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Portland Bankruptcy & Consumer Rights Attorney - Kelly D. Jones
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Is Bankruptcy the Best Option for You?

Although the economy has improved a lot, at least on Wall Street, most middle to low income households simply have simply not benefited in their daily lives. Across the country and right here in Oregon, many people just can't make ends meet. Many have lost a job or can't find a job that pays enough. Maybe a medical condition or an emergency resulted in uninsured hospital bills. Whatever the case, people expected they would get back on your track and be able to pay the debts back. Unfortunately, for many people their situation hasn’t improved, or hasn’t improved enough. Many Oregonians are drowning in debt and need help – now. I’m a consumer rights and bankruptcy lawyer located in SE Portland, and I may be able to help.

Many people think that bankruptcy is a financial death sentence. It’s not. In truth, it’s probably the most powerful of all our consumer protection laws, and it has given millions of people the fresh start they so desperately needed. But your creditors and debt collectors don’t want you to know that. Many of these companies have filed for bankruptcy themselves. They just don’t like bankruptcy when it helps everyday people who really need help, because they want to maximize their huge profits. Although banks, debt collectors, and other creditors have lobbied to make it more difficult to file, bankruptcy is still available to stop collections, garnishment, and lawsuits; to wipe out debt; and to get a fresh start.

Creditors aren't just trying to collect the amount you borrowed, but an alarming amount of interest/penalty fees on top. They won’t even accept a practical payment plan. Worse yet, original creditors sell accounts to debt-buying companies you’ve never heard of until you’re harassed or sued by them. Once these aggressive debt collectors get a judgment against you, they’ll likely garnish your bank accounts and/or paycheck, and attach a lien on your home. Trying to hide from the situation is not a solution and can often make things much worse. If any of this sounds familiar, or you’re struggling to stay afloat, ask yourself – is bankruptcy the best option for me?
At the risk of sounding too much like a lawyer, the answer is … it depends. There is no doubt that filing for bankruptcy can be a lifeboat in a stormy sea – it wipes the slate clean, stops the collection calls and letters, and provides a fresh start. Almost all consumer debts, such as credit card debts and medical bills, are dischargeable via bankruptcy. Also, the vast majority of people get to keep all of their property, including their house and car. However, whether to file for bankruptcy, when to file, and how to file are all extremely important considerations. The particular financial circumstances, future expectations, and personal preferences of each individual need to be carefully assessed. Ultimately, of course, the decision whether to file for bankruptcy must be made by the individual or couple, not by friends, family, or a lawyer.

With that said, it is highly recommended that those contemplating bankruptcy consult with a qualified bankruptcy attorney prior to making this crucial decision. The bankruptcy laws themselves can be quite complex, are poorly drafted, and have been interpreted differently depending on the jurisdiction. The required forms (petition, schedules, etc.) are numerous and require accurate, detailed, and current information. A good (and ethically responsible) lawyer will never try to “push” his or her potential client to file for bankruptcy. Instead, the attorney should thoroughly evaluate the overall financial circumstances of the client and explain the bankruptcy process, including the pros and the cons. Only in this way can people considering bankruptcy make the best decision for themselves and their family. Of course, there are scenarios in which, even if you have fallen behind on your bills and accumulated significant debt, bankruptcy may not be the best option. However, if you can answer yes to some or many of the following questions then bankruptcy may indeed be a good option for you.

Are you significantly behind on your credit card payments or other payments? Has your credit card company or another creditor/debt collector sent you a default notice, or threatened to sue you? Has a creditor assigned your debt for collection? Are you being sued by a debt collector or its attorney? Do you have judgments against you for unpaid debts? Are your wages being garnished or threatened with garnishment? Have you recently lost a job, suffered an illness or a disability, and had debts pile up? Are you stressed out about your debts and concerned about your ability to pay them? Have you incurred significant medical bills that you are afraid you will not be able to pay? Has the stress of your debts caused arguments or turmoil in your personal life? Are debt collectors calling you, sending you letters, or harassing you?

Even if some of the above scenarios apply to you, it does not mean that bankruptcy is the only choice, but it is probably a good idea to at least consult with a bankruptcy lawyer to help you assess your situation further. If you live in Portland, Gresham, Multnomah County, or the Portland Metro area, and you think that bankruptcy may be a good option for you, contact Kelly at (503) 847-4329 for a FREE phone consultation.

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New study indicates that 1/3 of Americans have debt in collections and the average Oregonian is $60,752 in debt- the 9th highest average in the country

More than one-third of Americans (35%) have a debt in collections, according to a study recently released by the Urban Institute: http://www.urban.org/publications/413191.html.

That means just about every third person you pass by on the street is dealing with a collection company in regard to a delinquent debt. Just about one out of every three Oregonians is also dealing with a debt collector. The same study found that 30.5% of Oregonians have a debt in collections, with the amount averaging $5,456. The national average amount of a debt in collections is $5,178. The national average debt is $53,850. The average Oregonian is $60,752 in debt, the ninth highest in the nation. Only 20% of Americans with credit records have no debt at all.

Debt in collections often originates from nonpayment of a bill, including failing to make payments on an outstanding credit card balance, not paying medical or utility bills, or even not paying a parking ticket. After a debt is more than 180 days past due, it is typically placed in collections by the original creditor or sold to a third-party debt buyer. What the report reveals beyond the numbers is the daily financial distress millions of Americans are living under, as well as the degree of that distress.

The collections industry recovers approximately $50 billion annually, mostly from consumers, according to a study published this year by a Federal Reserve branch research group. Thus while everyday Americans may be struggling, the collections industry is booming and cashing in on the situation. Debt collectors are regulated by the federal Fair Debt Collection Practices Act (FDCPA), among other state specific statutes, such as Oregon’s Unlawful Debt Collection Practices Act (UDCPA).
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SCOTUS Holds That Inherited IRAs Are Not Exempt Retirement Accounts in Bankruptcy

Recently, in an opinion authored by Justice Sotomayor, the U.S. Supreme Court released its unanimous decision in Clark v. Rameker, holding that individual retirement account (IRA) funds that a Chapter 7 bankruptcy debtor inherited from her deceased mother are part of the debtor’s bankruptcy estate and are not protected from liquidation by the Trustee to pay her creditors.

The Supreme Court upheld the Seventh Circuit’s decision disallowing the exemption, by finding that inherited IRAs do not share many of the same important characteristics of non-inherited IRAs and thus, unlike non-inherited IRAs, are not exempt from liquidation pursuant to the Bankruptcy Code. The applicable provision, 11 U.S.C. § 522(b)(3)(C), states that a debtor may exempt "retirement funds to the extent those funds are in a fund or account that is exempt from taxation" as set forth in the Internal Revenue Code. According to the Court, the central distinctions of inherited IRA accounts are that, unlike non-inherited IRAs, the beneficiary of the inherited IRA cannot continue to invest funds into the account, IRS tax rules require withdraw of funds from the account after it is inherited, it is possible to completely drain the account upon transfer, and the withdraws, or complete liquidation, could occur long before the transferee’s retirement age.

The Supreme Court’s decision resolved a circuit split, as the Fifth Circuit had reached a contrary holding in In re Chilton in 2012. It is important to note that “inherited” IRAs are different from “roll over” IRAs, and IRAs that are bequeathed by a deceased spouse to the surviving spouse. Those accounts may still be exempt pursuant to 11 U.S.C. § 522(b)(3)(C), because the IRS rules governing these types of more traditional IRAs do not necessarily exhibit the characteristics highlighted by the Court in Clark. It is also worth noting that some inherited IRAs may still be exempt pursuant to various state exemption schemes, depending on the language of the applicable state exemption statute. Although most bankruptcy attorneys outside of the Fifth Circuit were probably already cautious in advising potential bankruptcy clients with funds in inherited IRAs, but this is another reminder that extremely careful pre-bankruptcy asset determination and planning is certainly a must. 

#bankruptcy   #exemptions   #portland   #lawyer  

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Seventh Circuit further limits the collection of time-barred consumer debts

A recent decision by the Seventh Circuit in the consolidated appeals of McMahon v. LVNV Funding, LLC, and Delgado v. Capital Management Services, L.P., suggests that debt collectors need to take heed when collecting on debts for which the limitations period related to the underlying claim has expired. In both cases, the consumer plaintiffs had alleged that specific collection attempts violated various provisions of the Fair Debt Collection Practices Act  (“FDCPA”) (15 U.S.C. § 1692, et seq.). In McMahon, the dunning letter sent to the consumer was an attempt to collect on an alleged utility debt that originated about 14 years prior. In_ Delgado_, the alleged debt was about eight years old. In both cases, the applicable limitations period had long since passed. Perhaps the most notable fact regarding both collection letters is that neither of the letters directly threatened litigation on the time-barred debts, as previous case law already supports FDCPA violations for such conduct (e.g., Herkert v. MRC Receivables Corp., 655 F. Supp. 2D 870 (N.D. Ill 2009).

However, favorably citing a Federal Trade Commission Report titled A Broken System: Protecting Consumers In Debt Collection Litigation and Arbitration, the Court reasoned that it’s likely that many consumers do not understand their rights (not to be sued) with regard to time-barred debts, and therefore may be misled into believing that if they do not pay the settlement amount that the debt collector will then initiate litigation. The Court also addressed concerns that in the absence of any explanation that the limitations period has expired, unsophisticated consumers could be coaxed into making even a small payment on the debt, unaware that such a payment may restart the limitations period pursuant to state law. This holding by the Seventh Circuit decision stands in conflict with previous sister circuit court decisions, by the Third Circuit in Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3rd Cir., 2011) and by the Eight Circuit in Freyermuth v. Credit Bureau Services, 248 F.3d 767 (8th Cir., 2001), and is likely to cause some ripples throughout the debt collection industry.
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