Avoid Bankruptcy

Bankruptcy is the absolute last resort in the process of saving your home. Under certain circumstances, it may be the only viable solution for some clients. After a thorough analysis of your case shows that loan modification is not an option at this time, our attorneys may recommend bankruptcy as an alternative to get you and your home the most protection available.

The bankruptcy process allows debtors to have their qualifying debt forgiven in federal court. The law protects homeowners when they do not have the ability to meet their creditors’ repayment demands. We have a network of bankruptcy attorneys that can handle your case depending on the state you reside in. Complete the form in the right column to find out if you qualify for bankruptcy.

After successful completion, the bankruptcy court will issue a documentation of discharge, which legally releases the consumer from his debts. Your creditors will then have no legal authority to contact you or pursue any of your debts listed in the bankruptcy discharge documentation.

Filing for bankruptcy also activates an automatic stay, which stops creditors from any attempt to collect from you. This prohibits phone calls and letters from collection agencies, wage garnishments, lawsuits, bank levies, and any other type of collection tactics from your creditors.

The two common bankruptcy options for consumers are: Chapter 7 and Chapter 13. Chapter 7 allows a consumer to discharge debts completely if you qualify under the new bankruptcy reform guidelines, while Chapter 13 is a debt consolidation plan which allows you to repay a portion of your financial obligations.

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160

By Bankrate.com

What’s worse than declaring bankruptcy? Hiring the wrong attorney for the job.

Handling bankruptcy filings has become a volume business for many lawyers, leaving some of them overworked and unable to attend to the details of all their cases.

Bankruptcy mills — storefront operations offering cut-rate services — have set up shop in many places. All this activity means that individuals facing the ultimate financial decision too often find themselves with legal services that are inferior to what they expect or need.

“I’ve seen cases where the lawyer hired to represent the client didn’t show up at the bankruptcy hearing,” says Vince Slusher, a shareholder and attorney with Davis Munck, a Dallas-based law firm.

Nobody wants a no-show or incompetent attorney, especially when it’s your financial future in the balance. That’s why you need to do some research before hiring a bankruptcy lawyer.

Get going on your research
Here are 13 tips to help you find the best attorney to handle your bankruptcy filing.

1. Don’t dawdle.

“Contemplating hiring a bankruptcy attorney has all the allure of selecting your mortician,” explains Ray R. Graves, who served 20 years as a federal bankruptcy judge for the Eastern District of Michigan who went on to work for BBK Ltd., a business consultancy headquartered in Southfield, Mich.

“People don’t want to deal with it. They put it off beyond the last minute when the wolf is at the door.”

Waiting until the last minute won’t give you the time you need to find a good attorney.

And it won’t give a good attorney enough time to adequately prepare for your case.

2. Don’t ask friends for referrals.

Unless your fellow churchgoer or golf buddy has gone through a bankruptcy, he or she won’t have any leads for you. Asking will just waste time, says Graves. “This is a closed club,” he explains.

3. Do ask for suggestions from legal professionals.

Consider who among your circle of acquaintances might know a bankruptcy lawyer. If you have a personal attorney, start there. Keep in mind, however, that bankruptcy law is a specialty, so if your lawyer offers to handle the case as part of your usual retainer, make sure he knows his way around bankruptcy court.

Also check local or state bar associations or professional organizations. Good places to ask include the Association of Consumer Bankruptcy Attorneys, the American Bankruptcy Institute and your local legal aid society. (Legal aid societies won’t handle bankruptcies, but many keep a running list of bankruptcy attorneys.)

4. Investigate certifications.

Attorneys who are certified by the American Bankruptcy Institute have had to meet additional standards. See if your prospective attorney has this added training.

5. Spend a day at bankruptcy court.

Observing the attorneys in action can give you an idea of the lawyer you want representing you. At the court you also can find out which locals specialize in this form of law. And you can get a chance to talk to the debtors and can ask them whether they felt their lawyers did a good job, says Rick Mitchell, partner with Iseman, Cunningham, Riester & Hyde in Poughkeepsie, N.Y.

6. Find out who sits on local bankruptcy court panels.

Mitchell says to check out the trustee panel. “These are attorneys who are regularly in bankruptcy court and are well enough respected to be put on the panel,” he says.

Graves recommends you also get the names of lawyers on the local bankruptcy court’s debtor or creditor committees. “People on these committees do it to attract business, but they also take their work seriously,” says the former judge.

Look around and pose the right questions
7. Check out the law firm’s offices.

You’re not looking for how tastefully a lawyer’s office is decorated, but how well-organized an office it is, as well as the general environment. This office appraisal can give you vital clues as to how a lawyer would handle your case.

“Look around the office and see how well organized it is. Is it neat, or are there 25 folders spread around the floor?” asks Judge Graves. “You wouldn’t go to a doctor with a dirty examining room and you don’t want to go to a lawyer with a disorganized office.”

8. Ask questions.

Once you have some candidates, interview them or someone at the law firm. Be sure to ask:

How many bankruptcies do you handle in a month or in a year?

How many of those bankruptcies are consumer or personal rather than business filings?

How much access will I have to an attorney during my bankruptcy filing?

If I’m not working directly with you (the lawyer), whom will I be working with?

Can I interview the person with whom I would be working?

What time frame do you have for this bankruptcy?

How will the procedure work?

This is a critical decision, so if you get evasive answers, it’s probably a red flag that this is not the firm for you.

9. Evaluate the responses.

Because bankruptcy law is a volume business, the time you’ll actually be working with a specific attorney may be small. In fact, with most consumer bankruptcies, the client works with a clerk or a paralegal; your actual attorney won’t come into play until your day in court.

“In the end, 90% to 95% of people who file for bankruptcy don’t have complicated issues and their filings can satisfactorily be handled by most attorneys or their paralegals,” says attorney Mitchell. That’s why, he says, it’s important to use the interview process to determine whether you can work well with the whole firm as well as a particular attorney.

Consider whether candidates answered you fairly and in enough detail so that you can make an informed decision on whom to hire.

Make sure the attorney (and firm) has the expertise you need. Someone can be a great attorney who handles 60 business bankruptcies a month, but that probably isn’t the attorney you want to handle your personal bankruptcy.

And while you want an experienced lawyer, you want to make sure the attorney doesn’t have too much work. “You have to make sure that they are not spread too thin,” says Vince Slusher, a shareholder and attorney with the firm of Davis Munck in Dallas.

10. Understand your role.

Go over time frames and filing requirements with the firm, says Rick Hoagland, a partner and shareholder with the CPA firm of Moore, Ellrich & Neal in Palm Beach Gardens, Fla. Make sure you know what is expected of you; if you do your part, you’ll increase your chances of a successful filing. So a lawyer who briefs you on your role is probably a keeper.

Avoid the bargain-basement bankruptcy
11. Don’t hire the cheapest lawyer.

You’re obviously filing because you don’t have a lot of cash to spare. But like most things in life, taking the cheap route in bankruptcy could cost you even more in the end if a bargain attorney makes mistakes.

“When it’s all said and done, you want a lawyer who knows the system and will do the best job of representing you,” Graves says. That may end up costing a little more.

Verify what the going rate is in your area. Your local bar association probably can help you determine whether a proposed fee is fair and in line with local standards. Anybody who charges too much or too little probably shouldn’t be your lawyer of choice.

12. Get fee specifics.

Find out exactly what the costs of bankruptcy are. What’s included in your lawyer’s fees? What’s not? In some complicated proceedings, for example, a forensic accountant may be needed, says Hoagland. If that’s the case, is it included in your charges or is it an additional fee?

13. Stay involved.

Once you hire a lawyer, don’t be content to let him or her handle it alone. Double check all filings. Did any of your creditors get dropped off the list? Staying on top of your bankruptcy filing will help ensure that the proceedings go smoothly and will keep your lawyer on his or her toes.

“When you’re hiring a bankruptcy attorney, you should remember that it’s not just who you know, but what you know and what you’re willing to learn,” says attorney Slusher.

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160.

By: LawInfo

If you are looking to hire a bankruptcy attorney then you have likely seen multiple ads that all claim to provide prospective clients with free legal consultations. However, the word consultation means different things to different attorneys and it is, therefore, important to understand what your free bankruptcy consultation will be before you agree to it.

Why is a Free Bankruptcy Consultation Important?

You should think of an initial consultation with a bankruptcy attorney as a job interview with you being the employer. You will, after all, be paying the attorney for a service and you, therefore, have the right to find out if you are comfortable with the attorney and if the attorney has the skills and expertise to get you the best possible outcome in your bankruptcy proceedings.

Many attorneys understand that they are providing you with a service and, accordingly, will not charge you for the initial meeting. This is not only to your benefit but to the attorney’s benefit as well. The attorney needs to conduct an initial case evaluation in order to determine if he or she is qualified to help you and to determine if it is a job that he or she wants.

What Questions Should I Ask If An Attorney Offers a Free Consultation?

While many attorneys realize the importance of providing an initial bankruptcy consultation free of charge, every attorney defines that initial consultation in a different way. There are some questions that you should consider asking any attorney, who is offering a free consultation, including:

* How Long Is the Free Consultation? Attorney consultations can vary widely in duration. Some attorneys offer free 1 hour consultations and charge for any time over 1 hour. Other attorneys do not put a specific time limit on the consultation session.
* Where is the Free Consultation? In an effort to keep consultations short and time efficient, some attorneys will only conduct free consultations over the phone or internet. Some clients and some attorneys prefer face to face meetings, however.
* If I Don’t Retain You, What Happens? The lawyer should be aware that professional responsibility rules in most states limit what the lawyer can do with the knowledge obtained from a prospective client during a consultation meeting.
* Should I Bring Anything to Our First Meeting? Similarly, would you like anything to review prior to our first meeting? These questions will allow you to come to the meeting prepared to answer the attorney’s questions.

A Free Consult Can Be a Good Start

When an attorney, or his or her office staff, answers your questions about a free bankruptcy consultation, it is important to take note of all of the answers. The way in which the attorney handles your questions and free consultations can be indicative of how the attorney will handle your entire case.
Most clients are looking for an attorney with whom they feel comfortable, and who they trust to do the best job possible in handling their bankruptcy. While this in no way means that an attorney is obligated to give prospective clients free consultations that go on for extraordinary lengths of time, it also means that prospective clients should not full rushed during a free consultation. Rather, each free consultation should be a productive meeting where the attorney and client have a chance to honestly get to know one another and to decide if the attorney is a good match for that particular client.

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160

By: LawInfo

Corporations and other businesses are required to declare bankruptcy through an attorney. However, individuals are allowed to represent themselves in bankruptcy proceedings. You may be tempted to declare bankruptcy without a lawyer’s assistance. The process may appear simple. You may wish to avoid involving others in a situation that is already stressful. And obviously, money can be tight during this process. However, there are excellent reasons to ask for an attorney’s advice and assistance during any bankruptcy.

A bankruptcy proceeding can be an extremely stressful situation. There is no reason to go through that stress without getting the most benefit possible out of it. An attorney can help you ensure that your bankruptcy goes smoothly and save you money—as well as stress—in the long run. Here are some things a bankruptcy attorney can offer:

Information. Bankruptcy law can be complex. A bankruptcy can take several months to complete. This can add stress to what is already a bad situation. An attorney who practices in bankruptcy law can help you to understand this process. Your attorney can offer you strategies and alternatives that you might not have known about. Having this information can be vital to planning your bankruptcy. An attorney can also give you valuable advice during the process of a bankruptcy.

Expertise.  Bankruptcies require a lot of paperwork. Different bankruptcy courts have different rules. You must provide the bankruptcy court with information on all of your debts, property, and financial information. Bankruptcies involve communication with the court, creditors, and trustees. You must also follow the rules specific to the court in your jurisdiction.

All paperwork for a bankruptcy must be filled out correctly, or you can risk not having your debts cancelled. Bankruptcy documents are randomly audited to prevent fraud. If you make a mistake in providing information, you can face prosecution for fraud. Obviously, the best way to protect yourself is to get the help of a lawyer who has experience in these issues.

To get the most out of your bankruptcy proceeding and protect yourself from mistakes, it is vital to get an attorney’s assistance. An attorney who practices in bankruptcy law will understand how to submit information to the courts and to your creditors, to ensure that your debts will be discharged.

Protection.  Even after you retain a lawyer, your creditors can still contact you. However, a bankruptcy attorney can help to stop harassing phone calls. Having someone else take over the hassle of dealing with your creditors can save you time and energy—and make sure that you gain peace of mind during as well as after the bankruptcy process. Your attorney can also help you make sure that debts discharged during your bankruptcy do not show up on credit reports in the future.

Bankruptcy can be a painful process, but there are ways to reduce the stress involved. An attorney can help you get the most out of your bankruptcy, prevent mistakes, and protect you before, during, and after the filing process.

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160

by: Kathryn Dawson

Wealth management is really just about organising your financial affairs, preserving the value of your accumulated assets, if possible increasing the value of your assets, and thinking about the future. Get your life organized and simplify financial decisions. If you haven’t thought much about the future, then now might be a good time to make some choices with regard to investments, pensions and retirement planning.

You can find help online about wealth management, and there are plenty of financial experts and professionals who offer their services and can advise on banking, estate planning, legal resources, tax professionals, investment management and other wealth management services.

Wealth managers can be independent financial consultants or working for large corporations, and their role is to ensure you make the most of your accumulated wealth and financial assets. To do this they focus on financial planning and retirement planning. The first step is to set up an interview to gain an understanding of where your finances are at the moment and your objectives. From this information they will compile a detailed and comprehensive plan designed specifically for you. The plan will outline guidelines and strategies aimed at achieving your individual needs and goals.

Planning for your retirement is important as it is a time you’ll need security and financial comfort, at that age the last thing you want to be worrying about is finding a part time job or whether you have enough to live on. Although currently, this might not be a high priority for you, it’s very important to start planning for your old age whilst you are still young as it generally does require a long period to save enough to ensure you have a good standard of living in retirement.

A major part of financial planning is organizing your life so you can reap the benefits in the future. This includes aspects such as education for your children including university fees, being successful in business, living the kind of lifestyle you enjoy, and retiring with enough savings to live comfortably. Tax and pensions are difficult to understand but extremely important for individuals and businesses, a financial advisor should be knowledgeable about tax-mitigation strategies that will reduce the amount of tax you pay overall, and be able to set up a pension scheme that you can afford and will be sufficient to let you lead the kind of lifestyle you enjoy.

There is so much to consider when getting your life in order and financial planning advisors, with their experience and knowledge, can set it all out for you in simple terms. The best place to start is to go online and find some businesses in your local area, then give them a call or send an email and set up an appointment for a chat.

A good advisor will be pro-active and easy to get hold of when needed. They should keep in touch with you regularly keeping you informed of relevant information or updates, discuss any issues that have come to light, and share any thoughts or ideas about your investments or future goals.

As added reassurance, you might consider advisors and firms with additional qualifications. Chartered Financial Planner status can only be achieved by passing demanding Chartered Financial Planning exams plus a minimum of five years’ relevant industry experience. In addition there has to be a demonstrable commitment to Continuing Professional Development. A Chartered Financial Planner is highly qualified to take care of all your financial planning and wealth management needs. By choosing a financial firm that invests in its people and can provide you with expert advisors, then you know you are getting only the best for all your investment management needs.

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160

Kathryn Dawson writes articles for Tower Hill Associates, a growing financial advisor and one of the 275, chartered financial planners in the UK offering a range of financial planning services such as investment management and personal insurance advice.
http://www.towerhillassociates.com/our-service/elements-of-our-service/investments

I found this great article in the Los Angeles Times this morning.  I could not resist sharing it.

Underwater on their mortgages and angry at banks, more homeowners are ’strategically defaulting.’

Article source: Los Angeles Times, Alana Semuels

Wynn Block has always dutifully paid her bills and socked away money for retirement.  But in December she defaulted on the mortgage on her Palm Desert home, even thoough she could afford the payments.

Bloch paid $385,000 for the two-bedroom in 2006, when prices were still surging.  Comparable homes are now selling in the low $200,000s.  At 66, the retired psychologist doubted she’d see her investment reboundin her lifetime.  Plus, she said she was duped into an expensive loan.

The way she sees it, big banks that helped fuel the mess all got bailouts while small fry like her are left holding the bag.  No more.

“There was not a chance that house was ever going to be worth anywhere near what my mortgage was,” said Bloch, who is now renting a few miles away after defaulting on the $310,000 loan.  “I haven’t cheated or stolen.”

Time was when Americans would do almost anything to hang on to their homes.  But that commitment appears to be fraying as more people fall behind on their loans while watching the banks and lenders that helped trigger the financial crisis return to prosperity.

Nearly one-quarter of U.S. mortgages, or about 11 million loans, are “underwater,” i.e. the houses are worth less than the balance of their loans.  While home values are regaining ground – median prices rose 10% in southern California last month to $275,000 compared with a year earlier – they remain far below the July 2007 peak of $505,000.

Many homeowners are just coming to grips with the idea that prices will take years to reach the pre-crash peak: as long as 14 years in California, according to economist Chris Thornberg.

Stuck with properties whose negative equity won’t recover for years, and feeling betrayed by financial institutions that bankrolled the frenzy, some homeowners are concluding it’s smarter to walk away than to stick it out.

“There is a growing sense of anger, a growing recogniion that there is a double standard if it’s OK for financial institutions to look after themselves but not OK for homeowners,” said Brent T. White, a law professor at the University of Arizona who wrote a paper on the subject.

Just how many are walking away isn’t clear.  But some researchers are convinced that the numbers are gowing.  So-called strategic defaults accounted for about 35% of defaults by U>S. homeowners in December 2009,  up from 23% in  March of 2009, according to Luigi Zingales, a professor at the University of Chicago’s Booth School of Business.

He and colleagues at Northwestern University’s Kellogg School of Management reached that conclusion by surveying homeowners about their attitudes and experiences with loan defaults.

They found that borrowers were more willing to walk away if someone they knew had done it, and that the greater a homeowner’s negative equity the more likely he or she was to default, even if the monthly payment was affordable.

An analysis released last year by credit bureau Experian and consulting firm Oliver Wyman estimated that nearly 1 in 5 homeowners who were seriously delinquent on their mortgages in the last three months of 2008 were walkaways.

The fact that people are strategically defaulting – there is no question,” Zingales said, “The risk that the number of people doing this might explode is significant.”

A flood o walkaways could damage the nation’s fledging housing recovery by swamping the market with foreclosed properties.  Still, some experts are dubious that millions of underwater homeowners will pull the plug as Bloch did.  Home ownership remains the cornerstone of the American dream.  Moving is a hassle.  And the stigma associated with a foreclosure is likely to keep many hanging on for a recovery.

The biggest surprise is that so many underwater homeowners continue to pay, said White, the Arizona lawprofessor.  He’s convinced that personal shame, as well as moral suasion by the government and financial institutions , has kept many homeowners from walking away, even when they’d  be better off financially by dumping their homes.

But real estate veterans said old taboos were eroding fast.  Jon Maddux, a former real estate investor who in 2007 founded You Walk Away, a non-profit company that guides homeowners through the process of default, said his earliest customers struggled with emotional ties to their homes as well as remorse about reneging on an obligation.  That’s changed as those homeowners have considered that the housing market isn’t going to rebound quickly and they’d be better off cutting their losses.

“Now it’s more of a business decision- it’s people who could afford their house but it’s an inconvenience,” Maddux said.

He and other experts said average Americans are fed up with hearing how they’re supposed to honor their debts while businesses operate by another set of rules.

Case in point: Maguire Properties Inc., one of the largest commercial landlords in California, walked away from seven prime ofice building in Los Angeles and Orange counties last year, defaulting on loans worth more than $1 billion.

Consumers typically begin to think about walking away once the value of the property has fallen to 25% less than the value of the debt, according to research conducted by Sam Khater, senior economist at real estate research firm First American CoreLogic.  About 5 million people nationwide are in that situation, he said.

Some purchased their homes at the peak of the market only to see the value drop precipitously when the bubble burst.  Others bought low but couldn’t resist borrowing against their rising equity to make home improvements and pay off other bills.  When home values fell, they too found themselves underwater.

Ken Henrich purchased his Marysville, Calif., home for $187,000 in 2004.  He and his wife later refinanced the property, tapping their increased quity to pay off credit cards.  They now owe areound $300,000 on a place that’s worth about $132,000.  They let the four bedroom residence slip into foreclosure and are waiting for it o be sold at auction.  They’re planning on renting for a few years until they can perhaps buy again.

“We can more than make the payment,” the 54-year old sales rep said. “The way we look at it, our credit will still be perfect years from now but we’d still owe tons more than it’s worth.”

There are consequences to walking away.  A default will knock down a credit score by at least 100 points, said Craig Watts, a spokesperson for FICO, the company that developed credit scores.  That could make t tough to borrow money, rent an apartment or get a job because many employers now routinely check the credit histories of potential hires.

To some homeowners those consequences are a small rice to pay to gain a measure of revenge against the financial institutions whose loose money helped fuel the crisis.

Joseph Shull, a 68-year old marketing professor said he’s planning to walk away from the town house he bought in Moorpark in June 2006.

“I’m angry, and there are a lot of people like me who are angry,” he said.

He purchased the home for $410,000 and spent $30,000 renovating.  Now the house is worth around $225,000.

Shull admits he overpaid for his property.  But he said it fell in value in part because of “regulatory mismanagement.”

“The bank stabbed me, but at least I got in a pinprick bac,” he said.  “This is the new economy.  The old rules don’t apply any more.”

alana.semuels@latimes.com

Write-offs account for most of what was thought to have been payments

Source: Associated Press

With unemployment high and personal wealth dminished, how was it that strapped consumers were paying down their credit card debt last year? It turns out they probably weren’t.

The bulk of 2009’s drop in credit card debt instead came because banks were forced to write off loans people failed to pay, according to an analysis of Federal Reserve data.

Banks typically charge off loans once they’re 180 days past due, assuming the debt won’t be repaid.

In 2009, banks wrote off a record $88.27 billon in credit card debt. A study by consumer credit research site Card-Hub.com found that accounts for the bulk of the $98.2 billon drop in consumer card balances the Fed reported for last year.

“If you jut look at the numbers, you thin, “Oh, my goodness, there was a big decrease in credit card debt,” said Odysseas Papadimitriou, CEO and founder of Card-Hub.com

But Papadimitriou said consumers couldn’t have made such a big dent in debt while under the financial pressure they faced last year.

Fed reports on outstanding consumer loans don’t tease out the amount charged off by banks. By that measure, credit card borrowing fell for 16 straight month through January, suggesting consumers have been chipping away at balances and spending less.

When you consider how much banks forsake in bad loans, however, consumers’ ability to pay off balances doesn’t appear as rosy.

The only time consumers truly paid down their debt was in the first quarter of last year, the Card-Hub.com study finds. During those three months, card balances fell by $46.9 billion, excluding the $17.59 billion baks wrote off.

After that, card balances either remained steady or rose.

The charge-off rate on credit card loans spiked dramatically in the downturn, hitting a record of 10.1 percent in the third quarter of 2009.

The rate eased to 9.4 percent for the year’s final three months. By comparison, the rate was 4 percent in the fourth quarter of 2006, a year before the downturn began.

The situation may only get worse for banks. Moody’s Investor Service expects the charge-off rate to top out at 2 percent later this year.

Charge-off rates vary depending on the bank, however.

At Bank of America, the annual net charge-off rate for U.S. cards declined to 13.2 percent in January from 13.5 percent in December, while Capital One said its rate rose to 10.41 percent in January from 10.14 percent in December.

Gail Cunningham of the National Foundation for Credit Counseling said she’s not surprised if consumers are still leaning on credit cards, especially given the high unemployment rate.

Still, she said she’s noticing significant belt tightening.

“People have made a conscious decision to reign in their spending,” Cunningham said.

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160

If you would like a free financial/debt evaluation, go to http://www.freeattorneyconsultation.info or call us directly at 866-868-2160

The Bankruptcy Code (11 U.S.C. § 522(b)) allows an individual debtor to protect some personal property from the claims of creditors because it is exempt under federal bankruptcy law, or under the laws of the debtor’s home state. Many states have taken advantage of the provision in the Bankruptcy Code that permits each state to adopt its own exemption law in place of the federal exemptions, and in these states, the treatment of exemptions looks much like it did before the Bankruptcy Code was enacted in 2005. In sixteen states and the District of Columbia, you can chose the exemptions that work the best for you – either the federal exemptions or your home state’s exemption statute. It is always best to check with an attorney in your state to see what exemptions apply to your individual case.

Some of the primary exemptions that may be available to an individual filing bankruptcy under federal law are as follows:

Exempt Property:

•Homestead (equity in your primary residence)- up to $20,200
•Automobile (equity held in one vehicle) – up to $3,225. The equity in your car is based on the car’s market value, less any loans against it.
•Household Items (appliances, furniture clothes) – up to $10,775, $525 maximum per item.
•Jewelry and heirlooms: up to $1225 in value.
•Tools of the trade – up to $1850 in value.
•Life insurance – includes disability benefits and unmatured life insurance policies.
•Alimony and child support – amount reasonably necessary for support of debtor and dependents
•Public benefits such as unemployment, workers compensation, public assistance, Social Security or Veteran’s benefits.
•Retirement funds are exempt under § 522(d)(12) of the Bankruptcy Code. The exemption applies to pension, profit sharing and stock bonus plans, employee annuities, Individual Retirement Accounts (IRAs), deferred compensation plans such as your 401(k) account, and certain trusts. The 2005 amendments to the Bankruptcy Code expanded the protection allowed to certain tax-exempt retirement plans that weren’t always protected under former law.
Non-exempt Property
•expensive musical instruments (unless you’re a professional musician)
•stamp, coin and other collections
•cash, bank accounts, stocks, bonds and other investments
•second car or truck, and
•second or vacation home.
The following states allow a debtor to choose either federal or state created exemptions (but not both): Arkansas, Connecticut, The District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin. All remaining states have opted not to allow its residents to utilize the federal exemptions, so each state has its own statutes which define and list the exemptions.

Talk to a bankruptcy lawyer for a free consultation by completing the form at the top of this page for options that are  best for your individual situation.

Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even.

It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.

As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.

The practice started last fall as the economy worsened. But in recent months, with unemployment topping 9 percent and more people having trouble paying their bills, experts say this approach has risen drastically.

They say many credit card issuers have revised internal guidelines to give front-line employees the power to cut deals with consumers. The workers do not even have to wait for customers to call and ask for a break.

“Now it’s the card company calling you and saying, ‘Let’s talk turkey,’ ” said David Robertson, publisher of the credit industry journal The Nilson Report.

Only a few creditors are willing to confirm the practice. Bank of America and American Express say they decide on a case-by-case basis whether to accept less than the full balance. Other card companies refuse to discuss the subject, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.

The shift comes as the financial services industry finds itself losing some of its legendary power. A credit card reform bill that makes it harder to raise rates on existing balances and prevents certain automatic fees flew through Congress and was signed by President Obama in late May.

Borrowers still have a crushing amount of debt to deal with, however.

Revolving credit, a close approximation of credit card debt, totaled $939.6 billion in March. The Federal Reserve reported that 6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it began tracking the number in 1991. The amount being written off was also at peak levels.

After a balance has been delinquent for six months, regulations require the card company to reduce the value of the debt on its books to zero. If a borrower has not paid by this point, chances are he never will.

“The creditors would rather have a piece of something now instead of absolutely nothing down the road,” said Adam K. Levin, the founder of the consumer education Web site Credit.com.

Banks and credit card companies are discussing new programs that would, for the first time, allow credit counselors to invoke reductions of principal as a routine part of their strategy, said Jeffrey S. Tenenbaum, a lawyer for many counseling agencies. In the past, counselors could persuade card issuers to adjust interest rates and modify late fees, but the balance was untouchable.

An example of how quickly the card companies are shifting their approach is in the behavior of HSBC, a major issuer, toward Mr. McClelland.

He was paying fitfully on his card, which was canceled for delinquency. In April, HSBC offered him full settlement at 20 percent off. He declined. A few weeks later, it agreed to let him pay half.

Traditionally, the creditors could play tough with any accounts that became delinquent because the cardholders had assets. The creditors could sue or place a lien on a cardholder’s house.

As the recession grinds on, though, many cardholders have less to lose. Mr. McClelland, 42, is a renter. Since he is self-employed, he has no wages to garnish. But he did not want to feel like a deadbeat.

“Having this over and done with was appealing,” he said. He raised the agreed-upon $2,743 and sent it off electronically last week. He has spared himself the prospect of years of collection calls.

HSBC said it did not comment on individual cardholders and would not discuss its policy toward settlements. “Every customer situation is unique,” said a spokeswoman, Cindy Savio.

The card companies, perhaps understandably, do not want to promote the idea that settlements have become merely a matter of asking nicely. The creditors also point out that a delinquency, like a foreclosure, destroys a credit record.

And there can be a Catch-22: those with the fewest assets are the likeliest to receive a settlement offer, but they are also the least able to come up with the cash for that final negotiated payment. Some creditors, though, are helpfully letting people stretch this out over months.

Still, a line has been crossed, credit experts say.

“Even in the early stages of delinquency, settlements can be dramatic,” said Carmine Dorio, a longtime industry executive who ran collection departments for Citibank, Bank of America and Washington Mutual.

During the boom, nonpayers were treated more harshly because, paradoxically, their debt was more valuable. Collection agencies were eager to buy bundles of old debt from the card companies for as much as 15 cents on the dollar. In a healthy economy, even the hopelessly indebted can pay something.

In this recession, where collection agencies have little hope of collecting from the unemployed, that business model is suffering. Experts say 5 cents on the dollar is now the most a card company can hope to get for its past-due accounts.

Another factor undermining the card companies is the rise of debt settlement firms. These are profit-making companies that charge fees, nearly always in advance, to bargain with creditors on a consumer’s behalf.

Settlement companies are under fire from regulators, who say they promise much and deliver little. But their ubiquitous ads, which make a settlement seem not only easy but also a moral victory over shamelessly gouging card companies, have done much to spread the idea.

Although there are few independent statistics on the settlement industry, there is no doubt that some generous deals are being done.

Consider Bedros Alikcioglu, a gas station owner in Newport Beach, Calif. He owed $112,000 on four cards and was paying $3,000 a month in interest and late fees. “It was so hard to earn that money, and paying it to nowhere didn’t make sense anymore,” said Mr. Alikcioglu, 75.

He signed up with a debt settlement company named Hope Financial, which negotiated deals with his creditors to settle for about 35 percent of his balance. Hope Financial is charging Mr. Alikcioglu about 12 percent of his original debt.

“I did not want to leave the legacy of bankruptcy,” Mr. Alikcioglu said. “I am now at peace.”