October 20, 2014

Can Unemployment Benefits Stop Foreclosure?

The threat of foreclosure usually occurs after months, years, even decades of slipping behind on finances. For some families, foreclosure is the result of an immediate and unforeseeable event such as an accident, medical condition, job loss, or the death of a breadwinner. According to reports, 6.5 million homeowners have already lost their homes to foreclosure since the housing bubble burst in 2008. For most of these homeowners, the most identifiable cause of foreclosure was unemployment. Losing a job doesn’t just mean a temporary lack of income, it can mean the inability to pay a mortgage. While homeownership was supposed to be a security blanket, homeowners also weren’t able to tap into equity because of depressed housing values.

Facing foreclosure can be overwhelming, especially when there are children involved. According to a study conducted by the Federal Reserve Board of Governors in a partnership with Northwestern University, many homeowners were able to protect their homes against foreclosure with their unemployment insurance benefits. The reports indicated that between July of 2008 and December 2012, an estimated $250 billion in federally funded unemployment was used to pay mortgages to prevent foreclosure. This means that there were more homes saved through unemployment benefits than through the Home Affordable Modification Program (HAMP).

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October 10, 2014

Slipping into Unmanageable Credit Card Debt

Credit card debt is one of the most troubling financial woes for Americans, young and old, rich and poor. It doesn’t often matter how much money you are bringing in to your household, keeping up with bills, mortgages, and other financial responsibilities compounded by credit card debt is a recipe for disaster. In a recent Business Insider report, a family explains how the family racked up over $100,000 in credit card debt even with a six-figure income. Though the family was eventually able to pay back their debts, getting out of the credit card hole was not easy.


The couple was planning for a family vacation when they realized that all five of their credit cards were maxed out. After reviewing their income, debts, and credit card situation, they realized how underwater they were with debt, living paycheck to paycheck, and using credit cards to cover everyday expenses, from lunches to groceries to clothes, hair appointments, and personal items. This is the trap faced by many American families who struggle to make ends meet. Using the credit card for that “one time” emergency can easily lead to regular spending and a habit of racking up debt. Overtime, this means that families are not only paying more for their expenses because of fees and interest, but it is making it more difficult to climb out of debt.

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October 2, 2014

Best-Selling Author and Producer Files Bankruptcy

Fame and fortune are no roadblock to bankruptcy. Athletes, celebrities, and politicians—despite notoriously high incomes, power, and financial freedom—are often seeking relief through bankruptcy. According to recent reports, a best-selling author who sold millions of books and the executive producer of the new film, “Addicted,” has filed for bankruptcy. The author, known as “Zane” wrote erotica whose work was often compared to the “Fifty Shades of Grey” series. She filed for Chapter 7 bankruptcy in a U.S. bankruptcy court. According to reports, her total assets topped more than $1.4 million including a $950,000 primary residence. She also listed a $530,000 investment property.

Bankruptcy courts require filers to list their assets, debts, and income. Before filing, it is important to consult with an experienced advocate. Do not try to file on your own because you could risk waiving certain exemptions, including personal property, such as a family home. In this case, the author had liabilities over $3.4 million, including an estimated $337,000 in back taxes. According to court records, the author owes more than $1.4 million to creditors and additional amounts in state and federal taxes. Though taxes are usually not dischargeable in bankruptcy, many filers who have unpaid taxes will pursue bankruptcy options to help them get on a manageable repayment plan. In this case, the IRS reports that the author owes more than $540,000. The Treasury Department placed a lien on her investment property in 2010. The property was purchased for over $1 million in 2004.

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September 29, 2014

McClendon v. Springfield: On Whether Civil Lawsuit Judgments are Dischargeable in Bankruptcy

McClendon v. Springfield, a case from the United States Court of Appeals for the Fifth Circuit, involves the president and only shareholder (“Debtor”) of an insurance company for which an employee (“Employee”) worked as the Chief Financial Officer (CFO) for four years.

gavel-5-140-m.jpgAt the end of 2007, Debtor accused Employee of stealing from the company and fired him. A month later, Debtor file a state court civil lawsuit against Employee on claims of theft and conversion. As your Birmingham Chapter 11 bankruptcy attorney can explain, conversion is a civil action that involves the taking of the property of another person or company.

The civil action proceeded to trial, and a jury awarded Employer (not Debtor) just over $340,000 on his counter-claim for defamation. Since Debtor could not pay the judgment against him, he filed a voluntary Chapter 11 petition with the bankruptcy court. The civil court entered civil judgment against Debtor in the amount awarded by the jury, and Employer was made a creditor to Debtor’s bankruptcy estate.

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September 20, 2014

In re: Vaughn, et al: On Bankruptcy Actions Where the IRS is a Creditor

Our Birmingham bankruptcy lawyers understand that a prior year's tax debt may be a major factor in one's decision to declare bankruptcy.

In re: Vaughn, et al, an appeal argued before the United States Court of Appeals for the Tenth Circuit, involved an adversary bankruptcy proceeding started by Appellant. According to court records, Appellant was the Chief Executive Officer of a cable television company. Though Appellant had little, if any, education beyond a high school diploma, his substantial practical experience took him very far in the industry.

As the head of the cable company, Appellant turned the company from a small entity into billion-dollar organization. When the company was sold, Appellant received over $30 million in cash and stock.

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September 16, 2014

Galaz, et al v. Galaz: On a Bankruptcy Court’s Jurisdiction to Decide on Non-Core Issues

In Galaz, et al v. Galaz, et al, an appeal argued before the United States Court of Appeals for the Fifth Circuit, Debtor filed an adversary proceeding against her ex-husband in bankruptcy court. As your Chapter 13 bankruptcy attorney in Birmingham can explain, an adversary proceeding generally involves a petition filed by a potential creditor to challenge the discharge of an asset, or another aspect of another’s bankruptcy case.

In Galaz, Debtor filed a petition that asserted her ex-husband had fraudulently transferred the assets of a company in which she had an interest to a LLC owned by his father. Her ex-husband and a music producer founded the company for the purpose of collecting royalties for a now disbanded funk group.

Even though the company was no longer generating a profit, as part of their divorce settlement, Debtor’s ex-husband transferred half of his 50 percent interest in the company to Debtor. Due to the fact that Debtor’s ex-husband did not receive written approval from his business partner, as per the operating agreement, Debtor received a 25 percent interest in the company with no right to participate or vote on company affairs.

After the divorce, and without the consent of either Debtor or his business partner, her ex-husband assigned all of the companies to a company that did not exist. After doing this, he assisted his father in filing the necessary documents to form a company of the same name, to which he transferred the royalty rights. At this point, the music from the old punk rock group became commercially successful and millions of dollars of royalties were paid to this newly created LLC. Neither Debtor nor her ex-husband’s business partner received any money from the sales of the band’s music.

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September 9, 2014

Peoples v. Radloff: On Standing to Appeal Bankruptcy Court Orders

Peoples v. Radloff, an appeal from the United States Court of Appeals for the Eighth Circuit, involved a debtor (“Debtor”) who filed a lawsuit in state court against her employer, the city government (“Employer”) on several counts of employment discrimination.

Two years later, Debtor filed a voluntary petition under Chapter 7 of the bankruptcy code. As your Alabama bankruptcy attorneys can explain, Chapter 7 is often the best option for many debtors.

In Radloff, Debtor did not disclose her pending lawsuit against city government as an asset when filing her petition for Chapter 7 bankruptcy. The court granted Debtor’s petition and discharged her from bankruptcy. The petition was listed as a no-asset filing in court documents.

After this point, in her civil case, Employer filed a motion for summary judgment to dismiss Debtor’s action on grounds that Debtor failed to include the suit in her bankruptcy petition. Debtor then filed a petition to reopen her bankruptcy case, so that she could disclose the fact that she was involved in an ongoing civil lawsuit.
The bankruptcy court allowed to reopen the proceeding; however, the Chapter 7 trustee determined that Debtor’s interest in any proceeds from the litigation was an asset that should be given to creditors.

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August 18, 2014

Fighting Back Against Debt Collectors: Statute of Limitations

For consumers, one of the most stressful consequences of mounting debt is creditor harassment. Stacks of letters, countless emails and even threatening phone calls can become the norm for debtors who cannot get ahead. Unfortunately, many American consumers do not realize they are entitled to protections against their creditors. Under the Fair Debt Collection Practices Act, collectors must follow specific guidelines when seeking to collect debt. Any violations could give the debtor the right to take legal action against a creditor. Similarly, some laws will make debts null and void.


Every state has a statute of limitations on debt collection. This means that after a certain period of time, debtors no longer have the right to come after you. Our Birmingham debt relief attorneys are dedicated to helping protect consumers against unscrupulous creditors and unfair debt collection practices. In addition, we will help clients explore debt relief options, including Chapter 7 or Chapter 13 bankruptcy. We know the quickest way to eliminate unwanted debt is through the bankruptcy process.

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August 11, 2014

Birmingham Bankruptcy Watch: Predatory Lending in the Auto Industry

Since the 2008 mortgage crisis, legislators, consumer watch groups and other advocates for low-income borrowers have been paying closer attention to predatory lending techniques. While most attention has been paid to lending in the housing industry, car lenders have also been known to target and exploit low-income earners. The federal government is taking action with the auto lending industry where unscrupulous practices have left low-income earners unable to recover from loan debt.

For most debtors, filing bankruptcy comes after years of hardship, trying to pay off debt and make ends meet. Our Birmingham bankruptcy attorneys understand the severe hardship faced by our clients. We know that making the decision to file bankruptcy is often a last resort for individuals who have gone through divorce, unemployment or an illness or injury. Rather than let your debt continue to mount, you can eliminate or reorganize debt to get back on a path towards financial freedom. Our attorneys will review your assets, debts and income to determine the best solution for you and your family.

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August 11, 2014

Military Members Get $92 Million in Predatory Lending Settlement

Consumer advocacy groups have found that military members and their families have been the target of predatory lenders. Now more than 17,000 military personnel along with other consumers will receive $92 million in debt relief as part of a settlement involving improper lending practices. According to Reuters, Colfax Capital and a subsidiary used mall kiosks in areas that specifically targeted individuals living near military bases, into taking out loans for computers, electronics and other computer products. The company, formerly operated as ‘Rome Finance Co,’ was notorious for hiding expensive charges and using misleading financing contracts that downplayed the full cost of the loan. As part of the settlement, Colfax also agreed to stop collecting unpaid debts.


While military members were the alleged target of the improper lending practices, other consumers suffered as well and will be able to stake a claim to the debt relief settlement. Our Birmingham debt relief attorneys are dedicated to protecting the rights of Alabama consumers. We help our clients pursue all debt relief options, including bankruptcy and other legal action to stop harassing creditors and debt collection companies. Chapter 9 and Chapter 13 bankruptcy allow you put an immediate end to creditor action, including foreclosure proceedings.

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August 2, 2014

One-Third of Americans Have Debts in Collection

The ongoing impact of the recession has resulted in job loss, upside-down mortgages, and debts, compounded by divorce and medical expenses. For millions of Americans, debt and creditor harassment has become the norm. According to a recent study conducted by the Urban Institute, more than 35% of Americans have debts and unpaid bills that have gone to collection agencies. While some of these debts may be only a single utility bill, a significant number include credit card and other debts in the tens or hundreds of thousands of dollars.

For most Americans, debt accrues over time or may be the result of a single, unexpected event such as an injury or sudden job loss. While many consumers will try to get ahead, the struggle may turn impossible as debts are turned over to collection agencies. Our Birmingham bankruptcy lawyers are committed to protecting the rights of our clients. We will take the time to review your assets, debts, and income to determine if bankruptcy is the right option for you. In addition to putting an immediate end to creditor harassment, filing bankruptcy will stop all legal action including lawsuits and foreclosure proceedings.

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July 25, 2014

Citigroup Settles Subprime Mortgage Lawsuit for $7 Billion

In another settlement that favors borrowers of Alabama, Citigroup has agreed to pay $7 billion. Of that $7 billion, 2.5 will go to pay mortgage relief for homeowners. The settlement was announced by U.S. Attorney General Eric Holder and involves mortgage-backed securities the bank packaged and sold to investors prior to the 2008 mortgage collapse. The case is another example of how the sub-prime mortgage market caused significant losses to business, investors, and borrowers involved with loans prior to and even after 2008.


During the height of real estate lending and the secondary mortgage market, banks, including Citigroup pooled mortgages and sold them as securities. Investors who purchased the mortgages on the secondary mortgage market were unaware that many of the loans were made in bad faith and, in some cases, fraudulent. Our Birmingham foreclosure defense attorneys are experienced in helping clients protect their rights through bankruptcy. If you are being threatened with foreclosure, you may be able to protect your rights and investments through bankruptcy. In addition to helping clients achieve debt relief, we are also abreast of legal developments in the mortgage market that may impact consumers, including Alabama borrowers.

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