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NEWS ARCHIVES  April 11 2006 FILING FEES GO UP EFFECTIVE APRIL 9 2006 As of April 11, it costs more to file a bankruptcy petition in the U.S. Bankruptcy Court. The cost of filing for Chapter 7 bankruptcy protection went up from $274 to $299. Included in this total is a $15 trustee fee and a $39 miscellaneous fee. Costs for filing Chapter 13 also increased from $189 to $274. The filing fee increases were mandated by Congress when it passed the new bankruptcy law Oct. 17, 2005.
April 10 2006 THE PULSE OF CONSUMER BANKRUPTCY FILINGS Lundquist Consulting Inc recently published the following bankruptcy statistics for the first quarter of 2006: Bankruptcy filings are down 73% nationally when compared to the same period for 2005. 102,949 bankruptcy cases were filed nationally, down from 381,743 in the same quarter 2005 Chapter 7 Filings are 80% lower compared to the same period for 2005. Chapter 13 filings are 53.6% lower compared to the same period for 2005. Overall Data reportedly indicates filings are slowly trending towards pre BAPCPA levels. SOURCE:
Institute For Financial Literacy King's BAPCPA listserve, hosted by BankruptcyBooks.com, sampled current case traffic around the country. Here are some typical responses: "Not an increase over last year, but things are definitely picking up. Chapter 13 are closing in on the old rate, Chapter 7s are lagging right now." - William E. Pray, Leavenworth, KS "I am getting plenty of calls, but it's taking clients longer to gather up all of the necessary documentation." - Joyce Leary Clark, Scarborough, Maine "There has absolutely not been an increase in business this year. There has been a substantial decrease. However, we have seen a rise in our market share as other attorneys drop out of the practice of bankrutpcy law and refer cases to us." - Mary Wheeler, Pennsylvania "Business is way off. However, the inquiry calls are increasing." - Kelly Brown, Portland, Oregon "Business is not booming in the bankruptcy world. Fortunately I have other matters that probably are more profitable and the clients have money." - Jim Jackman, Bradenton,Florida “Business is slowly picking up from December, January. (but way down from last year)." - Doug Jacobs, Nor. California, Eastern District "I seem to be getting more calls now than I was earlier in the year, but very few prospective clients actually make an appointment (my follow through rate was much higher in previous years)." - Ronald Thomas, Phoenix, AZ _______________________ NEW IRS AUTOMATIC EXTENSION Six-Month Automatic Extensions Available to Most Taxpayers in 2006 TRAP FOR THE UNWARY IN FUTURE TAX DISCHARGE CASES? WASHINGTON &emdash; Taxpayers will be able to request an automatic, six-month tax-filing extension for most common individual and business returns under regulations released today by the Treasury Department and the Internal Revenue Service. The new regulations provide streamlined and simplified procedures that are expected to save taxpayers between $73 million and $94 million, annually, by eliminating or consolidating several existing IRS forms. As a result, Beginning Jan. 1, 2006, most individuals and businesses will be able to request a full six-month tax-filing extension, without a reason or even a signature. Since
the start of the 3-year period for tax discharge prescribed
at 11 U.S.C. § 507(a)(8)(A)(i) commences on the most
recent due-date for filing the return, in a few years
bankruptcy lawyers will have to be especially diligent in
determining whether there has been an automatic extension in
each case. NOMINATIONS FOR THE OUTSTANDING YOUR RESTRUCTURING LAWYERS Turnarounds & Workouts, a publication of the Beard Group, is accepting nominations for the 2006 list of Outstanding Young Restructuring Lawyers. The list will be published in the April 15, 2006 issue. Please submit your candidate, along with specific reasons for your selection, no later than April 12, 2006, by replying to this email. All nominees must be under the age of 40, and those named to the list will be honored at an awards banquet in November during the Thirteenth Annual Conference on Distressed Investing in New York City. Nina Novak, Managing Editor, Turnarounds & Workouts nina@beard.co NEW BANKRUPTCY RULES PROPOSED At its Spring 2006 meeting in March, the Advisory Committee on Bankruptcy Rules approved amendments to several Official Bankruptcy Forms and Interim Bankruptcy Rule 1007, which implement the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The proposed changes to Interim Rule 1007 and Official Forms 1, 5, 6-Summary, 6D, 6E, 6F, 6I, 6J, 6-Declaration, 9G, 9H, 9I, 22A, 22B, 22C, 23A, and 23B reflect practice under the reform act, comments received since the Interim Rules and Official Forms were issued in 2005, and new statistical reporting requirements which take effect this fall. Among the proposed changes is a new form, Official Form 23A, to be filed with the petition regarding prepetition credit counseling; revision of Official Form 22C to require all Chapter 13 debtors to complete Part III, Application of Section 1325(b)(3) for Determining Disposable Income; and a change in Official Form 23, renumbered as Official Form 23B, to no longer require that the debtor attach a copy of the document, if any, furnished by the course provider attesting that the debtor completed personal financial management training. If approved by the Committee on Rules of Practice and Procedure (the Standing Committee) at its meeting in June 2006, the proposed amendments to the Official Forms would be transmitted to the Judicial Conference for consideration at its September 2006 Session. It is anticipated that the proposed amendments would take effect on October 1, 2006. Because of differences in the adoption process for bankruptcy rules and forms, the proposed changes to Interim Rule 1007, if approved by the Standing Committee, would be transmitted to the courts for adoption locally. The Advisory Committee also recommended the publication of all Interim Rules and Official Forms for public comment and ultimate adoption as permanent, national rules and official forms. If the Advisory Committee's recommendation is approved by the Standing Committee, the rules and official forms will be published in August 2006, with an anticipated effective date of December 1, 2008. The Advisory Committee also considered comments received on the proposed amendments to Rules 1014, 3001, 3007, 4001, 6006, 7007.1 and proposed new Rules 6003, 9005.1 and 9037 published in August 2005. As a result of the comments and further consideration of whether it is necessary to limit the number of pages of attachments to a proof of claim, the committee recommended that Rule 3001 not be amended. The committee approved the other published amendments, as modified. If approved by the Standing Committee, the Judicial Conference, and the Supreme Court, and if Congress does not act to the contrary, the proposed amendments will take effect on December 1, 2007. Notwithstanding the foregoing, comments can still be submitted on the outstanding rules. David
Goch _____________________ U.S. CONSUMER CREDIT DEBT RISES 1.8% January figure revised up 3.4% vs. 2.2% By Robert Schroeder, MarketWatch WASHINGTON-- U.S. consumers took on an extra $3.26 billion in debt in February, pushing total outstanding consumer credit up by 1.8% to $2.163 trillion, the Federal Reserve reported Friday. The overall credit number for January was revised to rise by 3.4%, compared with the previously estimated 2.2%. Revolving debt such as that on credit cards increased by $802 million in February, or an annualized 1.2%. In January, revolving debt rose a revised 3.3%, or by $2.2 billion. Nonrevolving debt like automobile loans rose by $2.5 billion, or 2.2% annualized in February. Nonrevolving debt for January was revised higher, to an increase of 3.5% compared with the previously reported increase of 2%. Read the full report. _______________________ EX-BUILDER FACES BANKRUPTCY FRAUD The former president of a Stanton Heights, Pittsburgh home improvement firm was indicted Wednesday by a federal grand jury on a charge of bankruptcy fraud. Andrew F. Andros, 44, former owner of Builders Choice Remodeling in Stanton Heights, filed a Chapter 7 bankruptcy petition in November 1999 and was discharged in April 2001. Throughout the proceedings, according to the Criminal Investigation Division of the IRS, he concealed the existence of various financial accounts with Ameritrade, E Trade and Spectra Fund.
May 13 2005 ADMIN OFFICE CLARIFIES EFFECTIVE DATE OF INCREASED FILING FEES The Administrative Office of the United States Courts issued a memorandum Fri. May 13 stating "... the changes to the fee amounts and the method for their apportionment will be effective Octover 17, 2005." The Chapter 7 filing fee will be increased to $220. With the trustee fee of $15 and the $39 administrative fee, the total Chapter 7 filing fee will be $274. The Chapter 13 filing fee will be reduced from $155 to $150. Thus, the total filing fee for Chapter 13 will go from the current $194 to $189. The increased fees will not be retroactive. The above changes were contained in § 325 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, as amended by H.R. 1268, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, signed into law May 11, 2005.
May 8 2005 Beating the bankruptcy deadline Lawyers expect a rush before legislation takes effect in October. By
Kurt Blumenau David Dunn knows what he will be reading for the next few months. Dunn, a bankruptcy attorney for 35 years, is plowing his way through the new set of bankruptcy laws President Bush signed into law last month. The new policy, which takes effect in October, will make it tougher for debtors to shed their obligations through bankruptcy. ''The table of contents of this law is 13 pages long, to give you some idea of the scope of it,'' said Dunn, who practices in Allentown. Like Dunn, other Lehigh Valley bankruptcy attorneys are still learning the nuances of the new law. But they know what to expect. They anticipate a rush of clients in the months leading up to October, trying to file before the changes take effect. Those who do not make that deadline will face a longer, more difficult process, involving more paperwork and, possibly, less relief at the end.
Recognize and fight predatory lending By
M. Anthony Carr One out of five loans is subprime in today's market. These are loans to consumers whose credit is substandard. A subprime mortgage means it has tougher terms for the borrower, such as more points, a higher interest rate and high private-mortgage-insurance premiums as part of the mortgage payment. It is in this arena that you will find the practice called "predatory lending." Before moving forward, let me emphasize that many subprime mortgage programs are legitimate. Consumers with bad credit can purchase homes with these programs, which carry less-than-stellar terms. When you have missed payments, filed for bankruptcy or taken on too much debt, you are not going to receive the best of terms. When others are paying 5.75 percent, you could be paying 8 percent, 9 percent or 10 percent. The U.S. Department of Housing and Urban Development lays out how to recognize predatory lending practices. Predatory "mortgage professionals" may try to: Full
story
A costly lesson: Bankruptcy judge warns about dangers of credit cards By
LAUREN LONG OVID &emdash; Buy it now, pay for it later. That's the message to young people across the country who are wide-eyed with their first piece of plastic from a credit card company, and one that continues to haunt people of all ages. The Hon. John C. Ninfo II, chief bankruptcy judge of the Western District of New York, is trying to educate people about the wise use of credit and ways to develop a realistic budget. On Friday, he spoke with upperclassmen in the South Seneca and Romulus school districts. "What I see in court everyday are people like your older brothers and sisters, your parents, your grandparents," he told the students in the South Seneca High School auditorium. Teachers, doctors, lawyers, accountants &emdash; people who really should know better, but who got caught up in it just like everyone else, he said. Ninfo, founder of the C.A.R.E. Program &emdash; Credit Abuse Resistance Education &emdash; told students about the real cost of credit that includes interest rates of 18 to 24 percent and fees on top of that. Thirty-five percent of credit card company revenue comes from fees, he said. Full
story
NACBA'S CONVENTION LAST WEEKEND SAW RECORD ENROLLMENT The annual convention of the National Association of Consumer Bankruptcy Attorneys, held April 29-May 1 in San Diego, was attended by over 1,100 consumer bankruptcy lawyers ... a record-setting attendance. The key theme of the convention was of course the Reform Act. But this was a general over-view of the key provisions of the Act, not a course of instruction. To meet that need, NACBA has scheduled an intensive workshop and seminar to cover the Act from A to Z. This event is scheduled for July 29-July 30, 2005, in Chicago. The program, "Fighting Back: Helping Debtors Survive the New Bankruptcy Law," is open only to NACBA members and bankruptcy judges. To attend, you will have to join NACBA. The details of the program are not yet up on the NACBA web site. We suggest you keep an eye on their web site for the announcement and details. Visit - CONGRESS MOVES TO PROTECT PRIVACY Schumer-Nelson Identity Theft Prevention Bill Senators Schumer (D-NY) and Nelson D-FL) on April 12th introduced S. 768, the Comprehensive Identity Theft Prevention Act (the "Act"). The bill establishes the Office of Identity Theft (the "Office") within the Federal Trade Commission and would provide the FTC with broad authority to prevent identity theft and establish limitations on businesses that collect, maintain, sell or transfer sensitive personal information of individuals. The FTC would have civil jurisdiction over all commercial organizations that collect, maintain, sell or transfer sensitive personal information. Sensitive personal information includes an individual's: * Social security number * Driver's license number or state identification number * Bank or investment account number * Credit or debit card number * Certain medical information * Payment history * Other information specified by the FTC REPORT CRITICAL OF CREDIT COUNSELING INDUSTRY Interestingly, despite the recent signing of the bankruptcy reform bill by President Bush (Pub.Law 109-8), and its requirement of debt counseling, the debt counseling industry has not, to date, been the most favorably received. Last week the Government Accounting Office issued the following report: "Profiteering in a Non-Profit Industry: Abusive Practices in Credit Counseling" (S. Rept. NO. 109-55). Click
here to view report
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Life has gotten more expensive thanks to iPods, the Internet, and much more By
Andrew Webb It's bill-paying day for Albuquerque businesswoman DJ Heckes' family of five. Two cell phones: Check. Dual-line home phone with a special ring for the fax machine: Check. Premium cable television: Check. High-speed Internet: Check. Sound expensive? That's just the beginning. Thanks in part to the proliferation of new technology and some old-fashioned American marketing, families are finding lots of new ways to spend their money. April 6 2005 PERSONAL BANKRUPTCY PREDICTED TO RISE 11.3% BY 2007 Associated Press Online Global Insights new study, "Predicting Personal Bankruptcies," projects that after a lull in recent years, annual bankruptcy filings in the U.S. will increase to more than 1.74 million in 2007. Global Insight cites rising interest rates and inflation combined with slower income growth and housing appreciation as the primary culprits behind this alarming rise in bankruptcies. Nevada, Maryland, New Jersey, Virginia and Utah will experience the most significant increases in bankruptcy filings, driven by differences in regional economic growth and fluctuations in single-family home market values. "We can see clearly the connection between economic conditions and bankruptcy filings," stated Mark Lauritano, managing director of Global Insight's Financial Practice. "In the next few years, as interest rates rise and recent income gains begin to slow, consumer debt burdens will increase both in dollar terms and as a percentage of income. These debt burdens will drive bankruptcy filing rates up. April 4 2005 High Court to Decide State Immunity Bankruptcy Case WASHINGTON (Reuters) - The U.S. Supreme Court said on Monday it would decide whether Congress can revoke a state's immunity from being sued in bankruptcy proceedings, a case pitting state powers against those of the federal government. The high court agreed to decide a dispute involving Virginia after failing to resolve the issue last year in a case from Tennessee. The justices will hear arguments and issue a ruling during their term that begins in October.
April 1 2005 BUSNESSES, CONSUMERS SET NEW BANKRUPTCY RECORD WASHINGTON &emdash; With the pressure of both a shaky economy and the impulse to act soon before new laws limit the opportunity, US businesses and consumers filed a record 400,394 bankruptcies in the quarter ended June 30, the federal government reported. That hits home with service providers stuck with unpaid fees, those who've been forced out of business or lost contracts to client shutdowns. The quarterly total was 24.5 percent above the year-ago 321,729, the Administrative office of the U.S. Courts said. Six-month filings of 767,235 cases put bankruptcies on course to break the record of 1,442,549 cases set in 1999, said the American Banktruptcy Insitute. Full
story
STUDY: COUNTIES WITH CASINOS HAVE HIGHER BANKRUPTCY RATES By JONATHAN ROOS A new gambling study points to a link between casino gambling and bankruptcies in Iowa. A preliminary report on the University of Northern Iowa study, shared with lawmakers today, shows there are more bankruptcies in counties with casinos than in a comparable-sized group of counties that don't have gambling facilities. That finding dovetails with the perceptions of 44 percent of Iowans surveyed for the study, who believe more bankruptcies have resulted from gambling. They outnumber the 30 percent who say that hasn't happened.
BANKRUPTCY JUDGES OFFER FINANCIAL EDUCATION With Congress working to make bankruptcy protection tougher for consumers to get, the chief bankruptcy judges from Kansas and Missouri have launched a financial literacy education program to teach Kansas City-area high school students the hazards of credit card debt. The Business Journal of Kansas City
March 15 2005 RUSH TO COURT PREDICTED AFTER REFORM IS SIGNED Those considering filing are likely to try to get a jump on tough restrictions Congress is passing, experts say. Bankruptcy experts are predicting a surge of cases as cash-strapped consumers try to get the jump on a new law that will make it tougher for people to erase their debts through the legal system. Among the changes brought by the bankruptcy-reform bill: No longer would Florida -- which exempts homes from creditors -- represent an easy haven for would-be filers. Under the legislation, only those homes purchased at least 40 months before a bankruptcy filing are safe from creditors, and the bill would limit those home exemptions to $125,000. If history is a guide, many people now contemplating bankruptcy will flock to the clerk's office before the new restrictions kick in. "We saw a spike in past years when people thought it was going to pass," said Scott Spradley, a bankruptcy lawyer for GrayRobinson in Orlando. "This time it did, and I'm sure the same thing will happen." The Senate approved the most sweeping reform of U.S. bankruptcy law in decades Thursday in a move supporters said targets slackers who abuse the system and try to stiff creditors. The legislation will next go to the House of Representatives, which is expected to approve it. President Bush has said he will sign the measure, which could take effect by late summer. But even as reform advocates embraced it, critics said the new law would bring more pain to many people already financially devastated. By Richard Burnett and April Hunt Sun Sentinel Staff Writers
Feb. 10 2005 BANKRUPTCY FILINGS DOWN In its recent report on bankruptcy filing trends through the second quarter of 2004, the Administrative Office of the U.S. Courts confirmed that, for the first time since 2000, bankruptcies declined during a 12 month period. The total number of personal bankruptcies filed for the 12-month period ending June 30, 2004 was 1,599, 986, down 0.8 percent from the period ending one year earlier. The drop isn't large, but is welcome. Sam Gerdano, the executive director of the American Bankruptcy Institute (Alexandria, VA) told the American Banker, "Consumer bankruptcy filings appear to have turned a corner. . . Improving economic conditions and low interest rates are permitting more families to clean up their household balance sheets." During the 12 months ending June 30, 2004, chapter 7 bankruptcies comprised 71.7 percent of personal filings, as they have for more than a decade. Out of 91 bankruptcy judicial districts in the U.S. and Puerto Rico, 43 experienced year-over-year declines in filing volume during the period. The table below provides detailed statistics on the number of filings and growth rates by judicial district. The accompanying chart displays the year-over-year rate of change in personal bankruptcy filing rates, by quarter. Note the continued quarterly improvement in the filing rate. Second quarter 2004 personal bankruptcy petitions were 4.2 percent lower than during the second quarter of 2003. Feb. 4 2005 MEDICAL COSTS CONTRIBUTE TO HALF OF US BANKRUPTCIES Harvard University study shows half of all personal bankruptcies filed in 2001 by Americans resulted from people being unable to pay their medical bills. NACBA.COM
Jan 10 2005 REFINANCING OF HOMES BRINGS INCREASE IN FORECLOSURES Refinancing in America skyrocketed 35 percent from 1993 to 2001, but from 2000 to 2003, foreclosures also climbed 45 percent. Many economists suggest that with volatile real estate and money markets, pinning all of your financial future on your house isn't much different than taking a spin at the local casino. "There are people in this world who want to take that kind of gamble, but that's not what most Americans want to do with the place they live," says Warren. And the high stakes don't stop with loans. A recent study by October Research shows 55 percent of appraisers say they've felt 'uncomfortably pressured' to overstate property values, and 46 percent of those say they were asked to inflate the value by 11 to 30 percent.
NACBA HONORS ATTORNEYS The National Association of Consumer Bankruptcy Attorneys recognized the following members at the 2004 Convention in Boston for their meritorious service: Max Gardner of Shelby, NC was named "Champion of Consumer Rights for his "extraordinary service in protecting American consumers." Max assisted the former employees of Shelby Yarn Company through his innovative and unique use of the bankruptcy laws to obtain more than $2 million in damages and monetary recoveries from the former principals of the company. NACBA presented a special award to retiring Board member James (Ike) Shulman of San Jose, CA. Ike was a co-founder and first president of NACBA, and has played a critical role in the organization´s ongoing success. Over the years he has devoted endless hours to the organization. In "retirement" he´ll stay on as Treasurer and Legislative Chair. Other members recognized for their ongoing contributions and support for the organization include: - Bob Adams - Eric Clayman - Bill Oliver - Neal Allen - John Colwell - John Orcutt - Mark Bond - Gary Gale - Marlow Preston - Edgar Borrego - Jeffrey Jenkins - Jerry Tanzy - Brad Botes - Bob Michelson - Gerald White SOURCE: NACBA web site CORPORATE BANKRUPTCY FILINGS HIT 10-YEAR LOW Bankruptcy filings by US public companies reached a 10-year low in 2004 as low interest rates and better access to financing helped troubled businesses amass cash and pay debts, according to a research report. This year, 80 public companies filed for bankruptcy, including Trump Hotels & Casino Resorts Inc. and US Airways Group Inc. The total is less than a third of the record 257 publicly traded US corporations -- including Enron Corp. and WorldCom Inc. -- that sought Chapter 11 protection in 2001, according to a Dec. 27 report by New Generation Research. This year's number is the lowest since 1994, when 70 public companies sought court protection from creditors. Low financing costs helped US companies pay down debt and amass a record $1.3 trillion cash stockpile at the end of the third quarter, according to Federal Reserve data. "The fact there is a very substantial amount of capital and credit available has allowed public companies to refinance outstanding debt and avoid default," said Harvey R. Miller, vice chairman of New York-based investment bank Greenhill & Co. SOURCE: Bloomberg News December 30, 2004 UNDERFUNDED PLANS MAY HIT RETIREEES, TAXPAYERS HARD Generations of Americans have counted on their pensions to carry them through the golden age of retirement. Yet increasingly they have discovered an unsettling trend: There are no guarantees. One after another, corporations have thrown in the towel on their traditional pension plans, seeing the funds as too costly and too volatile to bear. Steep downturns in industries such as airlines and steel have sparked a rash of bankruptcies, forcing many to default on their pensions or threaten termination. "Companies see all this risk," said Paul Klauder, managing director of SEI Investments, whose recent survey said that three quarters of chief financial officers believe that pensions are negatively affecting the financial health of their companies. "And now they have settled on an easy answer." SOURCE: James Paton, Rocky
Mountain News December 25, 2004
CREDIT CARD DEBT HITS $800 BILLION (AP) During a season with shoppers racing about to wrap up holiday spending, half of Americans say they worry about their overall level of debt, an Associated Press poll found. That includes many - about two in 10 of those surveyed - who say they stay worried about their debt level most or all of the time. Those debts can come from home and car loans as well as credit cards - even more so with December buying sprees. Three-fourths in the poll said they have credit cards. Most people who have credit cards say they work to keep control of them, but one in six with cards say they don't trust their own spending with plastic. Young adults and those who make less than $25,000 a year were most likely to doubt their own ability to manage credit cards. The total amount of revolving credit debt, such as that caused by credit cards, was just over $600 billion five years ago and is almost $800 billion now, according to the Federal Reserve. In the survey, about 10 percent of those with credit cards said they have missed making their minimum payment during the past six months. SOURCE: CBSNews.com BANKRUPTCY FILINGS DOWN Bankruptcy cases filed for the 12 month period ending September 30, 2004 dropped 2.6% from the same time period in 2003. 1,618,987 case were filed, down from 1,661,996. (Bankruptcies first broke the 1 million mark for a 12 month period June 30, 1996.) Business bankruptcies also dropped 3.8% from 36,183 in 2003 to 34,817 in 2004.
THE IRS HAS BEGUN A POTENTIALLY WIDESPREAD REJECTION OF NONPROFIT STATUS FOR CREDIT COUNSELING AGENCIES This past year, the IRS began tightening its scrutiny of the nonprofit tax status of credit counseling agencies. In some recently made public letters rejecting the nonprofit tax status of particular agencies the IRS makes it clear that it doesn't buy the argument that using credit counseling to collect debts for creditors is a legitimate "nonprofit" activity, and could wipe out the "nonprofit" tax-exempt status of virtually the entire industry. In the letters, the IRS essentially makes the case that the creditor funding and the creditor benefits of debt management plans (DMPs) effectively make credit counseling agencies debt collectors, not charities. The members of the largest credit counseling association, the National Foundation for Credit Counseling (NFCC), for example, collectively receive two-thirds of their funding from creditors. That funding, as determined by the IRS in these letters, is essentially payment for debt collection services, which it does not consider to be a tax-exempt activity. If the principles spelled out in the IRS letter were applied industry- wide, it could have the effect of wiping out virtually the entire credit counseling industry. That's because virtually the entire industry is composed of nonprofit, tax-exempt CCAs which rely heavily on creditor "fair share" funding provided in exchange for servicing DMPs. Source: The Coalition for Responsible Credit Practices _____________________ FOR FIRST TIME - USE OF CREDIT CARDS TRUMPS CHECKS For the first time, Americans' use of credit cards, debit cards and other electronic bill paying has eclipsed paper checks. The number of electronic payment transactions last year totaled 44.5 billion - exceeding the number of checks paid, 36.7 billion, according to Federal Reserve studies released Monday. The shift seen in 2003 toward more electronic payments reflects the expanding role of technology in the retail, financial and banking businesss, private economists said. SOURCE:
AP
FREE CREDIT REPORTS START DECEMBER 1 Beginning on December 1, 2004, free annual credit reports will be made available upon consumer's request, pursuant to the Fair and Accurate Credit Transactions Act of 2003 ("FACT"). The reports will be available across the country in four stages: Dec. 1, Alaska, Hawaii, and other Western states; March 1, Midwestern states; June 1, Southern states; New England and other Eastern states, Sept. 1. Consumers will be able to request their reports from all three major credit reporting agencies, at a special web site, AnnualCreditReport.com; the credit report will appear on the screen and may be printed out. Or, they may call 1-877-322-8228, or write to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. ______________________ November 14, 2004 ADVERTISING THAT PROMISES TOO MUCH IS CRITICIZED For the second time this year, a New Jersey Supreme Court committee is reining in lawyers who market their services through mass mailings to people whose names appear on court dockets. In an opinion published Monday, the Committee on Attorney Advertising sharpened the pencil on what bankruptcy lawyers can say in solicitation letters and what disclosures they must make. Examples of "overreaching and improper statements," include: "If you do not act quickly, you could very likely lose your property or home." "YOU NEED NOT LOSE YOUR SINGLE MOST IMPORTANT INVESTMENT, BUT YOU MUST ACT SOON." "In order to save your home you must act quickly and you must do so having been given the right advice... Time is limited." The committee faulted lawyers for touting themselves with language like: "YOUR BANKRUPTCY SPECIALIST." "I have been helping people just like you save their homes and improve their financial condition for the past XX years." "My practice is exclusively devoted to debtor relief and I have developed an expertise in assisting homeowners in saving their property." "I urge you to compare my experience, reasonable fees, and personal attention." The letters also exaggerate the benefits of bankruptcy by making unqualified statements that it can stop foreclosure, car repossession, utility shutoffs and creditor harassment and wipe out credit card debt, said the committee. N.J. Panel Curbs Solicitations for Bankruptcy Work Lawyers' letters called 'formulaic,' hyperbolic in predicting disaster Mary P. Gallagher BANKRUPTCY FILINGS SOAR TO NEW RECORD Last year, appeals filed in the U.S. courts of appeals increased 6 percent, to 60,847. In the district courts, civil filings dropped 8 percent, largely because of a reduction in asbestos-related cases, but criminal filings rose 5 percent and immigration cases increased 22 percent. Bankruptcy filings increased 7 percent to a record 1.6 million. CONSUMERS VICTIMS OF WISHFUL THINKING The "Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, narrowed by 2 percentage point from October to 9 points. A month ago, 78% of Americans planned to pay off debt, while a month later only 69% actually did so. SOURCE: Credit & Collections World News (CollectionsWorld.com)
DEBT SETTLEMENT AND DEBT NEGOTIATION INDUSTRY FORMS NEW TRADE ORGANIZATION WASHINGTON, D.C. (PRWEB) October 15, 2004 -- The debt settlement and debt negotiation industry has formed a new trade association, the United States Organizations for Bankruptcy Alternatives (USOBA), to provide industry education, advocate legislative interests, promote fair and reasonable regulation and advance strong consumer protections. USOBA"s first convention will be held in Washington, D.C. on November 18 & 19, 2004. CONTACT INFORMATION: Kallie Guimond, Executive
Director October 5, 2004 MEDICAL COSTS & INSURANCE PREMIUMS CONSUMING DISPOSABLE INCOME In the past four years, Americans have spent an ever-growing portion of their paychecks on health care and for the most part gotten less for their money, forcing millions into the ranks of the uninsured or personal bankruptcy, according to government figures and several independent assessments. Nationwide, workers' costs for health insurance have risen by 36 percent since 2000, dwarfing the average 12.4 percent increase in earnings since President Bush took office, the liberal consumer group Families USA reports in an analysis scheduled for release today. The number of Americans spending more than a quarter of their income on medical costs climbed from 11.6 million in 2000 to 14.3 million this year, according to the group. For four straight years, Americans have paid double-digit increases in health insurance premiums, bringing the price for a typical family of four to nearly $10,000. Premiums paid by workers in 26 states and the District climbed 40 percent, according to Families USA.
IRS Alters Stance on Bankruptcy Code Application to Certain Pension Plans On September 9th, the IRS's Chief Counsel office announced it will no longer argue the IRS may include in the value of its secured claim the debtor's interest in a pension plan that is excluded from property of the estate under Section 541(c)(2), a change in its litigating position on the application of Bankruptcy Code Section 506(a) to pension plans excluded from a bankruptcy estate under Bankruptcy Code Section 541(c)(2). The IRS explained that under Section 506(a), a creditor with a lien on property of the estate holds a secured claim to the extent of the value of the creditor's interest in the estate's interest in such property. Section 541(a) provides that, upon the commencement of the bankruptcy case, an estate is created that consists of all legal or equitable interests of the debtor on that date. SOURCE: CLLA
USDA SAYS
COST OF RAISING A CHILD The cost of raising a child in 2003 for middle-income families ($40,700 to $68,400) was projected to be $178,590, according to a recent study by the U.S. Department of Agriculture. Estimates are provided for major components of the budget by age of child, family income, and region of residence. The estimated annual expenditure is $10,760. The complete report is available CLICK HERE
Abuse of privilege By Phil Kent [This article appearing in The Washington Times today complains about the unconscionable fees collected by plaintiffs' lawyers in class-action suits, and debtors' lawyers, apparently in large reorganization cases. It appears to lump all debtors' attorneys into one group, thus incorrectly alleging that consumer bankrutpcy lawyers are at fault] When Congress created the U.S. Trustee Program as a pilot project in the 1978 Bankruptcy Reform Act, it intended for those trustees to act as a "watchdog" to monitor the integrity of how bankruptcy cases are administered. Sad to say, the watchdog today is too busy catnapping on the porch &emdash; and those seeking justice are instead being robbed blind by the very lawyers who purport to be on their side. The most alarming example of this is a bankruptcy case in Kentucky where three out of 50 plaintiffs crawled away with a total of $2,206, while their lawyer, John O. Morgan Jr., danced away with $1.32 million. Mr. Morgan had the audacity to add to his clients' pain and suffering by pocketing about $600 for every dollar he won in the case against the check-cashing industry. Some clients got nothing. It's one of the most blatant examples to date of lawyers winning the coal mines while their clients are getting the shaft. Click here for the FULL ARTICLE
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CASE ARCHIVES  July 5 2006 Rising rates, higher gas prices make it harder for consumers to handle debt By Associated Press NEW YORK - Rising interest rates and higher gasoline prices are putting the squeeze on consumers' budgets, and many are finding it harder to keep up with their bills. Credit counseling agencies say that consumers are coming in in droves seeking help. "My phones are going crazy," said Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Services Inc. in Fort Lauderdale, Fla. "Consumers are carrying an exorbitant amount of debt - and they don't have any savings to fall back on if things don't go right." An important measure of consumer financial distress, late payments on credit cards, ticked up in the first quarter, according to figures from the American Bankers Association. The Washington, D.C., based trade group said the percentage of bank cards 30 or more days past due increased to 4.40 percent in the January-March quarter from 4.27 percent in the final quarter of 2005. The Federal Reserve's decision last week to raise short-term interest rates for the 17th consecutive time will boost yet again borrowing costs for consumers, likely prompting more delinquencies on credit card bills - as well as on auto loans and mortgages. For
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MORE CREDIT CARD HOLDERS PAYING LATE NEW YORK Credit counseling agencies say consumers are storming their offices for help -- just one sign that credit card holders are feeling a painful pinch. Experts say rising interest rates and higher gas prices are squeezing consumers' budgets. As a result, more people say, "Charge it," then find it harder to pay the bills. For
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IRS WILL PRESENT ITS INTERPRETATION OF BAPCPA ON TAX TALK TODAY - JULY 11 2006 Via an interactive webcast the IRS will discuss the ramifications of the Bankruptcy Reform Act on federal tax issues, including updates on IRS procedure for handling tax claims in consumer bankruptcy cases. Participants must register in advance. To register for access to this online broadcast visit the IRS Tax Talk Today link here - July 3 2006 Credit card company to pay $11 million to settle probe By MICHAEL GORMLEY ALBANY, N.Y. -- A Georgia-based credit card company has agreed to pay $11 million in restitution to New Yorkers to settle Attorney General Eliot Spitzer's investigation into its practices. Columbus Bank and Trust Co. and CompuCredit Corp., a marketing and collection company, agreed to reform practices for its sub-prime credit cards held by 60,000 New Yorkers, Spitzer said. The cards are marketed to consumers with lower incomes or credit problems who are willing to pay higher rates and fees to secure credit cards. Spitzer had accused the company of failing to disclose activation charges of as much as $179 on Columbus Bank's Aspire Visa cards that were marketed to low-income people and consumers with poor credit. He also said the company exaggerated how much credit would be provided, enrolled customers in other programs without consent and then billed them with renewal fees. Spitzer also criticized the debt collection practices. For
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BILL TO INCREASE TRUSTEES' FEES MOVES IN HOUSE The CLLA continues to be involved in bankruptcy issues. Recently, the CLLA has provided commentary on legislation to increase the fees for Chapter 7 bankruptcy trustees, also known as "panel" trustees, who play a role in the operation of the bankruptcy system. The current level of compensation for panel trustees is considered low and has not been increased since 1994. Specifically, on June 12th, HR 5585, the Financial Netting Improvements Act of 2006 was introduced (the primary purpose of the bill is to ease systems for mortgages and credit unions). The bill also contains language in Section 7 to increase trustee fees to $100. The bill, as primarily a banking type bill, was referred to BOTH the Financial Services Committee and the Judiciary Committee. SOURCE: CLLA July 1 2006 SUITS CHALLENGE CREDIT BUREAUS By Kenneth R. Harney In a case with potentially far-reaching significance for mortgage applicants nationwide, a South Carolina consumer has filed class-action lawsuits against the three national credit bureaus, charging that they allow a practice that lowers the credit scores of millions of people. Depressed scores raise the interest rates and fees that mortgage lenders offer. Sometimes the higher rates lead to monthly payments that are hundreds of dollars higher than they otherwise would be. The three lawsuits charge that, under the federal Fair Credit Reporting Act, the national bureaus -- Equifax, Experian and TransUnion -- are required to follow "reasonable procedures to assume maximum possible accuracy of information in consumer [credit] reports." For
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BANKRUPTCY FILINGS STEADILY RISING Bankruptcy filings have declined from about 35,000 per week in 2005 to approximately 10,000 per week this year. However, the number of monthly filings has been slowly increasing this year from 34,411 in January to 43,780 in May. In the first five months of this year a little more than 200,000 filings have been made compared to nearly 700,000 for the same period one-year ago. The 2005 drop-off was due to the full implementation of the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" which took effect on October 17th. Bankruptcy filings nose-dived in the first quarter, falling 73% compared to one-year ago and down six-fold sequentially. The number of filings in the first quarter is the lowest number of quarterly filings in the last 20 years. According to CA-based Lundquist Consulting 1Q/06 Chapter 7 consumer filings are 80% lower 1Q/05. According to the Administrative Office of the U.S. Courts, consumer and business bankruptcy filings hit a record 667,431 petitions in the fourth quarter. For monthly figures on bankruptcy filings visit CardData (www.carddata.com).  SOURCE: CardWeb.com
AMERICANS AREN'T ALONE IN CREDIT CARD DEBT: CREDIT CARD SCOTS CAUGHT UP IN DEBT "NIGHTMARE" CREDIT card debt in Scotland is reaching "nightmare" proportions, according to a Scotland on Sunday survey. Citizens Advice Bureaux staff are reporting that up to half of their workload now comes from consumers caught up in a debt spiral prompted by the easy availability of credit. The average debt of consumers approaching CAB for help is almost £14,000 - up an alarming 64% from a year ago. And Scotland appears to be turning into the debt capital of Britain, with 27% of adults having debts on credit cards compared with 23% in England.
CREDIT CRUNCH: BILLS MAKE AMERICANS CUT SPENDING American consumers are in a dour mood these days. America's Research Group founder and CEO Britt Beemer said his surveys show that 27 percent of consumers plan to cut back on spending because of the pressure they're feeling from credit card bills. Just 16 percent said that a year ago. Beemer told a Florida retail group that only 28 percent of shoppers feel "really confident" today, compared with 36 percent two months ago and 54 percent a year ago. June 23 2006 PROMINENT LA LAWYER ACCUSED OF MONEY LAUNDERING AND BANKRUPTCY FRAUD GREG RISLING LOS ANGELES - A prominent attorney who has filed many high-profile lawsuits against law enforcement agencies was indicted on charges of trying to evade paying more than $100,000 in federal income taxes, authorities said Friday. Stephen Yagman, 61, faces 19 counts that include bankruptcy fraud and money laundering. Yagman surrendered to federal authorities and was expected to appear in U.S. District Court on Friday. Yagman is accused of trying to conceal his assets and hamper the collection attempts by IRS agents. He used various bank and brokerage accounts in his girlfriend's name to deposit and disguise his personal funds, including about $776,000 that was given to him by relatives, according to the indictment. Yagman filed for personal and corporate bankruptcy in 1999, even though he lived in a 2,800-square-foot house in Venice, prosecutors said. He failed to disclose that he made mortgage and property tax payments on the house and made other misrepresentations and omissions to a bankruptcy court, the indictment said. He also failed to disclose personal bank and brokerage accounts that he controlled, but were in his girlfriend's name, as well as hundreds of thousands of dollars in legal settlements, client payments and attorney's fees that he received in 1999 and 2000, the indictment said.
TRUSTEE: MOTHER COMMITTED BANKRUPTCY FRAUD BY STEVE PATTERSON More trouble hit the mother of a boy wrongly accused in the Ryan Harris murder case Monday as a bankruptcy trustee said he plans to seek criminal charges against her for allegedly failing to disclose a pending $2 million settlement when she filed for bankruptcy. "What she's done is bankruptcy fraud," David Herzog said. "I'd be remiss if I didn't report this to the U.S. attorney's office." Full
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BANKRUPTCY ACADEMY SEEKS YOUR INPUT ON TOPICS TO TEACH The Bankruptcy Academy, hosted several times a year by King Bankruptcy Media, invites consumer bankruptcy attorneys to do a survey of preferred topics. The survey also asks your choice of location out of 8 major cities. The Academy will offer live seminars of from 1 to 5 days in length, plus a series of 45-minute web-casts. Please take a minute or two and do the survey . . . your opinion is important!
IRS Outlines Steps for Prompt Determination of Bankruptcy Estate's Unpaid Tax Liability On May 30th, the IRS published in Internal Revenue Bulletin No. 2006-22, Revenue Procedure 2006-24 which provides steps a bankruptcy trustee or a debtor in possession must follow to obtain a prompt determination of any unpaid tax liability of the estate. A prompt determination of any unpaid liability of the estate is requested by filing a signed written request, in duplicate, with the Centralized Insolvency Operation, P.O. Box 21126, Philadelphia, Pa. 19114; the request must be marked "Request for Prompt Determination," and must be accompanied by an exact copy of the return (or returns) for a completed taxable period filed by the trustee with the service. The request must also contain the following information:
Within 60 days of receipt of the request, IRS will notify the trustee whether the return filed by the trustee is being selected for examination or is being accepted as filed. David Goch PERSONAL BANKRUPTCY CASES RISE DESPITE REFORMS By John Poirier WASHINGTON (Reuters) - A new law to deter consumers from seeking bankruptcy protection made filings plunge to a 20-year low in the first-quarter of 2006, but a rapid rise in new cases since then raises questions about whether the law is working as expected. The 2005 bankruptcy reform law was pushed through Congress by banks and credit card companies that sought to prevent abuse by individuals trying to wipe their financial slates clean from runaway debt. By making it more difficult to file for personal bankruptcy, the companies reasoned that consumers would be more likely to negotiate a repayment plan. "I think the law so far is working as it was intended," said James Chessen, chief economist for the Washington-based American Bankers Association trade group. "Some of the abuses have been wrung out of the system." But credit card companies and banks are keeping an eye on the recent increase in filings. The law took effect October 17, 2005, prompting a surge of 619,322 personal bankruptcy filings for that month as debt-laden consumers rushed to court. New cases plunged to 13,758 in November, then rose to 21,636 in December, 27,235 in January, 35,352 in February and 49,977 in March, according to the Administrative Office of the U.S. Courts.
HOUSE BILL TO INCREASE JUDGE'S SALARIES Prior to the Memorial Day recess, House Judiciary Committee Chairman Sensenbrenner (R-WI) introduced H.R. 5454, a bill to authorize salary adjustments for justices and judges of the United States for fiscal 2007. David Goch JUDGES LASH OUT AT BANKUPTCY REFORM "There's going to be the most fantastic anarchy in bankruptcy courts for years." What happens when the credit card industry writes congressional legislation? According to the judges who have to enforce it, anarchy By BRIAN J. ROGAL In December, Alfonso Sosa, a house painter in Fredericksburg, Texas, fell behind on the payments for the mobile home he shared with his wife Melba. The mortgage holder moved to foreclose, and Sosa filed an emergency petition in federal court for bankruptcy protection. But the Sosa family quickly ran afoul of the country's new bankruptcy law, which had gone into effect only six weeks before. One of the many new provisions requires all debtors to take a simple, one-hour credit counseling class before they file, but the Sosas had not known about the requirement. Although Sosa had taken the class by the time they got back to court, U.S. Bankruptcy Judge Frank R. Monroe quickly dismissed their case, leaving the Sosa trailer open to foreclosure. Monroe was furious, not with the Sosas, but with Congress for tying his hands. "Can any rational human being make a cogent argument that this makes any sense at all?" he wrote in his opinion. He even accused Congress of colluding with the nation's credit industry "to make more money off the backs of consumers in this country." June 7 2006 House Committee Votes to Ban IRS Private Debt Collection Yesterday, the House Appropriations Committee approved draft legislation that would fund the Internal Revenue Service at $10.5 billion for fiscal year 2007 but would also prohibit any of that money from being used to hire private debt collectors. The vote of 29-27 in favor of the amendment by Rep. Rothman (D-N.J.) followed a lengthy debate about privatization and congressional jurisdiction. The one-year ban was included in the fiscal 2007 appropriations bill funding the Treasury Department. That measure will be on the House floor during the week of June 12. David Goch |