Suleman filed for Chapter 7 bankruptcy to try and clear some of her outstanding debt (which was revealed to be around the $1 million mark) but her case has been dismissed because she did not properly complete her filing in the required amount of time. The court documents in her case also showed that Suleman has $50,000 in assets.
]]> The Chapter 7 filing put a temporary freeze on the foreclosure proceedings that threatened Suleman's home. With the dismissal, though, the foreclosure process can move forward. She is also on welfare -- and has been for at least a month -- and also garners roughly $2,000 per week in food stamps.Suleman's landlord says he has not been paid rent in 11 months, and claims that the troubled celebrity owes him $483,000. He has brought legal action against Suleman to collect the late payments, and their case will be heard on June 14.
No matter what you may think of the plight of a celebrity, these types of stories (albeit without the extreme circumstances) are common for many average Americans who are simply trying to get their finance in order. Suleman said that filing for Chapter 7 was an attempt to earn a "fresh start" and that is exactly the goal of filing for bankruptcy.
Granted, there is a cost -- your assets could be liquidated and it will hurt your credit score for some time. But these pale in comparison to being spared the harassing calls of creditors and to know that you are no longer in a financially precarious situation. Bankruptcy helps hundreds of thousands of people every year to reestablish their financial footing and get a new lease on life.
Source: Los Angeles Times, "'Octomom' Nadya Suleman's bankruptcy case thrown out," May 16, 2012
]]>It is an impressive streak that demonstrates the growing financial health of both the city and the state as the recovery from the economic tumble of 2008 continues. But there is even more good news for Arizona -- the state posted the largest decline in mortgage delinquency rates for the 12-month period ending in March in the entire country.
]]> The report -- which deemed someone "delinquent" on their mortgage if they were at least 60 days past due on their payment -- said that 6.86% of mortgages were delinquent in March, a stark difference from March 2011 which had a mortgage delinquency rate of 9.14%.Two major factors in the dramatic drop of the mortgage delinquency rate are a decline in the joblessness rate and the consistent rise of home prices in recent months.
However, there is still work to be done. The Arizona mortgage delinquency rate is still above the national average (5.78%) and we are still in the bottom five states for worst past-due mortgages. In addition, there are still plenty of Arizona and Phoenix residents that are struggling to prevent their home from entering foreclosure, even with this good news.
Source: Arizona Central, "Arizona's mortgage improvement fastest in U.S.," Russ Wiles, May 9, 2012
]]>Well now there is some good news: there is a movement to reform debt collection laws so that they are more stringent on the collector and more favorable for the in-debt party. And, if successful, it could spur more changes to the Fair Debt Collection Practices Act at the state and federal level.
]]> Massachusetts is pioneering the cause, as their Attorney General has spent about a year fine-tuning her proposal. There are four new rules being discussed.First, it will be illegal for a collector to attempt to collect "time-barred" debt without clearly telling the in-debt party that the collector cannot sue to induce payment. "Time-barred" debt means that the debt has passed its statute of limitations for collectors to sue the insolvent party.
Along the same lines, a collector must complete or at least attempt to follow through on any action threatened. Some collectors would threaten legal action on those with "time-barred" debt, even though they knew they had no legal right to pursue the action. That would be illegal in Massachusetts under the new laws.
Maybe the most significant change is that collectors will be limited to two calls or text messages per week to insolvent individuals. This will spare many people the harassing and often-unrelenting calls by collectors. Lastly, the new laws in Massachusetts will require collectors to verify the validity of any debts. This will also apply to third-party collectors who purchase a person's debt.
Source: Huffington Post, "Bad News for Most Debt Collectors and Good News for Consumers," Bill Bartmann, May 8, 2012
]]>Falling one short of 2,000 filings, Phoenix bankruptcies last month decreased significantly from April of last year, which saw 2,748 filings. In addition, there were 3% fewer filings last month than in March for all of Arizona. The numbers for the state don't really compare to the national scope. Across the country, there were 11% fewer bankruptcies in April than compared with March -- meaning the bankruptcy rate here is still a bit of a worry.
]]> And that can't be stated enough. It is easy to see this data and call it "good news," but the reality is that 1,999 people in Phoenix were in financial disarray and needed to declare themselves insolvent in order to escape their debt. Imagine the stress it could cause - your debt, may it be by credit cards, student loans or a mortgage, outnumbering your assets.Thankfully, the bankruptcy process can help people in dire financial straits overcome their seemingly-inescapable situation. Chapter 7 is a straightforward way to go about clearing some of your outstanding debt, and 87% of the April filings in Phoenix were Chapter 7. This type of bankruptcy discharges many of the debts a filer has, though some are still exempt.
Of course, there is still a cost. When filing Chapter 7, a trustee will investigate your situation and liquidate some assets to repay creditors. However, it pales in comparison to the financial burden that could be lifted from your shoulders by seeking personal bankruptcy.
Source: Arizona Central, "Valley bankruptcy filings decline in April," Russ Wiles, May 7, 2012
]]>Given the last four years, though, many students who believed getting a post-collegiate job would be a formality have been shocked by the reality. Student loan debt is a continually-rising issue in the U.S. and it has to be organized and dealt with by the in-debt party. But that can be a tricky act to fulfill if the lenders you are in debt too are making false claims.
]]> A federal class action suit by a former college student (who has four loans to pay off) accuses Citibank, Discover Bank and The Student Loan Corporation of intentionally misleading him into thinking his debt had been reduced.Allegedly, the companies reduced the monthly payments the plaintiff had to make under the guise of a reduced interest rate. It sounds like reorganizing someone's debt so that the in-debt party can afford his or her installments, right?
Though the monthly payments did decrease, they only represented a reduction in the payment towards the principal debt, with no change in interest rate. In other words, the reduced monthly payments only extended the length of time the plaintiff would have to pay off his debt, racking up greater quantities of debt due to the interest.
If true, it is a devious tactic that is all too common for many debt collectors. Stories like this show why the Fair Debt Collection Practices Act is an important piece of legislation, protecting borrowers from fraudulent, misleading, aggressive or harassing behavior by collectors.
Source: Courthouse News Service, "Sneaky Banks, Student Loan Corp. Keep Students in Debt, Class Claims," Adam Klasfeld, April 30, 2012
]]>Accretive, a company that collects outstanding hospital bills from patients, is being accused of aggressive, underhanded and illegal tactics for collecting such debt - allegations similar to those charged against credit card debt collectors under the Fair Debt Collection Practices Act.
]]> The incident is out of Minneapolis, where Fairview Hospital ended its relationship with Accretive after allegations were made that the collection company pressured patients to pay for medical procedures before they were performed. Even after they were done, the agency would approach patients while they were recovering to try and induce payments.As Minnesota's Attorney General put it, the representatives of the collection company would pressure patients "at their most vulnerable moments," likely when they were groggy or feeling weak from the treatment. If these sneaky and deplorable tactics are proved to be true, there could be a wave of FDCPA-related lawsuits against Accretive.
The complaint against Accretive says that the company actually discussed, through emails, how to get patients to pay up before a medical procedure was performed on them.
Source: Star Tribune, "Billing company denies it pressured Fairview hospital patients," Heron Marquez Estrada, April 29, 2012
]]>Some occupations may seem impervious to bankruptcy: the income afforded would have many believe bankruptcy was never an option. Movie stars, sports stars and successful tech innovators have this stigma - but being a judge is another job that you rarely hear of being bankruptcy-prone, especially federal judges, who supposedly make about $174,000 a year.
]]> As a sign of these tough times, one federal judge in California has filed for Chapter 7 bankruptcy after his debt ($895,292) surpassed his assets ($833,426). The trustee appointed to his case plans to sell his $1.2 million dollar home in Los Angeles County to help pay off some of the federal judge's outstanding debt.No one is immune to the perils of poor money management as this story shows, and while that may be a disheartening thought, there is hope for the hundreds of thousands of people who suffer from a seemingly-unending and inescapable amount of debt. It doesn't just have to be Chapter 7 -- filing for bankruptcy, with the right support and appropriate legal counsel by your side, can help you bring an end to your financial nightmare and move on with your life.
Source: Wall Street Journal, "Federal Judge, 'Like So Many Others,' Files for Bankruptcy," Joe Palazzolo, April 26, 2012
]]>Sometimes, though, there are major expenditures that must be paid off. One example of an abrupt expense is a sudden trip to the hospital or a major medical procedure you were not expecting to have done. Medical bills can be tough to pay off, but hospitals are starting to offer specialized credit cards that pay for a patient's medical bill.
]]> The practice is increasingly prominent in the Carolinas and in the southeast. A company based in the region, called AccessOne, offers credit cards to patients who voluntarily agree to the terms of the card. The card can be used to pay for their medical bills, and no interest is charged on the account -- but only if the debt is paid back within one year. In addition, the interest rates on the card can rise for late payments, just like with a regular credit card.AccessOne says they do not hand any information over to collectors, instead giving the account information to the hospital where the patient stayed.
The intentions of this specialized card are good, but the potential for further financial harm posed by the card is real. One resident in the region was late paying her medical bill, causing an interest rate jump from the original 9.25% to 18%. The card, as advertised, helps patients manage their medical bills, but there is still the potential for the holder to suffer from credit card debt.
Source: News & Observer, "Credit cards issued for debt collection," Ames Alexander, April 24, 2012
]]>The organization looked at the amount of foreclosures and short sales in and around Phoenix for this past March, and the suburban areas of the city had high numbers. The effect was especially harsh in the East Valley, where more than 2,600 homes were foreclosed on. By comparison, West Valley had roughly 1,800 foreclosures and had the three lowest hit suburbs in Phoenix.
]]> Those three suburbs were Glendale, Peoria and Surprise; which had 540, 414 and 413 foreclosures or short sales respectively in March.To the east, Mesa had 919 foreclosures or short sales. Scottsdale, Chandler, and Gilbert followed up that high with 676, 637, and 595 foreclosures or short sales.
Being forced into a short sale or having your home foreclosed is obviously a very serious situation. Both damage your credit score immensely, though foreclosures are generally more harmful than short sales. It is critical that you consult proper legal representation when the possibility of either process becomes a reality. Your counsel will help you complete the sometimes complex bankruptcy forms and help you get back on your feet.
Source: Phoenix Business Journal, "East Valley sees more short sales, foreclosures during March," Mike Sunnucks, April 16, 2012
]]>Since 2001, the Labor Department data shows that tuition jumped 57% after inflation. It is a staggering increase for the decade-long period, only made more astounding when you consider that people aged 25 to 34 experienced a 7% decrease in their wages during the same slice of time.
]]> The combination of factors means less up-and-coming Americans are able to afford their homes or even get a mortgage. "The explosion in student debt is a development that calls for a lower homeownership rate," said a financial analyst who studied the Labor Department's data.Add in the fact that national student debt surpassed $1 trillion in March (greater than the national credit card debt total), and the result is many young adults are considering a Chapter 7 or Chapter 13 bankruptcy filing to deal with their financial situation.
It is important to note that entering bankruptcy will not necessarily wipe away your student debt -- it is rare to have college or education loans discharged through Chapter 7 or Chapter 13. However, if your debt causes extreme hardship (and you have an experienced bankruptcy attorney by your side) you could be absolved of the student debt.
Source: Bloomberg, "'Explosion in Student Debt' Drags Down Housing: Chart of the Day," David Wilson, April 16, 2012
]]>Whether you are considering bankruptcy or not, recent numbers show that March bankruptcy filings in Phoenix fell compared to both 2010 and 2011. The metro Phoenix area had 2,074 filings in March, a sharp decline of about 26% compared to the 2,813 filings in the same month last year (in 2010, there were 3,063 filings).
]]> In fact, the entire state of Arizona has a 14-month streak going of having less year-over-year bankruptcies in that month.The housing market continues to play a major role in these numbers. Due to the unstable market, people are tightening up their wallets and clearing unnecessary financial burdens as much as possible - or just outright avoiding loans.
Outstanding debt in all 11 loan categories monitored by the American Bankers Association declined at the end of last year. "You can't get a better consumer-credit report card than this," said a leading economist for the ABA.
Another impact the housing market is having is on real estate agents themselves. The difficulties in making a sale in this market have forced more real estate agents to file for bankruptcy.
These numbers point to a reluctance to seek bankruptcy, which is a choice anyone is free to make. However, delaying the issue often makes the situation worse. You may have to liquidate your assets or lose important pieces of property. For those in debt, seeking help to start a Chapter 7 or Chapter 13 bankruptcy filing is the first step towards alleviating the stress your debt is causing you.
Source: Arizona Republic, "Phoenix bankruptcy filings still declining," Russ Wiles, April 5, 2012
]]>The combination of these clauses condemns holders to the likelihood that a card issuer could seek discharged, paid or possibly fabricated credit card debt with barely any proof. An issuer would merely need to show you have used the card once and that there is some apparent debt that they claim you owe, and they could pursue litigation against you for outstanding debt. HB 2664 places card holders in an unknowing position of potential debt, which clearly favors the issuer -- a situation that Phoenix Representative Debbie McCune Davis is unhappy about.
]]> Davis criticized HB 2664 of achieving its passing vote through unjust circumstances. HB 2664 was originally denied by the Arizona Senate Banking and Insurance Committee, until the panel reviewed the decision and passed the bill. Davis filed a complaint with the Secretary of State accusing an unregistered lobbyist of pushing the committee to allow HB 2664 to go through.She didn't stop there, slamming the dangerous possibilities the bill allows, such as giving debt collectors "the power to accuse almost anyone of owing a debt without having to show a contract."
"If this bill passes, a debt buyer would be able to sue a person with little evidence," she said. "The lawsuit could proceed if the company had something as simple as a spreadsheet showing a name and an alleged amount due or a generic credit card agreement -- even if the debt has already been paid or dismissed."
Source: Courthouse News Service, "Credit Card Companies Get Kiss From Arizona," Jamie Ross, April 9, 2012
]]>The issue of collecting debt in a legal manner, though, has also heated up in recent months. Bank of America was faulted in a $25 billion robo-signing settlement, and now another major player in the debt collection industry -- Encore Capital -- is being cited for the same illegal debt collection practice.
]]> Based in San Diego, Encore Capital is accused of robo-signing affidavits by the attorney general of West Virginia and then using those documents to obtain default judgments against borrowers in the state.Robo-signing is an act by a financial institution where an employee signs off on papers -- may they be foreclosure, credit card or other debt documents -- without confirming or knowing the details of the document. These falsified documents are then used in any legal action against consumers.
Simply put, robo-signing is the mass production of false legal documentation. It is a money-driving scam that can cause much financial stress for unsuspecting borrowers. With debt collectors reaching out to one in every seven Americans for outstanding debt, robo-signing is an egregious and fraudulent breach of the Fair Debt Collection Practices Act.
If you feel you are being unjustly pursued for debt that either doesn't exist, was discharged or is paid off, consult an attorney with experience handling abusive debt collectors.
Source: Huffington Post, "Encore Capital, Debt Collector, Sued For Alleged Robo-Signing Practices," Jillian Berman, Mar. 12, 2012
]]>The report shows that 7.58% of U.S. residential loans were delinquent as 2011 came to a close. That pales to the average delinquency rate we saw before the bubble burst, which was about 5% -- but it's also a far cry from the staggering 10% delinquency rate homeowners were experiencing in 2010. However, there are still housing fears presented by the report as roughly one in every eight homeowners (12.63%) were in delinquency trouble or in foreclosure.
]]> Falling behind on your home loan creates two adverse reactions: it puts your credit score at risk, and you can be subjected to late fees that place further increases your financial burden. A prevalent credit score provider, FICO, says that a delinquent borrower risks as much as a 110-point hit to their credit score if they are 30 days late on mortgage payments.It could take your credit score take anywhere from nine months to three years to recover from such a fall, FICO says.
The effects on credit scores are bad enough -- but the reason a homeowner is delinquent in the first place is because they are financially strapped. A borrower usually gets a grace period for making up outstanding debt, but when your mortgage payment surpasses this window of opportunity, late fees are applied. One home loan professional said these fees range from 2% to 5% of the monthly amount, placing additional stress on the homeowner.
While the descent of the national mortgage delinquency rate is nice to hear, many Arizona homeowners are in dire straits financially. Late mortgage payments affect your credit score, which hurts your ability to obtain new credit or loans, which makes it even more difficult to pay off outstanding debt.
The cycle is vicious, but many people have decided to break the trend and apply for bankruptcy. Bankruptcy can protect your home from foreclosure and give you the financial freedom you desire to live a less stressful life.
Source: New York Times, "Paying on Time," Vickie Elmer, Mar. 8, 2012
]]>A recent study was done by the credit information company TransUnion, featuring 4 million Americans. Each had a minimum of one car loan, one credit card and one mortgage. After studying their payment habits, TransUnion found that a mere 10% of participants were late on their car loan payments while paying their credit card or mortgage bills. By contrast, 39% were late on their mortgage while up to date on the other two, and 17% were delinquent on credit cards.
]]> So why are cars the new priority when Americans manage their bills? There are three big reasons. The first is more common sense than financial phenomenon. "Today, most people need a car to get to a job or to look for a job, and that has made cars a priority," said TransUnion's vice president of research and consulting. Making car payments facilitates a person's ability to work, and thus pay other bills.Another reason is the housing market. In 2006 when the same study was performed, the payer's priorities were flipped - only 3.6% were late on their mortgage. That's because the value of homes at the time were much higher than today. Given that, currently, the mortgage on many homes is greater than the actual value of the home, people are putting their money elsewhere first.
Last and certainly not least is the in-debt party recognizing what it can get away with. The foreclosure process can take years to fully develop. Delinquent car loans, though, can lead to repossession within 90 days. It's a combination of the first two reasons -- cars are more important to people and they help with work, while homes have less value and are more lenient with outstanding debt than car payments.
Source: Minneapolis Star Tribune, "Americans put a priority on staying current on the car loan, a study finds," Pallavi Gogoi, Mar. 29, 2012
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