Orange County Bankruptcy Lawyer Blog

The U.S. Supreme Court has agreed to consider whether Chase Bank can be sued for changing credit-card interest rates without written notice to account holders who were late in making payments, the Wall Street Journal reported.

The Orange County bankruptcy attorneys at the Shakoori Law Group continue to monitor changes in the credit card industry in the wake of recent federal reform meant to protect consumers against some of the industry's worst practices. Changes, including better notification requirements and a ban on raising rates on existing balances, may help consumers. But the industry is looking for other ways to make up for lost income, including high membership fees and higher initial interest rates on credit cards.

Credit card debt is one of the leading causes of bankruptcy in California and throughout the nation. Consumers facing high levels of credit card debt should consult a Riverside bankruptcy lawyer for a confidential appointment to discuss their rights. An interest rate hike -- frequently to 20 percent or higher -- can quickly overwhelm a struggling family and lead to thousands of dollars in additional interest and unaffordable monthly payments.

In this case, the bank, which is a unit of J.P. Morgan Chase & Co., is asking the court to overturn a lower court decision in California that revived a class-action lawsuit against the company. Chase argues that federal law at the time did not require it to give notice of rate changes to cardholders who were late on payments. The bank claims the initial contracts given to cardholders already contained provisions allowing increased interest rates for borrowers in default.

The Federal Reserve Board amended that law last year as part of a comprehensive overhaul of credit card practices. Banks are now required to give advanced notice of rate increases, even if the default rate was already specified in the initial contract language.

Continue reading " California case against credit card company heads to U.S. Supreme Court -- consumers seek protection against abusive interest rates " »

The Wall Street Journal reported that the number of consumer bankruptcies nationwide fell for the second straight month in May. However, those numbers are unlikely to signal the start of a permanent decline, particularly in hard hit areas like California and Florida.

As our Orange County bankruptcy lawyers and San Bernardino bankruptcy attorneys recently reported, Orange County bankruptcies increased by 50 percent in April. In the Los Angeles area, 1 in 6 consumers filed for bankruptcy protection last year.

Nationwide, consumer bankruptcy filings fell to 136,142 in May, down nearly 6 percent from April. However, personal bankruptcy filings are up 9 percent from a year ago and up 15 percent when compared to the first five months of last year. In some areas of California, bankruptcy filings have increased more than 300 percent since the start of the economic downturn.

For struggling consumers, Chapter 7 bankruptcy allows for the forgiveness of most debt while a Chapter 13 bankruptcy can establish a repayment plan. Either filing will stop creditors from hassling you at home or work, and can also stop the garnishment of wages, foreclosure proceedings and other debt collection measures.

Bankruptcy filings could top 1.6 million this year, compared to the 1.4 million bankruptcy cases filed in 2009. California could account for nearly 10 percent of all bankruptcies filed nationwide this year, with an estimated 120,000 consumers expected to seek protection in bankruptcy court.

California ranks 8th nationwide in the number of filings based on population, with 6.26 bankruptcy cases for every 1,000 residents. Nevada, Tennessee, Georgia, Indiana, Alabama, Michigan and Ohio have higher rates. However, California has by far the highest number of bankruptcy cases of any state in the nation.

Continue reading " Nationwide decline in bankruptcy filings unlikely to impact hard-hit California consumers " »

Nearly half of all U.S. families are drowning in credit card debt --carrying an average balance of $7,300, according to U.S. News & World Report.

Credit card debt is one of the leading causes of consumer bankruptcies. The Orange County bankruptcy lawyers and the Santa Ana bankruptcy attorneys at the Shakoori Law Group assist residents in the Los Angeles are who are overwhelmed by consumer debt.

5 Ways to Reduce your Credit Card Debt:

1)Pay more than the minimum: Paying just the minimum will add years to the length of time needed to pay off your credit cards and will result in thousands of dollars in extra interest payments. A balance of $2,000 with a 19 percent interest rate will take nearly 8 1/2 years to pay off if you make just the minimum payment of $80 a month. Interest charges would total $1,179. Paying $160 pays the debt in under 2 years and saves nearly $1,000 in interest.

2) Ask for a lower interest rate: Some banks are willing to negotiate, particularly if you have not fallen behind on your payments. Reducing the interest rate on a $5,000 balance from 20 percent to 15 percent will save $300 a year.

3)Don't pay annual fees: In response to the economic downturn and consumer protection laws aimed at banning some of the most blatant practices employed by credit card companies in the past, many companies are now opting to charge card holders with an annual fee. Consider switching to a card with no annual fee. (A word of caution, closing an older, established account, can reduce your credit score).

4) Skip loyalty programs: These programs are good ... for the credit card company. Typically the costs associated with loyalty programs exceed any potential benefits.

5) Cut the plastic and pay cash: Studies continue to show that people are more aware of their spending habits when they use cash instead of credit.

While these tips are all good advice, there comes a time when some consumers need to honestly admit that they are in over their heads. Speaking with an experienced bankruptcy attorney can be the beginning of a fresh start. Chapter 7 bankruptcy in California is available to borrowers who meet certain income-to-debt ratios, while Chapter 13 bankruptcy will permit consumers to establish a repayment plan. Filing for bankruptcy protection will also immediately stop bill collectors and credit card companies from hassling you and your family.

Continue reading " Orange County bankruptcies frequently involve credit card debt " »

Orange County bankruptcies and business and personal bankruptcy filings skyrocketed nearly 50 percent in April, the Orange County Register reported on Friday.

As our San Bernardino bankruptcy attorneys and Riverside bankruptcy lawyers reported recently on our Orange County Bankruptcy Lawyer Blog, about 1 in 6 local residents filed for bankruptcy protection last year in the Los Angeles area. The fact that filings increased 50 percent in April over last year's figures is a startling reminder of the financial stress consumers still face in Southern California.

Filing for bankruptcy is a powerful tool that offers consumers a new beginning. Californians are continuing to seek protection in record numbers in response to the real estate bust and the economic downturn. For those who meet certain criteria, Chapter 7 bankruptcy offers a chance to completely erase most debt, including credit card debt, medical debt and judgments or liens. For others, Chapter 13 bankruptcy will allow you to structure an affordable repayment plan. In either case, bankruptcy will stop creditors from hassling you at work or home and will provide the space and time you need to help reclaim your financial freedom and independence.

Compared to last year, bankruptcy filings increased in April across the California Central District of the U.S. Bankruptcy Court, which covers five counties from San Luis Obispo County to the Arizona border, including Santa Ana, Los Angeles, Riverside and San Bernardino counties.

Area California bankruptcy filings for April 2010:

-Orange County: Up 48.8 percent to 1,682 from 1,130.

-Los Angles Up 71 percent to 4,835 from 2,828.

-Riverside/San Bernardino: Up 36.1 percent to 3,818 from 2,805.

-Southern California: Up 43.6 percent to 12,425 from 8,655.

Continue reading " Orange County bankruptcies jump nearly 50 percent in April " »