Bankruptcy Reform - One year later...

There have been many stories in the press about the anniversary of the bankruptcy reform act and it's impact. In general, the reports are holding to party line. I say that because one of the goals of the reform was to reduce bankruptcy filings and filings are down significantly. Although some are calling the current level "historically low", you need only to go back 7 or 8 years to reach monthly filing levels comparable to the previous quarter.

Let me take some of the talking points and address them specifically.

Significantly lower filing rates. The first goal of the legislation was to reduce the number of bankruptcy filings. I want to offer an analogy: a medical clinic is seeing 1000 patients a month with minor to major wounds. The clinic supporters, faced with increasing costs to serve patients, decide to charge everyone coming in according to their income. Activists complain that will cause some patients to not come to the clinic but supporters claim those that can afford to pay, will pay
their fair share and those that do not will continue to get free or close to free care. After instituting the plan, admissions drop to 600 a month.

Now the question is, did the number of people that got injured drop? Did fewer people get hurt because of the possibility they would have to pay for medical care?

The number of bankruptcy filings in 2004 was lower than 2003. Absent the reform act, it is likely that the trend would have continued. As many supporters of the reform pointed out, the economy was getting better. Assuming a similar drop from 2004 to 2005 as 2003 to 2004, about 1.4 million people would have filed. As about 2.1 million did, we can say that 700,000 people filed either: because get while thegettin was good; or they were going to file anyway and getting in under the old law was a rational choice. Adding 90% of the rush filers to the probable filers in 2006, would have given us about 1 million filers this year, roughly a 30% drop. How
much of that drop could be attributed to different factors will be left up to researchers in the future but let us look at the possibilities:

Fewer people filed bankruptcy in 2006 because:

The law made it more difficult for above median income debtors to file chapter 7

This is the reason most commonly cited by the pro reform groups/supporters. However, it generally fails to acknowledge one fact ignored IN THIS CONTEXT, the number of chapter 13 filers grew by as much as 50%. Why? These are people that are BELOW the median. They, theoretically, can file chapter 7 but CHOOSE to file chapter 13.

The cost to file bankruptcy (regardless of chapter) has increased, pricing many of the most needy out of the ability to file.

This was the reason most opponents gave for opposing the reform act. Attorney fees increased across the board and across the nation. In many areas, attorney fees had been capped by courts and kept at artificially low levels for years. In our area, fees had remained steady for more than 10 years. The increase in documentation requirements and the requirement that attorneys VERIFY AND ATTEST to the accuracy of information provided by the debtor, resulted in courts allowing higher fees. The court costs to file a chapter 7 rose by 43%. The requirement that all debtors take and pay for credit counseling added another $50 to the costs (effectively increasing the filing costs by 67%). For some people, especially the least able to afford it, the court cost increase was/is prohibitive. [Before some moron claims that the very poor can get the fees waived, they should be aware that - in general - a person represented by an attorney that gets ANY fee, is generally NOT able to get the court
costs waived. The court believes if you can afford an attorney, you can afford the court costs, even if the attorney is working for a substantially reduced fee. Given the requirement that attorneys verify and attest to the accuracy of debtor information, such a situation will become very rare, the liability issues alone cause attorneys nightmares.] Finally, many attorneys allowed clients to pay part of
their fee upfront, and the balance after filing. This gave clients relief and although most courts (when presented the issue) denied attorneys the balance of their fees post filing, bankruptcy attorneys took the risk. Under the new law, that risk is unacceptable and very few attorneys (none we know of) provide payment plans, instead requiring the full fee to be paid in advance of filing. The significant increase in attorney fees, the significant increase in court fees and the addition of secondary fees has made filing more expensive for those people most in need of bankruptcy - DESPITE claims by reform supporters that it would not hurt below median filers at all.

The means test will either weed out those that do not really need to file or force them to file chapter 13.

Reports from credit counseling services indicate that 97% of the people taking credit counseling have insufficient income to pay their bills. But only about 60% of those that have taken the counseling have actually filed. Any argument that suggests that those that have not filed after taking credit counseling were potential abusers under the old system and too scared to face the new system ignores the 97% claim. More likely, the people that don't file CAN'T AFFORD TO. Again, if 97% of the people
that take credit counseling can't afford to pay their bills and chapter 13 rates INCREASE, then people are filing chapter 13 despite the fact they will probably fail. In the past, 40% of chapter 13 filers fail to complete their plan. The reasons are many, but chapter 13 budgets are usually very tight (even under the old law) and leave little room for unexpected expenses. Failure rates will take years to determine under the new law, but if the 97% number is accurate, expect failure rates to climb.

So, why would someone with little hope to pay their bills, and below the median income, file chapter 13? And to do so increasingly under the new law?

Chapter 13 is most commonly used for people that wish to retain an asset, such as a home. People facing foreclosure can file chapter 13 and reorganize their debts allowing them to keep their home. When foreclosure rates increase, so do the number of chapter 13 bankruptcy filers. And what has happened to foreclosure rates recently? Up 50% nationwide so far this year. For the first time ever, foreclosures will number over 1 million....historical. The number of chapter 13 filers is increasing because the number of people facing foreclosure is increasing (IMO). Despite the changes in the law, the number of chapter 13 filings is down considerably LESS than chapter 7 filings.


Some words on the law itself (rather than it's consequences). When debated, Todd Zywicki, a primary drafter of the law, sat in front of a Senate committee and claimed the law was just fine, no amendments were needed. After 8 years of trying to get through Congress, the draft bill addressed all the "real" concerns of those opposing it. In action however, the law has left many judges andtrustees frustrated. In a rare display of displeasure, judges around the country are noting their frustration in written opinions. On judge cited Mr.Zywicki's testimony disparagingly. Mr. Zywicki cried foul, but the overwhelming response to his complaint that he had been taken out of context was one of dismissal. Attorneys almost unanimously felt the Judge had not erred. Recently, Senator Hatch offered an amendment to the reform law...apparently, the 'perfect' law had a consequence that hit too close to home for the Senator from Utah (the state with the highest percentage of bankruptcy filers and one of the largest percentage of charitable givers) when a judge ruled that chapter 13 filers could not continue charitable contributions.

Lastly, bankruptcy fraud. One of the chief complaints of pro reform advocates was the claim that 10% of bankruptcy cases included fraud. This percentage was thrown about very often in the debate but NO support for it was ever given. First, let me give you an example of "fraud", hiding assets: A client appeared at a bankruptcy hearing wearing a stud earring. The trustee noted that there was no jewelry listed in the personal property schedule and required the petition be amended to include the stud earring. Value, $5. This was fraud, caught by a trustee, under the old law. REAL bankruptcy fraud is so rare, that when cases were brought, the FBI issued press releases! This year, the Justice Department and the FBI investigated cases in 36 bankruptcy districts and of the 250,000 cases filed, they found 18 with fraud. 18.


How much fraud has occurred?

From 1988-1995: 1474 cases referred, 355 convictions (~7.5 million cases filed)
From 1995-2001: 6090 cases referred, 482 convictions (~7 million cases filed)

14.5 million cases, 7600 cases referred .05% fraud rate. Where oh where did 10% come from? By the way, only 837 convictions came out of those 7600 cases, or .0058%

The most recent report on the 18 cases out of 250,000 filed indicates .072% fraud rate...gee...under the new law, the fraud rate, WENT UP! We'll see what the actual conviction rate is much later.

By every measure, the number of bankruptcy filings is increasing post reform enactment. It may take time to reach previous levels, but there is no doubt it will happen. Reform promised several things: fewer filings - CHECK; more chapter 13's - CHECK; less fraud -OOPPS; continued availability for those most in need - OOPPS; lower credit interest rates for everyone (oh, you didn't hear that claim...sure, it was right there when they said that loose bankruptcy rules were costing everyone $400 a year in extra interest paid, suggesting that everyone would be paying $400 less per year when the law was changed - your interest rates on credit cards and other loans have gone down this year...haven't they?) -OOPPS.

Remember this next time some paper or news station reports that bankruptcy reform has worked, the only ones bankruptcy reform has helped, were the credit card companies that did not report a SINGLE quarter of losses due to the 2.1 million bankruptcy petitions filed last year.

Is there any reason to rehash this?

Those opposed to voting to return the GOP to Congress provide a long
list of failures by the GOP. A failure of leadership both in the
Congress and by the White House.

It is clear that a Democrat
controlled Congress certainly will not address GOP/Conservative
concerns so voting for them as punishment will only make matters worse.

Claiming
that Democrats will make things worse is not a good reason to vote for
Republicans. Ground your teenager to his room and he will be unable to
do hislawnmowing chores. Your punishment to others, hurts you. Classic cutting off your nose to spite your face.

Or is it?

Rewarding
bad behaviour is never an appropriate response. But if the punishment
is likely to cause more problems than continued bad behavior - how do
you stop the bad behavior?

I don't have a good answer to that, but I am sure that grounding the Republicans, isn't it.

Numbness...or short attention span?

A suggestion has been made that Americans are numb to the death and destruction impaled on our psyche daily by the press. Ya think?

In the United States in 2005 there were:
16,927 murders
417,122 robberies
93,934 forcible rapes

Meaning, everyday in the United states there are 46 murders, 1,142 robberies and 257 rapes. Put that next to the droning of how many people were slaughtered in the name of Allah in Baghdad today.

Now, in this country, no matter how "numb" we are to the daily carnage we hope that the criminals are punished and we are saddened for the victims. Ok, not really unless it is close to home, but you can be pretty certain, NO ONE IS CHEERING!

No preacher is standing in front of his flock and telling them to go forth, murdering and raping! (Unless that preacher happens to be MUSLIM...then I am not so sure.)

People are not NUMB to the carnage in Baghdad (and make no mistake, despite the occasional car bomb in Mosul or Basra the main problem is in Baghdad and it's suburbs) they just recognize two minor facts: A larger percentage of the population is actively supporting the carnage; and it is a DAMN WAR ZONE! Duh!?

Bankruptcy Fraud: a review

The Justice Department and the FBI have jointly announced a significant nationwide sweep of bankruptcy fraud criminals.

Yep, you can read how after investigations in 36 districts the sweep netted:

18 cases, and 78 people.

Out of over a quarter million cases.

MAN that new law is great!

A call to dis-arm

I know that I have a small readership, and generally you do not make comments, but I am asking now.

Please leave a comment: agree or disagree (additional comments are welcome)

In passing I have answered the anti-war group that we should recall all military personal, no matter where stationed, home.

I AM NOW MAKING THAT REQUEST. I want every single military member currently assigned to ANY station overseas, returned to US soil within 90 days. From South Korea, from Japan, from the Philippines, from Diego Garcia, from Afghanistan and Iraq, Kuwait, Saudi Arabia, from Europe, from England, from South and Central America.

Recall however that military troops also guard our embassies and consulates the world over. They are to be returned also. Recall ALL embassy staffs and ambassadors. Given that we are leaving, I expect the world to respond in kind. As some countries may be reluctant, I ask that the creditials of every diplomat currently in the US be revoked. All embassies are to be closed and vacated within 10 days. No asylum will be granted to anyone currently here on diplomatic creditials. Further, as the UN constitutes a 'foreign' presence, it is also to be vacated within 7 days. All foreign nationals on diplomatic work at the UN are to leave within 7 days.

All deployed naval groups are to return to home ports. All deployed air units are to return to their home fields.

Effective immediately, all vessels not under the US flag are to be boarded prior to entry into US navigational waters. All aircraft requesting landing in the US must provide personal information on ALL travelers at least 3 hours prior to DEPARTURE or the planes will be turned away, militarily.

The left has been screaming for this for more than a year. Step up now and support this request.

What's a moderate to do?

Rep. Mark Foley resigned. Too bad he didn't have a democratic PR person on the payroll, it may have helped him keep his seat.

Right now, if I were the democrats (I use the small d to denote all of that particular political persuasion), I'd keep my mouth shut about Foley and what anyone might have known, when. The democrats might not have noticed, but they are standing in the finest of crystal chambers holding big, heavy rocks.

Rep. Mark Foley resigned. Apparently, he has some semblance of character remaining. There are many examples of less notable Democrats.

Just to the right of this post is a little icon RESET. It is a link to my website that suggests we should not be voting for incumbents. Several noted essayists have recently penned that however disgusted we find ourselves with the current Republican majority, having Democrats running Congress (or even half of it) is a far greater potential disaster. I find their arguments compelling. However.

Rep. Mark Foley resigned. I accept that we elect humans to Congress. With all their faults and personal deficiencies. I am however troubled by the unseeminglyness that seems to pervade the very pores of those that have held office for (apparently) more than a few hours. There is a war on and the 'prisoners' we have captured receive better food, medical treatment and personal services than just about every American EXCEPT those in Congress. According to some human rights stupidity, I heard that the significant weight gains experienced by the 'detainees' in Gitmo is "evidence" of their mistreatment. The GOVERNMENT of the United States is fighting a war EXACTLY as the British fought our 'war of independence'. Marching with drums in bright red coats onto a field of battle, all but saying, "shoot ME! Please!"

Rep. Mark Foley resigned. The man charged with finding Osama bin Laden in the CIA a week ago stated: "Richard Clarke, Sandy Berger and President Clinton LIED." And was he pissed when he said it. Mr. Clinton stated the week before that he tried very hard to get bin Laden, but failed. Mr. Clinton was right, he FAILED. He failed to protect US in 1993 at the World Trade Center, in Africa (in Somalia and the embassies), in Yemen and he contributed mightily to 9/11. George Bush Sr failed us in Iraq in 92 and contributed to WTC in 93. Reagan failed us in Beirut. And George Bush Jr has failed us. But Bush Jr will be leaving soon enough, unable to continue his failures. However, Congress has failed in it's duties and has every appearance of continuing to do so. On virtually EVERY topic, our government is failing and spending obscene amounts of money doing it.

Rep. Mark Foley resigned. Not because of 9/11, not because the FBI found $90,000 wrapped in foil in his freezer, not because he has an intern 'service' him in his office, but because of words written on a computer screen.

If Congress and the Administration had ONE OUNCE the integrity of Rep. Mark Foley, they would resign too. I don't expect it and therefore, I continue to support, NO TO INCUMBENTS.

It's the third round and ...

he has them right where he wants them. All summer he has played their music and the little rats have followed him down to the ring. This week, the ring leader stood in front of all the little rats who were drooling over his every word...ah, the ROP A DOP

Religion of Peace a Destroyer of Peace

A letter to Senator Hatch

In response to the NY Bankruptcy judge's findings that above median income debtors can not provide money to charity, Senator Hatch's spokesman Peter Carr said that they would be looking into an amendment to the bankruptcy reform act, I have sent the following to Senator Hatch:

To Mr. Peter Carr and Senator Hatch regarding the finding of a NY Bankruptcy judge that above median income debtors can not propose a chapter 13 bankruptcy and allow for charitable contributions: Sen Hatch. Todd Zywicki sat in your committee and proclaimed the law needed no amendments. You stood on the floor of the Senate and claimed that after 8 years of compromise and changes and adjustments, amendments were only being offered by those that would oppose the bill in any form. Sir, the chickens have come home to roost. By almost all accounts rendered in the written opinions of bankruptcy judges faced with dealing with 'perfect' bill, it is an abortion. Initial reports are that over 97% of the people going through credit counseling have NO means to make any repayment. That is a HIGHER percentage of chapter 7 than existed prior to the BARF of 2005. Further, the argument that only a small portion of people would be affected by the 'reform' ignores the $90 rise in filing fees, the $50 cost of credit counseling and the higher attorney fees due to the substantial increase in reporting, documentation and liability issues. All increases in costs on the backs of those least likely to be able to afford them. Congrats Sen Hatch on a bill you helped shepherd for 8 years. The Trustees, judges and attorneys that have to deal with the aftermath will remember you kindly when you attempt to amend your pinnacle of bankruptcy legislation to cover your butt with those churches that rely on charitable contributions...oh wait...the impact is on so few people....why bother with an amendment....if they are above the median...they can afford to pay their bills, before giving money away.

Debunking Bankrate's 12 Myths of Bankruptcy

Bankrate.com has posted 12 Myths About Bankruptcy. As we have a page on our site called 6 Myths of Bankruptcy I thought it would be an interesting read. After all, maybe there are some additions we could make to our page!

So imagine my surprise(not) when I started reading myths about the myths. Shall we?

1. Everyone will know I've filed for bankruptcy.
Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the number of people filing is so massive that very few publications have the space, the manpower or the inclination to run all of them.

This is our #4. In reality, most counties do publish the names of people or businesses that file bankruptcy. In our area, they are published in the one of the daily papers and in the monthly business magazine. It has been our experience that with few exceptions the names are published regularly. In Chicago, there is a separate legal publication that publishes all legal filings, including bankruptcy. The point trying to be made is that few people actually READ such notices. The three groups most likely to read the listings: creditors, advertisers (people selling credit repair scams) and the terminal (those people without a life).

2. All debts are wiped out in Chapter 7 bankruptcy.
You wish. Certain types of debts cannot be discharged (erased). They include child support, alimony, government-issued or government-guaranteed student loans, and debts incurred as the result of fraud. It's also very unlikely that a judge will discharge legal settlements you've been assessed, such as money you've been ordered to pay to someone who sued you.

They start off great, but end terrible. Judgments (what they claim to be legal settlements) are often dischargeable. If a credit card company gets a judgment against you, it is discharged in a chapter 7. Some judgments where you are assessed criminal damages to pay someone you have harmed do stay after bankruptcy. Only a good bankruptcy attorney can determine which judgments are dischargeable. Where fraud is concerned, talk to an attorney. Of course the biggest omission in their list is SECURED debts. Your personal obligation gets discharged, but plan on continuing to pay the mortgage or car loan if you want to keep them because the liens still exist against the property.

3. I'll lose everything I have.
This is the misconception that keeps people who really should file for bankruptcy from doing it, says Chris Viale, chief operating officer of Massachusetts-based Cambridge Credit Counseling Corp.

"They think the government will sell everything they have and they'll have to start over in a cardboard box," Viale says.

While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing.

This is our #6. There are some states that do not have exemptions. In those states, FEDERAL exemptions apply. Ok, maybe I am just being picky here. But, what can be exempt was seriously curtailed with the new bankruptcy law. Among other things, the federal exemptions now limit you to ONE TV, one radio, one computer and one DVD/VCR (and clothing and household goods). Paintings bought at a store, golf clubs, guns and bikes (adults) are also more exposed under the new law. Although there are ways to deal with this change, a good bankruptcy attorney is necessary!

4. I'll never get credit again.
Quite the contrary. It won't be long before you're getting credit card offers again. They'll just be from subprime lenders that will charge very high interest rates. "There are innumerable companies that will provide credit to you," says California bankruptcy attorney and trustee Howard Ehrenberg. "I don't advise any of my clients to run out and run up the bills again, but if someone does need an automobile, they can go and will be able to get credit. You don't have to go underground or something to get money."

However, if you're planning to buy a house or a car, you might want to do that before you file. Those loans will be tough to get and the higher interest rate on such a large purchase would make a significant impact on your payments. Also, if you have a credit card with a zero balance on the day you file for bankruptcy, you don't have to list it as a creditor since you don't owe any money on it. That means, you might be able to keep that card even after the bankruptcy.

Our #5. First they are correct about getting credit in the future. Heck, we even have Chapter 13 clients getting refinanced while IN bankruptcy. But it does have an impact on your credit rating, history and the rates you will be offered. Be very careful with credit offers, scams are rampant. Oh, and their suggestion to obtain debt before filing, such a suggestion is ILLEGAL if made by anyone offering bankruptcy advice. However, this is one of the perversions of the new law. Example: Two single men, one earning $45k a year, the other earning $90k a year. Both wanting to file a chapter 7. Assuming the median income in their area is $40k a year, at initial glance, both have to file chapter 13 instead. Let's now compare debts. Our $45k earner rents, has a beater car and $80k in credit card debt. Our $90k earner owns a home, a new Hummer, a Harley, a Snowmobile, a $2k computer and all new furniture - all purchased with secured debt, and $25k in credit cards. After all calculations are done, our $45k earner has to pay $450 a month into a chapter 13 plan, but our $90k earner qualifies for a chapter 7. Sounds fair? It is the new law.

5. If you're married, both spouses have to file for bankruptcy.
Not necessarily. "It's not uncommon for one spouse to have a significant amount of debt in their name only," Hargrave says. However, if spouses have debts they want to discharge that they're both liable for, they should file together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who didn't file.

We ignore this one because we are a community property state. Debts are usually community property (there are exceptions - talk to a good bankruptcy attorney!) and therefore filing as a married couple makes sense. There are several community property states, check yours. But even here, we get one spouse filings. Give them this one.

6. It's really hard to file for bankruptcy.
It's really not. You don't even technically need an attorney. However, it's not recommended to go through the procedure without one.

Technically you don't need a dentist to pull a tooth. Technically you don't need an attorney to buy a home. Technically you don't need a doctor for a 104 fever. It is not hard to file bankruptcy at all! It is however very hard to get a discharge that covers all the debts that can be discharged without a good bankruptcy attorney. I'll give them this one, technically.

7. Only deadbeats file for bankruptcy.
Most people file for bankruptcy after a life-changing experience, such as a divorce, the loss of a job or a serious illness. They've struggled to pay their bills for months and just keep falling further behind.

Our experience is that over 90% of people that file bankruptcy have had at least one of the 'life-changing experiences'. We have had gamblers, and an occasional "I'm going to beat the system' types (which we send packing BTW). But my nit-pick here is the 'struggled for months'. In almost every case, the time frame is years. On average 2.5 years. No credit here, they are adding a myth.

8. I don't want to include certain creditors in my filing because it's important to me to pay them back someday and if the debt is discharged, I can't ever repay them.
Bless you for even thinking about such a thing. You're no longer obligated to repay them, but you always have that opportunity. If your conscience won't let you sleep nights because you didn't pay your debts, there's nothing in the bankruptcy code that prevents you from doing that once you're back on your feet. But bankruptcy is an all-or-nothing deal, so you have to include all your creditors in the petition.

Bless you? Credit extension was a BUSINESS decision, appealing to your religious guilt is a way creditors coerce people to keep paying even at the expense of family or health. For decades businesses have used the bankruptcy card to justify higher interest rates. Anyone see interest rates GO DOWN this year? Nope. How many businesses get the government to bail them out of a bad decision? After 8 years of trying the credit industry got just that plum. Exactly how many $600 million dollar a year in profit businesses do you know care one bit about YOU? Bless you...HAH! No credit on this one just for pissing me off....

9. Filing for bankruptcy will improve my credit rating because all those debts will be gone.
That sounds like an ad for a bankruptcy lawyer trolling for clients. Filing for bankruptcy is the worst 'negative' you can have on your credit report. Unlike other negatives, which stay on your report for seven years, bankruptcy can be there for 10 years.

Oh, those nasty bankruptcy lawyers.....trolling for clients....while credit card companies send out 5 BILLION OFFERS this year.... Yep, bankruptcy is a bad thing on your credit report...so is a repossession, a foreclosure, judgments and continued lates on payments....so when a bankruptcy is filed...the judgments go away, the lates stop and you get back on your feet financially. While there will be some hemming and hawing from the credit REPORTING side of things, all things being equal, if you take two people in exactly the same terrible financial shape, have one file bankruptcy and let the other continue struggling, guess who's credit score will be higher next year? You got it...the person that filed bankruptcy. And remember their #4? Never get credit again? Who do you think the credit issuers will give lend to next year? The person that filed bankruptcy, or the one still struggling?

10. You can't get rid of back taxes through bankruptcy.
Generally speaking, this is true. However, there is such a thing as tax bankruptcy, says tax educator Eva Rosenberg, known on the Web as Tax Mama. To get a shot at it, you have to file all your returns and the taxes owed need to be at least three years old.

It is not easily done, and as stated, there are conditions, but taxes can be discharged. Credit them this one.

11. You can only file for bankruptcy once.
You can file for bankruptcy more than once, but the bankruptcy law that went into effect in October 2005 lengthened the required wait between filings. You can only file for Chapter 7 bankruptcy once every eight years. You have to wait two years to repeat a Chapter 13 filing and four years between a Chapter 7 and a Chapter 13 case.

Of course, that doesn't make it a good idea.

"Multiple bankruptcies are really bad," Rosenberg says. "Many people get into the habit of once they've done it, it becomes a way of life. This is not good for your karma." Or your credit rating.

Actually, the time frames with regard to Chapter 13 are more ...pliable... than that, but generally speaking they are right, you can file more than once. Prior to the law, we often filed twice for a particular type of client: homeowners. We would file a chapter 7 to get rid of unsecured debt, then a chapter 13 to deal with secured debt. It is still possible to the same under the new law, with some qualifiers and conditions. But I will call your attention to one repeat filer many will be familiar with: Donald Trump. There are reasons for bankruptcy, and damn it, leave religion out of it.....karma....shheesssh.

12. I can max out all my credit cards, file for bankruptcy and never pay for the things I bought.
That's called fraud and bankruptcy judges can get really cranky about it. The trustee in your case will review all your purchases right before your filing. The trustee knows what to look for.

Ah, now the credit industry wants to let bankruptcy judges and trustees watch for fraud. See, before the new law passed, it's supporters claimed that the judges and trustees practically NEVER caught such fraud despite it's obvious widespread nature. And for many people that do file bankruptcy, many of them, maybe a majority, maxed out their credit cards in the year before filing without any problem in bankruptcy.

So. There are myths about bankruptcy, mostly promoted by the credit industry to keep you from filing. If you have these danger signals, you should be talking to a knowledgeable bankruptcy attorney. Because the most important myth to debunk is the one you read about somewhere.

Score one for Hatch

Dear Senator Hatch,

Congrats on the passage of the Bankruptcy Reform Act. According to the Federal Bankruptcy Court, Northern District of New York, your constituents that earn over the median income will no longer be able to deduct charitable contributions in calculating the required means test. Given that Utah has a significant Mormon population that actively tithes, their future inability will likely piss off the Church. No worries though...that vast reduction in the number of bankruptcies filed will have little impact on the Church receipts (oopss...filings are increasing and expected to reach pre-reform levels sometime next year)!

Again, congrats on a job well done for the banking industry!

Sectarian? Actually, religious war...

There has been much made over the Rumsfeld speech and the military report on Iraq over the last several days and I wanted to add a few words.

First: sectarian violence. This is members of one sect of Islam killing members of another sect of Islam. It is exactly the same as Protestants killing Catholics. What you say? Protestants are not killing Catholics? Yes, well, they were in Ireland. The scale is smaller but I don't recall the MSM calling it civil war....maybe the scale has something to do with it. The actual point I want to make is that the "sectarian violence" in Iraq is not calling for a split of the country. We do not hear of 'spokesmen' saying that if the Sunnis get their own country, they will stop killing people. We do not hear of Shite 'spokesmen' saying that if they get their own country, free of Sunnis, they will stop killing people. Hell, we don't even hear Kurdish 'spokesmen' saying if they get their own country...well, they are not killing anyone so what's the worry there. There is no civil war, there is ongoing religious based mass murder. Quit calling it sectarian violence...it makes it sound so, clinical. Call it what it is, Islamic violence. This is about two groups of Moslems killing each other over who has the right God sense. There is nothing civil about it.

Second. Fourteen of the eighteen provinces in Iraq are generally speaking, quiet. No more dying is going on in those provinces than goes on in Washington, New York, Detroit or Los Angeles on any particular day. The four provinces still fighting battles are those that were predominately Sunni controlled. Gee, surprise. Of course, we are not exactly on great terms with Shites..given their fawning over Iran. Still, there does appear to be a real political life in Iraq and we need to be more on that side than any other.

Third. Bush lied crowd: grow up. Joe Wilson has been so discredited, I surprised Mastercard hasn't hired him. No plan to win: we won already. The war to dispose Saddam was won and accomplished. Getting Iraq to the point of stability and ability to defend itself, we're working on it. Takes time.

Fourth. War on terror. I keep hearing that the left agrees we have a war on terror. However, their suggestions on how to deal with it all seem to revolve around talking to our friends and talking to our 'enemies' (and we shouldn't call them that because it just makes them mad and more prone to being angry...). Talking is so great....If we could have just talked to Atta...maybe he would have landed instead.

Last: Powell convinced the rest of the Administration that France was on board, right before France appeased Saddam. Rice convinced the rest of the Administration that France was on board, right before France appeased the Arabs. Does anyone else think that the State Department should get billing as the latest reincarnation of the home of the body snatchers? I want to know: does the State Department cafeteria only serve Perrier?

Victoria has been listening to Air America a lot over the last 10 days or so...therefore, of course, so have I. If Air America is any indication of the current mentality of the left, half this country has already surrendered.

A job...

I am looking for work I can do at home. If you need administrative help of virtually any kind, please let me know. Resume available upon request.

Now, as I think this post is generally off topic and a request for help, I think it is only fair I give something of value back to you. Below is a list 'definitions' I wrote the last time I was looking for work...

Entry Level	Low pay, lotsa work, no future
Ability to work independently	No support staff, you're on your own
Experienced	No training provided
Team player	Boss gets credit, you get blame
Salary history required	We don't want someone we have to pay a lot for
Salary requirements	We don't want to read all the resumes we'll get...note: see above
Salary negotiable	We don't know how much to pay, or the more you can do, the less we can pay
Excellant benefits	The salary is below average
Flexible hours	Overtime and weekend required with no notice
Self starter	You must know the job in the first week
Room for advancement	We want to replace your future boss but pay less for the position
Casual environment	1. Dress down on alternate Fridays 2. Personnel reviews done in company lunchroom or at company parties
Supervisory position	We'll blame you for the other people's screw ups
Leadership abilities	Your boss wants someone to cover for him while he golfs
Ability to take charge	Your boss works 60-70 hours a week and has been looking very pale lately
Boss' right hand	1. Boss has two left hands, or... 2. Boss needs someone to do his work also
College grads encouraged	We hope you'll take anything to pay off your loans
Re-entering work force	You earn the same as you would as a stay at home mom without the cute smiles....or We'll pay you entry level rates and expect managerial experience
Managerial experience	You'll be expected to supervise a bunch of children
Diverse environment	We have one of everything here
Experienced only	You'll be the only one that can do the job
College degree required	We want to say that we have a college degreed person doing this menial job
Customer service	You'll have to answer the phones when the Receptionist is at lunch
HS Diploma or equvalent required	We need a warm body
Some college required	Teenagers need not apply
Advanced degree required	We mean it...you have to know something about this
MBA	We want a fast track program and you're it!
No experience required, we'll train	It's our way or no way
Some experience	We'll let you do the grunt work
10 years experience	You teach us
Support busy manager	You make the coffee and pick up the laundry
Family environment	Babysit the bosses kids

A good economy?

My friend Tom over at BizzyBlog and I have slightly different opinions about the state of our economy. His opinion is that the economy is doing great and the doomsayers are taking molehills and making mountains out of them. I am by nature an optimistic person but because of our business, we see a lot of molehills.

First, foreclosures. When a family faces foreclosure, their financial condition is usually in very serious distress. Many people facing foreclosure have judgments against them for non-payment of credit cards, utilities or medical bills. The foreclosure is usually the last in a long line of non-payments. Still. Foreclosures occur even in the best economic conditions, so in and of themselves, they do not indicate a systemic problem with the economy. Despite the 70% increase in foreclosures nationwide during the first quarter of 2006, we are talking about less than one million foreclosures in a market of over 75 million. A relatively small percentage. In our area, we saw a similar foreclosure rate in our area, but it has settled down to about 30% increase for the 2.66 quarters of this year. Based on previous history, it will probably finish the year nearer 50% increase. A troubling issue, but we are talking about 2500 foreclosures in an area of about 850,000 people. Of those 2500 foreclosures, about half will actually be able to come up with the money to stave off the loss and keep their homes. This will of course lead most reasonable people to dismiss the issue as a molehill. But I do want to use one more stat to suggest it is a bigger problem. Last year about 14,000 homes were sold in the area, meaning about 10% were foreclosures. There is a current unsold inventory of almost 5,000 homes in our area. Foreclosure increases will lead to additional inventory and because of their nature, pressure on pricing.

The impact of foreclosures will not show up in many econ stats: people still need a place to live and most people evicted by foreclosure will end up in rental housing. Based on a general opinion, most people will net a reduction in housing costs freeing up money for other expenses.

Foreclosures and housing bubble? Markets that had significant investor involvement were getting very overheated last year and those markets are the ones experiencing 'bubble' like results. Other markets with moderate increases in values and sustainable growth seem to be weathering things just fine. Regional housing recessions are likely but not expected to spread - IMO.

Second issue: gas prices. We have several truck drivers as clients. Over the last 18 months, they have experienced almost 100% increase in fuel costs. Even average drivers have seen significant increases in fuel expenditures. Miles driven have not decreased (though the increase is minor) over the last year. I will be interested to see how the 'vacation' areas did over this summer.

I think we have a good economy. Two million people filed bankruptcy last year with practically no impact on the economy (or the profit margins of the credit issuing industry...kinda makes you wonder why they were all in a huff to get the law changed). Katrina practically wiped out New Orleans and parts of the Gulf Coast also with little or no economic impact to the country. However, there ARE problems.

...cash-outs from refinancing to total $162 billion for the year but, as rates continue to rise, the figure would fall back to $69 billion for the whole of 2006. In 2004 homeowners extracted $140 billion in equity through refinancing their homes.

http://www.mortgagenewsdaily.com/852005_Cash_Out_Refinancing.asp

Based on the refinancing, there was a net pre-tax savings of over $31 billion in 2003. That number was certainly higher in 2004 and 2005. Equity refinancing added almost $200 billion to the economy in each of the last three years, not an insignificant change. If however many of the refinancings were to ARMs or other non-standard mortgages (interest only for example) then interest rate increases will make it harder to refinance in the future and increase the demand upon family budgets. 3 year ARMs sold in 2003 are coming due for their increases and we are seeing contractual limit increases (2-2.5%). On a $150,000 mortgage, payments are jumping as much as 28%. Those that can, are selling their homes when faced with stiff increases, but the market has slowed. Home sales are down almost 5% over last year. This situation is worse in those markets that had active investor involvement driving prices.

Over the last 5 years, real estate has driven a lot of our economy. A slowdown in housing sales and construction, already underway in many markets, will lead to increased unemployment as the fall progresses. Unable to refinance and faced with higher gas and maybe mortgage payments, retail sales may slow also - though there is little indication of that occurring yet. Consumers are getting pinched.

We have a good economy, but certain pillars of that economy are showing serious signs. High fuel prices are going to force prices in many parts of the economy higher. Unable to refinance and facing higher mortgage payments, consumers will be unable to sustain their current spending habits. A slow down in housing will increase unemployment. Every good economy ended, sometime. In hindsight, the writing was on the wall.

Remember this: By the end of the year, 500,000 families will have lost their homes.

The question for us optimists is: are we looking at the wall now, or keeping our backs to it...

Give me liberty or give me...

Plenty of people are writing about the foiled plot, I shall not add to the din.

I have heard, after some shock has worn off, the same refrain from the left about liberties and security:

"He who would trade liberty for some temporary security, deserves neither liberty nor security"


And I am really tired of the thought process that thinks that any attempt to protect people is a slippery slope to a police state. So, I sat down with the above saying and let it roll around in my pretty little head and I now have some responses to the dweebs:


1. He who would sacrifice security for liberty, seeks to act against his neighbors freely.

2. Liberty without security is like freeing the tiger from his cage, he will neither thank you, nor withhold his hunger.

3. Liberty is not freedom without security.

4. The monster at your door is not seeking security and sacrificing liberty, it is seeking your life; open the door at your peril.

5. Liberty without security is anarchy.

6. My security establishes a limit on your liberty, not mine.

Although 6 is my favorite, I leave you with the following thought:

Every night I lock my doors, I trade liberty for temporary security; do you want to give up YOUR locks?

It's the premise...

I was taught a long time ago that when debating someone, the first person to agree with their opponent's premise, loses.

1. What military purpose do the rockets fired by Hezbollah serve? None. They are random shots into civilian areas. They are too rudimentary for anything other than 'terror'.

2. Hezbollah says they will continue to fight until every single Israeli is off Lebanese soil. That's great, but Hezbollah currently is holding two Israeli soldiers hostage in Lebanon. Israel would be HAPPY to leave if Hezbollah would just return their two soldiers - UNHARMED.

Every single sentence out of official Israel should start with the question in #1 and end with Israel's agreement to leave as soon as the two soldiers held by Hezbollah are returned. My preference is that nothing be said between those two points.

If it bleeds, it leads...

...but where is the blood?

In the top of the hour news on Fox at 11 am central, a report was aired about an Israeli 'incursion' into Gaza in the early morning hours. Near the end of the report, we are treated to the usual people being rushed into a hospital for treatment. Flash to a little girl (10-11yr old) with a red print dress. She is on a bed and the doctor/nurse/attendant puts a clump of gauze on her forehead right at the hairline and begins wrapping her head. As everyone KNOWS, a head would bleeds profusely. Yet, there is no blood on her face, her dress or in her hair. There is no indication that her hair is even wet. The picture lasts 3-4 seconds and then we see her again being carried by someone, her head wrapped in gauze. Again, we see no blood in the dressings.

I have often wondered about news coverage. But the coverage of the events in Qana have made me very suspicious of 'injury' coverage. This report from Gaza appears to be an attempt to claim another 'unwarranted' injury of a child.

BTW, the little girl was alert, looking right at the camera and not crying.....curious no?

The right time for a cease fire?

Israel should consider a cease fire the second Nasrallah of Hezbollah publicly pleads for one,

AND NOT ONE SECOND SOONER.

Has it gotten quiet?

The reporting out of Iraq has gone almost silent. Either the fighting is over or all the press has left. Hmmmm.....

Take a short breather guys, the fighters have no one to play too so they will probably sit back and wait. Done with the break....time for a quiet push...

I support our troops and their efforts, whether or not the camera is on.

War is hell

People have been complaining about the heat here....it is 30 degrees hotter in Iraq and Afghanistan and our troops carry packs and body armor. Quit complaining.

Did you know people die in war? NO? It happens. Every day unfortunately. Most of the time, it is the bad people, and sometimes a few of the good people, but too often, it is the people trying to get out of the way. It is not right, not good, not nice. But war is hell and as long as people give aid by allowing bad guys to hide among them...well, more people than ought are going to get hurt.

Now, I am not saying that every time a fighter runs into a residence the people are aiding them, but you do have to wonder how many times an IED goes off on the same section of street before someone quietly turns in the house where aid is really give.

I hope it happens more than I hear. It does appear to be happening more. Apparently, the Sunnis that have been calling for insurrection and terror against our troops for the last 3 years have gotten the message that when you keep the lion's cage in your bedroom, it is not safe to dangle your feet off the bed....

I support our troops and hope they soon can get out of hell....because sooner than you can imagine, it is going to be freezing there again...

Sacrifice and honor

It will come as no surprise that our troops serve every day with honor. With very few exceptions, I have refrained from any discussion of situations where a or a couple of soldiers did not do so. I acknowledge that a few of OUR soldiers have violated the law, on the battlefield and off and have done so with dishonor. They have and will be punished as it appropriate. I have refrained because those that do not honor our troops use every such opportunity to smear our troops and I do not wish to give them any ground to stand on.

For the few times it has occurred, I would remind my 3 readers(!) that the sacrifice and honor of our troops is NOT diminished by such acts, but reinforced by the willingness to air the issue and adjudicate appropriately. The other side of this conflict has no such honor or willingness, instead proclaiming their vile acts as something worthy of praise.

I prefer to praise the sacrifice and honor of our soldiers and do so daily.