Colorado Springs Bankruptcy Attorney Blog

Bad news for Octomom in her bankruptcy case

2012-05-21T13:53:15Z

Nadya Suleman, commonly known as "Octomom," had her bankruptcy case thrown out of court. A judge was forced to throw out her claim since she failed to file the paperwork necessary to determine her capability to repay her debts. This is an integral part of filing for Chapter 7 bankruptcy known as the means test. While the television personality claims to have approximately $1 million in debt she is unable to pay, her legal mistake may leave her at the whim of her creditors who can now repossesses assets and begin foreclosure proceedings.

As we wrote about earlier, Suleman appears to have become trapped by debt. She is reported to owe money to a large selection of individuals and groups, including schools, relatives and utility companies. While Suleman has attempted several plans to acquire enough money to pay off the debts, these do not appear to have worked as well as one might hope. With the amount of debt she claims to have, it is understandable why she was seeking to file for bankruptcy.

]]> A Chapter 7 bankruptcy can stop foreclosure proceedings, end creditor harassments, stop garnishments and result in the complete or partial dismissal of debts. For an individual suffering under the weight of overwhelming debts, this option can result in an improvement far better than any alternatives.

But, as this story shows, filing for Chapter 7 bankruptcy is an unfamiliar and complicated process that often requires assistance in order to successfully complete. For this reason, it is suggested that any individuals seeking to file for Chapter 7 bankruptcy discuss the intricacies of the process with an experienced bankruptcy lawyer prior to taking action. With diligence and legal assistance, individuals suffering from debt may be able to free themselves from financial burdens by filing for Chapter 7 bankruptcy.

Source: ABC News, "'Octomom' Bankruptcy Case Thrown out of Court," May 16, 2012

Colorado home foreclosure appears to be trending downward

2012-05-16T13:56:38Z

There may be some good news for those worried about having to prevent a foreclosure: foreclosures in Colorado have fallen 1 percent since the beginning of 2012 when compared year-over-year. Included in this period was a 29 percent decrease in foreclosure auction sales.

While these figures varied during the months, with foreclosure filings decreasing in March and increasing in April, the overall trend indicates a reduction this year from last year. Because March and April are typically the high-water points for foreclosure filings throughout the year, this may indicate further decreases throughout the remainder of the year.

]]> The Colorado Division of Housing report, which first reported these declines, also made note of specific counties affected significantly by these changes. For instance, foreclosure filings in Douglas, Denver and Boulder counties decreased significantly, as much as nearly 41 percent, from last year.

While the reasons for these decreased numbers of foreclosures may be a result of a large variety of options, it may indicate the beginning of the end of the string of foreclosures which has beset Colorado.

For those who are seeking to avoid a foreclosure and help contribute to this positive trend, there are several options. Filing for bankruptcy could be one of these options, provided that you meet the criteria necessary. For instance, the criteria to file for Chapter 7 bankruptcy include needing to pass a means test, which determines your capability to repay your loans. If you pass the test, you may be eligible to have significant portions of your debt eliminated.

Another option is to file for Chapter 13 bankruptcy, which could consolidate and reduce your payments. As a result of either of these options, you could prevent a foreclosure, stop property repossessions and block harassment from creditors.

Source: Examiner.com, "Foreclosures fall again in Colorado and all its metro areas," Ryan McMaken, May 10, 2012

Eight little babies lead to one big bankruptcy filing

2012-05-09T14:58:50Z

Coloradans may be interested to know that Nadya Suleman, popularly known as "Octomom," has found herself in financial trouble. The mom, who became a public figure after giving birth to eight children using the process of in vitro fertilization, is reported to have nearly $1 million in debt.

Suleman has opted to file for Chapter 7 bankruptcy with the hopes of having some of her debts discharged. Filing for Chapter 7 bankruptcy can be complex, but some of the potential payoffs include debts being discharged, stopping foreclosure proceedings and preventing repossessions.

]]> The process of filing for Chapter 7 bankruptcy depends largely on what is called the means test. The means test determines the debtor's capability to pay back their loans, which determines whether they are eligible to have their loans discharged and, if so, to what extent.

In Suleman's case, she is reported to have assets of approximately $50,000, putting her debt at nearly 20 times her current assets. This figure will certainly come into consideration during the determination of her ability to repay her debts.

Suleman owes money to a variety of organizations such as the Whittier Christian School, the homeowner she rented from, family members, government entities and corporations such as DirectTV. According to her home's owner, Suleman owes more than $30,000 in missed rent payments. As a result of letting Suleman stay in the home without rent payments, the homeowner says the house is now undergoing foreclosure proceedings due to missed mortgage payments. A foreclosure auction on the house was delayed.

Source: Northern Colorado 5, "'Octomom' files for bankruptcy, owes $30k in rent," April 30, 2012

Abundance of foreclosures stifling sale prices for homes

2012-05-02T12:43:02Z

According to some economists, the sales of foreclosed homes are keeping U.S. home prices low. There are several reasons for this in Colorado and around the country. The most prominent reason is that foreclosure sales often result in houses selling at incredibly discounted rates. And, with approximately 15 to 20 percent of the housing market consisting of foreclosed homes, the demand for houses is being met largely by this huge supply of low-cost houses. This, according to the Standard & Poors/Case-Shiller home-price index, is the sixth consecutive year in the decline of housing price for a large majority of the cities they measure.

This news follows the recent story, which we discussed on this blog, on the foreclosure deal made with five of the largest mortgage lenders in the country. In the wake of that deal, banks have been increasing their rate of foreclosure. Foreclosures are predicted to continue to contribute to this trend of low home prices for at least the rest of the year. For those seeking to prevent a foreclosure, doing so might not only provide an obvious boon to your immediate family, but may have an additional positive benefit of helping reverse the trend of low housing prices.

]]> There are several ways which a person or family can end the threat of foreclosure and regain financial stability. Two of these options are filing for either Chapter 7 bankruptcy or Chapter 13 bankruptcy.

A Chapter 7 bankruptcy filing can help consumers rid themselves of their debt. A Chapter 13 bankruptcy filing is a process that reorganizes debt into more manageable payments. In addition to these financial benefits, filing for bankruptcy has additional benefits such as protection against creditor harassment or property repossessions, meaning those who file can often remain in their home during the road to financial recovery.

Source: Colorado Springs Gazette, "Foreclosures squeezing U.S home prices, sales," April 24, 2012

Football veteran Warren Sapp files for bankruptcy

2012-04-27T18:11:25Z

Football fans in Colorado likely know the name Warren Sapp, and they may be surprised to know that the ex-football star and television commentator is filing for bankruptcy. He has an astounding $6.7 million dollars in debt.

Sapp has explained to several sources the cause behind his economic misfortune: construction deals gone bad. While building homes in Florida, the deals apparently did not play out and forced him into bankruptcy as an attempt to avoid jail time.

]]> This story illuminates the unfortunate truth that in bad economic times the financial wellbeing of an individual can be ruined by an ill-fortuned investment. For Sapp, it was a construction deal, but for others, it may be opening a business.

Even issues such as medical costs or dwindling income from the layoff of a family member can cause a family to face overwhelming debt. Often, these situations can lead to credit card debt, which can further threaten a person's ability to keep their car or their house.

Filing for bankruptcy in these situations is not always ideal, but the results can significantly improve the livelihood for those that do. For instance, filing for Chapter 7 Bankruptcy could completely eliminate an individual's debts, prevent creditor harassment and put an end to any concerns over a foreclosure or repossessions. In order to qualify for a Chapter 7 bankruptcy, the individual must pass a means test that determines their financial capability to repay debt.

For those that do not meet the eligibility requirements to file for Chapter 7 Bankruptcy, Chapter 13 Bankruptcy may be an option. This allows the person to reduce payments by reorganizing their debt, and can also potentially stop foreclosure or creditor harassment.

Source: Yahoo! Sports, "Warren Sapp filed for bankruptcy to avoid going to jail," Brad Biggs, April 14, 2012

Colorado activists hope Initiative 84 will protect homeowners

2012-04-16T22:16:42Z

Colorado House Bill 1156, which proposed requiring lenders to prove that they own property before foreclosing on it, failed to pass through committee. The bill, whose supporters argue would bring more accountability to the foreclosure process, has been repackaged as a proposed ballot initiative.

The proposal will appear on the ballot in an upcoming election as an update to the state's constitution and could be passed by a vote of the state's citizens. The hope of the ballot initiative approach is to sidestep some of the legislative problems and bring the issue to the voter directly.

]]> The issue is viewed as a constitutional matter by its supporters. These supporters argue that there is a link between the foreclosure proceedings and the necessity for due process stipulated in the state constitution. By not having a legal necessity to fully prove ownership of a property before a lawyer can sign off on a foreclosure, they say that some people facing foreclosure may experience unjust eviction from their homes. This initiative, supporters say, would prevent foreclosures without sufficient evidence by reinstating the requirement of proof of ownership prior to the beginning of foreclosure proceedings.

For some fighting an invalid foreclosure, this initiative could help. But it does not offer much help to those that will undoubtedly lose their home unless action is taken to reduce mortgage payments and bring their finances into a more manageable situation.

For those in need of financial help, declaring either Chapter 7 or Chapter 13 bankruptcy is an option. Bankruptcy could allow people under the threat of foreclosure to either remove or reorganize their debt into more manageable payments, prevent foreclosure proceedings and even stop harassing phone calls.

Source: Denver Westword, "Foreclosure reform: Initiative 84 aims to put fix rejected by House committee in constitution," Kelsey Whipple, April 12, 2012

Debtor called by Bank of America 38 times after injunction

2012-04-09T19:16:58Z

For Coloradans trying to break free from the financial burden of overwhelming debts, threats of wage garnishment and creditor harassment are a constant fear. One of the benefits of filing for bankruptcy, aside from the financial debt relief, is the ability to escape the seemingly nonstop contact from collection agencies. But for one man, the creditor harassment did not stop.

After successfully filing for bankruptcy, the individual involved filed for a debtor's discharge, which serves as a legal injunction against creditor harassment. But this did not stop Bank of America from allegedly calling the debtor an astonishing 38 times after the injunction was filed.

]]> This incident is yet another strike against Bank of America, which has a previous history of disrespecting legal injunctions meant to prohibit creditor harassment. For instance, Bank of America is known to use outside collection agencies to seek payments from debtors who file for debtor's discharges. Furthermore, the ruling in yet another case noted that Bank of America took insufficient steps toward finding out if a debtor has filed for a discharge before seeking payments.

This incident is an illustration of the lengths, legal or not, that collection agencies and major banking institutions can go to in order to collect payments from their debtors. As such, it is important for debtors to be well aware of their finances and to seek knowledgeable legal assistance for answers to questions and advice on debt relief options.

This case is an example of how seeking legal assistance can pay off: after the debtor brought Bank of America to court for breaking the debtors discharge, the court forced the bank to pay $12,500 to the harassed person in order to cover his attorney fees and for causing emotional distress.

Source: The Huffington Post, "BofA Allegedly Called Debtor 38 Times After He Filed for Bankruptcy," Alexander Eichler, March 30, 2012

Colorado attorney general announces foreclosure aid plan details

2012-04-03T17:19:21Z

The attorney general of Colorado, John Suthers, has announced along with Gov. John Hickenlooper that the state has developed a plan to implement $51.7 million in discretionary money it received from a large class action lawsuit against five major banking and mortgage institutions. The remainder of the settlement money, which was recently detailed on this blog, is set to be disbursed directly to the homeowners involved in the mortgage crisis.

Of the many ideas that the governor and the attorney general considered, the programs will focus on supplemental-loan modifications that make alterations to mortgage payments and affordable housing programs, as well as funds for counseling, temporary staffing, and various outreach tools such as a public hotline and marketing efforts. The bulk of the funds, approximately $42 million, will go toward loan modification and affordable housing programs.

]]> Another important program that the funds will cover is Colorado Legal Services, which provides free legal assistance to low-income people struggling to stay in their homes. When an individual or a family is facing foreclosure, legal assistance can be the difference between losing a home and keeping it by taking any available steps in the direction of controlling mortgage payments and reducing debt.

While the state is utilizing its funding to take the pressure off some homeowners facing foreclosure, their efforts will likely not reach everyone in need of help. For those who do not qualify for free assistance, the benefits of finding legal assistance could be worth the cost. Among a number of options, filing for Chapter 7 or Chapter 13 bankruptcy could potentially eliminate or reduce debt payments and relieve the hefty burden while preventing foreclosure.

Source: Bloomberg Businessweek, "Mortgage money going to Colo. Homeowners, veterans," Kristen Wyatt, March 16, 2012

Colorado foreclosure scammers caught, will pay restitution

2012-03-27T15:07:48Z

For those facing foreclosure, the process of staying in their home is daunting enough. To make matters worse, there are some individuals who sought to capitalize on the financial desperation of families trying to prevent foreclosure. However, thanks to Colorado state and federal prosecutors, some of these people have been stopped. Prosecutors announced last week that a national foreclosure and mortgage scam has been permanently shut down.

The organization, Bella Homes, had its assets frozen and will be forced to pay more than $1.2 million dollars in restitution and its frozen assets will be used to repay the victims of its scam. The scheme involved convincing people to sign away the titles to their homes. Then, the organization would lease the people's homes back to them. According to prosecutors, the owners of the organization were essentially paid rent by at least 450 individuals in multiple states.

]]> A scheme such as this is just one more problem that people may deal with while trying to avoid foreclosure. Other issues include possible harassment or illegal behavior from debt-collection agencies or living under the constant threat of repossession or eviction.

For many of these people in Colorado, there are few options available to control their debt and remove the fear of foreclosure. Two of these options are Chapter 7 and Chapter 13 bankruptcy. By filing a Chapter 7 or Chapter 13 petition, it is possible to eliminate debt or reorganize debt into manageable payments.

Perhaps most important for the affected homeowners' state of mind, these proceedings can stop foreclosures, prevent repossessions and halt harassing phone calls. Discussing these options with a legal expert can help people understand the possible benefits of taking legal action.

Source: CBS News, "Prosecutors announce end to foreclosure scheme," March 22, 2012

Fair Debt Collection Practices Act regulates collection methods

2012-03-20T19:31:00Z

People in Colorado with significant credit card debt need to be aware of the rules and regulations governing collection agencies. The Fair Debt Collection Practices Acts (FDCPA) prevents collection agencies from harassing debtors in a variety of important ways. For instance, the FDCPA sets time restrictions for phone calls, preventing agencies from calling any time other than between 8 a.m. and 9 p.m. Monday through Saturday.

Agencies are also prevented from calling with extraordinary frequency or to call friends, employers or family regarding your debt. These are just a few example of the potential benefits afforded to debtors by the FDCPA. If a creditor is reported for breaking the laws set down in this act, the legal repercussions could potentially involve a lawsuit for improper debt collection practices.

]]> In some instances, state regulations may go beyond the FSCPA in regulations for collection agencies. There is, for instance, also a Colorado Fair Debt Collection Practices Act that complements the federal law. However, there are still many collection practices that agencies are still capable of using. Provided that a collection agency goes through the proper legal channels, legitimate wage garnishment and property repossession threats still exist.

While harassing phone calls may be curbed, collection processes can continue regardless. To resolve these problems, people in need of debt relief may have to take additional steps to relieve themselves from the financial burden. Two of these options are Chapter 7 and Chapter 13 bankruptcy petitions.

The primary benefit of filing for Chapter 7 petition is the potential to have significant portions of debt discharged. As for Chapter 13 petition, there is potential to reorganize debt into more manageable payments. For either of these options, discussing the details of your finances with a knowledgeable legal source can help determine the extent of help available through pursuing a legal option.

Source: San Francisco Chronicle, "What Debt Collectors Can And Cannot Do," Angie Mohr, Mar. 15, 2012

Even the wealthy in Colorado can face foreclosure

2012-03-12T20:24:31Z

For one successful businesman, facing a foreclosure was the last thing on his mind. In 2007 when he and his family were moving to Colorado, few economists had an inkling of the massive downturn yet to occur. So when he and his wife built a new multimillion-dollar home from the ground up and opened two new restaurants using the home as collateral, the consequences of their timing were unimaginable.

Yet, just one year later, the economic downturn had begun and their restaurants were without customers. They eventually closed the restaurants by filing for Chapter 7 bankruptcy. They reached out to CitiMortgage hoping to renegotiate their mortgage payments and prevent home foreclosure, but the bank refused to modify the mortgage.

]]> And they are not alone among the wealthy facing this problem; in fact, foreclosure on the homes of wealthy people outpaces foreclosures on other homes throughout the country. The fact of the matter is that as a consequence of the economic downturn, outstanding expenses or a variety of other reasons, any types of Americans can find themselves in need of debt reduction and seeking relief from the burden of a potential foreclosure.

For many individuals, filing for Chapter 7 or for Chapter 13 bankruptcy could either reduce debts into manageable payments or eliminate them altogether. Perhaps more importantly, taking either of these actions could help prevent a foreclosure once and for all. But it is important to know that the process for either of these legal options can be complicated. It is also important to know that the results of any bankruptcy proceeding depend on your fiscal situation and require full disclosure of your finances. However, with some legal advice and proper preparation, successfully eliminating debts, reducing debts or avoiding a foreclosure are all attainable goals.

Source: CNN Money, "'How we're losing our multi-million dollar home'," Jessica Dickler, Mar. 2, 2012

Government seeks to regulate unlawful debt collectors

2012-03-05T20:52:51Z

The Consumer Financial Protection Bureau and the Federal Trade Commission are both looking into ways to prevent debt collection agencies from engaging in predatory collection practices.

With a focus on educating consumers about their rights and about what constitutes fair collection processes, these two agencies are hoping to create an environment where abuse and exploitation are uncommon occurrences. For instance, a debt collection agency is limited in the times it can call, and is legally prohibited from threatening to arrest any individual. As a result of the efforts of the CFPB and the FTC, several laws that aim to protect consumers in need of debt relief from unlawful debt collection agencies have been implemented within the Dodd-Frank Act.

]]> With one in seven debt collections today being handled by third-party agencies -- twice the rate of a decade ago -- the necessity for clarity in debt collection issues is paramount. It is critical for Coloradans and others attempting to resolve financial problems to know how to stop harassing phone calls, prevent foreclosure or repossession, and relieve overwhelming debts without the constant fear of creditor harassment.

For many, declaring bankruptcy is one way to stop creditor harassment and reorganize or eliminate debt. To file for Chapter 7 bankruptcy, an individual needs to take and pass a means test. This test determines a person's capability to repay debts. Chapter 7 bankruptcy can help struggling debtors eliminate some or all of their debts and stop harassing phone calls once and for all. For those who do not qualify for Chapter 7 bankruptcy, Chapter 13 bankruptcy can help reorganize debt and lower payments to manageable levels.

Source: Huffington Post, "Debt Collectors Targeted For Heightened Unlawful Harassment," Catherine New, Mar. 1, 2012

Colorado receives $204.6 million in landmark mortgage case

2012-02-29T15:44:13Z

In a landmark national case, five major mortgage lenders have agreed to a settlement that provides roughly $25 billion in compensation for victims of unjustified foreclosure or other abuse related to the collapse of the housing market. Forty-nine states took part in the agreement. The financial institutions in question agreed to the settlement in exchange for avoiding any state-level civil litigation, but individual homeowners can still levy civil charges against the institutions themselves. Furthermore, federal and state governments can still bring the organizations to court for criminal offenses.

Colorado was awarded nearly $205 million under the settlement, which will provide different forms of relief to homeowners. In addition to direct reimbursement, the settlement stipulated that financial institutions must reduce mortgage payments and otherwise help struggling homeowners who are underwater to avoid foreclosure.

]]> Yet critics of the settlement argue that the agreement does not do enough to fix the damage caused by illegal foreclosures, and that more investigation is necessary to reveal the true extent of the problem. While the settlement is sure to help some homeowners, there will undoubtedly be many left in need of assistance.

Those not affected by this settlement may be left dealing with creditor harassment and potential foreclosure. For these people, legal options such as filing for Chapter 13 bankruptcy may be able to help. Chapter 13 allows for an individual to re-organize their debt into more manageable payments. It can also put a halt to creditor harassment or prevent a foreclosure. Since the process of filing for Chapter 13 bankruptcy can be complicated, consulting with an experienced legal team can be helpful for anyone considering this option.

Source: The Gazette, "Deal reached over foreclosure abuses; Colorado to get $204.6M," Feb. 9, 2012

Colorado home foreclosures on the decline in January

2012-02-22T17:23:22Z

For Colorado residents concerned about home foreclosures, there is some good news. According to recent state reports, filings for home foreclosures for January 2012 are lower than they have been for the previous five Januaries.

There has been a 28.2 percent drop in home foreclosure filings and a 23.3 percent drop in foreclosure sales for this month alone, along with an overall 14 month trend of declining foreclosures. Considering these statistics, there is hope that the worst of the Colorado housing foreclosures may be over.

]]> Yet this optimistic trend will provide little comfort to those who are still struggling to make a difficult mortgage payment or save their homes from foreclosure. For homeowners in need of debt relief who are also trying to keep their homes, finding ways to stop their foreclosure can be a daily problem. For some of these people, filing for Chapter 13 bankruptcy may be a solution.

Filing for Chapter 13 bankruptcy can be difficult, but the results of doing so can significantly reduce financial burden. For example, filing for Chapter 13 bankruptcy can result in:

• Discharge of debt

• Prevention of foreclosure

• Reorganization of debt into manageable payments

• Reduction of vehicle payments

While the results of filing for Chapter 13 bankruptcy are different for everyone depending on their finances and the extent of their debt, it can be considered as an option for debtors fearful of losing their homes.

Since the results of any Chapter 13 bankruptcy filing are determined largely by what criteria your financial situation meets, taking your debt problems to a knowledgeable legal source could help provide insight as to what the specific results of a Chapter 13 bankruptcy filing could be for you.

Source: startribune.com, "Colorado foreclosures filings, sales drop in January; Filings down for 14 months in a row," Feb. 16, 2012

Colorado residents can learn from Gary Busey's bankruptcy

2012-02-14T15:03:37Z

Anyone can find themselves in need of debt relief. As insulated from the real world as they may seem, even celebrities are not immune.

For example, actor and television personality Gary Busey has formally filed for Chapter 7 bankruptcy. Busey is reportedly in debt to a diverse assortment of entities, including the IRS, medical facilities, banking institutions, lawyers, and others. According to Busey's manager, there are many reasons for his current financial situation, including "past unfortunate choices, associations, events and circumstances."

]]> What is clear from this situation is that anyone, even celebrities, can find themselves in need of debt relief. Colorado residents suffering from creditor harassment and wage garnishment can learn from this example that filing for bankruptcy may be necessary to relieve financial burdens.

Some of the benefits of filing for Chapter 7 bankruptcy include:

• Preventing property seizures

• Protection from new lawsuits or wage garnishments

• Stopping harassing phone calls

Before being approved to file for Chapter 7 bankruptcy, you will need to take a means test. A means test takes your financial circumstances into account and calculates your capability to make payments on your debt, which will determine if you are eligible to file for Chapter 7 bankruptcy.

While new laws may make the process of filing for Chapter 7 bankruptcy seem out of reach, consulting with a lawyer about your financial situation could help you successfully navigate the process. The filing process can be time-intensive and does require full disclosure of your finances. However, in some situations, the potential benefits can certainly outweigh the temporary sacrifices.

Source: Reuters, "Gary Busey Bankruptcy Shocker: Actor Files for Chapter 7 Protection," Tim Kenneally, Feb. 9, 2012