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January 2012 Archives

Benefits and Consequences of Defaulting On Your Mortgage

The housing crisis has caused a lot of Americans to default on their home loans. Many people are finding they can no longer afford their mortgage payment, whether it’s due to a pay cut, job loss, or medical emergency. Others may find themselves able to scrape by, but only by draining their retirement accounts or using credit cards for food and gas each month.
While some people are defaulting out of necessity, others are defaulting as part of a strategy. You may hear about these people, they decide to walk away from their homes because they are underwater on their mortgage, meaning that the home is worth less than they owe the mortgage company. You may think these people are irresponsible or immoral, but be careful before you judge this particular book by its cover.
When someone decides to let a home go, it’s not an easy decision. There are “costs” to defaulting on a mortgage, and if you’re considering it, it’s important to make sure you know the pros and cons before you make the final decision to stop paying.
Very few states offer deficiency forgiveness, and Colorado is not one of them. If you default on your mortgage, your bank will eventually start a foreclosure and it will be auctioned off at a foreclosure sale. If it sells for less than the bank is owed, there is a deficiency. You are on the hook for this amount and the bank will most likely try to collect.
In addition to a deficiency owed to the bank, you will have to accept that your credit score will take a hit. This will affect interest rates you are offered for things such as future car loans and credit cards. Most banks won’t approve you for a mortgage for about 4 years with a foreclosure on your credit, and that’s only if you build your credit to a score they will accept.
Neither of these will sway you if you are unable to make ends meet and defaulting on your mortgage is the only option you have. If this is the case, one of the only ways to ensure that you won’t be affected by a foreclosure deficiency is to file bankruptcy. If you have other debt that you are unable to payoff, speaking to a bankruptcy attorney is something you really should consider. Getting out from under a mortgage you can’t afford may only be the first step to getting back on track. Call Greenwald & Hammond today to set up an appointment for a free consultation.
Submitted by:Kerry Hammond, Esq.

Tags: credit score, default, deficiency forgiveness, foreclosure, mortgage

Bankruptcy and Income Tax

Tax season is upon us. If you have not received your W2 yet, you should have it by tomorrow. While we may not have a fondness for preparing our taxes or even paying our taxes, tax debt and tax refunds each have a special role and deserve special consideration when an individual is considering bankruptcy. The determination as to whether tax debt can be discharged in a bankruptcy is one that even seasoned bankruptcy attorneys struggle with. As a rule, income tax debts that are due and owing for the three tax years prior to filing bankruptcy are not dischargeable. Income tax debt that was due more than three years prior to filing requires some additional analysis when trying to determine whether taxes can be discharged in bankruptcy. The date the tax return was filed and the date of the assessment are important dates to have when seeking a determination regarding whether an income tax liability will discharge in bankruptcy. When tax debt is a problem, bankruptcy may be able to help. For Debtors with income a chapter 13 can be used to pay taxes while eliminating some or all of the interest and penalties on past tax liability. Generally income taxes due for the three years prior to filing bankruptcy are considered priority debts and in a chapter 13 must be paid through the chapter 13 plan. Because the IRS charges such high interest on past due income tax, chapter 13 can be used to stop the interest from accruing and pay off the tax liability through a chapter 13 plan over three to five years. At the completion of a chapter 13 plan the interest and penalties as well as older tax debt that meets certain criteria, will be discharged. Chapter 7 may be used in some instances to discharge income tax debt that meets the criteria for discharge. It can also be used to eliminate other debt thereby allowing any available income to be applied to any non-dischargeable tax liability. In some instances income tax debt may be resolved through an offer in compromise following a chapter 7 bankruptcy. If you do not owe taxes then it is possible that the IRS may owe you! If you are anticipating a tax refund and considering bankruptcy there are some things you should know. In Colorado, there is no exemption for tax refunds (some states have a "wild card" exemption which can be claimed to protect a bankrupt debtor's right to receive a refund). Because there is no exemption, if the IRS (or the state) owes you a tax refund, if you file bankruptcy before you receive your refund, you will be expected to turn over the refund for the benefit of your creditors (some trustees will even intercept your refund). Most attorneys will tell you that it is advisable to file your taxes, receive your refund, and spend the refund on your necessary living expenses prior to filing bankruptcy (although there are some cases in which delaying filing bankruptcy while waiting for a refund may not be advisable). If you are planning to go this route, it is important to note that refunds should not be used to pay debts to close friends or family members. It also would not be wise to use the money to pay creditors whose debt would otherwise be discharged in the bankruptcy. The money can be used legitimately to pay for the cost of filing the bankruptcy, attorneys fees for a bankruptcy, doctor or dentist visits, car repairs, necessary household repairs, clothing for your dependents, food, mortgage (or rent) expenses, and/or moving expenses. Of course this is only a partial list of legitimate uses for spending a tax refund prior to filing bankruptcy. Whether tax debt is a problem or spending a refund is at issue, discussing the options with an attorney will typically lead you in the right direction. Contact Greenwald & Hammond today for a free bankruptcy consultation. Submitted by:
Mindy Greenwald, Esq.

Tags: Greenwald and Hammond, IRS debt, bankruptcy attorneys, chapter 13, chapter 7, free consultation, income tax, tax debt, tax refund

Have Home Prices and Interest Rates Really Hit Rock Bottom?

Many people dream of being homeowners. I, on the other hand, dream of never owning my own home. As a lifelong renter, and someone who has frequently been accused of not being inside the box, I am very intrigued by articles that tell you that NOW is the best time to buy. Usually it’s because home prices have hit rock bottom or interest rates are at an all time low.
Since, as stated above, I am constantly reading these articles, it’s amusing to me when I read the same message year after year. How can prices be at rock bottom in December of 2010 and then the same in December of 2011? I realize that I have to consider the source and that many of these soap boxers are in the real estate market, in the form of Realtors or bankers. But it still makes you think.
I also find it fascinating that the American dream is so attached to home ownership that even people I represent in bankruptcy, who have surrendered a mortgage they couldn’t afford, are asking me when they will be able to buy again. They haven’t even gotten their discharge yet and they are wondering when they can sign on the dotted line and lock themselves in for another thirty years.
Don’t get me wrong, owning a home may be the right decision for some people. If you’re going to live there for 15 years or more (this number used to be 5) you may even break even when you sell. If you have kids and want to lock into a coveted school district it may also make sense to plant mortgage roots. But there are so many people out there who would benefit by speaking to a financial advisor to see if it’s the right financial move for their situation.
Like anyone else, I am amused by articles that disagree with my stance, and tickled at ones that agree. I thought I would share a link to a video and article entitled “Don’t Buy a Home OR Home Builder Stocks.” It contains an interview with Todd Schoenberger, managing director at LandColt Trading. He gives his opinion of the market and whether or not it’s time to buy. Watch and decide for yourself.
And, as always, I want to point out that Greenwald and Hammond is a bankruptcy law firm. We offer free consultations to anyone who is in financial trouble or considering bankruptcy. So if you bought a house in search of the American dream, only to find out that it was more of a nightmare, call my office. There may be a way to get your life, and your sanity, back.
Submitted by:Kerry Hammond, Esq.

Tags: American dream, Mortgage rates, Realtor, buy, foreclosure, homeowner, interest rates, rent

Coupons That May Not Save You Money

If you are like me, then every time you log into your email, you have at least five "money saving" coupons for goods and services in your inbox. At first, I was excited to receive my one email a day from Groupon to see what great service I could obtain at a ridiculously low price. Now it seems that everyday I receive a multitude of offers from dozens of similar companies. After reviewing the various "deals" I have purchased, I have to wonder, am I really saving money? The deep discounts are great, especially when they are for something you really want to do or a restaurant you really want to try, and these types of offers are a great marketing tool especially for small businesses who need to get business in the door. These offers can be really tempting and consumers really should ask themselves, "do I really need/want this?" before buying. The marketing is simply genius: act now (because tomorrow you cannot get this deal); we have an app too (so you can click buy now from your phone while sitting at a stoplight; your credit card is already in our system so you don't need to hassle with grabbing your wallet; you can print your coupon later or use your smart phone to present the coupon at the vendor's location. In the past, I have made some smart purchases. I bought a Whole Foods $20 certificate for $10. I am in Whole Foods no less than twice a week, so clearly I benefited from that one. Today I was going to buy movie tickets for $6 which we all know is a good deal, though my friend beat me to the punch and bought both of our tickets. That is a good deal too. Once I bought one to a restaurant that I go to from time-to-time; also a good deal because I would be going to that restaurant again, coupon or no-coupon. These purchases all save us money. Now for the less-than-good deals: I bought a set of six laser-hair-removal sessions. I have always thought I wanted laser hair removal to eliminate the need for waxing or shaving. It turns out that the hair I most want gone (some annoying little ones on my face) will not respond to lasers because they are too light. Good news that they are so light (only I can really see them), bad news that I need to use my discount package to remove hair elsewhere that I probably wouldn't have bothered with but for the fact that I bought the coupon. $99 spent on something I definitely would not have paid full price for and definitely didn't need. Not to mention that every time I go in for a treatment, the technician tries to convince me I need botox (something at this time I am adamantly against). I also once bought a mini-spa package. This included a facial, a haircut and style, a manicure and a pedicure also for $99. Obviously nothing offered was a necessity but it is always nice to have a day of pampering. Well the location was convenient enough and all services were at the same location, a relatively new day spa. The downside, the facial was a "mini facial" so it was only for about 20 minutes and the technician spent the entire time trying to sell me any and all of their products, as well as up-sell the service to a full facial or specialty facial, the haircut and style was okay with the exception of the stylist telling me that he is "not very good at styling fine hair" so I may want to finish blow drying it myself (seriously!), and the mani/pedi was given in an area that is adjacent to the salon where no less then three hairstylists were using blow dryers (loud - not relaxing). I even said to the nail tech (who could barely hear me) that the acoustics there were not good and she agreed. Another $99 impulse buy that I probably would have been better off without. There are definitely some really great deals to be had, and these offers definitely allow many people to try things that they otherwise might not have tried. The upside to my experience is that now I don't feel that laser hair removal is something that I cannot afford, it is something I really do not want or need. The danger of these offers is that many of us are impulsive and when we see something that just yesterday seemed unaffordable (or frivolous) and today we can afford it (and tomorrow it will be gone), the temptation to buy may be hard to resist. If you have been receiving these discount offers for some time, you know that some will repeat eventually, and some may not. In hard economic times, it is still okay to treat yourself from time-to-time but it is important to give yourself time to think before you purchase. When you do buy a "deal" remember that the vendor may not be making a lot of money on your purchase so they have a lot of incentive to upsell and add on to get more of your hard earned money. Be prepared for an encounter with an aggressive salesperson and do not feel bad saying "no" to the "botox special" or some other unnecessary offer. The thing to remember is that these deals may be great but if you are spending money that you otherwise would not have spent at all, you are not saving money. PS: please don't tell my husband about all of this! (I am joking, of course). Submitted by: Mindy Greenwald, Esq.
Bankruptcy Attorney at Greenwald & Hammond, PC

Tags: Greenwald and Hammond, affordable bankruptcy, credit card

Managing Stress

We all talk about being stressed. Our jobs, marriages, and our kids can cause us stress. With the economy the way it is these days, I hear more and more people proclaiming that money problems are causing them stress. The sad fact is that stress doesn’t discriminate. It doesn’t attack people of a certain religion, ethnicity, or nationality. Even kids experience stress, whether it’s in school or on the playground. I think that most people, if asked, would agree that they suffer from stress of some sort.
The levels of stress can vary from person to person. It can depend on physical and mental make-up or external factors, such as what is going on in your life. Medical studies have shown that stress can lead to health problems. It can lower your immune system, causing you to get sick more frequently. And increased medical bills, or loss of work due to illness, can make money matters worse. Therefore, stressing over one thing (money) can circle around (causing you to get sick) and provide you with a reason to stress over something else (medical bills).
So what can we do about stress? How can we deal with it if we can’t afford a $200 an hour counselor, or a spa getaway? I frequently search for ideas that promote relaxation and activities that promise stress relief. I’ve found that some of the simplest ideas can be most effective. You can consciously take several deep breaths when you feel the most stressed. A relaxing bubble bath works for a lot of people after a rough day at work. Or, if you’re adventurous, you can even try meditation. And of course exercise is always helpful to blow off a little steam.
In addition to the above ways to relax, I recently came across an article entitled “Ten Affordable Ways to De-Stress.” Since I’m a fan of all things affordable, I thought I’d see if the article could provide any new and interesting ways to relax. I was pleasantly surprised and have listed the 10 ideas below. Some are repeats, but there are a few new and interesting ones. All are self explanatory.
Do something you haven’t done since you were a kid: Volunteer your time or expertise, Stretch, breathe, or meditate, Hang out with your funniest friend, Sleep (I’m a big fan of this one), Go to a shooting range, Try your hand at an art project, Make a great dinner using items already in your fridge, Go on a hike or walk, Take a bath with candles and bath salts
So when you start to feel stress over your job, kids, or money, try one of these ideas to get your mind off things and recharge. They won’t solve your problems, but they may just give you the energy to work out a solution.
Submitted by:Kerry Hammond, Esq.

Tags: Stress, affordable, health issues, medical bills, money problems, relax

Spend Less and Still Enjoy Life

I have always been a chronic money waster. I love to go out to nice restaurants and shop in cute boutiques or fancy department stores. Just like almost everyone else though, funds are limited and I am really trying to find ways to cut back, especially now that I have two very young children. I recently began playing Mahjong weekly with a group of my friends. So you are probably thinking "wow she is either a very old lady from Florida or a wealthy Asian man." I do not think I am either. All joking aside, after about 7 months of "staying in" with a group of friends, I have discovered that I am spending far less money each month. Since we started playing weekly, we rotate who hosts and each week about four to nine women get together, play, talk, snack and sometimes drink. As host, one might provide a few snacks (fresh baked pastries) and a bottle or two of wine. As a guest I don't typically need to bring anything, though I have toted the occasional bottle of wine from time-to-time. On occasion we have done a potluck dinner (fortunately I know a lot of really good cooks). The company is always the best part though. For years I would typically round up friends during the week to go for happy hour, which would usually wind up turning into dinner and always wound up costing somewhere between $20 and $60 (per person). Now every Wednesday evening I can count on having the social contact I really crave and most weeks I will not spend a dime. Before we started this weekly ritual I might have thought that I craved the feeling of "being out and about;" However, the satisfaction and enjoyment I get from the social interaction with my friends is the real draw. Some of my friends had discovered this long ago and instead of having "girls night out," they have "girls night in." There are so many small ways that we can curb our spending. I came upon an article today on MSN Money entitled "Spend on the Things You do Everyday," which has some good advice on reducing the amount you spend on what the author calls "someone else's life." She discussed how she lives in Texas but owns a snowboard and a wardrobe for snowboarding yet she has only snowboarded once. Her point being that all the money she spent for those items would serve her far better in savings or spent on something she would use far more often. I do not think she regretted snowboarding, rather that purchasing all the accessories (and owning her own snowboard) may have been excessive for the one trip and she would have enjoyed the snowboarding trip equally if she only had one outfit and had rented a snowboard. If you figure out what you spend your money on it may be easier to figure out how to save money. Though for me it was a pleasant surprise to discover that just having a set night with my friends, helped me spend less. If "going out" is your weakness, try "staying in" with friends about a third of the time and see if that works for you. If Mahjong is not be your thing, Poker, Bridge, Bunco, or Eucre might be worth a try (of course there's always Truth or Dare, a seance or Wija Board too). Submitted by: Mindy Greenwald, Esq.
Bankruptcy Attorney at Greenwald & Hammond

Tags: Colorado bankruptcy, Greenwald and Hammond, bankruptcy attorneys, saving money, spending money

Are You in Financial Trouble?

That sounds like a pretty straightforward question, one that each of us could answer without much thought, and with a simple yes or no. It would be obvious to us if we were in financial trouble, right? Well, for some it may not be that obvious. There may be signs that even people who feel financially responsible may miss.
I think we can agree that if you get a foreclosure notice in the mail, or are served with a lawsuit filed by Mastercard, you are in financial trouble. But there are other signs, ones that are more subtle, that may also tell you that you are either currently in trouble or not very far from it.
The article “5 Red Flags That Show You’re in Financial Trouble” points out some things that we may not have previously considered to be dangerous.
Overdrawn on Your Checking Account
If this happens once or twice in a lifetime, I think we can all agree that it’s a temporary loan from the bank that came at a much needed time. If you find that you are constantly overdrawn, always in the negative, this is a serious issue. It may be an easy fix. You may just be spending too much because you don’t follow a budget. Or, your budget isn’t tight enough for the money you bring in and needs to be tweaked. Either way, re-evaluating your budget is an important first step in this case.
Only Making Minimum Credit Card Payments
If you find that you are paying only minimum payments to your credit cards, you are getting nowhere near paying down your debt. Minimum payments tend to go mostly toward interest and only reduce the balance of your account by very little each month. If you continue to use the card, raising the balance even more, not only doesn’t your balance decrease, but your minimum payment will increase. It’s a vicious circle and a hard one to break. If you switch to using cash, and only buy what you have enough cash for, this is a good start. But at the same time you need to increase your payments above the minimum if you want to see a dent in your credit card balance.
No Rainy Day Fund
It’s hard to fault anyone who lives paycheck to paycheck because the fact that they’re actually able to make ends meet on a monthly basis in this economy can still be a win. However, things come up that can’t be expected. Family members get sick, hours get cut, jobs are lost. Having a rainy day fund can make the difference between sinking or swimming. Even if it’s only a couple of month’s salary, it can still get you out of a jam.
You Only Pay the Important Bills
As stated above, living paycheck to paycheck is one thing. But it’s another to not even be able to pay all of your bills each month. If you are frequently paying the rent but not the electric because you have to choose between them, you may have to revisit your budget to see if something can be done.
Dwindling Credit Score
The lower your credit score, the higher risk you are to potential lenders. This means you’re going to be offered higher interest rate accounts than you would if you had great credit. This might not seem like a big thing now, but when your car dies and you need to go out and replace it, it will matter a lot more. A higher interest rate on an auto loan can make the monthly payment much higher. It’s easy to see why the above list contains red flags to financial problems, and a lot of the suggestions may even sound like great ideas. But if you’re buried under so much debt that you find that you are unable to implement any of them, it’s definitely time to get help. You may need to speak to a bankruptcy attorney to see if you may be able to get out from under all of the debt in order to move forward, maybe even starting that rainy day fund.
At Greenwald & Hammond, we offer a free consultation where we can discuss your personal situation and figure out what can be done to help. We can offer advice on how you can get out of debt. Contact our office to set up an appointment for a free consultation, it may be the best thing you do to start 2012 on the right foot.
Submitted by:Kerry Hammond, Esq.

Tags: credit cards, credit score, debt, minimum payments, overdrawn, rainy day

Yes There is Life After Bankruptcy

One of the biggest concerns many people have when considering bankruptcy is whether they will be able to obtain credit again after filing. To some this may sound silly, after all credit is what got them into this situation to begin with. But obviously credit is important for various reasons. One big concern many debtors have is whether they will be able to purchase a vehicle after bankruptcy. Surprising to many, within a few days after filing bankruptcy, most people receive dozens of offers for new credit cards and enticing offers for auto financing. Generally we advise our clients to avoid credit card offers or to open at most, one credit card account, and to limit use to emergencies and a few minor purchases, and to pay balances off quickly. While many people are surprised that auto financing is available after bankruptcy, it actually makes sense in most cases. After a bankruptcy, the only debts that may remain are typically mortgage debts (if a debtor chose to retain their home). The individual with a "fresh start" only has income which hopefully covers necessary living expenses. After a chapter 7 bankruptcy, the debtor cannot file chapter 7 again for eight years and the typical debtor in bankruptcy hopes to never file again. So in most cases someone who has filed bankruptcy may be considered a low credit risk. When determining where to go to obtain an auto loan, it may be beneficial to ask your bankruptcy attorney for a referral. Offers in the mail may sound good on paper but may not be the best option. Bankruptcy attorneys have numerous clients who need financing while in chapter 13 and after chapter 7 and may be able to connect you to lenders who understand bankruptcy and want to assist in improving your credit. By obtaining new auto financing, and making timely monthly payments, not only do you get to drive a new car, you are starting to rebuild your credit. For more information on bankruptcy and financing vehicles before or after bankruptcy contact Greenwald & Hammond. Submitted by: Mindy Greenwald, Esq.

Tags: Greenwald and Hammond, auto financing, bankruptcy attorneys, buy a car after bankruptcy, chapter 13, chapter 7, credit after bankruptcy, credit cards, credit score, fresh start

How to Retire Without a Mortgage

Retirement, and living off of Social Security and a pension, is hard these days. Not only have our 401k accounts been hit by stock market fluctuations, but cost of living increases and account balance decreases have made it hard to imagine retiring. When you add to that the fact that your “cost” of living includes a mortgage payment, it can be downright impossible.
I recently read a Kiplinger article entitled “6 Ways to Retire Without a Mortgage” and found it very interesting. Not all of the six ways work for everyone, but in my opinion it passes the nugget rule. What is the nugget rule you ask? If an article provides me a nugget of information or sparks a helpful thought, it’s worth the read. (As you can see, it has no relation to the Denver Nuggets, sorry sports fans.) Here is a quick guide to the ideas that I found to be most useful: Make an Extra Mortgage Payment
It’s amazing how just one extra mortgage payment a year can cut down on not only the interest you will pay over the term of your loan, but the number of years it will take to pay it off. You don’t have to do it all at once, either. If your mortgage is $1200 a month, add $100 to each payment. If it’s $2400 each month, add $200. If you get in the habit of doing this and adjust your budget for it, it will seem like that was your payment all along and you won’t even notice the difference.
I hear so much about the low interest rates people are getting these days, so this may be an option for some. If you’re trying to pay the mortgage off before you retire, however, be careful not to get a lower monthly payment by refinancing for a longer term than you currently have. Maybe you can even refinance to a lower interest rate in order to reduce your term, rather than reduce your monthly payment. I’m not sure what the banks are offering, but it can’t hurt to ask.
If you have enough equity in your home, you may be able to sell your current home and buy a smaller one for cash. Or, if you don’t quite have that much equity, you may be able to put a large down payment on a smaller, cheaper home and be paying on a smaller, shorter term loan. This may allow you to prepare to pay your mortgage off by the time you retire.
I’m a big fan of renting, so you won’t hear a lot of downsides to the idea from me. When something breaks, I don’t have to pay to fix it. When the taxes or HOA fees are due, I’m not the one that pays them. When you near retirement, the big risk is running out of money to pay rent. But if you enter retirement with a mortgage, aren’t you facing the same risk? Of course, when you rent, you don’t have anything you can sell to get at your equity.
It’s all really a numbers game, and not every solution works for every person. You have to run the numbers, decide which option you can afford, and go with the one that works best for you. Don’t let anyone tell you that there is only a one size fits all answer.
Submitted by:Kerry Hammond, Esq.

Tags: equity, mortgage, refinance, rent, retirement

Can You Afford to File Bankruptcy?

Today I opened up my Internet browser to an article entitled "When You're Too Poor For Bankruptcy" which I found interesting and thought provoking. In her article, Liz Weston, discusses a family whose income decreased over the past few years and as a result incurred large amounts of credit card debt (a very common situation). After consulting an attorney they felt they could not afford the costs of hiring a bankruptcy attorney and paying the court fees. The article goes on to discuss alternatives and suggests ways to come up with funds to pay an attorney. Bankruptcy is not a one-size fits all product as some attorneys may lead you to believe. Individual circumstances vary. Attorneys fees may vary depending on individual circumstances. Interviewing several attorneys may result in a variety of different fee quotes. The cheapest attorney may not be the best for you so use your instincts when shopping around. While it may seem costly to hire a bankruptcy attorney, the product you receive should include knowledgeable advice, first rate service, and peace of mind (but remember, you get what you pay for). In the article, the sample debtors indicated they could not afford to begin the process. There are many options available to debtors in need of bankruptcy assistance here in Colorado. First off, many bankruptcy attorneys offer free initial consultations. Our office will often accept a small portion of the total fees to begin representation (though not to actually file a case) while others may require the entire fee be paid before any work begins. Once an initial payment is made we will assist clients by communicating with collectors and creditors while they save up the remainder of the fees or make installment payments toward the fees. Often notifying a creditor that the debtor has retained bankruptcy counsel is enough to temporarily stop collection activity. This allows our clients some immediate relief by ending collection calls and sometimes even stalling collection lawsuits. For Debtors considering filing on their own, the United States Bankruptcy Court for the District of Colorado in conjunction with the Denver Bar Association, hosts two pro se clinics each month at the courthouse. The clinics are presented by volunteer consumer bankruptcy attorneys and are open to the public. The presenting attorneys offer legal advice, some that is general, some that is very specific. After the presentation individuals are encouraged to submit questions and the attorneys typically stay to answer most, if not all questions, and will even speak one-on-one to individuals with more complex questions. The article discusses the notion of being "judgment proof." In a free initial consultation, a well-intentioned attorney will explain and help determine if you truly are judgment proof. There may be a problem with just assuming that being judgment proof will prevent collection efforts. All too often I have met with individuals whose social security has been garnished from a bank account. Without the knowledge or assistance of an attorney many social security beneficiaries have a difficult time recovering funds improperly garnished from their bank. Many individuals whose sole income is social security may qualify for help from Colorado Legal Services, Metro Volunteer Lawyers or assistance from attorneys looking for pro bono work. It is also important to note that bankruptcy court fees may be waived or paid in installments for individuals who qualify. If you are not sure whether you can afford a bankruptcy attorney but you are considering bankruptcy, you may want to think "can I afford to not have a bankruptcy attorney." If you are sure that you cannot afford an attorney, spend your time wisely. Take advantage of a free consultation to explore your options and get your questions answered. Attend the pro se bankruptcy clinic at the bankruptcy court in Denver at least once, although you may attend more often. For additional questions and a free consultation please contact Greenwald & Hammond to meet with an attorney. Submitted by: Mindy Greenwald, Esq.

Tags: Colorado bankruptcy, Greenwald and Hammond, United States Bankruptcy Court, afford bankruptcy, affordable bankruptcy, attorney's fees, bankruptcy assistance, bankruptcy attorneys, pro se clinic

Have You Reached Retirement Age, Only to Find Out That You Can’t Afford to Retire?

Lately I find myself wanting to write blog posts that deal with retirement. Part of the reason is that I am speaking to more and more people in their late 50s and 60s who are exploring their bankruptcy options. More Americans are finding themselves in one of two places; at or nearing retirement age, but realizing they are be unable to retire financially, or retired and unable to make ends meet.
For those who are at or nearing retirement, you may find yourselves unable to retire due to unsecured debt you are struggling to pay off. Even if social security and retirement accounts provide enough money to live on, trying to pay minimum payments on credit cards may put you in the negative each month.
As hopeless as this situation may seem, it is something that can helped. Even though bankruptcy may be the last thing you planned to do at retirement age, it could make the difference between being able to retire comfortably and struggling to make ends meet.
If you’re already retired and unable to pay your living expenses, you need to figure out why. If it’s due to unsecured debt or medical bills that you feel like you’ll never pay off, there may be help for you too. Many people can afford to live on social security and retirement money, but not if credit card payments take a large part of that income.
If either of these situations sounds familiar, you may need to contact a professional to find out what can be done to help you achieve retirement. Speaking to a bankruptcy attorney doesn’t mean you have to file bankruptcy, it just means that you are exploring your options. Bankruptcy doesn’t work for everyone. Find out for yourself if it may work for you. Contact Greenwald& Hammond for a free consultation and learn more.
Submitted by:Kerry Hammond, Esq.

Tags: retirement, unsecured debt. Credit card debt

Student Loan Debt and Bankruptcy

It may be common knowledge that student loans are not dischargeable in a bankruptcy, but this doesn’t mean that you should immediately remove the option of filing bankruptcy from the table. There are many circumstances when filing is still a benefit to you, and can even allow you to get back on track with your student loans.
In a large percentage of the bankruptcy cases we file at Greenwald & Hammond, there is student loan debt. The amounts we see range from a few thousand, to numbers that contain six figures. In both of these cases, this student loan debt is non-dischargeable, but we find that our clients can still benefit from a bankruptcy filing.
The reason for this benefit is the simple fact that for a lot of people with student loans, this is not the only debt they are facing. They are also struggling with credit card debt, medical bills, mortgage arrears, or all of the above. Paying minimum payments to credit cards and trying to get on top of medical debt can put the student loan payments to the bottom of the list.
People continue to pay credit card minimums in order to keep the credit card active. They pay medical bills because they may still need to see the doctor. But student loans are old news, many of us have been out of school for years before the payback becomes an issue, thanks to deferments and forbearance periods. Because of this, a lot of people think that these debts will be more lenient and easier to put off until more money is available.
Don’t be fooled, though. Student loan debt can go into collection just like any other unsecured debt. The collection agencies often hire attorneys to take you to court, get a judgment against you, and garnish bank accounts and/or your paycheck.
When your unsecured debt is causing you to have no money left over for your student loans, something may need to be done. Filing for a chapter 7 bankruptcy, and discharging the rest of your unsecured debt, allows you to clear your plate of minimum payments and concentrate on paying back your student loans.
If you find yourself in a chapter 13 bankruptcy making plan payments to the trustee, and these payments pay a portion of your unsecured debt, there’s an upside. Remember that your student loans are part of that unsecured group of debts. They will share with the other creditors in that group, so you may end up paying for debt that you need to pay anyway.
If you find yourself falling behind on student loan payments due to other debt, it may be time to contact a bankruptcy attorney to see if something can be done. At Greenwald & Hammond, we offer a free initial consultation and have office hours to fit your schedule.
Submitted by:Kerry Hammond, Esq.

Tags: Student loans, chapter 13, chapter 7, discharge, garnishment, non-dischargeable, unsecured debt

Paying Back Friends and Family Before Bankruptcy May Feel Good to You but Could be Bad For Them

Individuals that have been teetering on the verge of bankruptcy for long periods of time, often borrow money from their loved ones, in attempts to stay out of bankruptcy or just to get by. When the decision finally comes to file bankruptcy a debtor typically stops making payment on credit cards and secured on items they don’t intend to keep. For anyone with a paycheck, this will result in having money to attribute to other expenses.
For many the freed up money means a much needed trip to the dentist, a car repair they had been putting off, or even a 401K contribution. In most instances such spending prior to filing a bankruptcy is justifiable and likely will not cause problems.
For some, there is an understandably strong desire to pay back personal debt owed to close friends and family members. Believe it or not, paying debt owed to friends or family in the year prior to filing bankruptcy can cause problems for those you paid. If a bankruptcy is filed, a close friend or family member is typically considered an insider. The trustee in a chapter 7 bankruptcy can avoid any payments made to insiders in the year prior to filing the case. A trustee in such a case will likely seek to recover any amounts paid to an insider (unless the amount paid was nominal). The sad result is that your mom (or other family member) will receive a not-so-friendly letter that threatens legal action if the money paid to her is not returned to the trustee by a certain deadline.
Debtors without attorneys often make the mistake of paying back family members large sums of money with their tax refunds just prior to filing bankruptcy. They were slick enough to determine that they needed to receive and spend their refund to avoid turnover, however they did not consult an attorney to determine the various acceptable ways to spend the money. Not only do they wind up without the money but they also wind up with a very unhappy family member.
If contemplating bankruptcy, there are so many things to consider. There are so many pitfalls that debtors can encounter. Most people are completely unaware that paying back certain types of debt could create additional hardship. It is important to consult with a knowledgeable attorney when making financial decisions. At Greenwald & Hammond bankruptcy is our only practice area. This allows us to remain focused on the laws affecting our clients. Contact us today for a free consultation.
Submitted by:Mindy Greenwald

Tags: Bankruptcy, Greenwald and Hammond, bankruptcy attorneys, chapter 7, credit cards, free consultation, insiders, personal debt, tax refund

Can I File Bankruptcy on Only Some of My Debts?

Many people feel a certain attachment to one of their credit cards. Maybe it is just the idea that they have a credit card or maybe it is a certain bank that they feel a loyalty to, but some people just do not want to part with all of their creditors. In bankruptcy it is an all or nothing proposition.When you file a bankruptcy, you are required to list all creditors on your bankruptcy petition. Whether they are unsecured or secured, every creditor must be listed and notified of your bankruptcy. This means that if your bank account is overdrawn, you must list your bank. If you owe money for your car or home, you must list them.With a secured creditor, such as your mortgage or car loan you can make a decision as to whether you wish to keep the collateral. If you decide you want to keep the collateral for a secured debt, then you must continue to make your payments.For credit cards you cannot pick and choose which ones you want to keep and which you want to go away. Creditors will cancel your account in most cases even if you decide to make post-petition payments. Even if you fail to list a credit card, the creditor is likely to discover your bankruptcy and cancel your account.Some banks will close your account too. When preparing to file bankruptcy it is advisable to bank where you do not owe money. Depositing money into a bank that you owed money to on the date of filing can have negative consequences. Some banks have been known to freeze accounts and use a one-time setoff by applying deposited funds to debt that otherwise would be discharged.For those who are attached to the idea of having a credit card, please do not worry. Almost anyone who has filed bankruptcy will tell you that their mailbox was full of offers for new credit cards almost immediately after filing bankruptcy. For anyone who is attached to one specific credit card or bank, it is also good to know that some creditors and banks are willing to work with you if your overdraft was minimal and you reaffirm a portion of it, though as a bankruptcy attorney I never advise this route.If you are considering bankruptcy, get all the facts from an experienced attorney at Greenwald & Hammond. We offer a free consultation. Submitted by:Mindy Greenwald

Tags: Bankruptcy, bankruptcy attorneys, credit cards, free consultation, keep my credit card, overdraft, reaffirm, secured creditor, setoff

The Business of Real Estate Investing

In previous blog posts, we’ve discussed filing bankruptcy to discharge business debt. You may have started a business, leased an office, and even hired an employee, only to find out that you couldn’t make the business work. Bankruptcy can help people who personally guaranteed the debts of a failed business. It can help you move on by discharging your liability to these debts, as well as many personal ones you may have incurred while you tried to get the business off the ground.
When real estate was a better investment, a lot of people purchased properties, updated them, and then filled them with tenants. Some zealous investors even bought several properties, figuring that the rental income would easily cover the mortgage, with even a little to spare for the occasional repair, and the investment would take care of itself. These people basically started a rental property business.
This plan wasn’t a bad plan and actually worked out well for a lot of people, for awhile. Unfortunately, when the real estate market started to decline, these investors found themselves owing $200,000 on a house that was all of the sudden worth $150,000 or less. Add to that the rising unemployment rates, not necessarily affecting the landlord but possibly affecting the tenants, and the problems increase. Tenants who were having no problem making their rent while employed were finding themselves unable to pay and moving out due to the loss of a job or a pay cut.
So now you own a property with a $200,000 mortgage, that’s worth $150,000, and it’s now vacant. You not only have to cover the mortgage on the house where you reside, but you are having to cover the mortgage on an empty rental property, as well as the utilities. If you have more than one rental property, this can quickly spiral out of control and cause you to fall behind on mortgages, forcing the banks to start foreclosure proceedings.
If you find that you need to get out from under a rental property, or several rental properties, bankruptcy may be something you need to explore. Oftentimes, selling the properties to pay off the mortgages isn’t an option because of the current property value. Bankruptcy laws allow you to surrender these properties in a bankruptcy, in essence giving them back to the bank and starting over.
The good news is, it’s not an all or nothing transaction. If you can afford to, you may choose keep the property you use as your residence and only surrender the rental properties. Filing bankruptcy doesn’t mean you have to give up your home or your belongings. There may be some factors that need to be considered, as each situation is unique, so speaking to a bankruptcy attorney would be a good place to start. Find out what can be done to get out from under real estate investments that haven’t worked out the way you’d hoped.
Contact Greenwald & Hammond to set up a free consultation with a bankruptcy attorney.
Submitted by:Kerry Hammond, Esq.

Tags: Real estate, business, foreclosure, investment, rental, surrender

Non-Exempt Assets: Can I Give Them to My Brother?

Bankruptcy relief, in one form or another, has been around since biblical times, maybe longer. In modern times, there are strict guidelines that govern our system of bankruptcy. The bankruptcy code and court rules are voluminous and make for some fun bedtime reading. The code anticipates much of what individuals have tried to do over centuries to avoid paying their creditors. While some debtors have little or no assets to speak of, many have assets that may or may not be exempt under the bankruptcy code or under state law. In Colorado, state law determines the exemptions that can be claimed to protect assets in a bankruptcy. Colorado's bankruptcy exemptions are somewhat generous compared to those of some states and lacking compared to those of other states. "Why not file in a state with better exemptions" is something that debtors have considered. There are residential requirements in each state that determine whether a debtor may claim that states exemptions, some states may require a debtor to reside in the state for longer than two years to declare the exemptions of that state, so a debtor who lives in one state may be required to claim exemptions of their previous home state or use the federal exemptions. A bigger problem is debtors who think they can be sneaky and give away assets to friends or family members for little or no money. Every bankruptcy attorney has had a consultation that went something like this: Attorney: oh so you own your BMW free and clear and it has a blue book value of $22,000?
Debtor: yes
Attorney: well in your case, you can only claim an exemption on that vehicle of $5,000 therefore you may have to turn the car over to the trustee for liquidation if you want to go forward with a chapter 7 bankruptcy
Debtor: how about I change the title over to my father(or insert any friend or family member here)? The debtor usually thinks that he/she is the first one who ever considered this as an option. Obviously a bigger problem is a potential debtor who transfers title without first talking to an attorney, or actually filed a case without an attorney after doing something like this. As previously mentioned, bankruptcy protection, as it exists today, has anticipated this line of thinking as well as many, much more creative, attempts to conceal assets. The bankruptcy code allows the chapter 7 trustee to look back at least one year, and in Colorado, at least four years, from the date of filing to determine whether an asset was "fraudulently transferred" and allows the trustee to avoid any such transfer. So Debtor in the above scenario would have lost the car completely, and would have also lost his $5000 exemption if the asset was transferred to Dad without Dad paying fair market value for the vehicle. Keep in mind that the term "fraudulent transfer" does not require any actual fraud be proven, it simply requires the transfer of a valuable asset to have occurred without the exchange of value, within the avoidance period. At my first law job as an attorney, the attorney I worked for told me, "if you can think of it, someone else thought of it before you." (My law partner also says that, which just goes to show that my first employer didn't come up with that on his own) The bankruptcy code anticipates pretty much any scheme one can think of to alleviate themselves of valuable assets to avoid turning them over for liquidation. Purposely failing to disclose assets on your bankruptcy schedules can result in punishments such as denial of discharge and as severe as time served in federal prison. One may think that the trustee couldn't find out but one never knows who the trustee may be or who the creditors may be. Hopefully you have learned that the answer is "NO" you cannot give it to your brother. When there are assets at stake, speaking to an experienced bankruptcy attorney may help to determine legal and ethical ways to protect the asset. An attorney may be able to guide you to a solution in which the asset may be used for your own benefit rather than lost in a bankruptcy. Contact the experienced attorneys at Greenwald & Hammond for a free bankruptcy consultation. Submitted by: Mindy Greenwald

Tags: Bankruptcy, Colorado bankruptcy exemptions, Greenwald and Hammond, assets, bankruptcy attorneys, chapter 7, exemptions, free consultation, non-exempt assets

You May Not Be Unemployed, But Are You UnderEmployed?

When you are unemployed, you are earning no wages whatsoever. You are not receiving a paycheck, company offered health insurance, or contributing to your retirement. However, you also are not paying for gas or bus fare to commute to work, putting wear and tear on your car, and spending additional grocery money on food you can take with you in a lunch bag or eating out with co-workers. You may even be collecting unemployment benefits, which is just a fraction of your previous paycheck, but can go a long way to paying the rent and utilities. You are free to spend your day searching for a job and sending out resumes in your field.
As frustrating as the above scenario may seem, it may be more attractive than what many other Americans are experiencing, which is underemployment. Many people are working 40+ hours a week, and making so little per hour that they are barely scraping by. These people find themselves in a vicious circle. They have to spend money on all of the work related expenses mentioned above (gas, bus fare, food) but the costs of these things can sometimes be a large percentage of the wages they bring home. They may even be in a job that does not offer health insurance benefits, and most are making too little to even think of contributing to a 401k.
Add to this the fact that they are working full time for these wages, and sometimes overtime as well. Spending 40 or more hours at a job, and then trying to take care of your family, leaves little or no time or energy to search for a higher paying position to get out of the cycle you’re in.
Making enough money to pay the necessary bills (rent, mortgage, utilities) is the first hurdle. But if you have a high amount of credit card or medical debt, trying to make these minimum payments in addition to the necessities can seem impossible.
Filing for bankruptcy and discharging much, if not all, of your unsecured debt can be a help in either situation. It can eliminate the minimum payments on credit cards and medical debts so that you have enough to pay the necessary expenses to keep a roof over your head and food on the table. Whether you are unemployed or underemployed, you may need to rid yourself of unsecured debt in order to make ends meet. You may need to speak to a bankruptcy attorney.
At Greenwald & Hammond, we offer a free consultation and will analyze your specific circumstances and let you know how bankruptcy may help you. Call now to set up an appointment to speak with an attorney.
Submitted by:Kerry Hammond, Esq.

Tags: Unemployed, medical debt, underemployed, unemployment, unsecured debt

Medical Debt Bankruptcy

When most people think of bankruptcy, they think of people who have significant credit card debt. This is not always the case. Medical debt can be a real problem for people living responsibly within their means. Medical debt is the primary cause of a significant number of individual bankruptcy filings. Even with adequate medical insurance, an unexpected illness or injury can result in lost wages and higher than expected medical bills. Many people cannot afford the high costs of medical care and avoid seeking routine medical and dental care to minimize costs. When an emergency arises there is nothing in the budget to cover the expenses. Many hospitals and medical providers employ independent billing services to collect their fees. Third party billing companies are completely removed from the patients' circumstances and are rather unsympathetic to the patients' inability to pay their bills. If you've been in a hospital lately you may remember receiving your resultant medical bills almost immediately upon discharge. Unpaid medical debt typically gets turned over to collection agencies rather quickly, and in most cases the collectors are completely unsympathetic. Fortunately medical debt is included in a bankruptcy discharge. Along with most unsecured debt, medical debt is discharged in bankruptcy. The protection of bankruptcy is often just what people with medical debt may need to fully recover from a medical event. Clients are often concerned about being refused ongoing treatment by their doctors or dentists. While some providers may be inclined to discontinue treatments, I often tell my clients to advise their provider that they are filing bankrutpcy and that their attorney advised them that they must include the debt in the bankruptcy. Many will work something out with the patient. If you are suffering from medical debt, filing for bankruptcy may help you recover. Call Greenwald & Hammond to set up a free bankruptcy consultation and learn more about medical bankruptcy. Submitted by:
Mindy Greenwald, Esq.

Tags: Bankruptcy, Credit card debt, discharge, dischargeable debt, medical debt, medical expenses

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