Tag Archives: Tacoma Bankruptcy

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.

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.

What if my income makes me ineligible for bankruptcy?

Bankruptcy is a very complex piece of legislation made more complex by the fact that some states have enacted their own versions of what is, essentially, a federal act. Despite having state bankruptcy laws in place, bankruptcy is still petitioned through the Federal Bankruptcy Court system. While it is fairly rare, it is technically possible to be ineligible for bankruptcy because of your income. As I stated, it is rare, however, the legal system is starting to see more people fitting this criteria every week.

So why would income make you ineligible for bankruptcy? To qualify for a Chapter 7 petition for bankruptcy, your income needs to be below the state median. The term ‘income’ in this situation is actually a figure that is determined by averaging your actual before tax income over the proceeding six months. If you had a high income job, and then found yourself out of work, that high income job may push you over the state median – this means your ineligible for a Chapter 7.

The bad news is that on November 1 2011, the median income in all states dropped. For one person households, the drop is only a few hundred dollars per year, but for a four person household, the drop could be as high as $4000 depending on the state you live in. Every state’s median income is derived from data collected by the Census Bureau and with unemployment high it was only natural that median income levels were going to drop. This means that more people are now ineligible to file a Chapter 7 petition than before.

On the other hand, if you are trying to file a Chapter 13 petition for bankruptcy, you may be ineligible due to too little income. In a Chapter 13 petition, you need submit a payment plan that will cover your secured and priority debts as a minimum. If you are not working or you have a very small income, you may not be in a position to submit a plan that adequately covers those debts. The trustee may then refuse to accept your payment plan. As you can see, there is the possibility for a catch 22 situation, technically ineligible for either forms of bankruptcy.

There are options available that an experienced bankruptcy attorney can consider. While you may not qualify for a Chapter 7 petition based on income, but if you are only slightly above median, there is an alternate route whereby your attorney can work through every expense. This route looks at allowable expenses such as car costs, rent, education and medical expenses, which may well modify your income enough to bring you below the state’s median. . You may also qualify for special circumstances, or totality of circumstances – the latter will look at your lost employment to determine if this is going to be a long term situation. After all, if you don’t qualify today, you may well in two or three months when your past employment has a reduced effect on your average income.

There’s a saying we hear a lot in law – “what a difference a day makes.” In law, this is very true. If you file for bankruptcy on a Thursday, you may be ineligible for a Chapter 7 – submit that same petition on the Friday, and you could be eligible. It all comes to the average of your income over the past six months. By waiting one day, you could move from one pay period to another, with the second being unemployment, and that can significantly drop your average income to below the state’s median.

That indeed may well become your final option – waiting. Of course, that is only an option if you have that time up your sleeve. This well depends on your circumstances and the amount of pressure coming from creditors. What is important to note is that bankruptcy law is always in flux. What is true today may not be true tomorrow, especially when judges enter new interpretations of the law. The smartest move anyone can make when considering bankruptcy is to engage the services of an experienced bankruptcy attorney. It is their job to keep up to date with all the latest changes in bankruptcy.

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 [email protected]. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

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.

Do I have to include credit cards with a zero balance on my bankruptcy petition?

While bankruptcy is designed to help people escape serious debt problems, the situation becomes interesting when it comes to credit accounts with zero balances. These are typically credit card debts, either through credit card companies or those issued by individual businesses. When filing for bankruptcy, debtors only need to include actual debts, so in theory, they do not need to list those zero balance accounts. The situation becomes a little murkier if these accounts include monthly or annual fees, and those fees will become due during the bankruptcy process.

In most instances, you can leave these accounts out of your bankruptcy petition. You should be aware that your petition for bankruptcy does become a matter of public record and that most credit providers regularly data match bankruptcy petition notices and their own records. While your account may have a zero balance, your credit provider is quite within their rights to cancel those cards to prevent you incurring new debt.

Should your credit provider not cancel those accounts, they will be available to use post bankruptcy. This can help to kick start a new positive credit history post bankruptcy so it is well worth considering paying down any credit accounts with low balances prior to filing for bankruptcy. Paying down those accounts will not guarantee they survive the bankruptcy process, however, it can be well worth exploring the option.

Bankruptcy will, especially in a Chapter 7 bankruptcy, discharge all eligible debt no matter how large or small the balance is. Paying down to zero any low value (less than $200) balances makes sense for a number of reasons, most particularly, having that account survive bankruptcy and available post bankruptcy.

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 staff1. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

I’m newly graduated, are there any jobs out there for me?

New census data recently revealed states that Americans between the ages of 20 and 40 have become a “lost generation” of unemployed and underemployed.

The once American dream of going to college, obtaining a degree, finding a career, and making it on your own, is now gone. The Associated Press says that only 2.4% of college graduates find a job that motivates them enough to move out of the state they grew up in. The other 97.6% of graduates will move back home and live with their parents. It is estimated that 5.9 million members of this so-called “lost generation” will finish school, and move back in with their parents. That number is 25% more than during the last recession the U.S. went through.

The even more frightening aspect of all this is that only 55.3% of this generation will ever start a career. Most will continue to work various odd jobs, just like they did when the first left school. That being said, the entire American process of growing up, getting married, buying a house, and having kids is delayed. Marriage among the “lost generation” has reached a new low of 44.2%, and homeownership fell from 67.3% in 2006 to 65.4% in 2010.

On top of all this, economists have squashed the idea of “things will get better soon”, by claiming that this trend will continue for at least the next ten years, and when it’s finally over, it will take another ten years for this generation to fully recover.

When the “lost generation” is finally “found” again, they will be older, but none the wiser, as they will have little experience and absolutely no assets to speak of.

What can a creditor do if I default on my debt?

A common question that people considering bankruptcy have, is what will happen if they don’t pay back their debt. There is a time frame limiting the ability of a creditor to pursue the collection of a debt. That time frame is in between the time of default and the expiration of the statute of limitations.

After plenty of phone calls and threatening letters, your creditor will have to go to court and obtain a judgment against you. A judgment is simply the official decision of a court at the completion of a lawsuit. If in favor of your creditor, it can be thought of as a court order to pay your debt.

The first step to obtaining a judgment is filing a lawsuit. If a creditor has filed a lawsuit, you will receive notice. It is a legal requirement that you are served with paperwork notifying you of the hearing time and location. This is commonly known as a “summons”.

In the hearing, the judge will decide if the creditor should be allowed to collect the debt. If the debtor fails to appear, the judge has no choice but to decide in favor of the creditor and a default judgment will be issued against you.

If the court rules in favor of the creditor, the creditor then has the right to pursue collection of the debt in question. At this point, the creditor will most likely attempt to collect the debt from you voluntarily. If you do not voluntarily pay back your debt, the creditor will proceed with collecting the debt through other means. This could include requesting a wage garnishment, a levy on the debtor’s bank accounts, and/or a lien on the debtor’s property.

One thing to remember is that this takes time. The time period from your initial summons to collection of debt, is normally several months. All current and future actions by creditors to collect debt will cease immediately once your bankruptcy petition is filed. While I do not recommend waiting until the very last minute to file, you have the time to make an educated decision about your current financial situation, and what you want your future situation to look like.

Is Credit Counseling really going to help me?

We’ve all heard clients complain about the pre-filing credit counseling requirement and ask why they have to jump through this hoop when they know they’re going to end up filing for bankruptcy anyway. In many cases, we may be inclined to agree: a client facing foreclosure or repossession is in a hurry, and we know that there aren’t any other realistic options on the table.

However, a new study released by the University of Illinois Department of Agriculture and Consumer Economics and MMI, suggests that the credit counseling requirement does benefit those bankruptcy debtors after the fact. The study sought to measure two general areas: change in knowledge and change in behavior.

The educational value, based on pre-test and post-test scores, seems clear: the average score jumped from 77.1% to 85.9%. And an overwhelming percentage of participants surveyed reported that they felt more knowledgeable about their options and more confident in their ability to make financial decisions after the credit counseling briefing.

The other conclusion drawn by researchers–that credit counseling impacts future behavior–is less clear. That conclusion rests on participant reactions to a list of financial behaviors pre- and post-counseling. However, the pre-briefing questions related to actual current behavior, whereas the post-briefing survey asked which behaviors participants plannedto implement. Good intentions being what they are, we’ll need to see some data on actual post-briefing behavior before drawing any firm conclusions on that point.

Why is the National Association of Consumer Bankruptcy Attorneys so important to James H. MaGee and his clients?

I am proud of my longstanding membership in NACBA. As most consumer bankruptcy attorneys are solo or small firm practitioners, NACBA forums and Members Only Workshops give us a location to learn new materials, trends and tactics, and give us a refuge and available community of like-minded, caring professionals. This is crucial to professional advancement, avoiding professional isolation and aids much in problem solving for our clients.

NACBA is crucial. Failing to join and participate in NACBA is foolish and short sighted, in my opinion.

So, it is with great pleasure that I announce…….the following…….!!!!!

BIG NEWS! I am off to Colorado Springs to attend the prestigious (and awesome!) Members Only Workshop of the National Association of Consumer Bankruptcy Attorneys October 27-29th, 2011.

Last October 2010, I attended the same annual three day workshop in Puerto Rico and was humbled and energized by the quality of people I met there. NACBA (of which I am a proud member) is a group of attorneys; NACBA really care about the practice of bankruptcy. NACBA members have an overwhelming compassion for the suffering and hardships of individuals and families that find themselves in a bankruptcy situation.

The NACBA Members Only Workshop education is top-notch! Few other local lawyers calling themselves bankruptcy attorneys bother to join NACBA….and even fewer attend the Members Only Workshops. In 2010, only four attorneys from the entirety of Washington state bothered to travel to Puerto Rico for the incredible October 2010 Members Only Workshop educational opportunity. Failing to attend at least one Members Only Workshop per year is a huge mistake. NACBA schools lawyers on the present practice and the future trends in representing people in federal bankruptcy court. Those attorneys calling themselves bankruptcy attorneys who do not participate in NACBA Members Only Workshop education offer only dated and dangerous information and technology …. Practicing bankruptcy law without the guidance and assistance of NACBA Members Only Workshops may be like driving around at night, in the fog, without bothering to turn on the headlights. Just a bit dangerous, you think?

Demand the best….demand that your bankruptcy attorney be an active and current member of the National Association of Consumer Bankruptcy Attorneys NACBA and that he/she attend at least one NACBA Workshop event per year.

Upon my return from NACBA Colorado Springs, I will write you a compelling email newsletter and some blog posts (see www.washingtonbankruptcy.com or www.jameshmagee.info for blog access) introducing you to some of the exciting new technology and information that I learned at the National Association of Consumer Bankruptcy Attorneys’ – Members Only Annual Workshop. I can hardly wait to share these new developments with you! Chat with you in November!

Very truly yours, James H. MaGee, attorney

Want to break out of the Credit Card rut this holiday season? – ask for retail layaway!

Retailers are meeting the challenge of "credit contraction" and consumer conservatism by reviving the lost art of consumer layaway.

What is causing the recent revival in layaway programs? How do layaway programs work and operate? Who is offering layaway programs? Should I use retail layaway programs? What other valuable lessons and benefits are offered by layaway programs?

The holiday hangover. Consumer aversion to the dreaded "holiday hangover" of large post-Christmas season credit card bills is one explanation offered by retail industry watchers for the explosive growth and revival of retail store layaway programs. For an anthology of collected media stories about the growth in layaway programs, visit www.layaway.com/company/media_relations.com.

Economic uncertainty. Another reason given is the uncertainty of employment and income perceived by many consumers. Shortly put, it is usually relatively painless to step out of a retail layaway commitment at the last minute….and purchase something more modest priced than the item originally placed on layaway.

Benefits of delayed purchase. Worried about the possibility of receiving a December layoff notice? Better to have that bigger ticket gift on layaway until the last possible minute – retreiving and paying for the item on December 23rd. If the layoff notice comes on December 22nd, then you can simply decline to complete the transaction….with little or no penalty.

Credit contraction. Were your credit card maximum allowable balances (credit limits) reduced so you no longer have "room" on your credit card balance to fit in the purchase? No problem…just place the item on layaway.

(Note: I do not recommend carrying a balance month to month on a credit card. I recommend timely payment of the full balance each and every month so as to avoid finance charges).

To my present knowledge, Sears, Walmart, Best Buy, Toys-R-Us, Marshalls, Burlington Coat Factory, T.J Maxx and KMart all offer layaway. Kohls offers a 3 day hold, but no layaway as of my latest internet inquiry. JC Penny may offer layaway at some locations. I don’t think Macy’s has a widespread layaway program, and I can’t find any indication that Nordstroms has a layaway program. (FYI, most of this information came from an online article, dated Sept. 28, 2011, at www.Bizmology.com.)

Interestingly, Walmart had scrapped its layaway program in 2006, yet revived it just a few years later, as reported October 13, 2011 in the NY Times, page B7 "Wal-Mart Sales Improve at its US Stores" by Andrew Martin.

So to answer the balance of questions about layaway:

Yes, I would recommend investigating layaway programs, but of course read the ayaway agreement fine print ahead of time to ensure there are no costs, fees or payment forfeitures for failing to complete the transaction.

No, I would not recommend layaway if the sole reason for doing so is to because you are already maxed out on other credit cards. Use layaway as a tool to minimize or avoid finance charges and do not use it as a desperate substitute for lack of available credit limit when other cards and accounts are maxed out.

Yes, I would teach your children about layaway. Financial literacy is a valuable lesson…almost as beneficial as the lesson in delayed gratification and financial discipline encouraged by the "save for it" nature of the venerable layaway program.

Happy shopping…and even if it is a bit early….Happy Holidays!