Jump Law Group Blog

Housing Cool Down a 'BUST'?

2006-08-30T10:27:00.000-07:00

Friday, August 25, 2006
Housing Gets Ugly
By PAUL KRUGMAN

August 25, 2006
Op-Ed Columnist NEW YORK TIMES

Bubble, bubble, Toll’s in trouble. This week, Toll Brothers, the nation’s premier builder of McMansions, announced that sales were way off, profits were down, and the company was walking away from already- purchased options on land for future development.

Toll’s announcement was one of many indications that the long-feared housing bust has arrived. Home sales are down sharply; home prices, which rose 57 percent over the past five years (and much more than that along the coasts), are now falling in much of the country. The inventory of unsold existing homes is at a 13-year high; builders’ confidence is at a 15-year low.

A year ago, Robert Toll, who runs Toll Brothers, was euphoric about the housing boom, declaring: “We’ve got the supply, and the market has got the demand. So it’s a match made in heaven.” In a New York Times profile of his company published last October, he dismissed worries about a possible bust. “Why can’t real estate just have a boom like every other industry?” he asked. “Why do we have to have a bubble and then a pop?”

The current downturn, Mr. Toll now says, is unlike anything he’s seen: sales are slumping despite the absence of any “macroeconomic nasty condition” taking housing down along with the rest of the economy. He suggests that unease about the direction of the country and the war in Iraq is undermining confidence. All I have to say is: pop!Now what? Until recently most business economists were predicting a “soft landing” for housing. Even now, the majority opinion seems to be that we’re looking at a cooling market, not a bust. But this complacency looks increasingly like denial, as hard data — which tend, for technical reasons, to lag what’s actually going on in the market — start to confirm anecdotal evidence that it is, indeed, a bust.

Why the sudden crackup? When prices were rising rapidly, some people bought houses purely as investments, betting that prices would keep going up. Other people rushed to buy houses, or stretched themselves to buy houses they couldn’t really afford, because they feared that prices would rise out of reach if they waited. And all this speculative demand pushed prices even higher. In other words, there was a market bubble.

But eventually prices reached a level beyond what even optimistic potential buyers were willing to pay, especially after interest rates rose a bit. (They’re still low by historical standards.) As demand fell short of supply, double-digit price increases declined into the low single digits, then went negative everywhere except in the South.

And with prices falling in many areas, the speculative demand for houses has gone into reverse, as people try to get out with a profit while they still can. There’s now a rapidly growing glut of unsold houses. This is a recipe for a major bust, not a soft landing.

Moreover, it could be both a deep and a prolonged bust. Since 2000, much of the nation has experienced a rise in home prices comparable to the boom in Southern California during the late 1980’s. After that bubble popped, Los Angeles house prices began a slow, grinding deflation, eventually falling 20 percent (34 percent after adjusting for inflation). Prices didn’t begin a sustained recovery until 1996, more than six years after the downturn began.

Now imagine the same thing happening across a large part of the United States. It’s an ugly picture, and not just for people and companies in the construction business. Many homeowners — especially those who bought their houses with interest-only loans or with minimal down payments — will find themselves in financial distress. And the economy as a whole will take a hit.

As far as I know, Nouriel Roubini of Roubini Global Economics is the only well-known economist flatly predicting a housing-led recession in the coming year. Most forecasters consider his call alarmist, and many Federal Reserve officials remain optimistic. Last week, Richard Fisher, the president of the Federal Reserve Bank of Dallas, dismissed “Eeyores in the analytical community” who worry about a possible recession.

Call me Eeyore. While I don’t share Mr. Roubini’s certainty, I see his point: housing has been the main engine of U.S. economic growth over the past three years, and with that engine now going into reverse, it’s hard to see how we can avoid a serious slowdown.

The Heights of Hypocrisy

2006-07-05T20:54:00.000-07:00

Headline: The moral burden of bankruptcy
Byline: G. Jeffrey MacDonald Correspondent of The Christian Science
Date: 07/03/2006

Jump Law Group Comment: The moral dilemma of the Christian Right is borne from the idea that debt is a moral responsibility from a type of society that has not existed in decades. It used to be that credit card companies didn't exist. Interest in excess of 12% was considered unlawful!

Your credit was extended from Bob the Butcher down the street. You knew that he wasn't trying to gouge you with interest and fees and you knew that his extension of credit was because he was interested in doing business with you and making sure you had food on the table. You also knew that if you didn't pay Bob back, Bob would be personally affected. He also had to put food on the table for his family. So the responsibility and moral burden of debt was very different in that society and rightly so.

In today's society, companies like Capital One and Mastercard are not Bob the Butcher. These companies and the christian right are trying to impose the moral values of a decades old society. It is doubtful that Bob the Butcher even needs to extend credit anymore as Capital One has made credit so easy for everyone to obtain, we can all use our credit cards when we are at Bobs. But for that matter, it is likely Bob the Butcher doesn't even exist anymore because now Safeway, Albertson's, and Fred Meyer rule the grocery world. The concept of the corner store and local merchant have gone. Now we are buried under a corporate homogeny known as Target and Walmart.

For these people to suggest a moral dilemma in filing bankruptcy is hypocrisy at its highest. Deuteronomy 15:1-11, mandates that all debts shall be forgiven every seven years. It seems that the same people who want to make you feel guilty for utilizing your right as a citizen, are speaking with a forked toungue. But I digress. Read on and judge for yourself. It is the opinion of this attorney that no guilt should be involved in choosing to file bankruptcy. It is a financial decision, pure and simple. Do you think United Airlines had feelings of guilt when they filed for Chapter 11? How about Donald Trump when he filed his casino into Chapter 11? How much personal responsibility and burden do you think they imposed on themselves?

Consumers daunted by mountains of debt face another uphill climb as they sort through mixed messages on the moral implications of filing for bankruptcy.On one side, Christian conservatives who applauded last year'stightening of bankruptcy laws are now appealing to higher authority to tweak the consciences of would-be defaulters. On the other side, voices irked by double-digit interest rates and questionable marketing tactics of credit-card issuers say debtors are often morally justified in seeking relief. The morality debate is heating up amid signs of trouble for people living on the margins:
*Even though tougher filing laws took effect Oct. 17, the number of monthly bankruptcy filings grew by more than 300 percent between November and March, from 13,758 to 49,977, according to a June report from the Administrative Office of the US Courts.
*Foreclosures on home mortgages were up 38 percent nationally in the first quarter of 2006, according to property tracker RealtyTrac Inc.
*The average American household owes more than $9,300 on credit cards, up from $2,966 in 1990, according to Cardweb.com.
Against this backdrop, advocates for and against the use of bankruptcy disagree about where to lay the blame when someone gets buried in debt. Christian personal finance guru Mary Hunt has a stern message for anyone considering bankruptcy: "It's absolutely legal, but it is not moral."

"I would say, 'You accepted these credit cards. You had the obligationto know what you were getting into,' " says Ms. Hunt, author of "Living Your Life for Half the Price." " 'You spent the money, and sure you had a big medical bill, but it probably would not have put you over the edge had you not already been deeply in debt.' " Studies show this isn't true.

To make this case, bankruptcy's critics often cite Psalm 37:21: "The wicked borrow and do not repay, but the righteous give generously." From sources such as Crown Financial Ministries and Dave Ramsey's nationally syndicated radio show, advice seekers hear they have a duty in most cases to keep their payback promises even when life throws them a curve ball. But another school of thought sees a more complex picture in which lenders also face admonitions to forgive debts. For instance, JonathanAlper, a bankruptcy attorney in Orlando, Fla., reminds distraughtclients that the American legal tradition of allowing for bankruptcystems from Deuteronomy 15:1-11, which calls for debt forgiveness everyseven years. Others agree with Mr. Alper that those who are able shouldrepay, but those unable to do so should not feel guilty.In Psalm 37, "the psalmist is talking about [cases where] borrowingmoney and not repaying it becomes a business strategy," says GaryMoore, a Christian investment adviser in Sarasota, Fla. By contrast, hesays, single women should not worry about declaring bankruptcy, forinstance, after using credit cards to feed their children."Those people ought to go to bed every night knowing that God hasgranted them debt relief," Moore says. "And they're not, because theyhear this garbage [from antidebt Christians]. That's what Jesus calledplacing heavy burdens on his flock.""May," a Virginian who requested anonymity to protect her reputation,knows the moral struggle well.For 14 years, she paid the minimum balance due until she maxed out hercredit card on routine purchases such as shoes, clothes, haircuts,gifts, and equipment for her dog-grooming business. Charges initiallyworth $5,000 resulted in a balance of $10,000, even after she increasedher payments to $150 per month. Every day, she hid the mail before herhusband could see her predicament, and she remembers wishing "I couldgo to sleep and not wake up." Yet she kept paying back her debts atclose to 20 percent interest."I did think, 'I signed up for the credit card. I used it. I have amoral obligation to pay this,' " May says. "If I didn't feel some moralobligation, I would have told these debt collectors to take a hike."But after a creditor told her she was incurring debt faster than shecould pay it down, she spoke to a lawyer, divulged her secret to herhusband, and sought protection under Chapter 7."I must have paid [creditors] way over $20,000 for a $5,000 debt," Maysays. "Knowing in my heart that I paid everybody that I owed theoriginal amount plus a reasonable amount of interest, I don't feel anyguilt about having filed bankruptcy. I wish I had done it a lot sooner."In Hunt's view, what matters in resolving the moral quandary is whetherthe borrower lived up to his or her original promise. But Alper begs todiffer because, he says, the circumstances surrounding the originalloan are sometimes suspect to a degree that they nullify a borrower'smoral duty to repay."The people [whom creditors] often solicit are high-risk customers"with considerable vulnerabilities, Alper says. "By contract, they owethe money. But what's the validity of offering a lollipop to adiabetic? Or offering a cigarette to someone who's addicted tonicotine? You're not on an equal footing," and therefore the contractisn't moral in the first place, in his view.Others might bear some blame as well, according to David Jones,president of the 177-member Association of Independent Consumer CreditCounseling Agencies. He sees bankruptcy as morally justified insituations stemming from uncontrollable events, such as a job loss ormedical emergency. But he also blames teachers and schooladministrators for failing to make credit education a part of mostcurricula."Society has failed many people because [it] hasn't provided the kindof education and help and background that they need," Mr. Jones says."I suppose you could say [some profligate spenders] are somewhat offthe hook, but I'm a little bit concerned about that because there is aresponsibility to be a good financial steward."In Hunt's view, individuals benefit far more in the long run frombelt-tightening disciplines, such as those she employed to paynonmortgage debts in excess of $100,000, than they do by filing forbankruptcy."There's a good feeling we get when we're paying back debt," Hunt says."Bankruptcy is the opposite of that."But if restoring good credit is the goal, Jones has some bad news for Hunt's theory of thrifty virtue. Creditors like to see a recent history of bankruptcy, he says, because it usually means an applicant has poor spending habits, has no debts, and is ineligible for bankruptcy for another five to seven years. In short, this applicant stands to be a near-term cash cow for the creditor. May's experience suggests he might be right. She received three credit-card offers - including one from a previous creditor - during one week in June."Somebody that has a lot of debt and is paying their debt and straining every month to do so is not nearly as good a credit risk as someone who has just walked out of bankruptcy," Jones says."I would hate to invite people into bankruptcy with that scenario, but that happens to be the fact," he concludes.

(c) Copyright 2006 The Christian Science Monitor. All rights reserved.

Myths of Bankruptcy

2006-05-12T16:20:00.000-07:00

Ortiz: New bankruptcy law - 6 months later
By Nicholas F. OrtizThursday, May 11, 2006

As most people know by now, last year Congress enacted amendments to the bankruptcy laws. On Oct. 17, 2005, the president signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and, in so doing, modified the bankruptcy laws in the most significant way since 1978. About six months have passed since then, perhaps warranting a renewed look at the law after some dust has settled.

Something everyone can agree on is that the new bankruptcy law is complex. This may account for why there is so much misinformation out there. As a bankruptcy and consumer protection lawyer, I regularly talk to people who are overwhelmed by debt. This is my list of the top five myths about the new bankruptcy law:

Myth: Bankruptcy is no longer possible.

This is an easy one. BAPCPA amended the bankruptcy laws; it did not eliminate them. BAPCPA did make bankruptcy more difficult by creating new documentation and accuracy standards; however, the bottom line remains the same: people who cannot afford to pay their debts can get a fresh start free of most or all debts. Some of the misinformation on this point may be calculated. Some debt collectors, for example, have been telling people that bankruptcy no longer exists just to ratchet up the pressure to collect a debt.

Myth: People making more than the median income cannot file for bankruptcy anymore.

This myth involved the "means test," which is a creature of the new law. The purpose of the means test is to make people who are able to pay part of their debts. Although this has been presented as new, the truth is that people with consumer debts who could repay a reasonable amount were required for years to do so before the coming of the new law. The means test is just more technical. The means test applies to people who make more than the state median income. In Massachusetts, the median income for a single person is $47,176 and goes up by family size. (Exact numbers can be found at http://www.bkmass.com.) The means test is fairly complicated, but essentially asks whether a person should be in Chapter 13 (where you pay back part of your debts) or Chapter 7 (where you don't). If you can afford to pay some, you do. If you can't, you don't.

Myth: There is a difficult new credit counseling requirement under the new bankruptcy law.

The truth is that the new credit counseling requirement requires only nominal additional expense and time. My clients have spent, on average, about a half-hour over the phone fulfilling the prefiling credit counseling process. The bankruptcy system does not require people to deal with the type of credit counselors that have been in the news recently that have scammed people out of money. The U.S. Trustee has approved the credit counselors who can be used in the bankruptcy system.

Myth: I will lose all my property if I file for bankruptcy.

The reality is that although there have been some changes to the bankruptcy exemption scheme (based on residency and a few other things), the substantive exemptions still exist. What this means is that almost everyone will be able to keep all their property when they file for bankruptcy just as they did before the bankruptcy amendments.

Myth: Bankruptcy won't stop creditor harassment or lawsuits.

Bankruptcy still provides an automatic stay that stops the lawsuits, phone calls and other devices creditors and debt collectors use to collect debts. The automatic stay is central to bankruptcy and gives people the breathing room to go through the bankruptcy process without being hounded or harassed. BAPCPA makes some changes to the automatic stay with respect to notice requirements and repeat bankruptcy filers, but these changes will not impact most people and can be dealt with by experienced bankruptcy attorneys.

This article is not meant to minimize the changes under BAPCPA, but bankruptcy still exists and in most cases will provide the exact same relief it did before the change in the law. Bankruptcy often is the only reasonable way for people to deal with a situation in which they cannot pay their debts. Dealing with debt collectors and creditors after defaulting on debt remains worse than bankruptcy. It is more important than ever to retain an attorney who specializes in bankruptcy law who can steer you safely through the changes in the law.

Jay S. Jump quoted in Seattle Times

2006-02-14T14:25:00.000-08:00

It now costs you more money to prove that you're broke

By Melissa Allison
Seattle Times business reporter

In October, when a new federal law made it more difficult to file for personal bankruptcy, it also made filing more expensive.

Since then, the cost to file for Chapter 7 bankruptcy in the Western District of Washington has jumped from $209 to $274, and filers now have to pay $40 to $50 for credit counseling before they can file.

On top of that, some bankruptcy lawyers have doubled their fees because of the additional deadlines and paperwork required by the new law.

"It takes more time, more money and more effort on the debtor's part," said Michelle Branigan, a bankruptcy and real-estate lawyer in Seattle. Her fees went up by a couple of hundred dollars.
Jay Jump, a bankruptcy lawyer in Kent, raised his Chapter 7 fee from $600 or $700 to $1,250.
Jump runs background checks on his clients now to verify certain facts because the new law holds attorneys liable for false information. In the past, only the dishonest client was held liable, Jump said.

In eight years and about 4,000 bankruptcy cases, Jump has had two clients lie to him about their financial situations.

Lawyers also have to crunch more numbers to prove that their clients qualify for Chapter 7 bankruptcy, which is the kind that wipes away many debts. Chapter 13 calls for repayment over time.

He and other attorneys said they expect bankruptcy filings to bounce back after a recent lull.
The number of Chapter 7 filings in Western Washington jumped from around 2,000 a month to 9,912 last October, then dropped to 133 in November and 172 in December.

Richard Granvold, a bankruptcy attorney in Federal Way, filed 260 bankruptcy cases in the 15 days before the law changed in October and has filed only three since then. But that pace will change.

"It will pick up," Granvold said. "A lot of people filed before the law changed, so it dropped off. It'll take until August to be back where it was."

That doesn't surprise the American Bankers Association, whose members lobbied for the new law. It was not intended to slash the number of bankruptcies significantly, spokeswoman Laura Fisher said.

"We weren't expecting a huge drop in filings, just that the system be more fair," Fisher said.
To creditors, that meant weeding out the 5 to 10 percent of Chapter 7 filers with high incomes who used bankruptcy as "a financial planning tool," Fisher said. Those people "got into debt, declared Chapter 7 and erased all their debts, leaving the rest of us with the tab."

To go bankrupt now, they will have to file Chapter 13, which forces them to repay more of their debts.

Fisher figures the higher cost of filing is worth it for debtors.

"If you think about the amount of relief people are getting, sometimes in the tens of thousands of dollars, it's significant," she said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

A perfect storm

2006-02-13T15:16:00.000-08:00

Weathering stormy sea of rising debt
By Patricia Hasson

Several years ago, Warner Brothers released The Perfect Storm, an epicfilm about the impact of a cataclysmic storm formed by the confluence ofseveral severe weather systems in the North Atlantic. As the filmdramatized the storm's tragic impact on the crew and families of a shipknown as the Andrea Gail, the audience witnessed the bravery as well asthe folly of the crew in the face of doom they could not see but couldhave easily avoided.

A perfect financial storm may be brewing for many families in theeight-county Philadelphia region. A debt and savings survey of 833people completed late last year by Consumer Credit Counseling Service ofDelaware Valley revealed that debt loads were rising across the board,but particularly among people with low to middle incomes.

An alarming 33 percent of people with incomes of between $41,000 and$50,000 reported that their debt had grown last year. With many familiesstill feeling the effects of last year's holiday spending, it is likelythat debt will continue to go up. In fact, among the agency's 9,000customers who had one-on-one counseling sessions last year, the averagedebt was a little more than $14,000.

The reasons for our escalating consumer debt are diverse, but themost-cited reasons were the costs of housing, fuel, health care and"unexpected" expenses. And when we look ahead, there are several trendsconspiring to make it more difficult than ever to manage that debt.

Last year, the average cost of a barrel of oil, which governs the priceof heating oil, gasoline and a multitude of products used by industryand consumers, rose by 40 percent to nearly $55 per barrel. During 2005,the Federal Reserve raised the nation's discount rate by about 60percent to 5.25 percent. The discount rate is a benchmark thatinfluences the interest rate charged on such debts as mortgages, homeimprovement loans, and outstanding credit-card balances.

Now, federal banking regulators are trying to save consumers fromthemselves by issuing guidelines to credit-card companies and banksstating that monthly minimums should cover interest, any fees and extracharges, and at least 1 percent of the principal. Many observers expectthe immediate impact of the new guidelines will be to cause credit-cardminimum payments to double, creating pain for consumers as they get usedto a new playing field.

These dramatic increases are taking place in an environment where thepersonal income per capita among Pennsylvanians has been rising at nomore than 3 percent in recent years.

While the storm clouds are gathering, the situation for most of usprobably is not yet out of control. We can take steps to avoid or rideout the storm in a safe harbor. Recognizing potential financialdifficulties and what they may mean for us is the first step in avoidinglong-lasting debt and cash-flow distress, loss of property and a reducedstandard of living.

Since the interest charged on credit-card debt is often exorbitant - ashigh as 17 to 22 percent - the most important step you can take is toreduce your credit-card balance by eliminating it altogether, setting upa payment plan, or increasing your monthly payment well above theminimum, accelerating the payback of that debt. (Making only minimumpayments can increase the cost of goods purchased two or more times.)

Consolidating your debt and reducing the interest rate you pay are also viable solutions. Consolidating debt doesn't reduce it, but it is astart in the right direction. Also, be careful of loans that requireinterest-only payments for a period of time, since the payment of theloan is only being deferred.

Take steps now to avoid The Perfect (Credit) Storm.

New Post

2006-02-11T12:47:00.000-08:00

The Jump Law Group has created a blog with some great articles for your review!

Click on the link below to go to the blog.

Jay S. Jump
Jump Law Group

What is Credit Scoring?

2006-02-11T12:06:00.000-08:00

Credit Scoring

Ever wonder how a creditor decides whether to grant you credit? For years, creditors have been using credit scoring systems to determine if you’d be a good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans. Here’s how credit scoring works in helping decide who gets credit — and why.

What is credit scoring?

Credit scoring is a system creditors use to help determine whether to give you credit.

Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.

Because your credit report is an important part of many credit scoring systems, it is very important to make sure it’s accurate before you submit a credit application. An amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the major nationwide consumer reporting companies to provide you with a free copy of your credit reports, at your request, once every 12 months.

Free reports have been phased in during a nine-month period, starting with the states in the West and ending with states in the East. Beginning September 1, 2005, free reports will be accessible to all Americans, regardless of where they live.

To order your free annual report from one or all national consumer reporting companies, visit www.annualcreditreport.com, call toll-free 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281. The form is at the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They provide free annual credit reports only through 877-322-8228, www.annualcreditreport.com, and Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281.

If you’re not yet eligible for a free annual credit report, a consumer reporting company may charge you up to $9.50 for each copy. To buy a copy of your report, contact:

· Equifax: 800-685-1111; www.equifax.com

· Experian: 888-EXPERIAN (888-397-3742); www.transunion.com

For more information, see Your Access to Free Credit Reports at ftc.gov/credit.

Why is credit scoring used?

Credit scoring is based on real data and statistics, so it usually is more reliable than subjective or judgmental methods. It treats all applicants objectively. Judgmental methods typically rely on criteria that are not systematically tested and can vary when applied by different individuals.

How is a credit scoring model developed?

To develop a model, a creditor selects a random sample of its customers, or a sample of similar customers if their sample is not large enough, and analyzes it statistically to identify characteristics that relate to creditworthiness. Then, each of these factors is assigned a weight based on how strong a predictor it is of who would be a good credit risk. Each creditor may use its own credit scoring model, different scoring models for different types of credit, or a generic model developed by a credit scoring company.

Under the Equal Credit Opportunity Act (ECOA), a credit scoring system may not use certain characteristics -- like race, sex, marital status, national origin, or religion — as factors. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants.

What can I do to improve my score?

Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change — but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.

Nevertheless, scoring models generally evaluate the following types of information in your credit report:

· Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.

· What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.

· How long is your credit history? Generally, models consider the length of your credit track record. An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.

· Have you applied for new credit recently?
Many scoring models consider whether you have applied for credit recently by looking at “inquiries” on your credit report when you apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not counted.

· How many and what types of credit accounts do you have?
Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.

To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It’s likely to take some time to improve your score significantly

How reliable is the credit scoring system?

Credit scoring systems enable creditors to evaluate millions of applicants consistently and impartially on many different characteristics. But to be statistically valid, credit scoring systems must be based on a big enough sample. Remember that these systems generally vary from creditor to creditor.

Although you may think such a system is arbitrary or impersonal, it can help make decisions faster, more accurately, and more impartially than individuals when it is properly designed. And many creditors design their systems so that in marginal cases, applicants whose scores are not high enough to pass easily or are low enough to fail absolutely are referred to a credit manager who decides whether the company or lender will extend credit. This may allow for discussion and negotiation between the credit manager and the consumer.

What happens if I am denied credit or don’t get the terms I want?

If you are denied credit, the ECOA requires that the creditor give you a notice that tells you the specific reasons your application was rejected or the fact that you have the right to learn the reasons if you ask within 60 days. Indefinite and vague reasons for denial are illegal, so ask the creditor to be specific. Acceptable reasons include: “Your income was low” or “You haven’t been employed long enough.” Unacceptable reasons include: “You didn’t meet our minimum standards” or “You didn’t receive enough points on our credit scoring system.”

If a creditor says you were denied credit because you are too near your credit limits on your charge cards or you have too many credit card accounts, you may want to reapply after paying down your balances or closing some accounts. Credit scoring systems consider updated information and change over time.

Sometimes you can be denied credit because of information from a credit report. If so, the FCRA requires the creditor to give you the name, address and phone number of the consumer reporting company that supplied the information. You should contact that company to find out what your report said. This information is free if you request it within 60 days of being turned down for credit. The consumer reporting company can tell you what’s in your report, but only the creditor can tell you why your application was denied.

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the creditor if a credit scoring system was used. If so, ask what characteristics or factors were used in that system, and the best ways to improve your application. If you get credit, ask the creditor whether you are getting the best rate and terms available and, if not, why. If you are not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information in your credit report.

Where can I get more information or file a complaint?

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

General Tips

The Federal Trade Commission (FTC) is the nation's consumer protection agency. Here are some tips from the FTC to help you be a more savvy consumer.
Know who you're dealing with. Do business only with companies that clearly provide their name, street address, and phone number.

Protect your personal information. Share credit card or other personal information only when buying from a company you know and trust.

Take your time. Resist the urge to "act now." Most any offer that's good today will be good tomorrow, too.

Rate the risks. Every potentially high-profit investment is a high-risk investment. That means you could lose your investment - all of it.

Read the small print. Get all promises in writing and read all paperwork before making any payments or signing any contracts. Pay special attention to the small print.

"Free" means free. Throw out any offer that says you have to pay to get a gift or a "free" gift. If something is free or a gift, you don’t have to pay for it. Period. Report fraud. If you think you've been a victim of fraud, report it. It's one way to get even with a scam artist who cheated you. By reporting your complaint to 1-877-FTC-HELP or ftc.gov, you are providing important information to help law enforcement officials track down scam artists and stop them!

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

It would be nice if Congress could practice what they preach

2006-02-04T10:49:00.000-08:00

In the Saturday Wall Street Journal I read an interesting article on page A26 - Tax Talk Goes Orwellian.

It seems that when Congress passed bankruptcy reform, they weren't thinking about the example they themselves have set.

Our National Debt is presently at $8,184,000,000,000.00. Yes, there are that many zeros. (You thought your $10,000.00 credit card debt was high!).

But rather than behaving in such a way to reduce their debtload, which is what Congress told you and I to do, they instead are poised to raise the United States Debt Limit to $9,000,000,000,000.00. Congress is not publicizing this upcoming vote because they don't want you to know they can't pay their debts. If the government doesn't raise the debt limit, then they will default.

Rather than tightening their belt, Congress simply votes to raise their own credit limit.

Jay S. Jump
Jump Law Group

A lesson from the past

2006-01-30T09:52:00.000-08:00

Early Debtors Faced Jail at Own ExpenseUntil All Was Repaid
January 30, 2006
Cynthia Crossen - The Wall Street Journal Online

One piece of baggage America's first settlers carried with them from England was the belief that not repaying one's debts was a moral failure. As in England, the colonists' penalty for such wickedness was often prison.

The theory behind jailing debtors was that the threat of incarceration might persuade them to reveal hidden assets. Or their families might take pity and pay their ransom. But if the debtor was truly penniless, he could be sentenced to what amounted to life in prison. Unlike murderers, rapists and thieves, the debtors were also responsible for paying their own upkeep, thus putting them even further into debt.

As a 16th-century English judge declared, "If a debtor can't feed and clothe himself, let him die, in the name of God, if he will and impute the cause of it to his own fault, for his presumption and ill behavior brought him to that imprisonment."

Two centuries later in New Hampshire, an aged Revolutionary War veteran remained in prison for almost four years because he couldn't pay his debt and the bill for his imprisonment. During that time, his original $8 liability grew to almost $300.

And if a debtor had dependents, wrote Peter Coleman in his 1974 book "Debtors and Creditors in America," jailing him "threw the burden of caring for them on friends, charity or the public."
But the Old World attitude toward debt as a breeding ground for extravagance and sin proved difficult to sustain in the New World, where cash was in short supply and economic growth would have been stunted without credit. Furthermore, imprisoning healthy workers deprived the labor force of badly needed hands. So some colonies allowed debtors -- without their consent -- to be bound in service to their creditors for as long as seven years.

This had its own unintended consequences: Some Northern merchants kept their workers on the fishing grounds off Newfoundland by plying them with rum and then declaring them defaulting debtors when they couldn't pay their liquor bill, Mr. Coleman wrote.

The colonies gradually developed more forgiving laws on debt, recognizing that owing money could be the result of bad luck rather than evidence of fraud or indolence. "Crops fail, prices fall, ships sink, warehouses burn, owners die, partners steal, pirates pillage, wars ravage, and people simply make mistakes," wrote Bruce Mann in his 2002 book "Republic of Debtors." "Failure was the down side of entrepreneurial risk. This made failure the potential common fate of all merchants."

Colonial lawmakers began taking a more charitable view toward debtors, but they were likelier to excuse a rich defaulter than a poor one. In Connecticut a legal commentator argued that rich people who couldn't pay their debts shouldn't be forced into servitude, the way poor people were, because "where a man has lived in affluence and by some unforeseen misfortune and unexpected accident is reduced to poverty, it would be cruel to aggravate his wretchedness by subjecting him to servitude."

Indeed, when some large speculative financial schemes collapsed after the Revolutionary War, many wealthy men were suddenly bankrupt. One of them, Robert Morris, who had signed the Declaration of Independence and provided critical financing for the war, lost his fortune speculating on land. Sentenced to debtors' prison in Philadelphia in 1798, Morris rented the best room in the jail and outfitted it with a settee, writing desks, a bed, a trunk of clothes and other comforts of home.

However lavishly they could outfit their prison cells, though, rich and poor faced the same dim future. There was no way an insolvent could get a fresh start -- the "holy grail of debt relief," as Mr. Mann put it. In prison or out, debtors were expected to repay every penny they owed their creditors, even if it took them the rest of their lives.

Although the Constitution gave Congress the power to pass "uniform laws on the subject of bankruptcies," Congress first began seriously debating bankruptcy laws in 1797. Northern federalists believed a uniform bankruptcy law would encourage economic growth because honest merchants who had suffered from unforeseeable misfortunes could "begin the world anew." Jeffersonian Republicans feared the increased power of federal courts. They also worried that because people could be thrown into bankruptcy involuntarily, farmers would lose their property to impatient creditors, whose eagerness to sell would result in unfairly low prices.
Congress passed a bankruptcy law in 1800 but then repealed it three years later. Not until 1831 did New York abolish prison for most debtors; Pennsylvania kept its debtors' prisons open until 1842.

William Keteltas, a lawyer who had been sent to debtors' prison in New York in 1800, published 25 issues of a jailhouse newspaper called "Forlorn Hope." "What can the relentless creditors of many who have died under the infliction of their torture expect from the throne of grace," a letter writer to the newspaper asked, "when they pray with the words, 'Forgive us our debts as we forgive our debtors'?"

It's what we don't know that hurts us!

2006-01-20T21:04:00.000-08:00

This secret score can hurt your credit

A credit score looks mainly at your history of paying bills, but a ‘bankruptcy risk score’ looks ahead at how likely you are to file -- and lenders are paying attention. You probably already know about your credit score. That's the number that helped increase your credit card limit or perhaps prevented you from purchasing your dream car. Well, there's another influential scoring tool you should know about:

It's called the bankruptcy risk score.

According to financial experts, this score is used secondarily to the credit score when financial institutions scrutinize a consumer's credit history. Kept tucked away from consumers for nearly 20 years, this number differs from the credit risk score, because it's a little more specific. It measures how likely a person is to file for bankruptcy.It is used by credit reporting agencies and geared specifically to lenders.Researchers say the score typically surfaces when a consumer gives the bank permission to pull his credit report during the application process for a new loan, bank card or credit card, and during the periodic review of clients' accounts to determine whether to increase a consumer's credit limit.

Karen Gross, director of the New York Law School Economic Literacy Coalition, believes some lending institutions are using the score for their own compliance risk."Banks are required, by law, to keep a reserve based on potential bad debt losses," she says."In other words, to ensure the solvency of our lending institutions, we require that they maintain a certain capital-to-risk ratio. Bankruptcy scores give banks a more finely tuned instrument by which to assess true risk within their portfolio. As such, the bankruptcy scores could enable lenders potentially to lower their bad debt reserves because they can more accurately assess and hence narrow potential risk."

Aim for a low score

Credit reporting agencies weren't the only ones dabbling in this innovative approach.Researchers say a few credit card companies in the late '90s developed a means to make the score a more powerful tool based on a combination of factors, including information that was right in front of them: consumers' spending habits and types of charges."They could see that level of granular detail. So what they tried to do is combine credit bureau information and transactions to get a better idea," says Mike Staten, director of the Credit Research Center at Georgetown University in Washington D.C. "They would use that and make the score available and even go as far as sending to issuers, that subscribe to their service, specific alerts when a person exhibits warning signs of higher bankruptcy risk."

Analysts at credit reporting agencies say advanced mathematics and data analytics are used to determine the complex score.However, they say, some variables come directly from your credit report, such as how the credit is used, how often a bill payment is late and the number of inquiries made."For a conventional credit score, you want a high number," Gross says. "For a bankruptcy score you want a low number. And to increase the complexity, the range of the numbers is not the same. The credit score has a range of 350-850. The bankruptcy score range starts in the negative numbers and increases to possibly 2,000."

Ready to go public?

Why is it kept from the public? "The argument is that people spent time and money researching the scoring model, and no one wants to disclose the model because they are giving away the value of the research that they've conducted," says Gross.However, Experian is considering making its score available to consumers."We feel that it may help consumers if they are getting in trouble with their debt," says Samah Haggag, manager of analytics at Experian.

A July study by Experian is giving consumers some insight. The study ranked the states with the highest propensity to have consumers file for bankruptcy within the next year. The top five are:· Texas· Nevada· New Mexico· Louisiana· Arizona

Economist Mark Lauritano, of Global Insight in Massachusetts, says from a broad economic view you can see the reasons why Texas would be at the top of the list."Based on studies we've done: It's a relatively young state, people are moving to Texas, there's a lot of immigration from south of the border, it has a below-average income and it has a relatively low homeownership rate," says Lauritano.The things that improve your bankruptcy risk score are the same ones that improve your credit score: Pay your bills on time and apply for credit sparingly.

Foreclosures are on the rise - Don't become a statistic

2006-01-20T10:03:00.000-08:00

Experts foresee a wave of loan defaults as easy credit standards come back to haunt buyers. For astute investors, though, opportunities will abound.

By Steve McLinden, Bankrate.com

It might be the best time in years to buy a foreclosure home, which would mean it's perhaps the worst time for thousands of financially strapped U.S. homeowners struggling to hang onto their homes.

Many economic experts are predicting that mortgage delinquencies will rise up to 15% in 2006 among homeowners with higher-cost or "subprime" loans. About 19% of all U.S. home loans are now subprime, in contrast to just 5% 10 years ago, according to the folks at Fitch Ratings, an investment-analysis firm. A lot of those homeowners with adjustable-rate subprime loans will see their loans reset at higher interest rates in the coming months, and that will spell trouble.
The buyers are circlingOther factors expected to contribute to the default phenomenon are already-high consumer debt levels, rising energy costs and the advent of somewhat risky interest-only mortgages. So expect to see a lot of defaults on low-to-mid-level homes in 2006, although your opportunities will vary from market to market, of course.

That said, foreclosure buying is a very competitive game right now, with so many real estate gurus advocating the strategy in books and seminars, and on TV and the Internet. Just do a Web search under "foreclosure opportunities" and you'll see what I mean. Obviously, more and more buyers -- particularly investors -- are looking for an advantage in the game.
While there's not space here to go through all the strategies, buying a "pre-foreclosure" from a defaulting or financially strapped owner might be the best way to go on the consumer end. The county clerk's office keeps lists of such pre-foreclosures. Seek out titles where a "lis pendens" notice has been filed by the lender.

Be tenacious – and cautious

Before contacting and engaging in negotiations with the owners of these properties, make sure you are pre-qualified for a loan. You'll probably want to enlist a buyer's agent to make sure your best interests are represented and that you make the right offer -- which would ideally be at a below-market price.

Finding an agent with foreclosure experience would also be a plus.

The foreclosure-property auctions that you see advertised are usually the realm of more heavily bankrolled professional investors who stand ready to pay cash for a property.If you are brave and well capitalized, you might try your hand at it. You might want to attend one or two for observation before acting. Whichever approach you try, don't give up if your first few efforts don't pan out. Eventually, your tenacity will pay off in substantial savings.

Bankruptcy Myths

2006-01-17T13:53:00.000-08:00

Myth 1: Under the NEW bankruptcy law, there's no more bankruptcy (or it's too late to file).

Not True. In fact...nothing could be further from the truth. Sure you heard it in the press, but it's just not true. The news media overcooked the whole story. The truth is that you can do almost everything under the NEW law that you could do under the OLD law. In some ways, the new law actually increased the benefits of filing bankruptcy.

Myth 2: Everyone will know you have 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 and the people who you tell. While it's true that your bankruptcy is a matter of public record, the number of filings is so massive, that unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed. However...telling someone that someone else filed bankruptcy is good gossip...just like telling a someone you heard so-and-so is getting a divorce. So...if you don't want everyone you know to know you filed bankruptcy....you need to keep the information to yourself. As for newspapers...my experience is that most papers don't include information about who filed bankruptcy.... and even if they did...think about it....who would be interested enough to read that stuff.

Myth 3: You will lose everything you have.

Nothing could be further from the truth. The fact is....most people who file bankruptcy don't lose anything.

First....while laws vary from State to State, every State has exemptions that protect certain kinds of property. Using North Carolina as an example.....there are exemptions to protect such things as your house, your car, your truck, household goods and furnishings, IRAs, retirement plans, the cash value in life insurance, wages, and personal injury claims. There is even a "wildcard" exemption of $3,500 per person that can be applied wherever you want it. In those rarer situations where you have more property than can be protected by available exemptions...there is Chapter 13. In Chapter 13...you can even keep this property by paying a higher Chapter 13 plan payment.

Second.....as mentioned above (Myth 2)....filing bankruptcy does not generally wipe out liens. Therefore...if you want to keep a car, truck, home or business equipment that serves as collateral for a loan....you need to keep paying on the debt. If you make these payments and have exemptions to cover any value above what is owed....you can rest assured you will be able to keep these items.

Myth 4: You will never be able to own anything again.

A surprising number of people believe this....but this is completely false. In the future...you can buy, own and possess whatever you can afford.

Myth 5: You will never get credit again.

Quite the contrary. Filing bankruptcy gets rid of debt....and getting rid of debt puts you in a position to handle more credit....and this makes you look more attractive to would-be lenders. In my experience.....unfortunately....it won't be long before you're getting credit card offers again. I say "unfortunately" because I don't want you to get right back in debt again. At first...the would-be lenders will want more money down and will want to charge you higher interest rates. However....over time....if you are careful, and keep your job, and start saving money, and pay your bills, and do things that will put good marks on your credit report....the quality of your credit will get better and better. Generally...in my experience...if a client has not re-established good credit in 2 to 4 years...sufficient to buy a car or even a house....it's not because they filed bankruptcy. It generally means that something else has happened after the bankruptcy to hurt their credit.

Myth 6: Filing bankruptcy will hurt your credit for 10 years.

Not true. You are getting 2 completely different concepts confused with each other. You are getting the fact that bankruptcy is reported on your credit report for 10 years mixed up with the effect that reporting will have on your credit. Just because something is reported on your credit report does NOT necessarily mean it will have a negative effect on your credit standing.
First...let's get one thing out in the open. By the time you need to make an appointment to see a bankruptcy attorney.....your credit is already messed up or maxed out...or both. This being the case....you have no credit for bankruptcy to hurt.
Furthermore...as I mentioned above...in my experience...if you have not re-established good credit in 2 to 4 years after you file bankruptcy.....most likely....it has nothing to do with the fact that you....once upon a time....filed bankruptcy...and it certainly has absolutely nothing to do with the fact that your credit history still shows an old bankruptcy.

Myth 7: If you're married...both you and your spouse have to file for bankruptcy.

Not true. In many cases...where both husband and wife have a lot of debt....it makes sense and saves money for them to both file....but it is never a requirement under the law. We have many cases where only one spouse has filed. The good news is that generally....if it makes sense for both spouses to file together....they can both file for the price of one filing.

Myth 8: It's really hard to file for bankruptcy.

No....it's not....at least not in the hands of an experienced bankruptcy attorney. In the hands of an experienced bankruptcy attorney...filing bankruptcy is easy. The decision to file may be hard...but once the decision is made...the filing part is easy.

Myth 9: Only deadbeats file for bankruptcy.

Not true. Most of the people who file bankruptcy are good, honest, hard-working people...just like you and me....who file as a last resort....after months or years struggling to pay the bills that left over from some life-changing experience, such as a divorce, the loss of a job, a failed business venture, a serious illness, or some family emergency...or because they honestly and mistakenly fell into debt at a young age before they knew better...before they knew anything about budgeting or how to manage money.

Myth 10: Filing bankruptcy means you're a bad person.

Not true. There's a reason over 1,000,000 Americans file bankruptcy each year...and it's not because they're bad people. Lots of good, honest, hard-working people fall on hard times. Let's face it....life can be brutal....and sometimes...the money's just not there. The bankruptcy law were created with this in mind...to make sure you have a way....if need be....to get free from the burden of debt...so that you...and your family....can have a second chance at a "fresh start".

Myth 11: Filing for bankruptcy will hurt your credit.

That's not true. Think about it. By the time you come to a bankruptcy attorney....your credit is already either messed up or maxed out. And if it's already messed up or maxed out....how can bankruptcy hurt it?The big surprise for my clients is when I tell them that filing bankruptcy can actually help them re-build their credit. Bankruptcy gets rid of debt....and getting rid of debt puts you in a better position to handle new credit....if only someone will give it to you. Therefore....bankruptcy is the first step in the process of re-building your credit.

Myth 12: Even if you file for bankruptcy, creditors will still harass you and your family.

This is NOT true. In fact, nothing could be further from the truth. The minute you file bankruptcy, the Bankruptcy Court issues an order telling all of your creditors to leave you alone. No more phone calls. No more collection letters. No more lawsuits. No repossessions. No foreclosures. Nothing. This order has a name. It is called the "automatic stay"; and it is issued pursuant to 11 United States Code, Section 362. The automatic stay prohibits you from any and all collections actions. After you file bankruptcy, the creditor is not even allowed to talk to you. In addition, the creditor must stop any collection attempts already started. The automatic stay is very powerful, and puts the full weight of the United States Courts to work for you, to make sure your creditors leave you alone. If a creditor violates the automatic stay, you have the right to bring the creditor before the Court for Contempt of Court, and to be compensated accordingly. Believe me, Bankruptcy Court Judges do not take kindly to creditors who ignore the automatic stay, and these Judges have been known to punish creditors severely. Very simply, once you file for bankruptcy, creditors must leave you alone or suffer the consequences.

Myth 13: If you file for bankruptcy, it may cause more family troubles and may even lead to divorce.

This is NOT true. Usually, it works just the opposite. Filing bankruptcy is not the problem. The problem is not being able to pay your bills. All good, honest, hard-working people feel a strong need to pay their bills, and not being able to do so, causes them to feel tremendous stress. Unless you do something to relieve this stress, the stress can quickly build to the breaking point....the marriage breaking point. Bankruptcy is designed to get you out from under the burden of debt, to protect your property and to lower your stress level. If your experience is like that of other couples, you will find that filing bankruptcy... and lowering the stress level.... can be a crucial first step in bringing the love and caring back into your relationship....which.....in turn.....gives your marriage a fighting chance.

Myth 14: You can't get rid of back taxes through bankruptcy.

We get rid of old "income" taxes for our clients all the time. By "old"...I mean income taxes more than 3 years old. Under the law...there are 3 or 4 qualifications that have to be met....but once these are met....these taxes are gone. Please note: Filing bankruptcy does NOT get rid of withholding or sales taxes...no matter how old they are.

Myth 15: You can only file once for bankruptcy protection.

The truth is....you can only file for a Chapter 7 bankruptcy once every 6 years....but after 6 years...if need be...you can file again. As for filing a case under Chapter 13 of the Bankruptcy Code....there is no such restriction. Hopefully...however...you will never need to file more than one bankruptcy.

Myth 16: You can pick and choose which debts and property to list in your bankruptcy.

I'm sorry...but you can't. Doing so would be against the law. Under the law...when you file bankruptcy...you have to list all your property and all your debts. Most people want to leave out a debt because it is their intent to keep paying on it. The good news....on this score....is that you can achieve the same goal, even though you have to list the debt. If you want to keep paying on a debt...after bankruptcy....you can. After bankruptcy....you can go back and pay anybody you want. In fact...after you file bankruptcy....there are some debts you have to keep paying on. For instance....if you have a car, truck or house loan....even though you list the debt in your bankruptcy....if you want to keep the car, truck or house....you have to keep paying on the debt. More importantly....you need to know this. As long as you stay current on the loan...and keep the property properly insured....you are protected under the law .... and you get to keep the property....because...under the law...the creditor is stuck with you and can't do anything about it.

Initial Post

2006-01-17T09:31:00.000-08:00

I've long considered writing a book on the experiences of my clients. Every day families and individuals sit across from me at my desk and tell of their financial woes. The stories usually run along the same theme. A spouse or child became ill, the company was downsized, the mortgage interest rate increased, etc.

The bills simply got away from them. They aren't sure where it happened or when, but one morning they woke up and realized that they were too far behind and had no hope of catching up. These are the people that come to see the Jump Law Group.

Oddly, the public perception is that people who file bankruptcy have brought this on themselves. Sadly, the people who come to see me also believe that they have brought this on themselves. Nothing could be further from the truth. A lot of my time is spent counseling people on the nature of debt and how it works. That also means I have to show my client's why it is not their fault that they have to declare bankruptcy.

No one ever is happy about declaring bankruptcy and I suppose that is a good thing. But neither should people come into my office carrying the burden of the 'guilt' that they feel about declaring bankruptcy.

Do we think less of United Airlines for filing bankruptcy? Do we think less of MCI for filing for bankruptcy? No. In that case, it was merely a strategy decision for the company to protect its assets.

The same is true for the regular consumer. Filing bankruptcy is a financial decision and nothing more. It is not a moral fault as your creditors would like you to believe. Filing bankruptcy is taking advantage of your right to get a fresh start and begin anew.

The purpose of this blog is to reach out to wider audience than the clients who come to my office. 72% of all Americans qualify for bankruptcy relief. That is a significant number. We are a nation of debtors and massive debt, but we don't speak about it. Our measure of self worth is equated to the size of our paycheck or our material possessions.

This blog is a way for all of us to openly discuss how debt affects our lives. Many of my client's find it useful to write down what has happened in their lives to bring themselves to bankruptcy. I hope that this blog will allow you to do the same and show others that they are not alone.

With that said, I yield the floor to you. I have only one rule.

(1) Do not use your real name. Please post a username or something else so you won't be identified. This is a public blog and I would hate to see someones post used against them.

I wish you luck and I look forward to reading these posts as this blog takes shape. If you have questions about bankruptcy or debt, you can view the Jump Law Group website at www.jumplawgroup.com

Jay S. Jump
Principal - The Jump Law Group
528 2nd Avenue South
Kent, WA 98032
(253) 479-0241
(253) 479-0245 Facsimile
www.jumplawgroup.com