Los Angeles Bankruptcy Lawyers Blog

If you live in Los Angeles and have had financial difficulties, chances are a week does not go by without hearing about great programs that can easily modify your home loan to two percent or ways to have the bank write off some of your debt. Others advertise that they can simply consolidate your loan so that you make one easy payment. Here's another one: play the lottery and you can win millions of dollars! It is so sad that many of these companies not only do not deliver on their promises, they are scamming the very people who are most financially desperate out of what little money they have left just so they can believe the dream of easily getting out of debt just by signing up with these companies who just need you to sign their contract and they'll take care of the rest.

Here's a real Debt Consolidation Program: A Chapter 13 Bankruptcy. This program actually looks at what your disposable income is after all your debts and allows you to take that amount as your monthly payment. It lasts anywhere from 36 to 60 months depending on your income level, the amount never changes, and here's the best part. YOU DON'T PAY ANY INTEREST AND THE FEES COME OUT OF THE MONTHLY PAYMENT FOR THE LIFE OF THE LOAN.
So, what is the biggest concern? My credit is going to be ruined, right? Well, I have yet to meet someone on the verge of Bankruptcy who has excellent credit. What is even more interesting is that right after you declare Bankruptcy, you are a safe bet for creditors because you can't declare Bankruptcy again for another eight years. Within a few months, low and behold, credit card companies are already invading your mailbox once again.

Of course, there is more to it. But, remember, unlike the Consolidation, Modification, Lottery Markets, Bankruptcy is actually governed, regulated, and protected. Before you get scammed again, talk to a reputable Bankruptcy Attorney because the old adage is simply true: If it sounds too good to be true, it probably is.

Kirk Laron
Los Angeles Bankruptcy Attorney

Avoiding Bankruptcy has now become a cottage industry: Loan Modifications, Credit Counseling, Negotiations with Creditors have all become Catchy Slogans for many new business ventures - some reputable and some downright crooks. Most clients are willing to do just about anything to avoid Bankruptcy on their record, but many of these options do not make mathematical sense, especially when there is little chance of a higher income in the near term.

A recent article in the Chicago Tribune gives some signals that suggest a Bankruptcy might be inevitable, but I believe most people have the common sense to know in their gut when the mountain of debt is insurmountable.

Personal bankruptcy filings for July were up 34 percent over last year, according to the American Bankruptcy Institute. This is now the highest monthly total since the infamous 2005 change to bankruptcy laws, making it more difficult for debtors to file. Translation: Average Californians are getting financially devastated by current economic conditions, their State Government is so beholden to Special Interests that it is incapable of responding to the downturn, and a catastrophic correction finally occurred in artificially created Housing Assets that Bankruptcy has become the only realistic option for average folks.

This is what you won't often be told. Historically, the number one reason why a person does not declare Bankruptcy is because they have to protect the Equity in their Home. What used to be an insurmountable obstacle is now just a little bump in the road. No equity translates to a free pass to the world of Bankruptcy Relief. It's not that simple, of course, but it is a big deal, and does much to explain why the tougher Bankruptcy Laws of 2005 have done little to impede Bankruptcy Filings of late. As a Los Angeles Bankruptcy Attorney, I will take a in depth look into your particular situation and determine if Bankruptcy is your best option. Hopefully, I can tell you whether a Chapter 7 Bankruptcy is the right choice BEFORE you spend money on other options that don't work.

- Kirk Laron
Los Angeles Bankruptcy Attorney

Many California residents contemplating Bankruptcy have been frustrated in their attempts to avoid foreclosure. Some of the excuses given are that the lenders cannot convince their investors to sign onto a typical Government Loan Modification Program. Another reason is that lenders may not be motivated by a homeowner who is not far behind in their mortgage payments. This has led to a whole new industry that charges people to pay for the Dream of a Loan Modification and avoid Bankruptcy. Most of the time, they end up not getting the modification, while wasting money on fees.

How about this reason for not getting a loan modification? Delinquent loans bring huge fees to mortgage companies, which are then collected after a home is sold! In other words, homeowners who fall behind are perfect investments for a mortgage company looking to increase their profits. While the Obama administration continues to put pressure on various mortgage companies to process loan modifications and various other foreclosure avoidance programs, it is an uphill battle that fights against the essence of the Capitalist spirit - Increased Profits.

Just think of the various services that benefit from the foreclosure process. Appraisals are needed, more title searches are performed, there is a need for more insurance policies, just to name a few. All of these ancillary services profit from the foreclosure of a home.

The result of all this is a classic example of a conflict of interest that the mortgage companies simply cannot avoid. On the one hand, they have the prospect of collecting exhorbitant fees for a delinquency. On the other hand, they are supposed to look out for the investors who are the true owners of these mortgages to ensure that they are protecting that investment. Just one more of the many reasons why loan modifications are not as easy as people think. In the end, Bankruptcy is often the only realistic option. As a Bankruptcy Attorney, I will not suggest that a client declare Bankruptcy unless it makes sense. Many times, it simply makes sense and actually avoids needless fees and expenses.

Kirk Laron
Law Offices of Frazee/ Laron