Clark County Bankruptcy Law Blog

If you are experiencing financial problems, you have more than likely been contacted by a debt collection agency. Unfortunately, your experiences with the debt collection agency may have been entirely unpleasant and extremely stressful. They may have contacted you relentlessly, falsely informed you that bankruptcy is not an option, and even threatened to take you to court or garnish your paycheck.

Fortunately, you do have options when faced with these overwhelming circumstances.

After filing for bankruptcy, you will be immediately protected from debt collection agencies via an Order for Relief (Automatic Stay). This means that creditors are prohibited from calling you, writing you, suing you, foreclosing on your property and garnishing your paycheck.

Please note, even if you are not at the point where you want to file for bankruptcy, you do have a measure of protection from relentless creditor harassment ...

According to a recent study in the American Bankruptcy Institute's ABI Journal, 42 percent of all bankruptcy filers in 2007 were "baby boomers" (i.e., those born between 1946-1964). Surprisingly, the study also found that Americans 55 and up were filing for bankruptcy at a much faster rate than Americans 25 and under.

The study was authored by John Golmant and James Woods, both of whom are employees of the Administrative Office of the U.S. Courts in Washington D.C. The two performed the study as an update to their groundbreaking 2002 project that examined the correlation between age and bankruptcy filings.

Specifically, Golmant and Woods wanted to determine whether the trends in the 2002 study continued after the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). They accomplished this by examining and comparing national bankruptcy filing data from 1994, 2002 and 2007.

In today's troubled economic times, more and more homeowners are finding it difficult to make their mortgage payments. Many are "underwater" on their mortgages, a situation in which the total amount they owe on their mortgage far exceeds the current value of their home. Unfortunately, many of the homeowners in these untenable positions are electing to pursue a "voluntary foreclosure" or "strategic default," whereby they simply abandon their mortgage payments.

While this may seem like a viable (and perhaps tempting) option, it is extremely important to realize that there are certain ramifications associated with walking away from your mortgage.

• It may be difficult to secure a mortgage for several years after a strategic default/voluntary foreclosure. To illustrate, Fannie Mae, a major player in the mortgage industry, recently stated that homeowners who willingly stop making mortgage payments will be unable/ineligible to secure a Fannie Mae-backed mortgage for approximately seven years after the foreclosure on the home.
• Homeowners may still face state tax liability on the unpaid mortgage. (The Mortgage Forgiveness Debt Relief Act of 2007 protects taxpayers from federal taxation in the wake of a foreclosure)
• Lenders may still bring deficiency judgments against homeowners for remaining amounts owed or retain the services of a debt collection agency

Fortunately, those homeowners who are struggling with mortgage payments and/or facing foreclosure do have options.

Chapter 13 bankruptcy can help those who are behind on their mortgage payments and do not have the ability to make their past due mortgage payments (mortgage arrears).

In essence, Chapter 13 allows you to create a three to five year repayment plan to gradually pay off your mortgage arrears (without paying interest), and also enables you to eliminate second or third mortgages.

If your mortgage is too far underwater, you should strongly consider the possibility of eliminating overwhelming debt via bankruptcy. Walking away from your mortgage may just not be the best course of action.

The following post was for informational purposes only. If you would like to learn more about Chapter 13 bankruptcy or foreclosure, take the time to speak with an experienced legal professional who can answer all of your questions.

Related Resources:
  
• Risks of Walking Away from Mortgage Debt (Bankrate.com)

One of the most potentially confusing topics in all of bankruptcy law is exemptions. What makes bankruptcy exemptions so particularly confusing is that they are an amalgam of both state and federal law.

Article 1, Section 8, Clause 4 of the United States Constitution gives Congress the express right to "establish a uniform rule ... on the subject of bankruptcies throughout the United States." While this means that only Congress can regulate bankruptcy, the right to determine what property should be "exempt" from the bankruptcy process was extended to the states many years ago.

The following post is designed to provide some general background information on the topic of bankruptcy exemptions.

What is an exemption?

An exemption is a law that protects certain property from both bankruptcy trustees and creditors. To illustrate, if you file for Chapter 7 bankruptcy, you may have to liquidate (sell) property in order to settle your debts with creditors and obtain a fresh financial start. However, an applicable exemption (either state or federal) will prevent certain property (a house, car, etc.) from being subject to the liquidation process and it will remain yours.

Are there both state and federal exemptions?

Yes. Certain states have established their own exemptions that completely replace the federal exemptions (See 11 U.S.C. § 522). However, other states offer debtors the choice between the state exemptions and the federal exemptions.

These states include:

• Arkansas
• Connecticut
• District of Columbia
• Hawaii
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New Mexico
• Pennsylvania
• Rhode Island
• South Carolina
• Texas Vermont
• Washington
• Wisconsin 

Please note, the federal bankruptcy exemptions are unavailable in Nevada (i.e. the state has its own set of exemptions that all parties must use).

Future posts will continue to discuss this complex topic in greater detail, including a look at some of Nevada's generous exemptions ...

The following post was for informational purposes only. If you would like to learn more about bankruptcy or bankruptcy exemptions, take the time to speak with an experienced legal professional who can answer all of your questions.

Related Resources:
  
• An Introduction to Bankruptcy Exemptions (FreeAdvice.com)
• Bankruptcy: An Overview (Cornell University Law School)

According to a recent survey by the American Bankruptcy Institute, the total number of bankruptcy filings (Chapter 7 and Chapter 13) through June 2010 was roughly 14 percent higher than the same time last year. In fact, the total number of bankruptcy filings over the last six months has now reached 770,117.

Clearly, the majority of these Chapter 7 and Chapter 13 bankruptcy filings can be traced directly to the fallout from the "Great Recession."

To illustrate, many companies have been forced to lay off employees in record numbers in order to combat serious losses. (By some estimates, more than 7 million jobs have been lost). This scenario left many hard-working Americans struggling to make ends meet and ultimately led them to consider the financial lifeline provided by bankruptcy.

If you are considering filing for bankruptcy, you may feel slightly uncertain. While you would certainly relish the opportunity to obtain a fresh financial start, you may also have concerns about the effect that bankruptcy will have on your financial future, namely your credit.

The reality of the situation is that filing for bankruptcy will not have as adverse an impact on your credit as you may be thinking.

In fact, you will more than likely be able to obtain some level of credit from certain lenders. While the initial amount of credit extended by the lender may be somewhat smaller than you are accustomed to, it will nevertheless help set you on the right path to financial recovery and improved post-bankruptcy credit.

According to a recent report by the Greater Las Vegas Association of Realtors (GLVAR), the number of home closings for the month of July fell roughly 12 percent from the previous month and 21 percent from a year ago. In addition, foreclosure sales increased over the last month by 5 percent while the number of short sales declined by 3 percent.

What's the reason behind these less than encouraging statistics for southern Nevada's housing market?

Economic analysts have long cautioned that the expiration of the federal government's tax credit for first-time homebuyers ($8,000) and all other homebuyers ($6,500) at the end of April would result in lower sale rates and an increase in foreclosure sales.

A closer look at the statistics provided by GLVAR reveals that this prediction may be coming true:  

• There were a combined 2,948 single-family homes sold in Clark County, Nye County, Lincoln County, and White Pine County in July, as compared to 3,360 in June and 3,738 in July 2009.
• The total number of single-family homes, condominiums and town homes sold in these same counties numbered 3,748 in July, as compared with 4,265 in June and 4,602 in July 2009.

"Our (sales volume) decrease is matching the increase we saw in the previous several months due most certainly to the federal homebuyers tax credit," said GLVAR President Rick Shelton.

In regard to foreclosure sales and short sales, the numbers were equally compelling:

• Foreclosure sales (i.e., sales of homes owned by the bank) rose from 38 percent in June to 42 percent in July.
• Short sales fell to 31 percent in July, a 3 percent fall from a previous high of 34 percent in June

To learn more about protecting your home and stopping foreclosure, contact an experienced legal professional ... 

Related Resources:
  
• Home Sales, Prices Fall in Las Vegas in July (Las Vegas Sun)

There are many different myths associated with Chapter 7 bankruptcy. While some of these myths are relatively harmless, others can have a more detrimental impact. For example, the mistaken belief of one person that bankruptcy will completely destroy a person's credit score may prevent others (who would otherwise benefit) from filing.

Today's post will attempt to debunk four of the more common Chapter 7 bankruptcy myths.

If a person files for Chapter 7 bankruptcy, everyone will be able to see the information.

Bankruptcy is a matter of public record, much like any other legal proceeding. However, the number of people who file for bankruptcy is relatively large. Accordingly, most publications will pay attention to those bankruptcy filings involving prominent organizations or notable public figures.

If a person files for Chapter 7 Bankruptcy, they will lose all of their possessions.

The U.S. Bankruptcy Code and most state laws include provisions that allow people to keep certain "exempt" property. This includes a home, an automobile and household furnishings, among others.

If a person files for Chapter 7 bankruptcy, all of their debts will be discharged.

The truth is simple: If you successfully file for Chapter 7 bankruptcy, not all of your debts will be discharged. For example, child support payments, alimony payments and student loans cannot be discharged.

(Please see the previous post "Bankruptcy and Support Obligations" for more information)

A person can only file for Chapter 7 Bankruptcy once in their life.

According to the website of the United States Courts, "the [bankruptcy] court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed."

Talk with an experienced legal professional to learn more about the myths associated with Chapter 7 bankruptcy ...

Related Resources:
  
• 12 Myths About Bankruptcy (Bankrate.com)
• Discharge in Bankruptcy (United States Courts)