Archive for the ‘Commercial or Business Debt Management’ Category

Although I am not in the least an Obama fan (I am being kind here), at least I was happy to see some sense of vision for the future in Obama’s State Of The Union address last evening.  Some of Obama’s old fire was back, albeit misdirected once again.

I am sensing the same old disconnect again.  Sure, Wall Street is doing well recently, and hopefully it’s not a bubble and the Americans who still have some money in the markets were able to recoup some of their losses from the market highs of the past.  But make no mistake– Americans certainly arent feeling any richer.  Their home have lost value.  Their 401(k)’s are still down.  Jobs are still a big problem, and contrary to what appears as the officially published unemployment rate, things arent as good as the press wants everyone to believe.  There is once again a very serious disconnect between the bedfellows of Washington & Wall Street and the poor folks on main street.

I am not a census-taker.  My last name isnt Gallop.  But I do have eyes and ears, and I continually ask the question to many individuals, business owners, and just about everyone I come into contact with:  “do you feel richer, poorer, or what?”  “How do you feel now compared to four years ago?”  “are you more or less hopeful about your future than you were last year?   the year before?”.

The good news is that most Americans do believe that the worst of the financial hurricane is over.  They are looking around at the devastation it has caused in their lives, and now its time for the clean up.  Jobs are at the core of the American Psyche, and until employment improves, the sun may just be shining on the devastation in the wake of the storm. 

Certainly, we have had a glimmer of hope in recent months.  At least it is some improvement over the past couple of years for many.  But let’s be cognizant of the enormous debt we face, the Obama’s insistence on spending this country into oblivion, and the fact that any instability right now– whether it be a bursting of the stock market bubble, a financial crisis looming in a foreign country, steep inflation in cost of living (which is already underway if you look at prices at the pump, groceries and clothing), a war that develops (North Korea, the Middle East), and we are right back in a fix.  The only problem now is that people are just financially drained from trying to survive for the past two years. 

Banks’ balance sheets, in my opinion, are still not reflecting a ton of debt that is either in default or at risk for default.  Again, my opinion is not a scientific study, but what I see is some glimmer of hope amidst a real clean up mess.  The responses I get suggest the following among the “main-streeters”:

“THINGS ARE BOOMING”:                                                                virtually nil

“I’M SURVIVING”:                                                                                45%

“MY SITUATION IS STILL DETERIORATING                           35%

“I AM IN A CRISIS”                                                                               20% 

The concern I have with the numbers above from my independent study is this:  My offices is in a relatively upwardly mobile income area, and consists of many families, professionals, and business owners.  I would classify the study population as mostly middle to upper middle class families.  It exemplifies, and truly makes me wonder what results would occur if the study was taken involving all walks of life.  Over half of the people interviewed were not making any forward progress, and just still trying to stem the flow of blood.

When you really peel this proverbial “onion”, there are still a lot of layers to it all.  I sure hope we dont find a worm in the middle.  What I do know is that people are still concerned about jobs.  For those fortunate enough to have found jobs, there are many out there that are working for 1/2 to 2/3 of their former income.  Two-earner households are still living on one paycheck. 

It’s about the jobs, Mr. Obama.  You discussed the “jobs” problem, but offered no clear direction in your speech.  All the rosiness of the future you painted in your speech doesnt mean a hill of beans if people cant support their families.  All the clean air in the world doesnt feed the people.  Dont spend money on dumb stuff that no ordinary Americans care about.  Lower taxes, give small business a real chance to recover, and just get out of our way.  We are Americans, and we will survive.

Reality Check: There’s no “I” in Bankruptcy
The fact is that filing for Chapter 7 Bankruptcy is less about the person and more about the process. Let me say it a different way- there is no “I” in Chapter 7 Bankruptcy. Here are some examples of opening statements that have no relevance in the realm of personal bankruptcy.
1) “I want to…..”
2) “I think that ….”
3) “I feel that….”
4) “I don’t agree ….”
As a culture, Americans have become accustomed to services or items centered on their personal desires. Easy example? I-pod- the music and media that you want, when you want it, in the size that you prefer with lots of accessories to customize the product even more to each individual’s preferences. In the arena of bankruptcy, your personal opinions, preferences and beliefs have very little relevance or impact on the process at hand. And speaking from experience, clinging to those opinions, preferences and belief systems can escalate your financial troubles from bad to worse. Just because you think that the antique car you inherited from your Uncle Bob is exempt from personal property because it was a gift doesn’t necessarily make it so. Failure to list any asset can result in your petition for bankruptcy protection being rejected by the bankruptcy trustee, expose you to implications of perjury, and waste precious time and money that are hard to come by these days.
Here is another real life example. “I want to file for bankruptcy.” Just because you want to file to have your debts discharged and start over fresh, doesn’t mean that you can. There is a detailed test called the “means test” which will determine if you are eligible to file for bankruptcy. That’s right folks, just like you have to pass a credit check to apply for a mortgage or credit card, you also have to pass the “means test” to be eligible to file for bankruptcy. So regardless of what you think or your friends all tell you, there are certain criteria you must satisfy in order to file for bankruptcy. In many cases, our clients pass the means test and the bankruptcy makes financial sense, so we proceed. In other cases, we have to explore different avenues. With the last round of bankruptcy code overhauls, there are lots of things to consider.
The economy continues to creep along at an alarmingly slow rate, forcing many Americans into financial crisis. My advice to anyone who has given even a passing thought about filing bankruptcy. Get the facts from a licensed attorney or legitimate non-profit agency. Many bankruptcy attorneys offer complimentary consultations, verify the credentials of the firm or attorney with the NC State Bar Association and the Better Business Bureau, then take advantage of this opportunity to find out if bankruptcy is a viable option for your personal situation. DO NOT employ any debt settlement firms until you get advice. There has been more fraud than it’s worth in dealing with out of state debt settlement companies that promise the moon and the stars.
Sometimes in life, there are policies and processes bigger than us. Unfortunately, bankruptcy is one of them and legal guidance will significantly increase the likelihood of successfully navigating through the process. Make sure you get advice from a licensed attorney on whether you can file, whether you should file, or whether there are better options out there based on your own unique set of circumstances. A well-rounded professional may have some fresh ideas and good insight. Resolving the financial woes you are facing is a cooperative process. Fully disclose everything to your attorney. Participate and listen to the recommendations, and don’t commit anything to your creditors until you have a roadmap in place—then simply stick to the strategy.

Just one letter can mask the truth as evidenced in the title of this article. Home Loan Modification has really turned out to be “modi-fiction”, a manufactured term that has very little basis in truth. If you take the “n” out of declining unemployment and substitute “mb” you will have the truth; unemployment is climbing and growing even as you read this article. Regardless of how many presidential press conferences (aka Story Time with Obama) are conducted- the facts still remain the same. Americans are unemployed, losing their homes and getting lost in a sea of double speak and confusing policy.
Fact #1- Of all of the Americans that should qualify for home loan modification, only 11% of those individuals actually do receive financial relief in the form of reduction in interest rates or principal. Many Americans get lost in the application and review process which can take up to 9 months. How many individuals in financial crisis have up to 9 months of liquid assets to stay afloat during this wait? God forbid that your employment status should change during the waiting period. If your application doesn’t immediately enter the Twilight Zone, expect to go back to the end of the line and start the process over.
Fact #2- It is extremely difficult to borrow money today, in some cases impossible as certain loan programs have either gone completely into extinction or as so limited that 1 out of 20 million people could qualify for them. Stated income programs previously allowed potential homeowners to simply “state” rather than prove their income with tax returns- this method was most often used by self employed individuals (1099). Of course there was a cost for this act of good faith, typically a higher interest rate. Today, if you are self employed or an independent contractor, you are more likely to grow wings and fly than to qualify to successfully apply for a mortgage. You would have to submit the previous 2 years of tax returns which demonstrate enough “reported” income to qualify for the mortgage.
Fact #3- Refinancing your current mortgage has about the same success rate as trying to win the lottery. Do not be fooled by the stories out there of homeowners refinancing their mortgages and saving themselves thousands of dollars. You probably do not know anyone who has done so and neither do I. Ask the next ten people that cross you path, they won’t be able to name anyone either. The truth is since the housing bubble burst, most homes are worth significantly less than what is owed on then. Plus the banks will no longer lend 100% of appraised value, so unless you have 50% or more cash equity in your home, refinancing is not an option. Save the $399 application/ appraisal fee that the lender charges before telling you that they cannot refinance your home. I can personally name 6 people off the top of my head who have wasted the $399- you probably can as well.
Fact #4- Unemployment figures for the last 6 months have been watered down and misrepresented due to the massive wave of hiring for the US Census. This temporary assignment will end soon and thousands of Americans will re-enter the ranks of unemployment, driving the figures back up. If there are 6 degrees of separation between you and any given person in America, and neither of us nor the people we know can think of a single business that is hiring, then logically we can conclude that there is not a big wave of hiring happening anytime soon.
Now that you have removed the rose colored glasses and taken a good hard look at reality, it is time to take action. Do not bury your head in the sand and hope that things will get better or take a swim down the river of denial and pretend that everything is fine. If you are in financial crisis or facing mounting credit card debt, everything is not fine and your situation can go from bad to worse quickly if you ignore it. The only way your financial situation will get better is if you take action and get help. Seek out a licensed bankruptcy/ debt settlement attorney or a legitimate non-profit agency to help you get back on the path to financial wellness and stability.

Remember when it was encouraged to borrow more and acquire additional credit cards? Consumers were told that having credit card debt was actually a “plus” as the monthly payments they made demonstrated the willingness to pay as well as established a history of responsible, timeliness. Almost everyone was approved for some type of extended credit by which they could indulge themselves with purchases outside of their immediate financial means. When individuals exceeded their credit limits, typically a simple phone call was all that was required to have the issue resolved and the limit increased. Sometimes, the credit card company would automatically increase the limit as a “courtesy” to the client. Other courtesies extended by credit card companies to their card holders included “skip a payment” coupons and special checks to make use of their credit lines with retailers or service suppliers that did not accept credit cards.
Just like the tech bubble and the housing bubble, the unlimited credit bubble has burst. Suddenly, consumers are feeling the pain of getting too close to their credit card limits as well as the burn of owing to Citibank, Chase, Capital One, Bank of America, American Express, etc, etc, etc….. Debt to Income formulas have overrun the credit card landscape and the results for consumers include massive interest rate increases, over the limit fees, jumps in minimum payments, sudden drop in credit limits and drastic dings to their credit score. Here is an example to illustrate what is happening to many Americans.
Meet Jane. Jane has 7 credit cards with balances on all of them. Jane has been making the minimum payments plus extra whenever she can. Jane’s salary is $50,000 a year, plus bonus, yet her credit card companies have extended to her lines of credit totaling $98,000. On a few of the cards Jane is very close to the credit limit. Jane has two credit cards with several thousand available in credit that she keeps as her “emergency” credit cards. Due to the increased cost of living, Jane has used her credit cards more heavily for daily expenses than in past years.
Jane was planning on paying off some of her credit cards when she receives her annual bonus. Unfortunately for Jane, she learns at a town hall meeting that due to the weak economy and drop in production, there will be no annual bonuses as well as no merit or cost of living salary increases for 2010. Jane is disappointed but tries to be positive and is thankful that she still has a job while so many Americans are unemployed.
Then Jane’s car breaks down. After dealing with the ordeal of getting the car towed to the dealership, calling her employer to let them know she will not be in until later, Jane is presented with a large repair bill. She attempts to pay using her “emergency” credit cards only to discover that the credit limits have been decreased. As Jane must have a can to get back to work, she is forced to write a check. This unexpected expense now puts Jane in the situation where she does not have enough cash to pay her mortgage on time this month and cannot make the minimum payments on her credit cards.
Next month, Jane opens her mail to find that the several credit cards have escalated the interest on her cards to 30% and applied several penalty fees, her minimum payments have doubled in some cases. Jane calls customer service to find out why her credit limits were decreased as well as why her interest rates were increased. She is told that her debt to income level is too high. Jane tries her best to make the new minimum payments, cut back on spending and look for a part time job to supplement her income. Due to the increased interest rates, her debt continues to grow faster and faster, her monthly payments make no difference. Jane attempts to refinance her home but is told that her debt is too high and her credit score has been severely impacted by the late payments and level of debt.
Does Jane’s story ring any bells for you? Many Americans are currently walking in Jane’s shoes and frustrated by the new rules and realities. Clearly, this is not a situation that an individual can solve by themselves. If you are facing similar financial hardship due to reduction in income and soaring unsecured debt, seek the guidance of a licensed attorney or legitimate non-profit credit counselor so that you can change your current path and get back on track towards financial wellness.

I consider myself one of the “small people” that the leader of BP condescended to “ care about”. Raised with 6 other children on a teacher’s income, as a boy, I trimmed hedges and mowed lawns to buy tennis shoes. Later on, I worked fulltime, attended business school and law school in the evenings, and repaired everything from cars to dishwashers with whatever I could find in my garage. So from one small person to another, here is my best advice.
Don’t Wait!!
The cost of waiting is too high. There have been over 50,000 payment claims filed and only 26,500 paid. Passively waiting is the kiss of death and can thrust you and your family into financial crisis, spiraling credit card debt and even bankruptcy. Don’t wait for the date to come, start following up ahead of time and keep detailed records of calls, names, dates, etc.. Consult an Expert.
Not a relative or a friend of a neighbor who once knew someone in a similar situation 20 years ago. Seek out a licensed and credentialed resource (see below) that is knowledgeable about the current legislation and changes to direct you & establish a plan of action. Once the plan is in place, follow it. Ask questions when you are unclear and ask for everything in writing.

Below are the websites and contact numbers for the Bar Associations and some suggested guides for Gulf Disaster Victims seeking Legal Assistance.

Call the Florida Bar toll free
Call the Louisiana Bar toll free
Call the Mississippi Bar

Helpful Guides:

Mass Disaster: A Victim’s Guide
A Consumer Guide to Client Rights
Guide to Find Lawyer

Remember to verify the lawyer’s credentials before agreeing to representation or handing over any payments. Look for address, Bar number, area of expertise & eligibility to practice law in that state.

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Debt Law Help Logo Joseph M. Bochicchio, PLLC

Debt Settlement and Bankruptcy Lawyers

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