Monthly Archive for June, 2009Page 2 of 3

California Divorce, Recession, & Alimony

alimony-in-recessionNobel Prize winning economist Gary Becker performed a now famous study on the effects of income in marriage back in 1977.  What he discovered was that any change in income, positive or negative, makes a family more susceptible to divorce.

The results of this study are still proving true over 30 years later as the current recession in the U.S. and California specifically has seen a rise in money-related divorces, and also led to an increase in problems associated with an ancillary issue to divorce- alimony.

Popular divorce site Divorce360.com recently blogged about this very alimony trend.  Because the financial situations of many California couples seeking divorce, or already divorced, has changed so drastically in the past year, there has been a huge increase in requests for alimony modification.

We’re seeing similar trends at LegalMatch.  According to statistics compiled from all people seeking alimony legal assistance in California within the last 12 months, the overwhelming majority of inquiries involved either collection of past due alimony or termination of alimony payments.

The high level of interest in these two categories is even more interesting because they are polar opposites and come from different sides of the divorce- one being the spouse looking to alimony as income and needing all back payments, and the other being the spouse looking to alimony as a financial pitfall that he or she is trying to get out of to save needed funds.

The numbers are high and the reasons aren’t surprising.  The recession is fully reflected in all aspects of California divorce proceedings and the trend will continue as long as these tough economic times persist.

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Be Careful What You Write: Social Media Marketing

social-media-marketingFirst, what is social medial marketing? Essentially, social media is a blend of social outreach and internet technology, achieved principally through blogs, Facebook, MySpace, Twitter, and Linkedin.  While these Internet tools allow people to connect to other people of all age groups, they have also become the new “feeding ground” for employers seeking to learn more about a potential employee than they can discover through a resume. In fact, according to employeescreenIQ, 56% of what is written on a resume is padded.  (Company Unveils List of 2009 Background Screening Checks)

In 2006, CareerBuilder.com reported results of a survey that they conducted of over 1,000 hiring managers.  Results indicated that 12% of these managers used social media websites to verify information about a job candidate, with 63% not hiring a candidate based upon the information that they found. (Background Check News)

Today, as quoted from one blog, almost 40% of employers have used Facebook and other social media sites to obtain information about job candidates, and greater than 80% of employers found negative information about the potential employee that may have lead to the candidate not being extended a job offer.  (Employment Background Checks

Clearly, taking control of one’s public persona is critical for anyone in the job market.  However, employers could also subject themselves to litigation for negligent hiring practices through the use of social media when making employment decisions.  So, far, no one has made this challenge but expect this to come.

Social media marketing is not only being used by prospective employers but a new crime is on the rise – social media identity theft.  St. Louis Cardinals MLB team manager Tony La Russa was a recent victim.  An identify thief created a Twitter account using Tony’s name and image, posting defamatory remarks on the account.  La Russa sued Twitter and the case is currently pending in court.  La Russa wasn’t alone; impersonators hacked into President Obama’s Twitter account, as well as the Twitter accounts of Britney Spears and Bill O’Reilly at Fox News.  (Twitter, Social Media Indentity Theft & Personal Background Checks)

Prosecutors are also using social media to their advantage.  A 22-year old woman charged with a fatal DUI, faced a 5 year sentence after photos of her on her MySpace page after the accident depicted her with tequila, shot glasses and a T-shirt labeled, “Jail Bird?” came up at trial despite the warnings of her defense attorney.  (Unrepentant on Facebook? Expect jail time)  And, a YouTube video was elevated to fame in 2008 when Ms. Trisha Walsh Smith made a video about her acrimonious divorce from Phillip Smith, a Broadway giant.  Smith complained about her prenuptial agreement and made disparaging remarks about her then current husband.  The New York County judge granted the husband a divorce on the grounds of cruel and inhuman treatment.  (Inside the YouTube Divorce)

If these stories don’t cause you to rethink what you may have posted on social media sites such as Twitter and Facebook, maybe they should give you pause for thought.  Depending upon what you have posted, you could lose a job opportunity or worse.  Count on LegalMatch to continue to monitor these trends; we expect more litigation to revolve around the use of social media.  But, don’t say we didn’t warn you.  Be careful what you write!

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When It’s Too Good to Be True: Foreclosure Equity Scams

You’ve always paid your mortgage on time but now you find yourself unemployed.  You’ve tapped out your savings. You haven’t paid your mortgage in 3-months and discovered a Notice of Default in your mail.  Not only are you put on notice of a default, but since this notice is also recorded with your County Recorder’s office, there are others on the lookout, too.

Take the experience of Charleen Trana, a 78 year-old widow living in her San Fernando home of 50 years, worth at least $350,000.  Because her disabled son was having difficulty maintaining jobs, Trana took out a $100,000 mortgage on her home to help him.  However, when Trana’s health began to fail, her costs skyrocketed.  She fell behind in her mortgage payments. Trana received a notice of default, but that wasn’t all that she received.  Some very nice men approached her days later and offered to rescue her home from foreclosure. Desperate, Trana signed her property deed over to these men for a small sum down.  She also signed inch-thick documents with the promise that these rescuers would not only pay off her mortgage but, in exchange for rent, Trana could continue to live in her home.  But, there was a catch; the rescuers failed to pay-off the mortgage, leaving Trana on the hook both for the mortgage and the rent while they held the deed (and equity) to her home!

Trana’s story is not atypical.  Indeed, the Federal Trade Commission (FTC) just announced a new crackdown in foreclosure equity stripping schemes.  (Federal and State Agencies Crack Down on Mortgage Modification and Foreclosure Rescue Scams)  One of these schemes concerns loan modification scams.  Firms involved in these scams use on-line ads, spam, and direct mail targeted to homeowners in financial distress, promising high success rates at modifying their mortgages and saving their homes.

While LegalMatch does not specifically track foreclosure equity scams, we have had an explosion of customers contact us during the past year either because a foreclosure had been filed against them or because there was a foreclosure judgment.

RECENT EXPLOSION OF LEGALMATCH CUSTOMERS SEEKING ASSISTANCE WITH FORECLOSURES

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If you suspect that you’ve been approached by a rescuer, contact your local District Attorney and report the individual(s) to the FTC.  If you’ve been a victim of a loan modification or a foreclosure equity scam, you may either be able to file criminal charges or bring a lawsuit against the rescuer for damages.  LegalMatch has many experienced real estate attorneys who can assist you in determining the best course of legal action.  Whatever you do, don’t sign your property deed over until you’ve consulted your local agency or licensed attorney to ensure that you aren’t a victim of a foreclosure equity scam!

Federal Trade Commission Home Equity Scams

National Consumer Law Center

U.S. Dept. of Housing and Urban Development Guide to Avoiding Foreclosures

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Keeping Credit Card Companies in Check

credit-card-reformNearly 80% of Americans carry credit cards and about 44% of those individuals with credit cards carry credit balances.  On an annual basis, credit card companies have earned $15 billion in penalties for late fees alone!  (A New Era for Credit Cards)

President Obama attributes the practices of credit card companies to contributing to the down market economy.  While Obama expects American consumers to be responsible in paying their debt, he also expects credit card companies not to saddle already debt laden consumers with retroactive interest rate increases and other unfair credit practices.  Some of Obama’s sweeping legislation requires credit card companies: 1) to post their credit agreements online, 2) to provide 45-days advance notice if the credit card company plans to change its terms and conditions, 3) to standardize payment due dates rather than to shift payment dates to different dates each month, and 4) to apply excess payments to the highest interest rate balance first.  (White House Fact Sheet)

But, to keep the credit card companies in check, U.S. consumers will still need to proactively review their credit card records for accuracy and to (politely) challenge the credit card companies if there is a reporting error or a violation of the new White House reforms.

Americans are entitled, by law, to one free credit report per year from each of the three major credit reporting agencies: Equifax, TransUnion and Experion.  (Credit Reporting Rights)  After reviewing these reports, if there are inaccuracies, consumers have the legal right under the Fair Credit Reporting Act to dispute this information and to have it corrected, usually within 30-days. (A Summary of Your Credit Reporting Rights) Keeping your credit record accurate is important not just to obtain a mortgage or a short-term loan, but employers are also increasingly checking consumer records as part of their background screening process.  (Employers and Consumer Reports)

Even though U.S. consumers have these rights, some credit reporting agencies may be less than compliant. Always put your request for correcting reporting inaccuracies in writing, specifically identify the inaccuracy and provide verification of the reporting inaccuracy in your request for a reporting correction.  As a first step, write a demand letter.  Examples of demand letters can be found through Nolo press or through other on-line resources. (Credit Repair) When mailing a demand letter, send the letter by certified mail and keep a record of the delivery receipt so that there can be no denying that you’ve made an attempt to notify the credit reporting agency.  (7 Steps to Fixing Your Credit Report)

If these measures are ineffective, LegalMatch can help. Sometimes it is only with an attorney as your advocate that credit reporting inaccuracies can be more quickly resolved.  During the past five years, we’ve assisted nearly 2,000 consumers who have required the assistance of an attorney to correct inaccuracies in the credit reports and another 2,100 who have requested an attorney to assist them with other credit reporting issues.  It is obvious not just to our President, but to LegalMatch, that credit card companies and their reporting agencies need to be kept in check.

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Where There’s a Will, There’s a Way?

According to the U.S. Census Bureau, by 2030, about 20% of the U.S. population will be age 65 or older and by 2050, this aging segment of the U.S. will represent 88.5 Million people versus the 38.7 Million in 2008.   The increasing age of the Baby Boomer population comes with a significant transfer of wealth either through wills, trusts or through state mandated intestacy laws.  And, it raises an issue concerning how prepared Americans are in developing their estate plans, whether their estate is valued in the millions or in the thousands.

Contributing to this significant transfer of assets is an increase in the number of will contests being brought today, particularly as it relates to step-families.  Children of these families are rapidly learning that the second (or third) spouse often has significant if not greater rights than the children; intestacy shares can range from 1/3rd to as much as ½ of the decedent’s estate when there is no will.  (Before Your Parent’s Say ‘I Do’ Again)

anna-nicole-smithEven when there is a will, sometimes a new spouse will change not only the family dynamics but also the dynamics of the will or family trust.  Most Americans are familiar with Anna Nicole Smith’s short-lived marriage and protracted court battles that continue even after her death. (Daughter to Inherit Mother’s Estate ).  Anna’s litigation, however, is not atypical although most people’s estate assets are significantly less than the Marshall fortune.

In fact, some children are proactively approaching their parents about their estate plans before their parents die.  SmartMoney.com profiles Neil Finkel whose 80+ year-old father placed a large percent of his multi-million dollar estate into a trust for his son.  However, Finkel’s Dad married a woman 30 years his junior. Amy, the new spouse, and Neil subsequently waged a 2-year court battle over the father’s dwindling assets which were being eroded by the spending habits of the new wife.  Although the case was settled, it’s unlikely that the rift in the family will be healed and it could erupt again after Dad Finkel’s death.  (Before Your Parent’s Say ‘I Do’ Again)

During the past five years, tens of thousands of people have used LegalMatch to find an attorney to represent them in filing a lawsuit to contest a will or to defend the estate against a will contest.  Not surprisingly, many of the most popular states for will contests have a high concentration of residents age 65+.  Plus, this top 10 state list comprises over 55% of LegalMatch’s will contest customers:

Rank Top Ten States Where LegalMatch Customers Sought Will Contest Lawyers
1 California
2 Texas
3 Florida
4 New York
5 Illinois
6 Pennsylvania
7 Ohio
8 Georgia
9 Virginia
10 North Carolina

Your will or trust will have lasting implications on your heirs after your death, particularly in those families where there are step-children or multiple spouses.  Probate litigation is generally protracted and can tear families asunder.  Developing a proactive estate plan, even if your estate assets are small, should help to reduce family tension after your death.  However your estate plan is crafted, you will be communicating a strong message to your family. The properly drafted will can stand the tests of probate court and ensure that your intent is followed after death.

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