Los Angeles Bankruptcy Lawyer Blog

Los Angeles bankruptcy lawyers know that sometimes, parents can go into debt while helping out their children.

This may be expected to some extent, though some parents end up requiring a Los Angeles bankruptcy if the situation gets out of control.

However, for children to be indebted to the government for their parents' expenses? It had actually been happening much more than you might think, particularly in California, through a program called CalWorks. It's a practice that goes back decades, but now is slated to end following the settlement of a lawsuit brought on by those who say it's patently unfair.

The department would essentially go after children, even after they'd entered into adulthood, for over-payments of social services that had been given to their parents.

In a few of the examples cited:

One was a 73-year-old man who was raising his 14-year-old great-granddaughter. He received little more than $300 a month from the government to help with the very basics. But then last year, the CalWorks program docked that payment by 10 percent each month. The reason was because the program mistakenly had sent some $10,000 to the teen's grandfather and mother. By docking her monthly assistance, they were trying to recover some of that expense.

In another case, a Riverside County girl was just 16 when the county gave money to her mother for her brother's expenses. As it turned out, her brother didn't actually qualify for those expenses. When they couldn't find her mother to recoup those losses, they threatened to take her 2011 tax refund to collect the nearly $800 they were owed. That was money she had been counting on to cover college living expenses during her first year.

And yet another case involved a single mother of three who was struggling to pay her way through college. Officials from Butte County contacted her and threatened to seize her tax return if she didn't pay the $7,000 that was collected by her father on her behalf a decade earlier, when she lived with various relatives. It took months and many sleepless nights, she said, to get the mess straightened out.

For many of these children and the family members who care for them, they may already be living paycheck-to-paycheck. Forcing them to pay these additional debts on top of their regular expenses may be enough to push these individuals to the brink of a Los Angeles bankruptcy.

Of course, this is not to say that a bankruptcy is a bad idea, particularly if the debts held prior to the collection demands were significant.

Up until 1996, federal law had mandated that public officials go after any member of the household for alleged over-payments. Now, however, states can decide whether to go after minors if they want. Los Angeles County reports that more than 4,600 children and nearly 90 adults have been penalized for over-payments.

But the fact that this program is going to stop going after children and people who were children at the time the debt accrued is going to be a huge relief to many of these families.

Continue reading "Los Angeles Bankruptcy and CalWorks Debt" »

Los Angeles bankruptcy lawyers know that for same-sex couples, life is fraught with challenges, ranging from social acceptance to how you file your taxes.

For a lot of these couples, a Los Angeles bankruptcy can help to alleviate some of the stressors that accompany the specific financial challenges that come with a same-sex partnership.

While same-sex marriage has been legal in California since 2008, there are still a number of issues these couples must contend with.

To explore a few of these:

1. Same sex couples are often barred from sharing in the basic benefits that married couples enjoy. In an example detailed by CNNMoney, a 76-year-old man from Hayward talked about how when his partner of more than 50 years died, he lost not only his husband and best friend. He lost his home, his income, his health insurance, his animals and even his furniture. He was dropped from his husband's employer's insurance and was blocked from receiving the $2,000 a month he had previously received from his husband's Social Security benefits. He also was denied getting any survivor benefits, and then it took another three years before he was able to gain access to his husband's pension plan benefits.

2. Same sex couples have a much tougher time in establishing parental rights. Some couples can end up spending $3,000 or more in legal fees just to outline the basics of a parenting agreement of how to proceed if the couple should separate or one of them die. These are aspects that would be already in place if they were allowed to legally marry and adopt together.

3. Disability benefits are often unavailable to same-sex partners, meaning that when they fall ill, they must shoulder a greater burden their heterosexual counterparts.

4. Tax filing can be confusing, arduous and downright unfair. A ruling by the IRS in 2010 mandated that homosexual couples in community property states like California had to divvy up their income equally on their federal tax returns. Because same-sex couples still can't file jointly, this has helped some, but it's confused the process for others. CNNMoney detailed the plight of one couple, in which one owned a business in which the other was not involved. The new rule, however, required the spouse to claim half of his husband's income on his own tax return. That, in turn, meant the non-business owner spouse no longer qualified for early retirement, as he had previously done. What's more, he was ordered to pay back some $10,000 in benefits, which he'd already collected. A tax lawyer helped the pair sort out the mess and appeal that decision - but it wasn't cheap.

According to a decision made by 20 California bankruptcy judges last year, same-sex couples can file jointly for bankruptcy, despite the Defense of Marriage Act.

Consulting with a Los Angeles bankruptcy attorney about your options is the first step to a fresh start.

Continue reading "Los Angeles Bankruptcy for Same-Sex Couples" »

Los Angeles bankruptcy attorneys are finding more frequently, there is a new generation that is learning first-hand what it means to struggle financially.

More often than not, those seeking a Los Angeles bankruptcy aren't single parents or middle-aged empty nesters. Rather, they are those that had just a few short years ago held the most promise: college students.

Or now, rather, new graduates.

What was once seen as a good investment is now looking more and more like a scam.

As we've previously written on our Los Angeles Bankruptcy Lawyer Blog, student loan interest rates are set to double by summer and parents are scrambling too, trying to figure out how they will help their child not be immersed in a vicious cycle of debt and predatory credit.

Many students hadn't pictured filing for bankruptcy right out of college (they were supposed to be embarking on that dream job!). But life has a way of happening, and sometimes, bankruptcy is the best option to help you establish a fresh start.

According to a recent article on this issue by The New York Times, the average amount of student loan debt last year stood at more than $23,000. About 10 percent of students owed nearly $55,000. Another 3 percent owed more than $100,000.

Across the country, the total federal student loan balance stands at more than $900 billion.

Although student loans were once seen as "good" debts, financial analysts are now likening this to the predatory mortgage loans that landed our country in a housing crisis.

Part of what prospective students need to consider to avoid some of these issues is the true cost of their education. Often in college promotional materials, that aspect is something that's glossed over. These institutions are also banking on the fact that you're young, naive and still believe that if you follow your dreams, it will all just work out.

Unfortunately, as many new graduates are finding, that's not reality.

While student loans can be difficult to discharge in the course of a Los Angeles bankruptcy, they're not impossible. Basically, you have to show that the payment of the debt causes an undue hardship on you and your dependents.

Proving this can be tough, and courts can vary on how they apply it. Generally, you're going to have to show that you can't maintain a minimal standard of living if you're forced to repay these debts, that you have made a good faith effort to repay them and that there may be additional circumstances to indicate that this current state of financial affairs is likely to last for a long time.

But even in cases where the debt isn't completely canceled, a bankruptcy can automatically provide you protection from collection agencies and could allow you to discharge other debt so that at least you aren't bogged down with debt from multiple sources.

Of course, meeting with an experienced Los Angeles bankruptcy attorney will help you determine what all your options are and plan your best course of action.

Continue reading "Los Angeles Bankruptcy and a New Generation of Debt" »

Los Angeles debt management is becoming more and more difficult, and L.A. consumer attorneys know that isn't likely to change anytime soon, according to a recent article featured in CNNMoney.

The article breaks down the fact that basically, the income gap between rich and poor has been markedly increasing. That means the wealthiest are continuing to make more money, while the other 95 percent have seen debt levels soar and income levels that are doing nose-dives.

Rather than alter their lifestyles or curb spending, many people are becoming more and more reliant on credit to maintain their standard of living. This has led many into a deep hole of debt that many find it nearly impossible to dig their way out of.

It's important to note that a Los Angeles bankruptcy can be one way of establishing a clean slate and a fresh start. There's no shame in it, particularly considering so many others are in the exact same boat.

Of course, it's always better to avoid a mountain of debt in the first place, if you're able. (In some cases, especially where the cause can be traced back to an unexpected medical condition or job loss, people aren't left with much choice.)

Let's take a look at the research:

Back in 1983, the majority of Americans had roughly 60 cents of debt for every dollar that they earned. In a disconcerting development, as of 2007, Americans had about $1.50 worth of debt for every $1 they earned.

Now compare that to the wealthiest earners. Back in 1983, they were accruing about 75 cents of debt for every dollar they earned. But in 1997, that number dropped to roughly 65 cents of debt for every dollar earned. What's more, their incomes increased about 34 percent, compared to about 20 percent two decades ago.

So what does that mean in practical terms? Certainly, it means that some people are fighting off a foreclosure and have had to downsize considerably. But what economic analysts are increasingly finding is that rather than do that, Americans are just racking up more debt so they won't have to downsize. They're swimming in debt racked up from their house, car, student loans and credit cards.

Many Americans have been successful in shedding their debt, albeit through means of foreclosure and bankruptcy, the report says. Sometimes these are good solutions for your financial situation, sometimes not. It's important to consult with a Los Angeles debt management attorney before making any decisions.

Some general things to keep in mind if you're trying to reduce your debt-to-income ratio:

1. Think about what the real issue is. For example, if you're retired and thinking about taking out a reverse mortgage, maybe instead start thinking about if you may need to downsize your current home.
2. Try to avoid robbing Peter to pay Paul. For example, don't drain your 401k to pay off your credit card debt. That's going to mean you may have to work much longer before you can retire.
3. Consider an attitude shift in your spending habits. If your credit card debt is unmanageable, bankruptcy is one option.

Continue reading "Los Angeles Debt Management: A Growing Divide Between Rich and Poor" »

Much has been made of the crushing debt that is forcing many students and younger people to file for a Los Angeles bankruptcy.

It's important to note, though, that it's not just the students who are finding themselves barely treading water: They're parents are drowning in debt right along with them.

L.A. bankruptcy attorneys know that while Congress is debating a back-step on the student loan rate, which is set to double from 3.4 percent to 6.8 percent by the beginning of summer, now is the time many high school seniors are deciding which college to attend -- and parents are deciding how they are going to pay for it.

Across the U.S., student loan debt is much higher than credit card debt - nearly $870 billion, compared to about $7000 million, respectively. What's more, while the average public school debt is going to level out around $12,500, there are about 30 percent of students for whom that debt has ballooned to somewhere in the $25,000 to $200,000 range - an insurmountable amount, particularly considering the abysmal current employment environment.

And where new college graduates turn when they're in over their heads? Mom and dad, of course. That's one reason so many college graduates have returned back home, creating even more of a burden on their parents' finances, at a time when parents were maybe hoping to an enjoy an empty nest.

One problem is that a college education is difficult to effectively gauge the value of. For example, we may know what kind of a house we can reasonably afford. We may know what kind of car we can drive or which weekend activities we can shell out a few extra bucks for. But when it comes to a college degree, what you're paying for is an investment in the future. Parents want to help make their children's dreams come true, and universities have done a fantastic job of selling us on the idea that an expensive degree from a top school is going to equal success. Unfortunately, that's not always the case.

So what happens? Not only do new graduates end up mired in debt, so do their parents.

A recent column in The Baltimore Sun outlined this issue, and what parents need to do to avoid getting themselves trapped in a quagmire of debt, which may at some point require a Los Angeles bankruptcy.

The first thing you need to do is determine how much debt you and your child can reasonably afford. Figure it out on a per-month basis. Then, you need to decide how much your child will likely be able to cover once they graduate. This can be tricky because you don't necessarily know exactly what the job market is going to do. But for example, while there may be value in a liberal arts degree, what kind of job is your child likely to land with this diploma?

It might be, as columnist Susan Reimer suggested, the compromise will be two years at a community college, followed by two years at a public university - or some combination like that.

The key is to hold firm, and not splurge for more of an education than you can afford.

Continue reading "Los Angeles Bankruptcy a Reality for Parents of Students Mired in Debt" »

Los Angeles debt management is perhaps one of the greatest sources of contention between spouses.

Because of it's very nature, our Los Angeles bankruptcy attorneys know that it can impact virtually every aspect of your life, from what you eat to where you live to what you do on Saturday nights.

But what do you do when your spouse is hiding his or her debt from you? This is going to have repercussions not only on your wallet, but also the very core of your relationship.

Still, when people have money trouble - either because of gambling, substance abuse or other reasons - it's very difficult to talk about. They believe if they can keep it a secret, it will go away. Or, they may have every intention of dealing with that debt on their own, but it simply grows to a point they can no longer manage it. They fear their spouse's reaction, so they continue to hide it, long after it's become a major problem.

And of course, the longer it's hidden, the more out-of-control it can get.

Some examples of this include a spouse who racks up tens of thousands of dollars on credit cards to subsidize a gambling problem. Or a husband who heists his wife's credit card to use at a local race track. In other cases, spouses may end up spending thousands of dollars on other consumer products.

The money may also involve something they may not want their spouse to know about in the first place, so coming clean when the debt has grown horns seems out of the question.

In most cases like this our Los Angeles bankruptcy attorneys know a relationship split may also result. But even a divorce won't absolve you of debt that your spouse has accrued in joint accounts - even if you had no idea what was happening.

Sometimes, you may not find out until it's too late - like when the creditors start calling.

Before it gets to that point, though, there are some warning signs you may want to be on the lookout for:

1. Is money-talk taboo? If your spouse gets extremely defense or accusatory any time the subject of money comes up, that may be a red flag. You also may want to dig a little deeper if your spouse gives you confusing answers to what should be fairly simple financial questions.

2. Does your spouse spend a lot frequently or without good reason? If he or she seems to always be out shopping, even if with friends or the children, they could be racking up high bills without your knowledge. You should take note of the expenditures in your bank account. If you don't see those expenses reflected there, one possibility is that there may be credit cards or accounts you don't know about.

3. Does your spouse rush to be the first to get the mail? Ask yourself why that may be.

4. Why don't thinks seem to add up? A lot of people have difficulties getting each paycheck to stretch. But if you make at least decent money and seem to have reasonable expenses and are still forever coming up short, you need to ask yourself why that is.

Continue reading "Los Angeles Bankruptcy Watch: Is Your Spouse Hiding Debt? " »

In what is being lauded as a victory for everyone facing Los Angeles bankruptcy, a large consumer debt buyer has been ordered to pay a $2.5 million fine for a number of misrepresentations while trying to go after old debt.

Asset Acceptance is a company that purchases overdue debt from creditors such as banks, credit card companies, fitness clubs and more. Asset Acceptance then hounds those who owe.

Unfortunately, our Los Angeles bankruptcy attorneys know that although Asset Acceptance is one of the largest of its kind, it's not the only company in which agents will misrepresent themselves and their powers in order to bully people into paying up.

In this case, the Federal Trade Commission has alleged that the company told people they would sue them (even when the debt was legally too old to go after in court). They also reportedly failed to investigate claims that the original debt was erroneous - they simply kept on pressing people to pay. In doing so, the FTC says the agency broke the law - the Fair Collection Practices Act an the Fair Credit Reporting Act. In all, there were nine counts against the company, including:

• Insisting that consumers owed money, when that could not be proven;
• Didn't disclose that certain debts were too old to be legally enforceable (called time-barred debt) or that if a consumer made a partial payment on that debt, it would actually hurt the consumer by extending the amount of time the debt could be enforceable;
• Giving false information to credit reporting agencies;
• Not performing an investigation when receiving notice of a dispute from a credit reporting agency;
• Hounding third parties (employers, family members) regarding the debt;
• Informing third parties about debts;
• Using illegal means to obtain debt, such as fudging on the legal status, nature or amount of the debt;
• Not providing proof of the debt and continuing to try to collect it even when the consumer had disputed it.

Under the settlement agreement, Asset Acceptance has to let consumers know if a debt is too old to legally sue them. Once the company makes that disclosure, it is forbidding from going after them in court, even if the person makes a partial payment.

It is also forbidden to make any misrepresentations whatsoever about who they are, the legal power they hold or anything else. It must thoroughly investigate when a consumer insists the information about the debt is wrong. They can't put a debt on a consumer's credit report when it hasn't put that same notice in writing to the consumer. The settlement also underscores the details of the Fair Credit Reporting act and Fair Debt Collection practices - and warns the company from crossing the line again.

The FTC has also issued information to consumers about time-barred debt, and has recommended that consumers talk with an experienced attorney before making any sort of payment on an old debt.

Continue reading "Los Angeles Bankruptcy Attorneys Applaud Sanctions of Debt Collectors" »

Tax season is looming, and unless you're looking forward to a refund, it's typically not a process anyone enjoys.

It can be especially agonizing when you're drowning in debt, and the IRS is just one more creditor on the pile.

A Chapter 7 bankruptcy can help in a number of ways, but it is best to talk with a Los Angeles bankruptcy attorney to discuss your options. An experienced bankruptcy attorney may be able to settle your tax debt for significantly less than you owe, work out a reduction or removal of interest charges and penalties, end the garnishment of your wages and stop the seizure of your property.

Of course, no one plans to find themselves mired in debt, and most people will take whatever steps possible to claw their way out of it.

If at all possible, it is better to get ahead of the issue of tax debt before it becomes a problem. One way to do this is to make sure your taxes are properly filed. Consumer Reports recently released some tips on ways to ensure you are organized, choose a tax preparer who will work to your advantage and hopefully avoid audit.

First of all, if you make less than $200,000 a year, you have a 1 out of 100 chance in being audited by the IRS. Your chances go up quite a bit higher if you are a small business owner - particularly if you are itemizing deductions for a home office, business meals and telephone.

Business expenses that seem as if they might be instead personal (i.e., meals, travel) are one of the first things that IRS agents will hone in on. It's important for you to maintain meticulous notes and records about all of your business meetings.

And speaking of records, hang on to your tax documents from the previous three years - that's how far back the IRS can audit you.

It's also important to check your math. A great deal of IRS notices are sent out because someone forgot to carry over the 1 (or a similar mathematical mistake).

That may be motivation enough to seek the help of a professional. You have a few options in this regard: a certified public accountant, an enrolled agent, a tax preparation chain, or free tax preparation. Explore each option carefully to determine which may be the right one for you. And before you meet with any of these professionals, make sure you have all of the appropriate social security numbers. Consider putting your documents in an accordion folder, with section dividers for categories such as W2's, Form 1099, charity receipts, etc.

To avoid getting potentially ripped off by a shady preparer, Consumer Reports recommends you first ask for a list of fees upfront. Sometimes, preparers will try to charge a "processing fee," but this is often just to put more money in their pockets. Be wary of refund anticipation loans, which are really just short-term loans that will charge you upwards of triple-digit interest. You may also want to be very careful if your preparer offers to put your refund onto a debit card. These are often loaded with fees.

Continue reading "Los Angeles Bankruptcy May Help With Tax Debt" »

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.

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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.

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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.

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