Preparing For Bankruptcy

by Adrian Lapas, Eastern North Carolina Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/preparing-for-bankruptcy/

When you are considering a trip, usually, you make substantial preparations in anticipation of that trip. You make travel arrangements; you make sure you have a place to stay; you make reservations for any activities in which you wish to participate. You will often make significant plans and preparations for any “big” event. Bankruptcy is no different. It is a significant life event that demands some thought and preparation before you embark on it.

In talking with potential bankruptcy clients, it seems that a lot of them wait until the last minute before contacting a bankruptcy lawyer to find out how bankruptcy may help them. While visiting a bankruptcy lawyer most likely does not rank high on most people’s “bucket list,” if you are struggling financially, it most likely makes sense to determine if and how bankruptcy can help you sooner rather than later.

So, how can “preparing” for bankruptcy help? First, you will need to have the fees for the lawyer and for the court available. For now, for a chapter 7 filing, just the filing fee is $306.00. Additionally, before you file, you must complete a consumer credit counseling session and get the certification that must be filed with the court. If you “fail to plan” for your bankruptcy filing by finding out what you need ahead of time, when your car is on the verge of getting repo’d, you may not have the time and/or money to retain a bankruptcy lawyer.

Second, you can carefully go over your income and expenses and see where the trouble lies. Certainly a bankruptcy lawyer can help you identify the problem (with appropriate information) but you also need to know how you got into this financial mess. Some problems are easy to identify–temporary loss of income; extraordinary medical bills; overspending for a bit, etc. Bankruptcy can assist in overcoming those past problems but you need to be aware of the problem so that you can avoid it in the future. Bankruptcy is designed to be a “fresh start.” You can greatly assist in obtaining that “fresh start” by breaking or modifying some of the habits that perhaps got you here in the first place.

Third, make sure you know who you owe and how much. Find out if there is any collateral associated with the debts and gather up loan documents. Your lawyer will need this but, more importantly, you need to know your own financial picture. Credit reports are freely available and can be a big help. Also, if lawsuits or foreclosures have been filed against you, make sure you have that paperwork–all of it! It is important!

Finally, change your mindset. In dealing with individuals facing financial problems, it is often much more difficult instead of dealing with distressed businesses. That is because a business looks at assets and liabilities and can make a rational decision as to whether keeping an asset is worth the corresponding liability. Understandably, people are attached to their “things.” But, after all, they are just “things” and you have to consider carefully whether retaining a “thing” is worth the potential stress and headache. As an example, if you suffered a decrease in income and you have two relatively late model cars. No one wants to give up one or two cars but sometimes it is better to surrender a vehicle or two in order to keep your house (if that is important to you). There will be some emotional attachment to some “things” but it is imperative that you do this. Determining what is important to you is important for your bankruptcy lawyer in setting achievable goals for your bankruptcy filing.

Finally, do some research. There is a lot of information about bankruptcy that is freely available. However, you should exercise extreme caution in considering the information. Not that the information is inaccurate (some info may be outdated or simply inapplicable) but it takes an experienced profession to know what is appropriate and what is not. But, by familiarizing yourself with some basic bankruptcy information, you will be in a better position to appreciate and assist your bankruptcy lawyer in setting realistic and achievable goals.

After all, the real goal of a bankruptcy filing is a “fresh start.”

Rich, Famous & In Foreclosure (Nickolas Cage, etc.)

Site: http://money.msn.com/home-loans/rich-famous-and-in-foreclosure-bankrate.aspx

Rich, famous . . . and in foreclosureStar status won't pay the mortgage -- and some celebrities have seen the foreclosure epidemic firsthand. Here are 5 who lost their homes.

Related topics: homes, home financing, foreclosure, property taxes, luxury

How does Nicolas Cage get behind on his mortgage payments? The same way other rich and famous people do.

"They've stretched themselves higher than they probably should have," says John Anderson, owner of Twin Oaks Realty in Minneapolis and a National Association of Realtors expert in foreclosures. Some couldn't keep up when the rates on their adjustable rate mortgages shot up, Anderson says. Price drops at the high end of the market were so steep that a sale wouldn't cover the debt. In other words, high-end homeowners face the same problems that plague the rest of us.




Buy a foreclosed home

Find the best home mortgage rates
Here are five of the biggest names on the of list homeowners falling to foreclosure. We've included a bit of info about the current markets where these stars once lived. -- you know, in case you'd like to hunt for a foreclosure deal in one of those tony neighborhoods.

Nicolas Cage
The star: He's an Academy Award-winning actor (for "Leaving Las Vegas"), nephew of multiple-Oscar-winning filmmaker Francis Ford Coppola and the former son-in-law of Elvis (he was briefly married to Lisa Presley).

The house: Make that "houses." In November 2009, Cage lost two New Orleans homes -- one in the French Quarter, the other in the Garden District -- worth a combined $6.8 million, according to a CNNMoney.com report. Cage was behind $5.5 million in mortgage payments, and he owed $151,730 in property taxes to the city of New Orleans. Regions Bank paid $4.5 million for the properties.

MSN Real Estate: Need a zero-down mortgage? Look outside the city
The market: One in 720 homes in Orleans Parish had foreclosure filings in November 2010, according to RealtyTrac. The average foreclosure sales price in the city was close to $110,000.


Erin Moran
The star: She's best known as Richie Cunningham's freckle-faced little sister Joanie on the 1970s sitcom "Happy Days" and co-star of the spinoff "Joanie Loves Chachi."

The house: Los Angeles County court records posted on the entertainment website TMZ.com show that Moran, also known by her married name Erin Fleishmann, owed $315,930 on the Palmdale, Calif., home. The Bank of New York Mellon Trust bought the house at auction for $291,150 in July 2010. According to TMZ, Moran stayed in the home after losing it to the bank and was evicted.

The market: Palmdale, just north of Los Angeles, posted foreclosure filings in November 2010 on one in 80 housing units. The average foreclosure sales price was around $154,000.


Lisa Wu-Hartwell
The star: Viewers of Bravo's "Real Housewives of Atlanta," may remember Wu-Hartwell from the first season as one of the network's touted "six fabulous women from Atlanta's social elite." Hubby Edgerton Hartwell, the former Oakland Raiders linebacker, made frequent appearances.

The house: According to court records posted on TMZ.com, the couple borrowed $2.9 million to buy their suburban mansion in June 2007. Just more than two years later, Bank of America paid $1.9 million for the house at a foreclosure sale at the Forsyth County, Ga., courthouse, after the Hartwells defaulted on their adjustable-rate mortgage.

Is it time to refinance?
The market: RealtyTrac reports there were foreclosure filings on one in 248 housing units in Forsyth County in November 2010. The average foreclosure sales price was around $210,000.


Lenny Dykstra
The star: Nicknamed "Nails," the former Major League Baseball pro was an outfielder for the Mets and the Phillies during the late 1980s and early 1990s. After filing for Chapter 11 bankruptcy in 2009, Dykstra -- in a move many found ironic -- started an online financial advisory firm in 2010 called Nails Investments.

The house: Dykstra bought the 6.5-acre property in Thousand Oaks, Calif., from hockey pro Wayne Gretzky for $18.5 million in 2007, according to the Los Angeles Times. He lost the house in a Ventura County foreclosure sale in November 2010 to a winning bid of $760,712, the newspaper reported. Dykstra owed about $12 million to JPMorgan Chase.

MSN Real Estate: Find a foreclosure
The market: One in 201 homes in Ventura County received a foreclosure filing in November 2010, according to RealtyTrac. The average foreclosure sales price was in the neighborhood of $382,000.


Veronica Hearst
The star: The name is Hearst's claim to fame. She's the widow of newspaper heir Randolph Hearst and stepmother of Patricia Hearst, who was kidnapped by left-wing guerrillas in 1974.

The house: Located Manalapan, Fla., near Palm Beach, the Villa Venezia was originally built for the great-grandson of railroad tycoon Cornelius Vanderbilt. According to The Palm Beach Post, the 52-room, 28,000-square-foot mansion sold to New Stream Capital for $22 million at a Palm Beach County auction in February 2008.




The market: One in 211 housing units in Palm Beach County received a foreclosure filing in November 2010, reports RealtyTrac. The average foreclosure sales price was about $137,000.

How to Avoid Bankruptcy with Debt Settlement, Debt Negotiation or Debt Relief

AVOID BANKRUPTCY WITH DEBT SETTLEMENT, DEBT NEGOTIATION, OR DEBT RELIEF

Debt settlement, debt negotiation and debt relief all mean the same thing. It is a process by which the debtor negotiates an agreement to pay a portion of the debt owed in exchange for relief from the remainder of the debt. If a credit card company or other creditor agrees to a debt settlement the rest of the debt is eliminated forever, avoiding Bankruptcy.

Most consumers have tried to negotiate a settlement on their own but have failed. Choosing to retain the San Diego Bankruptcy Law Firm to negotiate your debt relief can help protect your rights and will generally result in a better offer from the credit companies who know that they will receive nothing if you file for Bankruptcy.

The San Diego Bankruptcy Law Firm can you help you avoid bankruptcy and attempt to negotiate a debt settlement on your behalf.
What is Debt Settlement, Debt Negotiation or Debt Relief?

Debt Settlement, Debt Negotiation and Debt Relief all refer to the same thing it is the process of negotiation with creditors by a professional agency or law firm which results in having to payback only a percentage of the debt you owe while wiping out the rest of your debt.

How does a Debt Negotiation program work?

The San Diego Bankruptcy Law Firm and its team of attorneys will negotiate with your creditors. Typically, if a creditor cannot collect on the debt, they write it off as a loss on their taxes; however they may still pursue a law suit to recover their money. Therefore, it is in their best interest to negotiate or settle the debt for a fraction of what you owe, rather than receive nothing. Working with the San Diego Bankruptcy Law Firm can help protect your rights and in the event that a lawsuit is threatened or filed, we can help you pursue Bankruptcy as a last resort. Creditors may reach agreements to settle debt in order to recover a portion of monies they often would not of have been able to collect.

Will Debt Relief affect my credit?

This depends on your current situation. Typically, you must stop making your payments so that the Credit Card Company will negotiate your debt. Your credit may be adversely affected due to non-payment of existing debt that you wish to settle. In the process of reaching an agreement with your creditors, many items can be negotiated such as removing negative remarks. This depends on the creditor. However, once your Credit Card Debt has been settled you can begin to rebuild your credit.

How Much does it Cost?

Every case is different and the cost will depend upon how much you owe and how much we are able to save you. Contact us today to see if you qualify for debt settlement. We can be reached 24 hours a day at 619-260-1800 or 877-GOBK619.

Kerry Steigerwalt's Pacific Law Center Closing---San Diego Bankruptcy Law Firm Will Help Abandoned Clients

Kerry Steigerwalt's Pacific Law Center appears to be closing down. Bankruptcy Attorneys at the San Diego Bankruptcy Law Firm will take abandoned clients for what they owe to Pacific Law Center. The San Diego Bankruptcy Law Firm is committed to our community and to our clients. The last thing someone facing bankruptcy needs is to lose their money because their law firm went out of business. Contact us at www.gobksandiego.com or call us at 619-260-1800.

UNION TRIBUNE ARTICLE:

http://www.signonsandiego.com/news/2010/jun/30/pacific-law-center-winding-down-not-adding-clients/

Pacific Law Center 'winding down,' not adding clients
By Dana Littlefield, UNION-TRIBUNE STAFF WRITER

Wednesday, June 30, 2010 at 9:37 p.m.

Kerry Steigerwalt’s Pacific Law Center, the highly visible firm with its ubiquitous television ads, has stopped taking new clients and is “winding down” its business, the firm’s owner said Wednesday.

Steigerwalt, a well-known San Diego defense attorney who bought a majority interest in the firm in 2008, said that he broke the news to his staff during a morning meeting at the University City-based firm and advised them to focus on current cases. He said the economic downturn and the company’s business model of “little or no money down” contributed to the firm’s money woes.

“Our model is predicated on people making payments,” Steigerwalt said in a telephone interview. “Fewer and fewer people have money to hire us, and those that do are not paying. It just became a managerial nightmare.”

Steigerwalt said the firm, which has offices in San Diego, Chula Vista and Escondido, isn’t going out of business. Despite some staff reductions, he said, the lawyers working there are well-equipped to represent existing clients to the fullest.

“At this point in time, I want to take no further cases,” he said. “I want to begin winding down this business.”

The 17 attorneys listed on the firm’s website represent hundreds of clients in criminal cases, bankruptcies, loan modifications and personal injury lawsuits. The firm has 107 employees after staff cuts in February,

The lawyers, including Steigerwalt, are featured in the law center’s frequently running television commercials in which they promote aggressive representation for “little or no money down” and affordable payment plans. Testimonials from clients also are used in the ads.

Steigerwalt said he called local television stations Wednesday and told them to stop running the ads.

Steigerwalt bought 51 percent of Pacific Law Center in March 2008. Former managing partner, Robert Arentz, had a 49 percent stake. Steigerwalt later became sole owner.

Before he bought a stake in Pacific Law Center, the firm had been dogged by complaints from clients and allegations of unethical activity by former lawyers. The problems continued to some degree after Steigerwalt came on board. Clients had filed lawsuits against the firm, as did a former attorney who claimed that the sale to Steigerwalt was a fraud.

Steigerwalt said he believes he successfully turned the firm around and that its old reputation was not a factor in the decision to stop taking new clients.

Kerry Armstrong, a defense lawyer who worked for Steigerwalt for 11 years but did not work at Pacific Law Center, said Wednesday’s announcement was inevitable.

“I knew it was coming; I just didn’t know when,” Armstrong said.

Armstrong said the firm was hamstrung by its business model and a poor reputation that changed little despite Steigerwalt’s efforts.

“I think Kerry really wanted to change it when he went in,” Armstrong said. “He just didn’t put the right people in place to do it for him.”

Union Trib: Hefty tax bill hits those who lost home...short sale or foreclosure

Hefty tax bill may hit those who lost home
By Roger Showley, UNION-TRIBUNE STAFF WRITER

Wednesday, March 3, 2010 at 12:03 a.m.

LINK: http://www.signonsandiego.com/news/2010/mar/03/hefty-tax-bill-may-hit-those-who-lost-home/?source=patrick.net

Charlie Neuman / UNION-TRIBUNE

Phyllis and Jack Roth of Fletcher Hills are facing a California tax bill of up to $20,000 because, they have found, the state treats short-sales differently than the IRS.
San Diegans who have lost their homes through foreclosure or short-sales thought they had emerged from the dark times and could start rebuilding their lives.

Then the state tax man came calling.

With less than six weeks before taxes are due, an estimated 16,000 former homeowners statewide will owe $15 million in extra income taxes this year and $29 million through 2012.

The tax applies to what is called the “cancellation of debt” that occurs when property owners lose their homes through foreclosure or arrange a short-sale in which they sell for less than the mortgage balance. The lender sends them a form itemizing the forgiven debt, and the amount is subject to income tax.

Congress exempted most homeowners from the extra federal tax through 2012, and the state followed suit for 2007 and 2008 but did not extend the provision last year. The state Assembly may vote tomorrow on a bill to repeal the tax, but Gov. Arnold Schwarzenegger vetoed such a bill last year over unrelated provisions.

“They’re probably stuck,” San Diego tax attorney Bob Kevane said of former homeowners facing the tax. “The biggest way around it is if you’re insolvent.”

Brad Nemeth, another tax attorney, said he doubts the tax will be eliminated.

“The state of California is seriously upside down financially, and I think the governor will probably veto it again,” Nemeth said.

H.D. Palmer, a spokesman for the Department of Finance, said Schwarzenegger remains opposed to the bill in its present form but has not announced whether he will veto it again. Other versions of the tax repeal are in the hopper and could be passed next month, legislators’ analysts said.

Failure to halt the tax could cost Jack and Phyllis Roth of Fletcher Hills as much as $20,000 in state income taxes this year — they paid $781 last year — because of the home they sold short in Flinn Springs in November. They bought it in 2004 for $545,000, invested $50,000 in improvements, and then saw its value fall by one-third before they sold it for $410,000. The result was about $190,000 in net loss that was forgiven by the Roths’ lender.

Phyllis Roth, 63, a tax preparer, said she did not realize until recently that the state would treat the short-sale differently than the Internal Revenue Service would. She estimates her state taxes at $15,000 to $20,000.

“I didn’t call anybody,” she said. “I was looking online and didn’t see anything. That’s what happens when you rely on yourself.”

The state Franchise Tax Board has received an increasing number of calls from former homeowners who are discovering the giant tax bills they face, said spokeswoman Denise Azimi. Azimi said the former homeowners can work out a payment schedule, though the state charges 4 percent interest on such stretched-out payments.

If the tax is repealed eventually, the taxpayers could seek a refund, but for now, they have to pay what is due by April 15 or face a penalty.

Not all foreclosures and short-sales are subject to the tax, experts said.

In California, most home buyers get mortgages involving a “nonrecourse” loan — meaning that if the property is foreclosed, the lender has no recourse for recovering lost money except by selling the property itself. Lenders cannot go after the owners’ assets to make up the difference, and no tax is due. These rules apply to principal residences only.

However, when owners refinance or take out a second mortgage or home equity line of credit — as happened often during the housing boom — those loans are written as recourse loans and lenders can seek repayment from the owners’ other resources. Sometimes lenders agree to waive the lost amount, but under current state law, that amount is taxable for homes sold since Jan. 1, 2009.

“It’s one of those little land mines waiting to jump up on people,” Nemeth said.

Taxes also are not due if owners declare insolvency or bankruptcy, the lawyers said. For young homeowners whose main asset was their home, it’s likely they could fall under this provision. For others, the valuation of assets becomes a factor in determining solvency.

“Sometimes if they have other real estate, we try and value the stuff realistically, so that they have as little impact as possible,” Kevane said.

For the Roths, who continue to own a previous home and have other assets, their nearly $200,000 in losses does not cancel out their other holdings. The couple said they normally operate conservatively and only bought the home, which they lived in while their son continued to live in their first house, so they could sell it at a profit and pad their retirement accounts.

“If we have to pay it, we’ll pay it,” Phyllis Roth said of the taxes. “It’s less money to retire on, but it’s not the end of the world.”

Back in Sacramento, the proposal to waive the cancellation of debt tax has passed the Senate and awaits an Assembly vote. Its fate is wrapped up in a larger bill, SB8X-32, by Sen. Lois Wolk, D-Davis, which would bring other state tax provisions into compliance with federal law.

One of those, which prompted Schwarzenegger’s veto last year, relates to “erroneous reporting” of tax liability, by which some large taxpayers seek to avoid penalties for under-reporting of income by overestimating taxes due. Federal law charges a penalty for overestimating without a reasonable explanation, and the state bill would adopt similar penalties.

Wolk, who chairs the Senate Revenue and Taxation Committee, said it was appropriate to group all tax conformance measures into one bill. But if her bill is vetoed again, she indicated she would act to get the cancellation of debt tax repealed.

“We’re certainly not going to allow homeowners to have to pay significantly more tax when they’ve had to relinquish their homes through short-sales (and foreclosures),” Wolk said.

Roger Showley: (619) 293-1286; roger.showley@uniontrib.com

24% of residential homes upside down according to Reuters and CoreLogic

CoreLogic: 24% of residential properties upside down
Feb 23, 2010 17:58 EST
homeownership rate | negative equity
You don’t keep paying for something that you own.

http://blogs.reuters.com/rolfe-winkler/2010/02/23/corelogic-24-of-residential-properties-upside-down/?source=patrick.net

From FirstAmerican Core Logic:

…more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide.

Negative equity means the mortgage balance is higher than the value of the home.

The bulk of underwater properties are concentrated in five states: California, Florida, Nevada, Arizona and Michigan. Nevada leads the way in terms of most homes with negative equity at a whopping 70 percent.

“Home-ownership” is badly defined by, for instance, the Census Bureau, which considers all “owner-occupied housing units” in its calculation of the home-ownership rate.

But the rate would be far lower if one simply calculated the amount of equity that Americans have in their homes. Since this is the portion of real estate for which they don’t pay anything, it is the only portion that is truly “owned.”

Subtract folks who owe more on their homes than they are worth and the home-ownership rate drops from 67% to 43%.

This isn’t merely academic. Having equity in their homes is a big reason homeowners keep paying their mortgage, which is necessary for banks to stay solvent.

IF YOU ARE HAVING DIFFICULTY KEEPING UP WITH YOUR BILLS, OR YOU ARE FACING FORECLOSURE, THE SAN DIEGO BANKRUPTCY LAW FIRM CAN HELP. VISIT US AT WWW.GOBKSANDIEGO.COM