Credit card companies increase rates as holiday season approaches

If only it were just the Christmas tree...

Just in case you thought things weren’t bad enough, the credit card companies are stepping up to make sure you know that things can get worse according to a recent article in the Denver Post.

As holiday season approaches, credit card companies have been raising rates (sometimes double or event triple the previous rate), increasing the monthly minimum payment and lowering credit limits on unsuspecting consumers.  In some instances, credit card companies have sent notices of rate increases using mail designed to look like junk mail to increase the likelihood that consumers won’t notice.

Ironically, this is happening right now because of the Obama Administration’s attempt to curb the abusive practices of credit card companies.  In February 2010, the Credit Card Accountability Responsibility and Disclosure Act of 2009 (or, “Credit CARD” Act for short) will go into effect.  If there was any debate about the need for such a law, the blatant actions of the credit card companies to take full advantage of the remaining window of opportunity makes very clear that the credit card industry does in fact need to be reigned in and that increased protections for consumers are very much in order.

If you’re struggling with too much credit card debt in New York and are in need of legal advice about New York bankruptcy and non-bankruptcy options, please feel free to contact me for a free initial consultation.  I’ve been helping individuals fight back against unscrupulous credit card companies for years, and I’ll make sure you get the benefits to which you’re entitled under the law.

Contact

EMAIL Bruce Weiner
Phone
(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
Fax (718) 625-1966

Go to www.nybankruptcy.net to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.

BAPCPA Man #13: Halloween and Bankruptcy

What does BAPCPA Man dress up for on Halloween?  Read below and find out.

Note: This cartoon is posted on the NYBankruptcyNet site with the express permission of the creators of BAPCPA Man.

Click here to see a larger version of BAPCPA Man #13:  Halloween & Bankruptcy.

If the prospect of filing for bankruptcy in New York is scaring you and you’re looking for an escape from the nightmares, please feel free to contact me for a free initial consultation.  I’ll answer your questions and help you deal with all of your creditor demons.

Go to www.nybankruptcy.net to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.

Are any debts non-dischargeable in a bankruptcy case in New York?

The goal of a bankruptcy case is to get the discharge.  This is true whether your bankruptcy is in Brooklyn, Queens, Manhattan, Long Island or anywhere else in New York or the rest of the U.S.  And it’s the same whether it’s a Chapter 7, Chapter 11 or Chapter 13 bankruptcy.

The discharge is what gives you the “clean slate” or the “fresh start.”  It means you are no longer obligated to pay the unpaid portion of unsecured debts such as credit card debt, and that those creditors are no longer permitted to seek payment from you.

However, there are also certain types of debts that are “non-dischargeable.”  That is, you still have to pay them in full even after your bankruptcy case is complete.  Here’s a list of some of those non-dischargeable debts:

1. Any debts that you failed to include on your list of debts for your bankruptcy filing.

2. Debts resulting from criminal activity (e.g., fines levied by the court) as well as debts resulting from death or injury caused intentionally by you or caused while under the influence of drugs or alcohol.

3. Student Loans.  There’s been discussion in Congress (as I noted in a recent post) of a more lenient standard for discharging student loans.  But until you hear otherwise, you still have to pay them back regardless of any bankruptcy filing.  The only exception is “undue hardship,” with heavy emphasis on hardship.

4. Tax liabilities incurred within the previous 3 years.  And that goes for federal, state and municipal taxes.

5. Debts that were fraudulently incurred.  The classic example is where you max out your credit cards prior to a bankruptcy filing (which I discussed in a previous post) under the mistaken belief that you’ll be able to just wipe away all of that debt once you file.  Fraudulent debts also include any debts you incurred where you lied or misrepresented yourself, e.g., to get a loan, as well as any attempt to pay off taxes (non-dischargeable debt) with a credit card (which would otherwise normally be considered dischargeable debt).

6. Alimony and court-ordered child support.

7. Secured debt, i.e., your mortgage, your car or debt incurred that is backed by collateral.  Technically, these are dischargeable, but you can’t discharge the lien or security interest the creditor has in the collateral.  (“Debts are dischargeable, but liens survive.”)  So for all intent and purpose, you need to pay these back in full or the secured creditor has the right to the collateral (e.g., the house or car) via the bankruptcy process.

On this topic, it’s worth noting that there has been discussion in Congress on a “mortgage cramdown bill” that would, if passed, empower a bankruptcy judge to change the terms of the loan or reduce the principle of the loan as part of the bankruptcy process.  As with student loans, however, until you hear otherwise, assume that mortgages must be paid in full and cannot be discharged in a bankruptcy case.

To learn more about the bankruptcy process, please feel free to contact me for a free initial consultation.  You can get all of your questions answered about what you can keep and what you can’t as well as which of Chapter 7, Chapter 11 or Chapter 13 would be the right option for you.

Go to www.nybankruptcy.net to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.

Should I max out my credit cards before I file for bankruptcy?

Q:  Since all of my debts will be discharged after I file for bankruptcy, should I go ahead and max out my credit cards before I file for bankruptcy in New York?

A:  NO.  DO NOT RUN UP BIG CREDIT CARD BILLS BEFORE YOU FILE FOR BANKRUPTCY IN NEW YORK.

If the bankruptcy judge believes you incurred debts in bad faith, odds are you will be required to pay back those debts.  It’s also possible that your case will simply be dismissed.  Credit cards companies are experienced with these situations and know how to challenge large, non-typical purchases and charges, including cash advances.  In the end, you’ll only make your life more difficult, more complicated and more expensive.

Non-bank lenders and the Consumer Financial Protection Agency

We hear a lot of terms that refer to players in the money lending industry.  Banks, mortgage lenders, credit card companies, subprime lenders, mortgage brokers, etc.

One distinction we don’t hear a lot about, though, is the one between banks and non-bank lenders.  The difference is that banks are subject to much more regulation and oversight, while non-bank lenders are not subject to the same kinds of restrictions.

A recent article (“Real Change:  Turning Up the Heat on Non-Bank Lenders“) by Harvard bankruptcy law professor Elizabeth Warren, who is currently serving as the Chair of the Congressional Oversight Panel created to oversee the banking bailouts, draws attention to the importance of making sure these non-bank lenders are not able to scam consumers by working in the gaps between federal and state regulations.

The issue has arisen in response to President Obama’s recent proposal to create a new Consumer Financial Protection Agency, which is an attempt to right many of the wrongs that led to the current economic crisis we’re facing.  And as Professor Warren points out, the big business lobby is doing everything it can to squash the creation of the CFPA before it can get out of the gate.

That would be a shame as American consumers are in more need of financial protections than ever right now.  Consumers are vulnerable enough as it is in the current economy.  Easy pickings for unscrupulous non-bank lenders…unless we make the effort to stop them.

Stay tuned to this issue as its evolution will likely have an impact on bankruptcy filing rates in the future, in New York and across the U.S.

Read more at: http://www.huffingtonpost.com/elizabeth-warren/real-change-turning-up-th_b_276887.html

Annie Leibovitz avoids mandatory credit counseling in New York

"Say BAPCPA!"

ABC News reports that Annie Leibovitz reached an agreement with her creditors that, at least for now, staves off the need for a bankruptcy filing.

What if Annie Leibovitz had filed for bankruptcy in New York?

Would she have to go through mandatory credit counseling (cost:  $50) as required by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)?  Would she have to sit through a class with the huddled masses that tells her how she could have been a little more fiscally responsible with all of her multi-million dollar homes and valuable photograph collections?

The answer is yes, she would be subject to the mandatory credit counseling requirement.  And it wouldn’t matter if she filed for Chapter 7, Chapter 11 or Chapter 13.

However, she would not have to sit in a class with the huddled masses, because the mandatory credit counseling requirement can be fulfilled by online courses as well as over the phone (unlike, say, traffic school).

Hopefully Ms. Leibovitz will not have to file for bankruptcy.  But if she does, it’s good to know she has a few options.  And if she’s reading this, she’s hopefully a bit relieved to hear that if she did need to take the mandatory credit counseling course, she could do it in the privacy of one of her many homes.

Though in the bigger picture, this hypothetical really just helps demonstrate the inanity of the mandatory credit counseling requirement under BAPCPA.  Is a one-size-fits-all-debtors credit counseling course really the kind of help that someone like Annie Leibovitz needs right now?  Probably not.

If you’re seeking bankruptcy help in New York, please feel free to contact me for a free initial consultation to discuss your situation.  Whether you’re Annie Leibovitz or Auntie Em, I’ll help you figure out the best options and strategy available.

Go to www.nybankruptcy.net to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.

Can I rebuild my credit after bankruptcy in New York?

Yes, you can rebuild your credit within a few years if you’re careful about your finances and pay your bills on time after you’re done with your bankruptcy case.

A lot of people worry about their credit history when they consider filing for bankruptcy in New York.  It’s a legitimate concern and a healthy impulse to raise the question.

However, in the grand scheme, if you’re behind on a lot of bills and unlikely to be able to pay them off over time, then your credit history is likely to suffer regardless of which path you take.  Sure, bankruptcy affects your credit score.  But bear in mind repossessions, foreclosures and collection lawsuits become part of your credit history and remain there for as long as a bankruptcy does (i.e., 10 years).

If you’re drowning under a mountain of debt, then a more logical way to think about it is that filing for bankruptcy is the first step you take towards rebuilding your credit history.  When you file for bankruptcy, the case ends with a discharge.  The discharge gives you a clean slate and the breathing space to get your finances in order.  And regaining control of your finances is the path towards rebuilding your credit score.

Additionally, after your discharge you are suddenly very attractive to certain lenders.  Why?  Because you suddenly have little or no debt.  As a result, most debtors receive new credit card offers after coming out of bankruptcy.  Though it’s important to note that the credit cards generally have stricter standards and more limits than the types of credit cards you might have had previously.  Still, if you need a credit card, and you use it responsibly, then you’ll build up your credit score gradually over time.  In fact, using a credit card and making payments on time over a period of time actually improves your credit score.

If you have more questions about credit cards and credit card debt, or if you’re considering filing for bankruptcy in New York to deal with credit card debt or any other debt, please feel free to contact me for a free initial consultation.  I’ll be happy to answer all of your questions and figure out the best strategy for you to move forward with your financial life.

BAPCPA Man #2 – Automatic Stay Forcefield

With permission from Bankruptcy Bill himself, here’s BAPCPA Man’s latest heroics, this time in connection with the automatic stay which he appropriately likens to a forcefield.

The cartoon also illustrates a good point about electronic filing, namely that bankruptcy lawyers don’t physically go to the courthouse, but instead usually file cases electronically from the computer in their office.  The cartoon seems to imply incorrectly that the filing is done in the courthouse (though it is correct in stating that an automatic stay is harmless to your lawn).

To see more cartoons along with other helpful and entertaining information about bankruptcy, go to http://bankruptcybill.us.

New York personal bankruptcy rate likely to continue to increase

New York’s unemployment rate has increased to 8.7% from 8.2%, the worst it’s been since October 1992.  (FYI, the national rate just moved from 9.4% up to 9.5%, so New York is doing relatively well, but still…)

On healthcare, our government is facing an uphill battle in creating some sort of national healthcare option that would help control medical costs and make sure that all Americans, even the unemployed, can get health insurance.

What do these two things have to do with each other?

Unemployment and medical bills are the two most common causes of bankruptcy for New Yorkers and all Americans.  And yet, unemployment is on the rise, and it’s very unclear whether there will be any help or solution for dealing with medical bills.  (And even if it does pass, how effective or watered-down will it be?)

You don’t have to be an economist, then, to connect the dots and predict that personal bankruptcy in New York and across the country will most likely continue to rise.

FYI, in case you’re curious, the more complete list of reasons for bankruptcy often cited are:

• Unemployment
• Medical expenses
• Taking on too much credit card debt and other kinds of debt
• Divorce and other marital problems
• Large, unanticipated expenses

If you are facing unemployment or medical bills you can’t pay, you’re not alone.  In fact, many people often face a combination of these situations.  Because, of course, if you’re unemployed and you have an injury or illness, it’s going to be a lot harder to pay your medical bills.

So until the economy turns around or enacts a national healthcare insurance option, it’s helpful to know there’s still one form of protection you do have, the safety net in our legal system that is mentioned specifically in the Constitution:  Bankruptcy.

Whether you’re considering filing for Chapter 7 bankruptcy in New York or Chapter 13 bankruptcy in New York, or whether you live in Manhattan, Brooklyn, The Bronx, Queens, Staten Island, Queens or anywhere else in the New York City area, please feel free to get in touch for a free initial consultation.  I’ll be happy to answer all of your questions and make sure you understand all of the options available to you, whether you are employed or unemployed, and whether you have health insurance or no insurance.

Understanding your credit score in the new economy

A recent Washington Post article on credit scores (“Credit Score Shell Game“) is very illuminating.  It’s one more example of how the world of credit cards is getting less warm and fuzzy and how struggling Americans can get scammed in the process.

The gist of it is that:

• Credit scores are becoming more important as credit tightens and banks are less willing to lend.
• Many Americans’ credit scores have been decreasing as people face more financial challenges.
• As a result, people are more interested in checking their credit scores on a regular basis.
• However, it’s not so easy to figure out what your credit score is because there are a few different systems in use.  (“FICO score” is the one most people are familiar with.)
• Many people are paying $14.95/month for credit-monitoring services (e.g., FreeCreditReport.com and TrueCredit.com) only to find out that the score they’re given is inflated and not the same as the score that lenders are using.  (That is, they get a “fake-o score” instead of a FICO score, according to Even Hendricks, author of Credit Scores and Credit Reports and editor of The Privacy Times.)

The bigger picture is that times are tough.  Even if you’re doing everything you’re supposed to be doing, the playing field may still feel like it’s tilting against you.  And while our government