July 26, 2015

Knowing When Bankruptcy May be the Best Option

Many Americans spend every day thinking about how they are going to come up with enough money to pay their bills.

There are a lot of different types of debts, and there are many different creditors. Some people cannot pay their rent. Others cannot pay their student loan bills. Many are having trouble with mounting credit card debt, and others have unpaid medical bills. The creditors are calling multiple times a day, and they are wondering if they can or should declare bankruptcy.

money-1239608.jpgAccording to a recent news article from the Petoskey News, the first thing in making a decision is to get away from the line of thinking that filing for bankruptcy is the mark of failure, because that is not true. There are a lot reasons people can get into financial trouble. Many people base their current purchases on their expected income. This is completely normal, but what happens when there is a drastic reduction in income that was not expected?

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July 26, 2015

Former NBA Star Antoine Walker Files for Bankruptcy

These days, athletes make a tremendous amount of money. Even the lowest paid players in Major League Baseball (MLB) are earning over half a million dollars a year, and the game’s biggest stars are making $20 million to $30 million annually. Some are signed to multi-year deals and paid well over $100 million. For example, the Washington Nationals recently signed a seven-year deal with Cy Young winning pitcher Max Scherzer rumored to be valued at $210 million.

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However, despite these tremendously high salaries to play professional sports, we frequently hear about how former stars of the game have to declare to bankruptcy, as they have managed to spend all their money and save nothing for the future.

According to recent news feature from CNN, former National Basketball Association (NBA) star Antoine Walker, who was estimated to have earned around $108 million over his playing career, has now filed for bankruptcy.

Walker was 19-years-old when he helped his college team win the NCAA basketball national championship. He entered the 1996 NBA draft, and the Boston Celtics chose Walker as a high first round pick of that year’s draft. He became one of the game’s elites and was invited to the NBA All-Star team three times. He also helped lead the Miami Heat to a win in 2006.

Over his career, he had earned over $100 million, and that was far more money that he could have ever imagined growing up in a low-income Chicago neighborhood, as he said in the recent interview with CNN. He retired in 2008, and, two years later, he was broke. Walker said he thought he was financially set for the rest of life, but he was obviously wrong. Now he spends some of his time trying to help young athletes not make the same mistakes he did that lead to his filing bankruptcy.

Walker said like many other young athletes, suddenly wealthy, spend money on luxury items like cars, houses and jewelry. He also gave tons of money away to his friends and family and considered himself essentially an “open ATM” throughout his career.

He now knows that leading this kind of lifestyle cost him his financial future, and he hopes prevent people from making the same mistakes. He does admit to losing a lot of money from gambling but said that was not really a major cause of his economic downfall, and the media reports were overblown in that regard.

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November 25, 2014

Know Your Rights: Stop Retail Credit Card Bullying

We’ve all been there before—approaching the check-out line with purchases and the clerk’s aggressive prompts, “Would you like to save 15 percent by applying for our in-store credit card?”

Even if you refuse, they will invariably press on, “It will only take five minutes,” or, “Are you sure, you don’t want to miss this opportunity?”

Whether you simply don’t have time, don’t want to rack up more credit card debt or you don’t want to mess around with another credit card, it is important to know your rights when standing up to retail credit card bullying.

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With the Christmas shopping season underway, consumers are already feeling cash-strapped and stressed, especially those burdening debt.

On second thought, you think, “Maybe an extra credit card would be nice?” You can move some of the debts around, free up space on another credit card and save that 15 percent.

Don’t let retail bullies sucker you into a card you likely don’t need or really want. Over time, more credit cards and debt can lower your credit score and make it even more difficult to get out of debt.

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November 20, 2014

Alabama’s Student Debt Among Nation's Highest

Student loan debt is one of the greatest financial crises facing American youth. Throughout Alabama and nationwide, students are taking on debts to enter and graduate from college—though many graduates are not finding gainful employment with their new degrees.

In other cases, students drop out with debt and no gains from their educational loans. As debt continues to grow, recent studies have shown not all states are equal in the accumulation of student loan debt—and Alabama ranks among the highest. According to a personal finance website, state-by-state loan ranks Alabama as the 12th-worst for the accumulation of unpaid student loans.

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Researchers analyzed the average amount of debt per student, by state, finding Alabama loan holders have an average of $28,895 in student loans and a 14.2 percent rate of default.

Critics largely blame secondary education to blame for the high rate of debt in the U.S. Alabama’s educational system notoriously graduates high school students who are unprepared for college. According to reports, at least 30 percent of Alabama college students have to take remedial classes. Based on this evidence, it is no surprise there are more Alabama students in default—with more time spent on classes that do not count towards a degree, the more students will take out to finance their education, and the more they will accrue in debt.

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November 14, 2014

Legal Shifts: Students Seek Bankruptcy Help

Unmanageable and overwhelming debt plagues millions of individuals and families throughout the U.S. This problem is compounded by high unemployment rates and other factors that impact a family’s financial security—including divorce, illness or death.

Many debts, including medical expenses and credit cards are dischargeable through bankruptcy, one of the significant source of debt—student loans—is not.

Now representatives of the Center for American Progress are urging Congress to change the law to give those strapped by student loans a way out.

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Student loans can give hope and opportunity. However, they can become a nightmare in the event of an illness or death. Parents who have co-signed student loans have not been released from private student loans, even when their child dies unexpectedly.

For students themselves who have not been able to secure gainful employment, or in the event of illness, the debts can be insurmountable. Unlike car loans, credit cards or other unsecured debts, student loans are not dischargeable through bankruptcy.

Bankruptcy has a long history of providing debtors a fresh start. It is not so with student loans, according to current laws. Congress has continued to stand behind the student loan exception to the longstanding bankruptcy rules.

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November 4, 2014

Credit Card Debt and Peer-to-Peer Lending

Americans are strapped with all forms of debt—medical bills, utilities, student loans and tax debt. The most overwhelming form of debt involves credit cards. With high interest, fees and surcharges, debtors may get deep into debt, without being able to see a way out.

In some cases, borrowers can renegotiate debt settlement with credit card companies, but this tends to be an uphill battle. After all, the companies set out to make a profit by keeping consumers in debt as long as possible.

If you are only making minimum monthly payments or you struggling to make those, there may be a new option. Peer-to-peer lending is a growing industry that allows you to take out a personal loan and pay off cards at a lower interest rate.

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According to a recent report in the Huffington Post, peer-to-peer lending is a multi-billion-dollar industry helping thousands of consumers tackle their credit card debt.

Unlike ordinary financing or bank lending, it gives borrows and investors a “win-win” situation. Borrowers get low-cost financing and get to replace costly debts.

Investors get a low interest but significant turnaround earning back interest as borrowers continue to pay over time. This gives investors a “fixed income” investment strategy. Despite the many benefits of peer-to-peer lending, it may not work for everyone.

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October 31, 2014

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.
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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 to 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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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.

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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.
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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.

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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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