We are on track for another great seminar on Saturday, July 23rd from 10-11 A.M.  The seminar will take place at our offices in Chandler on Cooper and Ray.

This will be a great time for anyone in debt and not sure what to do.  Click on the link for more info.  Free Bankruptcy Seminar in Chandler.

Being in debt and dealing with the stresses that come with it can be painful.  Whether it’s creditors calling and harassing you, overdraft fees in your bank account, being sued or a late mortgage.  It’s a recipe for getting overwhelmed and sometimes trying to avoid even thinking about it.  Well, that doesn’t help.  Getting some control back into your life is the way to go.  Knowing your options will help you get a clear picture of how to move your life forward and get past the hard times.  We are putting on a seminar on Thursday, May 26th to help the local community.  This seminar will be about bankruptcy and how you can legally get a fresh start and stop the craziness.  Click here for more information about the seminar in Chandler.

Filing for bankruptcy is without question one of the most stressful periods of time in a person’s life. Unfortunately, society attaches a number of negative stigmas to personal bankruptcy leaving many debtors feeling insecure and devalued. Most people going through bankruptcy would rather keep it secret from their friends and family, and many debtors even experience severe emotional reactions to the stresses of bankruptcy.

But bankruptcy can be a good thing too. Not only for your wallet, but your emotions and health as well. All of the stress that comes with piles of debt and harassing creditors can cause serious health concerns for many people. Filing bankruptcy provides much needed financial and emotional relief. Most people feel a heavy burden lifted from their shoulders after filing their bankruptcy paperwork. And the day you receive your discharge paperwork, it can feel like a second chance at creating a debt free and financially healthy life.

Without question there are a lot of different emotions one goes through during a bankruptcy, but it’s important to keep your emotions separate from the bankruptcy process. Too many times people make emotional decisions regarding filing bankruptcy. Its all too common for homeowners to come to attorneys seeking bankruptcy information in an effort to save their home, the same house they have two mortgages on, owe more than the home is worth, and have all around negative equity in. Why do they even want to keep this house? It’s usually because of an emotional attachment to the home they can’t seem to shake. Often times they even know reaffirming their mortgage is a bad idea. I only share this story to illustrate how important it is to separate your emotions from the business of bankruptcy.

It’s also important to understand that millions of Americans go through the same process each year. Chances are, at least one of those friends or family members you don’t want to know about your financial troubles has gone through a bankruptcy themselves. But there is one person who you should never hide any aspect of your financial affairs from, your bankruptcy attorney. Your bankruptcy lawyer has been there before and it’s important to share everything with your attorney about your financial affairs. Talk with your attorney about your feelings and concerns, and listen to his input, as seasoned professionals who understand the bankruptcy process and how to get you back to a financially manageable life (after all that is the main goal of any bankruptcy) he will know what works and what doesn’t.

And most of all, remember there is a light at the end of the tunnel. Filing bankruptcy can help reduce all that stress and helplessness that comes with uncontrollable debt, putting you on the track to financial freedom.

We are having a free bankruptcy seminar on Thursday, January 27th at 7-8pm.  We have been putting on these seminars for a while and we really get great feedback.  If you looking to get a fresh start and eliminate your debt, this is great event for you.  If you are in foreclosure and you want clarity on what you should do with your home, register here.

Every now and again we come across the question, “What can I do if I forgot to add a creditor to my bankruptcy filing?” Unfortunately, this question isn’t really all that uncommon in the world of bankruptcy law.

Every bankruptcy filing should include a comprehensive list of all debts, both secured and unsecured. However, most bankruptcies are filed as a response to a financial crisis and occasionally some debts are inadvertently left off the original filing. Should this situation ever arise it may be possible to add an amendment to your bankruptcy filing to include the missing creditor(s).

The United States Code: Title 11, 523,(3),  states that a debt not listed on the debtor’s schedule can not be discharged if the creditor has a claim to any of the following:

• Fraud
• Theft
• Willful or malicious actions by the filing party
• The creditor would have/could have received monies owed through the bankruptcy estate.

If none of the above circumstances exist, than discharging the unlisted debt can most likely be accomplished. Of course the debt can not be a “new” debt meaning it had to exist prior to the filing guidelines for your bankruptcy. Any debt incurred during or after the point which you originally filed your bankruptcy paperwork will not be accepted or discharged as the debtor’s schedule is viewed as a final ledger of the debtor’s financial standing.

Adding a debt to the bankruptcy filing after the fact will result in additional penalties and fees to the court.

Of course the best course of action is to carefully prepare for your bankruptcy filing ahead of time. Make sure to divulge all your debts when you meet with your bankruptcy attorney and let your attorney determine which debts can be discharged and which can not. Don’t assume that a debt can not be discharged or conceal or hide any debts or financial activity from your attorney. Pulling a credit report 30 days prior to your bankruptcy filing date is also a good way to ensure you haven’t left any debts off your schedule.

One of the most important things you can do as you prepare to file bankruptcy is to stay well organized and keep exact records of all your financial dealings. These documents and expenses are used by the court to determine your financial capacities and what forms of bankruptcy protection you are eligible for.  In simple terms, saving all your receipts is a must when filing for bankruptcy protection. This is because like any other area of law, a bankruptcy hearing requires evidence; evidence in the form of financial documentation.

According to the US Bankruptcy Code Section 727, a bankruptcy discharge can be denied if a debtor has “concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information” that might be used to ascertain the debtor’s financial situation and standing. In other words, the trustee is going to examine all of your assets and expenses. Failing to adequately record and document your financial transactions can create all kinds of problems in a bankruptcy case, ranging from having an expense disallowed in your budget to having your entire bankruptcy case tossed out for failing to adhere to Section 727.

While preserving receipts for all your transactions should go without mention, it happens more often than one might think. Common problems that can arise in bankruptcy filings stem from debtors paying rent with cash, to even handling smaller expenses without receipt such as childcare fees, charitable donations, and even loans. Debtors who pay rent or the nanny with cash (especially to relatives or friends) risk the appearance of “fraudulent transfer” which if suspected can be disastrous on a bankruptcy hearing.

The best practice in any situation, but especially leading up to bankruptcy is to collect receipts for all your expenses, large or small, and let the trustee determine which are meaningful. Always create documentation for loans, even if the loan came from a family member. Otherwise the loan could be included as monthly income and affect your means test score. Keep copies off all your bank statements as well, and be sure to provide all your receipts and financial documents to your bankruptcy attorney prior to the filing date. And of course, if you are unsure about whether or not to include an expense or receipt consult with your attorney beforehand.

In summary: Make sure to put everything in writing before filing for bankruptcy.

Last week I touched on the details of an Order of Relief and Automatic Stay as they related to freezing the foreclosure process during a bankruptcy. This week I’d like to touch on an issue that affects nearly everyone considering filing for bankruptcy protection; creditor harassment.

Perhaps the most uncomfortable aspect of overwhelming debt is the harassing phone calls and threatening letters that accompany late payments and overdue balances. Collection agencies are relentless and it’s highly unlikely they will listen to or care about your unique financial situation. Because these collectors are compensated by commission, meaning they keep a predetermined percentage of the amount collected they have zero incentive to work with the debtor or to ensure that the debt they are attempting to collect is valid. Repetitive calls from aggressive collectors can be extremely stressful and overwhelming during times of severe financial burden. Not to mention many of the activities conducted by some collections agents are downright illegal.

If you are considering filing for bankruptcy you’ve probably already encountered your fair share of unscrupulous debt collectors. The constant harassment and threats may have even contributed to your decision to file bankruptcy. The bad news is, as the old cliché goes, it gets worse before it gets better.

Once collection agents catch wind of your intention to file bankruptcy the harassing calls and letters will intensify. Their goal is to get you to pay some, if not all, of the collection amount before you are able to file your bankruptcy. A person in the process of preparing a bankruptcy can expect collection companies to use just about every trick up their sleeve to get you to pay. Some of their threats and tactics are even illegal but many collections companies persist on the assumption that you, the debtor, won’t have the time or financial resources to challenge their actions in court. However, there are a few things you can do to stop creditor harassment prior to filing.

Know Your Rights

The Fair Debt Collection Practices Act (FDCPA) protects consumers against unfair collections practices. Under the FDCPA you have the right demand collectors stop calling you by writing what’s called a “cease communication” letter. A cease communication letter will tell the creditor you are no longer willing to discuss the debt with them and under the FDCPA they are no longer legally allowed to contact you except to inform you of actions they are taking to collect the debt or to cease collecting the debt. However, they can not contact you daily to threaten or harass you into paying them money. The letter must in written form, must be dated and it is a good idea to mail it certified to ensure confirmation of delivery.

Some unethical or just unconcerned collection agents might still attempt to contact you after receiving a “cease communications” letter. If the collections attempts persist, you have the right to demand the creditor validates the debt. The FDCPA provides that no debt is automatically considered valid, and therefore gives the consumer the right to obtain proof of said debt and dispute the amount, etc.  If a debtor disputes a collection attempt and requests validation the creditor has five days after the initial conversation to send a letter to the debtor with the amount of the debt; the name of the creditor; and a statement that provides the consumer 30 days to dispute the debt before it will be considered valid. If the debtor disputes the debt or amount within the 30 day period the collector is then obligated to obtain verification of the debt. If the creditor refuses and persists in collection attempts the consumer has a right to sue and/or the debt could be excused by a court.

Collections Attempts After Filing Bankruptcy

Once you have filed for Chapter 7 or Chapter 13 bankruptcy protection collection activity should stop. The Automatic Stay provides that all collections activity cease while your case is in bankruptcy. This includes phone calls, letters, lawsuits, and wage garnishments. Occasionally a stray collections agent will call attempting to collect on a debt. You simply need to inform them you have filed for bankruptcy protection, provide them with your case number and attorney’s contact information and hang up the phone. You do not need to answer any collection agent’s questions or discuss the debt with any person other than your attorney.

A recent news article in the Arizona Republic paints a grim outlook for those facing foreclosure in the coming months. While the article doesn’t deal directly with bankruptcy law it does deal with some of the major contributing factors considered when determining whether or not bankruptcy is a viable option. The article discusses how foreclosures in the Phoenix area dropped to a new 32 month low in November, but warns homeowners that the relief to the plummeting housing market is only temporary as experts attribute the new lows to foreclosure moratoriums put in place by the valleys biggest lenders led by Bank of America.

Bank of America pushed back over two months worth of foreclosures to revise internal policy and counter claims involving “robo-signing” of thousands of mortgage documents without first reviewing them. The article goes on to point out that starting in early 2011 Bank of America will have 2 months and over 8,000 foreclosures to catch up on in Phoenix alone. The ultimate message if you are sitting on the verge of foreclosure; be prepared for paperwork early next year. If you didn’t have a chance to read it you can catch the article here.

The question poised by many homeowners staring at foreclosure is; which is the better option, foreclosure or bankruptcy?  Here are so facts to consider:

Bankruptcy Can Halt the Foreclosure Process

For many homeowners facing foreclosure bankruptcy can help. When your bankruptcy attorney files for bankruptcy, whether it’s Chapter 7 or Chapter 13, the court will automatically issue an Order for Relief including an Automatic Stay. The Automatic Stay provides immediate relief for debtors by requiring creditors to immediately cease all collection activities while the bankruptcy is pending. This includes any attempts to foreclose on a house and evict the tenant.

The Automatic Stay stalls the foreclosure process and typically buys individuals three to four months to catch up on missed payments and reorganize their finances. However, Order of Relief doesn’t permanently put a stop to the foreclosure. Home lenders can ask the court for to lift the stay during the bankruptcy process, especially if the homeowner had been served with foreclosure paperwork prior to the bankruptcy filing date. Your bankruptcy attorney is the best source for information on whether or not your bank is likely to seek a lift on the Automatic Stay.

Bankruptcy Can Keep You in Your Home

Not all forms of bankruptcy can offer complete protection from foreclosure. For example, Chapter 7 protection can delay foreclosure, but inevitably results in the liquidation of most all assets. As a result those filing a Chapter 7 bankruptcy almost always lose their home.

Chapter 13 is more effective at helping borrowers keep their homes. Through Chapter 13 lenders are able to make payment plans to repay the arrearage on their mortgage. There are financial qualifications to ensure you are able to make suitable payments for both your current mortgage as well as the outstanding amounts, but assuming you are able to make all the necessary payments you will avoid foreclosure.

Chapter 13 can also provide relief by potentially eliminating second and third mortgages. Home values have fallen to record lows, and many home owners in the Phoenix area now owe more on their original mortgages than the value of their homes. When the first mortgage is secured by the entire value of a home, there may no longer be equity to secure the later mortgages which may change the status of second or third mortgages to unsecured debt. In Chapter 13 bankruptcy unsecured debt takes last priority and often times does not have to be repaid at all.

Bankruptcy May Lessen the Impact on Your Credit

It’s important to acknowledge that both foreclosure and bankruptcy have adverse impact on your credit standing. However, bankruptcy can be the better option for rebuilding credit. First, bankruptcy discharges most all debt while foreclosure does nothing to reduce credit card, auto loan, or other forms of debt which may have contributed to the overall financial crisis one may be experiencing. By filing bankruptcy you are able to start rebuilding healthy credit quicker. Additionally many banks and mortgage lenders look particularly unenthusiastically upon foreclosures and may be more understanding of a bankruptcy when considering an application for a home loan. Even if you are faced with no alternative to losing your home bankruptcy may be the more effective route.

There are many factors I haven’t presented here which need to be considered when looking at bankruptcy versus foreclosure. Among them are the value and equity of the home, the ability to make timely payments and more. If you are facing possible foreclosure and want to learn if bankruptcy could be a more suitable option for you, the first thing you should do is schedule a consultation with a bankruptcy attorney to review the individual merits of your case. Each bankruptcy is unique and working with an experienced bankruptcy attorney who understands the laws surrounding bankruptcy is pivotal to getting back in control of your financial future.

The timing of the date for filing bankruptcy is important.  You have a small exemption of $150 per debtor for money in your bank account on the date that your bankruptcy is filed.  There is no exemption for cash on hand.  If, on the date your bankruptcy case is filed, you are holding a pay check that was not deposited or any other payment instruments such as cashier’s checks or money orders, the trustee could require that you turn them over to pay something to your creditors.  The trustee is entitled to take any sum over $150 in your bank account for the benefit of your creditors.  The trustee will require that you provide them with a copy of your bank account which shows the sum in your account on the date your bankruptcy was filed.  If possible, you should bring that bank statement with you to the Meeting of Creditors (Sec. 341 hearing) which is usually scheduled approximately 35-45 days after your case is filed.  This is only possible if your bank has issued a bank statement prior to your hearing date prior to your hearing date.

Part of the process of preparing for filing bankruptcy includes monitoring your bank account so that the amount in your account ON THE DATE YOUR BANKRUPTCY CASE WAS FILED will not exceed the amount which is exempt under the law ($150 per debtor if you are using Arizona exemptions).  The following steps should be taken to help you avoid losing money that could have been used to pay your bills:

• Stop using checks to pay bills at least 2 weeks prior to filing bankruptcy.  Remember you have no control over when the payee will cash or deposit your check and if the check has not cleared your bank, the bank will report exactly what was still in your bank account.  It is not wise to simply write checks which are sent out to various payees because the checks may take from several days to several weeks to clear the bank.  Until the checks are actually paid by your bank, that balance is still counted as being available to you in your bank account.  Thus if you were to file bankruptcy at a time during which you have several outstanding checks, the trustee will be entitled to take that amount over $150.  Then when the outstanding checks are presented to your bank, you will have overdraft fees or bounced checks.
• Purchase money orders or cashier’s checks to pay your regular bills or buy groceries, gasoline etc.  This will result in an immediate debit to your account and also provides a convenient receipt.  However, don’t hold the money orders or cashier’s checks; send them out via mail before the date your bankruptcy case is filed.  If you still hold them, it may be possible for you to get cash by seeking a refund from the issuer.  There is no exemption for cash on hand when filing bankruptcy.
• If you use debit cards to pay for anything, the money will come out of your account more quickly than when paying with a paper check; however, it doesn’t happen instantly so be careful to monitor your account during the last few days before filing bankruptcy.
• Schedule the date for filing the bankruptcy case on a date just prior to your next pay day so that your pay check is not deposited just before your bankruptcy case is filed.
• If a large deposit has been made to your account shortly before filing your bankruptcy, the trustee may ask you to document how that money was spent.  You may be asked to provide receipts for the items you purchased or even a list of what you purchased.
• You can monitor your account and purchase money orders or get cashier’s checks for the bills you have to pay and send out those money orders and cashier’s checks prior to the date your bankruptcy is filed.

There were 1,596,355 bankruptcy filings in the Unites States in fiscal year 2010.  Bankruptcy filings have risen almost 14 percent from last October 31st 2009 to September 30th 2010. Maricopa has an increasing rate also.  Seven of every thousand people in Maricopa County filed bankruptcy last year.