How the MF Global Bankruptcy Is Affecting Charities

Since MF Global filed for bankruptcy protection at the end of October, much of the media attention has been focused on the scandal of the $1.2 billion in investor money that the firm cannot account for. That money, which reportedly belongs to about 38,000 investors, may have been used for MF Global’s own (questionable) investments in European debt.

But now, as the end-of-year charity giving season is in its final throes, another kind of fallout from the MF Global bankruptcy is coming to light: its effect on charity donations. According to sources, the country’s eighth-largest bankruptcy is likely to affect charity giving in a number of ways:

• Individual donors who invested with MF Global and lost money (when the firm misplaced those funds) may be less likely to contribute to charities than they were in recent years. Because many smaller investors lost significant amounts of money (relative to their total net worth), tens of thousands of potential charity donations might have been wiped out by MF Global’s collapse.
• Corporate charity organized by the CME Group will likely not occur. In years past, sources note, the CME Group kept a trust (called the CME Trust) of $50 million to compensate investors who were unfortunately hooked into (and who lost money by) fraudulent investment schemes. In the past, most of that money got donated to charities at year’s end; this year, however, the entire trust went toward compensation of MF Global investors who lost money.
• Some charities invested money with MF Global. In addition to the individual clients who lost money, organizations (including nonprofits and charities) put their money with this firm, as it was meant to be a relatively safe investment option. Now the firm’s bankruptcy will translate to a direct loss of funds for charity investors.

It’s no secret that the wealthiest citizens of the U.S. are often the ones behind major charitable grants and donations. But few news sources have discussed the potential effect a major bankruptcy like MF Global’s, which includes debts of more than $39 billion, is likely to have on charitable organizations this year.

What is perhaps even more troubling is that this blow to charities comes during a time when individual donors have cut back on charitable contributions because of unemployment and reduced wages. Naturally, the persistently tough economy also means that more Americans than ever are in need of the support that charitable organizations traditionally offer.

In recent years, the CME Trust donated millions of dollars to Chicago-area educational institutions, including universities, charter schools, and organizations that fund education in the city. Without such donations, those and other groups could face significant financial difficulties in 2012.

Quick Guide to Fees and Costs Associated With Filing Bankruptcy

Chapter 7 Fees

Chapter 7s typically take about three months from start to finish. Your lawyer would normally charge from $800.00 to $2000.00, depending on several factors such as how many people are filing, how much debt you have and what types of debt you have.

Chapter 13 Fees

Chapter 13s typically run from three to five YEARS, so the fee is higher. Each jurisdiction has certain guidelines for fees, for example, in Chicago, the fee is allowed to be $3500.00. In Ohio, the fee can be $3000.00. These fees are for the entire life of the Plan, and typically are paid in a portion up front and the rest in the Chapter 13 re-paymant Plan.

Court fees

The Clerk of Courts charges fees for processing your case, called filing Fees. For Chapter 7, the filing fee is $306.00. For Chapter 13, the filing fee is $281.00. Keep in mind, the CLERK charges over $300.00 for processing the paperwork your lawyer drafted. Now, if the CLERK charges this much just to PROCESS your paperwork, how in the World could a GOOD attorney charge you only $450.00 $600.00?? Dont go with a cut-rate bankruptcy lawyer, unless you want a cut-rate bankruptcy. The bankruptcy affects all future credit youll ever get, so make sure to hire a lawyer that knows bankruptcy law!

Dean D. Paolucci, Attorney at Law Paolucci Law 800.825.7010 Servicing Northern Ohio and Northern Illinois

Fresh Start on a New Year

The first few months of the year are a busy time for bankruptcy attorneys. There are two reasons for this: first. First, it is the start of a new year and a good time for a change. The holiday season has passed and families begin making plans for the future. When you take a look at your finances and an ugly pile of unpaid bills is looking back at you, it is probably time to consult with an experienced bankruptcy attorney.

The second reason is tax season. While filing for bankruptcy is cheap compared to many other legal services, finding extra cash to pay court fees, the credit counseling class, and your attorney’s fees can be challenging. Many debtors use income tax refunds to pay bankruptcy fees.

The safest advice for a debtor expecting a tax refund is to postpone filing bankruptcy until after you have received and spent your income tax refund.  Any expected refund that has not been received is property of the bankruptcy estate. The debtor must account for the expected refund and then apply a legal exemption to protect it. If you underestimate your refund, and do not have enough legal exemptions to protect it, you may lose a portion of your tax refund.

Taxes that have been received and spent before filing bankruptcy are not property of the bankruptcy estate. However, it is important to spend your income tax refund wisely. Any payment of over $600 to one creditor just prior to filing must be reported, and the bankruptcy trustee may ask the creditor to return the money. Gifts or loan payments to friends or family members can also be “avoided” by the trustee. Consult with your attorney before spending your income tax refund.

Tax season is a good time to file bankruptcy. Your income taxes have been recently prepared, and this information is needed for your bankruptcy case. Your attorney can advise you concerning the best time to file bankruptcy. Make your new year a fresh start on a better financial future.

Social Networking, DNA may Affect Credit Soon

Living in the Information Age has a number of advantages: we can avoid holiday crowds to shop from the comfort of our living rooms, and even ditch the commute to work remotely from home. But new stirrings in the credit card industry about future plans for collecting and using customer information have raised warning cries from a number of consumer advocates.

A recent article in Time magazine discusses plans that credit card issuer Visa has to gather more information from consumers to better target ads and evaluate credit card applicants. Sources report that the company has plans to collect information from a number of sources, including:

• Social networking websites, on which many consumers discuss their interests and post (even if indirectly) about their desires and spending habits.
• Credit bureaus, which they already use. This is why filing for bankruptcy has an effect on a filer’s ability to get credit in the future: credit card issuers can see that the bankruptcy took place for seven to ten years after it’s filed.
• Search engines, such as Google and Bing. This information could include not only shopping habits and interests but also information about everything a person researches, including words like “mortgage loan help” and “payday loans offers.”
• Insurance claims, which might paint a picture of a person’s health, driving habits, and more.
• DNA databanks. This last information source has caused the most uproar: information hardly gets more personal than a person’s genetic code, and the potential applications of such data are mind-boggling.

So how would credit card issuers use such a bevy of private data to their benefit? In a lot of ways, according to analysts. And many of them could seriously hurt consumers.

DNA or insurance claim data, for example, could reveal to credit card issuers a person’s health history or likelihood for developing a genetic condition. If that condition typically leads to significant medical expenses, the credit card issuer might deny the person credit—after all, many people end up discharging high medical bills in bankruptcy, and credit cards often get the same treatment in Chapter 7 cases.

What worries some analysts is that the U.S. currently has no laws in place to prevent such elaborate information gathering or denying credit on the basis of information like genetic code. As usual, the technology available has progressed far faster than the legislation designed to regulate that technology.

Another major concern? Identity theft and data breaches. It’s hardly uncommon to hear about data leaks and breaches in the news, but imagine the potential fallout if thieves had access to more than names and social security numbers.

At present, of course, neither Visa nor any other credit card issuer has such information on hand. But it could be a less distant future than we first imagine.

What Happens To You When Your Employer Files for Bankruptcy?

When Your Employer Files Bankruptcy

In today’s economic climate, it’s not enough to be careful with your own finances – you may face the bankruptcy of your employer.  Then what?  Does your employer have to continue to pay you, and give you health and retirement benefits?  Will you still be able to get paid what you are already owed?

The Type of Bankruptcy Matters

Much of the result of employer bankruptcy will depend on the type of bankruptcy the employer files.  If your employer files for Chapter 11 restructuring, you may find yourself in a relative unchanged position, if you are not laid off as part of the restructuring, that is.

In Chapter 11 bankruptcy, your employer may continue to operate as normal, and will probably not face closure unless the plan fails or there are unforeseen setbacks.  Often, companies file for Chapter 11 as a preventative measure, to avoid closure and liquidation.

In Chapter 7 bankruptcy, however, the situation begins to look a bit more dire.  In Chapter 7, your employer is closing its doors, liquidating its assets, and attempting to pay off as much as possible of its debts:  debts that include your salary.  And in many cases, Chapter 7 is filed when liabilities exceed assets, which means that some of those debts will not be paid in full.

Will You Lose Your Job?

This means that, not only may you lose your job, but you may have trouble recovering salaries, and your benefits may end.  Although your employer still owes you for past work, and such debts have priority status, it may take a while for the case to be administered and for you to receive that money.

As for retirement plans, such as 401ks, there are laws in place to protect employees from losing their assets.   Such money must be dept in trust so that the employer cannot use it in tough times.  This money should be safe, but your employer will probably have to stop matching contributions that you make.   Whether pensions are paid may depend on what happens in your employer’s bankruptcy case.   However, these matters are complicated, and it is worthwhile to talk to an experienced Phoenix creditor rights and Phoenix bankruptcy attorney to determine what options you have.

6 Reasons Not to Hire a Bankruptcy Petition Preparer in Las Vegas

People on the verge of a Las Vegas bankruptcy frequently have difficulty assembling the money necessary to pay their lawyers. As a result, they find ways to cut costs, and one way of doing it—so they’re led to believe—is to hire a bankruptcy petition preparer. There are 6 reasons to avoid this route.

1. Petition preparers cannot give any kind of legal advice. Bankruptcy lawyers work more with the law-side of issues than factual ones, which tend to be the same. Thus, which chapter to file in and the benefits of those chapters are off-limits. The other big question is which exemptions debtors should claim. These are often the most crucial legal issues that petitioners need answers to.
2. Petition preparers are watched closely by bar authorities to ensure that they aren’t violating unauthorized practice of law statutes. These laws are designed to protect people from unscrupulous and incompetent representation.
3. Bankruptcy lawyers are professionals who know important information outside bankruptcy topics. Often petitioners need help with the tax implications of filing bankruptcy or its affects on their retirement income. Petition prepares do not necessarily know these things.
4. Bankruptcy lawyers are also required to honor your private information by keeping it confidential.
5. The bankruptcy code devotes a section to petition preparers, and gives debtors legal remedies if preparers make errors. [http://codes.lp.findlaw.com/uscode/11/1/110]
6. According to the U.S. Trustee’s Office (http://www.justice.gov/ust/r05/docs/general/guidelines/bank_pet_prep.pdf), petition preparers are only allowed to type documents for a reasonable fee. That is the limit of their function. A trip to the local public library and you can do this for a lot less.

There you have it. An experienced Las Vegas bankruptcy lawyer is far more valuable to your bankruptcy case than paying a typist to save money.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation by calling 1-800-LAWYERS.

Fed Plan Could Lead Chicago Consumers Into More Debt

Recently, the Federal Reserve laid out a not-so-heralded plan to boost the economy by driving down long-term interest rates in order to stimulate the economy.

But the plan only works if borrowers take out loans now, which sends them into debt. Even with low interest rates, this situation can be a challenge to overcome. In fact, investors didn’t respond well to the plan, with the stock market largely in a sell-off in the days after the announcement was made.

Let’s be clear here, though — credit is a necessary function of our society. Most people don’t have $15,000 to $20,000 to buy a new car. And very, very few people have $150,000 in cash to purchase a new home. So, it’s obvious that banks and lenders are needed in order for our society to function.

However, what usually happens is that people are forced into bankruptcy in Chicago because of the lenders’ hidden fees and ridiculously high interest rates. This can leave a borrower actually paying a lot more than what the item or service is worth. Chicago bankruptcy attorneys have seen time and time again many consumers who have been taken advantage of by lenders.

While low interest rates are beneficial to those who must take out loans to make purchases, they can still add up over time.

According to a recent USA Today article, the $400 billion that the Fed shifted may actually have a low impact on consumers. They may end up getting lower rates on mortgages and fixed-rate loans, yet those holding long-term bonds may seen interest income dip as a result.

Because of the nation’s high 9.1 percent unemployment rate, the move is unlikely to provide long-term improvement. Some experts say the impact on consumers will be minimal. Here are some areas where consumers may see changes:

Mortgages
Mortgage rates are a focal point of the national bank’s plan. The $400 billion in short-term Treasury bonds will be used to buy long-term Treasury bonds by next summer. The money will be reinvested from mortgage-backed securities to help mortgage rates stay low.

Interest rates are already low — 4.09 percent on a 30-year, fixed mortgage — so it’s not interest rates that are the problem. Consumers are nervous about the housing market and are unwilling to invest.

Consumer Debt
Most people’s credit card rates are tied to prime rate, so the Fed’s plan could keep credit card rates lower at least until 2013. Yet, some analysts say the prime rate isn’t based fully on federal funds, but is also determined by the rates at which banks lend each other money and on the market.

So, if the economy and stock market continue to slump, rates could end up rising.

The article goes on to say that those holding long-term bonds will suffer under the Fed’s plan, including retirees hoping to benefit from interest rates later in life. This includes insurance companies, which are heavily invested in bonds. These companies could raise rates to make up for lost income there. Short-term savings and the stock market also will be affected.

Most people hope that the Fed’s plan works to help this country get back on track. But most people don’t have a strong feeling that it will.

FTC Halts Fraudulent Mortgage, Debt Relief Scammer

The Federal Trade Commission filed a complaint with U.S. District Court alleging that Christopher Mallett has engaged in deceptive practices online, targeting debt-ridden consumers. The complaint outlines Mallett’s alleged misdeeds, which include violations of the Federal Trade Commission Act.

According to the FTC, Mallett:

• Impersonated federal consumer protection agencies on multiple websites.
• Falsely claimed that he and his websites were affiliated with federal consumer protection agencies.
• Invented a consumer protection agency that does not actually exist (the Department of Consumer Services Protection Commission).

The FTC claims that Mallett attempted to attract debt-ridden consumers to his site and redirect them to affiliate sites that provided relief for mortgages, debts, and taxes. None of these sites had any actual affiliation with the federal government, and all reportedly charged customers for their services.

If proven, these actions would violate the Telemarketing Sales Rule and the Mortgage Assistance Relief Services Rule, which outline how online services and mortgage assistance can be advertised and sold.

In addition to Mallett’s alleged fraudulent affiliation claims, the FTC charges that he improperly used the FTC’s official seal and closely copied language from the FTC’s web site on his own web pages. Mallett’s companies and web sites reportedly include:

• U.S. Debt Care
• World Law Debt
• U.S. Mortgage Relief Counsel
• gov-usdebtreform.net
• worldlawdebt.org
• FHA-homeloan.info

Because of the close matches between official government logos and language and that on Mallett’s sites, he may also face charges of impersonating government agencies.

In addition to his false claims of government affiliation, Mallett reportedly made unsubstantiated claims about how his services could benefit consumers. The FTC notes that Mallett promised substantial reduction in consumer debts, even going so far as to publish charts showing previous customers’ “success” in lowering their debts.

The FTC is bringing the complaint as part of its efforts to eliminate scams that prey on consumers who are struggling with mortgage-related debt and other types of consumer debt. These types of scams can be particularly malicious because unsuspecting consumers may spend money they can barely afford for what they believe is a service that will help them turn their finances around.

When they learn that the service was nothing more than a scam, they often suffer a double blow of having lost money and having lost a chance at getting significant help toward improving their financial situation.

In some cases, consumers turn to such services to avoid filing for bankruptcy; ironically, spending money on such scams may push these consumers over the edge financially, leaving them with few choices besides personal bankruptcy.