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The Essential Guide to Bankruptcy Cases in Missouri and Illinois

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Life After Foreclosure Isn't Pretty - Why Bankruptcy Can Help

It is common knowledge that more and more families are facing foreclosure.  Over the last 14 years, Castle Law Office has helped thousands of families avoid a foreclosure and save their home.  But when the loss of the home is unavoidable, what happens next?

A recent article on CNBC discusses life after foreclosure and what it can mean for you.  As you will see, this article explains some helpful information when you are trying to purchase another home after a foreclosure takes place.  Keep in mind, this article does not address how a chapter 7 or chapter 13 bankruptcy has on this process.  In many cases, when a home is foreclosed upon, there is a balance owed because the home did not sell for what was owed on it.  This is referred to as a deficiency balance and the lender can go after you for that balance in court.

In most cases, filing bankruptcy can eliminate any deficiency balance after a foreclosure and help you get back on your feet and on your way to buying another home again.  To read more about life after foreclosure, click on the link below.

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Fenton, MO Chrysler Plant to Close

ST. LOUIS, Mo. - For 25 years, the minivan has been a bread-and-butter vehicle for Chrysler. When its U.S. competitors recently abandoned the vehicle and its stigma as "uncool," Chrysler hung in, saying it still saw a future despite a shrinking market.

Ford left, and though GM still makes minivans, it doesn't appear to be introducing a 2009 version of the Uplander and is expected to end production next year.

For more information, follow the link below.



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New Study Shows Declining Credit Card Use Among Americans Due to Economic Downturn

SAN FRANCISCO--(BUSINESS WIRE)--Financial research firm Javelin Strategy & Research (www.javelinstrategy.com) released today its latest report on credit cards and consumer spending, which shows that Americans are cutting back on credit card use and having difficulty paying off balances. The report indicates conservative spending behaviors as a result of the economic downturn and the ramifications of the mortgage crisis, soaring fuel costs and rising food prices.

“The sharp decline in credit card spending challenges the popular belief that Americans are charging basic goods in order to sustain their quality of life,” said Jim Van Dyke, president of Javelin Strategy & Research. “Consumers are making deliberate cutbacks like shopping at superstores, eating out less and watching what they charge. We believe this is because most people have already been impacted by the downturn or they’re anticipating that we haven’t seen the worst of it. It’s very cautious behavior.”

For more information, follow the link below.

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Credit Card Debt Piling Up for Americans

WASHINGTON — With more Americans struggling to pay for basic living expenses, a small but growing segment of the finance industry is encouraging consumers to pay their mortgages, car notes, student loans — and even alimony — online by credit card.
Those who pay their card charges in full each month may find that the practice provides a slew of card incentives while buying extra time to come up with the cash.

For more information, follow the link below.

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Alabama sewage job drags county down the drain

The largest county in Alabama is headed for the biggest municipal bankruptcy in US history, a US$3.2 billion mess caused by a corruption-riddled sewer construction project and the credit crunch.

Jefferson County, which has 658,000 residents and includes the state’s biggest city, Birmingham, got into trouble after the courts ordered a huge upgrade of its sewage system to meet federal water standards and stop raw waste being dumped into streams, the St Louis Post-Dispatch reported.

The county borrowed money on the bond market and when the mortgage crisis hit, the interest rates on the debt rocketed. The nearly completed sewer project, under construction since 1996, is now US$3.2 billion in debt.

For more information, follow the link below.

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St. Louis Post-Dispatch newspaper cuts 18 positions to trim costs

ST. LOUIS — The St. Louis Post-Dispatch said it has eliminated 18 jobs as it copes with declining advertising revenue and increasing newsprint costs.

The job cuts, announced Thursday, are in human resources, production and newsroom management.

"Like many businesses across the country, we continue to feel the economic challenges, including consecutive newsprint increases over the past 13 months," Kevin Mowbray, the newspaper's publisher, said in a statement.


For more information, follow the link below.

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Bankruptcy Cases Higher for Senior Citizens in Missouri and Illinois

According to the Consumer Bankruptcy Project, the number of bankruptcy cases filed for senior citizens over the age of 55 has soared between the time frames of 1991 and 2007.  So much so, that as of 2007, if you are over 65 years of age, you are two times more likely to have to file for bankruptcy relief.  The reason - it seems that the multiple effect of the loss of significant income along with higher medical costs drives our seniors to the edge.

To read more, follow the link below.

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St. Louis Bankruptcy Attorney Reveals Subprime Lenders Confessions

We have all heard recent reports of the subprime lending mess and how it has directly contributed to the overall increase in foreclosures through the first part of 2008.  I ran across an interesting article and video by an insider where he shares secrets the mortgage industry doesn't want you to know.  It's interesting to read that these loans are called "liar loans" by insiders in the industry because of the approval without verification of income or assets.

Richard Bitner, a former subprime lender, explains the ins and outs of the business, how these shady lenders took us all for a ride, what you need to know whether you’re buying, selling, or just watching it all play out, to make sure it never happens again.

For more on this story, click the link below.

The good news, a Chapter 13 bankruptcy can be the solution to help you deal with a bad subprime loan.  I have helped thousands of St. Louis, Missouri and Illinois families save their home from foreclosure by helping them file a Chapter 13 bankruptcy.

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Credit Counseling in St. Louis, Missouri and Illinois May Do More Harm Than Good

When the average person begins to get behind in their credit card and other debt, many first turn to the services of a credit counseling center.  Nowadays, these can be found both online and offline.  There are many credible counseling centers that have helped people get back on their feet, but there are an equal number of these services that provide little to no help and some that will totally rip you off. 

Although even the best credit counseling service helps some people, if you are having problems with foreclosure, repossession or garnishments, these companies will not likely be able to help you with that serious of an issue.  An experienced bankruptcy attorney can usually do much more to provide debt relief with the full power of the bankruptcy laws behind you.  Where the credit counseling service negotiates with creditors to try to get them to make a deal, under the bankruptcy law, creditors are not in a position to negotiate.  They must accept the outcome whether they like it or not.

St. Louis, Missouri and Illinois bankruptcy attorney James Brown with Castle Law Office has been helping families file for Chapter 7 and Chapter 13 bankruptcy relief for over 15 years.  If you are facing serious problems as a result of being behind in credit card debt, house payments, child support or even back taxes and student loans, we can help.  To find out more, request a free copy of our Ultimate Debt Relief Package today.

 

To learn more about credit counseling services, click the link below.

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How To Come Back From Bankruptcy

Q. All of my adult life I have had excellent credit. Recently related to a catastrophic illness my husband and myself had to declare bankruptcy. I would like to reestablish my credit and don't know how to start.

For more information, follow the link below.

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Small businesses buried by credit card debt

The financial health of small businesses is deteriorating quickly, if Advanta Corp.'s earnings, released yesterday, are any indicator.

The issuer of small-business credit cards from Spring House said it gave up on collecting $130.5 million of its customers' debts in the second quarter, up from $102.1 million in the first quarter and $50.7 million a year earlier

For more information, follow the link below.

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Bush signs sweeping housing bill

WASHINGTON: President Bush signed into law on Wednesday a huge package of housing legislation that included broad authority for the Treasury Department to safeguard the nation's two largest mortgage finance companies and a plan to help hundreds of thousands of troubled borrowers avoid losing their homes.

For more information, follow the link below.

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Credit card gripes flood Fed

Consumers are filing a record number of comments — mostly complaints — about credit cards with the Federal Reserve, adding momentum to efforts to reform the industry.

The comments respond to a rule that the Fed has proposed to curb "unfair and deceptive" lending. The public has until Aug. 4 to weigh in. Already, nearly 33,000 consumers, advocates and industry groups have done so — by far the most responses ever received on a credit card proposal, the Fed says. It plans to issue a final rule later this year.

For more information, follow the link below.

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Missouri cuts two interest-rate reduction programs for students

JEFFERSON CITY | Missouri’s student loan agency has eliminated two borrower benefit programs, shutting off opportunities for some new customers to reduce their interest rates by up to 3 percent.

The Missouri Higher Education Loan Authority made the cuts in order to leverage federal funding for new loans in the coming school year. Lenders have seen their ability to create new student loans shrivel in the frozen credit market.

For more information, follow the link below.

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Fallout From Bad Loans Rocks Regional Banks

Home mortgages and other loans that the banks made in good times are souring so fast that many of the lenders are scrambling to prop themselves up. If the pain worsens — and many analysts say it will — some of these banks, like Fifth Third’s predecessors, may eventually seek out suitors, most likely large national rivals.

For more information, follow the link below.

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Missouri Lender pushes NovaStar closer to bankruptcy

NovaStar Financial Inc. on Thursday drew closer to bankruptcy after a lender accelerated its loan and declared $51 million in obligations immediately due and payable.

For more information, follow the link below.

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St. Charles County eclipses national, state unemployment rates

More people in St. Charles County are out of work this spring than they were at this time last year. After the housing market collapse fueled a snowball effect among construction job losses, unemployment is now hitting a higher number of office workers.

In March, 5.7 percent of workers in St. Charles County were out of a job, a figure not even approached in the last 10 years. In April, the unemployment rate settled down to 5 percent. Yet in April of 2007, only 3.5 percent of workers in St. Charles County could not find work.

For more information, follow the link below.

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In the Debt-Soaked Economic Slump, Americans Find Solace in Support Groups

After years of free spending -- $200 jeans, a silver BMW and other grown-up toys -- Michael Wagner had racked up $25,000 in credit-card debt and was behind on his mortgage and car payments. Creditors called night and day. It was a "hopeless downward spiral," he says.

Then, last November, the 34-year-old sales manager for the St. Louis Post-Dispatch joined the "Sunday morning breakfast club," a group of debtors who meet weekly over coffee and eggs to share money woes. Mr. Wagner says he is now on the road to financial recovery, helped by his discovery that "I wasn't alone."

For more information, follow the link below.

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Bankruptcy for Elderly on the Rise in St. Louis Missouri and Illinois

In recent years, statistics show that elderly Americans have sought bankruptcy-court protection at sharply faster rates than other adults.  The main reasons cited are  overwhelming  amounts of debt compared to fixed income and the rising cost of medial bills.

From 1991 to 2007, bankruptcy filings increased among those ages 65 or older by 150%, according to AARP, which will release the new research from the Consumer Bankruptcy Project. Suprisingly, the biggest rise occurred among those ages 75 to 84, whose rate soared 433%.

For more information on the study and its results, click the link below.

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New Bankruptcy Law Isn't Helping St. Louis Debt Relief

When the U. S. Congress passed the Bankruptcy Abuse Prevention and Consumer Act of 2005, it was designed to curb abuse of the bankruptcy system and lead to more personal responsibility for consumers.

We are now 3 years after the passage of the law and although it has managed to make a dent in the number of bankruptcies filed in the early years after its enactment, bankruptcy filings are on the rise and fast approaching pre-2005 levels. 

Why is that?  With the subprime mortgage and home foreclosure mess, high gas prices and Congress' refusal to put a cap on the interest rates charged by credit card companies is only  the beginning to an economy we haven't seen since the early 80s.

For more on this topic, click on the link below.

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Chapter 13 Can Still Help As Home Foreclosure Surges 48% in May, 2008

Foreclosure filings were up nearly 50% last month compared to the same time period last year according to RealtyTrac, Inc.  Nationwide, there were over 261,000 foreclosure filings in May, up 7% over April.  That's bad news for an economy that is reeling from high gas prices, high interest rates and high unemployment rates.

Sobering statistics like these are leading to more calls for government help, especially from lawmakers pushing a plan for the government to guarantee as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.  However, the bad news is it doesn't appear this is a top priority for lawmakers across the country.

The good news is Chapter 13 of the U.S. Bankruptcy Code can help you in most cases save your home and reorganize your debt into a manageable monthly payment that you can afford. 

For more on the foreclosure crisis, click the link below.

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Tougher rules needed on credit-card policies

Federal officials are proposing tougher rules on how credit-card companies handle their relationships with customers — steps that are long overdue.

For more information, follow the link below.

 

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2 Ky. widows sue U.S. government over husbands’ VA deaths

EAST ST. LOUIS, Ill. - Two Kentucky widows are suing the U.S. government over surgical care they say killed their husbands at a southern Illinois Veterans Affairs hospital where surgeries were halted last year after a spike in patient deaths.

For more information, follow the link below.

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Diagnosis of blood clot at issue in malpractice trial

A Jasper County jury Tuesday began hearing a wrongful-death lawsuit brought against a Joplin family-practice physician by the wife and mother of a 28-year-old man who died more than four years ago of a pulmonary embolism, or blood clot.

For more information, follow the link below.

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Despite new laws, Chapter 7s are on the rise

Melanie Fletcher lost her job in 2006, when her position as a program educator for Oregon's Washington County was eliminated. She was able to secure another job within the same office, and though it paid less she and her husband, an optician, managed to get by on their combined incomes. Then the Fletchers decided to sell their home in Beaverton last year and move to a rural area near their relatives, about an hour away. That was when the trouble started.

For more information, follow the link below.

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Lender's goof slams credit scores

A blunder by student lender Sallie Mae briefly trashed the credit scores of hundreds of thousands of unwitting borrowers who signed up for the company's graduated-payment loans.

The loans allow borrowers to make smaller payments, sometimes covering only the interest owed, for a few years before increasing to full payments. But within the past week, Sallie Mae began reporting the loans to credit bureau Equifax as essentially delinquent, sending borrowers' scores plunging.

Sallie Mae officials said Wednesday that they had fixed the problem and that borrowers' scores had returned to normal. The error affected "less than 10%" of the lender's 10 million borrowers, a spokesman said.

Elan Glasser of Santa Monica, Calif., received an e-mail alert from his credit monitoring service this week that his Equifax FICO score had dropped 81 points, from 727 to 646. (A score above 720 on the 300-to-850 FICO scale is generally considered good; 620 to 660 is considered mediocre.)

When he investigated, Glasser found nothing significant had changed on his Equifax credit report -- except a notation on his Sallie Mae account of "arrangements made with credit grantor to make partial payments."

'I look like a deadbeat'

Such a notation is typically used for debt settlement arrangements in which the lender is paid less than the full amount owed. As a result, borrowers' Equifax credit reports showed the loans as seriously delinquent, with past-due balances and a recent history of missed payments -- all extremely detrimental to credit scores, which lenders use to gauge creditworthiness.

"Suddenly, I look like a deadbeat," Glasser, a filmmaker, said Tuesday. "I'm worried now that my interest rates will go through the roof."

Sallie Mae officials said the coding error was included in a recent download of credit information to Equifax. The other credit bureaus, Experian, TransUnion and Innovis, were not affected, they said.

"Sallie Mae fully understands the importance of one's credit rating, and we sincerely apologize for this error," company spokeswoman Martha Holler wrote in an e-mail Tuesday afternoon, when the lender was still working on a fix. "We are working with great urgency to ensure that the affected credit reports are corrected quickly; in fact, we expect full resolution within the next day. Once the issue is resolved, the payment histories will appear as they would absent our error."

Federal law prohibits creditors from reporting false information to credit bureaus and allows consumers to sue for up to $1,000 for violations. It's unclear, though, whether a goof such as this one qualifies as a violation of the law, particularly if the problem is fixed soon.
Such a serious drop in credit scores can cause havoc on a borrower's finances. Credit card companies may jack up interest rates in response to a plunging score, and insurance companies may increase the premiums they charge. Borrowers may be denied other credit or charged more because of their lower scores.

Sallie Mae markets the graduated-payment student loans as an option for borrowers who are just starting their careers or who need lower payments because of economic setbacks. Borrowers are allowed to make reduced payments in the initial years of the loan, sometimes paying just interest for up to four years before larger payments kick in.

Working on a solution

News of the blunder began circulating last week on Internet user forums, including CreditBoards.com, and spread as more borrowers checked their scores or were notified by subscription credit monitoring services that their FICO scores had changed.

One borrower, who preferred to remain anonymous, found the error had dropped his Equifax FICO score to 660, while his score remained 782 at TransUnion and 820 at Experian. After Sallie Mae announced the fix, his Equifax score zoomed back to 789.

If you have a graduated-payment loan from Sallie Mae and are concerned it may hurt your credit, here's how to find out whether you've been affected and what to do about it:

  • Obtain a copy of your Equifax credit report, which is available once a year for free from AnnualCreditReport.com. If your Sallie Mae loan account includes a note under the "Descriptions" heading reading, "Arrangements made with credit grantor to make partial payments," your credit has likely been affected -- even if the account shows "paid as agreed" elsewhere on your report.
  • Take a look at your actual FICO scores, which are typically not available for free. You can buy your Equifax FICO score from Equifax.com or MyFICO.com for $15.95. For comparison purposes, you can buy your FICO scores from Experian and TransUnion, at MyFico.com for $15.95 each (those two bureaus don't sell FICO scores directly to the public)
  • You can dispute the erroneous description directly with Equifax by using the link provided with your credit report. Make it clear in your dispute that the account is not delinquent and is being paid as agreed.
  • If you're having a problem with a loan or other credit account because of the Equifax glitch, Sallie Mae has promised to provide help. "We recognize that some customers may need a credit reference during this interim period, and we will gladly and promptly supply one to assist them," Sallie Mae's Holler wrote. "Anyone with questions about their Sallie Mae account may contact us at 1-888-2-SALLIE."



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10 ways for Missouri and Illinois consumers to curb sleazy debt collectors

The math in recessions is simple: More folks are unemployed; more folks fall behind; fewer folks are able to pay their debts once they get behind.  This time, many people can't even borrow against their home equity to pay the bills.

It's tough conditions like these that tempt collectors to get rough with consumers. Given that the debt-collection industry has trouble restraining itself during good times, you can imagine how bad this could get. Consider:

  • Complaints about collection agencies quadrupled between 2001 and 2007, the latest data available from the Federal Trade Commission. One in five complaints received by the federal agency concerned collectors, and the total of 70,951 exceeded that of any other industry.
  • Consumers most commonly complained that collectors misrepresented the character, amount or legal status of a debt -- demanding far more than was owed, insisting the consumer owed a debt that he or she did not, or claiming a debt was legally enforceable when the statute of limitations had long since expired. Other common complaints: that collectors violated laws against harassing consumers and using obscene language, that they falsely threatened dire consequences, such as jail time, and that they contacted consumers at work.
  • You no longer have to be a debtor to wind up the target of a collector's harassment. A booming market in old and often poorly documented debts means that in some cases collectors are going after the wrong people with a vengeance.
  • The industry itself realizes it has a public-relations problem that's likely to get worse. ACA International, a trade group that represents collectors, unanimously approved a first-ever code of ethics last year, and the head of one of the country's largest collection agencies has warned his colleagues that a public backlash could spoil the coming boom.

'Fresh' debts at 12 cents on the dollar


Vikas Kapoor, the chief executive of call-center company IQor, told a gathering of collection-agency executives in November that the industry needed to better comply with existing laws and improve the public's perception of collectors, according to insideARM, a newsletter that covers the industry.

In particular, Kapoor said, collection agencies should stop buying debt that hasn't been properly documented -- the kind of debt that triggers a lot of consumer complaints and lawsuits -- and should find a way to punish individual collection-agency employees who repeatedly violate fair-debt-collection laws.

These are fine ideas, but I'm not sure we can count on collectors to get their act together as the recession rolls through the economy. There's too much money involved and too little oversight to expect that collection agencies won't cut corners.

The boom has already begun. Sales of overdue credit card debts, already more than a $100 billion industry, are on the rise, and prices are dropping, reflecting both the increase in supply and the growing difficulty of getting borrowers to pay up in a worsening economy.

The price of "fresh," or recently charged-off, credit card debts has dropped between 10% and 30% in the past year to 9 to 12 cents on the dollar, according to Mark Russell, a director at collection-industry consulting company Kaulkin Ginsberg.  Older debts, for which two or more collection attempts have been made, have slid between 25% and 40%, Russell said, to 3 cents to 5 cents on the dollar.

Meanwhile, collectors are gearing up to go after these debts. The debt-collection industry has added 100,000 jobs in the past year, according to Kaulkin Ginsberg, bringing employment to more than half a million positions. The growth rate is expected to continue: The U.S. Bureau of Labor Statistics predicts employment in this industry to grow 23% between 2006 and 2016.

So now is the time to act. I have five suggestions for ordinary people dealing with collectors.  If you're contacted by collection agencies, you should:

Know your rights. Whether or not you owe money, debt collectors are required to treat you civilly and to obey debt-collection laws. The FTC has information on the Fair Debt Collection Practices Act, and the Privacy Rights Clearinghouse has prepared a fact sheet for consumers dealing with third-party debt collectors. Abusive language, threats to have you arrested and repeated calls are clear violations of debt collection laws; you can report them to the FTC, sue the offenders in small claims court, or both.

Understand the statute of limitations in your state. Your biggest risk if you owe a debt is that a collector will sue you, win a judgment against you (which damages your credit) and succeed in garnisheeing your wages. Your state's statute of limitations is supposed to prevent such lawsuits after a certain number of years (usually three to six years, but in some states it's longer). If the collector files a lawsuit after the statute has expired, you still need to show up in court to point that out.

Stop the calls. Whether or not you owe a debt, you want a paper trail to preserve your legal rights. In your initial contact with a collector, get the company's name, its address and a telephone number. If you're willing to pay the bill, tell the collector you want the company to send you the required proof that you owe the debt. If you're not the debtor, send a certified letter, return receipt requested, telling the collector it has the wrong party and to stop contacting you. (Sending such a letter if you do owe the debt can sometimes trigger a lawsuit, so tread carefully here.)

Keep an eye on your credit reports. You can get free annual peeks at all three of your credit bureau reports at AnnualCreditReport.com. (Make sure you go to the right site; other sites offer credit reports for a fee or as an inducement to sign up for credit monitoring.) Dispute any bogus collection accounts immediately and include any proof you have, such as police reports of identity theft or copies of letters you sent to the collection agencies.

Get help. If a collector continues to call, seek help. The best place to turn may be an attorney who is familiar with debt-collection laws. No money for a lawyer? Try your state attorney general's office.

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Bankruptcy Filings Expected to Soar as Economy Slides - Steady Increase in St. Louis Bankruptcy Filings

By Gail Appleson
ST. LOUIS POST-DISPATCH
04/06/2008

The law that drastically changed the Bankruptcy Code in October 2005 was supposed make it tougher to escape debts and reduce the number of filings. It worked, for a time.

Although the law made filing for bankruptcy more complex and expensive, the number of cases locally and nationally is rising again. Experts predict a big hike later this year, triggered by the nation's wobbling economy and heavy levels of consumer debt.

National statistics indicate the trend is well under way, with bankruptcy filings by individuals up 27 percent nationwide in the first quarter of 2008 compared to the year-ago period, according to new figures from the American Bankruptcy Institute, a research and education group.

Individuals' bankruptcies nationwide rose 40 percent in the 2007 calendar year compared to 2006. The ABI, which bases its figures on data from the National Bankruptcy Research Center, said the increase is due to rising household debt and growing mortgage problems.
The national trend is reflected in St. Louis-area courts. "We are seeing a steady increase in filings," said Dana McWay, clerk of the Bankruptcy Court for the Eastern District of Missouri. "The state of the economy is always a determining factor in what happens in our courts. I believe we'll see a steady uptick."

Total bankruptcy filings, which included corporate filings, in the St. Louis-based Eastern District rose to 10,091 in calendar year 2007. That represents an increase of 36 percent from the 7,442 cases filed in 2006. The 2006 filings had dropped by about 72 percent from 2005, when they peaked at 26,724 and the new law went into effect, and 2006.

Although filings by individuals make up the bulk of local bankruptcy applications, statistics for the first three months of 2008 show a worrisome trend in business filings as well.

Eighteen business reorganizations under Chapter 11 were filed in St. Louis between January and March. That's the same number of business cases that were filed during all of last year, McWay said.

In East St. Louis, the Bankruptcy Court for the Southern District of Illinois also showed an increase between calendar years 2007 and 2006; however, a breakdown between individual and business filings was unavailable.

The total filings of 5,153 for calendar year 2007 were up 19 percent from the 4,323 in 2006. The 2006 figure represented a decline of 66 percent from the 12,817 filings in 2005.

A LOOMING BOOM IN BANKRUPTCY CASES?

The full impact of the nation's sliding economy is not reflected in the most-recent figures — that may take a few more months — and many lawyers believe there will be a lot of bankruptcy-related business up for grabs this year.

"Nationally, people think that the No. 1 area of growth this year will be bankruptcy," said Carrie Titus, division director of Robert Half Legal, which provides legal staffing to law firms and corporate legal departments.

Titus based her comments on results from a Robert Half survey that asked large firms and corporations about staffing needs in the next 12 months. The results were released last week.

The reason the increase is expected later this year is because the impact of bad economic developments doesn't translate immediately into a sharp hike in bankruptcy filings, said Jack Williams, scholar-in-residence for the Alexandria, Va.-based Bankruptcy Institute. He's also a bankruptcy professor at Georgia State University College of Law in Atlanta.

"That spike generally lags about six to nine months behind the economy," Williams said. "Bankruptcy is a lagging economic indicator."

Because of this, Williams predicted that the number of filings across the country, including business and individual cases, will rise to between 1.2 million and 1.4 million by the end of 2008. Most cases are filed by individuals.

"This is a huge number…"…. This is fast approaching previous levels," he said, referring to the period before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect. "It's the very thing that Congress sought to fix. It will turn out to be a legislative failure."

The law, intended to make it harder to escape debts, made seeking bankruptcy protection more complicated and expensive. Among other changes, it requires an investigation into whether people who want to declare bankruptcy can pay off at least some of their bills.

CHANGES CRITICIZED

Changes to the Bankruptcy Code have drawn widespread criticism from debtors' lawyers, who describe the law as ill-conceived and badly written. Some provisions refer to sections that don't exist, some amendments contradict others and some sentences don't make sense, they said.

The lawyers' concerns drew a great deal of publicity, and many individuals rushed to file bankruptcies near the end of 2005, before the act went into effect.

Nationally, non-business filings for the Bankruptcy Court system's fiscal year ended September 2005 totaled 1.7 million, and they spiked to a historic high of more than 2 million for the calendar year ending that December.

Although filings dropped sharply in 2006, as anticipated, it appears that the decline might prove only temporary.

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Protect Your Credit In An Economic Downturn

Great credit is a powerful weapon in a struggling economy. Here are seven strategies for preserving yours. 

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Foreclosure Assistance for Missouri and Illinois lost as Senate drops bankruptcy aid from housing plan

WASHINGTON - Republicans and business-friendly Democrats on Thursday scuttled a plan to give people threatened with losing their homes more leverage in winning favorable loan terms from their lenders in bankruptcy courts.

The Senate killed the bankruptcy plan by a 58-36 vote on the first full day of debate on a bill designed to boost the slumping housing market.

The Democratic-backed bankruptcy law changes, opposed by banks and their GOP allies and a handful of Democrats, would have given judges the power to cut interest rates and principal on troubled mortgages to help desperate borrowers trapped in subprime mortgages keep their homes.

The idea was to give borrowers duped into abusive mortgages leverage in getting their loan terms adjusted. Such power, said the plan's chief proponent, Sen. Dick Durbin, D-Ill., would have helped "more people than all of the provisions combined" in the rest the bill.

But Republicans and 10 Democrats, along with Connecticut independent Joe Lieberman, voted to scuttle the bankruptcy provision. Opponents argued that, despite modifications by Durbin, the proposal would hurt more than it would have helped by leading mortgage lenders to ratchet up interest rates and thereby put another drag on the soft housing market.

The defeat of the bankruptcy plan highlighted a weakness that many people find with the bill _ that it showers generous tax breaks on money-losing businesses like home builders but does little to help people facing foreclosure.

The measure is advertised as helping people keep their homes and injecting demand into the teetering housing market. But its most costly provision simply gives tax cuts worth $25 billion over the next few years to businesses like home builders and banks.

Meanwhile, it provides just $3 billion in tax relief to homeowners over the same period, according to an estimate by the Joint Tax Committee, which explores for lawmakers the effects of tax legislation on the Treasury.

The benefits to businesses also dwarf the $4 billion in the measure that would be provided to cities and towns to buy up and refurbish foreclosed and abandoned homes. That provision is aimed at stabilizing communities and preserving values of neighboring homes.

Homeowners would benefit from $100 million to provide counseling to people threatened with foreclosure and help them in negotiating with their lenders. The measure also would provide new authority for states to issue $10 billion worth of bonds to be used to refinance subprime mortgages.

The bill opened to unenthusiastic reviews among many Democrats. House Speaker Nancy Pelosi, D-Calif., promised improvements when the House takes up the measure and negotiates a final bill with the Senate.

"Hopefully the balance will swing more in favor of the families in danger of losing their homes," Pelosi said.

The tax provisions in the measure enjoy sweeping support but deliver the bulk of their benefits to businesses _ regardless of whether they're involved in the housing market _ that are losing money in the current downturn.

Such businesses would be allowed to deduct current losses against taxes paid up to four years ago, when times were profitable. The current limit is two years of such operating loss "carrybacks."

The tax breaks, said Jerry Howard, the chief executive at the National Association of Home Builders, would provide smaller home builders with an infusion of capital that would allow them to stay in business.

The home building lobby has great power on Capitol Hill, but plenty of detractors as well, as do the banks who are currently suffering losses and also stand to benefit.

"Our goal ought to be preventing foreclosures, not just propping up home builders and big lenders," Durbin said.

"It's just a giveaway," said Sen. Judd Gregg, R-N.H.

The four tax provisions would cost $28 billion through the end of 2010, but would deliver just $1 billion in immediate relief this year.

"When they unveiled the package, the main theme was ... 'help families keep their homes,'" said Bob Greenstein, who heads the Center on Budget and Policy Priorities, a liberal think tank. "Three of the four provisions would do little or nothing to accomplish that goal."

The bill also would provide a temporary $7,000 tax credit awarded over two years to people buying foreclosed homes in the year after the bill is enacted. It would cost about $1.6 billion, which assumes about 240,000 home buyers would benefit from the credit.

The bill attracted several amendments to cut taxes further, including a plan by Sen. Ben Cardin, D-Md., to give a temporary $7,000 credit to first-time home buyers and a plan by Sen. Norm Coleman, R-Minn., to let homeowners who are late on their mortgage payments withdraw money penalty-free from their retirement accounts to avoid foreclosure.

The measure contains a broader rewrite of Federal Housing Administration law that would permanently raise the dollar limit on mortgages that FHA can insure to $550,000 in the most costly real estate markets. The economic stimulus bill approved by Congress in February temporarily raised the limit from $362,790 to $729,750.

But Republicans rebuffed efforts by Democrats and the White House to reduce down payments on FHA-insured loans. Instead, the down payment requirement would be raised to 3.5 percent from 3 percent. Democrats sought to lower it to 1.5 percent.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Employers cut 80,000 jobs in March

The Associated Press
updated 7:50 a.m. CT, Fri., April. 4, 2008

WASHINGTON - Employers worried about recession slashed 80,000 jobs in March, the most in five years and the third straight month of losses.

At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be contracting. The new snapshot of the job market, released by the Labor Department Friday, underscored the damage that a trio of crises —in the housing, credit and financial sectors — has inflicted on companies, jobseekers and the economy as a whole.

The unemployment rate was the highest since September 2005, when significant job losses followed the devastating blows of Gulf Coast hurricanes.

Job losses were widespread in March. Construction, manufacturing, retailing, financial services and various business services all racked up losses. That overwhelmed gains elsewhere, including in education and health care, leisure and hospitality as well as in government.

The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs and the unemployment rate to rise to 5 percent.

The 5.1 percent rate is relatively modest by historical standards, but was nonetheless the highest in more 2½ years.

Job cuts in both January and February turned out to be even deeper. Employers got rid of 76,000 in each month. The elimination of 80,000 jobs in March was the most since March 2003, when the labor market was still struggling to recover from the 2001 recession.

The economy is suffering the effects of a housing collapse, a credit crunch and a financial system in turmoil. That’s causing people and businesses to hunker down, crimping spending, capital investment and hiring. Those things in turn further weaken the economy in what has become a vicious cycle.

For the first time, Federal Reserve Chairman Ben Bernanke acknowledged Wednesday that the country could be heading toward a recession, saying federal policymakers are “fighting against the wind” in combating it. Many other economists and the public believe the recession already has arrived.

Economists define a recession as two consecutive quarters of negative growth.

Bernanke wouldn’t tip his hand about the Fed’s next move. However, many economists believe the central bank will lower interest rates again when they meet later this month.

The Fed has taken a number of extraordinary actions recently — slashing interest rates, providing financial backing to JP Morgan’s takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions are ultimately aimed at limiting damage to the national economy.

With a public on edge, Congress, the White House and presidential contenders are scrambling to come up with their own relief plans even as they engage in a political blame game.

With the pace of hiring slowing down, the number of unemployed people increased to 7.8 million in March; workers with jobs saw only modest wage gains at the same time.

Average hourly earnings for jobholders rose to $17.86 in March, a 0.3 percent increase from the previous month. That matched economists’ forecasts. Over the past 12 months, wages grew 3.6 percent. With lofty energy and food prices, workers may feel like their paychecks are shrinking.

Many analysts believe the economy shrank in the first three months of this year and could still be ebbing now. The government will release its estimate of first-quarter economic growth later this month.

Bernanke, however, has said he is hopeful the economy will improve in the second half of this year, helped by the government’s $168 billion stimulus package of tax rebates for people and tax breaks for businesses, as well as the Fed’s rate reductions.

Still, even Bernanke predicted this week that the unemployment rate would rise in the months ahead. Some analysts say it could climb to 5.5 percent or higher by year’s end.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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1st Annual Client Appreciation Picnic

Announcement:

1st Annual Client Appreciation Picnic

Sunday, May 18, 2008

Forest Park—Pavilion #5

12 noon till 3 pm

 

As a BIG thank you for being a part of the Castle Law family, you are invited to the 1st Annual Castle Law Client Appreciation Picnic. 

 

There will be food, fun and prizes.  We will have a bounce house for the kids and a dunk tank (if allowed by the park) where you will have a chance to get your lawyer ALL WET!  The pavilion is located next to the St. Louis Zoo, so make a day out of it in beautiful Forest Park.

 

NO alcohol is permitted!

You MUST RSVP at 1-866-570-8484

before May 9, 2008.

 

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©2008 Castle Law Office of St. Louis, P.C., All Rights Reserved, Reproduced with Permission
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