Articles Posted in Bankruptcy News

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This is a question we do not get very often, but it is something people like to know. In days gone past federal employees were not paid very well in comparison to other people in the nation’s economy. This has changed over the years. Take a look at this chart courtesy of The Federal Judicial Center:

Judicial Salaries U.S. Bankruptcy Judges

Date Effective Annual Salary

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A bipartisan bill, expected to be signed by President Barack Obama, would lower the rate on federally subsidized Stafford loans from 6.8 percent to 3.9 percent. It comes a month after lawmakers failed to reach a deal to keep the interest rates from rising from 3.4 percent to 6.8 percent. This is good news for everyone with student loans. Total student loan debt in this country is now higher than total credit card debt. It is fast becoming the number one debt problem in America.

I am the State Chairperson for the National Association Consumer Bankruptcy Attorneys (NACBA). Our lobbying arm worked very hard to get this interest rate reduction. We are continuing to lobby for changes to the bankruptcy law regarding the discharge of student loans. Current bankruptcy law only allow the discharge of student loans if the debtor can prove a hardship. The rules for hardship are so strict that it is virtually impossible to obtain a hardship discharge unless you are totally disabled and have been making payments on the loans.

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Before 2005, we could discharge private (as opposed to government guaranteed) student loans. That is no longer the case. NACBA is lobbying very hard to remove this private student loan restriction because these loans have the highest interest rates and private student loans are not eligible for most of the programs that government student loans have that allow for lower payments or forbearance. Once we have accomplished this, we will be lobbying for a return to the student loan discharge law as it existed before 1995, which did allow for a bankruptcy discharge for student loans that were over 7 years old.

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When it comes to guns, motorcycles and prescribed health aides, folks get downright indignant if someone tries to take them away.

It seems people think the second amendment to the U.S. Constitution has something to do with guns. This amendment has been around for a long time. It was enacted by congress on December 15, 1791. It reads as follows: “A well regulated Militia, being necessary to the security of a free state, the

right of the people to keep and bear arms, shall not be infringed.”

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For the first time since 2001, Arizona has increased the exemptions that a Debtor may claim when he files a bankruptcy. When debtors file a Chapter 7 bankruptcy, they receive a discharge of their debts (with some limited exceptions). In exchange for this discharge, a trustee is appointed who takes and sells some of the debtor’s property to be used to pay his creditors. However, pursuant to the Arizona exemptions, there are some items the trustee cannot take. The debtor gets to keep these items to help with her fresh start. Beginning September 15, 2013, the new exemption law allows exemptions in more items of property and for increased values. Some of the highlight are as follows: [NOTE: Regarding a debtor’s home-This was unchanged. A debtor can still exempt equity of $150,000].

530305_cacti.jpg 1. All wearing apparel not in excess of a fair market value of five hundred dollars ($500).

2. All musical instruments provided for the debtor’s individual or family use not in excess of an aggregate fair market value of four hundred dollars ($400).

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Joseph A. Smith has been appointed for a 3.5 year term to act as the Monitor for the National Mortgage Settlement. Mr. Smith served as North Carolina Commissioner of Banks beginning in 2002, and resigned from that position in February, 2012. As Commissioner, he oversaw the licensing and regulation of banks and thrifts. He also helped implement the North Carolina Mortgage Lending Act, North Carolina Secure and Fair Mortgage Licensing Act and State Home Foreclosure Prevention Project. While Commissioner, Smith also served from 2009 to 2010 as chairman of the Conference of State Bank Supervisors. He was an organizer and member of the Board of Managers of State Regulatory Registry, LLC, an organization dedicated to creating a nationwide mortgage licensing system. His Office of Mortgage Settlement Oversight will oversee the Settlement to ensure compliance by the Banks. For additional help in Arizona, please visit: http://nationalmortgagesettlement.com/states.

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After many months of negotiation, 49 state attorneys general and the federal government have reached agreement on a historic joint state-federal settlement with the country’s five largest loan servicers: ALLY/GMAC, BANK OF AMERICA, CITI, JP MORGAN CHASE AND WELLS FARGO. Arizona is included in the settlement. The only state not included is Oklahoma. The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. It’s the largest multistate settlement since the Tobacco Settlement in 1998.

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. Certain homeowners whose homes were foreclosed on between January 1, 2008 and December 31, 2011 may be entitled to a one-time cash award of between $1,500 to $2,000.

We will be reporting more details on this settlement in upcoming blogs. In the meantime, be on the alert for scammers contacting you about having you hire them to obtain your settlement. Neither the banks nor the Attorneys General will charge a fee to speed your settlement. You should not have to hire anyone (lawyers included) to participate in the settlement.

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As an Arizona Bankruptcy Attorney, it really breaks my heart to see people come into my office wearing a scarlet letter that is both self imposed and imposed upon them by the judgments of their peers. Society tends to attach this scarlet letter to a bankruptcy filer that, more often than not in these financial times, need not be so attached. While society ought to realize that, often, circumstances beyond an individual’s direct control can lead that person down the road of bankruptcy, for the most part, even in 2011 it often does not. For some reason, even in present times with all the reports of job loss and the downturn in the economy, there is still something about bankruptcy that causes many to make snap judgments and to stay behind walls of ignorant bias.

There is no doubt that there is an argument that some people in the past have run up large credit card bills all the while just planning to do a Chapter 7 liquidation bankruptcy to wipe out all their unsuspecting creditors. Additionally, there is no doubt that this is not laudable behavior. However, the danger comes when members of society assume this is what ALL people who file bankruptcy do. This stigma often prevents good people who find themselves in circumstances which are beyond their control, circumstances where bankruptcy could definitely save their financial present and future, from seeking out bankruptcy at all, to their great personal and financial detriment. The truth is that any one of us could easily be one divorce, one illness, one job loss, or one judgment away from finding ourselves staring at a potential bankruptcy. That being the case, it is imperative that we let go of stereotypes a bit and embrace reality.

In order to get past the stigma and stereotypes associated with bankruptcy it can be useful to really break down the circumstances that might lead a smart, capable, and responsible individual to look to the Bankruptcy Court for relief from debt. I will even use an extreme example by selecting Sonja Morgan, New York socialite and member of the cast of Bravo TV’s Real Housewives of New York City to make my point. sonja-morgan-getty-250.jpg

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President Obama signed the “Credit Card Accountability Responsibility and Disclosure” Act in May of 2009. The law was designed to further restrict credit card practices that the government and many consumer groups considered harmful. A few requirements of the law that I found to be interesting:

1. Credit card companies will not be able to charge a penalty fee that exceeds the amount associated with the violation. If the payment was $10.00, the penalty for paying it late can’t be more than $10.00.

2. Penalty fees must be “reasonable and proportional to the omission or violation”.

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According to an Article posted February 3, 2009 at Bloomberg.com, personal bankruptcy filings climbed by 34% in January of 2009.

The American Bankruptcy Institute expects 1.4 million consumer bankruptcies to be filed this year up from 1.06 million in 2008.

Considering the numbers, Arizona Bankruptcy filings will likely grow close to the number of filings in 2005. Those considering bankruptcy right now in Arizona are not alone.

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According to a recent USA today article, home foreclosures rose nationwide by 81% from 2007 and 225% from 2006.

Total repossessions were 850,000 up from 404,000 in 2007.

Arizona’s numbers were among the leaders.

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