Most Americans OK With Overspending

A new survey from COUNTRY Financial shows that most Americans spend more than they make, at least occasionally, but they are mostly okay with that. The May 2012 COUNTRY Financial Security Index concluded that 52% of respondents spent in excess of their monthly income at least a couple of months each year, but only 9% said their lifestyle is more than they can afford. If you are spending more than you make on a regular basis and find that you cannot afford it, you may want to talk to me about your options, such as filing bankruptcy in Kansas City.

The survey did find that 51% of respondents have a household budget in place. However, many appear to have a difficult time following it every month. Budget shortfalls occurred at least 6 months out of every year for 21% of respondents in the survey. I would suggest that because most families have a budget, they do not see their overspending as a problem.



Those surveyed compensated for the excess expenses with a variety of things. 36.2% used money from a savings account and 21.7% used a credit card. Additionally, 12.3% delayed bill payments and 7.8% borrowed money. It is also noteworthy that of the 21% of survey respondents who reported regularly having monthly expenses in excess of their income, only 13.5% adjusted their spending the next month to get back on track.

Lots of Americans also say that they are not meeting their savings goals. According to the survey, 61% of budgeters and 30% of non-budgeters create a monthly savings goal. However, of those with a savings goal, 57% of budgeters and 54% of non-budgeters say they meet their goals 50% of the time or less. I would suggest moving savings funds to a less accessible, but still liquid, account. For example, you may want to consider a money market account with limited check writing availability. Please feel free to leave your comments or questions.

New Homes Sales Are On The Rise

New home sales are picking up steam. This may be another sign that the housing market is finally recovering. New home sales in April rose 3.3% from March and were up 9.9% from a year earlier, to a seasonally adjusted rate of 343,000 according to the Commerce Department.

However, we are still far below historic levels. Since 1963, the average new single-family homes sold per year in the U.S. has been 671,000. New homes account for about 10% of the houses sold each year. 

Sales of previously owned homes have also risen lately, suggesting gains throughout the housing industry. The National Association of Realtors said that sales of previously owned homes rose 3.4% in April from March. This includes sales of multi-family dwellings, such as condominiums and duplexes. The Commerce Department figures only include single-family homes.

Housing prices are also rising. The median new home price in April was $235,700, which is nearly 5% higher than a year earlier. With all of this news, some economists are becoming more encouraged about the housing market. However, some economists and analyists had expected even stronger new home sales based on the double-digit order increases in recent months by large publicly-traded home builders.

Toll Brothers, Inc., which is a luxury builder, said that its contracts for the quarter ending April 30th were up 47% from last year. The National Association of Home Builders also reported that confidence among home builders hit a five year high in May.

It is important to note that the housing recovery could quickly revert if the economy goes back down, interest rates rise or inventory swells as banks seek to sell more foreclosed properties. If you are facing foreclosure I may be able to help you save your home and stop the foreclosure process through bankruptcy or other means.

146,000 new homes were listed for sale at the end of April, a supply that would take over 5 months to deplete at the current sales pace. Only 46,000 new homes were completed in April, a record low. However, decreasing inventories could increase future new home building. Home prices also rose 1.8% in March, on a seasonally-adjusted basis, compared to the previous month. As always, questions or comments are welcome.

More Disclosures Needed in Student Loans

For many, obtaining a college degree, which should lead to higher income and more opportunities, also often means years of paying off student loan debt. Schools should be forced to do more to educate students about the cost of their education and the student loan process.

In the U.S. approximately two thirds of Bachelor's degree recipients receive student loans from public or private lenders. In the early 1990's only about 45% of graduates borrowed money from any source, including family. The average debt for student borrowers last year was approximately $23,300, 10% of student borrowers owed more than $54,000 and 3% owed more than $100,000.

Federal law requires schools to provide basic "entry" and "exit" loan counseling. However, many schools market themselves to students without explaining the actual cost of attendance. Additionally, financial aid letters often blur the distinction between loans and grants, making the school look like a better deal than it really is. Also, once students are enrolled they are generally not receiving any counseling during the years they are enrolled, while still borrowing money every year.



President Obama's administration has proposed rquiring colleges to clearly disclose costs in a standardized "shopping sheet" that would allow students to see the aid they are receiving and the debt that they would incur. Later in the year the administration plans to post an internet "scorecard" that rates each college nationally on affordability and value, which are defined by graduation rates and whether graduates earn enough on average to repay their debts.

Additionally, a pending bill in the Senate would require colleges and lenders to educate students about the differences between federal loans and riskier, pricier private loans, and their borrowing choices. However, I think there is always more than can be done to help students and potential students to truly understand how much college is going to cost and how much debt they are going to have after graduation, including how long it will take them to pay it off. As a reminder, student loans are generally not dischargeable in bankruptcy. Please leave any questions or comments you may have.

New Rules for Prepaid Debit Cards

Prepaid debit cards are very popular depsite the fact that they are largely unregulated and often charge high fees with little disclosure. As new rules have targeted credit cards and traditional debit cards, many banks have increased their presence in the prepaid debit card market.

Today the Consumer Financial Protection Bureau introduced a preliminary rule for prepaid products, the first ever. Most fees on these cards will not be regulated, such an average $5 monthly maintenance fee. However, the rule will require companies to reimburse consumers for unauthorized charges.

Card providers argue that they offer a competitive price and help consumers control their spending. Some regulators and consumer advocates are concerned that companies are leading low-income consumers into a relatively expensive product as opposed to simple checking accounts. In 2009 borrowers had approximately $29 billion worth of prepaid debit cards. By 2013 that number is expected to rise to $90 billion.

Big banks, who are looking for new customers, are joining the prepaid debit card market. In March, Wells Fargo introduced a reloadable prepaid card. Regions Financial also unvailed a prepaid card targeted at borrowers who typically do not have a traditional bank account. JP Morgan also announced earlier this month that it would start offering prepaid cards. The card is called "Liquid" and carries a $4.95 monthly maintenance fee but does not charge consumers to add money to the card.

The banks have recently become drawn to prepaid debit cards because they were not included in the Dodd-Frank regulatory law and other recent crackdowns on debit and credit card fees. The Dodd-Frank law exempted prepaid cards, allowing banks to impose high fees on merchants when consumers make a purchase with a prepaid card.

Advocacy groups have also questioned if card issuers clearly explain to cardholders the fees associated with the prepaid cards, including activation charges, and charges for loading money onto the card, checking the card balance at ATMs and for calling customer service. For example, Wells Fargo charges $3 for customers to withdraw money using a bank teller and $5 to replace a lost card.

A study conducted also concluded that some customers were unaware that their prepaid cards are not necessarily protected by the FDIC (Federal Deposit Insurance Corporation). The Bureau's new proposal does not address this issue. However, the Bureau is seeking to apply Federal Regulation E, which applies to debit and gift cards, to prepaid cards. Regluation E requires companies to reimburse customers for unauthorized transactions that occur when a prepaid card is lost or stolen.

As a reminder, you may discharge credit card debt in bankruptcy. I look forward to your questions and comments.

Almost 1/3 of Student Loan Debt is now from Grad School

Graduate school, which generally leads to higher income, is increasingly leaving students with higher debt. As discussed in a previous post, Congress is attempting to keep student loan interest rates at lower levels. However, little attention is being paid to graduate students. Student loan debt in the U.S. now tops $1 trillion and graduate students account for approximately 1/3 of that sum, which is likely to grow.

Beginning in July, subsidized Stafford loans will no longer be available to graduate students. This likely will force graduate students into more expensive loans to pay for tuition. Currently, subsidized Stafford loans are the most popular student loans. More than 1/3 of students sign up for them annually because the government covers the interest payments while students are still enrolled. Other loans charge students the interest while they are still in school.

Without the subsidized Stafford loans, experts say that graduate students will likely soon account for a larger share of student loan debt. It is estimated that the student loan debt load at graduation will increase by about 6% on average.

The cuts are part of the federal goverment's move to slash spending across the board. Last year President Obama signed the Budget Control Act of 2011, which eliminated the subsidized Stafford loan for graduate degrees. This was expected to save around $21.6 billion over 10 years, with nearly $5 billion going to the deficit reduction. The adminstration says they removed the subsidized Stafford loans for graduate students because those with advanced degrees tend to have higher incomes, and these loans do not encourage more students to enroll in graduate school.

However, with the struggling economy, more adults have been returning to college for graduate degrees and leaving with more debt. Master's degrees account for about $200 billion in outstanding student loan debt, while other advanced degrees account for another $100 million. This year approximately 830,000 people are expected to graduate with advanced degrees, with debt averaging around $43,500, up 10% from five years ago. Since the fall of 2007, roughly 56% or 3.6 million graduate degree recipients incurred loans.

In spite of the rising student loan debt levels, proponents of the government's decision to elimiate subsidized Stafford loans for graduate students say that they don't need as much help because they'll make more money. During a 40 year career, individuals with only a Bachelor's degree will earn nearly $2.3 million on average, while those with a Master's degree will earn an extra $400,000 on average. The median income for someone with a Master's degree is on aveage about $12,000 higher a year than someone with just a Bachelor's degree.

However, the pay difference is even smaller in some fields. For example, the arts and journalism. Some professions even require a Master's degree but typically do not pay more. For example, teaching and social work. Additionally, since the recession tuition has risen 11%, to an average of nearly $22,000 per year for private, non-profit graduate programs. At public universities, tuition rose 25% to $9,247, outpacing undergraduate tuition hikes.

Schools are raising tuition even though enrollment continues to grow. Between 2007 and 2010, enrollment in graduate programs grew 11%, to an all-time high of 2.9 million students. Costs are generally rising because colleges are charging higher tuition for more popular programs and public universities are receiving less funding from their states. However, it is often argued that graduate programs are expensive to run, especially in technological intensive fields such as engineering and science, and profitable departments often subsidize less profitable or unprofitable departments.

I suggest that anyone considering graduate school look into attending public universities, which are generally cheaper than private institutions. You should also consider if the cost of attending graduate school is worth it. An individual with a Bachelor's degree in business or engineering should earn about $19,000 a year more with a Master's degree but you need to consider how much you'll have to borrow in student loans and how many years it will take to pay that off. It is also important to remember that student loans are generally not dischargeable in bankruptcy. I look forward to your comments and/or questions.

Less People are Paying their Mortgages Late

The mortgage delinquency rate in the U.S. declined in the first quarter to its lowest level since 2008. It is believed that this is due to the improving job market, which is helping more individuals pay their bills on time. Additionally, tighter lending standards have led to fewer defaults, which may in turn lead to a decrease in filing bankruptcy.

In the last three months the share of home loans at least 30 days late dropped from 7.58% to 7.4% according to the Mortgage Bankers Association. The 30-day late rate peaked at 10.1% in the first quarter of 2010. It has not been lower since the third quarter of 2008, when it was 6.99%. The decrease in delinquencies may help lower foreclosures and help the housing market recover. Low interest rates, combined with decreased prices, should increase demand in the housing market.

Housing affordability also reached a new high in the first quarter of 2012 and sales of previously owned homes rose 5.3% from a year earlier according to the National Association of Realtors. Additionally, housing starts, which is new home construction, increased 2.6% to an annual pace of 717,000 in April. This was higher than what analysts expected. This also points to the sign that the real estate market is getting stronger.

The U.S. unemployment rate also fell in April to 8.1%, which is the lowest it has been since January of 2009. Additionally, rates for 30 year fixed loans dropped to a record 3.83% in the week ending May 10th, according to Freddie Mac.

Most troubled loans originated between 2005 and 2007. Stricter lending standards and decreased prices for borrowers who obtained mortgages after the housing market collapsed account for the better performance of loans that have orginated since 2008. Statistics shows that most borrowers experience late payments in the first three or four years of a loan, so it is anticipated that the worst of the foreclosure crisis has probably passed.

Lenders usually begin the foreclosure process when loans are more than 90 days overdue. The percentage of loans more than 90 days overdue fell to 3.06% from 3.11% in the first quarter of 2012 and from 3.62% a year ago. However, the share of homes that had received a foreclosure notice but had not yet been seized by banks increased to 4.39%, up 0.01% from the previous quarter.

The foreclosure process has been slowed by mortgage servicers since the fourth quarter of 2010, when they faced allegagtions of using impropoer and fraudulent paperwork to repossess homes with delinquent mortgages. The five largest servicers reached a $25 billion settlement with state and federal regulators in February. Foreclosure starts decreased in 41 states and the rate of loans in foreclosure fell in 22 states. Please leave any questions or comments you my have.

Credit Is Once Again Becoming Easier To Get

Most businesses and individuals are now finding it easier to borrow money, which in my opinion may cause more financial trouble for both consumers and businesses. Ben Bernake, Federal Reserve chairman, recently said that credit conditions in the U.S. have improved significantly in a number of areas. He said large companies were selling bonds at historically low interest rates and that people with strong credit had "ready access" to credit card and auto loans. However, he also noted that many creditworthy Americans were finding it difficult to obtain mortgages. He also said that small business owners who used their homes as collateral for loans also faced "challenging" conditions.

The Fed chairman also said banks had made "considerable progress" in reducing risk and building reserves against future loan losses. Cash and securities holdings at large banks have doubled since 2009. The way banks finance themselves has also become safer. Large banks are now flush with deposits and depend less on short-term loans from financial institutions for their borrowing. During the fall 2008 financial crisis, much of the lending amongst financial institutions froze, which spread panic and helped push the economy into the deepest recession since the Great Depression of the 1930s.

Mr. Bernake noted that most of the 19 largest banks passed "stress tests" earlier in the year, meaning that they would probably survive and be able to lend in a financial crisis worse than 2008. The situation during those tests was that the unemployment rate rose to 13%, stocks dropped by 50% and home values dropped by more than 20%. Home loans have fallen 13% off from their peak, after adjusting for inflation.

The Fed chairman said a slow economic recovery, a troubled housing market, and cautious lenders mean that the situation is unlikely to improve quickly. Mr. Bernake also said that small loans from banks, though increasing, were still 15% below their peak since 2008, which occurred at the end of last year. In my opinion, the recent ease in credit may lead to consumers borrowing and spending more than they can afford. This, in turn, may lead to another rise in bankruptcy filings. As I previously discussed, bankruptcy filings have been on a steady decline recently. Please feel free to leave any comments or questions you may have.

Big Delays in Mortgage Refinancing

Often, the ability to refinance a mortgage, resulting in a lower monthly payment, can be the difference between whether individuals are forced to file bankruptcy or not. Interest rates have been hovering around 4% lately, leading to hundreds of thousands of homeowners seeking to refinance their mortgages. These low rates have helped thousands of homeowners to free up cash and/or pay off debts. Borrowers that refinanced during the first quarter of 2012 reduced their first year interest payments by $2,900 according to Freddie Mac.

However, the amound of homeowners seeking to refinance recently has clogged the mortgage pipeline. Fewer banks now control a larger share of the mortgage market than they did before the financial crisis. In 2005 independent mortgage brokers accounted for 31% of mortgage originations. That number is now at less than 10%. This helped rid the industry of lenders that were making questionable loans but has reduced options for borrowers. The U.S.'s four biggest banks now acocunt for 55% of all loan originations, up from 38% in 2004.

The nations's largest lender, Wells Fargo, third-ranked Citigroup, and fourth-ranked Bank of America are now advising borrowers to expect refinances to take as long as 90 days. Wells Fargo and Citigroup say they are picking up the extra cost of locking in the interst rate for longer than normal to protect customers if rates rise. Wells Fargo says it has also added staff. J.P. Morgan Chase, the third-largest mortgage lender, says it is telling borrowers to expect refinances to close within 45-60 days. It hired more than 1,100 new employees in late 2011 to handle mortgage originations and continues to hire. Citigroup has also added staff and streamlined processes to cut its average refinance time from 77 days to less than 50 days. Bank of America says it has added 500 employees in response to the latest surge.

Banks are also now being more careful about who they lend to and how they process loans. The housing crisis wiped away $7 trillion in household equity, leaving many homeowners with too much debt to qualify for new loans. Lenders are now being more cautious. For example, Fannie Mae and Freddie Mac have added new requirements to improve loan quality for all mortgages. Their appraisal packets now must include a photograph of all bathroom toilets to verify the number of bathrooms in a house.

Demand for refinancing has also surged in recent months due to the Obama administration's push to make it easier for homeowners with Fannie and Freddie loans to refinance, even if they don't have strong credit or equity in their home. That program, known as HAMP (Home Affordable Refinance Program), has recently accounted for up to 1/3 of recent refinance applications. President Obama is also renewing a push to enable refinancing for underwater borrowers (borrowers who owe more on their house than it is currently worth) on homes whose loans aren't backed by Fannie or Freddie.

It now takes an average of more than 70 days to complete a refinance, up from 45 days a year ago. Additionally, some larger lenders have boosted their rates to hold down volume while increasing profit. If you are considering refinancing you may want to look at smaller, local banks, which may be able to offer you a better rate and a quicker closing. I welcome any comments or questions. Thanks for reading!

Bank of America Now Offering Some Principal Forgiveness

Bank of America recently began sending letters to thousands of U.S. homeowners offering to forgive part of the principal balance on their loans by an average of $150,000 each. This reduction could save homeowners up to 35% of their monthly mortgage payment. The principal reduction offers from Bank of America Home Loans are the result of a $25 billion settlement agreement earlier this year with the attorney generals of 49 states as well as federal authorities who had been investigating allegations of abuses over the handling of foreclosures.

Bank of America said it planned to contact more than 200,000 homeowners who could be candidates. BOA expected to send out a majority of the letters by the third quarter of this year. However, to be eligible for the principal reductions, homeowners will have to meet certain requirements, such as having a loan owned or serviced by Bank of America and owing more on the mortgage than the property is worth (underwater). The homeowners must also be at least 60 days behind on payments as of the end of January.

The bank began making such offers in March to a select group of homeowners who were already in the process of seeking mortgage modification. The initial wave of offers were sent to about 5,000 people, which could result in $700 million in forgiven principal. However, homeowners have to make at least three timely payments for the reductions to become permanent. For homeowners who have their mortgage with Bank of America I see this as an excellent opportunity to avoid foreclosure and/or the possibility of filing bankruptcy in Kansas City. Please leave me any questions or comments you may have.

New Rules May Simplify Mortgages

Individuals often face bankruptcy because they cannot afford their house payments. This is often because they did not understand the terms of their mortgage or were unable to easily compare the products offered by competing mortgage lenders. The Consumer Financial Protection Bureau (CFPB) recently announced that it expects to propose new rules this summer to simplify mortgage points and fees and to bring more transparency to the mortgage industry. The new rules, which would make it easier for consumers to understand mortgage costs, are expected to be finalized in January.

Currently many consumers struggle with understanding all of the different fees and points associated with mortgages. This makes it difficult to compare lenders when mortgage shopping. The first proposal the CFPB is considering is requiring an interest rate reduction when consumers elect to pay discount points. Discount points are a fee, expressed as a percentage of the loan amount, to be paid by the consumer to the creditor at the time of loan origination in return for a lower interest rate. Discount points allow consumers to lower their monthly loan payments.

For example if you paid "two points" on a $200,000 loan, then you would pay 2% of the $200,000 ($4,000) up front and in exchange you would receive a reduction in your interest rate, which would lower your monthly payment, which may help you avoid foreclosure in the future. The CFPB proposal would mean that consumers must receive at a least a certain minimum reduction of the interest rate in return for paying the point.

Another proposal being considered by CFPB would require lenders to offer consumers a no-discount point loan option. Currently it's difficult for consumers to compare loan offers that have different combinations of points, fees and interests rates. The proposal would require lenders to a offer consumers a no-discount-point loan, which would enable consumers to better compare competing offers from different lenders.

The CFPB would also ban origination charges that vary with the size of the loan. This would prohibit creditors from charging origination fees that vary with the size of the loan and would require flat origination fees. These "origination points" are easily confused with discount points.

The CFPB is also considering setting qualification and screening standards for loan originators, including mortgage brokers and loan officers. Currently loan originators have to meet different sets of standards under state law and the federal Secure and Fair Enforcement Act, depending on whether they work for a bank, thrift, mortgage brokerage or nonprofit organization.

This proposal would help level the playing field for different types of loan originators so consumers could be confident that the originators are ethical and competent. All loan originators would be subject to the same standards for character, fitness and financial responsibility. Loan orginators would be screened for felony convictions. They also would be required to undergo training to ensure they have the knowledge necessary for the types of loans they originate.

Finally, the CFPB is also proposing to prohibit paying steering incentives to mortgage loan originators. The regulations would ban the practice of varying loan originator compensation based on interest rates or certain other loan terms, such as directing consumers into higher priced loans because they could earn more money.

These proposed regulations may enable consumers to better understand the costs associated with a mortgage, saving them money by allowing them to select the most cost-efficient mortgage. In turn, this may prevent consumers from filing bankruptcy in the future. Thank you for taking the time to read this. Any comments or questions are welcome.

Has your borrowing increased as it has in the U.S. as a whole?

Consumer borrowing in the U.S. rose in March by the most it has in over a decade. That is mostly attributed to demand for student loans and car loans. In March credit rose by $21.4 billion, the biggest gain since November of 2001, to $2.54 trillion. Non-revolving debt, which includes student and car loans, rose by $16.2 billion.

I suspect the rise in student loans can be attributed to a possible increase in new student loan interest rates that may become effective July 1st without action from Congress. The rate increase would affect about 7.4 million students and add an average of $1,000 a year in payments on student loans. The difficulty in finding work in the current economy may also have contributed to the rise in student loans, as more unemployed individuals may be going back to school.

Consumer confidence is also rising, reaching a four-year high early last month, which means that households are more willing to take on debt to boost spending, which accounts for about 70% of the U.S. economy. The warm March weather may have also triggered higher than normal spring shopping for automobiles. Car and light truck sales have exceeded an annual pace of 14 million in each of the past four months, the best performance since 2008.

Revolving debt, which includes credit cards, incrased by $5.2 billion in March, which is its first gain in three months. The recent increase in credit may lead to an increase in individuals filing for bankruptcy in the near future. Bankruptcy filings decreased last month compared to the previous month and compared to the same month last year. I would welcome and questions or comments you may have. Thanks for reading!

Fannie & Freddie Speed Up Short Sale Process

Fannie Mae and Freddie Mac are adopting new guidlines to streamline the short sale process. The new guidelines, effective June 15th, would requires servicers of mortgages backed by Freddie and Fannie to review and respond to short sale requests within 30 days of receipt of a buyer's offer. The guidelines also mandate weekly status updates to the borrower if the short sale remains under review after 30 days.

By the year's end Fannie and Freddie also will announce other changes to the short sale process, including borrower eligibility evaluation, simplified documents and payment to subordinate lienholders. Servicers will also be required to make and inform borrowers of final decisions within 60 days of receipt of an offer. As you may recall in my previous post on Mortgage Modification, I discussed how Fannie and Freddie were refusing to endorse principal reductions, which would more accurately align mortgages to fair market value, resulting in fewer underwater mortgages.

If you are not familiar with short sales, they are transactions where the lender agrees to accept less than the amount owed on the mortgage. It is designed to get the borrower out of financial trouble whithout going through the lengthy legal foreclosure process. However, it is important to note that a short sale does affect the seller's credit score, possibly as much as a foreclosure would. On average foreclosures are currently taking 306 days, compared to 113 days in 2006. The delays often result in loss of the sale. For more information regarding short sales and other foreclosure alternatives in Kansas City please contact me, Kansas City bankruptcy attorney Cary Smalley of The Smalley Law Firm, at (913) 601-3549 or http://www.thesmalleylawfirm.com for a free initial consultation.

Bankruptcy Filings Decrease

Total bankruptcy filings in the United States for April 2012 decreased 16 percent compared to the previous year, according to data provided by Epiq Systems, Inc. April bankruptcy filings totaled 108,865, down from the 129,815 filings registered in April 2011. Total commercial filings for April 2012 were 5,132, representing a 25 percent decrease from the 6,868 filings during the same period in 2011. The 103,733 total noncommercial filings for April represented a 16 percent drop from the April 2011 noncommercial filing total of 122,947. The April 2012 total bankruptcy filings also decreased 11 percent from the March total of 122,155.

Commercial filings dropped 9 percent in April from the March total of 5,668, and noncommercial filings dropped 11 percent from the March total of 116,487. Changes to total commercial Chapter 11 bankruptcy filings also decreased in April. Overall, the April total commercial chapter 11 filing total of 657 represented an 18 percent decrease over the April 2011 total of 800, and a decrease of 3 percent from the March 2012 total of 680. For more information about filing bankruptcy in Kansas City please contact me, Kansas City bankruptcy lawyer Cary Smalley of The Smalley Law Firm for a free initial consultation. I can be reached at (913) 601-3549 or at Kansas City Bankruptcy Attorney.

Even Judges File Bankruptcy

No one is immune from the threat of bankruptcy.  Most people are just a couple of missed paychecks away from filing bankruptcy in Kansas City.  In fact, a federal judge recently filed for bankruptcy.  U.S. District Judge Otis Wright filed for Chapter 7 bankruptcy on December 26th in Los Angeles.  Wright makes approximately $174,000 a year.  He and his wife alleged assets of $833,000 and liabilities of $895,000 including $30,000 on a Citibank credit card and more than $17,000 owed to two department stores.  Their income had steadily declined from just over $271,000 in 2009 to $171,366 last year.  The trustee has applied to hire a real estate agent to put their home up for sale for nearly $1.2 million.  The full story is here:  http://blogs.wsj.com/law/2012/04/25/federal-judge-like-so-many-others-files-for-bankruptcy/ 

For more information about bankruptcy in Kansas City please visit my website at http://www.thesmalleylawfirm.com or call me, Kansas City bankruptcy attorney Cary Smalley at The Smalley Law Firm, at (913) 601-3549 for a free consultation.

Facing Foreclosure?

If you are facing foreclosure you should contact an experienced Kansas City bankruptcy attorney such as myself, Cary Smalley of The Smalley Law Firm.  I offer a free initial consultation and can discuss your options to save your home, whether through bankruptcy or other means.  I can provide a personalized solution for your specific situation.   Just because you get a letter from your mortgage company saying that you home is being foreclosed does not mean that you have to vacate your home.  Foreclosure must be approved by the court in Kansas.  Therefore, in order for your home to be foreclosed upon, you must be served with court papers and have a judgment entered against you.

An attorney can potentially help you find errors in the paperwork.  Your lawyer may discover that there is a procedural error, that the bank does not even hold the note, or that there is fraud involved.  If these errors are uncontested you can quickly lose your property.  Without an attorney the foreclosure process can be completed in as little as two to three months.  By retaining an attorney the process can take much longer, often buying you time to get caught up on your payments, work out a loan modification, short sale, forbearance, or to file bankruptcy to stop the foreclosure process.  For more information or to schedule a free initial consultation please contact me, lawyer Cary Smalley at The Smalley Law Firm, at (913) 601-3549 or at www.thesmalleylawfirm.com

Mortgage Modifications

If you are considering personal bankruptcy in Kansas City and want to save your home you may want to consider loan modification before filing for Chapter 7 or Chapter 13 bankruptcy.  In response to the housing crisis, some banks and private lenders are voluntarily reducing mortgage principals to help homeowners who are at risk of losing their home.  This move has recently received support from the International Monetary Fund (IMF).  The IMF's managing director recently called on Fannie Mae and Freddie Mac, two holdouts who have yet to endorse principal reductions, to join other major lenders in curbing the housing crisis by reducing mortgage principals to more accurately align them with fair market value, resulting in fewer underwater mortgages.  The Acting Head of the Federal Housing Finance Agency has been under recently scrutiny by Congress, the administration and regulatory agencies for failing to give the go-ahead for mortgage principal reductions.

Reducing principal on existing mortgages will prevent homeowners from going into foreclosure by providing them with a new, modified monthly payment that homeowners can afford.  Lenders would take a loss but many of them view it as a less-costly alternative to foreclosure or a short sale.  The government's Home Affordable Modification Program (HAMP) also offers lenders an incentive of 18 to 63 cents for every dollar in mortgage reduction.  HAMP revisions also now offer that incentive to Fannie Mae and Freddie Mac although neither has indicated a willingness to allow reductions in mortgage principals.

To further discuss your options, including loan modification and/or bankruptcy, during a free consultation please contact me, Kansas City bankruptcy attorney Cary Smalley, at The Smalley Law Firm at (913) 601-3549 or at http://www.thesmalleylawfirm.com