Morris Denver Bankruptcy

Debt Settlement Scams

2010-05-10T11:41:00.000-07:00

The Better Business Bureau recently issued a warning to consumers regarding the misleading practices of debt settlement companies. This warning comes after receiving more than 3,500 complaints since the start of the recession in 2007. The BBB reports that many individuals paid hundreds of dollars in upfront fees to debt settlement companies, but only fell deeper into debt after the process failed.

In an article posted to the BBB website, Stephen A. Cox, President and CEO of the Council of Better Business Bureaus said, “The debt settlement industry is flourishing and many families are being lured into believing that debt settlement is an easy fix and that their credit card debt will just disappear.” Mr. Cox went on to say that “the truth is that the process doesn’t work for many consumers, it has potentially serious negative consequences, and should primarily be used as a last ditch effort[.]”

Debt settlement companies typically offer to negotiate a settlement for a fee. Unscrupulous companies mislead consumers with promises of large savings and quick resolution. The truth is that it is difficult for a non-attorney to obtain a debt reduction of 50% or more. Additionally, these types of settlements are only available with a one-time payment. Most debt settlement companies require an up-front fee and ask the consumer to make payments into a savings account held by the debt settlement company for future settlement. During the process of six months to a year that it takes to build up the account, the consumer is at risk of garnishments and lawsuits.

In some cases fraudulent debt settlement companies have stolen from the consumer accounts, or refused to return funds. In other cases the consumer is driven deeper into debt when the debt settlement company is unable to settle the debt.

Unlike debt settlement, the bankruptcy process is a legal process supervised by a federal judge and the U.S. Department of Justice. Your agent is a licensed attorney throughout the process. There are no hidden fees and you pay only what you are able to afford. At the end of the bankruptcy process your debts are discharged and you receive a financial fresh start ordered by the bankruptcy court.

If you are struggling with debt and need financial relief, call us to discover how the federal bankruptcy laws can help you and your family. Don’t be a victim of a debt relief scam.

Dealing with Student Loans After Bankruptcy

2010-05-05T09:59:00.000-07:00

The federal bankruptcy code states that a debtor may obtain a discharge of a government-sponsored student loan only if repaying the loan would impose an “undue hardship” on the debtor and his dependents. Most bankruptcy courts interpret “undue hardship” as meaning that the debtor cannot repay the loan and maintain a minimal standard of living. As a result of this very high bar, it is rare that a student loan is discharged during bankruptcy.

Consequently, many bankruptcy debtors are caught in a student loan trap of being unable to pay on the student loan and the interest continues to accrue. While discharging the student loan may not be possible, there are options for dealing with a student loan during and after bankruptcy.

First, the student loan lender or collection agency is strictly forbidden from engaging in any collection action during the bankruptcy. This protection (known as the “automatic stay”) may last from a few months during a Chapter 7 to several years during a Chapter 13 repayment plan. Interest may continue to accrue and will be tacked-on at the end of the bankruptcy case.

Second, if the student loan was not defaulted prior to the bankruptcy filing (meaning no payment for more than 270 days), the account will usually be re-aged and is considered current upon the conclusion of the bankruptcy case. This is a good time to negotiate with the lender for a payment plan you can afford. If the student loan was defaulted prior to the bankruptcy, the lender may offer a loan rehabilitation program.

Finally, your student loan lender has many repayment options after your bankruptcy case ends, including the Income Based Repayment Plan which limits your loan repayment to 15% of your income and offers loan forgiveness after 25 years of repayment (or 10 years for public service employees).

The Myth of "Medical" Bankruptcy

2010-05-03T11:03:00.000-07:00

Each year many Americans find themselves facing bankruptcy through no fault of their own. The American Journal of Medicine reported in 2009 that medical bills contributed to more that 60 percent of U.S. personal bankruptcies. A catastrophic medical condition can wipe out savings, assets, and even cause loss of income.

The study conducted by researchers from Harvard Law School, Harvard Medical School and Ohio University found that more than 75 percent of these bankrupt filers had some form of health insurance, two-thirds were homeowners, and three-fifths had gone to college. Many of the debtors were average middle-class families who saw their lives tossed upside-down after a serious illness.

"Our findings are frightening. Unless you're Warren Buffett, your family is just one serious illness away from bankruptcy," said lead author Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School.

While medical expenses can lead to bankruptcy, the federal law requires the debtor to include all debts in a bankruptcy case, including auto loans, mortgages, and credit cards. A “medical bankruptcy,” when the debtor only discharges medical debt, is a myth. The bankruptcy laws do not allow the debtor to pick and choose which debts are included and which are excluded. Debts are treated fairly and equally in bankruptcy, and the debt classes are structured to avoid preferential treatment of one creditor over another within the same class.

For example, a hospital and a credit card company are generally classified as unsecured creditors and will receive the same treatment during the bankruptcy. If there are no assets available to pay these debts, both debts are discharged at the end of the case. However, while a debt may be discharged and no longer legally enforceable, the debtor may always voluntarily repay the creditor.

If your family is faced with high medical expenses, consult with us and discover your options. The federal bankruptcy laws can discharge your medical bills and provide a fresh start on a better financial future.

Bankruptcy Terms Defined

2010-04-28T12:33:00.000-07:00

Bankruptcy law has its own confusing language. It is a good idea to have a basic understanding of bankruptcy terms before your initial consultation with a bankruptcy attorney. While most bankruptcy attorneys are very skilled at explaining the bankruptcy process and its impact to their clients in plain language, sometimes technical terms can sneak into the conversation. Below is a very general explanation of the most common bankruptcy terms:

Automatic stay – a court injunction that stops all collection action against the debtor. The automatic stay is effective immediately upon filing the bankruptcy

Bankruptcy estate – the debtor’s legal and equitable interest in property at the time the bankruptcy case is filed

Chapter – a section of the bankruptcy code. Some chapters are general and apply to all cases; other chapters apply only to specific bankruptcy cases.

Debtor – an individual who files a bankruptcy petition

Discharge – a court permanent injunction prohibiting the collection action against the debtor personally for any debt discharged in the bankruptcy

Equity – the value of a debtor's interest in property after subtracting monetary liens

Exemptions – legal protections that shields property from creditor collection

Means test – a calculation of the debtor’s income and expenses meant to determine the debtor’s ability to pay creditors

No-asset case – a Chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims

Nondischargeable debt – a debt that cannot be absolved through bankruptcy and the debtor remains personally liable after the bankruptcy case has closed.

Petition – the papers filed by the debtor that commences the bankruptcy.

Plan – the debtor’s description of repayment of debt during a Chapter 13 bankruptcy

Preference – a debt that was paid prior to the bankruptcy when the debtor was insolvent and unable to pay other creditors

Proof of claim – the creditor’s claim and verification of a debt

Reaffirmation agreement – an agreement between the debtor and creditor that entitles the debtor to retain property in exchange for continued personal liability to pay a debt (common examples are a car or house loan)

Schedules – the detailed description of the property, debts, income and expenses of the debtor
Secured creditor – a creditor holding a lien against property of the debtor’s as security for payment of a debt

341 meeting – a mandatory meeting that the debtor must attend with the trustee. The debtor’s creditors are invited to the 341 meeting and are allowed to ask questions.

Trustee – an individual appointed to oversee the debtor’s bankruptcy case. This is not the bankruptcy judge.

Sued in county court? Don't wait too long . . .

2009-09-24T08:38:00.000-07:00

If you receive a summons and complaint, act quickly to avoid a wage garnishment. In Colorado, a creditor can continuously garnish 25% of your wages until the judgment is paid. If you ignore a summons and complaint, a judgment will enter against you without further notice to you.

Bankruptcy is one way to prevent entry of a judgment. On the other hand, if you don't wish to file bankruptcy, a litigation attorney should set up a good defense to the complaint on your behalf by filing an answer to the complaint.

Even if you don't have a good defense to the complaint, filing an answer and setting up potential defenses will usually enable you to reach a smaller settlement with the creditor. Once the creditor has a judgment and is garnishing your wages, the creditor has no incentive to settle. For help with county court lawsuits, read the information at this site: www.coloradocountycourts.com

"High-Income" Chapter 7 cases

2009-09-10T11:04:00.000-07:00

In my law practice, I continue to see clients who believe that Chapter 7 bankruptcies either are not possible at all or are only possible for people with low incomes. This is a myth which has been largely perpetuated by erroneous news reports.

Chapter 7 bankruptcy -- usually the preferable way to go -- means you are in and out of bankruptcy in only 90 days or so. Generally, you walk away from almost all of your debt and lose no property. See http://www.wamorrislaw.com/chapter-7.htm

Most of our cases are still filed under Chapter 7. Even if your income is above the Colorado median income for your family size, frequently a Chapter 7 case is still possible by the time all allowable expenses are factored into the equation. Such expenses include, but are not limited to, day care, mortgage expenses, and health insurance.

In some cases, you might be better off filing Chapter 13 even if you qualify for a Chapter 7. For instance if you have a second mortgage and you want to keep your house, you can often eliminate your second mortgage in a Chapter 13 bankruptcy but not in a Chapter 7. Tax debts may also be a good reason to file Chapter 13. A further discussion is located here: http://wamorrislaw.com/taxes-chapter13.htm

Welcome to our new Bankruptcy Law Blog

2009-09-10T10:06:00.000-07:00

Thanks for stopping by and welcome to the new Morris Law Office bankruptcy blog. We will be providing you with insights into bankruptcy law and the bankruptcy process that you generally will not find elsewhere. Our website is at www.wamorrislaw.com

First, however, the basics. We do not run a bankruptcy mill. We do not "churn 'em and burn 'em" quickly with little attention to client care and without attention to detail. When Congress passed so-called "bankruptcy reform" in 2005, our firm was the first to post a new website with details about this ill-advised legislation. The truth is, your Senators and Congressmen were bought and paid for by the credit card industry and the big banks. http://www.wamorrislaw.com/us-trustee.htm

So, our response to this mean-spirited legislation? Beat the government at its own game and put your money where our mouth is:

Not just a bankruptcy attorney. an experienced trial attorney
William A. Morris is not just another Denver bankruptcy attorney, but is a TRIAL ATTORNEY with 19 years of trial experience prepared to fight for your constitutional right to bankruptcy relief. The new bankruptcy "reform" laws were pushed by the credit card industry to increase the billions of dollars they already pocket through high interest rates and excessive fees. You can't afford to give your Senator or Congressman a few million dollars in campaign money for legislation favorable to you, but you can choose a bankruptcy attorney with 19 years of experience not just in bankruptcy law but also as a TRIAL ATTORNEY prepared to aggressively defend any legal challenges to your bankruptcy case.

When you trust us with your bankruptcy case, we plan for every contingency in order to maximize your chances of a successful bankruptcy case.

Mortgage stripping

2009-09-10T09:59:00.000-07:00

Many of our clients are not only getting a fresh start via bankruptcy, but are also eliminating their second mortgages. In Chapter 13 bankruptcy, it is possible to keep your home and avoid your second mortgage entirely -- often saving tens of thousands of dollars.

This option is only available in Chapter 13. An old U.S. Supreme Court decision does not allow mortgage stripping in Chapter 7 bankruptcy cases.

More information:
http://www.wamorrislaw.com/mortgage-stripping.htm