Tag Archives: fees

Hollywood secrets: 7 big stars and their almost unknown bankruptcies and bonus: 8 best uses for the first $1,000 of your tax refund

Even after a long day of sympathizing with clients as they share financial troubles, I still have ample appetite to consume the latest news story of a celebrity’s financial train wreck. I cannot pass up a headline announcing the latest financial woes of the famous and telegenic. Even after a 20 client day, I will still pause to read about a celebrity debt default. I sometimes ask myself: How could all of that talent, fame and fortune leave one insolvent? How ever did it happen?

The layout of this blog post is unique: following every (ho-hum, yawn) financial inspiration tip of what one might do with the first $1,000 of any tax refund is a little tiny tidbit of irresistible celebrity financial muckraking.

You will get seven celebrity financial crashes and eight financial advice tips about how you might spend the first $1,000 of your tax refund – all mixed in one package. I think that is a square deal.

Enjoy!

The average tax refund is $2,913.00 – some of this is understandably might used for “catch-up” on household obligations or to repair aging vehicles. But if you can spare $1,000.00 of the refund, consider using the $1,000.00 for the benefit of your financial future – so I present eight tips about how to best use $1,000.00 of your 2012 tax refund.

But on to the crashing celebrities: We almost all know about Mike Tyson’s 2003 filing for bankruptcy protection and Anna Nicole Smith’s two filings. But did you know about Walt Disney’s bankruptcy filing? After bankrupting at age 21, he went on to found a company that grossed $38 billion in revenue last year.

Some of our most loved and respected celebrity entertainers have faced financial woes and were able to reconstruct their lives and finances with the assistance of the US Bankruptcy Courts.

If you are besieged with bills and collectors (or know someone who is) – then reach out to us for a consult and let us open the door to a bright post-bankruptcy future. Just consider Walt Disney…. he did just fine after bankruptcy.

1. Tip: Use $1,000 of your tax refund to open a Roth IRA for yourself, a child or a grandchild (or even a nephew or niece!). If you, your child or grandchild had taxable income for the year (even if no tax was due or paid) you can usually contribute up to $5,000.00 into a Roth IRA for yourself or that child or grandchild. But lets take it easy, as $1,000 would be more than a generous. The Tax Code provides the rest of the generosity as this contribution will grow tax-free year after year, and it can be withdrawn tax-free after age 59.5 years. What greater gift than to begin the creation of a nest egg for yourself, a loved child or a grandchild – so toss in $1,000.00 and watch it grow! Even if you or your loved one has financial troubles in the future, the money in the Roth IRA is virtually unreachable by creditors. Now on to the celebrity financial woes……

2. Celebrity bankruptcy: Actor Sherman Hemsley “a/k/a George Jefferson” filed for bankruptcy protection in June 1999. He was unable to repay a $1 million dollar loan and had IRS issues to boot. After some time he did withdraw his bankruptcy petition after negotiating repayment arrangements with his creditors.

3. Tip: Use $1,000 of your tax refund to replenish your emergency fund – set up a separate savings account for this purpose at a bank where you don’t normally do business. If you want to REALLY go for it, set up a paycheck allotment or auto-deposit of $100 monthly into the same emergency fund. In just two years, this fund will grow to nearly $5,000.00.

4. Celebrity bankruptcy: Actress Kim Basinger filed in 1993 after a town she purchased in 1989 (at the encouragement of relatives) turned into a financial nightmare. She had hoped to turn the whole town into a theme park of some sort, partnering with investment company Ameritech. Also compounding her financial challenges was an $8.1 million dollar judgment against her for withdrawing from the film “Boxing Helena”. Eventually Kim bounced back well, winning an Academy Award for her film role in “L.A. Confidential” and eventually settling the $8.1m lawsuit for about half of what she owed.

5. Tip: Get a Professional Review of Your Finances from a fee-only non-commissioned financial advisor – which usually costs less than $1,000.00. How is this different from calling Edward Jones or Charles Schwab? There is a big difference, as your local stockbroker is a salesperson, not a truly neutral financial advisor. Contact the National Association of Personal Financial Advisors for a local referral. A note of caution: if you have not yet filed your own bankruptcy to be rid of burdensome debt, I doubt that your friendly financial advisor will be able to instantly resolve financial woes. But once free of hopeless debt, you may have a little extra in the household budget – and this could be wisely invested in mutual funds, IRAs, GETT educational credits or other funds to suit your family’s long-term needs as recommended by your professional (non-commissioned) Personal Financial Advisor.

6. Celebrity bankruptcy: Crooner Wayne Newton “a/k/a Mr. Las Vegas” filed for bankruptcy protection in 1992. His woes then included $20 million in unpaid bills related to a libel lawsuit he had filed against ABC for claiming that organized crime was involved in some of his casino dealings. By 1999, Mr. Newton was doing better, but again faced financial problems by 2005, including a $1.8 million IRS taxes and $60,000 in unpaid airplane storage bills.

7. Tip: Improve your home’s curb appeal with a $1,000 tax refund trip to Home Depot. Yes! You get to go shopping! $1,000 will buy a trip to Home Depot for some new landscaping shrubs, a stylish new front door with fancy door knocker, a gallon of paint and three pink yard flamingos. There are two reasons for sprucing up your home: If you have to suddenly relocate and sell your home to chase a new job, you will be glad you took care of this “sprucing up” when you had the extra funds and time. Plus, coming home to a pretty home after a long day of work or job hunting is truly gratifying. Don’t own a home? Then plan “B” for those not owning a home is a little weird – spend $500 on professional wardrobe items and save the other $500 for your emergency fund – because should you eventually want to purchase a home or change apartments,you are going to need that $500 you placed safely in your emergency fund! Likewise, looking professional at work is never a poor investment.

8. Celebrity bankruptcy: Singer Vince Neil a/k/a Heavy metal band “Motley Crue” frontman. Mr. Neil has actually filed for bankruptcy twice, the most recent time in 2010. One of his creditors was his lawyer, to whom Mr. Neil owed $16,000.00, for getting him out of many a heavy metal jam.

9. Tip: Hire a lawyer to write your will for $1,000.00 from your tax refund. Yes, you can cheaply use an online form downloaded from the internet from legal zoom or worse and avoid the lawyer fee – but watch out! There are many issues you might overlook, and legal situations are treated differently state to state, so your Florida oriented form might not work so hot in Washington. Here are a few examples of subtle issues a lawyer might better address: Nominations in your will of a guardian to care for minor children, care for pets upon your passing, “health care directives” which direct when the medical establishment should back-off providing medical care to you and finally, addressing confusion between the death division of “non-probate” assets such as life insurance policies, IRAs and 401k’s and “probate assets” such as homes and realty investments. Special note: if you have not revised your will or changed financial asset beneficiary designations since completing a divorce, you had better get on it!

10. Celebrity bankruptcy: Baseball player Jose Canseco walked away from his 7,300 square foot Encino, CA mansion in 2008. While technically not a bankruptcy, abandoning your mansion seems pretty darn close to bankruptcy to me. Jose retired from baseball in 2002 after a long and highly compensated career with the Oakland Athletics. In 1988, he was the first player in major league history to steal 40 bases and hit 40 home runs in the same season. Two costly divorces and a steroid scandal laid low Jose’s finances and his mansion was foreclosed. He tried out for the L.A. Dodgers in 2004, but was passed over.

11. Tip: Hire a personal fitness trainer and diet coach with $1,000.00 from your tax refund. Try two sessions per week (one hour per session) at between $50 and $75 per hour to learn modern fitness technique. This seven to ten week investment may be the best money you ever spend. Fitness trainers and diet coaches are not just for movie stars any longer. I know that trainers work: Before starting with my trainer, I had never heard of “short burst cardio” – “burpees” – “bosu balls” – “kettle bells” – “arnolds” or “skull crushers”. With a richer vocabulary, a slimmer midsection and a much more positive mental attitude I strongly recommend a fitness coach. I revolutionized my diet with the trainer’s help and went from 219 pounds down to 201, dropping six inches off of my waist from 38 to 32. If not for the personal trainer, I would still been stuck in the same old unsuccessful exercise rut. Try the trainers at the YMCA for economy – but if you want the best, then try “The Club at Gig Harbor”, where I meet my trainer.

12. Celebrity bankruptcy: Mark Twain filed for bankruptcy in 1894 after a failed investment in an automatic typesetting device called the Paige Compositor. The investment cost Mark Twain his fortune (and also cost much of the inherited fortune of his wife), but he bounced back after bankruptcy. He went on to replace at least a portion of his fortune as a lecturer. Ironically, the man who coined the phrase “the Gilded Age”, Mark Twain, went broke.

13. Tip: Spend $1,000.00 of your tax refund to beef up career skills. Consider courses at community colleges or some on-line courses to strengthen the weaker portions of your resume and experience. A stronger resume can ease a transition into a new position with your current employer, or provide you with a new classroom learned skill that will be a focal interview “talking point” if you are interested in reaching out to new potential employers.

14. Tip: If you have not yet paid off your debts in full, then invest $1,000.00 of your tax refund money in the bankruptcy services of James H. MaGee. Each year that you toil along with debt means one less year to accumulate adequate retirement savings and one more year of hope-robbing and health-corroding stress. A bankruptcy case can often mean quickly restored creditworthiness – call us for a consult, and I can explain how and why! 253-383-1001 www.washingtonbankruptcy.com

5 Financial Scams That Target Your Money

Financial strain combined with busy lives can compromise the ability to make sound financial decisions. Are you a generous person with precious little time to research charities? Are you too busy to carefully monitor your online profile? If “yes” to any of these questions is your answer, then I caution you: be aware of these five financial scams.

The financial scams that we will review can be categorized as either “get ahead” scams or “help” scams.

In nearly 20 years of law practice emphasizing bankruptcy, I have been very impressed by the generosity of my clients. At the same time, my clients are generally hardworking people, and are exceptionally busy. They often provide substantial financial help to family as well as support to charitable causes like disaster relief, religious groups, or charitable organizations—sometimes in combinations. Balancing families, commitments to others, and workplace responsibilities, it is no wonder that my clients sometimes don’t take the time to investigate whether an opportunity or a request for help is truly legitimate, or whether it is an exploitative scam.

The “help” scams that touch the hearts of my generous clients make me sad. Unfortunately, the best of intentions and most generous of natures are exploited from time to time by unscrupulous shysters.

When it comes to “get ahead” scams, I sometimes sadly learn that their efforts, and drive to get ahead financially have been exploited by equally shady characters.

Both types of scammers are very active now. They know that many innocent, good-natured people may have a little extra cash this spring. The scammers step up their efforts in late February, March, and April because their targets may receive federal tax refunds.

Even if you aren’t expecting a tax refund this year, you may still be a target for the scammers. The “get ahead” variety will attack whatever funds you’re willing to part with in the hopes of investing in bettering your life in some way.

We all remember the old internet email scams of yesterday; clumsily written, and misspelled email come-ons offering huge windfalls in exchange for helping some long-lost offspring of exiled monarchs move a still larger fortune from some small country to ours with your help. All you need provide is a complete personal dossier that enables identity theft and a raid on your bank accounts.

Today’s newer scams are often better written, and sound more plausible, than the offers of a huge commission for helping someone move funds from overseas. These new scams are still every bit as dangerous to your family’s finances and identity as those that originated in the mid-90s.

Three Questions

Let me ask you three difficult questions:

If you are under either financial stress or have an unexpected need for income, would you consider an offer to “get ahead” quick?
Has your good nature and willingness to sacrifice a bit of your worldly goods—perhaps feelings of guilt for the conditions that you see the needy in when compared to your own—led you to consider doing something—anything—that could “help”. You may feel that you are either too busy or that it is rude to question the veracity of those who make such plaintive entreaties for urgent financial help?
Are you too preoccupied or does it seem too confusing to properly monitor your profiles on social media? Unprotected, open profiles provide scammers the best hunting grounds for opportunities and information.

If you don’t consider yourself at risk in any of the aforementioned areas, do you know of a friend or loved one who might be financially pressed or overly generous, and may more easily fall prey to one of the scams we described above? If under financial strain, you can always contact with us for a free and confidential consultation. If a friend or loved one is in need, we welcome you to accompany them so that you can provide moral support and encouragement. After all, that is why we have friends—for support and encouragement.

If you or a friend or loved one owes money on medical bills, taxes, credit cards, collections or court fines, by all means call us. If you or a friend or loved one is struggling under the weight of a costly mortgage or vehicle payment, then please come in for a consult. Don’t fall prey to the allure of a scammer’s “get ahead” story.

The Five “Big Ones”: The Hottest Scams of 2012-2013

Over payment/Fake Check/Car Ad scams: – A “get ahead” scam. The online ad says: “Get Paid Just for Driving Around”—naming a prominent and reputable company offering $400 or more per week to drive around with the company’s logo on signage placed on your vehicle. The scammers are convincing; they even mail you a check with strict instructions to wire-transfer part of the money to the “appointed” graphic designer who will create, customize, and deliver the advertising banners which will be later mailed to you for placement upon your vehicle. When the check mailed to you bounces a week later, the “graphic designer” is long gone, you are out the money which you wired over to the “graphic designer”, and you have a nice overdraft situation to deal with at your local friendly bank or credit union. Exasperating!
Emergency Scam: Grandchild or friend in trouble overseas! Help! I am in London and lost my wallet so can’t even pay for a phone call to explain, so I am contacting you by text message or email to send me $500 (or more) by wire transfer. Some nice person lent me their computer or this text messaging capable cell phone which can’t make nor accept overseas calls. That’s why—and how—I am able to contact you only by text message or through this new email account I just set up at the local Internet cafe. I need to pay an overdue hotel bill, and to make travel arrangements, so if you could please wire $500.00… You get the picture of course.
Thanks to social media sites, the scammers can feed you back a more plausible story by extracting personal details from your social media profile. For example, you might receive a very factually specific “help” scam message like, “Yeah, remember the video camera Jane got me for Christmas? I was so excited to take that new video camera I received last Christmas on this spontaneous trip to Denmark. I am so bummed that just after arriving, I was mugged, lost my cash, credit cards, and phone, and I can’t even pay my hotel bill. By the way, not paying your hotel bill here in Denmark is punishable by imprisonment. They have given me two hours to get the funds to pay the hotel bill or else the Danes are going to imprison me along with a huge bail obligation I won’t ever be able to afford.”
“Emergency” is an old “help” scam, but the new twist is that real events and names are used in the communication to make it more believable. This information is skimmed from unguarded social networking profiles.
Mystery Shopping: a “get ahead” scam. Mystery shopping can be legitimate, but to learn how it really works, visit the Mystery Shopping Providers Association www.mysteryshop.org site. You might avoid falling prey to a scam.
The mystery shopping scam is really just a variation of the over payment fake check scam described above. As a scam, the mystery shopping “employer” hiring you first sends you a check. As your first project, you are assigned to “evaluate” the customer service quality of a money transfer wiring service. You are supposed to cash the check on your own bank account, then you are to wire back some significant portion of the proceeds to the mystery shopping “employer”. They toss in a legitimate sounding requirement to complete a questionnaire about the money transfer wiring service staff—whether they were professional and courteous, etc.
When the check you received from your mystery shopping “employer” bounces, and you are left holding the bag for a large overdraft obligation, you will realized that you are the victim of a scam. Good luck tracking down your mystery shopping “employer” to make good on the bounced check.
Advance Fee/Prepayment scam: a “get ahead” scam. We all need a little extra cash from time to time to provide for family or household needs. The fraudsters know this. Watch out for “no credit check” or “easy repayment terms” for a loan advertised online. You will find there is a catch to such a great deal in that you have to first send in a payment for a “loan insurance policy” or to “secure” or “process” your loan.
Of course, once you send in the payment for the “loan insurance policy” or to “secure” the loan or to “process” the loan, you learn that there was never any loan to be made, and you have lost the funds you paid.
Charitable contribution to help those who suffered through tragic events: a “help” scam. Now, this one is really sick. While not necessarily a financial benefit/gain scam, it is among the lowest of the low. Reports abound of entreaties through social media and email seeking donations which are (falsely) dedicated to the suffering victims and their families. There has allegedly been at least one FBI arrest related to one of the many scams preying upon national sympathy for the Sandy Hook Elementary School victims.
If you do wish to donate to Sandy Hook Elementary related causes, perhaps you should first review the Better Business Bureau’s Wise Giving Alliance site www.bbb.org/us/charity to help you confirm that a charitable organization that interests you is legitimate.

Incautious generosity, financial strain, and family/work time pressures can lead to scam vulnerability and potentially to a financial disaster. Take the time to think carefully. Am I or someone I know truly vulnerable to a “financial gain” or a “help” scam? You may still be confused about some aspect of these offers, or some other major financial decision that could have life changing consequences. If so, a free 30 minute consultation with me, consumer/small business bankruptcy attorney James H. MaGee may be of help. Every situation is different, and the options may vary according to the details of the case, but as it is a free 30 minute consultation, why not take advantage of my expertise with no obligation?

Rebuilding the financial foundation for your life after falling behind on bills, or after a life changing event, is complex, no two cases are exactly alike. I may be able to help you understand your situation more clearly; I can certainly help you by discussing certain trade-offs and options concerning your situation, including bankruptcy chapters and their applicability to your situation. You can email my scheduler through our website for your free 30 minute consultation at www.washingtonbankruptcy.com or e-mail directly at [email protected]. To schedule immediately, you can reach a member of our friendly staff by calling at (253) 383-1001. Our office hours are Mondays through Thursdays, 9 AM until 5:45 PM, and on Fridays from 9 AM until 12 PM.

Who is Robert Shiller and why are his recent comments on housing price recovery so important? What does he have to say?

Robert Shiller says that values in the housing market are not poised for an overall recovery, notwithstanding spring-summer 2012 housing price increases in a some cities. He says that today’s low interest rates alone are not enough to spur a housing price recovery.

Why should we care what Robert Shiller says?

Well, this guy is big – really big. In fact, he “invented” the perhaps most widely watched economic indicator of housing market price movement in the United States.

He is “Shiller” of the Standard & Poor’s Case-Shiller 20-City Housing Price Index. So, when Robert Shiller talks about housing price movements, people listen, and listen very closely.

Mr. Shiller notes that there was in fact a 9 percent increase in housing prices over the time period March – September 2012 in his eponymous Case-Shiller housing price index. Some optimistic pundits have said that this good news shows near certain promise that we are “turning the corner” in the housing price slump.

Strongly disagreeing with these optimists, Mr. Shiller says in so many words that this 2012 Spring-Summer uptick doesn’t mean a thing in terms of predicting a long term positive trend of housing price recovery.

Mr. Shiller is more than pleased to splash the optimists with a few buckets of cold water reality.

Mr. Shiller offers well reasoned responses to the optimism of others. Mr. Shiller doubts that housing price optimism is well placed. Let’s examine three expressions of optimism and compare Mr. Shiller’s three down-to-earth responses:

1. Optimism: Concurrent with the housing price increase nemployment rates dropped from 8.2% to 7.8% March – September 2012
Mr. Shiller’s cautious response: No big deal; unemployment rate declines simply continued a trend inexistence since 2009 and unemployment tends to decline in the summer season anyway.
2. Optimism: Housing start permit applications have increased and the National Association of Homebuilders/Wells Fargo Index of traffic of prospective home buyers increased over the summer and fall of 2012.
Mr. Shiller’s pessimistic response: No big deal; the more important spring 2012 study/survey by Wellesley College’s Karl Case and McGraw-Hill Contruction’s Anne Thompson contradicts that there was no increased optimism or enthusiasm expressed by prospective homebuyers.
3. Optimism: Foreclosure activity decreased in 2012, thus presumably making less inventory available on the market.
Mr. Shiller’s discounting response: No big deal; this just continues a longer term trend in existence as reported by Realty Trac and thus should not by itself be seen as the kickoff of any long term trend of housing price increases.

Finally, Mr. Shiller presents five reasoned and discouraging response to optimism concerning housing price recovery:

1. Mr. Shiller says that the 86 percent increase in housing prices 1997 through 2006 was an historical anomaly, unlikely to be repeated by now wary investors. Such anomalies have eventually reverted to keep the long term growth in housing prices pegged to and indexed to an inflation adjusted consistent value says Mr. Shiller. The recent “housing price boom” was almost completely reversed by 2012, putting housing prices back on an inflation adjusted consistent value curve at just a point or two above ongoing inflation rates.
2. Mr. Shiller notes that there has only been one other major national housing price boom in the last century – 1942 to 1953 in which housing prices in real terms rose 68% nationally. It took 44 years (to 1997) for the next “boom” to kick in – and on that metric, the next boom is going to kick in at about the year 2050. Care to wait around for it? (Note: I, James MaGee will be 92 years of age when it starts to kick in….)
3. Mr. Shiller notes that home ownership is actually in decline, at 69% in the third quarter of 2006, down to 65.5% in the third quarter 2012.
4. Mr. Shiller notes that the wild lending that fueled the boom is more reigned in now by (a) new ability-to-pay standards announced by mortgage lenders and (b) the oversight of the new federal Consumer Financial Protection Bureau.
5. Finally, the Zillow-PulsenoicsHome Price Expectation Survey (involving the input of 100 housing price forecasters) was predicting very modest inflation adjusted housing price growth increases of only 1 to 2 percent per year over the next half-decade.

Mr. Shiller’s final word: Don’t expect an increase in your home price to bail you out of any problematic financial situation, and don’t do anything dramatic or difficult such as over-reaching financially to buy an expensive home or buy a home for short term use if you expect to have to move fairly soon, as there is too much uncertainty to justify any aggressive speculative moves right now.

Much thanks to the New York Times, Sunday, January 27, 2013 edition, page 1, Sunday Business Section: Economic View, by Robert J. Shiller; Titled, “A New Housing Boom? Don’t Count on It.”

Dating, Marriage and Credit Scores: A New Twist in the Road To A Happy Life

He was tall, religious, well employed in finance and had great teeth. Even better, he came from a nice family background, and was brought up similarly to her. She was attractive, peppy and fully employed as a flight attendant.

But Chicago’s Jessica LaShawn was dumped after a first date when somewhere between salad and dessert Jessica truthfully answered a question about her credit score. Jessica’s FICO score was subprime (below 660), as she had paid late on some bills and had some lingering unresolved debts. A couple of days later, Jessica received an apologetic text message from her potential prince charming – no second date – it wasn’t Jessica, it was Jessica’s credit score which caused him to decline a second date with her. Good bye prince charming. Good bye, white picket fence…

Credit Scores are newly becoming a relationship metric, as many people are deciding who to consider and who not to consider for marriage based in part upon credit scores. Dating site executives report that they are receiving more inquiries and interest about when and how to bring up the issue of credit scores when deciding whether to date or pursue a relationship with a potential suitor.

Similarly, many marriage counselors relate that improving credit scores is a frequent topic of discussion with marital and relationship counseling clients. Dissimilar levels of concerns about maintaining an acceptable credit score can lead to significant friction in a long term relationship.

So how does bankruptcy fit into the universe of dating, marriage and credit scores?

Credit scores affect us all. Credit scores are kept on about 200 million Americans by FICO. More than 34% of these Americans (68.6 million) tracked by FICO have subprime credit scores of less than 660. FICO is short for Fair Isaac Corporation.

About 18.5% of Americans (37 million) enjoy the highest credit score range of 850-900, another 19.0% (38 million) enjoy very good credit scores of 750-800. About 16.0% of Americans (32 million) enjoy “good” credit scores of 700 – 750 and 12.2% of Americans (24.4 million) have borderline FICO credit scores of 650-700.

If unpaid bills, high credit card balances, lingering tax debts, old foreclosures and unresolved vehicle repossession deficiency obligations are keeping you in the “below 700” catagory with respect to FICO scores, what can you do?

How about a bankruptcy? What? Doesn’t bankruptcy ruin your credit, you ask?

Well, sometimes you have to go down before you can go up.

Many experts recite that a bankruptcy will temporarily dump your credit score down to 550, but then in many circumatances you will automatically start a very steady and sure climb back to a level of 700 (good), 750 (very good) or maybe even higher.

The New York Time (April 12, 2012) reports that the car loan or credit card for which you were unable to qualify right before bankruptcy can very likely immediately be yours right after a bankruptcy filing. This might suprise you, but after bankruptcy, many creditors will actively and very aggressively again solicit your business. This sounds very counterintuitive and maybe even a bit crazy, but strangely it is true.

After almost 19 years, I keep thinking that some day I will have seen it all when it comes to Creditors. However, the Creditors keep suprising me with new ideas and schemes, and these are often to your benefit, so check out this new shocking twist: I have had a few Chapter 7 clients show up at Court bearing letters that recite in essece the following:

“Dear Newly Bankrupt Potentially Valued Client: We have reviewed that you have a vehicle financed with another lender. We want you talk to your lawyer at court about giving up that old financed car in a voluntary repossession, thus giving the car back to your lender. If you do this, then on your way home from bankruptcy court just stop by our car lot and secure quick financing for a newer and better car.”

How does that grab you? Stop by the car lot on the way home from bankruptcy court and pick up a new car? Strange, but often true.

If your marriage relationship is suffering the stress of not meeting financial and mateiral goals due to chronically low credit scores, then consider a bankruptcy filing to charge up the material needs which, face it, are an important part of living with some contentedness in a long term relationship.

We all like to say that love is enough, but we all know that every marriage has material needs and material aspirations. Even if such material goals are modest, such as replacing that aging car, starting to save for retirement or college, moving up to a more suitably sized home, getting on a cell phone data plan instead of being stuck with an expensive “prepaid phone” or maybe even renting a little nicer place to live – we all have needs and aspirations. Chronically low credit scores can take away some of the material comforts that we look forward to enjoying with our mate in a long term relationship, and these disappointments can take a little of the joy out of your daily walk of relationship and marriage.

And in Jessica’s LaShawn’s date with Mr. Right, he had her at hello…but it was quickly goodbye due to Jessica’s chronically low credit score. If Jessica had filed for bankruptcy well before her dream date appeared and had thus already started the amazingly quick post-bankruptcy credit score recovery process, she would probably have received that offer of a second date. But she was not proactive and did not file for bankruptcy. Jessica just ignored her declining credit situation because it was too uncomfortable to face. The result? Sadly, for Jessica the story is “white picket fence postponed”.

Get on with your life and start living now: Consider bankruptcy as a strategic tool for your long term dating, relationship and marital hapiness. You will be shocked at how quickly your creditworthiness is restored post-bankruptcy.

And while you are at it, spread the good news that there is hope for the future through bankruptcy- people need to know, and if you won’t tell them, they will never learn.

[Special thanks to Jessica Silver-Greenberg, for writing “Perfect 10? Never Mind That. Ask Her for Her Credit Score.” NY Times, Page A1, Wednesday, December 26, 2012.]

Considering the need for a bankruptcy filing to get your credit back on track? Contact us at 253-383-1001 for an appointment in Tacoma, Puyallup, Olympia, Chehalis, Renton or Bremerton.

Does the bankruptcy double standard play a role in personal bankruptcy?

A recent article from The New Yorker highlights a troubling disparity in the way we view bankruptcy and loan restructuring in general in this country. As was evidenced in the recent bankruptcy filing of American Airlines, bankruptcy for corporate entities is generally considered part of an overall savvy approach to managing debts and investments.

While American Airlines could have continued paying its debts (it filed bankruptcy with more than $4 billion in the bank), it opted to take the bankruptcy route, which will allow it to restructure its debts into ones that make more financial sense. After the company filed its Chapter 11 bankruptcy petition, most analysts praised its decision, citing the success other airlines have had with reorganization bankruptcies in recent years.

However, for consumers interested in filing personal bankruptcy, the attitude of the general public is vastly different.

The current turmoil in the housing market highlights exactly how differently the general public views personal bankruptcy:

The housing bubble falsely inflated housing prices. Arguably, the analysts and economists who were equipped to recognize this bubble for what it was an attempt to prevent its burst did not. Also arguably, consumers might have recognized the bubble, but were less likely to do so than those trained in economic fields.
Lenders and homebuyers took on risky debts, betting on rising home prices to pay them off. We now know that those debts were not so good.
Many banks lost millions or billions of dollars on bad home loans. Some of those banks benefitted from taxpayer-funded bailouts. Others have staunchly refused to refinance (on a significant scale) mortgage loans that have become untenable for their borrowers.
Many homeowners are underwater on their homes. Sources note that many Americans owe up to 50 percent more than their home’s value on their loan. The “smart move” financially for these people would be to walk away from their mortgage, to abandon their homes and stop paying their mortgages. Most don’t, though.

One of the major reasons more homeowners aren’t walking away from their unaffordable homes, even though such a move would be financially logical, is that nonpayment of loans has been morally stigmatized in the media.

Figures including the head of the Mortgage Bankers Association have reportedly noted that defaults on home loans “send the wrong messages” to community and family members. Others have hinted that we would do well to bring back debtors’ prisons. The total effect, in other words, is that personal bankruptcy and similar moves (even when they’re financially savvy) have been labeled as morally deleterious.

The New Yorker article summarizes the problem in its closing paragraphs, noting that the prevailing attitude in the U.S. runs that individuals ought to “do the right thing” by honoring their debts, but that large businesses, banks, and corporations—who usually have much more capital at their disposal—can do whatever earns them the greatest profits.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone 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 packed with plenty of information. The life impact of meeting with me in person will be unforgettable. 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 email my scheduler through our website for your free 30 minute consultation at www.washingtonbankruptcy.com or e-mail directly at [email protected]. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

How can I avoid bankruptcy fraud allegations?

Every so often, there’s a local news story about someone who has been convicted of bankruptcy fraud. This week, the case belongs to one George Raynor, of Baileyville, Maine. While the case itself isn’t exceptional in any way, it highlights an important precaution for potential bankruptcy filers to note in order to avoid a fraud conviction.

Bankruptcy fraud is exactly what it sounds like: a bankruptcy filer’s provision of false information to the court that alters the outcome of his or her bankruptcy case. In some cases, bankruptcy fraud can be unintentional, but its penalties are steep: those convicted of bankruptcy fraud might face up to five years in jail and up to $250,000 in fines.

Common examples of bankruptcy fraud include an attempt to shield property from the court; a filer might attempt to transfer property from his or her name to the name of a friend or family member or might simply fail to report ownership of a piece of property or sum of money.

But bankruptcy fraud can also occur when a filer fails to mention income he or she is expected to receive in the future. Raynor’s case falls into this category.

According to the Bangor Daily News, Raynor and his wife filed a bankruptcy petition in 2006 but, in their list of assets, did not mention:

A savings account in a bank;
A deferred compensation retirement account valued at roughly $150,000;
A lump sum payment from his retirement account in the amount of $97,000; and
A payment from his former employer of $12,000 as compensation for unused sick and vacation days.

Now convicted of the charges, Raynor could see as much as five years behind bars and fines of up to a quarter of a million dollars. To date, Raynor’s sentencing has apparently not been scheduled. Often, the amount of the fine assessed on a bankruptcy fraud conviction roughly equals the amount of money or value of property that the filer attempted to withhold from the court.

One of the easiest ways to avoid bankruptcy fraud is to work with a bankruptcy lawyer. Working with someone who is familiar with state bankruptcy laws and the procedures of the bankruptcy court can go a long way toward avoiding mishaps that could delay or derail a case.

Lawyers can also advise filers about which of their assets they must list, whether gifts or property transfers will be considered legal by the court, and what outcomes they can expect from their bankruptcy case.

In cases where a filer may have future income due to him or her, a lawyer can help determine how to calculate the value of that income and how to report it on bankruptcy filing paperwork.

Is student loan debt a bigger problem than credit card debt?

USA Today recently reported that student loan debt in the United States, which totals $850 billion, now exceeds outstanding credit card debt in the U.S., which totals $828 billion.

USA Today gets its numbers from a web site publisher named Mark Kantrowitz, who publishes two scholarship matching services called FinAid.org and FastWeb.com.

A more interesting element of this issue has to do with the monthly repayment numbers facing borrowers. The USA Today article suggests that $30,000 of student loans, payable at 6.8% interest over ten years would amount to $350 per month. At this level of debt, the average person would need to earn at least $42,000 per year.

In a bankruptcy context, student loan debt is not dischargeable except in cases of “undue hardship.” In most cases, “extreme hardship” has essentially been limited to student loan debtors who have a medical issue that prevents them from working. At this point in time, debtors have not been successful in arguing for hardship discharge on the grounds that they cannot find a job in this economy that pays enough to support their student loan obligations. There was a recent Supreme Court decision involving student loans and bankruptcy, but that case did not address the substantive issue of what constitutes “undue hardship.”

Why does it seem like everyone is filing for bankruptcy these days?

A growing number of baby boomers are going bust.

A newly released study found that 42% of all individuals filing for bankruptcy were between the ages of 45 and 64 in 2007 and that older Americas are filing for protection from creditors at a much faster rate than younger adults.

“The baby boomers are disproportionately represented in bankruptcy proceedings,” wrote John Golmant and James Woods, who compiled the study that appears in the September issue of the American Bankruptcy Institute’s ABI Journal. Golmant is a statistician and Woods is a social science analyst, both with the Administrative Office of the U.S. Courts in Washington.

Bankruptcy filings are increasing fastest among individuals between the ages of 55 and 64, the study found. From 2002 to 2007, the percentage of filers in that category grew 65%.

By comparison, the demographic group that experienced the largest percentage drop in bankruptcy filings was Americans 25 and younger, down 60% in 2007 from 2002.

“This significant demographic uptick in older bankruptcy filers has outstripped the aging of the general population as a whole,” Golmant and Woods wrote.

The authors said the recent housing crisis is at least partly to blame, as falling home prices left baby boomers with little or no home equity. The study noted that persons older than 50 were often targeted during the refinancing boom in the early part of last decade.

High levels of credit card debt and mounting health care bills also contributed to the higher number of filings among older Americans, the study found.

The recent study shows the continuation of trend stretching back to at least 1994. In that year, people between the ages of 55 to 64 accounted for 7% of all individual filings. In 2007, the same group accounted for 15.2% of consumer bankruptcies.

What debts are dischargeable through filing a Chapter 7 Bankruptcy?

A Chapter 7 bankruptcy is not as generous as a Chapter 13 when it comes to the range of debts that can be discharged. However, there are still a wide range of unsecured debts that can be discharged. One of the most common
debts is that of credit cards, and they are typically the major component of any Chapter 7 bankruptcy petition.

Bankruptcy itself can only ever discharge unsecured debts, so secured loans such as mortgages and car loans will remain no matter which Chapter a debtor decides to file under.

Some of the more common debts that can be discharged include:

· Personal loans including loans from friends, family, and employers

· Credit cards including overdue fees

· Medical bills

· Debt judgments

· Repossession deficiencies

· Auto accident claims except those involving drunk driving

· Business debts

· Monies owed under lease arrangements

· Negligence claims

· Income taxes that aren’t priority taxes

· Tax penalties over 3 years old

When it comes to back taxes and penalties, there are provisions that relate to when you actually filed returns and whether or not fraud or tax avoidance is an issue. While these unsecured debts are discharged through a
Chapter 7 bankruptcy petition, the following debts cannot be:

· Debts not included in the schedules filed

· Recent taxes

· Child or family support

· Criminal fines and/or restitution

· Accident claims involving drunk driving

· Penalties payable to the government other than tax penalties

· Student loans

· Taxes for years where returns were not filed or filed for less than 2 years

A Chapter 13 petition for bankruptcy may discharge some of these debts. Where a Chapter 13 petition does benefit a debtor, is in its capacity to help debtors catch up on overdue debts that cannot be discharged. This may
assist in preventing further action such as jail time for unpaid fines. If you’re in doubt as to which Chapter to file for bankruptcy under, consult an experienced bankruptcy attorney.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a
friend as we all know someone 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
packed with plenty of information. The life impact of meeting with me in person will be unforgettable. 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 email my scheduler through our website for your free 30 minute consultation at www.washingtonbankruptcy.com or e-mail directly at [email protected]. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Can I clear an IRS debt through bankruptcy?

Generally speaking, taxes are exempt from discharge through bankruptcy. However, in some cases you can discharge an IRS debt using a Chapter 7 bankruptcy filing. The only IRS debts that can be discharged are those that
are over three years old. There are certain conditions that must be met first.

The first condition is one that is attached to most debts. This relates to fraud and, in the case of taxation, tax evasion. Debts that arise out of fraud or tax evasion cannot be discharged through bankruptcy.

Other conditions include when you filed the tax return for the debt. Your return must have been filed at least two years prior to seeking relief through a Chapter 7 filing. There is also a “240-day rule” that has to be taken into consideration.

The “240-day rule” states that the tax debt in question must have been assessed by the IRS at least 240 days before you filed your bankruptcy petition, or it must not have been assessed as yet. Once your petition for
bankruptcy under Chapter 7 has been processed, your debt to the IRS will be discharged.

This effectively wipes out your personal obligation to pay the debt, and prevents the IRS from going after your bank account or garnishing your wages. There is one exception to this – if the IRS has recorded a tax lien
on your property before you filed your petition for bankruptcy, that lien will remain on the property.

Taxation can be a particularly tricky area when it comes to bankruptcy. It is important to seek legal opinion from a qualified and respected bankruptcy lawyer before proceeding with any application. Their advice could save you a lot of heartache and perhaps hundreds, if not thousands, of dollars.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a
friend as we all know someone 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
packed with plenty of information. The life impact of meeting with me in person will be unforgettable. 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 email my scheduler through our website for your free 30 minute consultation at www.washingtonbankruptcy.com or e-mail directly at [email protected]. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.