Los Angeles Bankruptcy Lawyer Blog

Los Angeles Bankruptcy and CalWorks Debt

Fri, 18 May 2012 08:43:18 -0800

Los Angeles bankruptcy lawyers know that sometimes, parents can go into debt while helping out their children.

This may be expected to some extent, though some parents end up requiring a Los Angeles bankruptcy if the situation gets out of control.

However, for children to be indebted to the government for their parents' expenses? It had actually been happening much more than you might think, particularly in California, through a program called CalWorks. It's a practice that goes back decades, but now is slated to end following the settlement of a lawsuit brought on by those who say it's patently unfair.

The department would essentially go after children, even after they'd entered into adulthood, for over-payments of social services that had been given to their parents.

In a few of the examples cited:

One was a 73-year-old man who was raising his 14-year-old great-granddaughter. He received little more than $300 a month from the government to help with the very basics. But then last year, the CalWorks program docked that payment by 10 percent each month. The reason was because the program mistakenly had sent some $10,000 to the teen's grandfather and mother. By docking her monthly assistance, they were trying to recover some of that expense.

In another case, a Riverside County girl was just 16 when the county gave money to her mother for her brother's expenses. As it turned out, her brother didn't actually qualify for those expenses. When they couldn't find her mother to recoup those losses, they threatened to take her 2011 tax refund to collect the nearly $800 they were owed. That was money she had been counting on to cover college living expenses during her first year.

And yet another case involved a single mother of three who was struggling to pay her way through college. Officials from Butte County contacted her and threatened to seize her tax return if she didn't pay the $7,000 that was collected by her father on her behalf a decade earlier, when she lived with various relatives. It took months and many sleepless nights, she said, to get the mess straightened out.

For many of these children and the family members who care for them, they may already be living paycheck-to-paycheck. Forcing them to pay these additional debts on top of their regular expenses may be enough to push these individuals to the brink of a Los Angeles bankruptcy.

Of course, this is not to say that a bankruptcy is a bad idea, particularly if the debts held prior to the collection demands were significant.

Up until 1996, federal law had mandated that public officials go after any member of the household for alleged over-payments. Now, however, states can decide whether to go after minors if they want. Los Angeles County reports that more than 4,600 children and nearly 90 adults have been penalized for over-payments.

But the fact that this program is going to stop going after children and people who were children at the time the debt accrued is going to be a huge relief to many of these families.

Los Angeles Bankruptcy for Same-Sex Couples

Tue, 15 May 2012 08:14:46 -0800

Los Angeles bankruptcy lawyers know that for same-sex couples, life is fraught with challenges, ranging from social acceptance to how you file your taxes.

For a lot of these couples, a Los Angeles bankruptcy can help to alleviate some of the stressors that accompany the specific financial challenges that come with a same-sex partnership.

While same-sex marriage has been legal in California since 2008, there are still a number of issues these couples must contend with.

To explore a few of these:

1. Same sex couples are often barred from sharing in the basic benefits that married couples enjoy. In an example detailed by CNNMoney, a 76-year-old man from Hayward talked about how when his partner of more than 50 years died, he lost not only his husband and best friend. He lost his home, his income, his health insurance, his animals and even his furniture. He was dropped from his husband's employer's insurance and was blocked from receiving the $2,000 a month he had previously received from his husband's Social Security benefits. He also was denied getting any survivor benefits, and then it took another three years before he was able to gain access to his husband's pension plan benefits.

2. Same sex couples have a much tougher time in establishing parental rights. Some couples can end up spending $3,000 or more in legal fees just to outline the basics of a parenting agreement of how to proceed if the couple should separate or one of them die. These are aspects that would be already in place if they were allowed to legally marry and adopt together.

3. Disability benefits are often unavailable to same-sex partners, meaning that when they fall ill, they must shoulder a greater burden their heterosexual counterparts.

4. Tax filing can be confusing, arduous and downright unfair. A ruling by the IRS in 2010 mandated that homosexual couples in community property states like California had to divvy up their income equally on their federal tax returns. Because same-sex couples still can't file jointly, this has helped some, but it's confused the process for others. CNNMoney detailed the plight of one couple, in which one owned a business in which the other was not involved. The new rule, however, required the spouse to claim half of his husband's income on his own tax return. That, in turn, meant the non-business owner spouse no longer qualified for early retirement, as he had previously done. What's more, he was ordered to pay back some $10,000 in benefits, which he'd already collected. A tax lawyer helped the pair sort out the mess and appeal that decision - but it wasn't cheap.

According to a decision made by 20 California bankruptcy judges last year, same-sex couples can file jointly for bankruptcy, despite the Defense of Marriage Act.

Consulting with a Los Angeles bankruptcy attorney about your options is the first step to a fresh start.

Los Angeles Bankruptcy and a New Generation of Debt

Sat, 12 May 2012 07:39:54 -0800

Los Angeles bankruptcy attorneys are finding more frequently, there is a new generation that is learning first-hand what it means to struggle financially.

More often than not, those seeking a Los Angeles bankruptcy aren't single parents or middle-aged empty nesters. Rather, they are those that had just a few short years ago held the most promise: college students.

Or now, rather, new graduates.

What was once seen as a good investment is now looking more and more like a scam.

As we've previously written on our Los Angeles Bankruptcy Lawyer Blog, student loan interest rates are set to double by summer and parents are scrambling too, trying to figure out how they will help their child not be immersed in a vicious cycle of debt and predatory credit.

Many students hadn't pictured filing for bankruptcy right out of college (they were supposed to be embarking on that dream job!). But life has a way of happening, and sometimes, bankruptcy is the best option to help you establish a fresh start.

According to a recent article on this issue by The New York Times, the average amount of student loan debt last year stood at more than $23,000. About 10 percent of students owed nearly $55,000. Another 3 percent owed more than $100,000.

Across the country, the total federal student loan balance stands at more than $900 billion.

Although student loans were once seen as "good" debts, financial analysts are now likening this to the predatory mortgage loans that landed our country in a housing crisis.

Part of what prospective students need to consider to avoid some of these issues is the true cost of their education. Often in college promotional materials, that aspect is something that's glossed over. These institutions are also banking on the fact that you're young, naive and still believe that if you follow your dreams, it will all just work out.

Unfortunately, as many new graduates are finding, that's not reality.

While student loans can be difficult to discharge in the course of a Los Angeles bankruptcy, they're not impossible. Basically, you have to show that the payment of the debt causes an undue hardship on you and your dependents.

Proving this can be tough, and courts can vary on how they apply it. Generally, you're going to have to show that you can't maintain a minimal standard of living if you're forced to repay these debts, that you have made a good faith effort to repay them and that there may be additional circumstances to indicate that this current state of financial affairs is likely to last for a long time.

But even in cases where the debt isn't completely canceled, a bankruptcy can automatically provide you protection from collection agencies and could allow you to discharge other debt so that at least you aren't bogged down with debt from multiple sources.

Of course, meeting with an experienced Los Angeles bankruptcy attorney will help you determine what all your options are and plan your best course of action.

Los Angeles Debt Management: A Growing Divide Between Rich and Poor

Tue, 08 May 2012 11:39:35 -0800

Los Angeles debt management is becoming more and more difficult, and L.A. consumer attorneys know that isn't likely to change anytime soon, according to a recent article featured in CNNMoney.

The article breaks down the fact that basically, the income gap between rich and poor has been markedly increasing. That means the wealthiest are continuing to make more money, while the other 95 percent have seen debt levels soar and income levels that are doing nose-dives.

Rather than alter their lifestyles or curb spending, many people are becoming more and more reliant on credit to maintain their standard of living. This has led many into a deep hole of debt that many find it nearly impossible to dig their way out of.

It's important to note that a Los Angeles bankruptcy can be one way of establishing a clean slate and a fresh start. There's no shame in it, particularly considering so many others are in the exact same boat.

Of course, it's always better to avoid a mountain of debt in the first place, if you're able. (In some cases, especially where the cause can be traced back to an unexpected medical condition or job loss, people aren't left with much choice.)

Let's take a look at the research:

Back in 1983, the majority of Americans had roughly 60 cents of debt for every dollar that they earned. In a disconcerting development, as of 2007, Americans had about $1.50 worth of debt for every $1 they earned.

Now compare that to the wealthiest earners. Back in 1983, they were accruing about 75 cents of debt for every dollar they earned. But in 1997, that number dropped to roughly 65 cents of debt for every dollar earned. What's more, their incomes increased about 34 percent, compared to about 20 percent two decades ago.

So what does that mean in practical terms? Certainly, it means that some people are fighting off a foreclosure and have had to downsize considerably. But what economic analysts are increasingly finding is that rather than do that, Americans are just racking up more debt so they won't have to downsize. They're swimming in debt racked up from their house, car, student loans and credit cards.

Many Americans have been successful in shedding their debt, albeit through means of foreclosure and bankruptcy, the report says. Sometimes these are good solutions for your financial situation, sometimes not. It's important to consult with a Los Angeles debt management attorney before making any decisions.

Some general things to keep in mind if you're trying to reduce your debt-to-income ratio:

1. Think about what the real issue is. For example, if you're retired and thinking about taking out a reverse mortgage, maybe instead start thinking about if you may need to downsize your current home.
2. Try to avoid robbing Peter to pay Paul. For example, don't drain your 401k to pay off your credit card debt. That's going to mean you may have to work much longer before you can retire.
3. Consider an attitude shift in your spending habits. If your credit card debt is unmanageable, bankruptcy is one option.

Los Angeles Bankruptcy a Reality for Parents of Students Mired in Debt

Fri, 04 May 2012 10:52:18 -0800

Much has been made of the crushing debt that is forcing many students and younger people to file for a Los Angeles bankruptcy.

It's important to note, though, that it's not just the students who are finding themselves barely treading water: They're parents are drowning in debt right along with them.

L.A. bankruptcy attorneys know that while Congress is debating a back-step on the student loan rate, which is set to double from 3.4 percent to 6.8 percent by the beginning of summer, now is the time many high school seniors are deciding which college to attend -- and parents are deciding how they are going to pay for it.

Across the U.S., student loan debt is much higher than credit card debt - nearly $870 billion, compared to about $7000 million, respectively. What's more, while the average public school debt is going to level out around $12,500, there are about 30 percent of students for whom that debt has ballooned to somewhere in the $25,000 to $200,000 range - an insurmountable amount, particularly considering the abysmal current employment environment.

And where new college graduates turn when they're in over their heads? Mom and dad, of course. That's one reason so many college graduates have returned back home, creating even more of a burden on their parents' finances, at a time when parents were maybe hoping to an enjoy an empty nest.

One problem is that a college education is difficult to effectively gauge the value of. For example, we may know what kind of a house we can reasonably afford. We may know what kind of car we can drive or which weekend activities we can shell out a few extra bucks for. But when it comes to a college degree, what you're paying for is an investment in the future. Parents want to help make their children's dreams come true, and universities have done a fantastic job of selling us on the idea that an expensive degree from a top school is going to equal success. Unfortunately, that's not always the case.

So what happens? Not only do new graduates end up mired in debt, so do their parents.

A recent column in The Baltimore Sun outlined this issue, and what parents need to do to avoid getting themselves trapped in a quagmire of debt, which may at some point require a Los Angeles bankruptcy.

The first thing you need to do is determine how much debt you and your child can reasonably afford. Figure it out on a per-month basis. Then, you need to decide how much your child will likely be able to cover once they graduate. This can be tricky because you don't necessarily know exactly what the job market is going to do. But for example, while there may be value in a liberal arts degree, what kind of job is your child likely to land with this diploma?

It might be, as columnist Susan Reimer suggested, the compromise will be two years at a community college, followed by two years at a public university - or some combination like that.

The key is to hold firm, and not splurge for more of an education than you can afford.

Medeiros v. Bankers Tells Debtors to Avoid Inaction in their Los Angeles Foreclosure Case

Sat, 28 Apr 2012 13:24:13 -0800

Almost everyone is suffering in this economy. People are losing their homes to the banks and even to the government. Knowing the rights you have in your Los Angeles foreclosure defense case can make a huge difference in the relief you can get.

The experienced Los Angeles foreclosure attorneys at Nader Law Firm can help you decide what options are best for you.

Medeiros is a recent case coming out of Rhode Island that exemplifies the potential hazards of inaction. Medeiros et al., v. Bankers Trust Company et al., No. 2010-145-Appeal (R.I. S.Ct. Mar. 13, 2012). Medeiros purchased a home and secured a note for the purchase of the home with Bankers Trust Company (Bankers). For a couple of years Medeiros made the requisite payments but began to struggle financially. Because Medeiros was not in a good financial situation, he was unable to make payments to Bankers or to the town for the real estate taxes he owed.

The town has the ability to sell the property of any person who owes real estate taxes on that property. This is commonly referred to as a tax sale and the town is required to send notice of this tax sale to all interested parties. Interested parties include the homeowner, lenders and secured creditors. When the town sent notice to the parties in this case, the town failed to send notice of this tax sale to Bankers. Subsequently, the tax sale occurred and the property was bought by Fiduciary Trust Services (Fiduciary). Upon this sale, the town gave Fiduciary a tax deed that had been executed by the town.

Medeiros stayed in possession of the home for a year after the sale to Fiduciary. This was because the state of Rhode Island provides this period as a redemption period. A redemption period is the time after the foreclosure sale of a property where the debtor has the opportunity to pay the outstanding amount owed on the property in order to keep it. Every state has different statutes surrounding this "right of redemption." States allow for this period of time because the loss of a property is such a large loss compared with the gain obtained by the buyer. This right is retained by the debtor even in cases where the foreclosure sale was the result of owed real estate taxes.

After the time had run, Fiduciary sought to end Medeiros' right of redemption by filing a petition with the court. Medeiros received notice of the petition, and he failed to respond or file an answer with the court. Because of this inaction, the court granted Fiduciary a default judgment to terminate Medeiros rights of redemption.

This case illustrates how integral it is to answer every complaint and notice you receive. If you receive any notification of a case, lawsuit, complaint, etc., you should seek the assistance of an attorney to help you understand the best way to respond. In foreclosure, an answer provides the property owner an opportunity to assert their claims to the property involved.

But allowing the time limit to run without answering only results in you losing the rights and defenses you have.

When Medeiros later sought to have his rights of redemption re-vested, the court held that to allow this would be inequitable. The court cited relevant law that states that where a default is entered in a foreclosure case on behalf of the buyer, the debtor's rights of redemption are forever barred.

L.A. Foreclosure Notice & Kekauoha-Alisa v. Ameriquest Mortgage Company

Wed, 25 Apr 2012 12:16:22 -0800

Los Angeles bankruptcy is governed by strict federal and state statute. Lenders are required to abide by specific guidelines through all of the steps of the bankruptcy proceeding.

Being faced with a bankruptcy can be overwhelming. Our experienced Los Angeles bankruptcy attorneys understand what it takes to get you the relief you are entitled to.

There are two types of foreclosure in California. There are judicial foreclosures when the lender actually sues the owner in order to have the property foreclosed on. And secondly, there are non-judicial foreclosures, which are more common in California. Non-judicial foreclosure is when lenders relinquish their rights to collect from borrowers and simply seek the proceeds from the sale of the property. Non-judicial foreclosures are favored by lenders because the process occurs quickly without the necessary costs of litigation.

Non-judicial foreclosures in California are governed by the Civil Code 2924.

Kekauoha-Alisa, et al. v. Ameriquest Mortgage Company, et al. is a recent bankruptcy case decided by the Ninth Circuit Court of Appeals. The problem in this case was that Ameriquest Mortgage Company (Lender) failed to publicly announce the foreclosure sale postponement for the property owned by Kekauoha-Alisa (Borrower).

Borrower refinanced the mortgage to her property in Hawaii, and executed a promissory note to the Lender. Because the borrower defaulted on this loan many times, the lender initiated foreclosure proceedings to begin in May of 2005. Three days before the foreclosure sale, the borrower filed for Chapter 13 bankruptcy.

Upon the filing of a Chapter 13 bankruptcy an automatic stay is placed on the sale of all of the property involved in the bankruptcy proceedings. Statute in Hawaii allows a mortgagee or the mortgagee's representative to postpone a foreclosure sale after making a public announcement. See Hawaii Revised Statute §667-5.

The lender complied with this policy and the foreclosure sale was postponed three times. On the fourth time, the lender's counsel sent a firm secretary to the scheduled auction. Because the secretary was inexperienced, she only asked people within the group if they were interested in the borrower's property. She failed to announce or post notice to the group that was present. The lenders wanted the foreclosure sale to proceed, so they asked the court for relief from the stay. This relief was granted and the borrower's home was sold.

The borrower filed a complaint with the bankruptcy court alleging that by allowing the property to be sold, the automatic stay was violated. Additionally, borrower argued that the lenders had breached the terms of the mortgage contract between the parties, and violated the requirements stipulated in the state code regarding non-judicial foreclosure. Borrower even argued that the lender was engaging in unfair and deceptive trade practices.

The bankruptcy court cited relevant law in this case. There is a public announcement requirement in state statute as well as in the mortgage contract. Also, where no notice is given to the public of a foreclosure sale postponement, the postponement is considered improper. When there is an improper postponement, the lender can be accused of engaging in unfair and deceptive trade practices.

The court in this case held that by failing to publicly announce the foreclosure sale, the lender violated Hawaii statute. Because of this violation, the court found that the lender had engaged in deceptive practices. The sale of borrower's property was voided and the case was remanded to the bankruptcy court to determine incidental damages for the borrower.

Los Angeles Bankruptcy Watch: Is Your Spouse Hiding Debt?

Sun, 22 Apr 2012 06:11:20 -0800

Los Angeles debt management is perhaps one of the greatest sources of contention between spouses.

Because of it's very nature, our Los Angeles bankruptcy attorneys know that it can impact virtually every aspect of your life, from what you eat to where you live to what you do on Saturday nights.

But what do you do when your spouse is hiding his or her debt from you? This is going to have repercussions not only on your wallet, but also the very core of your relationship.

Still, when people have money trouble - either because of gambling, substance abuse or other reasons - it's very difficult to talk about. They believe if they can keep it a secret, it will go away. Or, they may have every intention of dealing with that debt on their own, but it simply grows to a point they can no longer manage it. They fear their spouse's reaction, so they continue to hide it, long after it's become a major problem.

And of course, the longer it's hidden, the more out-of-control it can get.

Some examples of this include a spouse who racks up tens of thousands of dollars on credit cards to subsidize a gambling problem. Or a husband who heists his wife's credit card to use at a local race track. In other cases, spouses may end up spending thousands of dollars on other consumer products.

The money may also involve something they may not want their spouse to know about in the first place, so coming clean when the debt has grown horns seems out of the question.

In most cases like this our Los Angeles bankruptcy attorneys know a relationship split may also result. But even a divorce won't absolve you of debt that your spouse has accrued in joint accounts - even if you had no idea what was happening.

Sometimes, you may not find out until it's too late - like when the creditors start calling.

Before it gets to that point, though, there are some warning signs you may want to be on the lookout for:

1. Is money-talk taboo? If your spouse gets extremely defense or accusatory any time the subject of money comes up, that may be a red flag. You also may want to dig a little deeper if your spouse gives you confusing answers to what should be fairly simple financial questions.

2. Does your spouse spend a lot frequently or without good reason? If he or she seems to always be out shopping, even if with friends or the children, they could be racking up high bills without your knowledge. You should take note of the expenditures in your bank account. If you don't see those expenses reflected there, one possibility is that there may be credit cards or accounts you don't know about.

3. Does your spouse rush to be the first to get the mail? Ask yourself why that may be.

4. Why don't thinks seem to add up? A lot of people have difficulties getting each paycheck to stretch. But if you make at least decent money and seem to have reasonable expenses and are still forever coming up short, you need to ask yourself why that is.

Long Beach Corporate Bankruptcy Still a Reality for Many Small Businesses

Mon, 16 Apr 2012 05:40:03 -0800

A Long Beach corporate bankruptcy may be necessary for small firms that are seeing incremental gains and expanding debt.

Long Beach business bankruptcy attorneys know that stagnant economic recovery is to blame for the fact that not only are companies not investing in internal growth, often, they are taking on more debt to stay afloat.

A recent report by CNNMoney indicates that while small firms may be doing generally better overall than they were just a couple years ago - consumer demand is up - most small businesses are still struggling to dig themselves out of a financial pit.

The example given was of a frame maker, who, during the height of the recession, owed an estimated $30,000 to his glass, wood and paper suppliers. Within the last two years, the owner has paid that down to a balance of $10,000, but the market uncertainty has prevented him from taking out a loan that would allow him to pay off the balance to his suppliers. As the small business owner deftly pointed out, he was loathed to owe the bank any money. Vendors, he said, might at least work with him, while the banks are known for their ruthlessness.

However, some small business owners get to a point when the vendors are too many and the bills too high. This is when a bankruptcy filing may be the best option. And just as a personal bankruptcy doesn't equal financial ruin, a business bankruptcy doesn't have to mean that either. The best way to truly know what it might mean is to discuss your options with an experienced Long Beach business bankruptcy attorney.

For those firms that have thus far weathered the economic storm, they know it's not over yet, and are cautiously wading back into expansion. But the risk of drowning is still very real.

A survey of about 760 small businesses indicated that owner confidence dipped in March - the first decrease that factor has seen in a half a year. Another think tank showed that 43 percent made no effort to borrow funds in 2011. Compare that to 44 percent in 2009, and it shows not much has changed, despite the optimistic outlook of some economists.

However, one area that is seeing a spike in revenue are alternative lending sources - namely cash advances for merchants. These are essentially propped up by online peer groups and crowd funding websites that connect small firms with potential supporters and investors. There is a gaping hole that has been left by the banking industry withholding loans to borrowers who may be less than creditworthy.

But these can be risky investments, and there is a danger for businesses in accepting these loans when they won't have the future funds to pay them back.

As one chief investment officer from San Francisco was quoted as saying, it's as if a doorbell rung in 2008, saying, "Maybe there's such a thing as too much debt."

Encino Mortgage Loan Modifications Expanded With Updated HARP

Thu, 12 Apr 2012 08:03:36 -0800

Good news for individuals facing an Encino foreclosure or seeking an Encino mortgage loan modification: A revamped version of the Home Affordable Refinance Program (HARP) is expected to help some 7 million homeowners.

As our Encino foreclosure attorneys understand it, the modifications were announced last year, but they won't really hit stride until the middle of this month. That's when Freddie Mac and Fannie Mae will complete improvements to their automated application system.

Of course, any refinancing or loan modification action should be done in consultation with an experienced attorney, who can ensure your best interests are protected. However, we are encouraged that many more homeowners will have access to the benefits of this program, as many had been excluded under previously strict guidelines.

One aspect that's going to be extremely helpful for people who are drowning - completely underwater - on their mortgage, is the revision that allows the person to have a mortgage balance that is higher than 125 percent of the current resale value of their home. This is called the loan-to-value ration (or LTV). In the past, an individual's LTV had to be less than 125 percent in order to qualify. But that meant that millions of the hardest-hit homeowners were left out in the cold with few options.

Now, those homeowners can qualify for a mortgage loan modification at much lower interest rates - something that could save some people the heartache of losing their home or the weight of debt.

Still, there are some other stipulations that are to be considered before someone can qualify. These include:

Loans that are guaranteed by Freddie Mac or Fannie Mae are the only ones that will be eligible. VA or FHA loans won't.
Your mortgage has to have been bought or securitized by one of the above by the end of May 2009. Plus, it has to have an LTV higher than 80 percent.
You have to be current on your loan payments, with no more than one late payment in the last year.

One problem that has cropped up, however, has to do with who your mortgage insurer is - something you don't have any control over. United Guaranty Corp., which holds about 10 to 15 percent of all the loans that might otherwise qualify. The reason why is technical and complicated, but it basically boils down to the fact that UGC has refused to waive its right to compel the banks to re-buy bad loans, so it's mandating more underwriting in some instances.

The bottom line is that if this is something you are thinking of doing, apply for it anyway and consult with an experienced Encino mortgage loan modification attorney who can help guide you through the process.

Los Angeles Mortgage Complaints Addressed By Hotline

Sun, 08 Apr 2012 07:20:26 -0800

A new complaint hotline has been established for consumers grappling with issues of Los Angeles mortgage loan modifications and Los Angeles foreclosure.

Our Los Angeles bankruptcy attorneys specialize in helping you regain control of your finances. Consulting with an experienced attorney can help you transition to a brighter financial future.

We are encouraged, however, that the federal government is taking some steps to address that unresponsive and negligent banking and credit institutions are a huge part of what landed our country as a whole in the precarious financial situation in which it now finds itself. And that seems to be part of what this hotline is about.

It is a way for consumers to fight back when your mortgage lender has refused to work with you when you needed a loan modification or when your provider switched you to a more expensive home loan than what you originally signed up for.

The Consumer Financial Protection Bureau's home mortgage complaint and dispute resolution hotline hasn't gotten much press since it went live at the beginning of December. And that's because the bureau itself has wanted to keep it quiet, knowing that making it widely known would create a tidal wave of complaints, which might have the effect of overwhelming lenders and making the program less effective.

The bureau itself was founded in 2010, with the goal of serving as a watchdog for consumers in the arenas of home loans, banking and financial products. There was already a hotline for credit-card inquiries and disputes, which started last summer, and now the mortgage complaint hotline is up and running.

It works like this: The borrower/consumer files a complaint with the bureau, which will have all the important account numbers and other information. That complaint then is forwarded directly to the mortgage provider or lender, using a secure, online database. The bank must look over the information, get in contact with the customer if necessary and then figure out what action to take to resolve the issue. Then, the lender has to report that action to the bureau, which then passes it back on to the borrower to determine if the action was satisfactory. Throughout the entire process, the consumer can login using the secure, online portal and get updates on what's happening with the complaint.

Complaints may also be forwarded to other agencies when it's deemed appropriate. For example, law enforcement may get involved if there is an issue of identity theft or fraud.

Essentially, it provides some form of oversight and accountability for these large lending institutions, which have been at the root of so much of this country's financial woes. It's not yet clear, though, how effective this agency will be. There are some concerns that the bureau is writing checks it can't cash - in other words, making promises it might not necessarily be able to keep.

It remains to be seen. One measuring stick that may be useful is the figures that are reported on the success rate of the credit card complaint line. On this line, the bureau has received more than 5,000 complaints. Of those, about 85 percent went back to the issuers of the card. When those companies reported back to the bureau, about 75 percent said the problem had been resolved. Of those, about 71 percent of customers didn't dispute that the problem had been resolved. Little more than 10 percent of consumers said they weren't happy with the outcome.

Certainly, the mortgage complaint hotline isn't going to fix all of the country's housing woes - and it's no replacement for a qualified mortgage loan modification or bankruptcy attorney - but it is yet another tool consumers have in their toolbox.

Los Angeles Foreclosures Could Rise With Expiration of Tax Deduction

Thu, 05 Apr 2012 06:38:29 -0800

Los Angeles foreclosures could increase with the expiration of a tax deduction that had been extended to homeowners to write off their mortgage insurance premiums.

Our Los Angeles foreclosure attorneys understand that the loss of this write-off is going to impact millions of homeowners, who had counted on it since it was enacted in 2006.

It seems nearly every time we turn around, there is some other negative impact to homeowners, many of whom are struggling in a lagging economy, working to claw their way out of debt and hang onto their homes.

The measure expired, along with nearly 60 other tax code benefits that Congress decided not to renew. These include credits for houses that meet certain standards of energy efficiency and credits for local and state sales tax payments. Each of these were part of what would have been a yearly "tax extenders" bill that would have approved the continuance of benefits for homeowners for another year or more. These measures were all pretty non-controversial, and were of at least some assistance to homeowners, so it's disappointing that it wasn't passed. The Los Angeles Times reports there is a chance that legislators could take retroactive action to pass it, but that doesn't seem likely, given the heated debates taking place on other topics.

The mortgage insurance tax deduction is going to hit hardest those with conventional loans that were low down payment - mostly those having been signed since 2007, as well as all loans approved this year where the down payment was under 20 percent. Individuals who were using rural housing and guaranteed veterans loans - whose down payments are sometimes as low as zero - are additionally going to be negatively impacted.

The deduction had allowed refinancers and buyers who used federal guarantees or private or federal insurance, and who itemized their federal tax returns, to write off their insurance premiums. Those who were married and filing jointly or single and had a yearly gross income of $100,000 or less could write off all of their yearly mortgage insurance payments. Homeowners who were married and filing separately could have up to 50 percent off of their mortgage insurance payments. And anyone who had a salary over $100,000 could get deductions that fell on a sliding scale.

Our Los Angeles foreclosure attorneys understand that for many individuals, these savings were significant. The newspaper figured that for a new couple who had an income of roughly $100,000 and a mortgage payment of roughly $200,000 could expect a savings of about $1,000 annually. That may not seem like much, but if that couple secured the loan in 2007, and one-half lost his or her job in the interim, the loss of that deduction is going to be felt, and could be yet another factor in increasing debt and the possibility of bankruptcy and foreclosure.

There are ways individuals can work to fight foreclosure and manage debt, but it's imperative that you meet with a skilled attorney, who can offer you a detailed analysis of your unique situation and the options you have before you.

Los Angeles Mortgage Loan Modification Reforms Likely

Mon, 02 Apr 2012 05:51:09 -0800

A number of Los Angeles mortgage loan modification reforms could soon be enacted, according to a recent report by The Los Angeles Times.

Our Los Angeles mortgage loan modification attorneys are encouraged by the news that there won't need to be extensive political wrangling to make it a reality. That's because there are large portions of President Obama's mortgage refinancing package that won't require Congressional approval. They are essentially administrative improvements that could take place within just a few weeks.

However, a number of these improvements won't help much if you are underwater on your mortgage. Most of these measures are for borrowers who are current on their payments. But it is a start.

Mortgage loan modification could be an alternative to a Los Angeles foreclosure, although your best course of action is a consultation with an experienced attorney who can sift through all the factors in your situation to help you determine your best options.

The first of the Obama administrative changes that is likely to be enacted is that the refinancing process will be fast-tracked by a number of executive branch offices. So for example, individuals who aren't behind on their mortgage payments will be able to get a quicker refinancing on their homes because the Federal Housing Administration is planning not to count those deals against the banks. Typically, all instances of refinance are counted as a mark against the lending institution. Because a poor rating could impact a bank's ability to cover loans for the FHA, they are likely to shy away from streamlined refinancing. This will prevent that from being an issue. Ultimately, that means more homeowners can get a lower rate on their mortgages.

Additionally as part of this, a number of offices, such as the Agriculture Department, are slated to make it easier to refinance by waiving some of the requirements for things like appraisals and credit reports to get it done. The top requirement for homeowners is to be on time with payments.

Perhaps the measure that is likely to be the most beneficial to consumers who are teetering on the edge is a formal mortgage service bill of rights. Some of these rules are already in place, but the president's order would basically require all of the federal housing agencies to enforce a set of minimum standards on mortgage services. This would include requiring that banks extend immediate offers of loan modification or a forbearance as soon as it becomes clear the borrower might be hitting the financial skids.

For consumers, it's going to mean having one, continuous point of contact throughout the process. It's also going to require the banks to provide you, upon request, with access to all of the important documents the bank holds on your account. (This had been a problem in the past, as many banks weren't keeping the proper paperwork on file themselves, and in some cases, routinely claimed it had been lost.)

Additionally, it's going to mean help if you are denied a loan modification or other form of assistance. The president's plan will mandate a right of appeal in a review process that is formal, which would give consumers another chance to make their case.

Los Angeles Bankruptcy Spikes After Tax Refunds

Sat, 31 Mar 2012 06:36:11 -0800

A new study conducted by economists at three universities shows that bankruptcy filings in Los Angeles and across the country spike after tax season.

Los Angeles bankruptcy attorneys understand the new statistics reveal that bankruptcies in the U.S. went up about 7 percent in 2008 after Americans got their tax refunds in the mail.

Researchers at the University of Chicago, Columbia University and Washington University in St. Louis found that the reason for this phenomenon is that it does cost money upfront to file for a Los Angeles bankruptcy. On average, it cost about $1,500. That figure actually represents an increase of about 5 percent from 2001.

That's because the Bankruptcy Abuse Prevention and Consumer Protection Act, passed in 2004, increased the cost for administrative and legal fees needed to file for bankruptcy. The law also required individuals to cover the cost of their own credit counseling before they could file as well. The idea was to curb abuses of the bankruptcy system, but it had latent effect of making it somewhat more difficult for average Americans to file. It also came at a really bad time - just prior to the burst of the housing bubble.

There is good news though: Filing for bankruptcy can actually save you a great deal of money - and headaches - in the long term.

For example, a Chapter 7 bankruptcy will allow you to liquidate any major assets that aren't covered by the law in order to pay your credits. However, many of your most important assets are going to be protected. This often includes your home and cars.

And in a Chapter 13 bankruptcy, as soon as you file, you will be spared the barrage of calls from aggressive creditors, who call you both at work and at home at all hours. It can also mean that you will be allowed to drop your second or third mortgage, particularly if your home's value has dropped below what you own on it, as has been the case with so many Americans amid the housing crisis. It will also allow you to pay off your debt for pennies on the dollar. After the bankruptcy period is over, you are left with ZERO debt.

So the $1,500 you pay up front actually pays off fairly quickly.

For many people, though, it's getting that amount together. That's where the refund comes in. The number of overall bankruptcies actually went down quite a bit from 2005 to 2006 - about 71 percent, from 2 million to about 600,000. That's because many people couldn't get the funds together to pay some of those costs upfront. Now, though, those figures are rising again, and 1 million filed for bankruptcy in 2008.

If this is a concern for you, our Los Angeles bankruptcy attorneys can help. We offer a free consultation to help you determine what your options are before you file anything.

Attorney Fee Awards in Los Angeles Chapter 13 Bankruptcy Cases Referred to in Sullivan v. Papparlardo

Wed, 28 Mar 2012 11:43:55 -0800

When faced with a decision to hire an attorney, you may question how much you have to pay in fees. If you are going through a bankruptcy, you may feel that you cannot afford an attorney.

Our experienced Los Angeles bankruptcy attorneys are reasonable and understand what you are going through. When filing for bankruptcy in Lost Angeles, there are many decisions you need to make but none are as important as the attorney you hire.

Sullivan v. Papparlardo is a case that illustrates the importance of hiring the right attorney. The central issue is what are reasonable attorney fees in a bankruptcy proceeding.

The Sullivan's ("Debtor's") were filing bankruptcy under chapter 13. They hired Berliner ("Attorney") to represent them and file all of the required paperwork. Attorney estimated that the court costs and legal fees. Upon signature of the retainer agreement, the debtor's paid the amount attorney requested up front. Attorney completed the Chapter 13 plan which was approved by the bankruptcy court, but later filed a request for an substantial amount in additional attorney's fees and expenses. Pappalardo ("Trustee") was appointed by the court as trustee in this case, objected to this application for additional funds filed by the attorney on the grounds that this request was excessive.

There are many things to be taken into account when establishing attorney's fees. The court in this case relies on statute governing the area of attorney's fees which is 11 U.S.C. 330(a)(4)(B). The standard used in assessing the reasonableness of attorney fee awards is that it must be in line with the "benefit and necessity" of the services rendered. Things the court takes into consideration in determining this are: the nature, importance and complexity of the case; time attorney spent on the case; whether the billing rate was reasonable; and the expertise of the attorney.

Where cases begin simple and become more complex, attorneys are allowed to raise the costs to compensate for the changing complexity of the case. The court in this case found that this Chapter 13 bankruptcy was relatively straightforward and did not warrant the excessive award the attorney was asking for.

The court here looked at the type of work the attorney and his staff were doing and the hourly rate charged in the bankruptcy paperwork and found them to be acceptable. However, the court found that the attorney was billing clients for an excessive number of hours. The rule governing this is that only the number of hours spent productively count in assessing attorney fees. Therefore, time spent unnecessarily doing duplicative work or tasks should not be included in the determination of attorney fees.

Attorney argued several things that made this bankruptcy case extraordinarily different from other chapter 13 bankruptcies; however, the court here found that none of the evidence the attorney provided was sufficient to validate the increase in his fees.

Thus, the court found that the attorney could have properly and diligently represented the debtors interest in their chapter 13 bankruptcy without spending the large amount of hours claimed. Because of this finding, the court rejected the attorney's application for additional funds.

The attorneys at Nader Law Firm know about the burden of mounting debt and we have the experience to help you get the relief you deserve at reasonable cost from an attorney you can trust.