Her argument, as our Kansas City readers may recall, is that all of the difficulties she's facing now stem from unscrupulous management back in the 1990s. Over the course of years, she says she has attempted to clear the books. Her attorney says she has paid the original amount of taxes owed, and then some, but penalties and interest have always lingered and raised the stakes.
]]> This week, lawyers for the 72-year-old artist who had big hits with songs like "Do You Know The Way to San Jose," and "Walk On By," are scheduled to be back in court in New Jersey. On the other side will be attorneys for the IRS. The issue on the table is whether the government should be allowed to seek to collect the $7 million it says it's owed from two companies that have ties to her. They are KMBA Productions and Star Girl Productions Inc.The IRS apparently believes that the companies are business entities of Warwick's creation and that it should be able to hold them accountable for the taxes. But Warwick's lawyers say she has no stake in the companies other than being paid by them when she has been booked for singing engagements.
Her attorneys are expected to argue this week that if the IRS believes the companies are "alter egos" for Warwick, it should have included them in its original motion for collection. By not doing that, it has denied them due legal process. They are also expected to argue that the extent of Warwick's tax bill should be no more than about $25,000.
Source: The Wall Street Journal, "Dionne Warwick Takes on the IRS," Jacqueline Palank, June 10, 2013
]]>That can be one of the benefits of a duly filed petition for Chapter 13 bankruptcy. Once in place, the gears of the system are brought to a halt on the foreclosure and repossession of assets and the consumer gets needed time to work out a plan for regaining solid financial footing.
]]> This may not have been an option known to many people who got caught up in the abusive foreclosure practices of lenders during the most recent recession. Many homeowners found themselves suddenly under the financial bus before they knew what hit them.Governments at the state and federal levels did succeed in holding some of the largest banks responsible for this activity and some of the fruits of that effort are due to trickle down to some of the abuse victims in Missouri and Kansas later this month.
According to an announcement from Missouri officials, payments of $1,480 will be going out to some 24,000 Missourians who were foreclosed on between January 2008 and December 2011. Another 6,300 Kansans will get a similar payout. It's all part of the National Mortgage Settlement agreement reached last year between state and federal officials and the top five mortgage provider banks.
While the money will likely be welcomed by many, there are two sad aspects in the development. No foreclosures are undone as a result of it, and the money is perhaps something that is a little too little and coming too late.
Whether any of those homeowners could have been helped by filing for Chapter 13 bankruptcy is a question whose time has sadly come and gone.
Source: KSHB-TV, "Homeowners in foreclosure to receive payment from banks this month," Keith King, June 6, 2013
]]>Like many in and around the Kansas City area, this entrepreneur has had his ups and downs and late last month, he turned to the courts to file for Chapter 7 bankruptcy in a bid to clear his slate after what appear to be some debts incurred through various ventures that he admits went outside his typical zone of technology business comfort.
]]> The person we speak of is Halsey Minor, 47, founder of CNET Networks. Five years ago, he sold the technology news and information provider to CBS Corp. for $1.8 billion. His net from the deal, according to CNN Money, was something in the neighborhood of $200 million.Apparently that was not quite enough seed money for his endeavors since then. Five years out from that windfall, after investments in a pre-Revolutionary War plantation, hotels, art and horses, Minor is seeking protection from creditors. His filings claim he owes upward of $100 million and has only half that to pay toward his debts.
A detailed listing of his debts isn't available from the documents, but the filing does state that after the sale of all possible assets, there will not be any funds available for unsecured debt creditors.
In an emailed statement cited by one newspaper, Minor says that perhaps he should never have redirected his attentions beyond his successful technology roots. But he says he thinks that his willingness to push the limits of his comfort zone are what have made him a success in technology businesses.
With the Chapter 7 filing, Minor looks to realize a restart for his financial future; reflecting the positive outcome that bankruptcy is meant to provide.
Source: Bloomberg Businessweek, “How Halsey Minor Blew Tech Fortune on Way to Bankruptcy,” Dawn McCarty and Ari Levy, May 31, 2013
]]>Whether you live in Kansas or some other state, the strain on personal finances can be overwhelming. Driving cancer into remission is a victory everyone desires, but it can also lead to a person losing their health insurance, which can cause trouble later if the cancer returns or other health issues develop.
]]> One large new study recently confirmed a strong link between cancer and financial difficulty and the potential of that leading to financial difficulties requiring debt relief through personal bankruptcy. The results were so significant that it has prompted some in the medical field to start calling for more research into why it's happening and what needs to be done to address the issue before it overwhelms society as a whole.What the researchers from Washington state did was compare nearly 200,000 adult cancer patients with an equal number of adults who were cancer free. They were all cross referenced by age, zip code and gender. Then, they looked at court records to see who had been led to file for bankruptcy between 1995 and 2009.
What they found was that about 2,300 of the non-cancer adults had filed for bankruptcy. But in the same time frame, about 4,400 cancer patients filed for debt relief. In other words, cancer patients were more than twice as likely to have sought bankruptcy protection as healthy adults.
Younger patients tended to be more likely than older patients to file for bankruptcy, possibly because patients over 65 had Medicare and Social Security coverage. Non-white women patients were the most likely to seek debt relief.
Perhaps the saddest thing in all of this is the social stigma that is too often associated with seeking protection through bankruptcy. Patients who fight for their lives against cancer may wind up feeling as if they have somehow failed if they file for bankruptcy. That's a burden they should not have to carry.
Source: NBC News, "Cancer increases bankruptcy risk, even for insured," Barbara Mantel, May 15, 2013
]]>For the purposes of bankruptcy petitions, the justices have determined that the word means pretty much the same thing as fraud. What it means in terms of application is that if a person's request for bankruptcy protection is somehow colored by evidence of fraud on the their part, the request may be denied.
]]> The determination is expected to work to the benefit of an Illinois man who is seeking to have some court-imposed debt erased as part of his filing for Chapter 7 bankruptcy protection.The debt of nearly $300,000 stems from a legal dispute between the man and two of his brothers. The man had held sole fiduciary responsibility for a trust that was created when his father died. He was the trustee from 1978 to 1998. During that period, he issued loans from the trust. Sometimes he was the direct beneficiary. In all instances, he paid the money back with interest, so the trust never suffered.
The brothers sued the trustee sibling claiming breach of fiduciary duty and won. The court imposed penalties and ordered the brother to pay up. Subsequently, the man filed for Chapter 7 bankruptcy and sought to have the court debt erased. Lower courts denied the request citing provisions in the bankruptcy code that bars discharge in cases of "fraud or defalcation."
The matter before the U.S. Supreme Court was whether the man's lending, borrowing and payback actions fit the definition of defalcation. The justices didn't answer the question directly, but ordered the course to be reheard. And they said defalcation should be taken to mean something similar to fraud.
Because the trust never suffered for his actions, the man's attorney predicts his client will be cleared and should be able to obtain the relief he seeks. Further, he says it should make it easier generally to obtain debt discharges except in the most extreme cases.
Source: Thomson Reuters News & Insight, “Justices finally say what 'defalcation' means,” Lawrence Hurley, May 14, 2013
]]>Veteran support groups say PTSD is an easy thing to point to as a driver of despair. But they say just as troublesome and often overlooked is that many vets, released from service and unable to find work, slip into despair when they can’t meet their current duties of supporting their families.
]]> This doesn’t need to be the case. There are legal and appropriate means for those in troubling debt to achieve the mission of financial stability. Finding the right weapon may be the most daunting task, but it’s one that an experienced debt relief attorney can help with. The key is for the individual to step out and seek aid.How deep the problem may be is hard to say. There could be hundreds of thousands or more in desperate straits. VeteransPlus, one support organization, says it has received more than 170,000 cries for help from veterans faced with losing everything. And experts say it’s likely only to get worse in the coming years as 1 million or more service members make the move to civilian life.
A former sailor’s story perhaps serves as one example. The 30-year-old enlisted man got out of the Navy in 2009 after eight years and two tours of duty in Iraq and Afghanistan. While in the service, he oversaw the work of up to 30 other individuals and was responsible for millions of dollars worth of military hardware.
When he returned to his wife and daughter in Florida, he found he couldn’t get a job. Dozens of applications were submitted, even to McDonald’s. Not one nibble. Combat pay saved during his eight years in uniform disappeared to pay for basics like food and shelter. Eventually, the family moved from Florida to Oregon in hopes of finding something better, without much luck.
Bankruptcy is now under consideration, but it comes after he already has flirted with the idea that his family might be better off with him dead. That’s not the route he has taken, fortunately. Hopefully others can learn from this example and follow his lead before they fall victim to such despair.
Source: NBC News, “Financial strain pushes many veterans to the breaking point,” Bryan Briggs, May 4, 2013
]]>That's the prospect that appeared to be looming for a lot of people before the saving graces of the Rolling Jubilee Fund. The offshoot group of the Occupy Wall Street movement bought up a ton of debt owed by individuals in various states last month. Then, using money it had raised from donors, it paid forgave those bills and informed the debtors that they were free from the debt burdens.
]]> Among those who received this largesse were some 1,000 people in and around Louisville, Kentucky. Officials of Rolling Jubilee had bought more than $1 million of their debts –- specifically medical debts –- and wiped the red ink out of existence.In nearly all the cases, the group says, the recipients hadn’t even been aware that the money was still owed. They thought the bills had been paid off long ago. Included in those ranks were an 80-year-old woman and her husband.
Several years ago, she had racked up a bill of nearly $1,000 for back pain treatments. The bill fell into dispute and in 2011 the bill had gone to a collection agency. At some point, the woman’s doctor said the bill had been taken care of. She thought it had been paid by Medicare, she says, but what had happened is that the bill had been sold off to Rolling Jubilee by the collection agency.
When the couple got the letter letting them know they were off the hook for the bill, they said they were thrilled. But they said they were also irritated because they thought the bill had been resolved already.
One can only imagine what might have happened if the bill hadn’t been picked up by Rolling Jubilee and forgiven. Too often, individuals incur exorbitant medical expenses that they just can’t meet and then they are thrust into financial despair. People in the Overland Park area facing such circumstances should know that they don’t have to face the situation alone. All they need to do is contact an experienced debt relief attorney for help.
Source: Louisville Courier-Journal, “'Zombie debt' part of $1.1 million in Louisville medical bills bought by Wall Street protesters,” Jere Downs, May 10, 2013
]]>The issue that was before that court was whether or not an inherited Individual Retirement Account should be considered exempt from the grasp of creditors in a bankruptcy proceeding. The Chicago-based court ruled that the answer is no.
]]> Why is this an issue, you may ask: because that decision runs contrary to determinations in two other federal jurisdictions, including the 8th Circuit, which covers Missouri. In 2010, the 8th Circuit ruled that retirement funds are exempt whether they are held by a debtor or not. Then, last year, the 5th Circuit said that any asset that has at any time been set aside for retirement is exempt.When there is such conflict at the appeals court level on an issue, resolving that conflict means taking the matter to the U.S. Supreme Court for action. Indeed, the ruling from the 7th Circuit even alludes to the likelihood that a decision from the high court might be required.
Specifically at issue is an IRA worth about $300,000 that was inherited by a woman from her mother. The woman and her husband have filed for bankruptcy and claim debts of between $500,000 and $1 million. They want the IRA protected from forfeiture as retirement funds, but the 7th Circuit ruling says they stopped being retirement funds when they were turned over to the couple.
The question now is whether the couple at the heart of the recent ruling out of Chicago will appeal. They haven’t said.
Source: Thomson Reuters, “In circuit split, court says inherited IRA fair game in bankruptcy,” Nick Brown, April 24, 2013
]]>Discovering just what options may be available in terms of obtaining debt relief, including determining bankruptcy-exempt assets, can be a time consuming and confusing chore for people in the Kansas City area. But working with an attorney experienced in bankruptcy law can uncover possibilities. And where there is possibility there is room for optimism.
]]> The extent to which debt can present challenges was recently highlighted in a feature in New York Magazine. The article focused on how 16 different women, including one in Kansas, have dealt with their debts. The solutions employed covered the spectrum from exercising herculean financial willpower to bankruptcy.We don't want to get into each of the vignettes here, but it may be beneficial to call out some particularly noteworthy ones. For example, there was the woman, 36, who with her husband is expecting their first child soon. Even as they were decorating for the new arrival, they determined that bankruptcy was the only way to get their financial feet back on solid ground.
Credit card debt that had started to accumulate when the woman was in her early 20s became compounded by student loan debt. Then, when the housing market collapsed, they found themselves with a mortgage worth more than their house. Having filed for bankruptcy, she says she is now looking forward to the future.
Meanwhile, the woman from Kansas, age 27, is getting out from under after having moved back in with her parents two years ago. She says student loans and credit card debts were what got her into difficulty. She says she has always worked through her college career, but it hasn't been enough to recover.
Living at home, she says she's "almost there" in terms of getting her credit card debts paid off. She says the one thing she has concluded is that she fell victim to the taboo of not talking about debt when she was in high school. She says if she knew then what she knows now about how decisions affect the future, she would have behaved a lot differently.
Source: NYMag.com, "16 Women on How They're Dealing With Debt," Meaghan Winter, April 15, 2013
]]>There are some limits to what bankruptcy may be able to accomplish. That's one reason why it's so important to work with an attorney when considering various debt relief options. Circumstances will typically indicate what option might be most fruitful for you. For example, under most circumstances student loans won't be dischargeable. But there are exceptions, as is evidenced by the following case.
]]> It involves a $25,000 balance on a student loan held by a 53-year-old woman. She had been paying on the loan over the course of 11-years but now is considered destitute. She lives with her aging mother in a rural community and has no resources to find gainful employment.To get out from under her difficulties, she filed for Chapter 7 bankruptcy. The bankruptcy court judge granted her petition and discharged the student loan. The determination was based on the judge's finding that she had paid as much as she could and that to make her pay more would represent an undue hardship. But a district court reversed the decision. The appellate judge, while acknowledging the woman's destitute state, said that as a sign of good faith, she should have enrolled in a program that would have funneled money toward repayments if she ever happened to realize new income.
Last week, though, the 7th Circuit Court of Appeals reinstated the original decision. The appeals court said the bankruptcy court had acted fully within its discretion and that the district court's conclusion that good faith requires committing to making payments in the future would make it impossible to ever discharge an educational loan.
Source: ABA Journal, "7th Circuit OKs $25K student-loan discharge for 'destitute' paralegal," Martha Neil, April 10, 2013
There are actually three different reports from various groups that raise concerns among economy watchers. Back in January, the AARP issued results of a survey that showed that Americans over the age of 50 have drawn down heavily on their credit card lines. Medical debt represents the biggest drain. It's followed by debt taken on to bail out relatives. And nearly 20 percent of respondents say they've dipped into retirement to pay down that debt.
]]> Then there's the February report by the Employee Benefits Research Institute. It noted that the median level of credit card debt among individuals 76 and up shot up from $840 in 2007 to $1,800 in 2010. It also noted that while only 10 percent of 75-plus households had mortgage debt in 1992, the percentage had grown to about 24 percent in 2010.And that statistic seems to be supported by a Census Bureau report issued last month. It says that households of Americans over 65 saw their debt generally double between 2000 and 2011. The median rate of $26,000 was below the overall population's median of $70,000, but the jump for seniors was the larger than any other age group.
All this data suggests that many older individuals may be hurting and seeking some way of getting a leg up on their debt. There are ways to do it, including the possibility of Chapter 13 or some other form of bankruptcy. Consulting an experienced attorney to explore the options is always wise advice.
Source: Business Insider, "Household Debt Could Be A Game Changer For Retirees," Josh Boak, The Fiscal Times, April 2, 2013
If one has concern about what others might think about their filing for bankruptcy, it might help to remember that the process has been in place and available for centuries. There are rules to follow and standards to be met, but it is there to allow a person to discharge certain debt without the pressure and pestering from creditors. Even some tax liabilities may be discharged. It also may help to remember that some very notable individuals have benefitted from the process.
]]> One of the latest who is hoping to do so is singing star Dionne Warwick. She filed for Chapter 7 bankruptcy protection in New Jersey late last month. The 72-year-old artist has revealed in her filing that she is facing nearly $7 million in federal income tax liabilities. Her home state of California also seeks more than $3 million owed business taxes.The singer, whose classics include such hits as "Walk On By," "Do You Know The Way to San Jose" and "I Say a Little Prayer," also says that her current monthly income leaves her with only about $10 after her standard expenses.
Her publicist says she got into this predicament because of bad financial management back in the 1990s. He says she has actually paid the actual back taxes owed and that the current liabilities result from accrued penalties and interest. The spokesperson says Warwick decided to file for Chapter 7 bankruptcy after repeated efforts to work out manageable payment plans with tax officials failed.
Source: WLS-TV, "Dionne Warwick Bankrupt: Singer files Chapter 7 petition," Associated Press, March 26, 2013
]]>People who opt to file for bankruptcy usually find themselves faced with the decision for reasons outside of their control. Perhaps they have lots a job and can't find new work. They may have suffered a major medical setback and racked up a burdensome load of medical debt. In such circumstances, bankruptcy, whether it is Chapter 7 or Chapter 13, is a legal means by which a person may be able to find some relief.
]]> Among the advantages that may be found in bankruptcy is that filing for the protection allows a consumer to stave off foreclosure of a home. In some instances, it may provide just enough time for the individual to catch a much-needed breath so they can make a well-thought-out decision about their future.In others, it may allow for the negotiation of a mortgage modification that brings the amount owed in line with what the market now says a home is worth. This strategy does require the lender to be willing to negotiate. And, unfortunately, one of the biggest holders of mortgage loans has steadfastly refused to go that route.
We're talking about the Federal Housing Finance Agency, which regulates the government-owned Fannie Mae and Freddie Mac financing giants. Director Edward DeMarco has been acting head of the FHFA since 2009 and has consistently balked at allowing Fannie or Freddie from lowering principal amounts on the 60 percent of mortgages it controls. He says it would cost taxpayers too much and could hurt the housing market by encouraging homeowners to default on mortgages in order to force balance reductions.
His refusal to relax the policies recently spurred nine state attorneys general to call on President Obama to oust DeMarco from his position. Whether it is likely to work is in question. Republicans like the tough-minded FHFA official and there's speculation they might block any nomination for a replacement that might be made.
Sources: Los Angeles Times, "9 state attorneys general want housing official DeMarco replaced," Jim Puzzanghera, March 18, 2013
One such development that seems to be being offered by more and more credit card companies is the opportunity to transfer a lot of different debt balances -- not just credit card balances -- at zero interest. What that means is that you might be able to shift a secured loan, like a car installment loan, over to the card and magically turn it into unsecured debt.
]]> At least a portion of unsecured debt is typically dischargeable as part of bankruptcy proceedings, whether the filing is under Chapter 7 or Chapter 13. That might make the zero-interest card offer appealing. Indeed, one online card service company recently suggested that strategic use of such cards could save consumers a good chunk of money on their car loans. Other credit industry watchers, however, offer words of caution.They note that the zero-interest periods on credit cards tend to be only for a limited time period. When that window closes, credit card interest rates kick in and they are often in the double digits. These experts offer the view that the only consumers who might benefit from such a switch are those who could pay off the loan at the end of the zero-interest timeline. And they say that consumers with that ability would be better off just paying off the loan themselves.
Another caution offered by the industry watchers is that getting such a card could hurt your credit score. That's because secured debt and unsecured debt is looked at differently by the card rating services. Unsecured debt is seen as riskier for the lender. As such, taking it on can eat away at your score.
Ultimately, the observers say that while zero-interest card transfers may sound good, a closer look reveals debt relief shortcomings.
Source: The New York Times, "The Risks of Transferring a Car Loan to a Credit Card," Ann Carrns, March 18, 2013
This is of particular concern when mental illness is being dealt with. If a person has only one or two issues to deal with it may be possible to cope. But sometimes myriad mental conditions afflict one individual, requiring massive amounts of care over many, many years. Often, mental health benefits don't keep up and the result is a load of unmanageable medical expenses.
]]> This is the situation being faced by one middle-class Nebraska family. There are three children, a mom and a dad. The oldest child, a 16-year-old girl, suffers from Tourette syndrome and obsessive compulsive disorder. She was diagnosed at the age of five. As she got older, she developed anorexia and gastrointestinal troubles.Dad is an insurance agent and has good insurance, but it hasn't been enough. Mom doesn't work, because she's caring for the oldest child and the younger boys. Over the years, the father says they have spent hundreds of thousands of dollars trying to bring their daughter's conditions under control.
Under the Mental Health Parity and Addiction Equity Act, medical and mental health services are supposed to be covered equally by insurers. But a new study appearing in Pediatrics magazine recently indicates that it hasn't delivered much in the way of meaningful help. Costs in general are said to have been cut by 5 percent since the law took effect in 2010, but the average savings per year is estimated to be only about $180.
In some cases, the struggle for families has been so great that doctors have recommended that parents turn their children over to state custody. The suggestion is made under the aegis that it would make it possible for necessary treatment to be delivered and paid for by the government.
In the face of such torment it's no wonder that families dealing with such issues would find themselves at the ends of their ropes. Bankruptcy may offer relief in some cases, but making that determination is something to be done in consultation with an attorney.
Source: ABC News, "Medical Bills Bankrupt Families of Mentally Ill Children," Susan Donaldson James, Feb. 18, 2013
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