Archive | Bankruptcy Washington State

Retirement But Not Totally Part Three

This is t he third installation of Retirement But Not Totally, finishing off the Forbes.com list of top 25 places to retire, here are numbers 8-1.

8. Oklahoma City, Oklahoma: Oklahoma has a top-rated tax climate and an unemployment rate of 5.5%. Housing prices are an average of $143,000 and cost of living is cheap.
7. Pittsburg, Pennsylvania: Unemployment is 6.6%. Although the winters here are extremely cold, the cost of living is 6% below the national average and homes are going for $121,000. Also doctors per capita ranks at one of the nations highest.
6. Provo, Utah: Cost of living is average with homes going for $210,000 on average. This town is Brigham Young University’s hometown and has a 5.5% unemployment rate and a favorable tax climate.
5. Rapid City, South Dakota: So close to Mount Rushmore, Rapid city has an excellent job growth track record and housing prices average $152,000. Unemployment is down to 4.1%.
4. Salt Lake City, Utah: This is Utah’s largest city and enjoys a 5.6% unemployment rate. Ranking number six on Milkens Institute job and economic growth index, Salt Lake City’s cost of living is 5% below the national average.
3. San Angelo, Texas: Cost of living is far below the national average as is San Angelo’s unemployment rate. Home prices average at barely $100,000 and this town’s diverse job base and colorful city make for a satisfying place to reside.
2. Shreveport, Louisiana: With a 6% unemployment rate, Shreveport has a high job growth prospect. Cost of living is below 4% the national average and this city sits close by a medical school ensuring plenty of doctors per capita.
1.State College, Pennsylvania: 4.9% unemployment rate, $210,00 average housing prices and a high prospect for job growth, make this beautiful college town an ideal choice for living and enjoying the excitement and economic advantages that Penn State provides.

Retirement should not be all about staying at home or going out and going on expensive trips. With the right move and planning, everyday could be exciting and active. But with debt holding you back from enjoying your retirement, bankruptcy may be your best option for a fun and fulfilling retirement.

With rising cost on just about everything, it is hard to go out and enjoy life, especially when burdened with debt. But with bankruptcy, you are able to go back out and enjoy the things you may want to do.

The article can be found at:

http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Retirement But Not Totally Part Two

The second installation to Retirement But Not Totally cities numbered 17-9, is packed with nine more favorable options for a working retirement.

17. Fort Collins, Colorado: Cost of living and homes are at a national average in Fort Collins, and with Colorado State close by the economy is flourishing. The cold winters here are easily bearable with the 6.2% unemployment rate.

16. Great Falls, Montana: With an above average tax climate this small town enjoys many doctors and a small crime rate. The job and economic growth are outstanding and the unemployment rate is at a below average 5.6%

15. Harrisonburg, Virginia: Near two colleges, Harrisonburg rank high on the Milken Institute job and economy rating. With and unemployment rate of 5.3% this quaint town has one of the lowest crime rate on the list.

14. Huntsville, Alabama: Alabama has a very favorable tax climate with an average economy, housing prices and unemployment rate and below average cost of living.

13. Iowa City, Iowa: With Iowa medical school in its midst, the doctor count is six times above the national average. Also unemployment is at 3.8% and job opportunities are growing.

12. Jonesboro, Arkansas: An average home in Jonesboro sells for below $100,00 and the unemployment rate is at 6.4%. Also cost of living is dirt-cheap and 13% below the national average.

11. Knoxville, Tennessee: Knoxville has plenty of doctors, an unemployment rate of 6.6%, wonderful economic growth. And best of all the Smoky Mountains provide a pretty scenic aspect to this town. One downside to Knoxville is that it has the highest crime rate on the list.

10. La Cruces, New Mexico: Just $116,000 on average housing prices, La Cruces is another college town with wonderful economic growth. 40 miles from Mexico, La Cruces has an excellent tax climate, but the doctors per capita are sparse.

9. Lexington, Kentucky: Cost of living is 11% below the national average, and housing prices are at an average of $144,000. Kentucky has a favorable tax climate, and a lot of doctors.

Is retirement on the horizon for you? Are you worried whether your retirement income will stretch to provide a quality lifestyle? If these are some concerns that have popped into your head, you may want to consider relocating to one of these 25 havens for retirees who might wish to continue to work past retirement age.

Look out for the next post, which will continue with the next 1-8 cities. Whether you are looking for a place to relocate with a warm climate, plenty of doctors, or a cheap housing, this list has many options to choose from.

The article can be found here:
http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Retirement But Not Totally

The economy has had a great impact on those facing retirement. Many have lost jobs or have been forced to take jobs that pay much less than pre-recession employment. In addition, many people have lost homes due to foreclosure and high mortgages that greatly exceed their home’s value. Bankruptcy fillings in the pre-retirement demographic are skyrocketing, and have been high for many years.

With the growing costs of necessities such as food, gas, and medical care, many people worry whether or not social security can provide a comfortable retirement.

One way to help ensure quality of life in retirement is to keep working. And there are many places in the country that can provide better working opportunities than others.

A recent Forbes.com article, highlights the 25 top cities for a working requirement. What ever your preferences may be location, culture and climate wise, this article may help you choose a top location to enjoy a comfortable retirement.

Cities 18-25

25. Athens, Georgia: This beautiful college town sits at a high-ranking on the Milken Institute’s Job and Economic Growth Index with a 6.9% unemployment rate which is a refreshingly low percent compared to the country’s average of 8.5%. Not to mention that this town enjoys very favorable climate and weather, house pricing is an average of just $130,000.
24. Austin, Texas: Perks to living in this city include low crime rate, a cost of living 7% below the country’s average, and no state income tax. House pricing is a little above the national average at $950,000, but still reasonable.
23. Bismarck, North Dakota: Doctors per capita are at an amazing 50%, which is above the country’s norm. Winters here may be cold, but unemployment rates are at only 2.8%.
22. Bloomington, Illinois: This city is the head of State Farm, which results in a steady economy. Cost of living sits on the national average and unemployment is at 6.8%.
21. Cheyenne, Wyoming: Crime rates are low and physicians are plenty. It’s one of the least populated cities on this list and has a 6.5% unemployment rate. Winters here are cold, however.
20. College Station, Texas: This is a college town, and is leading in job and economic growth. 5.8% unemployment, plenty of doctors and a warm and sunny climate also make up this town.
19. Columbia, Missouri: The physician per capita rate in this city is more than three times higher than the national average. The unemployment rate is 5.0% and this city is known for having great job and economic growth.
18. Corvallis, Oregon: Yet another college town, Corvallis has 5.8% unemployment rate and room for strong economic growth. There’s no state sales tax, plenty of doctors and low violent crime rate.

These are the top 18-25 finishers for cities offering a working retirement, so if you are looking for an economy that is more impressive than just “so-so” maybe one of these cities should be considered for your comfortable working retirement. Stay tuned for a follow-up post detailing the next 9-17 cities .

Relocation may be a great retirement planning tool. Discharging or reorganizing your debt, as seen as possible through a bankruptcy proceeding, may also be a prudent step towards retirement planning.

After bankruptcy, you may well have funds to fortify your saving accounts and 401k/IRA account. This can help ease the financial crunch which often accompanies retirement. Call us if you or a friend might like to invest in a bankruptcy filing.

Follow the link below to read the article in whole:

http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Seek Help Before Trusting Your Home Lender

As many are aware, Wells Fargo Home Loans has been accused of qualifying customers into unfavorable loans. In efforts to avoid further attention, Wells Fargo attempted to settle their debt by offering their customers money. According to Scott Reckard, in his recent article in the Los Angeles Times entitled, “Wells Fargo sends refunds to some FHA mortgage customers”, borrowers had randomly received checks via mail from their mortgage home lender Wells Fargo. At first glance, what seemed like a nice surprise, these checks came with a string attached. Stated clearly, if borrowers cashed the checks, it prohibited them from suing Wells Fargo in the future.

Reckard reported, as a way for Wells Fargo to side step further litigation over steering their customers into unfavorable home loans, an estimated 10,000 letters enclosed with checks went out to Wells Fargo Home Loan’ borrowers. These unfavorable loans were written as Wells Fargo Home Loans surged to become the No. 1 originator of loans insured by the FHA.

In his article, Reckard shared how a California resident, Eric Murillo-Angelo, received a check from Wells Fargo for $6,676.89. Enclosed with Murillo-Angelo’s check was a letter stating, “You may have qualified for a conventional conforming mortgage” instead of the FHA loan he received in 2010. Also, in large print, the letter stated, “You should understand by cashing the enclosed check, you agree to release Wells Fargo Home Loans from any and all claims relating to Wells Fargo’s origination of a more expensive mortgage loan than the loans for which you may have qualified.”

Wells Fargo Home Loan costumers faced the dilemma of either cashing their checks, or not. If they did not cash their checks, the questions they faced were what other avenues of justice they could pursue. Or, at that point, who could help them fight a large corporation like Wells Fargo. After weeks of holding onto the check and debating these questions, Murillo-Angelo cashed his check and settled paying for a loan that he could be paying far less for. In his case, he had a secure job and was economically stable enough to possibly refinance into a less expensive loan later.

Fortunately, Murillo-Angelo has options to get out of the home loan that Wells Fargo gave him. However, many others have not been so fortunate. For many, their home loans have led them into escalating debt, and for many others, they face foreclosure. These refunds checks hold little meaning to borrowers who have already lost their homes or are facing foreclosure.

There is help for borrowers who have fallen victim to lenders who share the same practices as Wells Fargo. Instead of waiting for home lenders to help, it is important for borrowers to understand that they should seek outside help before trusting their home lender. It is possible to save their homes and relieve themselves from escalating debt.

James H. Magee is a Washington bankruptcy attorney who has helped many people in Pierce, Thurston, and King Counties save their homes and get on a stable financial path. With help on how to take the next step towards financial security, it is possible to overcome poor home lending practices and refinance expensive home loans into home loans that are fair and affordable.

Mortgages – Life After Bankruptcy

Can you obtain a mortgage or refinance a mortgage after personal bankruptcy?

The New York Times dispels some myths about the effects of a bankruptcy on the filer’s ability to obtain home mortgage financing.

The article entitled, “Life After Bankruptcy” that appears in the New York Times web edition, asserts that many bankruptcy filers mistakenly believe that it will be many years before they can either obtain a home mortgage or refinance an existing home loan “because notice of a bankruptcy filing typically stays on a credit report for 7 to 10 years. In reality, they could become eligible in as little as one year, as long as they work diligently to improve their financial picture.”

The article continues, “Mortgages guaranteed by the Federal Housing Administration are permitted one year after a consumer exits a Chapter 13 bankruptcy reorganization, which requires a repayment plan that is often a fraction of what is owed, and two years after the more common Chapter 7 liquidation, which discharges most or all debts. Conventional mortgage guidelines from Fannie Mae and Freddie Mac, meanwhile, call for a wait of two to four years.”

I fully endorse this recommendation: “’There’s a lot of other things that go into your ability to get approved’” for a mortgage after a bankruptcy, said John Walsh, the president of Total Mortgage, a direct lender based in Milford, Conn.”

“The most important point, he and other industry experts say, is that consumers re-establish their credit and show that they can manage it responsibly. They can do this by paying rent and utility bills on time, or perhaps by obtaining a secured credit card, according to Mr. Walsh.”

Ideas for Action:

“Rebuilding credit after a personal bankruptcy will take some work. Mr. Feinstein suggests that individuals maintain or take out one or two credit cards and routinely use them. ‘If the payment’s due on the first, make sure it’s paid by the 25th’ of the previous month, he said.”
“Mr. Feinstein says he has seen a few clients qualify for a mortgage only two years after filing for Chapter 7, though generally borrowers can obtain a loan quicker after a Chapter 13 reorganization, because of the partial repayment of debts, he said.
“As Mr. Walsh noted, “Chapter 13 is a little more responsible” way to go from the lenders’ perspective, so lender guidelines are a bit more lenient.”
“Almost 70 percent of personal bankruptcies are filed under Chapter 7, according to the American Bankruptcy Institute, a research organization. The institute data noted that last year there were 1.362 million personal bankruptcy filings nationwide, down from 1.53 million in 2010, and closer to the norm over the last 15 years. At the end of the first quarter of this year there were 311,975 filings, which is 5 percent less than the first quarter of 2011.”
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Short sales and tax consequences – analysis of a “normal” sale

Regardless of where you live in Washington state—whether you call Federal Way, Bremerton, Tacoma, Renton, Auburn, Tukwila, Lakewood, University Place, Puyallup, or Olympia home—you must be aware of potential tax consequences of a “short sale” or foreclosure.

The $250,000 capital gains exclusion plays a large role in whether or not you will have taxable income on your personal residence after foreclosure.

Please note that this analysis is limited to your personal residence in which you have lived for at least two years.

The NCLC (National Consumer Law Center) publication entitled “Foreclosure Prevention Counseling”, 2009 edition, Chapter 9, pages 147-152, covers this subject well. This publication is available for $60.00 at www.consumerlaw.org.

For example, Discharge of Indebtedness Income is not necessarily always the same as taxable debt forgiveness income, according to the NCLC, page 149.

To understand the problem of Discharge of Indebtedness Income/taxable debt forgiveness income, let’s examine a normal (non distress) transaction to determine whether the transaction does or does not result in taxable income.

Example #1 from the NCLC:

$100,000 purchase price of home
+ $30,000 add: improvements (new deck, addition, etc.)
= $130,000 new basis

$160,000 sale price
– $9,000 less: sales expenses
= $151,000 net sale price

$21,000 capital gain
$250,000 capital gain exclusion

$0 taxable gain
$0 taxable gain tax to be paid

Example #2 – single homeowner

$20,000 purchase price
+ $30,000 certain improvements
= $50,000 new basis

$600,000 sale price
– $40,000 less: sales expenses
= $560,000 net sales price

$510,000 capital gain ($560,000 – $50,000 = $510,000)
– $250,000 capital gain exclusion
= $260,000 taxable gain

$39,000 capital gains tax payable $260k x .15 tax rate = $39,000; assuming 15% tax rate on long-term capital gain)

The previous examples contemplate a “normal” sale–not a short sale or foreclosure.

In a future post, I will provide some examples of foreclosure/short sale operation.

What oversight actions has the Consumer Financial Protection Bureau taken recently

The Consumer Financial Protection Bureau (CFPB), an organization created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, has recently announced new rules to regulate and oversee some of the bigger agencies in the debt collection and credit reporting industries.

The CFPB was given the power to regulate non-bank financial entities by the Dodd-Frank Act, but has faced opposition since its inception. This resistance comes from various lobbying groups and a number of legislators who believe that regulation of such industries should not be part of the government’s jurisdiction.

Despite the opposition, the CFPB has pushed ahead to announced oversight rules that will apply to debt collection firms that earn more than $10 million per year and to consumer reporting agencies that make more than $7 million per year.

According to numbers from the CFPB, this will include about 175 debt collection firms, or four percent of all debt collectors in the U.S. Four percent may seem like a small margin, but they are responsible for collecting 63 percent of all debts in the U.S.

Along with the 175 debt collection firms, about 30 consumer reporting agencies will also be affected by the new rules. That is about seven percent of such agencies nationwide. Once again, seven percent is not a huge amount, but these consumer reporting agencies are responsible for collecting 94 percent of receipts from consumer reporting activities.

The CFPB estimates that its newest proposed rules will impact the lives of millions of Americans. At present, the CFPB reports roughly 30 million Americans have debts under collection.

In complaints filed with the Federal Trade Commission (FTC) and elsewhere, many of those have complained that debt collectors illegally tried to collect on debts. Among those illegal collection attempts were efforts to recover debts that were legally discharged in bankruptcy court.

It is important to note that debts discharged by bankruptcy cannot legally be collected.

Once the new rules go into effect, Americans might see better behavior from the non-bank financial institutions that they deal with on a daily basis. Some commentators, however, are less than optimistic about the potential impact of the rules.

After all, laws already in effect (including the Fair Debt Collection Practices Act and the Fair Credit Reporting Act) are supposed to protect consumers against many abuses from debt collectors and credit reporting agencies.

While the CFPB has the authority to oversee financial entities, it does not have the power to pass or enforce laws regarding this industry, and so may end up having a limited net effect on the way consumer debt and credit is handled in the U.S.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with mountains of debt. I can help you to understand the options available to you for dealing with your debts. I am sure that I can be of assistance to you, to a family member, or to a friend as we all know people experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations that fill your time with useful information. The impact to your life after an in-person consultation with me may be substantial, and life-long. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can contact my scheduler through our website for your free 30 minute consultation. If you wish, you may schedule your free 30 minute consultation by phone by calling us at 253-383-1001 Monday through Thursday from 9:00 AM until 5:45 PM, and on Friday from 9:00 AM until 12 noon.

Student Loans: Should I borrow the money? What is a Parent Plus Loan?

As I approach my 19th year in the practice of law, I often ponder the risks of assuming large student loans. I took the risk, and I successfully repaid my student debt. Others have not been so lucky.

I signed my first student loan promissory note on September 6, 1985. I finished undergraduate studies with a loan debt of $11,000. My total borrowings topped out at just short of $60,000.00 in 1993 following law school. It was a surreal number to me. I found it depressing. If I recall correctly, the payments were over $750 monthly, and started in January,1994. I struggled at first as my first job as a lawyer did not pay very much. I bumped along, scraping, scrimping, and saving (and keeping my old car running) for just about two years, until 1995 when I was able to “consolidate” to a payment of some $450 monthly plus an “unconsolidatable” loan that I paid $60 monthly on the side of for a total of about $510 monthly. This was a princely sum for a 27-year-old with an old, dying car and no outside family help.

Essentially, I paid my last student loan payment in July 2010. Some sixteen and one-half years later.

I have always been a bit entrepreneurial, In 1996, I was able to start my own law practice. From its inception, it has always done pretty well. Others have not been so lucky. Many of my friends have struggled with student loan payments.

How would my road be different today if I was a graduating high school student?

I don’t know if I would have even gotten so far today as tuition is higher and some of the student loans I was able to take out are not as available. Many of the loans offered today are Parent Plus loans, in which the student loan lenders try to get the parents of a student to sign up for the student loan. I don’t know if my parents would have been so willing to sign student loan notes for me in the amount required to get through four years of private undergraduate education. Also, with tuition hikes, the $10,000 I borrowed to get through my undergraduate program may be equivalent to borrowing $30,000 today. Would my parents (both hardworking people with high-school educations ) have been willing to sign up for $30,000 (in today’s dollars) of parent-obligated “plus loans”?

I likely would have had to attend a less expensive school under today’s situation, other than the Whitworth College (a private Presbyterian affiliated college in Spokane, WA) that I attended. I greatly benefited from my time at Whitworth. I believe that my educational experience at some other school would not have had the same qualities that Whitworth provided me. I can safely say that under today’s situation, my trajectory would have be different now than the one I was able to take.

If you are a parent, and your child is extremely motivated and a high achiever, I would probably step up and sign up for an appropriate amount of Parent Plus student loans as a last resort. However, if your child is a bit unsure of his/her direction, I suggest that you avoid the Parent Plus loan option. In the case where your child is less focused or not a high achiever, you are better off taking out a home equity loan (if you have any home equity) to pay for their education rather than taking out Parent Plus loans. The reason I recommend this approach is because even if you end up in financial trouble, the home equity line of credit can potentially be discharged through bankruptcy should you lose your home, whereas the Parent Plus loan is less dischargeable in bankruptcy.

If you are a child and are considering asking your parents to sign up for a Parent Plus loan for your benefit, all I can say is that you better be “on target” with your education. If you’re reading this blog, there’s a very good chance that you are aiming pretty well.

Seriously, for a young person to make good on their promise to their parents in return for their financial support through a Parent Plus loan, you need to get in, get great grades, graduate, and get to work. Do not screw your parents financially by changing your major five times, and by partying while you bring home a string of C’s, D’s and the occasional F. You need to decide on your major (or at least your department) before you show up for the first day of college as a freshman, and you need to stick with it even if you decide you might “want to go in a different direction”. You do not have the right to ask your parents to obligate themselves unless you are giving 110%. If you are not achieving top honors (baring some sort of learning disability) while asking your parents to sign up for Parent Plus loans, you are insulting your parents. Parent Plus loans did not exist when I was in college, but during my first couple of years at school, my parents did pay for some of the tuition. My way of honoring their commitment was to graduate summa cum laude which means “highest honors”. I was 5th in GPA in my college graduating class and finished with a 3.91 Grade Point Average. I received one “B” grade in my freshman year and two in my senior year. Every other grade was an “A”.

For what it is worth, that is my story. If you are a parent and your child does not have a commensurate level of committment to educational and study dedication, then you have the right to say “no” to a Parent Plus loan when asked by your child.

If you are a child and you do not intend to excel and be at the top of your class and department, you have no right to ask your parents to so obligate themselves to a Parent Plus loan, unless of course your parents are so wealthy that the Plus Loan is of no financial consequence to their long-term economic position.

Thank about it. Student loans are only for people ready to give a 110% effort towards being a student. There is a reason they are called student loans, and not called “play time, find myself loans.” Student loans are serious. If you take one out, you need to be serious about your career based on the education that you are buying with your student loan.

An update on the state of Washington’s economy

This past Tuesday, House Democrats presented their plan to fix the state’s budget shortfall. They have proposed relying on $400 million in delayed payments and reduced support for local governments, while mainly protecting basic education from further cuts.

The House Democrat’s plan saves over $890 million without asking voters for a sales tax increase, which was initially suggested by Gov. Chris Gregoire. On top of this, the Democrats propose to leave $504 million in reserves. The proposal does, however, open the door to higher local taxes.

The largest savings come from delaying the $405 million in payments to schools until the next budget cycle. That budget cycle begins in July of next year. Their proposal also calls for $65 million in cuts to higher education, and $224 million in cuts to health care and human service programs.

Democrats suggest decreasing distributions to local governments by $82 million. This will include support for criminal justice programs, along with the elimination of a sales tax credit for rural counties. To make up for that, the state would essentially give local governments authority to make tax increases without a public vote.

Another $18.1 million will come from the elimination of another tax break. This tax break allows out-of-state banks the ability to claim the break on interest earned on first mortgages. The plan also accounts for nearly $54 million in fund transfers, including more than $37 million in unspent agency money being returned to the state’s general fund.

The Democrats are looking to save an additional $130 million in other areas, including reductions to the Department of Corrections’ chemical dependency treatment and community supervision programs.

In a statement on Tuesday, Gov. Gregoire called the budget proposal “a good start”, stating “I’m pleased this budget leaves a sizable ending fund balance as we must continue to plan for unforeseen circumstances.”

Senate Democrats are expected to unveil their budget proposal next week. The 60-day legislative session ends March 8.

An update on Washington Mutual’s bankruptcy reorganization plan

Washington Mutual Inc. has reached an agreement with previously objecting creditors that could lead to an approval of its latest bankruptcy reorganization plan.

This morning, a hearing in WaMu’s bankruptcy was delayed several hours as attorneys worked towards obtaining a settlement involving creditors who bought certain WaMu securities. The WaMu securities in question were converted into stock when regulators seized WMI’s flagship bank in 2008 and sold WaMu’s assets to JPMorgan Chase.

The securities investors voted against WMI’s plan, because they faced far less recovery as stockholders than they would as debt holders. This raised doubts as to whether WaMu could win court approval.

In exchange for withdrawing their “no” votes, the investors will receive $18 million from JPMorgan and an unsecured claim of about $618,000. On top of that, these investors will be able to seek reimbursement of legal fees, up to $15 million.

I will post additional updates as developments in the case unfold.