Sydney Henderson will turn 100 on November 18th. Although a friend is planning a party for her, all she wants is for Wells Fargo (which holds a reverse mortgage on her condo) to stop foreclosing procedures against her for $24,000 in back taxes. When she took out a reverse mortgage in 1998, she believed she enrolled in a state program that allowed senior citizens with reverse mortgages to defer property taxes and roll them into their mortgage. Wells Fargo determined that she should have been paying the taxes all along. Sydney believes there’ll be enough equity in her condo when she dies to make the bank whole plus a profit. Her party planning friend saw the foreclosure notice in the paper and contacted an attorney. The day before the foreclosure, the attorney filed for Chapter 13 protection which temporarily stopped the proceeding. Sydney’s attorney has tried to negotiate with Wells Fargo. He has sent them letters which they acknowledge receiving but nothing else. He tried speaking to the attorney handling the case for Wells Fargo but she won’t return his calls. The bank’s spokesperson has told him as of September 1st, another company is handling all of the bank’s reverse… Continue Reading Wells Fargo Wants the Home of 99 Year Old Woman
For Americans, health insurance is a hot topic. For decades our government has been trying to put a program in place that will ensure health insurance is at least accessible to everyone. We tend to think that if everyone has health insurance, no one will have to go bankrupt as a result of medical bills. Unfortunately, this is not the case. “Take a couple who came to us interested in filing bankruptcy,” said Kevin J. Bambury, attorney, Jeffrey Freedman Attorneys, PLLC. “They had a health insurance policy provided by the husband’s work. He was an in-store customer service representative for one of the large cellphone companies. “Unfortunately, he developed colon cancer at the young age of 48. By the time it was discovered, the cancer had already reached Stage 4,” Bambury said. “His doctors determined that the surgery he needed was not available in Buffalo and recommended he go to the Cleveland Clinic.” The client’s health insurer agreed to cover his medical expenses in Cleveland up to what they would have paid for locally for the treatment of his disease. He underwent three surgeries and chemotherapy before he was clear of the cancer. He was unable to work for two… Continue Reading Winning a battle with cancer has its price
After a decade of declines, the U.S. Bankruptcy Court for the Western District of New York reported an increase for bankruptcy filings this year through August compared to the same period in 2016. Despite this recent rise, the number of overall bankruptcies remains down compared to a decade ago. Some of the long-term decline can be attributed to both the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and the Affordable Care Act (ACA), which brought health insurance coverage to 23 million Americans. According to the Kaiser Family Foundation, historically, medical debt was the number one source of personal bankruptcy filings in the U.S. After the ACA bankruptcy filings dropped roughly 50 percent: from 1,536,799 in 2010, to 770,846 in 2016. The decline is also strongly aligned with changes to consumer-lending policies in the banking industry. Today, however, consumers are facing a number of financial trends that have the potential to push the country toward an increase in bankruptcy filings. Recently, the Federal Reserve Bank released a report stating Americans have access to the highest level of revolving credit in history. As of June 2017, collectively, Americans held credit cards offering them $1.021 trillion in revolving credit – the… Continue Reading Financial trends may push bankruptcies up
In Indiana, a woman stole her husband’s identity while they were still married and looted his 401(k) retirement fund. Patricia Bippus-Allen was sentenced to five years in federal prison this summer after pleading guilty to subordination of perjury, wire fraud, conspiracy to commit bankruptcy fraud, and aggravated identity theft. She devised an elaborate scheme with the help of her brother, who impersonated her husband, and made multiple unauthorized withdrawals from her husband’s 401(k) account. In 2010, Bippus-Allen filed joint Chapter 13 bankruptcy without her husband’s knowledge. During the course of the bankruptcy proceedings, she created documents with forged signatures from her husband and had her brother impersonate her husband at a hearing. As a result of the bankruptcy plan, almost $74,000 was deducted from Bippus-Allen’s husband’s direct deposit paychecks without his knowledge or consent, and she gained access to those funds. She also took out more than $24,000 from her husband’s 401(k) and took out more than $16,000 in loans on the retirement account.
Debt settlement can seem like a better option than bankruptcy, especially now that increased regulation and enforcement have forced settlement companies to do what they promise and persuade at least some of a borrower’s creditors to forgive a portion of the debt owed. But in many ways, bankruptcy is a better option than debt settlement. Freedom Financial Network, which is the largest debt settlement company, states that half of its customers eventually settle at least three-quarters of their debt, but the process can take three to four years. Similarly, the amount of forgiven debt is usually reported to the IRS and is taxable as income. With a Chapter 7 bankruptcy filing, however, debts are erased in three to six months, and state laws protect most if not all of what filers own. Also, credit scores begin to recover immediately after the process is complete. And bankruptcy halts collections, including lawsuits, and can end wage garnishments.
Imagine yourself in this situation: You have three children (the oldest of which is starting to look at colleges) and you and your spouse both work to support your family. Unexpectedly, your spouse loses their job when the company they work for downsizes. Like many other Americans, you live paycheck to paycheck, just able to meet the expenses of supporting a family of five. When one of you is laid off, it’s not long before you are behind on credit cards, car payments and the mortgage. You start receiving late notices and collection letters. You keep hoping your spouse will find a new job, but unemployment is set to run out, and your mortgage company has served you with a foreclosure notice. This scenario is all too common. A decrease in income due to loss of employment, illness/injury, or divorce can be devastating to financial stability. I spoke with a couple recently who fell behind on their mortgage payments because the wife lost her job, making it impossible for them to meet all of their expenses. They were using credit cards at the grocery store and the gas station, and were barely able to make the minimum payments. They also… Continue Reading When should you consider bankruptcy?
A report released this week by the Federal Reserve shows that more consumers are getting access to credit cards backed by major banks: more than 171 million consumers have access to these cards, up from 162.5 million who had access in 2005. Lenders are giving more consumers with sub-prime credit scores access to credit cards but with lower spending limits. More consumers have taken on auto and student loans, which make it harder for younger consumers to buy homes. Debt delinquencies of 90 days or more have mostly improved since 2008, but about 10 percent of student loans have balances that are 90 days or more delinquent. Housing debt is down close to $1 trillion, but auto loan balances are $367 billion higher, and student loans are $671 billion higher. Mortgages remain the bulk of the debt total at 67% as of 2016.
United States credit card debt reached a new high at $1.02 trillion. Matt Shultz, the senior industry analyst at CreditCards.com summed up the need of paying down one’s debt: “Even if you feel your debt is manageable right now, know that you could be one unexpected emergency away from real trouble. Get that debt paid down while things are good so you can be better prepared if things turn for the worse.” The percentage of American households carrying balances on their credit cards fell from 44 percent in 2010 to 34 percent in 2014. But 6 in 10 millennials don’t pay off their credit card balances in full every month. Delinquencies and late payments are near historic lows, but they are rising. It is fine to maximize credit card rewards, but make sure you’re paying off your balances to avoid high interest rates and fees.
Chapter 7 bankruptcy eliminates unsecured debt when you give up your assets and stays on your credit report for 10 years. Chapter 13 bankruptcy involves a repayment plan and stays on your credit report for seven years. Personal debt consolidation loans can be taken out from banks, online lenders, or credit unions. You take out a loan at an interest rate that is lower than the interest rate on your credit card payments, and when the debt payments are gone, you repay the loan. A debt management program through a credit counseling agency involves a counselor who reviews all of your debt-relief options and may be able to reduce your debt by 30-50%.
Although debt consolidation is an alternative to declaring bankruptcy, it does not address many of the core problems that lead to the accumulation of debt in the first place, like overspending. Many times, people who consolidate their debt end up right back where they started. Often, people in debt don’t realize their expenses are greater than their income. Debt consolidation can be a viable solution if debtors stop using their credit cards, save for emergencies, and create and stick to a budget. However, if it would take more than five years to pay off the debt without debt consolidation, it’s best to consult an attorney to discuss bankruptcy options.