcy Attorneys, the foreclosure process immediately stops, even if the house is scheduled to be sold on the courthouse steps tomorrow. A notice is sent to lenders, creditors and others whom a person owes money to and they are no longer allowed to hound consumers.

Under the President's plan, only those with government-insured mortgages get the help and it triples the current limit of four months without payments. Even officials realize this move isn't a "silver bullet" in curing the foreclosure problem.

"We've had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up," Obama said. "That's probably been the area that's been most stubborn to us trying to solve the problem."

But the federal government is at least taking some steps to help protect the rights of homeowners. The Federal Reserve told Congress recently it wanted uniform standards for how mortgage servicers handle modifications, foreclosures and other issues. Mortgage servicers have been blamed and are being investigating in all 50 states for "robo-signing" documents and filing false documents on behalf of banks and lenders.

Still, these are only temporary fixes or fixes that don't help most homeowners. Another Los Angeles Times article recently reported the unemployment rate in Los Angeles County was 11.9 percent in May. Considering the population of Los Angeles, that's a large number of people who are out of work. I don't think it's reasonable to believe that most of those people will find work in a year.

Unemployment is one of the top reasons people file for bankruptcy, along with medical bill debt and consumer debt due to credit cards. It's not shocking that thousands of Americans file for bankruptcy every year considering how bad our economy has been following the Great Recession.

But still many people resist filing for bankruptcy because they're scared they will take a big hit to their credit scores. But if you are tens of thousands of dollars in debt or own a house that's worth 1/3 of what you paid, how good is your credit anyway?

The bottom line is that bankruptcy can stop a foreclosure and permit you to begin rebuilding your financial life. Getting a free consultation is a good first step. Discussing your options and looking over your situation should be a top priority if you are struggling with debt or a house that you can't afford.

Continue reading "Stopgap Measure Halts Foreclosure on the Unemployed in Los Angeles, But It Won't Stop Foreclosure Altogether" »

The Los Angeles Times recently reported that the Southern California housing market gained ground from May to June, but job loss and upside down mortgages predict doom.

Our area of the country is no different than others, where job loss, a sudden, unexpected medical catastrophe or predatory credit card companies have buried people in debt they can't manage. And banks and lenders are helping very few homeowners modify their loan or avoid foreclosure in Los Angeles.

Glendale Bankruptcy Lawyers are dedicated to helping consumers get out of debt and to using bankruptcy laws to their advantage. Whether trying to save your home or start fresh, our bankruptcy lawyers will work with you to help secure your financial future.

According to the Times article, 20,532 newly built and previously owned homes were bought and sold, up 11.6 percent from May.

And despite the increase from May, the numbers represented a 14 percent decline from June 2010. June is typically one of the strongest months for home sales in the area. The median home price for Los Angeles County was $285,000 in June, which was 1.8 percent more than May but still 5 percent lower than June 2010.

So, the numbers are deceiving. Add to those numbers the fact that Los Angeles County led the state in job losses in May, shedding a net 11,400 jobs, leaving the unemployment rate at 11.9 percent. Nearly 24 percent of all properties with a mortgage in the area are upside down. And 33 percent of sales in June were foreclosed houses.

So, while sales are up, it's not necessarily a great thing for our local economy. With people still losing jobs and government programs accomplishing little, many people are at their wit's end when dealing with finances. Some don't know where to turn. Others continue piling on debt without any hope in sight.

But there is hope. Bankruptcy laws are designed to help consumers start over. Filing for bankruptcy in Los Angeles can clear your debt completely or allow you to come up with a payment plan over three to five years to get out from under creditors and collection agencies.

Rather than continuing to stress about your situation or turning to scams that promise financial freedom, consult with our law firm. Our attorneys have experience and are trained to help you determine the best way to deal with mounting debt.

Speak with our firm today to get the facts about bankruptcy and see if it is right for your situation. But don't wait. The longer you put off a decision, the more difficult debt can make your life. Call today.

Continue reading "Los Angeles Housing Numbers Up, but Signs Point to Foreclosures, Debt in the Future" »

A new study released by Mastercard finds that 55 percent of consumers aren't familiar with the perks and benefits of their credit card. Some even paid extra for benefits they already had on their card, Forbes.com reports.

While credit card companies use high-profile celebrities to push their cards, it's perhaps only Hollywood stars who can actually afford all of the fees and high interest rates that credit card companies charge consumers.

Los Angeles Bankruptcy Lawyers have seen countless clients struggling to get by and trying to use credit cards to help, only to see the fees and interest rates levied by these companies bury them in debt. Rather than continuing to try to make it day by day, it would be best to consult with our firm to determine if filing for bankruptcy in Los Angeles and elsewhere in Southern California is the best move for you and your family.

Credit card companies push these perks and benefits to lure people into signing up for a card. And once you're in, it's tough not to want to use it to achieve the perks that are possible from making purchases.

For instance, MasterCard recently put together a campaign where the company will donate a penny every time someone uses their credit card to purchase food or drink, up to $4 million for cancer research, The Huffington Post reports.

Now, no one will argue that cancer research isn't important and it's certainly a good cause. But what advertising like this does is make people use their cards more, which adds to their debt and likely will benefit MasterCard from fees and late charges. It's rare that the stated benefit outpaces interest and other fees.

$4 million is a drop in the bucket for MasterCard and they could easily write a check for that or more if they were really trying to be generous. But instead, they're pushing their product hoping that some of the millions of Americans who use their cards will pay the minimum on their balance so they can stick them with their high interest rates.

Consider that a $5 Starbucks coffee charges to a credit card with 20 percent interest automatically becomes $6. Imagine paying an extra dollar every day for your coffee. And that's just one small example.

Credit card debt is dangerous because it can so easily spiral out of control. There are some perks and they can be beneficial when used in moderation. Here are some of the most popular perks:

• Car Rental Loss/Damage Insurance
• Extended Warranties
• Purchase Protection
• Security From Unauthorized Purchases
• Travel Accident Insurance
• Trip Cancellation Insurance
• Lost Luggage Insurance
• Travel Emergency Assistance
• Emergency Assistance
• Roadside Assistance

Sure, some of those could be helpful, but in the grand scheme of things, how often will they be used? It would be smarter to better manage your money and rack up less debt to save for emergencies rather than rely on a credit card for help.

Predatory credit card companies are one of the biggest reasons why people fall into unmanageable debt. And once stuck, it can be difficult to get out. If you face this decision, set up a free consultation immediately. Bankruptcy laws may give you the freedom you've been seeking.

Continue reading "Credit Card Perks Unknown to Many, but Pitfalls Plague Los Angeles Residents in Debt" »