Los Angeles Bankruptcy Lawyer Blog

A new study conducted by economists at three universities shows that bankruptcy filings in Los Angeles and across the country spike after tax season.

Los Angeles bankruptcy attorneys understand the new statistics reveal that bankruptcies in the U.S. went up about 7 percent in 2008 after Americans got their tax refunds in the mail.

Researchers at the University of Chicago, Columbia University and Washington University in St. Louis found that the reason for this phenomenon is that it does cost money upfront to file for a Los Angeles bankruptcy. On average, it cost about $1,500. That figure actually represents an increase of about 5 percent from 2001.

That's because the Bankruptcy Abuse Prevention and Consumer Protection Act, passed in 2004, increased the cost for administrative and legal fees needed to file for bankruptcy. The law also required individuals to cover the cost of their own credit counseling before they could file as well. The idea was to curb abuses of the bankruptcy system, but it had latent effect of making it somewhat more difficult for average Americans to file. It also came at a really bad time - just prior to the burst of the housing bubble.

There is good news though: Filing for bankruptcy can actually save you a great deal of money - and headaches - in the long term.

For example, a Chapter 7 bankruptcy will allow you to liquidate any major assets that aren't covered by the law in order to pay your credits. However, many of your most important assets are going to be protected. This often includes your home and cars.

And in a Chapter 13 bankruptcy, as soon as you file, you will be spared the barrage of calls from aggressive creditors, who call you both at work and at home at all hours. It can also mean that you will be allowed to drop your second or third mortgage, particularly if your home's value has dropped below what you own on it, as has been the case with so many Americans amid the housing crisis. It will also allow you to pay off your debt for pennies on the dollar. After the bankruptcy period is over, you are left with ZERO debt.

So the $1,500 you pay up front actually pays off fairly quickly.

For many people, though, it's getting that amount together. That's where the refund comes in. The number of overall bankruptcies actually went down quite a bit from 2005 to 2006 - about 71 percent, from 2 million to about 600,000. That's because many people couldn't get the funds together to pay some of those costs upfront. Now, though, those figures are rising again, and 1 million filed for bankruptcy in 2008.

If this is a concern for you, our Los Angeles bankruptcy attorneys can help. We offer a free consultation to help you determine what your options are before you file anything.

Continue reading "Los Angeles Bankruptcy Spikes After Tax Refunds" »

The United States Bankruptcy Court for the Central District of California, the court that governs Los Angeles, recently released statistics that show Chapter 13 bankruptcy in Los Angeles has become a more frequently used form of bankruptcy filing.

According to the court's analysis, Chapter 13 filings have increased more than 16 percent from January to August 2011 compared to the same period in 2010. The 2011 numbers are based on estimated filings through June.

Chapter 7 bankruptcy is by far the most popular chapter under which consumers file for bankruptcy, as it's the chapter under which a person can have their debts discharged and move on with life the quickest.

But Chapter 13 bankruptcy in Los Angeles has its perks for people in a different situation. For those who own assets and might make too much money to qualify for Chapter 7, Chapter 13 allows payment plans, usually for three to five years, to pay back creditors. Once the period has ended, the debts are considered paid in full.

Chapter 13 usually is for people who have assets that they would like to keep, whereas most Chapter 7 filers have far more debt than assets that could be sold to help pay their debt. Homeowners filing for Chapter 13 would likely be able to keep their house, vehicles and other assets after the process has concluded.

According to the court's numbers, 20,829 people filed for Chapter 13 bankruptcy in 2010, compared to 73,999 who filed for Chapter 7 bankruptcy. This year, Chapter 7 filings have decreased by about 6 percent, to an estimated 69,327 through August. But compared to the nearly 21,000 who filed Chapter 13 in 2010, there has been an estimated 24,200 so far in 2011.

This may show that the economy is hitting the working middle class the hardest right now. While waves of low-income or no-income families have used bankruptcy consumer laws to their advantage by discharging debts and getting a fresh start, the middle class, who may not qualify for Chapter 7 are still using these protection laws to help them with their particular economic situation.

Either chapter is designed to help consumers. Chapter 13 is simply for people who make a little more money, but the results are the same. They can come away from bankruptcy with a fresh start ready to move on with life free from debt and hounding creditors and lenders.

And at the end, they can still keep their home and vehicles, and have their debts from medical bills, credit card bills and other outstanding loans go away after making monthly payments consistently on time for a few years down the road. Whatever your situation, bankruptcy may help. The first step is consulting with an experienced and dedicated Los Angeles bankruptcy lawyer who can help you make the right decision regarding your finances.

Continue reading "Los Angeles Chapter 13 Bankruptcy Becoming More Popular" »

As the Los Angeles Bankruptcy Lawyer Blog commented on recently, the middle class has become more and more susceptible to falling into debt, which has led to an increase in the poverty rate.

And the statistics now show that it's true. According to new census data recently released, the nation's poverty rate rose to 15.1 percent in 2010, the highest level since 1993. In 2009, the rate was 14.3 percent, CNNMoney reports.

It is sad to see that people are struggling with debt so much that they are being driven below the poverty line. People are in such need that they are using credit cards in order to survive and it's those habits, along with the credit card companies' predatory practices, that have left many people deeply in need.

But for those who have little elsewhere to turn, filing for Chapter 7 Bankruptcy in Los Angeles may be an option to get back on their feet and start fresh. Bankruptcy laws are designed with consumers in mind, and they allow people to discharge debts and start over without the threat of creditors and lenders harassing them. In fact, filing for bankruptcy ensures that lenders can't contact the consumer during the bankruptcy process.

An experienced Los Angeles Bankruptcy Lawyer will go over your situation and look to find solutions to your debt problems. Should they be medical bill, predatory lending or job-loss driven, our firm will work with you to determine the best line of defense against creditors and lenders.

According to CNNMoney, 46.2 million people are now considered in poverty, a jump of 2.6 million from 2009. Given the economy, the numbers aren't surprising, experts say. Even with accounting for inflation, poverty is considered an individual who makes $11,139 or a family of four that makes $22,314 a year.

Census numbers showed that the rich have gotten richer and the middle class' income has largely stayed steady. From 1980 to 2010, the middle-income family earned only 11 percent more, while the richest 5 percent of Americans have seen their incomes increase 42 percent in the same time period.

More than 1 in 5 children are living in poverty, while the poverty rate for non-Hispanic whites is at 9.9 percent. Blacks had the highest poverty rate at 27.4 percent, with Hispanics at 26.6 percent. Slightly more than 12 percent of Asians fall under the poverty line.

Sadly, many of these families and individuals fell into poverty as a result of extreme debt problems, brought on by joblessness, unexpected medical bills and lenders who charge outrageous fees and interest rates.

So, for many people, drowning in debt has been brought on through no fault of their own. For that reason, it may be possible to use bankruptcy laws to their advantage to clear the debt and start fresh in an effort to avoid the poverty rate.

Filing for bankruptcy stops lenders from harassing consumers and allows them to discharge most of their debt and move on with life without fearing a move to a shelter or going on government assistance programs.

Continue reading "Poverty Rate Increases in Los Angeles, U.S. Due to Overwhelming Debt" »

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" »

Many people believe that life after bankruptcy means toiling without getting offers for credit and being unable to make purchases again, but that couldn't be further from the truth.

Los Angeles Bankruptcy Lawyers have seen clients going through bankruptcy receive offers for loans during and after the process. Bankruptcy in California is designed to help people get back on track after they have decided to take control of their finances and work to have a better future.

Life after bankruptcy in Los Angeles isn't necessarily a cakewalk, as it requires hard work and dedication. But as credit scores before bankruptcy decline, post-bankruptcy they should climb. Lowering a person's debt-to-income ratio is a key to improving credit. Stopping late payments and collection actions not only helps your credit, but restores your peace of mind.

While bankruptcy can be helpful to allowing people to consolidate and eliminate debts, Chapter 13 bankruptcy in California is one of the best ways to fight a foreclosure. Filing for Chapter 13 immediately stops creditors and collection agencies from coming after you for debt you owe. And Chapter 13 is different in that it allows the consumer to protect large assets, such as a house, and use a payment plan to pay back debt.

That can be especially helpful for families dealing with significant amounts of credit card debt because of a job loss or unexpected medical emergency that creates overwhelming medical bills. For anyone drowning in debt, the first step should be to consult with Los Angeles Bankruptcy Lawyers to determine the best course of action. Whatever your situation, set up a free consultation today to determine what your best option may be. Our firm will discuss your case, look at the situation and help you determine what aspects of the law you can use to your advantage in solving your debt problems.

Loansafe.com, a website dedicated to providing information for consumers about financial matters, recently published an article about how to recover from a bankruptcy. Here are the tips:

Save the credit card payments: After the bankruptcy process, your credit card debt should be wiped out. So, while you were previously paying on those bills, now that money can be sent to your savings account.

Start contributing to your 401k: Retirement is expensive, so putting away money in a retirement plan or a 401k savings plan is important. Even a little money each month adds up.

Get catastrophic health insurance: The number one reason for bankruptcy is medical bills. They are so expensive and for people who have little coverage or no coverage, they can be devastating. Prepare for the worst.

Apply for secured credit cards: Try your local bank first or look online for a list of secured credit cards to help improve your credit.

Check your credit score: Make sure it is updated to properly show which debts were included in your bankruptcy. You don't want discharged debts to show an open balance.

Continue reading "Tips For Life After a Los Angeles Bankruptcy" »

Walletpop.com recently provided some tips for people dealing with life after bankruptcy in Southern California.

What Los Angeles Bankruptcy Lawyers want readers to know is that filing for bankruptcy in Southern California can help you regain solid financial ground. But it's also a complex federal court case best handled by an experienced attorney. Bankruptcy in Los Angeles can be a scary process, but can also provide much-needed relief in the end.

For many people, mounting debt, unexpected medical bills, or a job loss right in the middle of the Great Recession has led to the necessity of filing for bankruptcy. For many, thinking of filing for bankruptcy leaves them with an uneasy feeling, a feeling of disappointment or perhaps the thought that they are a failure because they are considering meeting with a bankruptcy lawyer.

But this shouldn't be the case. Bankruptcy laws were created to help people who are willing to take a step in the right direction to shore up their financial future. And who wants to live with creditors constantly calling, trying to garnish wages and living under piles of credit card debt?

Those considering bankruptcy in Encino, Los Angeles, Glendale and elsewhere should take comfort in the fact that they are far from alone. According to the American Bankruptcy Institute, more than 353,000 Americans filed for bankruptcy in the first quarter of 2011. And in the Central District of California, which includes Los Angeles, Encino and Glendale, there were more than 137,000 bankruptcy filings.

The biggest tip is don't do it alone. Bankruptcy law is complex, can be tedious and requires a law firm that can protect you from unjust penalties and problems after the process has run its course.

On to the tips:

Let go of the guilty and shame: So many people are using bankruptcy laws to their advantage, it shouldn't be something people consider negative. While it does take a seasoned bankruptcy attorney to handle the process correctly, beating yourself up over this decision isn't a smart move. Don't dwell on negative thoughts but instead look to the freedoms the process will grant you in the future.

Reflect and regroup: Use family and friends or other support groups to help you out emotionally and mentally. The process can be tedious, so have people who can help you get through it. But don't go through the procedure and lose focus of how you got there. If it was poor money management, outlandish spending or living outside your budget, look back at how you got there and decide to make a change.

Stick to a budget: If you've never lived within a certain budget based on your income, now's the time. Work with a financial consultant to create a budget, create an emergency fund for unexpected budgetary events and repay existing bills. Don't let credit card companies sack you with high interest fees.

Use a credit card that can help you rebuild your credit: Some "secured" credit cards allow you to deposit money into a bank account that acts like your existing credit balance. By charging small amounts and immediately paying them back, you can help repair your credit score. But make sure the card reports scores to credit agencies, otherwise it could be pointless.

Separate fact from fiction about bankruptcy: Many bankruptcy filers receive credit card offers, home loans and car loans with reasonable interest rates shortly after the bankruptcy process is completed. It's not guaranteed that you will wallow in a life of bad credit because of bankruptcy. And if your credit debt was piling up in months or years before filing, your credit score may not have been that great, anyway.

Continue reading "Tips For Life After Bankruptcy in Los Angeles Helpful With Right Lawyer At Your Side" »

It's been well-documented that people in Los Angeles and throughout California have used bankruptcy laws to protect their financial futures in record numbers amid the predatory lending practices of banks that led to the economic collapse. According to the American Bankruptcy Institute, there were more than 260,000 bankruptcy filings statewide in 2010, up from about 72,000 in 2007.
And the statistics nationwide are alarming: We owe more than $2.4 trillion in credit card debt, medical bills and other unsecured debt, economywatch.com reports.

Los Angeles Bankruptcy Attorneys are available in Encino, Glendale, Downey or Antelope Valley to assist you in the process that may be best for you. In our state, bankruptcy can give consumers a fresh start. In fact, bankruptcy is one of the few laws on the books to protect the consumer rather than the nation's banks.

The statistics aren't pretty, but they show that more and more people are using bankruptcy to save their homes, eliminate their mounds of credit card and personal loan debt and move on with their lives. There are different forms of bankruptcy, including Chapter 7 and Chapter 13.

These are different forms of bankruptcy, but can help you accomplish the same goal of no longer being saddled with an unbearable amount of debt you can't handle. Consider taking advantage of our free consultation, starting with a form on our web site.

It's possible that Chapter 7 bankruptcy is best for you. What Chapter 7 does is permanently eliminates your personal debt without requiring you to pay any of it back. You may qualify if you:

• Owe significant debt
• Find it difficult to make ends meet
• Have little or no money left after paying your bills each month
• Experienced a job loss or a dramatic drop in income
• Own a home with little equity, or you rent

Chapter 13 is more geared toward people who want to save their homes or who have significant income with which to establish a repayment plan. If you think you can set up a payment plan over the next three to five years to satisfy your debts, you may file Chapter 13 and save your assets.

Continue reading "Californians Turning to Bankruptcy to Secure Their Financial Future" »

Whether you're a seasoned financial planner, a young family unable to keep up with payments on your house, car and students loans or someone who has already gone through the freeing process of bankruptcy, smart money tips can be helpful to you. MSN Money provides 15 areas where you're throwing away your money.

For many people, personal finances are the one thing they just can't get under control. Whether it's compulsive buying, ill-advised large-scale purchases, not putting any money away in savings, falling victim to predatory lending, or simply not having enough money to go around, they need help. The Los Angeles Bankruptcy Attorney has seen these struggles in clients for years. You're not alone.

But you must take action. Bankruptcy in California may be the solution to get your life back on track. Bankruptcy is a legal way to get your finances back in order. It's one of the few sets of laws on the books that protect consumers.

There are many reasons you may be stuck in a place where you can't realistically pay off your debt. Medical bills, unemployment, risky investments, divorce and credit cards with high interest rates have gotten to many of us. Sometimes all the planning in the world can't prevent tough life situations that cause our money problems.

Here are some tips to be smart with your money:

• Pay off your balance in full each month. For instance, a $1,000 balance with 18 percent interest on a credit card is a free $180 you're blowing every year.


• Cut the unhealthy habits. Are you smoking, spending thousands each year on cigarettes? Do you realize it adds to the cost of health and life insurance, too?


• Cellphone overload. Fancy smartphones cost hundreds of dollars and their rate plans can also cost more than $100 per month. Go to BillShrink to evaluate your usage or consider a pre-paid phone.


• Buying brand names. Many people insist that name brands are better, but many generic brands can provide the same product at half the price. Shop wisely.


• Get the freebies. Go to the library instead of the bookstore and eat at restaurants that offer free meals for kids.


• Make your money work for you. Search for high yields on CDs and money-market savings accounts instead of letting it sit in a low-interest savings account.

How you got there doesn't matter. But if you aren't able to make all those payments and you can't stop thinking of ways to prevent creditors from calling, you should schedule a free consultation with Los Angeles Bankruptcy Attorney to determine what avenue is the best for you

Continue reading "Smart Money Tips for Consumers In Los Angeles and Throughout California" »

The numbers don't lie. The Orange County Register reports that in the 12 months ending March 31, California filed nearly 7 bankruptcy filings per 1,000 people, the fourth-highest rate in the country. That's up from a year ago, when California had about 6 filings per 1,000 people.

While this news means people are struggling with their debt, it also means you aren't alone if you're seeking help filing for bankruptcy in Los Angeles. Take advantage of our free consultation to see if bankruptcy is right for you.

According to the bankruptcy numbers, there were 1.1 million Chapter 7 liquidations in California. Chapter 7 bankruptcy in California is also known as personal liquidation bankruptcy.

Chapter 7 usually involves debts such as credit card balances, medical bills, lawsuits and other money owed. Most people qualify if their debt prevents them from meeting their monthly living expenses and they don't have a lot of valuable property. A means test will be done to assess your income and determine whether you qualify.

In Chapter 7 bankruptcy, a trustee is appointed by the court to examine your net worth and records, information that will be organized and filed by Los Angeles bankruptcy attorneys. Part of the trustee's job is to pay creditors by liquidating any substantial assets that aren't protected under the law. In some cases, vital assets can be protected, such as a house and vehicle. We will help determine which assets can be protected.

But many of the people who file for bankruptcy have thousands of dollars in credit card debt, medical bills or other debt and can't make mortgage payments or pay bills for other important assets. Then, it's possible that California Chapter 13 bankruptcy would be the best way to proceed. It's a different from of bankruptcy, but is designed to give you the same result. How it differs from Chapter 7 is that you set up a payment plan over three to five years to satisfy outstanding debts.

The design of Chapter 13 bankruptcy is to give consumers with regular income more time to pay off debts and keep their assets. It can be used to stop foreclosure or halt the repossession of a car. You may also be able to void certain debts that wouldn't be allowed under Chapter 7.

This area of law can be particularly helpful to people who are trying to get their lives back on track. But it requires a smart assessment of your situation, your assets and what kind of outcome you are hoping for. So, consult with a Los Angeles Bankruptcy Attorney if you are considering this move.

Continue reading "Record numbers of Los Angeles Residents Seeking Bankruptcy Protection" »