October 24th, 2011

According to Associated Press, as reported by the Dallas Morning News on October 23, 2011), fifty percent of the U.S. workers earned less than $26,364 last year, reflecting a growing income gap between the nation’s rich and poor. There were fewer jobs, and overall pay was trending down except for the nation’s wealthiest. The number of people making $1 million or more soared by 18% from 2009. Despite population growth, the number of Americans with jobs fell again last year, with total employment of just under 150.4 million, down from 155.4 million in 2008. In all, there were 5.2 million fewer jobs than in 2007, when the deep recession began. the figures are just one indication of the toll that the worst downturn since the Great Depression has taken on the U.S. economy. These numbers have been made public while demonstrations are raging on Wall Street and in cities across the nation over a widening income gulf between average wage earner and the nation’s wealthiest. the unemployment rate remaineds stuck at 9.1%, with more than 14 million out of work.

According to the Treasury the U.S. will hit its Debt Limit in April/May 2011

February 3rd, 2011

According to the Teasury, the United States will hit a $14.3 trillion statutory limit on its debt slightly later than previously estimated.  The Treasury unveiled a still-hefty debt auction schedule. the Treasury officials said that the limit would now be hit between April 5 and May 31, versus a previous estimate of end-March to mid-May. The later time frame reflected an upward revision to estimates of tax receipts and a downward revision to projected borrowing from the Social Security and Medicare trust funds. Also, the Treasury officials said that they were proceeding with borrowing plans under the assumption Congress will raise the limit without a protracted battle.  This assumption is shared by the financial markets too.


December 17th, 2010

The Home Affordable Modification Program (HAMP) is not having the expected effect on the forecloure crisis.  Some have estimated that by 2012 as many as 13 million home mortgages will go through complete foreclosure process.  It has been predicted by the Congressional Oversight Panel that less than 800,000 foreclosures will be prevented under the HAMP.  “When viewed in light of the millions of foreclosure completions since 2007 and the large number waiting in the pipeline due to continued hardships from high unemployment rates and lower home values, HAMP has failed to make a significant dent in the number of foreclosures and does not appear likely to do so in the future,” the Panel stated in its December 2010 report.

Mortgage Lending Estimated to Drop Below $1 Trillion in 2011

October 27th, 2010

Bloomberg News reported that the Mortgage Bankers Association had announced that home lending in the U.S. will fall below $1 trillion in 2011, the lowest level since 1996. It is estimated that originations will drop to $996 billion next year, as opposed to the projected total of $1.4 trillion for this year. Mortgage lending reached a record $3.8 trillion in 2003 as refinancing became the trend and home prices and sales went sky high.  Tighter lending standards are limiting refinancing because an almost 30 percent drop in U.S. property prices since the 2006 peak, are making it difficult for homeowners to tap home equity.

Bankruptcy and The Home Affordable Modification Program (HAMP)

October 13th, 2010

If you are experiencing difficulty in paying your monthly mortgage payment do not lose hope.  There are several options available out there which you may be able to utilize.  The best known program may be The Home Affordable Modification Program (HAMP). 

HAMP is a federal program designed to help struggling homeowners stay in their homes by modifying their monthly mortgage payments to make the payments more affordable.  Not all homeowners will qualify for this program.  For those homeowners who qualify, HAMP may provide a real opportunity to save their homes.  The best thing about HAMP is that it can be utilized while in bankruptcy.   Here are the general eligibility requirements for HAMP:  (1) the homeowners must be the owner occupant of the home; (2) the mortgage debt must be less than $729,750; (3) the mortgage debt must have been incurred before January 1, 2009; (4) the monthly total for the principal, interest, taxes, insurance and homeowners’ association fee must be greater than 31% of the homeowners’ current monthly gross income; and (5) the homeowners must with supporting documentation show that they are unable to pay the current monthly mortgage consisting of the total for the principal, interest, taxes, insurance and homeowners’ association fee.  Once these five requirements are met, the homeowners become eligible for HAMP.  However, meeting the eligibility requirements does not entitle the homeowners to an automatic modification of the mortgage loan. 

Those homeowners who do not quliafy for HAMP may qualify for another of the many avilable programs.  For a list of the options go to:  http://makinghomeaffordable.gov/  This site also helps homeowners spot scams designed to take advanatge of them.  If you have questions about how HAMP and other programs may be utilized in a bankruptcy, contact us.

Can I file bankruptcy on business debt?

June 10th, 2009

I have a small business and run it as a sole proprietorship. I have debt for the business. Can I file
bankruptcy on the business debt and not for myself?

No. A sole-proprietorship essentially means that you are the business. You file taxes as a self-employed individual but do not have a separate legal entity like a corporation set up for your business. It is common for people to operate businesses as sole-proprietorships. You may have incurred debt that directly relates to your business such as leases, credit cards, vendors, bank loans, equipment loans, and tax debt. You do have personal liability on the debt even though it was for a business purpose. Filing for bankruptcy as an individual will help you to reorganize or eliminate this business debt while still maintaining some of your personal debt, like your home mortgage. Depending on the type and amount of debt, the bankruptcy may be filed as a “business case” meaning that the majority of your debts are not consumer debts. Filing bankruptcy does not mean that you will lose your business, either. You may still be able to operate and maintain control of your business assets and accounts while you are in bankruptcy. Every business is different. Bankruptcy can be a useful tool in helping your business to survive in a difficult economy.

Please call my office for an appointment to discuss your options in managing your business debt.

Can I file bankruptcy on tax debt?

June 10th, 2009

I owe money to the IRS for self-employment taxes for several years. I heard that under the new bankruptcy laws, I cannot file bankruptcy on tax debt. Is that true?

No, that is not true. There is still a variety of relief available for tax debt under the new bankruptcy laws enacted in 2005. It is a common problem for self-employed individuals or individuals running a business to have tax liability issues with the IRS, the State Comptroller, and the local property taxing authorities. IRS problems could include non-payment of personal income taxes, and 940 and 941 taxes including interest and penalties. Other tax issues could involve state sales taxes and local property or business personal property taxes.

The relief available to you in bankruptcy will strictly depend upon your circumstances. You need to consult with an attorney experienced in handling taxing authorities. The first questions I will ask you in a consultation about IRS debt are: have you filed your tax returns that are due, when did you file them, and are there any IRS liens on your property? Some taxes can be eliminated or reorganized in bankruptcy. In addition, bankruptcy may provide relief on interest and penalties.

Bankruptcy can be a useful tool in helping your business to survive in a difficult economy. Please call my office for an appointment to discuss your options in managing your tax debt.

Difference between a business bankruptcy and a consumer bankruptcy

June 10th, 2009

What is the difference between a business bankruptcy and a consumer bankruptcy?

A business bankruptcy can be filed by a legal entity, such as a corporation, but a business bankruptcy can also
be filed by an individual who has primarily “business debt”. Entities or individuals filing business bankruptcies may be attempting to eliminate or reorganize debt. A consumer bankruptcy is filed by an individual who has primarily “consumer debt”, which may include houses, cars, credit card debt, and medical bills. A consumer may need to be relieved of debt or may need to reorganize debt.

It is common for small business owners to have personally guaranteed their business debts such as SBA loans, leases, credit cards, or other bank loans. Typically, lenders and landlords do require such guarantees from an individual for business loans. If a business is not going well, the individual may need personal relief from the business debt to protect his personal assets; therefore, the individual may file a personal bankruptcy to receive relief from business and consumer debt.

The business itself, meaning the legal entity of the corporation or partnership, may also need to file a bankruptcy to handle debts of the business. A Chapter 7 bankruptcy is available to a business that is closing and liquidating assets. A Chapter 11 bankruptcy is available to a business attempting to stay open and reorganize debt or attempting to close and liquidate assets.

Please call my office for an appointment if you or your business are experiencing financial distress and unable to
service debt.

What happens to my business if I file bankruptcy?

June 10th, 2009

I own a business that I think needs to file bankruptcy. What is the difference between a Chapter 7 and a Chapter 11?

Businesses that are corporations, partnerships or limited liability companies may file Chapter 7 or 11 in bankruptcy. Chapter 7 is a liquidation bankruptcy. It means the business is closing, and all of the assets will be liquidated to pay creditors. Secured creditors and tax authorities get paid before unsecured creditors. Corporations may not protect, or exempt property—all assets will be liquidated. An individual person who has guaranteed payment of debt, such as a bank loan or a lease, will not receive relief from the liability of the debt unless the liquidation of the assets satisfies those debts in full. This is a common situation with small businesses. Individuals may end up filing bankruptcy to manage the business debts for which they may be liable. Chapter 11 is a reorganization bankruptcy. It means the business is attempting to stay open and actively operating, but it is reorganizing debt in some way. Generally, in a Chapter 11 the old management stays in control of the business subject to certain rules and restrictions. The business will be given time to propose a plan of reorganization which may or may not pay all creditors in full. The creditors get to vote on the plan of reorganization. The plan can be approved either by the vote and consent of the creditors or in certain circumstances it may be approved by the Bankruptcy Court over the objection of the creditors. The approved plan of reorganization will be a contract between the business and its creditors which will replace all the old contracts which the business used to have with its creditors. Bankruptcy can be a useful tool in helping your business to survive in a difficult economy. Please call my office for an appointment to discuss your options.

Credit Card Defaults Reach A Record High

May 6th, 2009

Credit card loans considered uncollectible and delinquent have reached record levels.   Debts considered uncollectible and written off have reached an 8.6% annual rate in March, up from 5.3% from a year earlier.   Delinquent loans hit 6.0%.    American Express charge-off rate rose to 8.5% and Capital One Financial’s to 8.4% rate.  Rising defaults may well hinder attempts by the Federal Reserve to get credit flowing to consumers because lenders traditionally pull back when faced with mounting losses.  In recent months, Bank of America, Citigroup and other credit card issuers have closed unused accounts, pulled in credit lines and raised fees and rates.  The loan portfolios of the top six credit card issuers fell at a 1.9% annual rate in the first quarter. Outstanding credit card debt has dropped by $21.0 billion since last September, a result of a lack of desire to lend and reduced demand from consumers to borrow.