Los Angeles Bankruptcy Lawyer Blog

For the better part of a year, banks and each state's attorney general have been negotiating a settlement on behalf of homeowners who may have had their house taken through foreclosure fraud.

Many news articles have looked at how homeowners' rights were violated as banks used robo-signing practices, in which banks paid companies to authorize documents they had never seen and didn't know to be accurate, as well as made-up documentation and also shady tactics to try to unlawfully seize people's homes.

As punishment, the nation's five largest banks agreed to pay $5 billion in cash plus $17 billion over three years toward current mortgages in a large-scale settlement that all but one state agreed to. As analysts point out, however, this money is unlikely to trickle down to do any real good to the homeowners who were affected. By now, they have lost their homes, so a one-time check in a low amount isn't going to help much.

In fact, one of the best ways to defend against a foreclosure is bankruptcy in Los Angeles. When a homeowner files for bankruptcy, they get what's called an automatic stay. This allows them to get immediate protection from a bankruptcy proceeding.

Los Angeles bankruptcy lawyers know that this means a person can keep their home even if the bank is in the process of trying to foreclose. What this protection does is allows a person to drop other forms of debt so they can continue making payments on their home.

If they have decided that the home is a liability because the homeowner is underwater on their mortgage, bankruptcy in Los Angeles can help a person get out from underneath their home as part of a strategic default. In either scenario, bankruptcy can provide protection while these important decisions are made.

According to The New York Times, Bank of America, Wells Fargo, Ally Financial, JPMorgan Chase and Citibank agreed to pay $5 billion in cash. They will also attempt to help homeowners who are underwater on their mortgages by reducing principal owed by $17 billion over three years. Borrowers may qualify for $3 billion in refinancing and those who faced improper foreclosure will get $1.5 billion, which will work out to about $2,000 a person.

Many critics agree this settlement won't do much to either restore confidence in lenders or help fix the woeful housing market. While the government and banks tried to tout this as a major deal that will have big benefits to consumers, critics point to the $700 billion in underwater mortgages and compare it to the $17 billion that will go toward fixing it.

The Times article points out another issue with the settlement -- how it will be policed. Other settlements and government programs have looked good on paper, but failed to deliver results for homeowners. It's unclear how the government intends to dole out money and make sure banks are actually doing what they agreed to do.

Continue reading "Los Angeles Bankruptcy a Benefit, Even with Bank Foreclosure Settlement" »

A recent report showed that the number of first-time applicants for jobless claims fell to its lowest level in about four years, signaling an improvement in the economy. That's the latest report from The Hill.

Other recent reports have also shown that unemployment numbers continue to drop as a boost in the number of hires toward the end of 2011 has helped stabilize the economy. The Inland Valley Daily Bulletin reports that unemployment in Los Angeles County for January dropped to 11.5 percent from 12.2 percent last January.

Los Angeles bankruptcy attorneys believe these are all positive signs that point to economic recovery. But California's unemployment still stands about 3 percent higher than the national unemployment rate. This shows that the West Coast is still mired in a slump.

It's possible that Los Angeles bankruptcy could be a viable option for consumers who just can't seem to make financial progress. If they have lost a job in the past or are currently unemployed, they may be wondering how they can get out of the debt that they continue to rack up.

Unemployment can severely drain a family's savings account and typically they use credit cards and unemployment checks to maintain their expenses in the meantime. But the current economy, especially in Southern California, has been brutal to the point that people have spent months and years looking for work.

According to the news article, people seeking unemployment benefits stayed at 351,000, while a four-week average fell to 359,000, which was down about 7,000 from 366,000, the Labor Department recently announced. This was the lowest level since March 2008, shortly after the recession started.

Economists believe that the numbers show that the job market is improving and that companies are beginning to hire. Statistics show that the job market has steadily improved since summer, as weekly applications for benefits has been below 400,000 since the fall. Analysts believe that if companies continue hiring about 200,000 people per month, the economy will continue to steadily improve.

These are all good signs and everyone certainly hopes that the economy continues to make these positive strides. Bankruptcy can play a role in the recover for consumers and it's a tool that millions of people have used to their advantage.

When a consumer who is struggling with debt files for bankruptcy, they are awarded an automatic stay. This means they are shielded automatically from debt collectors and lenders who are attempting to garnish wages, send threatening letters and call a dozen times a day.

This provides immediate relief and can help the consumer get a quick start on their road to recovery. As the bankruptcy process continues, the consumer is able to have years of built-up debt removed.

Using plastic to get by on a month-to-month basis and making minimum payments or missing payments altogether is a quick way to kill credit scores. Yet for many people who have been unemployed, it is necessary. Getting a paying job is a step toward recovery, but bankruptcy in Los Angeles may be able to help you even further along.

Continue reading "Los Angeles Bankruptcy Still Help, Despite Decreased Jobless Numbers" »

A federal agency designed to help rectify consumer complaints now wants to be able to oversee debt collectors and credit bureaus, both of which could have a profound effect on consumers dealing with debt in Los Angeles.

People who are dealing with piles of debt often have a tough time handling the stress of the situation. There is the realization that their income just isn't keeping up with their expenses. In many cases, a major life event causes a consumer to spiral into debt.

Major medical bills, unemployment, divorce and other things can make a consumer consider a Los Angeles bankruptcy. Los Angeles bankruptcy lawyers understand that bankruptcy has a negative connotation because of years of creditors and lenders creating bad publicity for the action.

But, bankruptcy has many benefits. For people who are struggling with debt, the obvious benefit is clearing out years of debt that is making life a constant struggle. Through Chapter 7 bankruptcy, a consumer can clear out their debt and typically keep most of their assets. In Chapter 13 bankruptcy, homeowners can protect their houses and other assets while creating a payment plan.

But the initial benefit is bankruptcy stops creditor and lenders from harassing the consumer. When a person files for bankruptcy, an automatic stay goes into place. This protection ensures that wage garnishments stop, and creditors no longer are allowed to call multiple times a day or send harassing letters and emails or contact relatives and friends.

Officials from the Consumer Financial Protection Bureau said recently they want to expand their operations to look at debt collectors and credit bureaus, both of which are among the most complained about entities by consumers. The agency -- created in 2011 -- first took on complaints about credit card issues and then expanded to analyze foreclosure complaints.

The main purpose of the agency is to try to be a middle man between consumers and the companies they are complaining about. Officials take complaints and attempt to put consumers in touch with people at the companies who may be able to help them. They then keep a record of what has been accomplished.

In a recent Washington Post story, the agency said it wants to oversee the nation's largest credit reporting agencies as well as debt collection practices to try to restore confidence in the government for consumers. As consumers are emerging from the recession, they have seen their credit scores drop.

And those scores have been important to people trying to get on track financially. Employers have started looking at credit scores as well and the agency hopes that more oversight will help.

Some consumers believe that bankruptcy will hurt credit scores and while there may be an initial hit to credit scores, wiping out debt and showing credit bureaus a consumer can make payments on time, live a life without debt and continue repairing their finances can vastly improve their score.

Bankruptcy clears out the debt so consumers can begin to recover. And while a government agency may help put pressure on credit agencies and debt collectors, they will still be aggressive in their actions. It is difficult to pay back debt when hidden fees and high interest rates are piling on. It's much easier when the debt is gone and bankruptcy can accomplish that.

Continue reading "Consumer Bureau Wants Oversight Of Debt Collectors, Credit Agencies" »

The Wall Street Journal is reporting that Americans increased spending at the end of 2011, which in turn jacked up the amount of consumer debt on the books.

As consumers' expenses outweigh their income, they will continue relying on lines of credit to get by. We all do it. in fact, without credit available, it would be nearly impossible for our country to function.

But when major events, such as job loss, major injury causing sky high medical bills or a divorce enter the mix, it can lead to serious financial problems. Consumers will look for any means to try to figure a way out of the debt issues that are causing stress. Many people have looked to Los Angeles bankruptcy for this help.

Los Angeles bankruptcy lawyers recognize that there are many debt management options available to consumers. Not all of them are completely helpful and some can actually hurt.

Bankruptcy in Los Angeles isn't a cookie-cutter solution to debt issues. But for millions of people, it has given them financial freedom and a chance to start over.

When people file for bankruptcy, they get what's called an automatic stay. This stops creditors and debt collection agencies from dealing directly with the consumer. Wage garnishments and other actions must stop. And through the process, the debt that the consumer has amassed over the years is wiped clean.

According to The Wall Street Journal, the amount of debt picked up late in 2011 as the holiday season hit. Different types of debt, including household borrowing through credit cards, student loans, car loans and mortgages increased by a 9.3 percent annual rate after a 9.9 percent rate in November.

Analysts saw that student loans increased the most, while auto loans and credit card use also increased. Some experts believe that with unemployment still high, many older Americans are taking out student loans to try to go back to school and learn a new skill that could make them more marketable.

Still, studies have shown that tuition for all students has gotten much higher in recent years, leading to massive debt problems for students. Credit card debt is expected to increase toward the end of the year, as retail sales spike during the holidays. But the uptick in auto debt was surprising to some analysts.

Bankruptcy in Los Angeles can wipe out many types of debts. There are some restrictions, but in most cases, people who have low or no income and few assets can have years of debt wiped clean through the bankruptcy process. The stress that goes along with getting a dozen phone calls a day goes away.

These consumers are able to live again without worrying what their credit limit is, if their cards are going to get rejected and what their children might think. Instead of being embarrassed by unwanted harassment and getting threatening letters and emails and garnished wages, these consumers can put all that behind them.

Continue reading "Consumer Debt Surged at the End of 2011, Leading to Los Angeles Bankruptcy Filings" »

One of the more popular myths about bankruptcy in Los Angeles is that a person who files won't ever be able to get credit.

That's simply not true. Los Angeles bankruptcy lawyers have seen clients get credit card offers just after the bankruptcy process is completed.

Think about it -- when a person has piles of debt they are trying to pay off, but are getting behind in payments, they are a high risk for lenders. But when all that debt is cleared, suddenly, that person is a more desirable borrower because he or she isn't being forced to make those payments anymore.

Filing for bankruptcy can actually go a long way toward repairing credit. While the main effect of bankruptcy is obvious -- debt relief -- there are other benefits that consumers get from going through with the process. One of the most helpful is credit repair.

Some consumers who are behind on credit card payments don't realize how badly their credit score has been hit by late and missed payments. Typically, people who are having debt problems aren't going to pay the fee or take the time to see what their credit score is.

For many, they recognize it's probably much lower than they would want. For others, they simply don't realize how much their score is being hurt by their debt problems. They believe bankruptcy will hurt their credit score, but don't know that their credit score is already in trouble.

What bankruptcy also does is allow a consumer to get the debt relief needed and still prepare a plan to improve their financial situation for the future. Bankruptcy provides just enough help to put this plan into action.

Now, as Fox Business reports, there are some credit cards that could help people get their credit scores improved in 2012. While consumers should be careful about using credit cards, especially right after bankruptcy, using them appropriately could actually help your financial situation.

Prepaid debit cards
As banks continue adding fees and trying to squeeze as much money from customers as possible, credit card companies often do much of the same. They require people to have the disposable income up front to put on these cards and payments don't actually get reported to credit bureaus. If you are hoping to build credit, this isn't the way.

Secured credit cards
However, some experts believe that secured credit cards can be a helpful tool to rebuilding credit. These cards, the article suggests, can teach a consumer how to save and spend money strategically. Major lenders offer secured cards with low annual fees, but the consumer must put a certain amount of money into a linked CD. That deposit is the line of credit.

Unsecured credit cards
As stated above, many consumers get bombarded with credit card offers right after bankruptcy has ended. Many of these offers come with high interest rates, though, so it could be best to start with a secured card and graduate to a better-rate unsecured card, which best helps improve a credit score.

The bottom line through all of this is that credit repair is an important aspect of post-bankruptcy life. But allowing predatory lenders to charge high interest rates and hidden fees can put a person in debt once again. It is important to be careful and get sound advice when trying to rebuild credit after bankruptcy.

Continue reading "Credit Cards Could Help Rebuild Credit After Los Angeles Bankruptcy" »

Fox Business recently reported that Los Angeles bankruptcy lawyers have shown concern that student loans may be the next major reason American consumers get into debt.

In 2007, the National Association of Consumer Bankruptcy Attorneys testified to Congress that they were increasingly worried about the number of people meeting with them to discuss bankruptcy because of subprime mortgage rates. Banks said the issue was under control, but that couldn't have been further from the truth.

Now, as Fox reports, the new concern is the increase in student loan defaults, which have become a growing problem. The association reports that half of its members have seen an uptick in the number of consumers seeking help with college debt that is crushing them. One in four attorneys report that the number of cases they have handled is up 50 percent or more.

Students graduating from college have a tough challenge ahead. They are being burdened with huge student loans because the cost of getting a degree has skyrocketed. The competition for loans and grants is fierce and at the same time, the job market has been slow to recover. As the association reports, many people are considering Los Angeles bankruptcy as a way to help.

Credit report company FICO reports that consumers owe $750 billion in student debt loan, which adds up to more than what people owe on their credit cards. On top of that, 67 percent of student loan lenders believe that delinquencies are set to increase. That's up 19 percent in three months.

Student loans can be provided by the federal government or by private companies. Either way, a huge rise in student loan defaults could send another shockwave through the nation. As with mortgage defaults, the country could be in for a tough road ahead.

While analysts don't believe there will be as big of a sticker shock as with the housing market, an increase in student loan defaults and ballooning tuition costs could cause students not to want to invest that kind of money into a college education. This could harm the country in the long-term because it would make America less competitive in research and other fields.

Changes made to bankruptcy laws in 2005 make getting student loan forgiveness more difficult. That's exactly what lawmakers were aiming to do when they changed the law. Student loans are treated differently than any other type of debt. Only those who can show they have an undue hardship from the loans can qualify to have the debt forgiven.

Bankruptcy can still be helpful for those who are in debt because of student loans. It's likely that consumers who have massive debt problems owe on other forms of credit as well. A bankruptcy filing can eliminate other types of debts and free up room to continue making the student loan payments.

Defaulting on loans can open up consumers to lawsuits in the future. But filing for bankruptcy actually stops creditor actions and provides instant protection from garnishments, harassment and other actions. Bankruptcy in Los Angeles may be a way to eliminate other forms of debts, allowing the consumer to pay back student loan debt at a low interest rate. This is likely a better option than defaulting on a loan.

Continue reading "Student Loans: The Next Reason For Increase in Los Angeles Bankruptcy?" »

A recent article on Dailyfinance.com looks at whether the threat of harassing creditors could cause problems at work for a person struggling with debt.

Los Angeles bankruptcy lawyers have talked with many clients who are under so much stress because creditors call them at home, on their cell phones and at work. They contact co-workers and can be very disruptive to a person's life.

The article looks at whether personal finance problems could seep into a consumer's work life and cause problems there. Los Angeles bankruptcy, however, could be able to solve some of those problems. When a person files for bankruptcy, they are able to get instant protection from creditors, thus helping to cut down on the harassment coming from creditors and lenders.

For a person trying to keep those things private, bankruptcy may be a way to do that. No one wants their personal matters, including debt issues, getting in the way and causing embarrassment.

According to the article, a recent study of human resources department officials shows that 83 percent think that personal finances problems have at least some impact on a worker's performance on the job. About four out of five believe that employees are facing tougher economic issues than they were five years ago.

Human resource managers tend to worry that if a person is having trouble with financial issues of their own, they may be unable to properly use the time and money of the company. While having personal money issues isn't an offense worthy of termination in most cases, if the employee's work performance is dropping off as a result, it could land the person in trouble.

The article goes on to suggest that if the bosses know the worker is having money troubles, they may be less likely to provide advancement opportunities, promotions and it could bring more scrutiny. Also, if the worker is bragging about spending money -- at a higher rate than they get paid -- it could also invite trouble.

But if a worker is struggling with debt problems and can show they are taking steps to correct it, these things can have a positive effect for the employee. If an employer knows there are problems at home, but see steps are being taken to improve the situation, this can show that the worker is able to adapt and make improvements.

Bankruptcy may be a helpful tool to improving your standing at work and still getting the debt relief help that is needed. When the creditor calls stop at the office and the worker is able to get some breathing room, it can help all the way around. If you see your debt getting in the way of your career, call for a free consultation.

Continue reading "Los Angeles Bankruptcy Can Help Repair Credit, Improve Job Prospects" »

It's amazing what credit card companies will do to try to rip off the American public. CNNMoney reports that a new type of credit card could end up costing the average consumer $400 a year in fees and charges.

It's no wonder so many people are looking to Los Angeles bankruptcy as a haven from the practices of credit card companies and lenders. These laws work for consumers and provide protection from accrued debt and lenders who attempt to keep people under control with hidden fees and high interest rates.

At a time when money is tight and there doesn't seem to be a way out, a Los Angeles bankruptcy lawyer can help. Filing for bankruptcy protection will instantly stop creditors from harassing the consumer and offers freedom from all the collection practices.

As soon as bankruptcy is filed, an automatic stay goes into place. This means collection agencies aren't allowed to contact the consumer directly, but must now focus their efforts on the bankruptcy court. This is helpful for a person who is having a particularly difficult time with credit card debt.

Many people rack up credit card debt when their expenses simply outweigh their income level and this could be due to a cut in work, job loss or even medical bills resulting from a freak accident or illness diagnosis. Many factors go into why a person requires help from bankruptcy laws.

As the bills become more and more difficult to bear, bankruptcy can help a person get a fresh start. Their debt can be discharged and they can find the freedom to make sound financial choices.

According to the CNNMoney article, the First Premier Platinum card is being geared toward consumers who have poor credit. It seems to be doing a good job of taking advantage of the current economic situation in which many Americans find themselves. Cardhub.com found that the 36 percent APR, coupled with some of the highest fees in the industry, could end up costing a person $400 a year just to use it.

The company already has 2.6 million customers and is sending out about 1.5 million solicitations a month to consumers nationwide. The company is aiming to snag people with poor credit scores who are being rejected by other companies. In turn, the company establishes high interest rates and scores of fees.

One of the fees that stands out is a credit limit increase fee, which slams people each time they are awarded more credit. This may be the only card that provides a fee for such a service. Some analysts believe the company is doing nothing to help people with poor credit.

In fact, this may end up doing more damage than good. If a consumer has a bad credit score, a secured credit -- where money is deposited and that becomes the spending limit -- could be a better option. The moral of the story is consumers have to do their research before signing up for a few card. Companies are hoping to make a profit, not run a charity.

Continue reading "Credit Card Hidden Fees Could Reach Hundreds of Los Angeles Debt" »