Alabama Bankruptcy Lawyer Blog

Alabama Chapter 7 Bankruptcy Lawyers Discuss Rebuilding Credit

Sun, 12 May 2013 10:51:25 -0600

It's a myth that a bankruptcy is going to permanently decimate your credit score.

The truth is, it will take some time, planning and effort to rebuild it, but our Birmingham bankruptcy lawyers know the process is not likely to hinder you probably near as much as you might fear.

First, you must take into account how a Chapter 7 bankruptcy actually works. That is, most of your key debts will be erased. Once the bankruptcy is discharged (and really as soon as you file), you are no longer responsible for continuing payment. That alone can make many of your financial goals much more attainable.

Secondly, if you plan properly with the help of your attorney, you should be able to avoid any serious consequences that might arise as a result of your credit score taking a temporary dive. And in most cases, a client's score is already poor due to missed payments, maxed out credit cards and collection action.

Beyond that, what's important to keep in mind is that because of the recession, a great many people found themselves struggling financially and record numbers filed for bankruptcy. The end result of that was two things:
1. The stigma that is so often associated with bankruptcy has largely been eliminated. The fact is, almost everyone knows someone who has been affected by the economy.
2. Banks have been loosening their grip when it comes to standards on lending for everything from credit lines to mortgages. If they didn't, they would be excluding a wide swath of people who are otherwise responsible consumers.

So a recovery is truly not as bad - or far off - as you might think.

That said, there are active steps you can take after your bankruptcy is discharged to help expedite the credit score recovery process.

Consider making the following part of your regular routine:

1. Once every month, set a date night with your credit. That is, take a few minutes to review your current credit scores. Look over the progress you've made. See if there were any errors you could have avoided. Set some goals for the upcoming month. This is sometimes a painful process for people to confront every month, but being honest and knowledgeable about your situation will help to set you on the right foot. And it can be pure joy when you are making a debt-free fresh start!

2. When you're reviewing your credit, don't overlook seemingly minor errors. For example, if your name is misspelled or you are somehow connected to an address at which you never lived, that could be a sign that your score has been mixed with someone else's. This happens more than you think. Checking it regularly can help you avoid major problems later.

3. Know that there are limits to how long certain negative information can remain on your credit report, per the Fair Credit Reporting Act. For example, late payments can remain on your history for seven years. Same with charge-offs, judgments and tax liens. Those things should be purged automatically after the cut-off date. Check to make sure.

4. Use your credit card again. This may seem counterintuitive, but one of the best ways to counter bad credit is by using credit cards. You can begin racking up points by making good on the credit you're taking out now. Bear in mind you don't want to max out that card, or your score is going to drop again. As a general rule, keep your balance at no more than 10 to 25 percent of the total available credit.

5. If there are any mistakes, do not hesitate to have them corrected immediately.

6. Pay your bills on time. This truly can't be stressed enough. Even a single late payment can result in a big dip in your score. If it helps, consider having your bills paid through an automatic bill pay service, to help avoid any unintentional errors.

Birmingham Bankruptcy Help: Depression Drives Debt, Studies Suggest

Mon, 06 May 2013 09:32:35 -0600

Our Birmingham bankruptcy lawyers know it makes sense that someone deeply in debt would find themselves distraught and perhaps even greatly depressed about the situation.

However, new research suggests that depression may actual fuel debt. Understanding this connection between our mental health and our financial health may help people who are working to rebuild their credit after a bankruptcy filing.

Researchers with the Harvard Kennedy School of Government published findings in the journal Psychological Science recently, purporting that sad people tend to exhibit something known as a "present bias."

That is, they place more value in the present state of affairs over the future. In other words, instant gratification is prized over the gains associated with delayed gratification - the kind that comes from saving and declining to spend.

It's in this way that many people end up getting ensnared in credit card debt. They may not have the resources to easily afford whatever they're eyeing, but they are still craving that instant gratification.

While some circumstances leading to a financial downward spiral may be beyond our control - a divorce, an illness, a lay-off, etc. - there may be some areas over which we can exert some authority.

For example, some of our clients have struggled with excessive shopping or bill avoidance. Both go hand-in-hand with depression and that pursuit of instant gratification.

It ends up becoming a vicious cycle because the more a person spends, the deeper in debt they become. This will inevitably result in contacts from collection agents - who can be absolutely brutal. This only serves to contribute to a person's feelings of worthlessness and stress.

Our Chapter 7 bankruptcy lawyers are not mental health therapists, by any means. However, we do want our clients to recognize whether there are actions that contributed to the current financial state that could be avoided in the future. Sometimes, that means taking a hard look at all the factors and identifying the root causes.

Another recent study, this one conducted by researchers at the University of Wisconsin at Madison, quantified the debt versus depression ratio this way: For every 10 percent dollar amount that your debt increases, your depressive symptoms increase by 14 percent. Those symptoms would include things like trouble sleeping or eating, feelings of loneliness or persistent sadness.

In most cases, it appears that sharp, short-term debt is the most to blame. Those would be the kinds of debt racked up by payday loan and credit card debt defaults. Longer-term debt tends not to affect us as deeply emotionally.

The most susceptible are those between the ages of 51 and 64. This makes sense when you consider that these individuals are at a time in their lives when they feel as if money shouldn't be a concern. They may feel as if they have somehow failed, and they also have retirement looming, are potentially coping with physical health ailments and age discrimination may make the job market a more hostile landscape.

This aspect of the finding is also in line with a recent analysis of retirement confidence conducted by the Employee Benefit Research Institute, which learned that half of all retirees today exited their jobs before they had initially intended due to disability, health concerns or downsizing.

But even knowing all this, one of the unfortunate coping mechanisms to which many people turn is denial. It's important that in order to move on and attain greater financial health, to accept the dual debt-and-depression problem, talk about it and take action to deal with it. Call us today to learn more about how we may be able to help.

Birmingham Bankruptcy Options for Families of Special Needs Children

Thu, 25 Apr 2013 13:45:04 -0600

Our Birmingham bankruptcy lawyers see the sacrifices, patience and dedication of parents with special needs children.

We know there are a few angels in the midst who make it possible.

But we know they are not all miracle workers. When it comes to providing specialized procedures, treatments, rehabilitation, therapy and education - none of that comes cheap, even for those who are on a decent health insurance plan.

It's not unheard of for families who are on this journey to find themselves deeply in debt, despite government assistance. Sometimes treatments and medications aren't covered by Medicaid or insurance, and the bills can quickly pile up.

In 2008, Washington University researchers discovered that American parents caring for special needs children pay, on average, twice the cost of other parents to raise their child.

This is not an uncommon scenario. Approximately 25 percent of all U.S. households have at least one member with special needs. Nearly 10 percent of children under the age of 15 have been diagnosed with a disability. Some of those are quite severe and require intensive treatment.

Not only do special needs children result in increased expenses, there presence is also correlated with the increased risk of divorce - which is often a major catalyst for filing for bankruptcy.

The non-profit research firm Autism Speaks reports that lifetime care of a person with autism is roughly $2.3 million. Most of those costs are covered by their families. Although there is state and federal help available, that is under constant threat of being reduced or altogether yanked out from underneath these families.

Some of the expenses that parents incur are fairly concrete. For example, one family calculated that for their 5-year-old autistic child, they spend $1,800 annually on diapers. That same family spends another $25,000 for a caregiver, who would not be necessary for a child without special needs. Then there was the part-time job that the mother had to give up in order to help with his care - another $25,000 annually.

In some cases, by the time the child reaches adulthood, he or she requires around-the-clock care that loved ones simply can't provide. Expenses for live-in care facilities can can reach upwards of $100,000 a year. Some of that may be covered by government aid, but not all of it.

And then there are other expenses that are less obvious. This includes the physical and emotional distress that care of someone with special needs can sometimes put on family members.

All of this has these families stretched extremely thin. Even those who are managing to somehow stay afloat financially are often more vulnerable to any kind of unexpected disaster or emergency.

There are those who are able to plan and make it work. But those who struggle should not be ashamed.

Birmingham Bankruptcy: Big Banks Loan Sharking?

Sat, 20 Apr 2013 13:04:13 -0600

Our Birmingham bankruptcy lawyers know that many people might never consider reaching out to a storefront payday lender for help if they were in a financial bind.

There has been a lot of media attention recently on the fact that these kinds of loans, even though they may start out relatively small, can begin to stack up and wreck your credit.

However, many people are accepting the same kind of high-risk, high interest offers from large banks. An official with the Center for Responsible Lending minced no words in labeling this kind of action: loan sharking.

The banks know full well the people to whom they are loaning can't afford the money they are being given. Despite heavy marketing to sell these kinds of micro-loans, consumers almost always end up worse off in the deal.

The major banks involved have been identified as: Regions Bank, Fifth Third Bank, U.S. Bank and Wells Fargo. For their part, the banks say the deals they offer are generally less costly than storefront locations and they do provide an important service to customers.

Perhaps if consumers only sought this service once or twice and were able to immediately pay back the loan, this might be true. The problem is these kind of "deals" end up luring people who can't truly afford them. That leads to a difficult struggle with a cycle of debt.

Some of these loans have annual percentage rates that top 300 to 400 percent. Meanwhile, longer-term loans usually carry an interest rate that doesn't top much more than 20 to 25 percent - and even that is deemed quite high by credit card standards.

It's worth noting that this type of transaction didn't really exist 25 years ago.

But then, we saw a rapid move toward deregulation. That's when demand for short-term credit shot up. By 2007, we had as many payday loan storefronts as we did Wendy's, McDonald's and Burger Kings combined - more than 24,000.

The reason the market has expanded so quickly is because it's so profitable - for the lenders. A borrower who takes out $100 until their next paycheck is usually paying about $17 on that cash. When we translate that into an annual interest rate, we're looking at an APR of almost 400 percent.

In some cases, when borrowers can't cover those amounts when their paycheck comes in, they usually have the option of rolling over the loan for another two weeks or so - for an additional fee, of course. the CRL says that the average payday loan borrower is usually indebted for that initial loan for about six months, rolling over their transaction about nine times. That means the mark-up is exponential.

It's true that payday loan offers made by larger banks are somewhat less expensive. But still with interest rates that are usually in the neighborhood of 200 to 300 percent.

In a report released in March, the CRL reported that most payday borrowers took out about 14 loans in 2011. More than 33 percent took out 20 or more loans. These individuals were twice as likely to rack up overdraft fees, as opposed to other bank customers. This makes sense, as most of the banks are taking the loan reimbursement right out of these people's checking accounts - whether or not they have the funds to cover it.

As of yet, most of the regulatory scrutiny on these locations has focused on the fly-by-night storefronts, not the larger banks. But we could see that change.

It's not so much that a payday loan - or even a few - will drive you to bankruptcy. The bigger issue is that if you are continuing to take out loans to cover basic, every-day expenses, you may have a more serious debt problem than you realize.

Filing for bankruptcy will help you clear most of your outstanding debts, and allow you to hit the reset button on your finances - giving you a clean slate.

More Birmingham Doctors Seeking Bankruptcy Protection

Fri, 12 Apr 2013 11:35:52 -0600

Physicians in poverty?

Anyone who has ever received a medical bill might wonder how that's possible. However, our Birmingham bankruptcy attorneys know that this is actually quite a bit more common than you might think.

The American Bankruptcy Institute recently reported that the number of bankruptcy filings among doctors has shot up in recent years.

There are a number of contributing variables.

First, many doctors are starting from a disadvantage because of their sky-high student loans. If they decide to open their own practice, there are costs for office space, diagnostic machines, other medical equipment - not to mention malpractice insurance. Doctors may have a higher-than-average income, but it costs an awful lot to practice medicine in the United States today.

Secondly, the declining economy has meant that many people are opting out of annual office visits or non-essential elective procedures. Physicians are also receiving reduced insurance reimbursements, increased costs for certain medications and the ever present need to keep up with more and more stringent regulations.

Thirdly, just because a person is an excellent doctor does not make him or her an amazing accountant or businessperson. Especially in private practice, ensuring all the bills are paid, the taxes are appropriately filed and the reimbursements are received - that can be a tall order for someone whose primary focus is medicine.

Exacerbating this situation is the fact that doctors aren't used to admitting they don't have all the answers or that they need help. Typically, they are the ones doling out the answers and the help. For this reason, many hold off on seeking intervention until their financial situation has gotten dire.

The good news is that many doctors are able to file for bankruptcy and still emerge with the ability to either keep their practice open or at least continue practicing medicine elsewhere.

One dramatic case out of Florida was chronicled by CNN, wherein the doctor of a private practice had been attempting to strike a balance between ballooning debt and juggling her practice and a side job at a nearby hospital. She was located in an under-served area, where clients were often uninsured and had trouble paying even bottom-level rates.

She fell behind on her taxes to the state. One day, state tax officials showed up at her practice with an order to shut down the clinic. She immediately dialed a bankruptcy lawyer, who was able to get an emergency order filed while the agents were still cooling their heels in the waiting room. The doctor then emerged with a case number for bankruptcy, which meant the agents left without shuttering the practice.

Eventually, the physician was able to restructure the debt in a Chapter 13 filing and manage to keep the clinic operational.

The dramatic, eleventh-hour filing was effective in the end, but it could have been avoided with an earlier call to a bankruptcy attorney.

The reality is that a private medical practice, like any other business, is vulnerable to ever-changing economic winds. That means in many cases, the situation may have been entirely out of your control.

Our Birmingham bankruptcy lawyers want to offer the opportunity to take back that control. Call us today to learn more about how we can help.

Birmingham Bankruptcy Sought By Small Business Owners

Mon, 08 Apr 2013 11:05:08 -0600

A new report released by the nonprofit Alabama Policy Institute reveals that Birmingham was ranked the fourth-worst city in the state in terms of small business friendliness.

Our Birmingham bankruptcy lawyers were disappointed to hear this, and understand that the failure or struggles of a small business often leave owners in dire personal financial straights. Filing for personal bankruptcy could offer some much-needed protection to help prevent you from losing everything.

The measurements used to score business-friendliness quotients in Alabama cities were economic vitality, community allure, business tax burden and transportation infrastructure.

Overall, Birmingham rank 47th out of 50 of the state's largest cities. On economic vitality, it ranked 39th. On business tax burden, it ranked 49th. With regard to community allure, it ranked 47th.

The only upside was that Birmingham ranked 8th for transportation infrastructure, meaning there is something upon which we can build. That's encouraging, because right now the state is a destination for new businesses or those looking to expand. However, some cities - including Birmingham - clearly need to do more to attract industry.

For those firms that are already here, though, business is sometimes a struggle. This is not unique to Alabama. The reality is, many small businesses have struggled for survival over the last several years, due to the tanking economy.

Many small business owners have a great deal of their own savings and other assets invested into the company. When a business fails to thrive for an extended period of time, that could force the owner to take out extended lines of credit, and the situation can quickly spiral out-of-control.

Whether you will have to close the business and liquidate or whether you might be able to save it really depends on the kind of business you own and the kind of bankruptcy for which you file.

For example, if you have a sole proprietorship, there is legally no distinction between you the owner and the company. So usually what that means is that your bankruptcy is the business's bankruptcy. Business debt is considered the same as your consumer debt, so it would have to be listed as part of your personal bankruptcy filing. That doesn't necessarily mean you will have to shut down. With the business debts discharged, you may be able to start fresh - or be in a better position to start something new.

In a corporation or an LLC, your personal finances and those of your business are considered two separate entities. That means you are not going to be held personally liable for the company's debts. It also means that the company can't be held liable for your debts. There are a few cases in which there might be an exception, but your bankruptcy lawyer should be able to fairly quickly assess your situation and determine where you stand.

You also have options with regard to what kind of bankruptcy you file. For example, in a Chapter 7 bankruptcy, all of your unsecured debts are going to be discharged, which means you will no longer owe them. On the other hand, a Chapter 13 filing will be a reorganization of your debts, which is a longer-term repayment plan.

Choosing the right option is going to mean carefully weighing the kind of business you own and what you want to see happen in the future. In some cases, people simply want to walk away from the venture altogether. Other times, they want to fight to do everything they can to save it. Your decision on this is going to dictate how we move forward.

If your business is struggling, waiting to consult with a bankruptcy attorney could potentially put you in a worse-off position. You may not need to file, but if you do, sooner than later is usually the way to go.

Our Birmingham Bankruptcy Lawyers Clean Up The Money Mess Your Ex Left

Mon, 01 Apr 2013 06:44:02 -0600

Enduring a divorce is perhaps one of life's most wrenching experiences - often due in no small part to the fact that your ex may have the power to batter you financially.

Our Birmingham bankruptcy lawyers know that even if you and your divorce attorney hammer out an agreement with your ex to split the outstanding joint debts down the middle, creditors don't have to honor that agreement. In fact usually, they don't.

And if your ex misses a payment or stops paying altogether, creditors may not even inform you, particularly if your name was not the primary name on the account. This often gets people into a great deal of financial trouble when they learn the account has gone into collections or when they are turned down for a loan.

In an ideal world, your divorce lawyer would give you ample warning of a problem like this and help establish some type of protections. The sad fact is, though, many divorce lawyers consider that your own problem after you've walked out the door. Even if they are aware of it, they may not be able to help you fully insulate yourself if your ex is being vengeful.

In a good scenario, you could work to close any joint accounts you have and refinance the loans in the name of whoever is responsible for them - prior to the time the divorce is final.

Unfortunately, you can't always do that. You might try to at least freeze the account so it can't balloon.

If the debt will be paid by your ex - but with your name remaining on it - get online access to the account so you can at least make sure it's being paid on time. That way, if you learn that your ex is slipping, you might be able to take steps to ensure your credit won't suffer.

Of course, all of that assumes you even know about the debt in the first place. Often, money disputes are among the primary factors leading to divorce. Financial infidelity, for example, is widespread, according to a large study of some 24,000 men and women last year. Researchers found that half of all married adults keep some type of money secrets - and those are only the half that admitted to it in the survey.

While honesty about money was said to be of key importance to 70 percent of men and women, more than 50 percent admitted to having fudged the truth about finances to their spouses.

Some of these might be small indiscretions, but we have seen situations in which spouses didn't learn of something as major as a second mortgage until after the marriage had dissolved.

Filing for bankruptcy protection is usually one of the best ways to absolve yourself of those debts, or at least work out a manageable repayment plan through a Chapter 13 filing.

You must also recognize that if your ex-spouse files for a Chapter 7 liquidation bankruptcy, you may subsequently be responsible for the entire balance on those joint accounts. Hopefully, that is something you can afford. If it's not, it may be in your best interest to file as well.

A Chapter 7 allows you to essentially walk away from the bulk of your debts and start off on a new foot with a clean slate. At the end of the day, that's usually the goal of a divorce as well.

We can help you close this chapter and move on to the next.

New Credit Score Rating Offers Relief to Millions

Sun, 24 Mar 2013 16:51:31 -0600

For a very long time, Americans have been stuck with credit scores sputtered out by the FICO model scoring of one of three firms - Equifax, TransUnion and Experian.

Our Birmingham bankruptcy lawyers know that FICO has been very unforgiving when it came to people who had little to no credit or those who had previously filed for bankruptcy.

Given that credit scores are used for everything from car loans to mortgages to credit card interest rates, this has always been somewhat of a deterrent for those contemplating a bankruptcy.

No matter what you did or what steps you took to settle your debts, those delinquencies were going to remain on your credit report for at least seven years. Now, there is very good news for millions of people who are struggling with this: A new credit score model is going to approach the whole process differently.

It's called Vantage Score 3.0, and it is going to work to the benefit of approximately 30 million Americans who currently fall into this little-to-no-credit history and poor credit history due to past collections.

Now, instead of those collections remaining on your account for seven years, they won't even be counted if your debt has been paid in full or settled. What will matter is whether the balance is zero. That's not to say bankruptcies won't remain on your record. However, a lot of the damage that was done prior to the bankruptcy may be significantly mitigated.

In addition to this, the firm gives a major break to victims of natural disasters. This is great news, especially for those in Alabama, which is prone to major damage from hurricanes, severe storms and floods. It's one of the reasons people end up having to file bankruptcy in the first place. Those individuals affected by a natural disaster will earn points for things like paying their bills on time, despite the hardship. However, they won't be penalized for not being able to do so in the immediate aftermath - unlike the other scoring firms.

So people who are still trying to recover financially from a catastrophic event should see an immediate boost in their score.

Of course, it's worth noting that it really only matters if the lender uses VantageScore, as opposed to the FICO scoring model. Many places still use the FICO model, but recent research shows that VantageScore is becoming much more common place. It's currently used by six of 10 major credit card issuers, four of the main auto dealers and mortgage lenders and seven of the 10 biggest banks.

Another great thing about this new model is that unlike FICO, it gives positive weight to things like utility payments and rent. These are priorities that people have to pay, but they received no credit for paying them on time. However if they were delinquent and those accounts went into collections, it would be used against them. It was inherently unfair, and the new score is hoping to balance the scales in this regard.

The other thing it will do is give people who have filed for bankruptcy more opportunities to boost their score.

Birmingham Bankruptcy Options When Incomes Plummet

Thu, 14 Mar 2013 11:15:30 -0600

The U.S. Commerce Department is reporting that the country's workers saw the sharpest drop in month-over-month income levels than have been recorded at anytime in the past two decades.

Our Birmingham Chapter 7 bankruptcy attorneys know that people often think filing for bankruptcy protection means you don't have a job or you are basically penniless. While it's certainly an option for those in that kind of situation, our goal is to help you before you ever get to that point. If your income has dropped significantly but your bills haven't changed much, this is something you may want to seriously consider.

You still have money coming in, you just may not have enough to cover all of your expenses. Or maybe you're just barely scraping by, unable to make much headway. That's a recipe for financial disaster - but one you can avoid with a bankruptcy filing.

Most filers have one of two options: Chapter 7 or Chapter 13. If you qualify for the first, it will allow you to erase most of your outstanding debt, yet still hang onto your retirement and probably your savings. The latter option is if you make too money or have too many assets for a Chapter 7. In that case, we would work with the court and the trustee to arrange a repayment plan that is often far less than the total you actually owe.

Given the most recent report from the federal government, we may be seeing more and more people in this boat.

The report indicates that personal income fell by nearly $6 billion from December to January. That's is a 3.6 percent drop, which is the largest we saw since the beginning of 1993.

There are a number of factors that may have contributed to this somewhat. First of all, income was markedly higher in December because many companies were trying to pay out early dividends in order to sidestep impending tax increases. But this really only affected high-income earners anyway.

There was also the expiration of the payroll tax cut, meaning most workers are having to pay 2 percentage points more in taxes for 2013. That was across the board.

And yet, consumer spending, which accounts for 66 percent of what drives our economy, was up by more than $18 million at the first of the year. So Americans are making less money, yet spending more. That doesn't necessarily indicate recklessness, as much as the fact that costs are higher as well. AAA recently reported that gas prices spiked 10 percent in February, and similar trends have been noted for everything from food to medical bills.That kind of spending cycle is simply not sustainable.

It's particularly troubling when you consider it means people aren't able to save. The government purports that on average, Americans were able to save about 2.5 percent of their income in January. Compare that to the 6.5 percent they were able to put away the month before. That is actually the smallest savings rate we've seen since the onset of the housing crisis, in late 2007.

If you are struggling with your finances, let us help you work through your options.

Birmingham Bankruptcy Lawyers: Credit Bureaus Err Far Too Frequently

Sat, 02 Mar 2013 09:57:04 -0600

When it comes to filing for bankruptcy, one of the primary hesitations most people express is the impact it will have on their credit score.

Our Birmingham Chapter 7 bankruptcy lawyers are quick to point out that someone who is already struggling to pay the bills is likely to have poor credit - or are on the path too poor credit - already. A bankruptcy is a deliberate effort to get on a better track. Your credit score will soon follow.

Accuracy is paramount for credit bureaus, as their whole business model revolves around agencies that trust them to provide correct, timely information. Unfortunately, sometimes they are the source of the problem. What's worse, fixing it is usually no simple task, as a recent investigation by the Federal Trade Commission has revealed.

According to the FTC, one out of ever five Americans has some type of error on their credit report. Another one out of 10 has a credit report mistake that could potentially serve to lower their overall credit score, making them a less desirable candidate for loans and driving up their interest rates on everything from car payments to mortgages.

A 20 percent error rate is unacceptable as it is, but what compounds the situation is that for some people, it can take years to correct that mistake.

Ohio Attorney General Mike DeWine, whose office has conducted its own investigation relative to credit reporting problems in that state, say that these major credit reporting bureaus have committed clear violations of federal law. Specifically, the Fair Credit Reporting Act. This measure says if you believe a mistake has been made on your credit report, you file a request and they have to conduct a reasonable investigation into the matter. But too often what's happening, DeWine said, is that these agencies aren't doing any investigation at all.

Some of the more common complaints include bills being listed as delinquent when in fact they were paid, closed accounts that are listed as open and delinquent debts belonging to other people with similar names or social security numbers popping up on their report. In many of these cases, people file complaints, but nothing is ever done to correct it. People go on the website, only to be given a phone number that has them speaking with representatives at a call center in India with no connection to someone who can actually help them. Complainants get referred back the the website, which again, has no formal channel to address the issue.

Across the country each year, some 8 million people file a dispute with a credit reporting agency over an error. It's unclear how many of those actually get resolved in a reasonable amount of time.

The bureaus indicated that industry-sponsored surveys found that 95 percent of consumers are satisfied with the dispute process, but we have no information regarding how that study was conducted to determine its accuracy. Given the evidence uncovered by the FTC and DeWine's office, those satisfaction measures are likely grossly inflated.

Birmingham Bankruptcy: Medical Bills are Killer

Sun, 24 Feb 2013 09:11:39 -0600

In the United States, people spend an estimated 20 percent of income on health care.

Our Birmingham Chapter 7 bankruptcy lawyers know that this price tag might be worth it to many, if it actually meant great strides in public health - but it doesn't, according to a recently-published story in TIME, "Bitter Pill: Why Medical Bills are Killing Us." The piece chronicles how our medical bills have become a chronic symptom of an ailing system - one that threatens not only our financial goals and dreams, but also our immediate health.

Those who can't afford the care are simply out-of-luck, and often, out of time.

The reporter starts off with the case of a 42-year-old Ohio man and his wife who had insurance. It wasn't a comprehensive policy, but they spent about $500 monthly (20 percent of their income), that would cover up to $2,000 daily in hospital expenses. But when the man was diagnosed with non-Hodgkin's lymphoma, health care providers refused to accept his "discount insurance." Instead, he and his wife were forced to beg for money from relatives - approximately $84,000 total - before doctors would even agree to see him to begin his chemotherapy treatment.

The bills kept stacking up - sometimes defying common sense. For example, generic Tylenol, which you can purchase at $1.49 for 100 online, was costing them $1.50 per pill. Simple chest x-rays that cost the doctor's office $21 was costing this couple $285. Lab and blood work that should have cost a few hundred dollars instead cost them $15,000. A single injection of a powerful cancer-fighting drug cost them $14,000, when it cost the hospital just $3,500.

This is not an uncommon scenario, and it soon becomes easy to understand why so many people who endure a medical crisis also experience a financial crisis as well.

On average, even when adjusting for higher salaries, Americans spend about 30 percent more than other developing countries on the same treatments, forking over an estimated total of $3 trillion just this year alone. Given that the health care industry has spent some $6 billion lobbying in Washington in the last 15 years, we shouldn't be at all surprised that these outrageous practices are likely to continue on, status quo.

Not even all of these cases involve chronic or dire health problems. TIME recorded one case in which a 64-year-old sales clerk was beginning to feel chest pains. She panicked and called 911, where emergency crews drove her to a hospital just a few miles away. There, she spent several hours undergoing a number of tests, briefly meeting with doctors. She was eventually informed that her pains were the result of nothing more than indigestion. Great. Except when she received the bill - $21,000. And this was a false alarm. For someone with no insurance and just shy of the age to obtain Medicaid, it was financially devastating.

What's worse, the TIME research found, many of those prices are arbitrary, set by a years-old internal "chargemaster" maintained by each institution in which the prices are neither consistent nor seemingly based on anything objective. These rates are often through the roof of what we expect to pay when someone is covered by Medicare. Even insurance companies find it a constant battle to negotiate rates that are more in line with actual costs. It used to be that insurance firms would try to negotiate rates that were no higher than 50 percent above Medicare rates. But having lost a fair amount of leverage in the last several years with hospital consolidation, insurance firms are now negotiating off that chargemaster sheet, arguing for rates that are 50 to 60 percent lower. In the end, that means higher pay-outs for the patients.

These kinds of costs simply aren't realistic.

The one bit of good news, though, is that you have an avenue for relief in the form of a Chapter 7 bankruptcy.

Bill Would Wipe Out Private Student Loan Debt in Chapter 7 Filing

Thu, 14 Feb 2013 08:49:07 -0600

A bill making its way through committees in the U.S. House of Representatives would effectively lump private student loan debt into the same category as other forms of debt with regard to bankruptcy filings.

Our Birmingham Chapter 7 bankruptcy attorneys are cautiously optimistic. We know that such measures have failed in the past (this being the measures fifth go-around), but the current economic climate could make this a reality.

As it now stands, student loans can't be lumped into your bankruptcy debt discharge. What we want to stress though is that this doesn't mean a bankruptcy can't help if student loans are the bulk of your problem. Bankruptcy offers a way to rid yourself of all your other debt so you can focus on paying down those monstrous loans.

Meanwhile, House Bill 532 would effectively amend federal bankruptcy law to allow private student loan debt to be included in your bankruptcy proceeding.

Of course, that still won't do much for those holding government loans, but it certainly won't hurt. The Consumer Financial Protection Bureau reported that in 2012, Americans held about $1 trillion in student loan debt that had yet to be paid. Of that, about $150 billion originated from private loans.

The fact such debt cannot be discharged means it's an arena rife with predatory operators who profit by saddling students with unmanageable debt -- often for an unmarketable education with questionable value. Such actions should be criminal.

We know private lending has grown considerably in recent years, but we may expect to see that tapering off with the passage of the Student Aid and Fiscal Responsibility Act. This law eliminated the federal guarantee that these private school loans previously had, which makes private lenders a lot more wary of handing them out.

For the most part, students will tap federal loans to pay for the majority of their tuition costs. But the federal student loan program doesn't pay for non-accredited schools and it also generally won't cover all the necessary costs of a person's education. For example, books and other fees usually aren't covered. These things are vital - and expensive - so students are more frequently seeking out private loans to make up the difference.

The hope is always that once they graduate and land a job, paying those debts off will be a top priority. However, far too many graduates aren't finding the job search all that easy. Even those who do land a job may find it doesn't pay as much as they hoped or that other expenses soon take precedence.

And again, HR 532 has a long way to go before becoming law, but consider a recent report by TransUnion, which indicated that more than 50 percent of all student loan accounts are currently in deferred status. In light of revelations like this, 14 representatives have already agreed to co-sponsor the bill.

It also may gain a fair amount of support in Congress overall. A new report from the Center for Responsive Politics indicates that in 2011, the total amount of student loan debt owed by members of the U.S. Congress was estimated to be nearly $4.5 million. Compare that to the previous high of $2.5 million in 2008.

With members of Congress having direct experience knowing what it is like to be burdened with this kind of debt, we may see a general shift in attitude - especially when we're not talking about discharging taxpayer-funded loans.

Right now, HR 532 is in the House Committee on the Judiciary, and we will be closely watching its progress.

The Young and the Jobless - When Bankruptcy Is the Best Option

Sun, 30 Dec 2012 06:03:04 -0600

A 26-year-old single man working two part-time, minimum-wage jobs is struggling to stay afloat financially.

Alabama bankruptcy attorneys know this isn't all that unusual these days. But what's especially troubling is that he has a Master's degree in public policy, an undergraduate degree in economics - and zero full-time job offers in his field.

New graduates in this recession face an austere and unforgiving job market, where the possibility of being underemployed or unemployed is very real.

Earlier this year, a study by researchers at Rutgers University found that in the last five years, just 51 percent of graduates from four-year undergraduate programs landed a full-time job. Graduates who earned their diploma between 2006 and 2011 earn, on average, $3,000 less annually than those who graduated in 2005.

Another study by Rutgers found that more than a third of new graduates said if they had it to do over again, they would have chosen a different and potentially more lucrative career. Of course, life unfortunately doesn't offer do-overs.

Complicating matters is the fact that most of these new graduates are burdened with soaring levels of debt. Higher than it's ever been in history, new graduates owe $870 billion - and that's only student loans. It doesn't include credit card and medical bills that may have stacked up due to their lack of access to proper health care. The typical new graduate holds nearly $30,000 in debt. Given that huge numbers of new grads also have a meager paycheck - or none at all - life plans are being significantly altered. In fact, Generation Opportunity, a student advocate organization, found that nearly 85 percent of those between the ages of 18 and 29 intend to either delay or completely forgo a major move or life change or purchase because of major concerns about the economy.

Sometimes this means staying at home with parents. For others, it means holding off on dreams of returning to school for a higher degree or move to a different city or start on having a family. In some cases, it may even mean that serious consideration should be given to filing for bankruptcy.

What you should know upfront is that having your student loan debt discharged is very difficult. But if you have racked up other major debts during the course of getting your education, this is an option you should certainly consider. A Chapter 7 bankruptcy can grant you the freedom to be able to afford your student loans and not become further entrenched in debt.

If you are carrying a great deal of anxiety about just being able to cover the basics due to the debt on your shoulders, that's a drain on the energy and resources you could be expending finding a relevant job in your field. It also may prohibit you from taking a lower-paying job in your field - but one that could help you get your foot in the door.

And as it turns out, not getting your foot in the door can have serious, long-term consequences. A Dartmouth study conducted in 2010 showed that a person who has spent more than a year unemployed before the age of 24 could expect to make 23 percent less than someone who lands a job right away.

The decisions you make now do matter. Consider carefully whether your debt is holding you back from making your dreams a reality. If so, call us today to see how we can help.

A Home For the Holidays: Lenders Temporarily Suspend Foreclosures

Sun, 23 Dec 2012 13:49:26 -0600

Some of the country's largest lenders, along with Fannie Mae and Freddie Mac, have announced they will be halting a number of foreclosure proceedings during the holidays.

As our Birmingham foreclosure lawyers understand it, the time-out starts Dec. 19, 2012 and will continue through Jan. 2, 2013 for Fannie and Dec. 17, 2012 through Jan. 2, 2013 for Freddie.

Representatives from both entities said they will put a temporary stop on all evictions of homeowners who are in single-family properties or in apartments that have up to four units and whose mortgages are financed by a government-sponsored enterprise.

Additionally, Citigroup and JPMorgan Chase announced they also intend to halt foreclosures temporarily. JPMorgan said its grace period will run Dec. 19 through Jan. 1. Citigroup hasn't given a timeline for its plan.

While this is good news, particularly for those who are on the brink of being forced out of their homes, the respite will be brief. In fact, firms that handle evictions for these entities are going to continue filing foreclosure paperwork so that evictions can proceed as usual just after the new year.

This means that those who are facing foreclosure certainly shouldn't take this as an opportunity not to act. If you contact us soon enough, our Birmingham foreclosure attorneys may be able to use this this time to your advantage.

The news is especially relevant here in Alabama, where foreclosure sales shot up 33 percent in the third quarter of this year, compared to the second quarter. Such properties sell for about a third less than what they would normally, and what's more, they force people to leave beloved homes.

According to RealtyTrac, there were nearly 1,000 foreclosures in the state during that quarter, which represents a sharp 12 percent rise from the same time last year.

In all, foreclosures in Alabama account for about 16 percent of all home sales. Throughout the country, it stands at 20 percent. In Georgia, which saw the highest foreclosure rate of any state, foreclosures accounted for nearly 40 percent of all home sales.

In a healthy market, we would be seeing this figure be closer to about 5 percent, so we can see that we still have a ways to go in terms of recovery.

Foreclosed properties in Alabama on average sold for about $105,000, which is about 30 percent less than their market value.

What's important to understand is that you are not helpless to fight back against foreclosure, even if you are significantly behind on your payments. Contacting an experienced foreclosure attorney is your first step.

From there, we can discuss requesting an extension from the court in order to buy several more weeks in order to carefully explore your options, so you won't feel rushed into anything.

Given the fall-out of the housing market collapse, there are many viable defenses to foreclosure, based primarily on lenders' failures. These defenses include:

--Predatory lending;
--Breach of contract;
--Truth-in-Lending Act;
--Home Ownership and Equity Protection Act;
--Failure to comply with pre-foreclosure conditions;
--Failure to verify assets or income;

You may also want to consider a Chapter 13 bankruptcy, which will allow you to reorganize your finances and make smaller payments to catch up on your debt obligations.

To determine what is the best course of action for you, don't wait until the holiday grace period is over. Call us today.

Birmingham Bankruptcy Weighed as Credit Card Debt Grows

Mon, 17 Dec 2012 13:08:12 -0600

Americans love their credit cards.

Even if the recession caused them to take a temporary break, people are once again increasingly relying on this form of payment.

Our Birmingham bankruptcy lawyers know that there is nothing inherently wrong with credit cards, except that it's so easy to find yourself in trouble with them.

Credit reporting agency TransUnion released recent figures showing that the average amount of credit card debt per borrower in the country shot up by 5 percent when comparing the three-month span of July through September this year to that of last year. It now stands at roughly $5,000 per borrower.

This is not necessarily a bad thing - until you consider that as this figure has gone up, so too have the number of delinquent borrowers. Those credit card debtors who were at least three months overdue were up to 0.75 percent. That's an increase of about .04 percent from what it was this time last year. Compare this to where we were back in the mid-1990s, when the late payment rate was just 0.56 percent.

Over the last couple of years, as many Americans were hit with lay-offs, higher prices for goods and a housing market that was flipped upside down, people stopped relying so heavily on credit cards. National data indicated many were working diligently to pay that debt down - as best they could, of course, as many were on the brink of losing their homes and made that the higher priority.

Some economists believe the uptick could simply be the result of end-of-the-year, holiday spending. But a huge part of it is the bolstering of consumer confidence, without which we likely wouldn't see much of an increase one way or the other - particularly because we're comparing the same time frame for the last two years and we're still seeing an increase.

The other factor - and this is important - is that credit card companies are issuing more cards, even to those who may not have great credit. TransUnion research shows that the number of new credit card reports rose by more than 3 percent in the second quarter of the year compared to a year ago. Of those, 1 out of 4 went to consumers who have a non-prime credit score, which is defined as anything lower than 700 on a scale of 501 to 990.

There is an upside to this in terms of those who are diligently working to rebuild their credit after a rough spot. However, those who may not yet have managed to reign in their spending habits may soon find themselves in a world of trouble because their interest rates are going to be much higher. Missing even a couple payments could set the stage for an out-of-control spiral.

If you find yourself struggling with credit card debt, please don't delay reaching out to us to see how we can help.