Reuters reported today that the number of U.S. businesses and consumers filing for bankruptcy fell 14 percent in the first half of 2012 and could end the year at the lowest level since before the 2008 financial crisis, according to data released by Epiq Systems.
New bankruptcy filings fell to 632,130 in the first six months of the year compared to the same period last year, according to Epiq Systems Inc, which manages documents and claims for companies in bankruptcy.
The number of businesses filing for bankruptcy dropped 22 percent to 30,946 and the number of consumers seeking court protection from creditors fell 13 percent to 601,184.
"We ...
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Credit After Bankruptcy – Now Easier That Ever
It’s looking like 2005 all over again for credit cards....
The New York Times reported this week that credit card solicitations, particularly for those individuals who have tarnished credit or have previously filed bankruptcy, rose substantially during the fourth quarter of 2011. Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year earlier, according to Equifax’s credit trends report released in March. These borrowers accounted for 23 percent of new auto loans in the fourth quarter of 2011, up from 17 percent in the same period of 2009, Experian, a credit ...
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Housing Crisis and Student Loan Crisis Are Joined At the Hip
Over the past few weeks, I have read and noted a number of blogs and other commentaries from respected economists and authors touting the growing concern about the student loan crisis as the outstanding balances on student loans approach the $1 trillion mark.
Many pundits have commented about the value of college education relative to its potential return of investment. Some have noted the strain it has caused, both emotionally and financially, on students who have obtained degrees in the “liberal arts” and have been forced to accept positions outside of their field of study at salary levels which may not even cover the servicing costs of ...
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Do You Want Bank of America As Your Landlord?
Bank of America has announced that it is rolling out a test program in three states (including New York) in which the bank will accept a deed-in-lieu of foreclosure from homeowners in foreclosure and then rent the properties back to the homeowners for an unspecified period of time.
For those homeowners who have tried to modify, have been unable to do so, and remain too stubborn to file for bankruptcy, this may be an option - but it may come with strings attached.
First, BOA has not discussed anything about the tax consequences of the transaction. Even if a homeowner “surrenders” a property bank to a lender, the lender still has the right ...
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Details of Mortgage Settlement Still Unclear – Don’t Jump For Joy Just Yet
After months of wrangling, the long-awaited foreclosure settlement between the government and the banks appears to be at hand.
A $26 billion settlement was announced Thursday morning between the federal government, state attorneys general and the five largest banks in the mortgage market: Ally Financial (GMAC), Bank of America, Wells Fargo, JP Morgan and Citigroup.
While many of the details still have to worked out, the major points are fairly clear:
(a) The settlement will only impact mortgages that were held by the five banks. If a loan was sold to Fannie or Freddie it may not be part of the pool that may be eligible to share in the ...
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Tax Refunds and Chapter 7 Bankruptcy – Nothing Has Changed For Homeowners With Equity
In bankruptcy, you are allowed to protect various assets, such as cash or cash equivalent assets such as the right to receive a tax refund. This is called exempt property or exemptions.
When the exemption laws were overhauled in New York in January 2011, it proved to be a major benefit to homeowners and renters alike. Homeowners are now allowed to protect up to $150,000.00 in equity in their primary residence. Renters are now allowed to protect up to approximately $12,000.00 in any personal property, including tax refunds.
Despite the above benefits, there has always been, and still remains, a tradeoff for homeowners. If a homeowner ...
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New Means Test Housing Allowances Levels Playing Field for Long Island Renters
Most individuals or couples filing for protection under either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy are required to meet certain income eligibility requirements under the “Means Test.”
Under the Means Test, you must first determine if your average monthly income for the last six months is below the median income for your state, based upon the size of your household.
If your average monthly income for the past six months is below the median income in New York, you have passed the first hurdle, and so long as you meet the other eligibility requirements, you can file for protection under Chapter 7 Bankruptcy.
If your average monthly ...
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It May Make Sense to Get Over It – Mr. Obama Is Not Going To Save Your Home…
Earlier today, I was listening to a business report on the radio in which an economist actually recommended that homeowners who purchased a home in the mid-2000's with little or no money down, who are now at least 12 months behind on their mortgage and have been unable to modify their mortgage because of insufficient income, actually file for Chapter 7 bankruptcy and GET IT OVER WITH - MR. OBAMA IS NOT GOING TO SAVE YOUR HOME!!!
Unfortunately, this mantra is going to going to get louder in the coming months as (a) banks may have already modified the vast majority of those who can truly afford to make timely mortgage payments, and (b) State ...
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Are Mortgage Lenders Encouraging Homeowners to File Bankruptcy?
I know this sounds completely bizarre, but it may start happening more frequently in the near future.
In the past 30 days, I have encountered three new clients who have been "informally" advised by their mortgage lenders to file bankruptcy to deal with their unsecured debt PRIOR to completing a mortgage modification.
Lenders, in addition to the 31% rule (previously discussed in another post), are now taking a closer look at a homeowner’s total debt ratio - also known in the banking business as the “back end number.”.
In the cases I have encountered thus far, each client had a total debt ratio (mortgage payments, auto payments and credit ...
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Parent Guarantees of Student Loans – Love Your Children, But Don’t Sign For Them!
In the recent past, I have seen a trend develop that, even as a parent, I find extremely disturbing - parents seeking bankruptcy protection in mid-life or in preparation for retirement that will remain saddled with their children’s student loan obligations long after they have discharged of their other debts.
Here’s an example: A couple in their early-mid 50's that rent an apartment, with a combined income of in excess of $80,000 per year has $50,000 in credit card debt. In addition, while their child was in college, they co-signed for an additional $50,000 in student loans. Their child, now is his/her late 20's, is having difficulty ...
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