When faced with paying attorney fees, some people are tempted to use their credit cards.  This is illegal because it encourages additional spending you cannot pay back.  A better option is to simply stop paying your credit cards.

If you are still trying to make payments to credit cards while preparing to file, that can be like throwing your money out the window.  The credit cards are going to be included in your petition anyway.  Paying the attorney fees with the money you would have been sending to the credit card company can expedite the process.

One good option is to use your tax refund, if you qualify.  Tax refunds are not exempt in bankruptcy cases so any refund owed to you will be absorbed by the trustee in the bankruptcy estate.  By postponing filing for bankruptcy until after you have received your tax refund, you may have your attorney’s fees covered instead of taking the loss.

A point to remember is that in the state of Arizona there is a cap of $150 (if filing single, $300 if filing jointly) as a free cash exemption. This means if you have any money in your accounts over $150 at the time of your filing, it will be taken by the trustee.  Using any funds you have in your accounts for your attorney fees will limit the amount that will be taken so you can start to rebuild again.

Another avenue to explore is asking a third party, such as a relative to help contribute.  If you have a relative you can rely on, they can be a good resource, especially if you are about to get relief of other financial burdens.

No matter how you come up with the fees, it is important to get the ball rolling so the creditors stop harassing you.  Coming up with the attorney fees can be overwhelming but by choosing to retain a qualified attorney, you are taking the first step toward regaining your financial freedom. If you’re still intimidated by the bankruptcy process and the fees that come with it, call (480) 648-8975 to schedule a FREE consultation with an experienced Arizona Bankruptcy attorney today. Ben Skinner can answer any and all of your questions and help you get control of your finances.

Student loans are deemed a non-dischargeable form of debt, unless you can prove undue hardship. This basically means that you have to prove that you have already done everything in your power to pay off your student loans, as well as showing evidence that continuing to pay off your loans will leave you destitute.

How to Determine if Your Student Loans Can be Discharged

When determining whether or not a student loan should be discharged on a claim of undue hardship, bankruptcy courts rely on the Brunner Test. This test requires that the debtor prove three things:

1) That, based on current income and expenses, continuing to pay off your student loans will leave you unable to maintain a minimal standard of living for you and your dependents. This would be true if you were unable to pay off a mortgage, buy food, or pay for critical medical treatment.

2) You have suffered additional circumstances, such as a physical disability, which will most likely prevent you from increasing your earnings in the foreseeable future.

3) You have made a “good faith effort” to pay back your student loans. This doesn’t just include a good payment record, but requires effort to increase your income by going back to school or searching for a better paying job.

Seeking Experienced Help

Unfortunately, it is difficult for the majority of people that have student loan debt to prove undue hardship. Often times, the bankruptcy judge handling the case can make a significant difference. If you are unable to prove undue hardship, and have dischargeable debt (such as medical or credit card debt) along with student loan debt, filing for bankruptcy may be a good option for you.

An experienced Arizona Bankruptcy attorney can help! Call (480) 648-8975 to schedule a FREE and confidential consultation with Ben Skinner today.

Reality For Most

Many college grads enter today’s professional environment determined and excited, and most are promptly discouraged when they learn that their college degree does not guarantee them a six-figure salary at the company of their choice. After reality sets in, they join the 20-somethings of America in working for the weekend, lucky to have any money left to save after paying for rent, food, and occasionally indulging on activities. The worry of student loans becomes an overwhelming presence when they already feel as though they are struggling to live comfortably day-to-day.

Don’t Defer

While it may seem preferable to let those student loans float from your memory, I’m telling you that you must STOP DEFERING YOUR STUDENT LOANS! The danger in doing so comes in the form of compound interest. This means that every day that you defer those loans, the more interest you continue to pile on top of what you already owe.

Another scary fact: student loans cannot be discharged in bankruptcy (unless you are able to prove undue hardship). So do yourself a favor and make your student loans a top priority…behind your living necessities.

Credit card and medical debt can however be discharged in bankruptcy. If you have dischargeable debts coupled with your student loans, filing for bankruptcy may be a good idea for you. To learn more about your options, call (480)-648-8975 to schedule a FREE consultation with experienced Arizona Bankruptcy attorney, Benjamin Skinner.

Who’s to Blame?

There are several theories as to why Hostess, who also owns the Wonder Bread, Drake’s, and Nature’s Pride brands, has plummeted back into financial distress. An article by USA Today suggests that America’s new eating habits are to blame, claiming that healthier snacks like yogurt and wheat bread are becoming preference over cakes and white bread in the United States. Even with America’s health craze, Hostess managed to sell 36 million packages of Twinkies last year, down only 2% from 2010, according to SymphonyIRI Group.

However, Hostess is pointing its finger at pension and medical benefits costs. The company plans to modify the collective-bargaining agreements that are governing the employment of its union workers. 83% of the company’s 90,000 employees belong to union organizations.

What’s the Damage?

The company’s debt is certainly another factor. Hostess’ most notable unsecured creditor is the Bakery & Confectionary Union & Industry International Pension Fund, to which the company admittedly owes approximately $944 million.

Though their situation seems bleak, the company plans to move forward and come out of this mess by obtaining new capital investment and withdrawing completely from multiemployer pension plans in hopes of reducing its heavy debt load, says president and chief executive, Brian J. Driscoll.

Light At the End of The Tunnel?

While I admit that Twinkies and other Hostess products are unhealthy, have suspiciously long shelf-lives, and contain ingredients that I can’t even pronounce, it’s never good to see a giant like Hostess Brands fall along with so many others; once successful companies with thousands of employees continue to lose against the monstrous economy in America.

If you have a business with similar financial struggles, contact an Arizona bankruptcy attorney that can help evaluate your situation. Call (480) 648-8975 today to set up a FREE consultation with experienced bankruptcy attorney, Benjamin Skinner.

The Beginning of Kodak

Kodak was founded in 1881, and the Kodak camera was put on the market in 1888. Former employees compare it to Apple and Google of today; it had a young and exceptionally creative staff and the company’s success was wildly discussed throughout the world. On ‘wage dividend days’, executives would hand out check bonuses that the staff would “use to buy cars and celebrate at fancy restaurants.” But even with Kodak’s fast achievements, it proved too difficult to compete with the entrance of digital cameras and smartphones.

Kodak first started struggling in the 1980s when foreign companies got in the film game. It began investing in the printing industry after some failed attempts with bathroom cleaners, chemicals, and medical testing devices in the 1980s and 90s. To this day, Kodak stands as the fifth most lucrative printer company in the world with 2.6% of international market share.

Antonio Perez, former CEO of the printing company, Hewlett-Packard, joined Kodak as its chairman in 2005, and got away with using Kodak’s patent lawsuits and licensing deals to keep the company running until 2011. In late September, the company withdrew $160 million from its credit line—even though it was telling its investors that Kodak was working on building cash. Shortly after, lawyers and financial advisers were hired to restructure the company’s accounts.

Restructuring The Company

Now the 131-year-old company is falling back on its patent portfolio, as selling it may help them avoid filing for Chapter 11. However, filing may allow the company to sell at higher prices. Filing would also release the company of its pension and health care obligations for retirees. Kodak is currently in conversation with a handful of large banks, including J.P Morgan Chase, Citigroup, and Wells Fargo about the necessary $1 billion in financing it will need to survive through the bankruptcy proceedings.

Kodak’s future remains unknown and uncertain. As investors are contemplating whether or not the company’s printing business is worth financing, or if all of its value remains in its patents, the world prepares to see another nostalgic business enter the ranks of the fallen. In the past five years America has watched as Polaroid, Blockbuster, and Borders have disappeared from the consumer world, victims of the economic turmoil that has become all too familiar. Will Kodak be next, or will it find a way to survive?

In 1932, George Eastman, the original founder and CEO of Kodak, committed suicide, leaving a note that read: “To my friends, my work is done. Why wait?” After its many world-changing accomplishments, perhaps Kodak’s work is done as well.

Maintaining your Business

If you’re concerned with the finances of your business and think you may have to consider filing Chapter 11 bankruptcy, call (480)-648-8975 to schedule a FREE consultation with Arizona Bankruptcy attorney, Benjamin Skinner.

Dealing With a Second Mortgage

Many people are not aware that in Arizona, a second mortgage or line of credit that was not used to purchase the home is a “recourse loan.” This means that you may still be liable for that debt even after the short sale or foreclosure has taken place. Unless the bank agrees to waive the balance of what’s owed, you will likely be sued for the balance. It is crucial that there is no language in the short sale approval documents that makes you liable for any portion of the unpaid balance after the short sale.

Another significant issue deals with tax liability that may result from debt forgiven in the short sale or foreclosure. If the bank agrees to cancel or waive its right to pursue you for the balance, there is a potential for you to incur tax liability on the cancelled debt. Following a short sale or foreclosure, your lender will issue a form 1099 giving notice to the IRS of any debt cancellation. Debt cancellation is considered ordinary income for tax purposes. However, there are a number of possible exceptions to avoid taxation on income from canceled debt. Debts discharged in bankruptcy do not result in any tax consequences.

Making The Best Move

Usually a short sale will result in less damage to your credit and can be an excellent way out of a bad situation. However, an individual with recourse loans or who is facing significant tax consequences may be better served by filing bankruptcy. Such an analysis is best accomplished by meeting with an attorney experienced in both real estate and bankruptcy to explore all of the possible consequences of each option. When so much is at stake, it is certainly worth the time and money to meet with an attorney to ensure that there are no unpleasant surprises.

If you need professional advice regarding your situation, call (480) 648-8975 to schedule a FREE consultation with Real Estate and Bankruptcy attorney, Benjamin A. Skinner.

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There are two common tools in bankruptcy that relate to mortgages. The first is called a “Lien Strip,” and the second is a “Cramdown.”  It’s important to note that these tools are only available in a Chapter 13 bankruptcy. (Chapter 13 requires monthly payments.)

Lien Strip

A Lien Strip will not provide protection or relief from a first mortgage, but it does provide complete protection and relief from second mortgages or third mortgages if you have them (or home equity lines of credit). A Lien Strip eliminates any lien or mortgage that is not supported by the value of your home.  For instance, if you owe $100,000.00 on your first mortgage and $50,000.00 on a second, but the value of the home is only $75,000.00, then the second mortgage is not supported because the entire value is swallowed up in the first mortgage.  However, if the value of your property is even one penny more than the amount you owe on the first mortgage then you may not strip the second mortgage from the home. Basically, a Lien Strip is an all-or-nothing deal, but it is a powerful tool to eliminate 2^nd and 3^rd mortgages on real estate.

Cramdown

A Cramdown is very different from a Lien Strip.  A Cramdown is not an all-or-nothing deal. Through a Cramdown, you can get partial relief from a mortgage by forcing the lender to accept the fair market value of the home in full satisfaction of the debt.  In other words, if you owe $100,000.00 on a first mortgage and the value of the house is only $75,000.00 then you could force the lender to accept $75,000.00. The practical drawback to a Cramdown is that the fair market value of the home must be paid off within the time frame of the Chapter 13 plan (3-5 years).  In most cases, it is not feasible to accomplish such a feat if the amount that has to be paid is too large. However, in some circumstances it is very useful.  A major limitation of a Cramdown is that it is not available to any mortgage on your primary residence.

If you have questions on if and how bankruptcy can assist you with your mortgage debt, call an experienced Arizona bankruptcy attorney to discuss your case. To schedule your FREE bankruptcy consultation today, call (480) 648-8975.

What Accounts Will Creditors Target?

When people file for bankruptcy, they often think creditors will target money in any bank account that has their name on it. This, however, is not the case. Under Arizona law, just because your name is on a bank account doesn’t mean that the money in the bank account belongs to you.  You only own money in the account to the extent that you owned it prior to it being deposited.  In other words, it doesn’t matter whose name(s) are on the account.  The only thing that matters is who deposited the money.

What If I’m a “Signer” on Someone’s Account?

Let’s say that your mother puts you on her bank account as a signer so you can help manage her funds and pay her bills.  During the course of your time as a co-signer, the only deposits are your mother’s social security and pension checks, but you never deposit any of your own money.  If this is the case, all the money in the account belongs to your mother even if you are a signer, and if you have to file bankruptcy, that money cannot be touched.

If you are considering filing bankruptcy, but are afraid to what might happen to a relative’s money because you are a signer on their account, call (480) 648-8975 for a FREE consultation with an experienced Arizona bankruptcy attorney.