Financial Meltdown


Saturday, January 12, 2008

Mortgage Fraud Scams.

If you suspect that you have been a victim of mortgage fraud or are aware of a possible scam, you can report it by calling the Mortgage Fraud Hotline 1-800-4FRAUD8 (1-800-437-2838). You can also contact your state's attorney general office. Locate your state's attorney general through the Consumer Fraud Reporting website.

Check out this video on Mortgage Law Network.

Saturday, November 17, 2007

All the pennies within the last six months.... what the heck does that mean?

What does "all the pennies in the last six months mean?" The means test looks at all the pennies in the last six months. You must take this test in order to qualify for bankruptcy. The means test counts every penny for the last six months starting the last month before filing bankruptcy. So if you file bankruptcy on November 10, 2007 you must count all your pennies within the months May 1 through October 31.

It truly comes down to every penny that has been acquired by you in the last six months. So our calculation begins with every penny you have earned within the last six months. Then you add every penny earned by your spouse if you are married. Then you add every penny from the sale of property received with that six month period. Add every penny from a 401(k) or other pension cash out. They key term here is "cash out." If it is a loan don't add the pennies. Then you look at the pennies from your tax refund. Look at the tax refund pennies but you do not have to add them to your calculation. However, if your parents, roommate, significant other or other parties have given you money on a regular basis or one large lump sum you will need to add these pennies to your means test. Do you have income from social security? Then like tax refunds you do not need to count these pennies for your means test calculation.

As you can see not only is a penny saved is a penny earned but pennies do add up and count towards your means test. So be sure to know how many pennies you have acquired during the last six months and tell your attorney about them. It could make the difference between filing a Chapter 7 or a Chapter 13 and if you live in the Kansas City Missouri District it could make the difference between qualifying for bankruptcy and not.

Sunday, October 7, 2007


It has been said that insanity is doing the same thing but expecting different results. You must change your spending habits when you file bankruptcy or if you attempting to change your overall financial habits. If you keep spending more than you make then your financial future will never change. Another saying is: Denial is not just a river in Egypt. You must face the reality that change must occur if you are on the verge of filing bankruptcy.

It is true that some people are filing bankruptcy due to medical conditions, loss of job or some other circumstance that is truly out of their control. However the majority of people are in bankruptcy because they spent more money than they make. They are led into the false belief that if they get 60, 90 or 365 days of no interest that they can save up for that debt and pay it off before the end of the no interest period. Unfortunately, more often than not this does not happen. Another common circumstance is that people live on their overtime budget as opposed to a 40 hour work week. When the overtime stops then the snow ball of debt begins to grow. It continues to grow until the snow ball rolls right of the top of you and crushes you to death.

We have become a society of instant gratification. This instant gratification pattern created by the media and credit industry has led us into the current state of poor economic outlook. Spending and saving are just like anything else in our lives. These are behaviors that become habitual. Since behavior is a human trait we have the free will to change or modify our behavior. This can be done but it is going to take hard work and perseverance.

This first step is to take a harsh look at your current economic outlook. This is something you can do yourself. You take your monthly income and place it in one column and then list your expenses in the second column. However, break out the expenses into two groups. The first expenses are those for necessities and the second are for those expenses that are non-essential.

Necessities are for rent/mortgage, electric, gas, water, trash, food, clothing, laundry outside the house, gasoline for auto, oil, tires, auto maintenance, charity, insurance (rent, house, auto, health direct pay, life), car payment, cellular, real property tax, personal property tax, work related expenses (not food unless you are a firefighter or other similar work schedules), children expenses related to school, daycare, cigarettes, and medical/dental. Total those expenses up and then work on the other expenses. These are the expenses that are optional things such as: drinks/food at the gas station, Starbucks coffee, dvd rentals/purchases, clothes you do not need, trips that are placed on credit, presents at Christmas or birthdays that you do not pay cash for, eating out instead of taking a meal with you to work, video games, drinking/partying spending, outrageous cable bill, etc...

You take the necessity expenses and deduct this amount from your net (take home pay) monthly income. Then take the other expenses and total them. Take this total from the remaining amount left over from the net income - the necessity expenses. How much money do you have left over each month? If the amount is zero it is time for a reality check.

If you have money left over then these funds should be placed into 401(k) or other savings plan. However, you should be placing the savings category into the necessity category. Savings are a necessity and must be a priority for you to change your behavior. This is the hardest habit of our spending pattern to change. However, if you can start and keep a savings fund then I feel confident that you can change your overall spending.

A great place to start is to read this savings article/ Every journey begins with the first step. It is up to you whether or not you are going to takes this first step to change your spending behavior for the better.

Tuesday, September 25, 2007

What to bring to the appointment?

When you walk into a doctor's appointment you want to tell him/her everything that is wrong with you. You want to list each and every ailment so that the doc can tell you what is wrong or that everything is okay. However, when people go to an attorney for an appointment they are generally unprepared. I cannot tell you how many times my clients tell me in their interview that they have no idea how far in debt they are or even how many money they make a year.

If you want us to make an accurate diagnosis and prognosis of your financial future you must give us input. Meaning you must provide us with details. In doing your homework you will also get a better picture for yourself of your financial situation. I would suggest at a minimum you have the following information and documents together before going to your first appointment:
1. Tax Returns - 4 years worth - state and federal
2. Pay statements for six months - from all jobs
3. A list of money received from 401(k) cash outs, lottery winnings, signing bonus (received or not issued yet), funds from friends and relatives
4. Monthly budget - with credit card debt and without
5. Equity in vehicles - Equity= Amount owed - Worth of Vehicle
6. Equity in house
7. Value of household goods and jewelry
8. List of all land and value - whether here or anywhere in world - other than your primary home
9. Amount of back taxes
10. Amount of back child support
11. What you have transferred in the last ten years worth $4,000 or more - vehicle, house, boat, plane
12. List of all assets (goods) worth $1,000 or more - television, home, car, season tickets, beanie baby collection, coke collection, timeshare, etc....
13. List of debts - secured (house, boat, plane, car, etc...), personal loans (Beneficial signature loan), credit card debt, tax, child support, payday loans. etc...

The more information that you can provide in a concise manner the better financial diagnosis you can receive. Remember to review your information before going to the appointment so that you can follow along with the analysis and you are not shell shocked to find out you are $60,00 in debt to the almighty credit card.

Saturday, August 11, 2007

How do I track my case online?

Is there a way that I can track my bankruptcy case online? Yes, you can sign up for a PACER account which will allow you to electronically access your case as well as any other case that has been filed. The cost to you is $.08 per page. You can sign up at PACER and provide a debit account number so you can be billed. Anyone is eligible.

PACER allows you to be actively involved in your case and your financial future. You can print and/or save the documents into a safe place on your computer. This is a nice backup if you lose any of the filed documents that will be issued throughout your case. In addition you can follow your case 24/7 without waiting.

Technology is a wonderful tool to help you regain financial control and stay actively involved in your case!


My mother used to tell me as a child "you have five minutes to worry about this problem if you cannot fix it within five minutes then you need to stop worrying." As a child I worried about everything. World hunger, world peace, the environment, what would people think of me, would I win my next swim meet, and list went on and on. I was a compulsive worrier and to some extent today I still am.

The anxiety of worrying was overwhelming. One could literally what if one's self to death. My mother was right then and continues to be right today, but don't tell her this. You can worry yourself to death, literally, about your financial situation. You can stay up every night losing sleep worried about whether or not your paycheck is going to be enough this time. You can yell at the kids and kick the dog because you are worried about how you are going to get money to feed these guys. You can disconnect the phone and and not answer the knock at the door because you are worried about who is contacting you.

Does all that worrying get you anywhere? Not to my knowledge and experience. I do not hear anyone giving testimony that by worrying every minute of every day this leads to a peaceful end. If you follow the path as outlined above you will lose sleep which leads to poor health and a cranky attitude which results in job loss or divorce or kids petitioning for emancipation and the dog runs away and the sweepstakes guy cannot deliver your winning check because you will not open the door.

Okay, the story above is a little far fetched but not by much. Stop and think about how much time you spend worrying about your finances. Now be honest with yourself and tell yourself has ALL that time worrying made any positive difference? NO should be the answer. So worrying is a waste of time. Quit arguing with yourself and make a change today.

Instead of worrying think about what steps you can take to make a difference in your life today. The greatest thing about life is that you have the ability to make a change but it is up to you as to whether or not you will take that first step towards gaining financial peace.

Stepping out in faith.

Change is one of the hardest and often scariest things that we must do as human beings. It takes an incredible amount of courage to break away whether it be from old friends, loved ones or habits. When I think about change in whatever aspect of my life I often hear the following messages: every journey begins with one step, it is the start that stops you, doing the same thing everyday and expecting different results is just downright silly. I could go on and on but I think you get the idea. We all have good intentions to change things in our life and in our world but very few summon the courage from the depths of their soul to take that chance.

If you are at the point of filing bankruptcy you about ready to turn your financial, spiritual and possibly physical life upside down. I sit in my office everyday and listen to one heart breaking story after another. Most people filing bankruptcy today are not filing today because they have lived large on their credit cards buying big screen tv's, traveling all the world or wearing expensive clothes. These people are in my office because they cannot afford to put food on the table or gas in their tank. These are people who were taught that in order to be successful and happy that they had to have everything and everything right now. It does not matter if they came from a private school education, public school or whether or not they belong to a church or if they agnostic. The media teaches us that unless we have the fastest car, the platinum card in our wallet and the biggest house on the block we are a complete failure.

No matter what I say to you or Dave Ramsey or even President Bush with his words of how stable the economy is, the fact of the matter is you must concur the words on the tape player (I pod for the younger generation) of your mind. What do you tell yourself everyday? Is that if you work another job you can pay off that $30,000 in credit card debt that continues to climb everyday? Is that you really need that brand new car because you just know that your current car is falling apart? Is that you need to drop $150 on a pair of shoes for your 12 year old so he won't be picked on, even though he will only be able to wear them for 3 months? Your mind is the biggest battlefield when it comes to taking control of your financial life or really any aspect of life.

How do I know this? Because I hear the excuses everyday of why people are in debt. Excuses is a rather harsh description but sometimes you really have to sit down and have a heart to heart discussion with yourself. I too hear the same excuses in my head every time I get behind the wheel of my little Ford Focus. I love my car, I love it as much as my Yugo. Yes, I did say Yugo. I got rid of my Yugo because you could not get parts for the vehicle anymore in the US. However, I make excuses about getting rid of the Focus because it is old, it is not cool, it is not posh, I can't haul anything with it. There are many other discussions that I have had with myself about the vehicle. The bottom line is that the vehicle is almost paid off, it gets 32 mpg and I have a trailer hitch now to haul whatever I need. So really do I need a new car? NO! But do I want a new car? Very much so, I wish a had a nice BMW or Acura Legend but reality is I need to be debt free before I even contemplated owning a luxury good.

Anyone who is successful or who appears to be successful always has the same conversations in their head that you are having on a daily basis. The saying that you do not know another person unless you walk a mile in their shoes is very true. Looks can be very deceiving when looking at other's alleged financial success. One thing that I have learned in this practice is that money and success ARE NOT one in the same. Everyone is different and this means that your individual needs and wants are unique to you. It is because of this uniqueness that you must step out in faith to make a financial change.

Stepping out in faith means that you must take a deep breath and muster courage from the deepest part of your soul and take that first step of change. Even the slightest change will bring far reaching effects. Think about something small that you may be able to change. Such as instead of buying that soda everyday at the vending machine you placed that into a savings account. That $.75 a day times five days a week times 52 weeks a year leads to $195 savings. Your response is that oh gee I am excited, whoopee! You are being sarcastic of course but one of the biggest excuses I hear for credit card debt is that, "I have no money to buy Christmas presents." Now take that $195 and multiply it by two because you and your spouse are doing to this and now you have $390 to buy Christmas presents guilt free and credit card free. But remember that change does exist in a vacuum. The benefit of not drinking that soda everyday is that you are saving calories and with this small change you also may lose a few pounds free of charge. How cool would that be?

Stepping out in faith may mean that you could lose some friends or some of your "cool status". Meaning that when you step out in faith to make a change you may lose some of your friends because their fast or lavish lifestyle is placing you in the poor house unless you stop. If your friends stop being your friends because you can't afford their lifestyle were they your friends to begin with? The same holds true for your family members. It takes an incredible amount of courage to stand up to a family member to say I cannot afford to do certain things at this time because I need to take care of myself and my family. There is no easy solution to dealing with family members who do not understand your need to cut back. My best advice is that you need to keep your faith and pray that one day your family will understand. You should not have to go into debt to earn your family's love and respect. For my father and my mother have forsaken me,But the LORD will take me up. Psalm 27:10

Stepping out in faith means that you understand that there will be set backs as you begin to change and travel along this new financial journey. I don't know about you but I need encouragement and someone to talk you when things get rough. I turn to God and others in my life. You too have to surround yourself with a network that can back you and help through this change in your life. Whether it be God, supportive friends and or family your are going to need a support system to guide you through this journey.

Bankruptcy can either be a temporary or permanent solution to your financial status. If you are not going to change your financial behaviors that led to bankruptcy then the filing will only temporarily provide your relief. However if you use bankruptcy for its intended purposed of being the starting block to a fresh start on your financial journey then you can step out in faith and make a change. I recommend that you attend a Financial Peace University Course with Dave Ramsey or getting some financial education at one of the local colleges that provide courses for fun and not credit. Another way to educate yourself is to read on the internet the wealth of information about taking charge of your financial life. But first and foremost I want you to sit down with yourself and have a long conversation with YOU and discover what you like about your life and what you don't like. Then I want to evaluate what is most important to you. When you have this all worked out I want you to write it down so you can remember what you are trying to achieve. Your likes will be your goals and the dislikes are the habits that you are going to change to reach those goals. Be realistic and be honest. If you are 30 years old and are 5'7" you are not going to grow to be 6' but you might be able to lose 20 pounds if you are over weight. You may never be able to financially afford to purchase a new BMW but wouldn't be nice to be able to pay cash for things and not have to worry about who is on the other line when the phone rings?

One of the most common messages that plays in our minds is that; one day, one day I am going to have enough money and time to enjoy my life. However when we spend everyday living this way we really have not lived at all and our precious time here on earth has passed. Don't wait until it is too late! Step out in faith today. Take that first step of change and start enjoying the splendors and this journey called life. Your life is all the reality television that you will ever need.