The post GARNISHMENT OF WAGES UP 121% IN PHOENIX. appeared first on Clint Smith - Bankruptcy AZ.]]> A wage garnishment is a legal process by which a creditor (including child support, taxes, banks or others who are owed money), by virtue of a court order, is allowed to take a portion of a person’s paycheck before the person receives it. It is usually the last straw for many people, who then have no other option but to file bankruptcy. Indeed, many have filed because they were unable to make payment arrangements with their creditors, and were forced to seek protection from the bankruptcy court in order to survive. Most garnishments are limited to 25% of take home pay by federal law, but tax and child support garnishments can be as much as 50%. A new report from the payroll company, ADP, states that garnishments are up 121% in Phoenix since 2004. That huge increase illustrates the problems with the economy in the state of Arizona in the last several years. Overall, the report has bad news across the country. Garnishment rates for mid-range and mid-career workers (ages 25-44) have the highest levels of debt, apparently due largely to child rearing responsibilities and divorce. Garnishment rates for child support were highest among those earning between $40,000 and $60,000. One takeaway from this report is to be aware of the rights of creditors. It is not just governments and child support creditors who are able to garnish wages. A credit card company, a hospital, a landlord or a collection agent can sue, obtain a judgment from a court, and garnish wages. This is a surprise to many people. The fact that garnishments are on the rise is evidence that the economy has not quite recovered, despite many headlines claiming such. Bankruptcy offers relief from garnishments, which can be either temporary or permanent. Appropriate legal counsel is advised if a garnishment is eminent. Also, don’t expect to be notified before your wages are garnished; the courts do not require you being personally notified before the garnishment begins.
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The post STUDENT LOANS ARE NOT JUST FOR THE YOUNG ANYMORE appeared first on Clint Smith - Bankruptcy AZ.]]>
How does this happen? It can come from either co-signing on a loan for a family member (which, by the way, makes you entirely responsible for the full balance, even if the student dies!), or educational loans obtained for the senior’s own benefit. Many people have gone back to school to retool in the “new economy,” after manufacturing and other construction jobs, among others, have evaporated.
Student loans are easy to come by. They are common, and there is a very good reason for that: the lenders know that these loans cannot be discharged in bankruptcy (in most cases). Thus, the lenders make only a cursory inquiry into credit worthiness or the wisdom of entering into a loan agreement before granting the loan and funding it. Indeed, these loans can be funded within hours in some instances.
The burden on individuals and communities is immeasurable. It is very troubling to think of those over age 65 struggling to make a student loan payment, but that is what is happening, in ever greater numbers. The total amount of student loan debt far exceeds $1 trillion dollars, far in excess of even the total amount of credit card debt in the United States. This is a trend not likely to be reversed any time soon. Congress held hearings about this matter in December of 2013 and again in the summer of 2014. We will see if that goes anywhere. Personally, I would not hold my breath.
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The post Bankruptcy Attorney in Mesa | Gilbert AZ – Are You Too Poor to File Bankruptcy? appeared first on Clint Smith - Bankruptcy AZ.]]> Are You Too Poor to File Bankruptcy?
Is it possible to be too poor to file bankruptcy? The answer to the question is no.
First of all, there are no limits on how much debt you have to have. No minimum amount or maximum amount. The bankruptcy code allows people to discharge debt in most chapters of bankruptcy. Especially with a chapter seven bankruptcy, there are no limits.
However, there are costs involved in filing a bankruptcy. If you want to hire a lawyer, it is a lawyers practice to charge his fees.
Some of my friends tease me about that. “How do you make money and be a bankruptcy lawyer? How do people afford to pay you?”
The answer is “They find a way”. If they are paying credit cards or for a car they are not going to be able to afford going forward, they stop paying those bills, save the money and then you can afford to file a bankruptcy.
Once you have stopped paying your credit cards, typically it is at least six and generally twelve or eighteen months before that credit card company is going to sue you. At that point, they are ready to garnish your wages or take some kind of drastic action to collect on that bill. So you have time after you stop paying the bills before you file the bankruptcy.
Also, people have things that they have free and clear, maybe a car that they don’t have a lien on. You can borrow. There are individuals or sometimes even a bank or a credit union, who will give you a loan against that vehicle. It’s perfectly okay to do. Then you use that money to file your bankruptcy. Remember, you do have to pay that money back if you want to keep that item.
So, there are options here and a competent bankruptcy attorney will help you explore those.
Some people choose to go on their own and there are places that will help you do that on your own. The bankruptcy court here in Arizona has a very good, helpful self-help center with a staff person who will help people prepare their own documents. I’m not offended by that if my people can’t afford me and they go there, that is fine.
I am making a living trying to help people through bankruptcy and so I help people try to figure out how they can get the money together to pay me too.
So, you don’t have to go without filing. You don’t have to fret about it, because it is no charge for the initial consultation with me to get the information and figure out what your options are.
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The post The Number 1 Cause of Bankruptcy appeared first on Clint Smith - Bankruptcy AZ.]]>
All things considered, credit card debt is the number one cause of bankruptcy.
There is a lot of noise in the news about medical bills that cause bankruptcy. I saw an article recently that said sixty percent of bankruptcies include medical debt. That is probably about right. But do they cause bankruptcy? I don’t think so. I think that in most cases, medical providers are willing to make arrangements. I have had people who have huge medical bills and they’re able to pay fifty dollars a months and so that is what they pay. And the medical providers are happy to do that. Ultimately, they are able to settle those if they have a chunk of cash to use towards that, but it can be a very large bill and sure, that causes some problems.
But the number one answer is really credit cards. Credit cards are the most one-sided contracts this side of slavery. And I am not kidding. In a credit card agreement, you have agreed to let that credit card company change the payment date, change the terms, change the interest rate, and ultimately to cut off your credit card line of credit. Many people have seen that happen to them. It is perfectly legal. It’s in that big, long page of fine print that you didn’t read when you signed up for the credit card. It is allowed and in the United States of America.
People are getting stuck with credit card bills that are ridiculous. They try to get a reasonable interest rate and sometimes the banks with work with you. Actually, we are pretty successful with that, doing debt settlements and working that out. But a lot of times my clients come to me and they say “I’ve tried.” I’ve tried to do what I could. I made a payment arrangement or I tried to make a payment arrangement. They either didn’t want to do it or after six months they said “No, that’s not enough.”
Many things can happen with a credit card payment and a debt that people didn’t intend to have. Sometimes they haven’t used their credit cards responsibly, but mostly they are just good, honest people who got in a hole. They felt like they were going to get a new job, or that they would be able to sell their house and they would be able to make those payments. But they just got in too deep and now they are piled up with credit cards. I have had people well into six figures in credit card debt. It is a very troubling thing. It makes you lose sleep. And those companies are not nice when they call you. They will be very angry with you. They will call you names and they will be very personal.
What we do in our practice is take that burden off of you. We will help you, if we are able to, take those calls and settle those claims or we will file a bankruptcy.
If you are having problems, call us today at 480-807-9300.
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The post The History of Bankruptcy appeared first on Clint Smith - Bankruptcy AZ.]]>
Bankruptcy relief is a natural outgrowth of a free market economy. The American system allows people to buy and sell at agreed upon prices, to begin business ventures, which leads to the possibility that some may not succeed. It also leads to the wide fluctuations in the economy, such as we have experienced recently.
As a natural result of this economy situation, many are having difficulties meeting their financial obligations. Income may be lost due to layoffs, divorce, illness or injury, or a number of other causes. Years ago, our founding fathers decided to give people in financial distress an option to go on with their lives. Our country did away with Debtor’s prison, which in Old England, put people in jail for failure to pay their debts. In the United States of America, we were given the right to file for bankruptcy protection to obtain relief, provided we meet the criteria allowed under the law. If those criteria are satisfied, bankruptcy relief is granted, and federal courts have been set up under the United States Federal Court system to grant that relief. These are Bankruptcy Courts, operating under the District Courts. In Arizona, there is one federal district in which they hold court hearings, both in Phoenix and Tucson. A federally appointed bankruptcy judge ultimately reaches a determination to grant the discharge to those who comply with the laws.
There are several kinds of bankruptcy. Some are known as Chapter 7, Chapter 11, and Chapter 13. But even before bankruptcy needs to be declared, there are several things you can do for debt relief.
Call our offices for your free initial consultation. We can help you decide what would be the best solution to your problem. Our phone number is (480) 807-9300
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The post Stockton City Bankruptcy appeared first on Clint Smith - Bankruptcy AZ.]]> Yay! Stockton gets to stay in bankruptcy!
By Clint Smith
The bankruptcy judge in the Chapter 9 case of Stockton, California ruled that the case may proceed. Why is that news? Because Chapter 9, which applies to municipalities (cities and counties, mostly) is not automatic.
Creditors (or other interested parties, like employees unions) can challenge the city’s effort to discharge obligations in bankruptcy. The judge decided to allow the city to remain in bankruptcy, to attempt to reorganize its affairs and thereby treat creditors better than if it were forced to fight outside of the bankruptcy protection. Or worse yet, to sell off its assets.
So we will get a chance to see what the plan will be to pay creditors. This is a common goal of businesses seeking bankruptcy relief, like American Airlines or Hostess. The bankruptcy laws keep creditors off the back of the debtor while it catches its breath and then makes a proposal to rise from the ashes. America West (now US Airways) did that very successfully not too many years ago. Hopefully, Stockton will do the same.
There is another message here. Some of my clients wonder if they will be “granted” bankruptcy relief. Short answer: “Why are you asking that?”
Apparently, there is a concern out there somewhere that some people don’t “get to go bankrupt.”
False. Except for a few rare cases of multiple filings and abuse of the system, everyone can obtain relief in bankruptcy. Some may be required to reorganize (in Chapter 11 or 13) instead of liquidating (in Chapter 7), but they CAN get relief and protection from creditors.
So, no, don’t worry that a bankruptcy judge will hold high profile (or any) hearings with rooms full of lawyers to decide whether you may remain in bankruptcy court, like Stockton did. For us humans, its pretty much automatic.
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The post Bankruptcy Fraud – What is that? appeared first on Clint Smith - Bankruptcy AZ.]]> We’ve had another public disclosure of some bankruptcy fraud in the state of Idaho.
A woman named Shauna Pennington was found guilty, in Criminal Court and in the Bankruptcy Court, of having provided false financial information and other things. Here’s what happened:
In March of 2010 she apparently went to a bank to obtain a loan, did not disclose certain debts that she had, included more money in her bank accounts than she actually had and misstated her income. It’s not clear how much due diligence the bank did there; it probably could have identified some of those problems, but it is entitled, in those situations, to rely on specific representations that people make in conjunction with a loan application.
So, here’s the timeline: March of 2010 she gets this loan, December 2010 files for bankruptcy and does not disclose all of her creditors. So that’s another problem: In bankruptcy, you are required, under oath, to disclose all of your creditors. And if you don’t, you violate bankruptcy law which provides penalties and criminal sanctions and all kinds of things for that failure.
So, Ms. Pennington was prosecuted by the United States Attorney’s office, for a federal offense. Both the misrepresentation to a federally insured financial institution, and the false representations in the bankruptcy proceeding. She was sentenced, and it was a pretty ugly situation.
There’s a lot of information floating around out there, talking to friends, looking on the Internet, whatever. People will tell you it’s not that big a deal and everybody leaves things off of their schedules, that you don’t have to disclose certain things. That is all false. The fact is, the Bankruptcy Code requires full disclosure of all information of which you have possession, in order to get a bankruptcy discharge and to comply with the law.
And under penalty of perjury, on at least two occasions, you are going to have to swear to that. That is, when you file your paperwork it says right by the signature lines “under penalty of perjury I affirm this information to be correct”. And then you go to a thing called a meeting of creditors where you raise your right hand, you take an oath with the bankruptcy trustee there to tell the truth about the information that is in your schedules and any other question he may have.
And that is a big deal. When you take an oath, it is a big deal. So let’s not take that lightly. And if somebody has told you not to disclose certain things and that it’s okay and it’s normal, don’t believe it, it’s false. You must tell all of those things to your attorney, and I do suggest, in most cases, having an attorney to file bankruptcy. If you don’t have much going on, I don’t have a problem with that, and I discuss that elsewhere.
But if you are going to an attorney, you need to give the attorney the whole picture. And if she doesn’t have it, she’s going to have a difficult time representing you. If you tell her, then she’s going to tell you things that maybe you don’t want to hear, such as, yes, you do need to disclose that boat in your backyard or other types of assets.
But you must give her that opportunity, and you don’t want to go afoul of these bankruptcy laws because they are serious and they are prosecuted and they do result in criminal sanctions.
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The post Mesa Bankruptcy Attorney Clint Smith Advises on Audits in a Bankruptcy Case appeared first on Clint Smith - Bankruptcy AZ.]]> by Clint Smith
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The post Bankrupt Cities | Mesa Bankruptcy Attorney appeared first on Clint Smith - Bankruptcy AZ.]]> Cities Declaring Bankruptcy | Mesa Bankruptcy Attorney
It’s time for an update on municipal bankruptcy. As you know, San Bernardino, CA as well as Mammoth Lakes and Stockton filed for bankruptcy protection in recent weeks. Moody’s Investor Service does analysis of various parties to determine whether they are credit worthy. Investors rely on that analysis to determine whether they wish to give loans to those entities, and that includes municipalities. Cities borrow money in the way of bonds from investors for such things as parks and bridges, streets and jails, all kinds of things. If they are going to borrow money and if they are less credit worthy, they pay higher interest. That is their concern.
So, Moody’s has gone around, having seen what happened in those three cities that I mentioned to determine whether there are other cities that are at risk. They want to be able to publish reports so that investors can choose whether they will lend money and at what rates. The city of San Jose is one city that has had to deal with that. They were probably approached by somebody in the press and answered some questions. Of course, some things are evident. There was a vote not long ago in which the citizens of San Jose voted overwhelmingly to reduce or cut the pensions of their employees. I am sure that was a painful thing for the public employees. They also closed libraries and reduced their police force and various things like that. When Moody’s sees those kinds of things going on, it’s a good thing on one hand because the city is taking action, but the problem is there is a certain perception by lenders and whether that means the lenders are now wary of lending money to that entity. And if they are, it reduces the likelihood they are going to give a loan, and if they do give a loan they charge higher interest. So those are the kinds of things that cities are struggling with right now in California. Not all states allow their cities to file bankruptcy. But California does so things are tough in California as they are in many places. I will be keeping an eye on that because it is a very important development as it affects a lot of real people in California.
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The post Mesa Bankruptcy Attorney Clint Smith on Hostess appeared first on Clint Smith - Bankruptcy AZ.]]>
“Well, I haven’t talked about the hostess bankruptcy yet, there are still lots of things happening in that case and are we ever going to be able to eat a Hostess twinkie again…”
Learn more about the Hostess bankruptcy and some lessons to be leared from it.
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