We live in a mad country when a mother is forced to consider this kind of question.
Question: Dear Bankruptcy Adviser,
My soon to be husband would like to know if he would be able to file bankruptcy (pending) on my medical bills? I told him because they were under my name, that he would not be able to; however, we are both wondering if he could file a bankruptcy under our just born son's name and eliminate the medical bills. Or will this be considered under my name as well since we were not married when the bills were incurred?
Answer: Dear Mary,
Stories like this truly make me nauseous. Illness is one of the three most common reasons people file bankruptcy. In some cases, the co-pay costs alone become insurmountable. But there are few options available to pay back the debt. You are right to consider bankruptcy when it appears there is no other option.
Before filing for bankruptcy protection, you ought to contact the hospital directly to see whether you could qualify for low-income waivers so that the hospital (or a foundation associated with the hospital) will pay the bills. Many hospitals provide financial assistance to anyone who is below 300 percent of the federal poverty level. But there are some circumstances that could make a person over that level eligible as well. Typically, an illness is also accompanied by a period of unemployment. You might easily qualify for financial assistance.
The majority of hospitals across the country, especially nonprofit hospitals, have charity care programs that pick up all or part of the cost of care for indigent or special needs families. Sometimes all it takes is one question to the hospital administrator to find out about these programs.
There are also nonprofit organizations that work with people buried in medical debt. Some are funded by large private donors. These organizations will negotiate on your behalf to reduce the balance and sometimes pay the negotiated balance. However, it is very important that you keep the bills from going into collections. Collection agencies are for-profit companies and are not as easy to work with as the primary care facility.
While I don't think you want to have your son file bankruptcy, be aware that your son will not be liable for any of the medical bills. He is under 18 and therefore cannot enter into a legally binding contract. Even if the bills are in his name only, the hospital (or subsequent collection agency) cannot sue him for the bills. What would the collection agency do anyway? Put a lien on his crib?
Your soon-to-be husband cannot file Chapter 7 bankruptcy in order to eliminate the debts in your name. You are the primary individual liable for the debt. However, he could file a Chapter 13 bankruptcy, which is essentially a monthly payment plan. As long as you include all credit debts into the Chapter 13 plan payment, then all bills will be eliminated. This is an option for you, as well.
Finally, try to negotiate a payment plan with the hospital. Something is better than nothing and bankruptcy will only place a larger burden on the hospital's bottom line.
There is a bubble in the bailout costs. The numbers keep getting bigger...
Last week, it was a $200 billion cash-for-bond swap for the banks. This week, it was a $200 billion bond-for-bond swap for the big investment houses. If they keep this up, pretty soon you'll be able to walk into any Federal Reserve bank and hock that diamond brooch you inherited from Aunt Mildred.
Forget all that nonsense about the Bernanke Fed being too timid or behind the curve. In the face of what is turning into the most serious financial market crisis since the Great Depression, the Fed has been more aggressive and more creative in using its limitless balance sheet -- in effect, its ability to print money -- than at any time in history.
We can argue till the cows come home about whether this is a bailout for Wall Street. It is -- but only to the extent that it is also a bailout for all of us, meant to prevent a financial and economic meltdown that drags everyone down with it. In broad strokes, we're going through a massive "de-leveraging" of the economy, wringing out trillions of dollars of debt that had artificially driven up the price of real estate and financial assets, and, more generally, allowed Americans to live beyond their means. The Fed's goal has not been to impede that process, simply to make sure that it proceeds in an orderly fashion. But even that has required central bank intervention that is unprecedented in scale and scope. And despite yesterday's huge rally in the stock market, Fed officials warn that this de-leveraging is nowhere near finished.
Check out this great piece on asset bubbles......
"All these crises are different. But many have shared common features. They begin with capital inflows from foreigners seduced by tales of an economic El Dorado. This generates low real interest rates and a widening current account deficit. Domestic borrowing and spending surge, particularly investment in property. Asset prices soar, borrowing increases and the capital inflow grows. Finally, the bubble bursts, capital floods out and the banking system, burdened with mountains of bad debt, implodes.
With variations, this story has been repeated time and again. It has been particularly common in emerging economies. But it is also familiar to those who have followed the US economy in the 2000s.
When bubbles burst, asset prices decline, net worth of non-financial borrowers shrinks and both illiquidity and insolvency emerge in the financial system. Credit growth slows, or even goes negative, and spending, particularly on investment, weakens. Most crisis-hit emerging economies experienced huge recessions and a tidal wave of insolvencies. Indonesia’s gross domestic product fell more than 13 per cent between 1997 and 1998. Sometimes the fiscal cost has been over 40 per cent of GDP (see chart).
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The fed's attempts to save the housing market have come to nothing. Risk has returned with a vengence. Banks have remembered how interest rates should properly reflect default probabilities.
Feb. 29 (Bloomberg) -- Consumers like Valerie Jacobsen aren't getting much of a break on borrowing costs even after five months of interest rate cuts by the Federal Reserve. Jacobsen, 30, wants to refinance her 7.25 percent first and 8.5 percent second mortgages into one loan at a lower cost. To cut the payments enough to recoup her $3,000 in closing costs, she needs a rate well below 6 percent. She wasn't ready when costs dipped in January and now they're back at levels that make her plan too expensive, the Austin, Minnesota, resident says.
``Rates I'm seeing aren't really mimicking what the Federal Reserve is doing,'' said Jacobsen. ``I'm wondering why that is.''
Trying to spur lending and avert a recession, the Fed has chopped 2.25 percentage points off its benchmark rate since September. Wariness among lenders and fears of inflation are keeping mortgage and auto loan rates close to or above levels before the central bank began easing, while credit-card issuers are tightening their standards.
The slippage between the Fed's rate cuts and consumers' ability to borrow or reduce loan costs is weakening the central bank's ability to stimulate the biggest part of the economy, consumer spending. It accounts for more than two-thirds of goods and services output and stalled for the second consecutive month in January after adjusting for inflation, the Commerce Department said today.
Homes everywhere and not a sale in sight. It is bad, real bad...
Feb. 29 (Bloomberg) -- When Quinn Cuthbertson looks around his new neighborhood in El Dorado Hills, California, he sees rows of empty homes and barren hillsides. A promised new school and a clubhouse haven't materialized.
Cuthbertson paid $460,000 for a four-bedroom house in this northern California town named for the mythical golden city. He now suspects his neighbor spent $45,000 less. Nearby, 87 of 98 Toll Brothers Inc. home sites are undeveloped.
Almost 200,000 newly constructed single-family homes are sitting empty in the U.S., the most since Commerce Department statistics began in 1973. Partially completed developments reduce revenue for cities and towns and hurt businesses, said Nicolas Retsinas, the director of Harvard University's Joint Center for Housing Studies. Rising foreclosures and falling property values may cut tax revenue by more than $6.6 billion for 10 states, including New York, California and Florida, the U.S. Conference of Mayors said in a November report.
``Half-filled developments are an advertisement for a failing housing market,'' said Retsinas, a former assistant secretary for housing at the U.S. Department of Housing and Urban Development. ``It also has a spillover effect on the surrounding community.''
Nowhere is safe....
NAPA, Calif. - For many residents of this, one of the most storied valleys in the world, life is still a bowl of grapes. But beyond the picturesque vineyards and stonewalled estates, times are shaky, the future unclear.
Tourists sipping their way up the 30-mile valley from the city of Napa to Calistoga may never see this other Napa Valley. But this celebrated wine country is proof that there are few places in the nation left unsmacked by the housing crisis. Beautiful Napa is experiencing foreclosures, plunging housing prices, unheard of drops in home sales and the nervous sense of foreboding that has spread across the country like a flu.
This must be a bank's worst nightmare; a homeowner who doesn't care about foreclosure. If there are enough people like Mr. Zulueta, then the very existence of the US banking system is in question. The walk-away home debtors are very dangerous.
When Raymond Zulueta went into default on his mortgage last year, he did what a lot of people do. He worried. In a declining housing market, he owed more than the house was worth, and his mortgage payments, even on an interest-only loan, had shot up to $2,600, more than he could afford. “I was terrified,” said Mr. Zulueta, who services automated teller machines for an armored car company in the San Francisco area.
Then in January he learned about a new company in San Diego called You Walk Away that does just what its name says. For $995, it helps people walk away from their homes, ceding them to the banks in foreclosure.
Last week he moved into a three-bedroom rental home for $1,200 a month, less than half the cost of his mortgage. The old house is now the lender’s problem. “They took the negativity out of my life,” Mr. Zulueta said of You Walk Away. “I was stressing over nothing.”
You Walk Away is a small sign of broad changes in the way many Americans look at housing. In an era in which new types of loans allowed many home buyers to move in with little or no down payment, and to cash out any equity by refinancing, the meaning of homeownership and foreclosure have changed, economists and housing experts say.
You could see this one coming. The Fed has cut rates but so far, mortgage rates have remained high. Could it be something to do with risk?
The Fed's effort to bail out the credit crisis and Housing crash has run into an odd problem: Despite cutting rates 225 basis points since September, mortgage rates have actually gone up. "The Fed's efforts so far to soften the blow of the housing slump with lower interest rates appear to be having a muted effect. Since September, the Fed has reduced its target for short-term interest rates by 2.25 percentage points to 3%. But some mortgage rates are actually rising, and those that are falling haven't fallen that much.
The average interest rate on a standard 30-year fixed-rate mortgage was 6.38% yesterday, little changed from September but up from 5.61% in late January, according to HSH Associates, a mortgage-data publisher in Pompton Plains, N.J. Interest rates on so-called jumbo mortgages -- those larger than $417,000 -- were at 7.35%, also close to their September levels.
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The lawyers are moving in. This is going to get expensive.....
WHEN BORROWERS FIGHT BACK: Banks watch closely to see if a couple's legal struggle with their lender will launch a new front in the battle over troubled mortgages.
A federal appeals court is nearing a decision on a battle between Chevy Chase Bank and a Wisconsin couple that could for the first time enable homeowners across the country to band together in class-action lawsuits against mortgage firms and get their loans canceled.
The case is alarming Wall Street's biggest banks, which could bear the hefty cost of reimbursing all mortgage interest, closing costs and broker fees to groups of homeowners who uncover even minor mistakes in their loan documents.
After a federal judge in Milwaukee ruled last year that the Wisconsin couple had been deceived and other borrowers could join their suit, Chevy Chase Bank appealed to the circuit court in Chicago. Kevin Demet, the lawyer for the plaintiffs, said a decision by the appeals court is imminent, though others involved in the case said it could be a matter of weeks.
"It's one of the most important cases for the mortgage industry right now," said Louis Pizante, chief executive of Mavent, which provides consumer protection law services to major lenders. "The case was somewhat interesting a couple years ago when it started, but its ramifications and impact have completely changed given the current environment."
Unfortunately, oil prices are not playing nice. The Fed would like to cut rates but inflation just will not go away.
The price of oil has hit a record high for the second day running, touching $102.08 a barrel for US sweet crude. However, the figure is still surpassed in inflation-adjusted terms by the peak of $102.53 reached in 1980, the International Energy Agency says. The oil price surge is supported by traders switching their cash out of shares and currencies and into commodities, traders say
These kinds of articles were popular during the boom. The premise was always the same; some kind of structural impediment was responsible for double digit price growth. However, it has been sometime since I have seen one of these articles. This one claims that Seattle prices are too high becomes of "regulation"; yeah right!
Backed by studies showing that middle-class Seattle residents can no longer afford the city's middle-class homes, consensus is growing that prices are too darned high. But why are they so high?
An intriguing new analysis by a University of Washington economics professor argues that home prices have, perhaps inadvertently, been driven up $200,000 by good intentions.
Between 1989 and 2006, the median inflation-adjusted price of a Seattle house rose from $221,000 to $447,800. Fully $200,000 of that increase was the result of land-use regulations, says Theo Eicher — twice the financial impact that regulation has had on other major U.S. cities.
"In a nationwide study, it can be shown that Seattle is one of the most regulated cities and a city whose housing prices are profoundly influenced by regulations," he says.
Those realtors will try anything to make a sale.....
The housing market in Las Vegas is pretty bleak. Many real estate agents are looking to find new ways to attract buyers into the glacially slow real estate market. One such “hook” that has popped up in a few places all over the country such as Stockton, San Diego, Palm Springs and now Las Vegas, are foreclosure bus tours. If you’ve loved partying in Vegas, riding through the suburbs might be a good way to see what you’re in for before your wild hair leads you to something more permanent. And then again, it could also help those in search of the never-ending Vegas party.
I recently took a “Foreclosure Express” tour in Las Vegas. Partially out of interest in the concept, and partially because with Vegas being one of the slowest housing markets in America, I wanted to see just how bad it had gotten. Or, for some people, how good it had gotten. Information provided by the sponsors of the Vegas Foreclosure Express said, “there is one foreclosure for every 152 households, giving the state the highest foreclosure rate in the nation.” Filings in 2007 were up 16% from the year before, they said
I don't understand the outrage here. The over-riding of a home equity loan is that you have some equity in your home. If house prices fall, wiping out home equity,then on can hardly be surprised that banks stop lending HELOCs.
At the risk of making a tangential point, should HELOCs be used to finance pre-school feews, as the woman in this article from the WAPO seems to be doing?
Homeowners Losing Equity Lines As House Values Fall, Some Banks Withdraw Credit
Nancy Corazzi was told by her lender, USAA Federal Savings Bank, that her equity line of credit was suspended because her Howard County home had dropped in value. In one brief phone call, Nancy Corazzi's lender yanked away what was left of the $95,000 home equity line of credit that she and her husband took out five months ago.
The lender informed her that her Howard County home had plummeted in value and the company did not want the risk that she would owe more than the house was worth. "I got off the phone and I was shaking," said Corazzi, who was using the money to pay preschool tuition for her twins ."I was near tears. We needed this credit line to get us through some tough times."
Several of the nation's largest lenders, along with smaller ones, are shutting off access to home equity lines in areas where home values are declining. It's an unusually aggressive move as the industry grapples with fallout from the mortgage crisis that began unfolding last year.
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The fiscal bust is just a few years ago - medicare, social security, the national debt - just give it ten more years.
December 4, 2005 (WLS) -- For years, every generation of twenty-somethings has had nicknames. Generation X and Y come to mind. But the latest phenomenon is well-educated, well-financed and not eager to pay dues. Employers, sociologists and even the media have dubbed them "the entitlement generation." They are images of desire, and they are everywhere. And many times they are expensive. In a world of instant communication and instant gratification, having it all can't wait. In the working world these people are known as the entitlement generation.
"Yes, there's an entitlement generation we are seeing a little bit more of," said Debbie Bougdanos. Bougdanos would know. She works at the world renowned advertising firm Leo Burnett and is in charge of recruiting for the creative department. Plenty of portfolios come across her desk. Many of the applicants think they are ready for the prime assignments, but she says, most assuredly, they are not.
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Making Wall Street pay for subprime? I can't see that happening.
BOSTON (AP) -- Regulators are trying to punish Wall Street for mortgage finance practices that expanded home ownership and spread risk among a host of new players -- but also may have duped borrowers and investors who supplied cash to fuel a housing boom that's turned bust.
A handful of state securities regulators and a couple foreclosure-blighted cities have fired the opening shots with lawsuits trying to prove that investment banks and big lenders are guilty of more than just bad business decisions and failing to foresee looming mortgage troubles. Some regulators say greed and fraud underlie much of the subprime mortgage mess that has spread across the broader housing market, triggering a spike in foreclosures.
Aside from the civil cases, the FBI is looking at possible criminal action, focusing on what Wall Street firms knew about the risks of mortgage securities backed by subprime loans, and whether they hid risks from investors.
Talking about being a little late...
BOSTON - Regulators are trying to punish Wall Street for mortgage finance practices that expanded home ownership and spread risk among a host of new players — but also may have duped borrowers and investors who supplied cash to fuel a housing boom that's turned bust.
A handful of state securities regulators and a couple foreclosure-blighted cities have fired the opening shots with lawsuits trying to prove that investment banks and big lenders are guilty of more than just bad business decisions and failing to foresee looming mortgage troubles. Some regulators say greed and fraud underlie much of the subprime mortgage mess that has spread across the broader housing market, triggering a spike in foreclosures.
We just can't keep away from those asset bubbles. Now it is treasuries....
NEW YORK: U.S. government bonds and emerging market equities have benefited as investors have sought refuge from the housing and credit crises, but the surge in popularity of the two asset classes is inflating a dangerous bubble that is likely to burst.
Last year, U.S. Treasuries benefited tremendously from the flight from risk as the credit crisis began. But the sector's popularity took off when the Federal Reserve started cutting interest rates aggressively last September to support the economy. It has reduced its target for the federal funds rate by 2.25 percentage points, to 3 percent.
Short-maturing U.S. Treasury securities have returned nearly 7 percent since August, while 10-year Treasury notes have posted returns of more than 11 percent, according to Merrill Lynch data. Not coincidentally, the Standard & Poor's 500, Dow industrial and Nasdaq Composite indexes in 2007 posted their worst annual returns in four years.
Things are never as we expect. Who would have imagined that people would just walk away from the overvalued homes. No wonder the ratings agency models have had nervous breakdowns.
Fitch Ratings, while telling investors last Friday to expect additional "widespread and significant downgrades" on $139 billion worth of subprime loans, has cited a new factor in their "worsening performance."
"The apparent willingness of borrowers to 'walk away' from mortgage debt," the analysts noted, "has contributed to extraordinary high levels of early default" on loans issued during the 18 months before the mortgage bubble burst. It expects losses to reach 21% of initial loan balances for subprime mortgages issued in 2006 and 26% for those issued in early 2007.
Such behavior, where not precipitated by willful fraud, shows that American homebuyers supposedly duped by their lenders aren't so dumb. They're perfectly capable of acting rationally without political interference.
I rmember when TOLL shares were going through the roof. Now, all I am left with are the memories.
BOSTON (MarketWatch) -- Toll Brothers Inc. doesn't see any end in sight to the U.S. housing market's woes as the luxury home builder said Wednesday that first quarter home-construction revenue fell 22% compared to the same period last year. "The housing market remains very weak in most areas. Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel," said Robert Toll, chairman and CEO also said its backlog fell to $2.4 billion, down 42% from the first quarter of fiscal 2007, as the number of signed contracts on homes fell 46% from last year. In addition, the average price of a house sold by Toll fell, while the average price of canceled houses rose. Joel Rassman, Toll's chief financial officer, said in a press release: "With conditions still weak in most markets, we expect to continue to face challenging times ahead. We are still in the midst of finalizing our first-quarter impairment analysis."
Hey! You've won a ride back to the top
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