News
An interesting blog article about the budget-basement “law firms” out there advertising chapter 7 bankruptcy legal rates that sound too good to be true. Blog by a fellow CA attorney (I would also add that even with the bk-mill attitude and the advertised rate, clients are rarely actually given the advertised price once they come in and explain their particular situation to the non-attorney. Please BEWARE and be sure to seek counsel from a reputable and experienced chapter 7 bankruptcy lawyer in your area.) –
$799 Bankruptcy You Get What You Pay For!
$799 Bankruptcy
A trend in Bankruptcy in the Riverside area is Attorneys advertising Bankruptcies for $799. A key fact to remember is that you get what you pay for! If you were to spend a couple days at the Bankruptcy Court and attend a couple of 341a Meetings With the Creditors you would see what I am talking about. There is a big difference in Bankruptcy Attorneys just as any other profession.With a low priced Bankruptcy Attorney you will most likely never meet the Attorney prior to your case being filed. Believe it or not you will likely have your first appointment with someone in the Attorney’s office that is not even an attorney. That person will then turn the case over to a secretary or someone similar to complete the Bankruptcy Forms, still without direction of your attorney. And then just when you need your Attorney the most, when you are nervous and attend the 341a Meeting With the Creditors again he will most likely not be present. Instead you will get what is called a special appearance attorney, one hired by your Attorney to attend in his absence. The problem with this is as you will meet this Attorney only minutes before your hearing, and he will no little or nothing about your case.
Avoid the $799 Bankruptcy Attorneys
When looking to hire a Bankruptcy Attorney take the following points into consideration. And ask your potential attorney about each of the points.
- In the Initial Consultation ask if it will be with the Attorney, then verify it.
- Ask how many Bankruptcies the Attorney Files a month.
- Ask how you will be able to contact the Attorney to answer your questions.
- Ask if they will be personally appearing at any and all of your hearings.
I have taken the time to write this blog because I feel bad for people that have hired an Attorney only to show up at their hearing and get poor representation. Bankruptcy is to important of an event in your life to not hire adequate legal representation. When you are talking about your financial future, which could include getting protection from large amounts of debt, or if you are trying to save your house, it is not the time to get by on the cheap.
[- Blog by a fellow attorney in the Riverside area.]
Number of College Grads Who End Up Filing for
Bankruptcy Jumps 20% Over Past Five Years:
Read more: Click Here
Americans with Advanced Degrees Are
Increasingly Filing for Bankruptcy
A new study by the Institute for Financial Literacy chronicles increasing rates of bankruptcy for Americans with advanced degrees.
The study found that the percentage of debtors with advanced degrees rose from 4.9 percent in 2006 to 6.7 percent in 2010. According to the report, the figures raise the question: “Why are those who are supposed to out earn their peers with lower educational attainment starting to seek bankruptcy protection in greater numbers?”
The study is based on a survey of more than 50,000 people who participated in financial counseling, a requirement for bankruptcy protection. It is not known what percentage actually filed for bankruptcy.
College graduates are the fastest-growing educational group of debtors counseled by the agency in the last five years, the Washington Post reports. The percentage with a bachelor’s degree rose from 11.2 percent in 2006 to 13.6 percent in 2010.
There has also been an income shift among people seeking bankruptcy counseling. People earning more than $50,000 had the greatest increase in filing rates compared to those at other income levels. In this higher-earning group, 15.8 percent sought bankruptcy counseling in 2010, compared to 10.5 percent in 2006.
Institute executive director Leslie Linfield told the Post she thinks falling home values contributed to the increase in filings among higher-income and better educated people. She told the New York Daily News that white-collar job losses also contributed to the trend.
Still, those with less income and lower education are the largest group of people seeking bankruptcy counseling. About 38 percent make less than $20,000 and about 42 percent have only a high school or primary school diploma.
Posted Sep 14, 2011 7:04 AM CDT
By Debra Cassens Weiss
U.S. Says Bankruptcies Reach Nearly 5-Year High
By Jonathan Stempel NEW YORK | NEW YORK (Reuters) – U.S. bankruptcy filings have reached the highest level since 2005, government data released on Tuesday show, as the economy slows and the unemployment rate hovers just below double digits.There were 422,061 bankruptcy filings between April and June, according to the Administrative Office of the U.S. Courts, up 9 percent from 388,148 in the prior three-month period, and up 11 percent from 381,073 a year earlier.
For the year ended June 30, there were 1.57 million bankruptcies, up 20 percent from 1.31 million a year earlier. Consumer bankruptcies rose 21 percent to 1.51 million, and business bankruptcies rose 9 percent to 59,608.
Quarterly filings surpassed 400,000 for the first time since a record 667,431 bankruptcies were begun in the fourth quarter of 2005, when Congress overhauled federal bankruptcy laws and made it harder for people and businesses to file.
“We know the causes of bankruptcy are principally job losses and health care, with the overlay of the foreclosure crisis,” said Deborah Thorne, an associate professor of sociology at Ohio University. “It feels very unsettled, and I’m not surprised the numbers are going up. Until we get our feet on the ground, provide decent-paying jobs, and do something with the housing crisis, bankruptcies will continue to go up.”
According to her website, Thorne has co-authored several publications with Elizabeth Warren, a candidate to run the new federal Consumer Financial Protection Bureau.
Last Tuesday, the U.S. Federal Reserve said high unemployment, reflected in July’s 9.5 percent rate, as well as modest income growth, falling home prices and tight credit amid a contraction in bank lending were factors contributing to a slowdown in economic growth.
Nevada had the highest rate of filings on a per capita basis in the last year, with 11.74 per 1,000 people, while Alaska had the fewest, with just 1.58 per 1,000.
Among the most populous states, California ranked 7th in per capita filings, while Texas was 48th, New York 41st and Florida 15th.
(Reporting by Jonathan Stempel in New York; editing by Carol Bishopric)
More Members of Middle Class File for Bankruptcy
By Christine Dugas, USA TODAY (11/19/09)
Staci Schubert’s career has taken her from New York to California, from graphic designer to website designer to sales executive. Most recently, she launched a business as a designer of handbags and accessories.
At 40 and with such accomplishments, Schubert is Middle Class America. She and her counterparts have long been the nation’s backbone, because their steady jobs and purchasing power have helped drive our economy.
But Middle Class America has two faces, a new study shows. Schubert is that other Middle Class America, too.
After earning $275,000 annually, Schubert used most of her savings to start her business in 2003. The earliest days of the recession in 2007 slowed sales, and she fell behind on business and personal bills. Credit card debt reached $65,000.
She tried to find a full-time job without much luck, because the job market was saturated. Temporary freelance design work couldn’t cover her bills.
So in January 2008, she filed for Chapter 7 bankruptcy, becoming one of nearly 1.1 million consumer filers that year.
A new study by Elizabeth Warren, Harvard Law School, Leo Gottlieb professor of law, and Deborah Thorne, Ohio University associate professor of sociology, finds that personal bankruptcy has become a largely middle-class phenomenon led by filers who are college-educated and owners of homes. According to the study, “The Vulnerable Middle Class: Bankruptcy and Class Status,” the shift occurred even before the Great Recession.
More than 100,000 middle-class families filed for personal bankruptcy every month in 2007, says the report, which was provided to USA TODAY but will be released in a book next year. Those who filed in 2007 were in worse financial shape than those who had filed in 2001.
“The bankruptcy filings are a warning about the risks now facing middle-class Americans,” says Warren, chair of the Congressional Oversight Panel on the Troubled Asset Relief Program (TARP). No longer can they count on a college education, a good job and homeownership to protect them from financial collapse.
“It’s horrifying for people who are not used to anything but an upward trajectory,” says Bob Anderson, a bankruptcy lawyer in Wilmington, N.C. “They are used to calling the shots.”
Schubert agrees.
“I’m a highly educated, middle-class woman,” says Schubert, who is the single parent of a 2-year-old son, Lincoln. “Until now, I have never in my life been unemployed.”
More filings ahead
In 2005, the bankruptcy law was changed to make it harder to file bankruptcy. After it took effect, filings dramatically dropped. But this year, filings are climbing and are expected to total 1.5 million, the level they were at before the tighter law took effect.
Warren and Thorne say their data show that the change in the law was not a scalpel that cut out only those deliberately not paying their bills. These days, it’s ordinary middle-class Americans, not a marginalized underclass or high-stakes gamblers, who are most apt to experience financial failure.
Poor savings habits, health problems and excess spending have traditionally been causes of bankruptcy. But the study finds that college education and homeownership, the traditional strategies for wealth building, may not be enough to guarantee financial security.
“As these time-honored wealth-building strategies become higher-risk undertakings, the middle class may face even greater economic instability in coming years, suggesting that in the modern economy, the path to prosperity may be far more perilous than anyone imagined,” the authors conclude.
The proportion of bankruptcy filers who have been to college, whether they dropped out or graduated, increased from 46.5% in 1991 to 58.9% in 2007, the study finds.
“The data was taken from the boom years,” Warren says, noting that it takes a long time to analyze and produce it. “I’m almost afraid to look at the data now.”
Instead of graduating from college with upward mobility, many Americans are overwhelmed with college debt and few job opportunities, according to the study.
Schubert, who didn’t have college loans, thought she had it figured out.
“I graduated from a top art design school in the country,” she says of the Rhode Island School of Design. “Opportunities always came.”
After filing for bankruptcy in 2008, Schubert hasn’t found a full-time job but has been doing freelance design work. She says she has designed a new handbag line and is looking for investors to help recharge her business.
Home, sweet …?
Homeownership, like higher education, guarantees little, the study finds.
“For decades the middle class counted on homes as an economic lifeboat,” Warren says. With a fixed-rate mortgage and a home that appreciated in value, families had a financial nest egg they could rely upon.
Now, homes are sinking families instead of stabilizing them, as home values plummet. When Diane and Nicholas Spano of Long Island, N.Y., ran into financial problems, they thought that the home they have owned for 29 years could save them.
Diane had a kidney transplant, and Nicholas temporarily couldn’t work at the post office because of a back problem. Diane went back to work at a drug and alcohol center, but it closed.
They applied for a home-equity loan, without realizing that there was no way they could afford the payments. House payments totaled $3,200 a month, and Diane had $200 a month in medical bills.
This summer the couple, who are both 66, filed for Chapter 7 bankruptcy.
“I feel bad,” she says. “But if we had not filed for bankruptcy, I don’t know where we’d be.”
The home went into foreclosure, but the Spanos are trying to work out a loan modification. Diane is working part time at CVS; Nicholas has retired.
“Carrying debt is like carrying a backpack full of bricks,” says James Doan, a bankruptcy attorney in San Clemente, Calif. “It weighs people down. They feel like failures. The are embarrassed and ashamed.”
The job-loss domino effect is catastrophic. In cities such as Boise, for example, the economy is dependent on the high-tech industry. Many of those workers have seen salaries shrink and bonuses disappear, while others were laid off.
“They were making good money, and now, many are working at Lowe’s and Home Depot,” says C. Grant King, a Boise bankruptcy lawyer. “Now, we’re seeing a wave of people who never thought they’d be coming in here, filing for bankruptcy.”
The housing market collapse, which devastated the construction industry, also brought in waves of filers. Builders, roofers, concrete workers, real estate agents and mortgage lenders are among bankruptcy filers now, King says.
Spend, spend, spend
During the boom years, many middle-class Americans lived beyond their means.
“People have been negligent with their finances,” says Doan. “They’ve taken a lot of money out of their homes like it’s an ATM.”
Middle-class families were encouraged to spend. But that often turned into a disaster when their bills increased and wages dwindled.
“My wife and I were great at lubricating the economy,” says Rock Macke, who lives with his wife and two children in Rancho Santa Margarita, Calif. “We loved to spend money, as is the middle-class thing to do.”
Macke says a $400,000 tax bill related to stock from his now-defunct employer wiped out the couple’s savings. He was able to keep working, but he says the couple lived paycheck-to-paycheck as debt mounted to about $225,000. They filed for Chapter 7 bankruptcy in March.
Since then, they’ve gotten rid of their expensive cars and downgraded. Macke takes care of the yard instead of paying for a gardener.
“I got wrapped up in materialism. But in a painful way, this reminded me of important things, like a healthy family, that you lose perspective on when you’re trying to chase the American dream,” he says
The PRESS ENTERPRISE:
RIVERSIDE / SAN BERNARDINO COUNTIES RANKED SIXTH NATIONWIDE IN FORECLOSURES.
Click on the red link above to read a recent article on the current Foreclosure Epidemic in the Inland Empire.
Wave of Bankruptcies Hits States
Hammered by Housing Bust
(wsj.com 1/7/10)
In states such as California, Arizona and Nevada, where housing prices soared and then collapsed during the past decade, consumer bankruptcy filings rose roughly twice as much as the national average increase of 32%. Homeowners fell behind on mortgages and could no longer tap into their home equity to pay down other debts.
“There’s a close relationship between high levels of household debt, including mortgage debt, and bankruptcy filings,” said Samuel J. Gerdano, executive director of the American Bankruptcy Institute, a research organization made up of attorneys, accountants and other bankruptcy professionals. “That…has been exacerbated by the bursting of the housing bubble.”
In Arizona and Nevada, where bankruptcies increased most, filings skyrocketed by 79.6% and 59.5%, respectively. Nearly 6.2% of mortgages in Arizona and 9.4% of mortgages in Nevada were in foreclosure by the end of the third quarter of 2009, according to the Mortgage Bankers Association.
California saw personal bankruptcy filings rise 58.8% last year. At the end of the third quarter, some 5.8% of loans were in foreclosure there.
Not everyone who goes through foreclosure ends up in bankruptcy and not every bankruptcy is driven by foreclosure. Some states with relatively few foreclosures, such as Utah and Wyoming, had larger increases in personal bankruptcies than Florida, the scene of lots of foreclosures.
Mortgage troubles and job losses were primary contributors to the rise in personal bankruptcies last year, with the impact of both often felt in the same household. Makoto Shuttleworth, a California bankruptcy lawyer, said his clients four years ago were almost exclusively renters. Homeowners in financial trouble could almost always take care of their debts by selling their home or turn its equity into cash via refinancing, he said.
As real-estate prices collapsed, Mr. Shuttleworth saw more homeowners come through his doors, most with steady incomes. Today, with the unemployment rate at 10%, he is seeing more clients whose debts have piled up after losing their jobs.
—Conor Dougherty contributed to this article.
Printed in The Wall Street Journal, page A8
WOW, ACCORDING TO THE FOLLOWING STATISTICS FROM BANKRUPTCY ACTION.COM BANKRUPTCY FILINGS IN THE U.S. ARE SKYROCKETING!!! A SIGN OF A BRUTAL ECONOMY FOR BOTH CORPS. AND INDIVIDUALS.
Chapter 7 filings for the year ended December 31st, 2008 have increased 43%
News Flash! March 5th, 2009 — The bankruptcy statistics were released on the Internet today by the Administrative Office of the Courts.
Chapter 7 bankruptcies have increased 43% from year end December 31, 2007 to year end December 31, 2008.
Non-Business bankruptcies have increased 31% from year end December 31, 2007 to year end December 31, 2008.
Business bankruptcies have increased 54% from year end December 31, 2007 to year end December 31, 2008.
Statistics are from the Administrative Office of the Courts
1,416,902 people filed bankruptcy in the
year ended December 31, 2008.There were 1,074,225 personal bankruptcies filed in the year ended December 31, 2008. So that means that 1,074,225 people filed bankruptcy. Right? Wrong!
The statistics include joint filings, for example for husband and wife. In accordance with a study reported in September, 2001, Young, Old, and in Between: Who Files for Bankruptcy? By Dr. Teresa Sullivan, Dr. Deborah Thorne and Professor Elizabeth Warren 31.9 % of the filings for the year ended June 30, 2001 were joint filings of husband and wife.
To approximate the number of people filing bankruptcy we must increase the filings by 31.9% to get 1,416,902 people who filed bankruptcy in the year ended December 31, 2008.
Source: The Fragile Middle Class: Americans in Debt;
Elizabeth Warren, Harvard Law School; Smith Business Solutions
- The typical family filing for bankruptcy in 1997 owed more than one and a half times its annual income in short-term, high-interest debt. A family earning $24,000 had an average of $36,000 in credit card and similar debt.
Federal Reserve (1997)
Kmart Tops U.S. Retail Bankruptcies List(Back)
Kmart Corp. is the biggest U.S. retailer to declare bankruptcy, according to data going back to 1980,
with total pre-bankruptcy assets of more than $17 billion, Reuters reported. The following list ranks the 10 largest U.S. retail bankruptcies since 1980, by total assets before bankruptcy, based on figures from BankruptcyData.com:
(Note: Ames Department Stores are included twice as they filed twice)BANK.
DATEKmart Federated Dept. Stores Montgomery Ward Holding Corp. Macy (R.H.) & Co. Inc. Allied Stores Corp. Southland Corp. Ames Department Stores The Circle K Corp. Carter Hawley Hale Stores Ames Department Stores Inc. Revco D.S. Inc.
United States Bankruptcy Court, Central District of California Website
