Riverside County Bankruptcy Lawyer Blog

Bankruptcy filings are increasing and will most likely top 2009 number of 1.4 million

August 17, 2010 | by Christopher Hewitt

Personal bankruptcy rose 9% in July according to the Wall Street Journal. That is a anumber of close to 138,000 in one month leading me to believe that 2010 will be the highest number of filings in five years. 2009 saw 1.4 million people file and we are already at 900,000 for 2010. For people who have had the credit rating reduced and are having a hard time finding a credit source, bankruptcy becomes one of the only ways to get out of a financial mess. The 2005 bankruptcy changes have had little impact in terms of reducing the number of filings. The main purpose was to force people into chapter 13 but creating the means test and the % of chapter 13’s have not drasstically changed and many people still qualify for chapter 7 relief.

California has almost jumped 30% in the nmber of filings as opposed to a year ago. With Riverside County having 15% unemployment I don’t see the trend stopping any time soon. One out of every 125 households has filed for bankruptcy protection in the last year. It is beoming apparantly obvious that bankruptcy has lost some of the stigma that was traditionally associated with it. My opinion is that it inevitably becomes a stimulous to the economy since consumers get to spend again instead of putting all there money into interest fees that have skyrocketed even while banks are borrowing money at less than 1%. 70% of our economy is based on consumer spending and sometimes being able to walk away from deficiency judgments and potential wage garnishments is better than contributing to bank profits when the banks are failing to put that money back into our communities. If you are paying to much in interest rates or are facing foreclosure or other financial problems, talk to a California Bankruptcy attorney who practices in all the federal districts.

Should I continue to pay on an underwater house or walk away and file bankruptcy

August 17, 2010 | by Christopher Hewitt

Everyday I have clients that wonder whether they should continue to make payments on a home that has lost so much value. I think you need to consider whether you are in an interest only loan and the payments will reset to something that is not affordable. The other consideration I take into account are what the prices for a rental would be and if its similar then potentially staying in your home is a better bet depending on how far behind on your mortgage or upside down you are and therefore the length of time it will take to build equity. As a bankruptcy attorney I believe it is imperative to go over all options with a client and let them make a informed decision.

FTC imposes new rule on Debt Settlement Industry

August 16, 2010 | by Christopher Hewitt

According to the new FTC Telemarketing Sales Rule debt relief companies who receive inbound calls are also now prevented from receiving up front fees until a debt is settled. Many debt settlement companies charge upwards of 15% and charge this before anything is paid to your creditors. Meanwhile your interest rates are rising, late payments are accumulating, and other fees are being asessed. Essentially there will be no frontloading payments only to have you sued by creditors inevitably unless you can pay quick enough on a settlement and depending on your assets a company might not want to settle. Unfortunately many companies do not truly look into whether debt settlement is the right option and consumers are constantly bombarded by advertisments of promises to settle at 50% of what is owed and saving their credit. Typically by not paying your credit cards for months on end you will be offered a settlement to pay as a lump sum, you end up with late payments and settled for less than amount owed on your credit report for 7 years. While its true that bankruptcy stays on your credit report for 10 years, by the time you settle all your credit cards if you have a lot of debt it will take 2-3 years and then it will be reported for 10 which is virtually the same thing.

Fortunately debt negotiations will still be a viable alternative for a bankruptcy attorney to review since attorneys aren’t making telemarketing calls or receving inbound calls from advertising. Clients that meet with a debt relief agent in person are not subject to the rule but some will still try to charge up front fees that are egregious fees, this at least stops the deceptive phone campaigns that are being waged across the country. I do believe in debt settlement for some people which is not a popular position amongst bankruptcy attorneys as many have seen the perils that it has had on clients who have wasted their money only to end up in the same situation but with much less of a fresh start. I understand that but also see it as a tool for people who have access to quick funds through a new business or have the ability to get a loan from family and who might otherwise pay more over a long Chapter13 plan.

The new rules ensures that companies disclose tax consequences associated with debt settlement, stops them from using bad statitstical data on past successes by not including drop outs and other important considerations, and makes sure they explain the time it will take based on current payments and other important disclosures. These are all things that I have been doing and assessing with any client that considers having me negotiate with their creditors. Debt settlement can be a risky venture to take although it can be very worthwhile if done right and should come with a list of disclosures and verifable statitics that can be enforced through fines and penalties assessed by the FTC. It is a good day for consumers and hopefully this will direct some of the people who really should be considering filing for bankruptcy instead of being lured into a false illusion of debt settlement based on small savings and 3 years plans that often fail. Talk to a qualified riverside bankruptcy attorney to see if debt settlement is a viable option and then learn about bankruptcy.

Lawsuit or summons in California by Hunt and Henriques?

August 12, 2010 | by Christopher Hewitt

Hunt and Henriques seems very trigger happy to sue but not so diligent in taking care of their lawsuits. If you have been sued by Hunt and Henriques or recently received a summons, there are several options available. You can file a chapter 7 or chapter 13 bankruptcy. You can try to negotiate with them before they get a judgment and most likely can get 70% settlement on what you owe. You can fight the lawsuit and hope they don’t follow the local court rules which isn’t as unlikely as you’d imagine. This is a major debt collector structured as a law firm, but one that is hard to get a hold of and one that doesn’t necessarily show up with the right documents to court.

A chapter 7 bankruptcy if you qualify will wipe out the debt completely. A chapter 13 will allow you to pay pennies on the dollar or if you have a lot of assets or money at least stretch your payments over 3-5 years depending on your income level. Hunt and Henriques is the biggest collector for Citi and if you spend any time trying to get a hold of them you will see why I believe optimism should prevail in the fact that you’ve been sued by a debt collector who doesn’t follow through with all their cases.

Cramming down a car in Chapter 13 bankruptcy

August 12, 2010 | by Christopher Hewitt

Chapter 13 has some powerful aspects that can really help people with financed vehicles. In a chapter 13 if you owe more on your vehicle than the current market value(blue book) then we can restructure your financing so that you pay on what the car is actually worth. This only works if the financing is more than 2.5 years old so you can’t buy a new car and walk off the lot and get it crammed down, but it works for a lot of people and can save you quite a bit of money.

I have had clients that have been able to fund a chapter 13 plan just in the savings that they made by cramming down their car. If you owe 20k on a car and its only worth 10k then just the money you save in financing would give you 200 a month to fund a chapter 13 plan.

Although Chapter 7 can be a faster way to get debt free, a chapter 13 with its cram downs and lien strips on real property can be a valuable way to put yourself in a great position to come out ahead when your chapter 13 debts are discharged.

Midland Funding and what to do if you are served.

August 9, 2010 | by Christopher Hewitt

Midland Funding is a big debt buyer and they typically buy deficiencies on cars that were repossessed, sold, or turned in. They buy the debt for 3 cents on the dollar and pay attorneys contingency fees to try to collect it. If you receive a law suit from them and they serve you, I can give you advice as it regards bankruptcy or trying to work out a settlement. Don’t roll over and let them get a default judgment and collect it via wage garnishment of a lien on real property. Fight back through aggressive representation and pay them a lot less than what they claim. A deficiency is an unsecured debt and will be treated the same way in bankruptcy as any other unsecured debt. Don’t let there aggressive tactics back you into a corner. Know your rights.

Foreclosure comes with tax consequences that bankruptcy can eliminate

July 21, 2010 | by Christopher Hewitt

Don’t allow a bank to foreclose on your home without first talking to a bankruptcy attorney. Foreclosure can come with huge tax consequences that could be eliminated in bankruptcy. When a mortgage is written off you can potentially get a deficiency judgment but there is also a likelihood of receiving a 1099 at the end of the year. If you are allowing a home to go into foreclosure you are probably not in a position to pay income taxes on the amount that the bank did not collect on your mortgage due to the foreclosure. The amount that the bank lost is treated as income to you and paid at your normal tax rate. This can easily double or triple your tax liability in the following year. If you surrender your house in bankruptcy there will be no tax liability.

Riverside Small business bankruptcy skyrocket in 1st quarter of 2010

July 21, 2010 | by Christopher Hewitt

Riverside and Sacramento metro areas had more small business bankruptcies then any other California localities according to a new article by Equifax. California led the U.S states in small business bankruptcies . This was a 15% increase from the last quarter. Small business throughout California are experiencing the impact from the current economic conditions. I feel that this is going to have a huge impact on individual bankruptcies as well as it is typically small businesses that lead us out of a recession and do a lot of hiring. Credit conditions are still difficult and especially difficult for small business. With the increase in bankruptcy filings being up the banks are going to keep their lending standards tight unless incentivized by the government to start lending to small businesses again.

Unfortunately with analyzing other trends in housing that have recently come out my belief is that this increase in bankruptcy filing is small businesses will not slow down. New construction is down and many of the small businesses in Riverside County are based on growth and construction. Bankruptcy is a viable option to restructure debts as well as to liquidate and protect yourself from creditors. Talk to a Riverside bankruptcy attorney if the current economic conditions have affected your business

Failed loan modifications can be fixed in a chapter 13 bankruptcy

July 20, 2010 | by Christopher Hewitt

As a riverside bankruptcy attorney I have been getting more frequent calls from people who have been trying to work with their lender in getting a loan modification. In order to qualify for a loan modification lenders often tell home owners that they cannot be caught up with their payments. Many homeowners have fallen behind on payments in hopes of getting a loan modification which often don’t ever come to realization. Banks are notorious for stalling on these loan modifications, losing paperwork, having you constantly send in new pay stubs and other qualifiers when it seams like there only motive is to drag this housing crisis out. Inevitably the day comes where the lender lets the client know that there is a notice of foreclosure pending and potentially a trustee sale. Fortunately there is a solution.

Chapter 13 Bankruptcy allows people to put their late payments(arrearages) into a chapter 13 plan and pay off their late payments over a 3 to 5 year period. The filing of a chapter 13 bankruptcy will stop the foreclosure process immediately and give you time to take the full amount that you are behind on your mortgage and pay it back over either 36 or 60 payments depending if you are above or below the median income for your household size. You can also pay pennies on the dollar to your unsecured creditors and discharging all those debts once your plan is complete. In order to qualify for a chapter 13 bankruptcy you will have to have enough disposable income to pay off your arrearages over the payment plan period. This usually means having a current income that pays your average expenses and leaves you with enough money to fund the plan. Don’t let a failed loan modification lead you to believe that you can’t keep your house. Often times bankruptcy is a much better option and you can realize a greater benefit. You can even get rid of a second or third mortgage in bankruptcy if your house is worth less than you owe on the first. Talk to an experience riverside county bankruptcy attorney and know your options before you allow the bank to take your home.

Hunt and Henriques

July 7, 2010 | by Christopher Hewitt

I have had more and more clients call me about Hunt and Henriques.

Hunt and Henriques are one the biggest debt collectors for Citi in California.
They have a few attorneys but a lot of collectors and are essentially a collection company posed as a law firm. They do file suits and I have had many clients sued by them but they take their time in trying to collect the debt before they bring it to a law suit. They are very unorganized and hard to deal with. They don’t answer their phones some days, they don’t call back. I have dealt with them on the debt settlement side and Hunt and Henriques can be bull headed and are one of the hardest companies to negotiate good settlements on. Even when my clients have been served by a Hunt and Henriques law suit, they still don’t answer their phone and deal with the issues. Filing bankruptcy on cases that they handle makes me happy as I hate debt buyers and collectors that act in the way that they do. They are very disorganized and it might even be a decent idea to fight them in court over alleged credit card debt as I would imagine they don’t show up with the right paperwork etc. I had one case where my client was 3 days away from getting a discharge and Hunt and Henriques wasted their money on a filing fee and process server to serve them 3 months after we filed bankruptcy.
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