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Beware Cut Rate Bankruptcy Advice

Wednesday, May 16th, 2012

Our elders always told us, “You get what you pay for,” but as we get older we learn that this advice isn’t always true. Sometimes you get more than you bargain for, and sometimes less. So how can you know if you are getting the best bankruptcy legal services for your money? The answer is actually simpler than you think. Below is a discussion of three little pigs attorneys who charged three different bankruptcy rates: the expensive rate, the market rate, and the discount rate.

The Expensive Bankruptcy Attorney

A consumer bankruptcy attorney who charges higher fees is telling you an important detail about his or her legal services. The expensive attorney does not need your business. The expensive attorney is often very experienced in consumer bankruptcy cases, but has committed his or her time to some other type of work. This is often true of bankruptcy attorneys who work for creditors, like banks and credit card companies. Sometimes Chapter 7 bankruptcy trustees represent bankruptcy clients, but most of their time is spent on trustee work. Sometimes bankruptcy is just a “side business” that the attorney can “take or leave.” Obviously the expensive attorney’s main focus is on something other than representing you.

The Discount Bankruptcy Attorney

The discount bankruptcy attorney needs your business either because he or she has started a new bankruptcy practice or because business is slow. A new bankruptcy practitioner is obviously a dangerous gamble. This attorney does not have the experience with the bankruptcy code, the local rules, the bankruptcy court judges and trustees, or the local creditors to reach the best outcome for the bankruptcy client. Practicing in the bankruptcy profession is not just a matter of knowing “what to do,” but the best result often depends on knowing “how to do it.” New bankruptcy attorneys simply do not know the “how to” of the bankruptcy practice.

A slow bankruptcy practice should also be a warning sign. Ask yourself, “Why is this firm offering a discount rate?” Is this attorney not getting referrals from other attorneys? No recommendations from previous clients? Why not? There may be reasons for the discount rate that could affect your case.

The Market Rate Bankruptcy Attorney

Successful consumer bankruptcy attorneys know what their competitors charge and will not over charge or under charge their clients. The market rate bankruptcy attorney knows the value of his or her services, and will confidently represent you in bankruptcy court. Most bankruptcy fees are simple and the process at a market rate attorney’s office is very efficient. This attorney can quickly identify issues with your case, recommend a course of action, and will zealously represent you. The market rate bankruptcy attorney has open lines of communication with the bankruptcy trustees and creditors, and can work quickly to achieve the best possible result.

Just like Goldilocks discovered, market rate bankruptcy services is just right! Your best option is an experienced bankruptcy attorney that charges a fair price.

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The Fair Credit Reporting Act and Bankruptcy

Monday, May 14th, 2012

The cornerstone of the federal bankruptcy law is the discharge at the end of the debtor’s case. The discharge provides the debtor with a new opportunity for a fresh financial start without the encumbrance of overwhelming debt. But a “fresh start” is not possible if the debtor continues to be penalized by past financial mistakes. Consequently, the federal law not only forbids a creditor from seeking to collect on a discharged debt, it also directs credit reporting agencies to report the debt accurately to avoid any indirect penalty.

The Fair Credit Reporting Act (FCRA) is a federal law that directs the collection and use of consumer credit information by credit reporting agencies. The FCRA contains two powerful provisions that debtors should know after receiving a bankruptcy discharge. The first is that credit reporting agencies are to list a discharged debt as “discharged in bankruptcy” with a “zero balance.” Any negative activity (delinquent payments, etc.) prior to the date of the bankruptcy filing can remain on your credit report for up to seven years. However, any negative information listed on your credit report that occurred after the date of the bankruptcy filing is a violation of the bankruptcy law and should be removed. This includes a post-filing transfer of the debt to a collection agency.

The second powerful FCRA provision is the amount of time a bankruptcy filing can remain on your credit report. The FCRA states that a bankruptcy can remain on your credit report for ten years after the date the bankruptcy case was filed. Note that the ten year period starts from the date the case is filed with the court, and not from the date you receive your discharge. This limitation is the maximum time the bankruptcy report can remain on your credit report.

The Fair Credit Reporting Act directs credit reporting agencies to maintain simple procedures for disputing inaccurate information. Once you file a dispute, the credit reporting agency must verify the accuracy of the information or remove it from your file. You are entitled to one free credit report each year by contacting the individual credit reporting agency. While there are dozens of these agencies, the most popular are Equifax, Experian, and Trans Union. A free credit report can be obtained from each of these credit reporting agencies by going to a joint website at: http://annualcreditreport.com

Understanding your credit report rights is an important part of your fresh start after bankruptcy. Debtors who correct credit report errors and rebuild their credit histories through responsible use of credit can quickly improve their credit scores to average or above average levels. If you need specific advice on improving your credit after bankruptcy, consult with your bankruptcy attorney.

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5 Ways to Save Money and Keep Yourself Out of Bankruptcy

Sunday, May 13th, 2012

Most people who consider filing a Chapter 7 Las Vegas bankruptcy already have debt problems that require a professional’s help. However, there are ways people can cut costs here and there that can really add up. Here are five examples:

(1)  Buying brand name products when generics will do. Brand name literally sells just that: a name. If you’re trying to curtail excessive spending, switching to a generic equivalent can save quite a bit of cash. The best situation in which to do this is where Americans spend most for brand: prescription drugs. Generic drugs are identical to their branded equivalents, which is why drug companies spend so much on advertising now—they don’t want consumers to realize they have alternatives.

(2)  Eating out too much. Restaurant spending can quickly cut into your budget, especially because eating out is such a relief from cooking all the time. That said, even taking leftovers home is more expensive than staying in.

(3)  Not changing vices and bad habits. It’s hard to quit smoking, but the cost of tobacco adds little benefit and increases the likelihood of reducing your long term health. Frequent alcohol consumption is also a bad habit because it can lower your inhibitions to make you want to drink (and sometimes smoke) more. Gambling is also a money suck, and not just slots and high stakes poker. It’s the small stuff that gets you, especially lotteries, which state governments use to supplement their revenues. The odds of winning the lottery are so terrible, the tickets are worthless.

(4)  Overpaying for insurance. Many people pay high premiums to insure themselves from situations in which they won’t file a claim. Avoid buying policies with low deductibles. They might make you feel more secure, but if you won’t report an accident involving slightly higher amounts of damage, the premium was wasted.

(5)  Paying for unneeded services. One of the problems with the 21st century is the large number of services for people to subscribe to. Cell phones come with confusing plans, unlimited texting options for people who don’t text, and Internet access for those who might not use it. Curbing these options will save you money on your monthly bill. Another service to get rid of is cable television, now that the Internet streams many good shows for less and occasionally for free.

Saving money doesn’t always help, and when a family member loses a job or suffers an illness, getting your finances in order can be a daunting process. Consulting with a financial planner, tax planner, or a Las Vegas bankruptcy lawyer can help you get a handle on your changed circumstances.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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Bankruptcy Is Not Absolute

Thursday, May 10th, 2012

The bankruptcy discharge is one of the most broad and powerful provisions in U.S. law. Discharged debts cannot ever be collected from the debtor. However, there are limits to the bankruptcy discharge and it is only meant to help honest debtors. The federal bankruptcy code excepts certain “bad actor” debts from discharge, like criminal fines, debts from willful and malicious conduct, debts from drunk driving, etc.

The case of Nicolai v. Larsen, decided recently by the 7th circuit Court of Appeals, is an excellent example of how the bankruptcy code may limit the discharge when the debtor is dishonest. In this case Larsen was awarded $3.4 million by a Wisconsin court as a result of injuries Nicolai caused while attempting to murder his wife. Nicolai tried to discharge this debt during bankruptcy. The 7th Circuit Court of Appeals found that the debt was based on Nicolai’s bad acts of battery, false imprisonment and intentional infliction of emotional distress. Under section 523(a)(6)of the bankruptcy code, debts arising from “willful and malicious injury by the debtor to another entity or to the property of another entity” are not dischargeable, the 7th Circuit denied Nicolai his request to discharge the $3.4 million debt. The court said:

“We imagine that all courts would agree that a willful and malicious injury, precluding discharge in bankruptcy of the debt created by the injury, is one that the injurer inflicted knowing he had no legal justification and either desiring to inflict the injury or knowing it was highly likely to result from his act. To allow him to shirk liability by discharging his judgment debt in those circumstances would undermine the deterrent efficacy of tort law without serving any policy that might be thought to inform bankruptcy law property of another entity.”

The bankruptcy code does not automatically except a debt for “willful and malicious injury” from the order of discharge. Instead, a creditor has a duty to affirmatively object to the discharge of the debt. If the creditor fails to file a timely objection, the debt is included in the discharge and the creditor may not collect from the debtor.

If you have caused a willful injury to another person and need financial help, speak with an experienced bankruptcy attorney. Your attorney can explain your legal rights and discuss your bankruptcy options. The bankruptcy code is flexible to permit repayment, discharge, or time to restructure your finances.

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Options For Secured Property In Chapter 7 Bankruptcy

Monday, May 7th, 2012

During your Chapter 7 bankruptcy, you may hear the trustee or your own attorney say, “Secured property must be paid for or returned.” If you have a debt that is secured by a lien on property, you must make arrangements to pay the creditor or surrender the property. That is the general rule, but its not always the case.

A lien is a interest given to a creditor that secures future payment of a debt. If you fail to make your payments as agreed, the collateral pledged as security for the loan can be repossessed (or foreclosed in the case of a home loan). A lien will generally survive a Chapter 7 bankruptcy case, hence the “pay or return” statement. For instance, you cannot discharge a loan secured by a car and keep the car. You have three options concerning secured debts on Chapter 7 bankruptcy:

Reaffirmation – if you want to keep the secured property and continue paying the loan, you can reaffirm the debt and continue the relationship with the creditor. The debt and lien survive the bankruptcy by mutual agreement between the debtor and creditor.

Redemption – secured property can be redeemed for its fair market value during Chapter 7 bankruptcy. Redemption does not apply to home mortgages.

Surrender – If you cannot afford to keep and continue paying on a secured item, you can surrender the property back to the creditor and “walk away” owing nothing.

A fourth option, called “ride through,” may be available under certain circumstances. “Ride through” occurs when the debtor discharges the debt, but the creditor is unable to enforce its lien because of a lack of breach of contract or some other state law impediment. Finally, if you have pledged household property that you own to secure payment of a personal loan, you may be able to strip off the lien and keep your property.

Your bankruptcy attorney will evaluate your secured property and recommend a course of action. While each case is different, the Chapter 7 debtor generally keeps all of his or her property. The bankruptcy laws are flexible to discharge burdensome debt and allow you to keep your home and family vehicles. Speak with an experienced attorney concerning the specifics of your case.

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Discharging Credit Cards Through Chapter 7 Bankruptcy

Thursday, May 3rd, 2012

A Chapter 7 bankruptcy case can discharge many financial obligations, including credit card debts. A Chapter 7 discharge means that the credit card company is permanently prohibited from trying to collect from you.  The debt is unenforceable against you, and you are not required to pay income taxes on the discharged debt.

Credit cards are classified as “unsecured debts,” the lowest category of debts during bankruptcy. Other common unsecured debts are medical bills and signature loans. The payment of an unsecured debt is not guaranteed by a pledge of property (e.g. a car loan).  Consequently, when an unsecured debt is discharged in a Chapter 7 bankruptcy, the creditor typically receives nothing.

Discharging a credit card debt in a Chapter 7 bankruptcy case comes down to one simple rule: was the debt incurred honestly? The Chapter 7 bankruptcy laws favor discharging credit card debt and giving the honest debtor a fresh start. However, the law balances the scale by withholding the discharge when the debtor is less than honest.

First, a credit card that is not listed in your Chapter 7 bankruptcy case is often excluded from your discharge. This is especially true if you continue to use the card during or after filing bankruptcy. The additional charges made after filing bankruptcy cannot be discharged, and becomes good evidence of an intent to conceal the credit card from the court and the bankruptcy filing from the creditor.

Second, if you go on a spending spree with our credit card immediately before filing bankruptcy, those charges are presumed non-dischargeable. This rule includes “luxury purchases” of more than $600 made within 90 days of the bankruptcy, as well as charges made on your card that you have no intention of repaying. The best advice is to stop using your credit card before you file bankruptcy.

Third, if you take cash advances totalling $875 within 70 days prior to filing bankruptcy, the debt is presumed non-dischargeable.

Fourth, a false statement to the credit card company on your application could be used to deny discharge of the debt. While credit card companies seldom use this tactic, if there is plain evidence of fraud (e.g. your yearly income was $20,000, but you claimed it was $200,000), the credit card company may file an adversarial action during your case and seek to deny your discharge.

Discharging credit card debt is usually a simple matter in a Chapter 7 bankruptcy case. It is very important to answer your attorney’s questions honestly and fully in order to receive the best advice. Your attorney can often avoid problems when they are revealed in advance, and can get you the relief you need.

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6 Things to Know about ‘Luxury Goods and Services’ in Las Vegas Bankruptcy

Wednesday, May 2nd, 2012

One of the changes the 2005 bankruptcy law made was to lower the minimum amount of debt a debtor could take on within 90 days of filing bankruptcy for spending on “luxury goods and services.” If the amount of debt is greater than this minimum threshold, then the debt is presumed to be fraudulent and therefore nondischargeable. Thus, there are several reasons for those considering filing Las Vegas bankruptcy to know about luxury goods and services.

(1)  The new law reduced the amount of debt spent on luxury goods from $1,225 to merely $500 within 90 days of filing. This sum is not indexed to inflation.

(2)  That $500 limit applies only to debt taken from a single creditor for luxury goods and services. It does not apply to all spending on luxuries. This means, in theory, that a debtor could take on more than $500 so long as it was owed to different creditors and no one creditor is owed more than $500.

(3)  On the other hand, the $500 amount is an aggregate limit, meaning that multiple purchases owed to a single creditor tally towards the $500 total.

(4)  If the debt obtained for luxury goods and services was somehow secured, i.e. it was not consumer debt, then it’s dischargeable at any amount. This is exceedingly rare, if it occurs at all.

(5)  Importantly, the bankruptcy code [http://www.law.cornell.edu/uscode/text/11/523] defines luxury goods and services by what they are not. The term does not include, “goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.”

(6)  If a creditor believes the petitioner fraudulently purchased luxuries, then it will almost initiate an adversary proceeding against the petitioner to make the debt nondischargeable. This means that whether a purchase is a luxury good is largely up to the bankruptcy judge’s discretion.

The bankruptcy code is very vague as to what is or is not a luxury good or service. It is, however, fairly generous to petitioners. The purpose is to prevent debtors from going on spending sprees and then discharging the debt in bankruptcy. Given that the time limit is only 90 days, and that the debtor will have other requirements to fulfill before filing, e.g. mandatory credit counseling, most debtors don’t encounter the problem of determining whether a purchase is a luxury. Even if one goes over the $500 limit, for instance to buy a new refrigerator, so long as it’s not a high-end model with needless features, it will probably still slip by. That said, luxury goods and services are just one of the many pitfalls in the bankruptcy code that a creditor can use against you, which is why an experienced Las Vegas bankruptcy attorney is necessary for handling your case effectively.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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9 Tactics Hospital Debt Collectors Use in Las Vegas

Tuesday, May 1st, 2012

Times have not been good for hospitals in the U.S. Large numbers of Americans do not have health insurance, but they get sick and injured just the same, which causes them to amass a lot of medical debt. When they get sick again they often have no choice but to use their credit cards or accept emergency care. As a result, according to the New York Times, hospitals have large, unpaid accounts receivables. In 2010, 5,000 community hospitals gave out $39.3 billion in uncompensated health care, which was 16 percent higher than in 2007. To deal with this, hospitals now hire debt collection agents to ensure that hospitals are paid, including for services given earlier. Here are nine examples of things debt collector hospital employees do to ensure the hospital is paid.

(1)  Hospitals have debt collectors stand at the front of emergency rooms and demand payment. Often debt collectors will discourage people from taking emergency care entirely if they can’t afford it, or they will demand that patients pay for their previous hospital visits before entering the emergency room.

(2)  The debt collectors use scripts—just like when they call debtors on the phone—to ask for payment, such as telling patients that they can retrieve their checkbooks from their cars to pay for previous visits.

(3)  Some companies give collectors access to confidential patient information, which is in violation of federal law, to help them enforce payment.

(4)  Most of the time hospitals turn to debt collectors after the care has been provided, but more recently, they’ve started turning over the management of front-end stations (appointment scheduling, patient registration) to debt collection companies to monitor patient payment.

(5)  Collectors often pressure employees to collect payment from as many patients as possible, even going so far as to reward them with gift cards for good performance.

(6)  Debt collectors even focus on extracting payments from women checking into obstetrics wards for labor and delivery.

(7)  Collection efforts become so aggressive that sometimes other hospital staff members claim it interferes with their provision of health care. The Emergency Medical Treatment and Active Labor Act requires hospitals to provide emergency health care without regard to citizenship, immigration status, or ability to pay.

(8)  Collection companies begin tracking patients who have not paid in “stop lists.”

(9)  Collection companies sometimes do not identify themselves as debt collectors, often in violation of state law.

Medical debt is a serious problem facing Americans, but hospital debt collectors often break the law when attempting to collect on debts, such as patient privacy laws and debt collection practice laws. If you had to take on debt to pay for medical care, and it’s a burden to you, a Las Vegas bankruptcy lawyer can help you with your debt situation so hopefully you can avoid dealing with debt collectors in person.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.

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Who Files For Bankruptcy?

Monday, April 30th, 2012

Financial difficulty crosses all socio-economic lines. Its not just “poor” people that file for bankruptcy relief, sometimes “rich” people file also. Recently former NFL player Warren Sapp filed Chapter 7 bankruptcy in South Florida. Despite earning an estimated $40 million during his career, and a monthly income in excess of $100,000, he now seeks protection from more than $6 million in debts.

Each year celebrities and athletes file bankruptcy, but rarely does a federal judge need the protection of the federal bankruptcy laws. The Wall Street Journal has reported that Judge Otis Wright II of California’s Central District has filed for Chapter 7 bankruptcy. Chapter 7 is an “erase-your-debts-and-start-fresh” bankruptcy. Creditors during a Chapter 7 bankruptcy generally receive little or nothing through the liquidation of the debtor’s assets.

Judge Wright’s bankruptcy petition and schedules show that he has assets of $833,426 and liabilities of $895,292, including more than $70,000 in credit card debt. Federal judges make about $174,000 per year. The Chapter 7 bankruptcy trustee plans to put Wright’s California home in Los Angeles County on the market to pay his creditors. The asking price is about $1.2 million with a debt of about $800,000.

Prior to filing bankruptcy Judge Wright and his wife drained his retirement funds to creditors. While his efforts to try and pay creditors were admirable, retirement funds are generally protected during bankruptcy. Your bankruptcy attorney will often advise against cashing out retirement funds to pay debts that may be paid or discharged during the bankruptcy case.

Bankruptcy is a federal legal process to reorganize your finances and free you from oppressive debt. The bankruptcy laws are flexible to help those who need a fresh start – despite fame or fortune. If you need this type of help, speak with an experienced bankruptcy attorney.

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Kansas Bankruptcy Court Protects Earned Income Tax Credit

Tuesday, April 24th, 2012

A Kansas Bankruptrcy Court has upheld the constitutionality of a Kansas law protecting a Chapter 7 debtor’s Earned Income Tax Credit (EITC) during bankruptcy. This law was challenged by the bankruptcy trustee who argued that the Kansas legislature could not write a law that only applied to bankruptcy proceedings. Bankruptcy is a federal process and its laws are written by the U.S. Congress.

The Kansas law created a new bankruptcy exemption for Kansas debtors. It allows bankruptcy debtors to protect their EITC money, a tax credit designed to assist low- and moderate-income families. However, the this exemption only protects EITC money during bankruptcy and does not apply outside of bankruptcy.

The Chapter 7 bankruptcy trustee challenged the constitutionality of the law by stating that it violates the Uniformity Clause. See In re Westby, No. 11-40986, 2012 Bankr. LEXIS 1428, (Bankr. Kan. April 4, 2012). There is currently a split of opinion in the federal courts whether state exemptions that only apply to bankruptcy proceedings are constitutional. The Kansas Bankruptcy Court in Westby found that Kansas’ EITC bankruptcy exemption did not violate the Uniformity Clause or any other constitutional provision. These cases could open the door for more debtor bankruptcy protections at the state level.

The full opinion can be found on the Kansas Bankruptcy Court website: http://www.ksb.uscourts.gov/images/ksb_opinions/JMK_11-40986-45.pdf

The federal bankruptcy process is a complex combination of federal and state laws. Navigating this process alone is like walking through a minefield while blindfolded. An experienced bankruptcy attorney can guide you through this complicated process, protect your rights and property, and get you a fresh financial start.

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