Monday, April 27, 2009

Bankruptcy leads possible plans for GM, Chrysler

Posted by: Brendan Boesch

President Obama, who announced the plans Monday with Treasury Secretary Geithner, said the U.S. would not let the auto industry "simply vanish."
WASHINGTON -- The Obama's administration's leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.
The move would in essence split both companies into their "good" and "bad" components. The government would like to see the "good" GM to be a standalone company, according to an administration official. The "good" Chrysler would be sold to Fiat SpA, assuming that deal is completed, this person said.

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Chrysler Near Chapter 11 Bankruptcy Filing

by Shu Zheng

(WSJ) - Chrysler LLC is preparing to file for Chapter 11 bankruptcy protection as soon as next week, whether or not it reaches a deal with its lenders or forges an alliance with Fiat SpA, said several people familiar with the matter.

If an agreement with the car maker's lenders can be reached, Chrysler would file for bankruptcy protection to rid itself of some liabilities. That would let Fiat pick and choose which operations it wants, these people said. The U.S. government would provide bankruptcy financing while the reorganization plays out.

The United Auto Workers union is on board with the plan and likely would end up owning a sizable stake in the restructured car maker, said these people.

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Myths About Bankruptcy

By Kaitlin Lanier
Bankruptcy has the reputation of being a big, scary process. There are many assumptions and embellishments when bankruptcy is discussed. However, the truth is not nearly as frightening as most believe. So if you need to file bankruptcy, wouldn?t you want to know the truth? Here are the most common misconceptions and the truth behind them:
  • Everyone will know I filed for bankruptcy. Unless you are a prominent person or you are filing with a big company, chances are high that the only people that will know about your bankruptcy filing are your creditors.
  • All debts are wiped out in Chapter 7 bankruptcy. Certain types of debt, like child support, alimony, and student loans cannot be wiped clean. Make sure to figure out exactly what your debts are before filing bankruptcy.
  • I'll lose everything I have. Bankruptcy laws do vary from state to state, but every state has exemptions that protect certain kinds of assets.
  • I'll never get credit again. The truth is actually the opposite. It won't be long until you are offered credit cards again, even though they will most likely be from subprime lenders that will charge very high interest rates.
  • If you are married, both spouses have to file for bankruptcy. Not necessarily. It is not uncommon to have one spouse in signficant debt while the other is not. However, they are encouraged to file together, otherwise the creditors will demand payment for the entire amount from the spouse that did not file.
  • It's really hard to file for bankruptcy. It is not. You can always ask an attorney for help or file by yourself once you do enough research.
  • Only deadbeats file for bankruptcy. Most people actually file bankruptcy after a life-altering event, such as divorce or illness. The debt has just piled on and they need help.
  • I don't want to include all my creditors in my filing. Well, that actually cannot happen. It's an all-or-nothing deal. However, if you want to pay certain creditors back, despite the fact that the debt is erased, you will still be able to do so.
  • Filing for bankruptcy will improve my credit rating because all of the debt will be erased. Actually, bankruptcy is the worst negative you can have on your credit rating. While other negatives may only be on your credit for a few years, bankruptcy can last for 10 years.
  • You can't get rid of back taxes through bankruptcy. Generally, this is true. However, there is such a thing called tax bankruptcy, where you have to file all your old returns and the taxes owed need to be at least three years old.
  • You can file for bankruptcy once. You can actually file for Chapter 7 bankruptcy once every eight years. For Chapter 13 reorganization, you can file more often than that, but cannot have more than one case open at a time. However, multiple bankruptcies are really bad and not good for your credit rating.
  • I can max out all my credit cards, file for bankruptcy, and never have to pay for the things I bought. This is called fraud and bankruptcy judges are on the look out for it. The trustee in your case will review all the purchases you made and be aware if you tried or did commit fraud.

MSN Money Article
Bankruptcy Law Network Article Article

Sunday, April 26, 2009

Detroit Courts Prefer Any Auto Bankruptcy to be Handled Locally

Article by Jonathan D. Glater and Micheline Maynard
Posted by Kaitlin Lanier

Detroit, which could lose an automaker to bankruptcy, hopes to console itself with a big piece of the legal action.

The bankruptcy court in the Motor City is making itself as attractive as possible should General Motors or Chrysler file for Chapter 11 protection, and it appears to be in the running.

At stake may be crucial decisions on how employees and others will fare in a restructuring. And the depressed Michigan economy could also benefit from all the hotel and restaurant revenue brought in by out-of-town lawyers, researchers, journalists and their support teams.

The established forums for big corporate cases are in Delaware, where many businesses are incorporated, and New York. The two locations have been home to six of the 10 biggest bankruptcy filings, including Lehman Brothers, Washington Mutual, WorldCom and Enron, according to

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Thursday, April 23, 2009

GM to shut many plants up to 9 weeks

Posted By Jen Lynch
Associated Press

In the post below I discuss several other factors dealing with this situation. I also wanted to include this quick video clip if people want more information about the current issue.

GM: Waiting for Delphi, closing plants

By Jen Lynch

Today General Motors announced that it would be shutting down 13 out of 20 manufacturing plants in North America on and off throughout the summer months to help save money on unsold cars in production. The issue at hand deals with a third party, Delphi Corporation (GM's auto parts supplier) and its lenders. Delphi has rejected a solution that would have solved its bankruptcy case quickly through just one proposal. In many cases of bankruptcy, companies are dealing behind-the-scenes with other parties, often influencing the outcome of bankruptcy filing.

You might also be wondering, what happens to the employees at these plants that are being shut down? GM President Troy Clark said that union workers will continue to receive full pay through a combination of state unemployment benefits and support from GM. Thousands of GM workers are going to be temporarily laid off, but their United Auto Workers union contract requires GM to make up most of the difference between their usual wages and state unemployment benefits. This is also scary because now you have thousands of workers sitting at home, getting by with benefit payments, and certainly not spending- which is even worse for the economy.

The auto-task force has been busy focusing on Chrysler, GM's long-time rival, which is facing an April 30 deadline to submit a restructuring plan to the Treasury Department for more bailout money. Chrysler has already received approximately $5 billion from the government and is still asking for more to keep business going. But now with Chrysler's deadline approaching, Obama's auto-task force is changing its focus to GM and Delphi, giving the auto supplier (Delphi) until May 4 to propose a new plan to its creditors. The U.S. bankruptcy judge set a hearing for May 7, and is giving creditors until the next day to make their decision. 

It is important that Delphi gets the loans it needs, not furthering its current state of bankruptcy. If the company is unable to provide parts to GM at a reasonable price and with cooperation, then GM will face many more economic, production and distribution issues. If creditors decide not to back Delphi's new proposal, GM will most likely be pushed closer to bankruptcy; a situation that would cause even more problems for the auto industry and our overall economy. GM has already received about $13.4 billion in government loans and could possibly get $5 billion more before May 30. President Obama has said GM must significantly restructure by this date in order to be eligible for further financial aid.

Wednesday, April 22, 2009

‘Surgical’ Bankruptcy Possible for G.M.

Posted by Yoshikuni Asaba

DETROIT — The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite G.M.’s public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend.

Members of President Obama’s automotive task force spent last week in meetings and on conference calls with G.M. officials and its advisers in Detroit and Washington. Those talks are expected to continue this week.
The goal is to prepare for a fast “surgical” bankruptcy, the people who had been briefed on the plans said. G.M., which has been granted $13.4 billion in federal aid, insists that a quick restructuring is necessary so its image and sales are not damaged permanently.

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How Celebrities Go Bankrupt

Posted By David Lucas,

What do Burt Reynolds and Thomas Jefferson have in common? How about Kim Basinger and Gary Coleman? What about MC Hammer and… well I think that name tells you where this is going. They are all famous filers of bankruptcy and members of a long line of celebrity debtors. We look forward to their tales of woe on the last five minutes of the eleven o'clock news. We marvel at the details of each financial fiasco. One can't help but wonder how could such fortune turn into such debt?

If you ask Kim Basinger, she might tell you it was her weakness for the town of Braselton, Georgia. Basinger bought the town for $20 million around the time she dropped out of the movie Boxing Helena. While this might have been a wise career decision, the financial fallout was severe. After being sued for breach of contract, Basinger filed for bankruptcy and had to sell the town.

Mike Tyson might point his finger at his pet tigers. They were among the boxer's many outrageous purchases and accounted for over $8,000 of his debt. Of course, these innocent, caged beasts represented only a fraction of Tyson's lifestyle which demands $400,000 a month to maintain.

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An Alternative to Bankruptcy

Posted By: Sean Brown

In evidence of a worrying trend, American adults age 55 and over experienced the sharpest increase in bankruptcy filings of any age group since 1991, according to a recent study conducted for AARP’s Public Policy Institute.
While the bulk of bankruptcy filers are in their 30s and 40s, Americans age 55 or older have experienced the sharpest increase in bankruptcy filings, accounting for 22 percent of all those in bankruptcy proceedings in 2007. That number is up from only 8 percent in 1991.
A weak economy and increasing health care costs put older Americans at greater risk for bankruptcy. Health care expenses can be one of the biggest, if not the biggest, causes of bankruptcy among older Americans

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GM's Debt Denial

Posted by Jen Lynch

By Joann Muller and Brian Wingfield, Forbes

General Motors apparently does not plan to make a $1 billion debt payment June 1. That's what GM Chief Financial Officer Ray Young told a Wall Street Journal reporter at a business lunch in Detroit Wednesday.

A surprise? Hardly. By June 1, GM will either have reached a deal with bondholders to restructure its debt under a government-supervised restructuring, or it will be in bankruptcy. Either way, it won't be making that scheduled debt payment.

GM is trying to reduce $27 billion in debt to $9 billion, and it hopes to have a bond exchange underway in the coming weeks. "That exchange could still be in process on June 1," says GM spokeswoman Renee Rashid-Merem. "In which case, we would not expect to make the June 1 Series D bond payment."

For Full Article Click Here

Car Towns are at Risk

Posted by: Thomas Gillick

Many people look at what is going on in the automobile industry and only think about the falling stock price and the chance of going bankrupt. The problems in the automobile industry not only have a dramatic effect on Wall Street but also dramatically effects small towns. Usually the same employer employs people who live in small towns. The problem with this is when the industry is doing bad or the company is in financial problems they start cutting jobs. This could dramatically affect the unemployment rate of the town causing the town as a whole to enter a financial crisis. This notion is getting stronger and stronger as the automobile industry is getting worse and worse. A small town in Indiana currently has a unemployment rate of 20% and most of those who are employed work at a Chrysler factory. If this factory shuts down that will destroy this town. Also many of these workers feel that filing for bankruptcy is not the answer. People in this town feel that bankruptcy is really union busting since most of the workers will have to renegotiate their contracts and settle for a lower salary and worse benefits if they even still have a job. The automobile crisis is not only affecting the investors but its affecting families and car towns that are dependent on automobile manufacturing plants.


Filing for Bankruptcy is ok as long as you know what your doing

Posted By: Sean Brown

Bankruptcy is not always a bad thing. In terms of a society bankruptcy needs to happen, businesses need to fail otherwise there will be a surplus of businesses in the same field. Bankruptcy allows for a peaceful well deserved bow out for a person who gave it their all but fell short. Bankruptcy allows for an owner to start over, yes it is a long road back, because you still do have to pay back your creditors and prove that you can be a productive member of the businesss society, but remember bankruptcy for an individual differs from that of a company. There is a reason for seperateing your invidual wealth from a company.

The top financial people such as a Donald Trump survive Bankruptcy after Bankruptcy because they follow that simple rule, which is to seperate personal income from business income. That way when you file Chapter 11 like Mr. Trump just did his personal finances will be safe as well as the other entities of his company.

All I am saying is, make sure you understand how bankruptcy works and if it will benefit you in the long run, because if you structure your finances appropriatly than you will be able to avoid the horrible outcomes that are associated with bankruptcy.

Myths on Bankruptcy

By Jenny Sutton

There are many misconceptions on bankruptcy. It is crucial to understand the difference between truths and myths of filing for bankruptcy.

First of all, many believe you are not able to file bankruptcy if you are employed. In reality, Chapter 13 is only funded if the person has a job, so this is a complete myth. Another misconception is the future after bankruptcy. Many people believe that you cannot receive credit for ten years after bankruptcy. This is also a myth because credit is available, although not at the best rates.

Bankruptcy is also something that should be looked at individually. While married couples can file bankruptcy together, they are also allowed to file separately. If this does happen, it is important to know what property is treated as bankrupt.

The idea of filing for bankruptcy is one that needs to be thought through thoroughly. The reality of this issue is that most people do not know much about the topic of bankruptcy. If you or someone you know is thinking about filing, make sure to do the research to find the truth about bankruptcy so you do not get caught up on the myths.


How to Avoid Bankruptcy

By Craig Rozelle

Bankruptcy should try and be avoided at almost all costs and here are a few tips in order to avoid filing for bankruptcy. If you declare for bankruptcy, you will find it difficult to get any type of credit or financing at decent rates for a long time after filing. You will have to start from scratch to build your credit back up again, and it will be a long and possibly painful process. But in spite of the serious drawbacks associated with bankruptcy, more and more people seem to be filing as a first option rather than as the last alternative. Bankruptcy is the final step you should take after all else has failed. The first tip to avoid bankruptcy is to sell your assets on your own. Sell your house and move into a smaller one, or sell your car for a cheaper one, or just sell some of the items in your house that you no longer have use for. If that is not enough work more often. Get a second job to help pay some of the bills that are pilling up. Another option is to reorganize your debt so that you can pay it at the timing that better suits your needs.


Tuesday, April 21, 2009

Bankruptcy Myths

Posted by Jenny Sutton

Recovery from bankruptcy

Posted By David Lucas,

Bankruptcy is not an end, there are ways for recovery from bankruptcy : The filing for bankruptcy is by and large the end of struggle for those struggling with burden of debt. Bankruptcy is the step, considered worst that you possibly can take. You will avoid going for bankruptcy till last, if one can. So recovery from bankruptcy should be the most sincere objective for anyone suffering from filing Bankruptcy.

Bankruptcy will be there in your credit record for almost ten years, if no efforts are made for recovery from bankruptcy. Bankruptcy will make it very hard for you to get credit, even opening an account with bank will be impossible, and a mortgage of any kind would almost become impossible. Though, there are methods for recovery from bankruptcy. But only earnest efforts can make it happen. You may recover as early as five years time period.

There are many things that you may consider doing to accelerate the process of recovery from bankruptcy. First; do not fall into trap of alluring loan that could be a scam. A number of greedy opportunist lenders in market who target purposely the recent bankrupt. They know that you are softest target. As you are getting over a recent bankruptcy it can be safely understood by any one that you are miles away from getting credit.

The moment a finance company contacts you with offer of credit, it is very much possible that you might jump over the offer. This will bring you are at the door steps of falling into a bad deal giving you loan at a very unreasonable interest rate. You have purchased another problem, rather recovery from bankruptcy you are nurturing bankruptcy after bankruptcy.

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What are the different chapters under which an individual can file?

Posted by David Lucas,

There are three different chapters of the Bankruptcy Code under which an individual can file, and they are called Chapter 7, Chapter 11, and Chapter 13. A Chapter 7 case is sometimes called a "straight" bankruptcy, or a "liquidation." In Chapter 7, a court-appointed trustee sells your non-exempt assets and distributes the proceeds amongst your creditors.

In Chapter 13, you file a plan that obligates you to pay some or all of your debts over a multiyear period. Under the new bankruptcy law, many consumer debtors will be required to file a Chapter 13 bankruptcy and commit to a 5-year repayment schedule.

Chapter 11 is primarily used by businesses that need to reorganize in order to get out from under debt, but is also theoretically available to consumer debtors. (K-Mart and WorldCom are examples of two "big" names who have filed under Chapter 11.) In chapter 11, the debtor proposes a plan for paying some or all of his debts, and his creditors get a chance to vote on whether to accept or reject that plan. In some cases, it may be possible to "cram down" a plan against a dissenting class of creditors. Chapter 11 may be the only recourse for a consumer debtor with an extremely large mortgage that causes his secured debt to exceed the limit for Chapter 13.

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Monday, April 20, 2009

Chapter 11 Bankruptcy Protection

Posted by Shu Zheng

Chapter 11 bankruptcy is a form of bankruptcy available to individuals, corporations, and partnerships. There is no limit on the amount of debt, and it is usually used by large corporations. Corporations use chapter 11 bankruptcy to recognize its business and try to become profitable again. Once chapter 11 is filed, management can still continue to run the day-to-day operation, but all significant business decisions have to be approved by bankruptcy courts. Companies still file Sec reports with about information of significant developments. Investors who take the least risk are paid the first; thus, bondholders have greater chance to recover losses than stockholders.

The following are some of the largest chapter 11 bankruptcies in history:
· Lehman Brother Holding Inc
· Washington Mutual
· WorldCom Inc
· Enron Corp
· Delta Air Lines, Inc
· Circuit City

Comparing with chapter 7 and 13 bankruptcy, chapter 11 is considered the most flexible one. Its flexibility makes it generally more expensive to the debtors. Therefore, the rate of successful chapter 11 bankruptcy is relatively low among all chapters.

Some critics about chapter 11 is that for the companies operating under chapter 11 protection, they would have advantages over the competitors, which can result in over-capacity industry and further harm overall business competition. Also, it can reduce the economic value of collaterals and increase cost of secured lending.


Even Donald Goes Bankrupt

Posted By: Sean Brown

ATLANTIC CITY, N.J. — The three Atlantic City casinos once run by Donald Trump filed for Chapter 11 bankruptcy protection on Tuesday _ for the third time.
Trump Entertainment Resorts made the filing in U.S. Bankruptcy Court in Camden, N.J., four days after the real estate mogul whose name remains on the company and its three seaside gambling resorts resigned as chairman of its board.
Trump was frustrated that bond holders and their allies on the board rebuffed his offer to buy the company and take it private.
"Other than the fact that it has my name on it _ which I'm not thrilled about _ I have nothing to do with the company," Trump told The Associated Press Tuesday.
He acknowledged being sad over the end of a venture that was so publicly and relentlessly associated with his name and image. Yet he said the company "represents substantially less than 1 percent of my net worth, and has for some time."
"If I can't manage something, it's not for me," said Trump, who still holds 28 percent of the company's stock.
The company has $2.06 billion in assets and more than $1.74 billion in liabilities, according to its court filing.

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What is Chapter 7?

Posted By: Asim Mohammed
According to the United States Bankruptcy Code there are different “chapters” to file under, chapter 7 and chapter 11 and chapter 13. People have always heard of the chapter 11 on the news for when corporations or businesses are in trouble. One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a fresh start. One of the most common forms of bankruptcy is chapter 7. Chapter 7 governs the process of liquidation under the bankruptcy laws of the United States. Under chapter 7, the bankruptcy trustee will gather and sell the debtor’s assets and uses the proceeds of such assets to pay creditors in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. Also, filing under chapter 7 may result in a loss of property. In order to qualify under chapter 7, debtor may be an individual, a partnership, or a corporation or other business entity. Chapter 7 has different laws for businesses filing to individuals filing. There is a certain process that requires someone to fill out forms in court to people preparing the bankruptcy proceedings and going through the court system.,_Title_11,_United_States_Code

Bankruptcy becoming more and more common among elderly

Posted by: Brendan Boesch

Bankruptcy is becoming more and more common among the elderly. One of the main reasons for this occurrence is because of poor financial planning. Many adults do not plan properly for retirement and underestimate the costs associated with it. Often times adults will retire with outstanding loans or other forms of debt, and do not take into account the fact that it will be harder to pay off this debt without a steady income. Payments that were easy to make while employed become unrealistic during retirement.
Another reason that bankruptcy is becoming more and more common among the elderly is because many people try to support their children to grandchildren while in retirement. This causes many of them to spend more than they should, and live above their means. This is another result of poor financial planning.
The increasing need for medicine among the elderly continues to drain the funds that they worked so hard to save. With the cost of medicine increasing every year, a huge burden has been placed on many elderly adults. In addition, if one’s spouse happens to pass away, that will decrease about half of the income of the family.
All of these reasons make it apparent that people should anticipate unexpected costs during retirement. Proper financial planning is essential to ensure that one can grow old without having to worry about declaring bankruptcy.

The Truth about Bankruptcy

Posted by: Brendan Boesch

Myth: I'll just file bankruptcy and start over; it seems so easy. Truth: Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage. Bankruptcy. That word sends chills up the spine. If you're facing the prospect of bankruptcy or in the middle of it right now, you know it's a living nightmare. It can devastate your job, destroy your marriage and steal your peace of mind.

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Athletes Going Broke

Posted By: Asim Mohammed

Many athletes, active and retired ones always have financial troubles, whether it’s not knowing where their money is going, to just going broke because of ridiculous expenditures and not being adequately educated.

The Toronto Sun ran a piece on athletes going broke and came up with a stat that says about 60% of retired NBA players go broke five years after their NBA pay checks stop arriving. Many famous athletes are in trouble because of the lack of education on how to handle their money. Many of them come from poor back grounds and when they start receiving millions of dollars from lucrative player contracts, they spend it on friends who want big houses, expensive cars, and clothes. Evander Holyfield is one of these athletes. He cannot make child support payments, and his 54,000-square-foot, 109-room; 17-bathroom home was set for auction due to a $10 million loan default. Another case of an athlete in financial trouble is Latrell Sprewell, a former NBA all star, Sprewell was in the final season of a $62-million five-year contract with the New York Knicks, said he was insulted by the Minnesota Timberwolve’s offer of a contract extension that was reportedly worth between $27 million and $30 million for three seasons. Sprewell stated, “I’ve got my family to feed.”

There are many stories of rich athletes going broke either during their playing times or afterwards. If athletes can educate themselves, earn money management skills and make smart, safe investments along the way, they should be good shape for the future.

Judge blocks Madoff bankruptcy

Posted By: Asim Mohammed
NEW YORK (CNN) -- A federal judge Monday blocked Bernard Madoff's assets from being moved into bankruptcy, saying there is probable cause the assets should be forfeited to the government. The order comes exactly one week after five investors filed papers in Federal Bankruptcy Court seeking nearly $64 million in an effort to force Madoff into involuntary bankruptcy.

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GM Bankruptcy Filings Meet with Skepticism

Posted by Shu Zheng

DETROIT — General Motors (GM) may be inching toward bankruptcy court, but the theory that GM could get through the process quickly faces increasing skepticism.

On Friday, Fritz Henderson said he came into his new position as GM's CEO three weeks ago believing a bankruptcy filing was more probable than not.

"I feel the same way today," he says. Henderson said GM is working on two scenarios: one that involves bankruptcy and one that doesn't. The plan that does not includes looking at each GM brand to see if it's needed. USA TODAY reported Thursday that dropping Pontiac and GMC was being looked at, along with Hummer, Saab and Saturn, which are already on the block.

Group Seeks Bankruptcy for Madoff

Posted by: Keun H. Maeng
Written by: The Associated Press

A small group of investors took Bernard L. Madoff to bankruptcy court on Monday, saying the disgraced financier bilked them out of nearly $64 million.

A Manhattan judge cleared the way for the newly filed Chapter 7 petition last week by granting a request from the same investors to lift a temporary order barring bankruptcy for Mr. Madoff. They had argued that a bankruptcy case was needed to protect their rights amid a scramble to seize his assets.

Mr. Madoff, 70, pleaded guilty last month to federal charges that his secretive investment advisory service was a multibillion-dollar Ponzi scheme in which he paid longtime clients with money from new ones. He is in jail awaiting a June sentencing for charges that carry a sentence of up to 150 years in prison.

Myths and Facts about Personal Bankruptcy

Written by: Keun H. Maeng

The obligation to file a bankruptcy is not always an event that gradually occurs. It can spontaneously happen to anyone from unexpected catastrophes such as natural disasters, medical expenses, and job loss. Filing bankruptcy can be extremely stressful. Therefore, it is very important to clearly distinguish between the myths and facts about personal bankruptcy before filing for an actual one.

There is a myth that filing for personal bankruptcy by law is prohibited. Obviously, this is a misconception. In 2005, U.S. Congress made changes that allowed any debtor to file for personal bankruptcy. This is governed by state laws, which determines whether the person is eligible to liquidate his or her assets.

People worry that filing bankruptcy is degrading. This misconception is again a myth. Filing bankruptcy is indeed something that you’re not very proud of. However, this is far much less embarrassing than getting chased by creditors by calls or by door. Filing bankruptcy wipes out your previous credit record. In essence, it can be a new start to your financial growth. Therefore, considering bankruptcy as a lesson is a better interpretation than embarrassment.

Another myth people believe is that once you file bankruptcy, his or her credit score will always be bad. This isn’t always true. Even though once you do file bankruptcy, your credit score would be poor, but once your file is discharged, your previous credit score will not be the same.


Show-me a bank failure: Missouri bank is no.24

Posted by: Thomas Gillick
By: Catherine Clifford

NEW YORK ( -- Two more banks failed Friday bringing the tally to 25 in 2009, according to the government.

American Sterling Bank, based in Sugar Creek, Mo., and Great Basin Bank of Nevada in Elko, Nevada were shuttered by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation was named receiver, according to statements posted on the FDIC's Web site.

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GM to cut Jobs

posted by: Thomas Gillick

By: Julianne Pepitone

NEW YORK ( -- General Motors sent an email to all employees Monday announcing it will cut about 1,600 salaried workers this week as part of a previously announced plan, a company spokesman confirmed.

The embattled automaker said in February it planned to cut 3,400 of its 29,500 U.S. salaried employees, with the majority of cuts completed by May 1.

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Sunday, April 19, 2009

10 Companies That May Go Bankrupt in 2009

Posted by Kaitlin Lanier
Article by Catherine Holahan

The B-word is in the headlines like never before. There were 7,843 commercial bankruptcy filings in March, according to AACER, a bankruptcy data management company. That's up 23% from the previous month and a staggering 65% from a year earlier. And the number of filings is accelerating.

"Bankruptcy typically has a lag behind what is going on in the marketplace," says Mike Bickford, the president of AACER, or Automated Access to Court Electronic Records. "So I think you are going to see increases in bankruptcy. . . at least over the next 12 to 18 months."

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The Fortune 500's biggest losers

Posted by Craig Rozelle

1. American International Group

No surprise here: The New York-based insurance company that spawned an out-of-control London derivatives dealership is now a $170 billion (and counting) headache for the American taxpayer. The bulk of the losses came from the hundreds of billions of dollars worth of contracts created by AIG Financial Products to pay off holders of mortgage-backed securities if the home loans that backed them defaulted.

As housing prices collapsed last year, the epicenter of the crisis quickly moved to the London offices of the previously little-known AIGFP. When AIG said in September it couldn't make good on the huge sums it owed AIGFP counterparties like Goldman Sachs, the U.S. Treasury Department took an 80% stake in the company rather than watch those contracts unravel disastrously.

Bounce back fast after bankruptcy

By Nicholas Hall

Filing for bankruptcy can be a huge hindrance and set back in a person’s life, but the good news is that you can always start over.  Just because your finances are not what they should be and you are having a few difficulties with your credit does not mean you can’t turn it all around and have excellent credit and finances in the not so distant future.  The first thing you need to start doing after filing for bankruptcy is to start up a new savings account.  Talking with your banker to figure out how best to re-establish your credit is also something you should consider.

The most important thing to do is to prove that you can be a persistent and non-risky saver.  Always pay yourself first, do not rack up charges on your credit card, and only buy things you absolutely need.  Nothing lasts forever; the bankruptcy filing will only stay on your credit report for 10 years.  In that time, it is integral that you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit, and not applying for too much credit at once.

To re-establish your credit you will have to get credit.  It might seem smart to try and live on cash without credit after bankruptcy, but that is not wise.  You are going to have to exercise self-control and show lenders that you are capable of handling your credit.  Figure out what went wrong the first time and learn from your mistakes.  Make a budget, create and emergency fund, and save a percentage of your salary no matter what.


Relief for Homeowners in Danger of Bankruptcy

Posted by Nicholas Hall

If you're considering filing for personal bankruptcy because you're having trouble making the mortgage payments on your primary residence, keep an eye on the so-called "cramdown" bill. The measure, which is part of President Obama's housing plan and is making its way through Congress, would allow bankruptcy judges in Chapter 13 proceedings to reset the terms of certain mortgages so that more homeowners can keep their homes.

The move would be a big change. At the moment, a Chapter 13 filing stops the foreclosure process and gives homeowners time to restructure their payments with their lender. But as the law currently stands, you don't have the ability to alter the terms of your loan.

Under the new measure, as passed by the House of Representatives, the judge can reduce your principal and interest rate. Say you have a $400,000 loan on a home whose value has fallen to $300,000. Under the plan, a bankruptcy judge could eliminate $100,000 of the debt, says Yardeni Research. Before you could qualify for a cramdown loan modification, you would have to show that you appealed to your mortgage lender for relief at least 15 days before you filed for bankruptcy.

Click here to read the whole article.  

Friday, April 17, 2009

Are Medical Bills Causing YOUR Bankruptcy?

By Kaitlin Lanier

Right now, the B-word is in headlines like never before. And the number of filings is accelerating. However, what most people do not know is the cause of all this bankruptcy. Surprisingly enough, the cause of half of all bankruptcies is illness and medical bills. And even more surprising, most of the people filing bankruptcy because of medical bills DID have health insurance. More than three quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy. Therefore, having or not having health insurance is not strictly the problem. Bankruptcy can occur even if an individual or family has a good health insurance plan.

Today’s health insurance policies contain high deductibles, co-pays, and many exclusions, which in turn offer little protection during a serious illness. Even many private insurance companies, which offer worst-case catastrophic coverage, provide very little financial security for less severe illnesses. Dr. David Himmelstein, an associate professor of medicine and lead author of the Harvard study of bankruptcy causes, says, “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick.”

Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds by Aflac
Medical Bills Make Up Half of Bankruptcies by Associated Press
MarketWatch: Illness and Injury as Contributors to Bankruptcy by David Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler

Thursday, April 16, 2009

Six Flags Faces 'Restricted Default' Rating On Swap

By Dow Jones Newswires
Posted by Jen Lynch

Fitch Ratings said it would view Six Flags Inc.'s (SIX) plan to exchange debt for equity as a coercive debt exchange, leading the ratings agency to lower the company's issuer default rating to restricted default if the swap were completed.

If the proposed exchange by the debt-laden theme-park operator wasn't complete, Fitch said it would maintain its current rating as it continues to maintain that some form of default is "inevitable whether it is a different exchange offer or restructuring plan, a prepackaged bankruptcy or other proceeding within the bankruptcy court."

On Friday, the company said it would seek to exchange a chunk of its debt for equity, in a deal that would leave its existing stockholders with a 5% stake. Six Flags warned if the offering wasn't successful, it may have to pursue an out-of-court restructuring or Chapter 11 bankruptcy filing.

The world's largest regional theme-park operator, which owns and operates 30 family-oriented theme and water parks in the U.S., Europe and Latin America, has been riding its own financial roller-coaster in recent years. It was forced to sell seven parks and lower prices to keep business running in 2007. Since then, it has focused on luring families, selling noncore assets and signing exclusivity deals with vendors.

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Wednesday, April 15, 2009

How to File Individual Bankruptcy?

Posted by Shu Zheng

Bankruptcy has a lingering and far-reaching impact that touches every aspect of your life. Bankruptcy ruins your credit, makes it difficult, if not impossible, to keep bank accounts and credit cards, and sometimes to get an insurance and find a job.

Here are some steps you would need to consider is bankruptcy is eventually your case:
1. Research your options as it relates to filing, and make sure there is no other alternative.
2. Contact a reputable bankruptcy attorney. Take all your financial papers including outstanding bills, bank statements, and copies of mortgage, car loan, and tax returns to your first meeting with the attorney.
3. Your bankruptcy paperwork should list every debt you owe. Discuss the unsecured and secured debt with attorney, and the debts that is dischargeable.
4. Refer all your creditors to your attorney.
5. Disclose your income with the past six months. If you have regular income and are behind secured debts, you probably want to file chapter 13 bankruptcy.
6. Review bankruptcy petition carefully after it is completed.
7. Your creditors will be notified of your bankruptcy. You need to wait for the meeting with the creditors.
8. When the petition is completed, “automatic stay” will get into effect immediately. It means that your creditors have to stop all collection efforts.
9. The 60th day after your meeting with creditors is first set is the deadline for creditors to file lawsuits challenging the discharge of a particular debt. If no lawsuit is filed, your debts will be discharged.
10. If you are thinking about filing a bankruptcy case, don’t use credit cards.


Causes of Bankruptcy

Posted by: Keun H. Maeng
Written by: Peter Gitundu

With the discovery of the credit card, people prefer paying their small bills with them. What most people do not understand is that they end up paying more than they would have otherwise paid in cash. This has been known as one of the major causes of bankruptcy. The interests charged on the credit cards continue to accumulate as more items are bought using it. As the interest accumulates, it reaches a point where one is caught up in paying the interest accumulated.

Insolvency is also caused by the small loans that people acquire to buy items. As they do this, interest charged on the card keep escalating. This way, the buyer ends up paying for what he bought years back as opposed to saving for the future. This, to many is referred to as a snowball since the accumulated debt continues growing big due to interest charged. This habit in the long run becomes an addiction leading to some to be declared bankrupt.

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What if GM did go Bankrupt?

Written by: Keun H. Maeng

When Chairman and Chief Executive G. Richard Wagoner Jr. strongly asserted on November 16th that filing Chapter 11 is not necessary for the company and that such action is “contrary to the interests of our employees, stock-and bondholders, dealers, and our suppliers and customers”, he may have underestimated the seriousness of turmoil his company is determined to undergo.

If GM did file Chapter 11, it would be the largest file on bankruptcy of all times in our country. The consequences that GM’s stakeholders are bound to face is immeasurable. Even though the overall effect of our national economy would not be devastated, the impact that Midwest would face on job losses and the benefit cuts for their retirees is a serious issue that has no definitive solution.

The price of GM’s credit-default swaps have soared from the past few years. Credit-default swaps are insurance in case the carmakers cannot pay back the loans they have made.
Today, the cost of the premium has increased to 12 percentage points, which is four times the amount of cost back in January 2005. Bankruptcy attorney from Fulbright & Jaworski LLP, believes that GM is better off in filing Chapter 11. During the past, companies who have filed bankruptcy have come back to their normal status within few years.

Bankruptcy Threatens Preakness

By Jen Lynch

The Triple Crown. One of the most notable and famous horse race, consisting of three legs, requiring the winner to take first at all three to win entirely. The second leg of the race occurs in Baltimore, Maryland at Pimlico Race Course, known better to the public as Preakness.

This Maryland heritage has recently been threatened of losing it's history as the second leg; Pimlico has been confronted with possible bankruptcy. Magna Entertainment's decision to seek bankruptcy protection last month and sell many of its assets, one being the race course. State officials have already made moves to avoid losing this culturally significant sporting event. With "Save the Preakness" badges on their jackets, officials moved suggested legislation quickly through government, with Gov. O'Malley signing legislation giving Maryland eminent domain rights over the Preakness Stakes horse race. 

"Governor O'Malley has worked with the leaders of the General Assembly to ensure that Maryland's rich history of horse racing -- begun with the first running of the Preakness in 1873 -- remains in the State," Adamec said. "This includes legislation that will expand the tools available to the state to keep the Preakness in Maryland. . . . It is the Governor's firm belief that Maryland would not be Maryland without the Preakness."

The Preakness also contributes hundreds of jobs and an influx of economic activity and profit in Baltimore. This situation demonstrates how bankruptcy of a parent or owning company can effect many smaller companies, or in this case, a Maryland tradition.

New York Times Article

Chapter 7 Bankruptcy

Posted by Craig Rozelle

Chapter 7 bankruptcy is designed to be a court supervised procedure by which a trustee collects the assets of the debtor’s estate. Then the trustee liquidates the assets into cash and makes payments to creditors. Some of these assets are exempt however and the debtor is allowed to keep some of the assets. The secured creditors are just given the secured assets instead of liquidating them. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called no-asset cases. Usually debtors with assets that they wish to keep and that are not covered by exemptions file chapter 13. Each state has their own specific rules for chapter 7 bankruptcy. A creditor holding an unsecured claim will only get money if they are able to prove that they are owed assets in a bankruptcy court. In most chapter 7 cases, the debtor receives a discharge that releases the debtor from personal liability for certain dischargeable debts. The debtor normally receives a discharge three to four months after the petition is filed. Filling for chapter 7 immediately stops collection from creditors until the proceedings are finished.


Tuesday, April 14, 2009

Top 10 Misconceptions About Bankruptcy

By Nicholas Hall

There are many misconceptions about bankruptcy that may cause an uninformed individual to either miss out on an opportunity or to go about solving their financial difficulties the wrong way. The first and most important issue to understand is that you do not have to be flat broke to file for bankruptcy. The only real requirement is that you must be unable to pay your bills as they become due. In all reality, you do not want to wait until you are flat broke to file for bankruptcy. If things are looking grim you want to make the move sooner than later, because congress allows you to keep some of your possessions and property.

Another common misconception is that a person who filed for bankruptcy at some point in their life will never again be eligible to receive credit. This is not true, if you file for bankruptcy it will stay on your credit report for only 10 years. If you are planning on filing for bankruptcy you most likely already have poor credit, so this is probably the best thing you can do to get yourself back on track to having good credit in the future.

On top of the fact that you will be able to receive credit down the line, you will also be able to buy a home and receive a mortgage. Lenders are always willing to take risks, especially if you have proven yourself after your bankruptcy. However, you will most likely be charged a higher rate. Also, you cannot lose you job over filing for bankruptcy because it is against the law. That means that even though you will be filing for bankruptcy you will still have income; but you will also still have to pay you taxes, which are not discharged during bankruptcy.


Bankruptcy in the UK

Posted by Jenny Sutton

Monday, April 13, 2009

Creditors Petitioned to Force Madoff Bankruptcy Filing

by Shu Zheng

Former customers of Bernard L. Madoff owed $64 million filed an involuntary Chapter 7 bankruptcy petition against the jailed financier Monday.

The customers' move comes after a federal judge on Friday lifted the injunction that blocked them from pushing Mr. Madoff into Chapter 7 bankruptcy, where his personal assets will be liquidated by an independent official.

Petitioning creditors Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno and Steven Morganstern said their $64 million in claims against Mr. Madoff are based on the balances contained in the last statements they received from his defunct firm, Bernard L. Madoff Investment Securities LLC.

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Sunday, April 12, 2009

12 myths about bankruptcy

Posted by Nicholas Hall

Like most big, bad, scary things, bankruptcy has a reputation based on a few tidbits of truth and lots of embellishment. And like most creepy crawlies, it's not nearly as frightening once you know the truth. With a mind toward declawing the monster, here are a dozen misconceptions about bankruptcy:

Everyone will know I've filed for bankruptcy. Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the numbers of people filing are so massive, very few publications have the space, the manpower or the inclination to run all of them.

All debts are wiped out in Chapter 7 bankruptcy. You wish. Certain types of debts cannot be erased. They include child support and alimony, student loans and debts incurred as the result of fraud. If you've defrauded someone and a judgment has been made against you, that won't be erased either.

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Saturday, April 11, 2009

Investors Can Force Bankruptcy in Madoff Case

Article by Tom Hays
Posted by Kaitlin Lanier

A Manhattan judge has given investors a green light to go after Bernard Madoff's personal property by forcing the disgraced financier into bankruptcy.

In a ruling in federal court on Friday, U.S. District Judge Louis L. Stanton lifted a temporary order barring involuntary bankruptcy for Madoff while the government continues its pursuit of his ill-gotten gains.

Victims of the massive fraud would benefit from a bankruptcy court's "orderly and equitable administration of his individual estate," the judge wrote.

Madoff, 70, pleaded guilty last month to federal charges that he cheated investors of billions of dollars over several decades with a gigantic Ponzi scheme that paid longtime investors with money from new investors. He is jailed, awaiting a June sentencing for charges that carry a sentence of up to 150 years in prison.

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Bankruptcy Myths

Posted by Craig Rozelle

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Wednesday, April 8, 2009

How GM can aviod bankruptcy

Posted By David Lucas,

According to some analysts on Wall Street, General Motors (GMnewsmsgs) lost credibility last week when the company said that it would be restating 2001 earnings.

Thats what it took for GMs management to lose credibility? How about years of mismanaging its production effort? Or refusing to aggressively streamline its product offerings, recklessly pursuing incentive strategies, failing to address ballooning health-care and pension liabilities?

In order for something to be lost you must have possessed it to begin with, and GMs management team hasnt had any credibility for years.

So now, as speculation mounts that General Motors will be forced into bankruptcy, are we really going to believe management when it says that it has no plans to file for bankruptcy protection? Of course not. Lets at least hope management has begun to realize that it's a possibility. 

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