HAMP modifications 1 of 7: NPV – the “secret formula” determining your future.

[Categories: Washington Bankruptcy Attorney]

There is a "secret formula" which is determining whether you are eligible for a HAMP – it is called the NPV – the "net present value".

What is this formula? I found two descriptions:

Description #1: This first is an official brief description from the "Frequently Asked Questions" portion of a government document – it recites as follows:
"Apply a Net Present Value (NPV) test to determine whether the value of the loan to the investor will be greater if the loan is modified (factoring in the government’s incentive payments) [versus if the loan is foreclosed and the foreclosed house sold by the foreclosing lender]. If the modified is not of greater value [greater NPV] the investor and servicer may still modify the loan. However, modification in such cases is nto required. Please note: Your servicer may re-run the NPV test before the modification becomes official if they receive new information taht could affect your NPV score. If the modified loan is of greater [NPV], the servicer must offer you a modification under HAMP, and, ifyou accept the offer, will put you on a trial modification (typically three months) at the new payment level. [ ] Misrepresenting any information required for the Home Affordable Modifidcation is a violation of Federal law and has serious legal consequences." Revised June 8, 2010, a copy is available at: http://makinghomeaffordable.gov/docs/BORROWER%20FAQs_6-8-10.pdf

Note that a list of servicers that have agreed to participate in HAMP modifications is available at a government website. Also included is a list of those HAMP programs (there is more than one HAMP program – adding to the confusion) in which the respective servicers have agreed to participate at: http://www.makinghomeaffordable.com/contact_servicer.html

Description #2 of NPV test – This description comes from an on-line post by an "in the trenches" individual who has claimed to have participated in and successfully completed 100 modifications:

January 2010: "The "NPV Test" (NPV is "Net Pesent Value") is a formula used to determine your eligibility for a loan modification under the HAMP Program. The purpose running an NPV calculation test is to decide if the investor of your mortgage is in a better profit position by approving you for a modification (basically which choice gets more money to their bottom line) or if they would have a higher profit margin by allowing the property to foreclose. This formula takes many different factors such as current value, foreclosure costs, resale time and compares this with payments on the reduced rates, how much principal they would have to defer interest free to make you qualify under 31% of your gross (pretax) income, after the other "waterfall process" steps the HAMP underwriting guideline require in order to lower your payment were first calculated, along with the risk in possible repeat default, and many other figures that are called values. In other words, it is the comparison of two formulas with multiple factors, that are then compared to see which is greater in profit to the investor of your loan. The investor is usually not the same as your servicer.

If the borrower is not approved for a HAMP modification because the transaction failed the NPV calculations, then the servicer must, explain what the NPV means tell you the factors used to make the NPV decision and advise you that you may request the values used in making the calculations along with the date the process was completed within 30 days of the notice of denial. and dates. The reason they have to provide this information to you is to give you the opportunity to make any necessary corrections to the values they used as they make or break your ability to be considered eligible for the Home Affordable Modification Program.

You or your authorized representative, can request the specific NPV values verbally or by writing to the servicer within 30 calendar days from the notice date and they must answer your request within 10 days.
If you request the NPV values and you have a foreclosure sale pending the servicer must not complete the foreclosure sale until 30 days after they deliver those values to you to give you time to correct the inaccurate values. If there are any.

Once the evidence that the NPV values used were inaccurate, the servicer has the burden to make the necessary verifications to see if the corrections are material to the outcome of the NPV.
Some values don’t affect the outcome and do not warrant a change from the original NPV. If you find inaccurate values in the NPV calculations and you follow the protocol for advising the lender then your servicer must reconcile the inaccuracies prior to proceeding with any foreclosure sale.

As always the best way to win at the loan modification game is to learn everything you can about the process so you can be empowered and successful with your loan modification and saving your home."

See Anna Cuevas at http://ezinearticles.com/?Denied-For-HAMP-Because-You-Failed-NPV-Calculations—What-is-NPV-Test?&id=3574993

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Consumer debt rises $21.4 billion in March 2012 – are credit cards making more bankruptcies inevitable?

Again taking a little break from discussing tax effects of foreclosures, I wanted to share a startling bit of information. Tuesday, May 8, 2012, I saw it reported on page A9 of the Tacoma News Tribune that Americans are back at it again…. This is the biggest one month increase in a decade, since 2001.

According to the short article, consumer debt rose by $21.4 billion in March from February, the seventh straight monthly increase and the largest since November 2001. A measure of auto and student loans increased by $16.2 billion, according to the publication. A gauge of credit card debt rose $5.2 billion after declining in January and February 2012. Total borrowing rose to a seasonally adjusted $2.54 trillion, which is below the all time high of $2.58 trillion reached in Juy 2008.

What does this mean? Overall consumer borrowing has thus declined by only (only?) $40,000,000,000 over 10 years- which is $40 billion dollars in overall decline. There is still an awful lot of debt still out there. I think that bankruptcies are almost certain to increase again, particularly as most markets have plenty of people discouraged about sagging or deflating housing prices.

I have said it before, that if you cannot see yourself being "debt free" of all consumer debt (yes, that means car payments and credit cards and student loans and tax debts) within 36 months, then you should consult with a qualified bankruptcy lawyer to see if a Chapter 7 or Chapter 13 bankruptcy filing might be a viable option to improve your life.

Renting Prosperity: Wall Street Journal Comments on decline of ownership.

A short break in blogging on foreclosure tax consequences. Here is something interesting about a major demlgraphic shift….

Yahoo Economics Editor Daniel Gross’s essay appeared in the May 5-6, 2012 Wall Street Journal edition. In it he notes that single family new home starts have dropped from over 1.1 million in 2007 to just a bit over 400,000 in 2011. He notes that home ownership has dropped from 69% in 2006 to 65.4% today. Mr. Gross points out that in 72% of metropolitan areas, it was cheaper to rent than to own, up from 54% a decade ago, according to Moody’s. In 2011, whereas single-family houseing starts fell 9% from the year before, starts of structures with five or more units were up 60%. In the first quarter of 2012, starts of multifamily housing structures were up another 27%, while single family starts were up only 16.7% according to Mr. Gross’s WSJ essay.

He also points out that builders increasingly intend to rent out what they build. in 2007, only 62% of the housing units in buildings with two or more units were built for rental. In 2009, 84%of the units in such buildings were built to be rented out. In 2011, 91% of the units in such structures were aimed at the rental market.

Many of you with whom I have met have heard me speak of a shift towards renting. Mr. Gross echoes some of my feelings on this point in his essay.

Your job my disappear, you may need to relocate if your company pulls out of the area and offers you a relocation, you may need to travel to another part of the country to help a child raise a sick or needy grandchild; you may need to relocate to take care of the affairs of an aging relative, some part of the country may recover economically faster than where you are currently living thus offering greater opportunities somewhere else.

If you feel the need for some flexibility in your living, employment and relocation opportunities then you might want to consider renting for a while. In most areas, housing prices ARE NOT increasing, so taking a year off or so to rent might not be at all economically harmful.

I promise you some more on Mr. Gross’s fascinating essay in coming days……

If you need to get out of your underwater house, underwater mortgage or want to talk about renting vs. buying and how the decision may be affected by your bankruptcy filing, give us a call. We are here to help. 253-383-1001 Appointments available in Tacoma, Olympia, Puyallup, Renton, Chehalis and Bremerton.

Short sales and tax consequences – part 4 of 7: Analysis of Discharge of Indebtedness Income vs. taxable debt forgiveness income.

This is part IV of a seven part series. I look at definitions of Discharge of Indebtedness Income vs. taxable debt forgiveness income. Note that the tax consequences of foreclosure or short sale of a commercial or rental property will likely be much different than discussed here. In this series, we are looking at your primary residence in which you reside.

You could be facing foreclosure or short sale nearly anywhere in Western Washington- and we can help. It doesn’t matter where you are at in Western Washington. I regularly service communities in and around Seattle, Washington; Federal Way, Washington; Bremerton, Washington; Gig Harbor, Washington; Silerdale, Washington; Bangor, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; and Olympia, Washington.

I have clients as far north as Snohomish County and Whatcom County, and as far south as Clark County, Washington and Skamania County, Washington. We have many clients in Aberdeen, Hoquiam and Gray’s Harbor County, along with the Kitsap area and Key Penninsula; you MUST be aware of potential tax consequences of a "short sale" or foreclosure.

As discussed before, the $250,000 capital gains exclusion plays a large roll in whether you have taxable income on your personal residence post short sale or foreclosure.

Note that this analysis is limited to your personal residence in which you have lived for at least two years. As stated earlier, investment, commercial and rental properties will have a much different result than discussed here – remember to always consult your tax professional. Properties you received as a gift or inheritance can have a different result as well, so always consult your tax professional in any distress sale situation.

The National Consumer Law Center’s publication "Foreclosure Prevention Counseling", 2009 edition, available for $60.00 at www.consumerlaw.org, at Chapter 9, pages 147-152, treats this subject well.

Now, recognize that for starters, Discharge of Indebtedness Income is not necessarily always the same as taxable debt forgiveness income, according to the NCLC manual "Foreclosure Prevention Counseling" 2009 edition, at page 149.

Discharge of Indebtedness Income – the IRS considers that a taxpayer has income from discharge of indebtedness when a lender forgives some or all of a debt. If the obligation to repay a debt is forgiven, then the government looks to see if that borrowed money now constitutes income to the borrower and, if so, how much. That income is taxable like any other income the homeowner receives. Nevertheless, as described in posts five, six and seven of this blog post series, there are a number of exceptions that may mean that discharge of indebtedness may produce no taxable income at all.

Lets talk for a moment about three situations in which tax MIGHT be due … but don’t panic … the next three blog posts in this series will put your mind at ease. These three situations rarely result in any taxable income. But so that you completely understand the concept, here are the three POTENTIAL (not certain) taxable income creation situations:

First, if there is a foreclosure and the homeowner is not laible for the deficiency, that forgiveness of the deficiency is a discharge of indebtedness income.

Second, another example is a short sale where the house sells for less than the debt and wehere the lender has agreed to forego any deficiency.

The third example would be a loan modification in which the lender forgave the principal of the debt or wrote the debt down. The amount of forgiven debt would also be discharge of indebtedness income.

Note that discharge of indebtedness income is VERY DIFFERENT AND DISTINCT from capital gains income. I reprint for you here the example from an earlier blog post (#3 of this seven part series) to illustrate difference.

Note from the partially reprinted/reposted example info below, it is possible for a short sale to result in both a capital gain and also a discharge of indebtedness situation. Each of (1) capital gains and (2) discharge of indebtedness must be analyzed separately and independently:

:::::::::::::::::::::::::::::::::::::::::::::::::::

Example #1 – single person completing short sale – illustration of development of capital gain and discharge of indebtedness income

$50,000 original purchase price of principal residence many years ago (no funds expended on improvements during ownership so as to increase basis)

$210,000 amount on mortgage after many rounds of refinancing to "pull out equity"

-$150,000 less: short sale price when homeowner falls into financial distress

$60,000 indebtedness not paid due to short sale

$100,000 capital gain ($150,000 short sale price – $50,000 acquisition price = $100,000)

$60,000 Discharge of Indebtedness Income (but Debtor may not have to pay tax on this 60k – read later blog posts #5, #6, and #7 in this series as we work through defining and diferentiating "Discharge of Indebtedness Income vs. taxable debt forgiveness income)

$100,000 capital gain – no tax due, because the capital gain exclusion is $250,000 for a single person on a principal residence.

::::::::::::::::::::::::::::::::::::::::::::::::

Ok, so our stressed out example short sale debtor above is off the hook for capital gains tax! But will he/she escape income tax on the $60,000 discharge of indebtedness income tax? Stay tuned for more! forthcoming posts #5, #6 and #7 of this series may will "save the day" for our stressed-out example debtor above … stay tuned to find out how and why!

As stated before, remember, that regardless of where the property is located in Western Washington, be it Tacoma, Federal Way, Renton, Auburn, Tukwila, Kent, Bremerton, Silverdale, I can often be of foreclosure and/or short sale assistance. I enjoy meeting with clients from areas as diverse as Bellevue, Olympia, Chehalis, Aberdeen, Olympia, Lacey, Graham, Puyallup, Orting, Chehalis, Centralia and Gig Harbor.

Remember, in Western, Washington, I am here to help you, regardless of where you are facing a foreclosure or short sale, be it Federal Way, Washington; Burien, Washington; Seatac, Washington; Des Moines, Washington; Bremerton, Washington; Silverdale, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; Graham, Washington; Orting, Washington; Spanaway, Washington; Lacey, Washington; or Olympia, Washington.

Short sales and tax consequences – part 3 of 7: Analysis of a short sale of principal residence

This is part III of a seven part series. I look at an example of the short sale of a principal residence – in some ensuing blog posts I will be looking at a definition of "discharge of indebtedness income" and also "taxable debt forgiveness income" as follow ups to this and earlier post examples of foreclosures/short sales – and the tax foreclosure or short sale of a commercial or rental property will likely be much different.

You could be facing foreclosure or short sale nearly anywhere in Western Washington- and we can help. It doesn’t matter where you are at in Western Washington. I regularly service communities in and around Seattle, Washington; Federal Way, Washington; Bremerton, Washington; Gig Harbor, Washington; Silerdale, Washington; Bangor, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; and Olympia, Washington. I have clients as far north as Snohomish County and Whatcom County, and as far south as Clark County, Washington and Skamania County, Washington. We have many clients in Aberdeen, Hoquiam and Gray’s Harbor County, along with the Kitsap area and Key Penninsula; you MUST be aware of potential tax consequences of a "short sale" or foreclosure.

The $250,000 capital gains exclusion plays a large roll in whether you have taxable income on your personal residence post short sale.

Note that this analysis is limited to your personal residence in which you have lived for at least two years. As stated earlier, investment, commercial and rental properties will have a much different result than discussed here – remember to always consult your tax professional. Properties you received as a gift or inheritance can have a different result as well, so always consult your tax professional.

The National Consumer Law Center’s publication "Foreclosure Prevention Counseling", 2009 edition, available for $60.00 at www.consumerlaw.org, at Chapter 9, pages 147-152, treats this subject well.

As stated before, remember, that regardless of where the property is located in Washington, be it Tacoma, Federal Way, Renton, Auburn, Tukwila, Kent, Bremerton, Silverdale, Bellevue, Olympia, Chehalis, Aberdeen, Olympia, Lacey, Graham, Puyallup, Orting, Chehalis, Centralia, for starters, Discharge of Indebtedness Income is not necessarily always the same as taxable debt forgiveness income, according to the NCLC manual "Foreclosure Prevention Counseling" 2009 edition, at page 149.

Example #1 – single person completing short sale

$50,000 original purchase price of principal residence many years ago (no funds expended on improvements during ownership so as to increase basis)

$210,000 amount on mortgage after many rounds of refinancing to "pull out equity"

-$150,000 less: short sale price when homeowner falls into financial distress

$60,000 indebtedness not paid due to short sale

$100,000 capital gain ($150,000 short sale price – $50,000 acquisition price = $100,000)

$60,000 Discharge of Indebtedness Income (but Debtor may not have to pay tax on this 60k – read later blog posts in this series as we work through defining and diferentiating "Discharge of Indebtedness Income vs. taxable debt forgiveness income)

$100,000 capital gain – no tax due, because the capital gain exclusion is $250,000 for a single person on a principal residence.

Remember, in Western, Washington, I am here to help you, regardless of where you are facing a foreclosure or short sale, be it Federal Way, Washington; Burien, Washington; Seatac, Washington; Des Moines, Washington; Bremerton, Washington; Silverdale, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; Graham, Washington; Orting, Washington; Spanaway, Washington; Lacey, Washington; or Olympia, Washington.

Short sales and tax consequences – part 2 of 7: Analysis of a foreclosure sale

This is part II of a seven part series. We look at a few examples of foreclosured homes and some sample tax impacts of such foreclosure.

Regardless of where you are facing a foreclosure or short sale, be it Federal Way, Washington; Bremerton, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; or Olympia, Washington; you MUST be aware of potential tax consequences of a "short sale" or foreclosure.

The $250,000 capital gains exclusion plays a large roll in whether you have taxable income on your personal residence post foreclosure.

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

The National Consumer Law Center’s publication "Foreclosure Prevention Counseling", 2009 edition, available for $60.00 at www.consumerlaw.org, at Chapter 9, pages 147-152, treats this subject well.

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

Here are some "foreclosure" examples of taxable income related to the foreclosure of a principal residence. Note that this analysis would not apply if a home you rented out as a business was foreclosed. That situation is much more sticky – you should see your CPA if you have a business or rental property foreclosed.

Example #1 – single person foreclosed upon

$50,000 purchase price of home "way back when"

+$10,000 improvements to home like a new deck and changed shower to bathtub

$60,000 basis in home

The home was refinanced many times to "pull out" equity, so the debt against the home at the time of foreclosure was $325,000.

In addition, $5,000 in "kash for keys" was paid to the single person owner after foreclosure as an incentive to move out without damaging the property.

At the time of foreclosure, the house was appraised at $400,000 by the bank.

$60,000 basis (home purchase price plus $10k improvement)

$330,000 "sale" price (e.g. amount of debt $325k + $5k paid "kash for keys"

$270,000 capital gain ($330k – $60k = $270k)

$250,000 capital gain exclusion

$20,000 capital gain

$3,000 capital gain tax due ($20k x .15 = $3k tax due)

Note: Read on in later posts in this blog – One of five exclusions to the obligation to pay $3,000 in capital gains tax may come into play

Example #2 – single person foreclosed upon

$125,000 home acquisition price, no improvements made to increase basis

$132,000 debt owed on home at time of foreclosure, including foreclosure fees

$80,000 home fair market value at time of foreclosure as housing prices have collapsed

$45,000 capital loss – capital losses are not taxable, thus homeowner does not owe any tax due to foreclosure as a capital tax.

HOWEVER, in this example #2, the single person foreclosed upon could potentially owe income tax (as no capital gain tax) as discharge of indebtedness income/taxable debt forgiveness income. More on this later over the next few blog posts.

In the next few blog posts of this seven part series, I will cover and explain in a very basic manner how discharge of indebtedness income can result in taxable debt forgiveness income – and will also discuss the five exceptions/exclusions to tax on the income.

Remember, we are here to help you, regardless of where you are facing a foreclosure or short sale, be it Federal Way, Washington; Bremerton, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; Graham, Washington; Orting, Washington; Spanaway, Washington; Lacey, Washington; or Olympia, Washington.

Short sales and tax consequences – part 1 of 7: Analysis of a “normal” sale

Regardless of where you are facing a foreclosure or short sale, be it Federal Way, Washington; Bremerton, Washington; Tacoma, Washington; Renton, Washington; Auburn, Washington; Tukwila, Washington; Lakewood, Washington; University Place, Washington; Puyallup, Washington; or Olympia, Washington; you MUST be aware of potential tax consequences of a "short sale" or foreclosure.

The $250,000 capital gains exclusion plays a large roll in whether you have taxable income on your personal residence post foreclosure.

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

The National Consumer Law Center’s publication "Foreclosure Prevention Counseling", 2009 edition, available for $60.00 at www.consumerlaw.org, at Chapter 9, pages 147-152, treats this subject well.

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

To understand the problem of Discharge of Indebtedness Income/taxable debt forgiveness income, you should understand how a normal (non distress) transaction would result (or not result) in income:

Example #1 from the NCLC:

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

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

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

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

Example #2 – single homeowner

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

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

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

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

The foregoing examples contemplate a "normal" sale – not short sales nor foreclosures.
In an ensuing post, I will provide some examples of foreclosure/short sale operation.

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

Student Loans – Should I borrow the money? What about my parents and a Parent Plus loan:?

As I approach my 19th year in the practice of law, I often ponder the student loan gamble. I took the gamble, and I won. Others have not been so lucky.

I signed my first student loan promissory note on September 6, 1985. I finished undergraduate studies with a loan debt of $11,000. My total borrowings topped out at just short of $60,000.00 in 1993 following law school. It was a surreal number to me. I found it depressing. If I recollect correctly, the payments were over $750 monthly and started in January1994. I hstruggled at first as my first job as a lawyer did not pay very much. I bumped along, scraping, scrimping and saving (and keeping my old car running) for just about two years, until 1995 when I was able to "consolidate" to a payment of some $450 monthly plus an "unconsolidatable" loan side payment of $60 monthly for a total of about $510 monthly. This was a princely sum for a 27 year old with a dying old car and no outside family help.

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

I have always been a bit entreprenurial…in 1996 I was able to start my own practice and it was a law practice that has always done pretty well. Others have not been so lucky. Many of my friends have struggled with student loan payments.

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

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

I likely would have had to attend a less expensive school under todays situation, other than the Whitworth College (a private presbyterian affiliated college in Spokane, WA) that I attended. I think I uniquely benefited from my time at Whitworth, so my education would not have enjoyed the same qualities that it was able. So, yes, under todays situation my trajectory would have been different I can safely say.

If you are a parent and your child is EXTREMELY MOTIVATED and traditionally high achieving, I would probably stump up and sign up for some Parent Plus student loans as a last resort. However, if your child is a bit willy nilly or unsure of his/her direction, I would suggest that you avoid the parent plus loans. You are better off taking out a home equity loan (if you have any home equity) to pay for education than taking out Parent Plus loans, because even if you end up in financial trouble the home equity line of credit can potentially be discharged through bankruptcy should you lose your home, whereas the Parent Plus loan is less dischargeable in bankruptcy.

If you are a child and are considering asking your parents to sign up for a Parent Plus loan for your benefit, all I can say is that you better be "on target" with your education. You need to get in, get done, get out and get to work so that you do not screw over your parents financially as you change major five times and party while you bring home a string of C’s, D’s and the occassional F. You need to decide on your major (or at least your department) BEFORE you show up for the first day of college as a freshman, and you need to stick with it even if you decide you might "want to go in a different direction". You do not have the right to ask your parents to obligate themselves unless you are giving 110%. If you are not achieving top honors (baring some sort of learning disability) while asking your parents to sign up for Parent Plus loans, you are insulting your parents. Parent Plus loans did not exist when I was in college, but my first couple of years my parents did cough up for some of the tuition. My way of honoring their commitment was to graduate summa cum laude which means "highest honors". I was 5th in GPA in my college graduating class and finished with a 3.91 Grade Point Average. I received one "B" grade in my freshman year and two in my senior year. Every other grade was an "A".

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

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

Thank about it….student loans are only for people ready to give it 110% in being a student. There is a reason they are called student loans…and not called "play time find myself loans." Student loans are serious. If you take one out, you need to be serious.

Are any agencies in the consumer credit industry enhancing their rules and regulations?

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

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

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

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

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

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

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

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

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

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

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

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Update: Is WA State’s economy rebuilding alongside the national economy?

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

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

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

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

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

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

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

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

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

An update to WaMu’s bankruptcy standing:

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

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

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

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

I will post additional updates as developments in the case continue to be disclosed.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at staff1. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Is WA State’s economy rebuilding alongside the national economy?

A recent article presented by KOMO News, stated that as of February 9, 2012, Washington State’s budget shortfall is down to $500 million. The state’s economy is stabilizing and showing signs of re-growth as people rely less on state services.

Numbers released last Thursday by the state’s Economic and Revenue Forecast Council showed $96 million in extra revenue and an additional $340 million in expected savings from less reliance on state services. Prior to this report, state legislatures had been looking at about a $1 billion shortfall.

According to Steve Lerch, the U.S. economy has had higher job growth than anticipated. He also stated that the state Boeing manufacturing, growth in the software sector, and other strong exports, have placed the state in a “decent” position.

Lerch still has his reservations about celebrating, though. He feels that due to, not only our own country’s financial situation, the economic crisis overtaking Europe and the slowdown in Asia, creates a variety of risks WA State needs to continue to be on the look-out for.

With these risks in mind, state budget officials are looking at ways to cover more than just the current shortfall. They hope to leave about $600 million as a buffer in case the state economy struggles again.

House Republicans plan to release their proposal for the budget by tomorrow, and the Democrats have said we should see their ideas next week.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Are there any updates to the long-running litigation of mortgage settlements?

According to the National Mortgage Settlement web site, 49 state attorneys general and the federal government reached agreement to settle a long-running dispute with the country’s five largest loan servicers: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo. The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government.

The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.

If you are a home owner, and your loan was serviced by one of the five loan servicers listed above, the settlement may apply to you. However, eligibility may take some time to determine. The agreement will be performed over a three year period.

Another point to consider is that, the agreement does not affect any individual’s rights. A consumer may still bring an individual action, be a part of a class action, or seek further review/relief from the Office of the Comptroller of the Currency (OCC).

Additionally, loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. The FAQ page on the site contains links to both sites to help you determine if your loan is owned by either Fannie Mae or Freddie Mac.

This is a complex agreement. I may be able to help you understand your situation; I can certainly help you by discussing certain tradeoffs and options concerning home ownership and bankruptcy. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, you can reach a member of our friendly staff by calling at 253-383-1001. Our office hours are Mondays through Thursdays, 9 AM until 5:45 PM, and on Fridays from 9 AM until 12 PM.

The National Mortgage web site contains quite a bit of useful content, including a list of Frequently Asked Questions about the agreement, an executive summary of the agreement, and even a list of contact information for the 49 participating state attorneys general offices.

Here is the information for Washington state residents:

Washington Attorney General Rob McKenna
1125 Washington St. SE, PO Box 40100, Olympia, WA 98504-0100
(360) 753-6200
http://www.atg.wa.gov/

Bankruptcy and Litigation

After a decade of litigation and related bankruptcy, Jacqueline Palank of the Wall Street Journal wrote on the question of who owns the song, “Whoomp! (There It Is)”.

This song is familiar to anyone who attended a sporting event in the ’90s. Released in 1993, “Whoomp! (There It Is)” was one of those ubiquitous pump-up-the-crowd songs played during sporting events, a status cemented by its inclusion on the first volume of “Jock Jams.” It was later declared the 65th worst-song-ever, surrounded by such other ’90s gems as “How Bizarre” by OMC, “Breakfast at Tiffany’s” by Deep Blue Something and “Supermodel (You Better Work)” by RuPaul.

To decide this matter, Judge Richard A. Schell of the U.S. District Court in Sherman, Texas, scheduled a hearing for Aug. 27. This is when a jury will be selected for a trial over which of two music companies is the true owner.

In 1993, Alvertis Isbell’s Bellmark Records released “Whoomp! (There It Is),” by one-hit wonder Tag Team. According to Isbell, the record label owned the sound recording of the song, while its affiliated publishing company, Alvert Music, owned the composition rights to the song’s written form.

However, DM Records licensed “Whoomp! (There It Is)” in 1997. Bellmark filed for bankruptcy protection the same year. In 1999, Bellmark sold most of its assets, including its sound recording rights, to DM Records. According to Isbell, the composition rights weren’t included in that sale because they are an asset of Alvert, which wasn’t in bankruptcy.

According to Isbell, DM has been wrongly claiming ownership of both the song’s sound and composition rights. Isbell is seeking a ruling that Alvert Music still owns the composition rights, and also wants damages for DM’s alleged infringement on his ownership rights.

DM Records, however, says written agreements do not mention him or Alvert Music by name, and therefore don’t distinguish between the two types of song rights. As a result, both were assets of Bellmark and therefore included among the assets DM Records bought from Bellmark’s bankruptcy.

After a decade of litigation, the parties asked Schell to rule on the dispute without a trial. The judge denied the request Friday stating, “Because there are genuine issues of material fact surrounding ownership of the subject composition copyrights, the court denies both DM and Isbell’s motions for summary judgment.”

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

If the best interest rates are from banks, credit unions, or savings and loans with low Bankrate.com Safe & Sound Ratings, does it make sense to go for the yield when the bank is potentially at risk?

An article I found on Bankrate.com discussed the truth about risky banks and their interest rates on certificates of deposit. When looking for the best CD rates, every tenth of a percentage point of yield makes a difference. This is especially true right now, when interest rates are at a historic low.

The answer is that it depends. "Technically, consumers have nothing to worry about as long as they stay under FDIC (Federal Deposit Insurance Corp.) limits, which are $250,000 through 2013," says Robert Laura, a financial adviser and president of Financial IQ in Farmington, Mich. According to the FDIC website, a CD that matures after Dec. 31, 2013, would have its insured limit reverted back to $100,000, except for certain types of retirement accounts.

The FDIC website states that if you have more than the current limits to invest, it may be better to break up your CD purchases by buying CDs from different institutions to stay under deposit insurance amounts. That being said, should you invest in a CD and the institution fails, the FDIC is required to make good on your investment as soon as possible. This can involve transferring your CD to the institution that acquired the failed bank or sending you a check for the balance due on your CD.

The FDIC website also has information on what happens if your CD is worth more than deposit insurance limits, and your bank fails. If this happens, you may receive some or none of that balance at a later date, depending on whether the FDIC is able to sell the failed bank’s assets and at what price. The FDIC provides frequently asked questions on federal deposit insurance.

Bryan Hopkins, CPA, CFP and president of Hopkins Wealth Management in Anaheim Hills, California states, while the FDIC generally makes good on insured deposits quickly, it’s wise to have other liquid funds in an insured checking or savings account elsewhere. "It could take as long as 90 days to get your money, so it’s a good idea to have funds elsewhere to cover day-to-day expenses," he says.

Though deposits are currently insured up to $250,000, it does make sense to pay attention to safety and soundness criteria, such as Bankrate’s Safe & Sound ratings. These ratings evaluate a bank based on an individual institution’s capital adequacy, asset quality, profitability and liquidity.

"Psychologically, a bank’s ratings are important and consumers should use them," says Bryan Hopkins. "Most consumers, especially older ones, remember the Great Depression. While bank failures are handled very differently now than they were then, nobody wants it to be the case where things don’t go smoothly, and have their money be in limbo for months.”

CD rates for banks with lower Bankrate Safe & Sound Ratings may be higher than those with higher ratings because those banks may be trying to build up their deposit base by offering higher yields through brokers to consumers. In early December, one-year CD rates varied from 0.5 percent from a bank with a four-star Safe & Sound Rating, to 2.08 percent from a bank with a one-star Safe & Sound Rating. However, there were several banks with one-, two-, three- and four-star safety and soundness ratings, offering CD rates from 1.7 percent to 1.99 percent.

Lower-rated banks don’t always offer higher rates than banks with higher ratings, so it is always a good idea to “shop around”. Some higher-yielding CDs may come with higher minimum deposit requirements, and some banks may be seeking deposits with a particular maturity. These banks may offer better terms on some CDs than others.

In many cases, the difference between higher yielding CD rates and lower yielding rates isn’t much. For example, if you buy a $10,000, one-year CD with a 1.9 percent interest rate, compounded daily, you’ll earn $191.81 in interest. If you buy the same CD at a lower rate, 1.6 percent, you’ll earn $161.28 — a $30.63 difference.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Do credit-reporting bureaus ever make mistakes?

A recent article posted on KOMO News online site, discussed a 2009 California class action lawsuit that challenged credit-reporting bureaus TransUnion, Equifax, and Experian with improperly reporting debts that had been discharged in bankruptcy. The defendants (the credit-reporting bureaus) eventually came to a settlement with the plaintiffs to the tune of $45 million.

The court approved the settlement by issuing an Order Granting Final Approval, but on August 12, 2011, the defendants filed a brief challenging that order. Their challenge is in regards to attorney fees and costs of the case. The reason for the article was to remind readers of the case, because the result of this appeal won’t be known until sometime later this year. The deadline for Appellants to file relevant briefs with the court is January 23, 2012, and Appellees have until February 24, 2012.

The lawsuit was brought on because Equifax, Experian, and TransUnion improperly reported debts that had been discharged in bankruptcy on consumers’ credit reports. Rather than accurately noting that these debts were “discharged through bankruptcy”, the credit bureaus noted that they were “120 days late” or that they had been charged off by the credit issuer.

Incorrectly reporting the status of a debt is illegal, but it also caused a lot of grief for the people affected. This mistake consequently made these debts appear to still be active. When a debt is still reported as active, debt collectors may try to collect on that debt.

The result was that people who had filed for bankruptcy precisely to eliminate their debts and stop getting harassed by debt collectors, had to deal with them anyway.

There are a group of petitioners that are eligible to collect on the settlement that are being represented by this case. To be a member of that group, petitioners had to have received a Chapter 7 bankruptcy discharge AND a credit report issued by one or more of the defendants between March 15, 2002 and May 11, 2009 with incorrectly reported debts. They also must have submitted a claim form with relevant information by November 30, 2009.

Even though the settlement amount seems large, it will be spread out over so many individuals that it likely won’t result to more than a few dollars per person.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Is there anything I can do about a student loan that has defaulted?

Typically once your loan enters default status, the lender requires you to pay off the remaining loan balance in its entirety in one lump sum. However, the U.S. Department of Education has a loan rehabilitation program to bring defaulted student loans current. There are several reasons as to why you should take advantage of this program. When you enter into the program, risk of wage garnishment ends, and the IRS will no longer be able to withhold your income tax refunds.

Additional advantages take place after you have completed the loan rehabilitation program. The loan will no longer be in default status and will be considered current. Furthermore, the negative credit reports to the three national credit bureaus associated with the loan will be deleted. You will now also regain eligibility of the benefits that were originally available on your loans before the loan defaulted. These benefits may include deferment, forbearance, and Title IV eligibility.

There are some differences to the program depending on what type of loan you are trying to rehabilitate, but in all cases you are required to make nine full and on-time payments of an agreed amount within twenty days of their monthly due dates to the Department of Education.

The differences I mentioned before have to do with what lender your loan is serviced by after you have completed the program. A Direct Loan will be returned to the Direct Loan Servicing Center, a FFEL Loan may be purchased by an eligible lending institution, and a Perkins Loan will be serviced by the Department of Education until the loan balance is paid off.

Some things to keep in mind, are that payments secured through involuntary means, such as wage garnishment or litigation, cannot be counted towards your nine payments. Also, you are only allowed to perform loan rehabilitation once per loan. That means if your loan falls back into default, you will have little to no options as to what you can do about paying it off, and will most likely be responsible for the remaining balance in full.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.

Migration will continue despite Tamaulipas – learn Spanish and never be unemployed again

What was the Tamaulipas Massacre?

"On August 24, 2010, an 18 year old Ecuadorean approached a military checkpoint in Tamaulipas, Mexico, a northern state in Mexico. He had been shot in the neck and explained that he had just escaped a massacre. Mexican marines followed his directions to a barn a few miles away. There they found 72 men and women shot dead. The teenager told the marines how the group, migrants from Central and South America, had been kidnapped on their way to the United states by bandits claiming to belong to the Zetas, a Mexican drug trafficking gang. When the group refused to work for the gang, they were executed, with only two confirmed survivors." From The Economist, September 11, 2010, page 36.

"…the price of being smuggled accross the border has risen from perhaps $2,000 per person to as much as $10,000, according to STRATFOR, a global intelligence company based in Texas."

"A 2010 report from the United Nations Office on Drugs and Crime (UNODC) estimates that human smuggling is a $6.6 billion industry in Mexico, and that 90% of unauthorised immigrants crossing into the United States through Mexico hired a smuggler at some point along the journey – for food, for shelter, for a hiding spot in the back of a tractor trailer, for guidance about where to find water on the trail. [ ] …some coyotes (smugglers) are members of their comunities in good standing, esteemed for having helped friends and neighbors."

Why is a bankruptcy lawyer blogging about illegal immigration, massacres and border smugglers?

Because this massive migration (850,000 people crossed the border without authorization in 2005, down to about 300,000 today) will provide you with job security.

Many, most perhaps, of these migrants do not speak English. English is very difficult to learn. In contrast, Spanish lends itself to literacy, in that it can be picked up relatively quickly and is straightforward in spelling and usage.

With latino populations in many areas at a "tipping point" where many do not need to learn English to survive, these people need human interfaces with the economy. You can be just that human interface…and be paid well for it.

Are you tired of being unemployed and laid off? Use your spare time to learn Spanish. This will guarantee that when you are re-employed, you will be one of THE LAST ones to be laid off, as opposed to the first.

Even if you are laid off, I have little doubt that your Spanish abilities will help you to become a finalist in almost every job for which you apply.

Stabilize and take control of your future….learn Spanish. You can search this blog using the Google site-search function (the little Google box up in the corner) to learn more about how you can learn to speak Spanish economically and quickly.

Times are tough all over. If you need to make a little extra time to study your Spanish language texts, consider filing for bankruptcy and then drop your work schedule to 32 hours per week because post bankruptcy you may not need to work so many hours to stay ahead of your bills. Use the resulting 8 hours to polish your Spanish skills. Sacrificing a bit of time right now could pay future dividends in the form of job and income security.

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

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

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

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

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

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

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

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

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

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 Monday through Thursday, 9 AM to 5 PM,  and on Friday from 9 AM to 12 noon.

How can I avoid bankruptcy fraud allegations?

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

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

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

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

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

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

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

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

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

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

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free consultation at http://www.washingtonbankruptcy.com or e-mail directly at staff1@washingtonbankruptcy.com. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.