The Truth About Bankruptcy

By Lingxiao Li



Bankruptcy, this 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. Do not file bankruptcy unless you really have to. Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report. Most bankruptcy cases can be avoided with proper help, such as our certified counselors and the Total Money Makeover. Your Total Money Makeover may involve extensive amputation of stuff, which will be painful, but bankruptcy is much more painful. If you take the thoughtful step backward to get on solid ground instead of looking at the false allure of the quick fix that bankruptcy seems to offer, you will win more quickly and easily. I know from personal experience the pain of bankruptcy, foreclosure, and lawsuits. Been there, done that, got the t-shirt, and it is not worth it.

http://www.daveramsey.com/article/the-truth-about-bankruptcy/
http://www.daveramsey.com/article/the-basics-of-bankruptcy/lifeandmoney_bankruptcy/
http://www.daveramsey.com/article/is-bankruptcy-in-your-future/lifeandmoney_bankruptcy/

What to Expect As New Rules on Credit Cards Take Effect

Post by Lingxiao Li


Credit-card users get new protections this week, the first of a series of federal actions that constrain card issuers from changing terms on customers.

Starting Thursday, banks must comply with parts of the recently passed Credit Card Act of 2009 by mailing bills at least 21 days before their due dates and providing at least 45 days' notice before making a significant change to their rates or fees. Currently, banks are generally required to mail billing statements at least 14 days in advance and provide a 15-day notice of altered fees or rates. The new rules also will bar banks from increasing fees and rates without warning when a consumer misses a payment or exceeds a credit limit.

Consumers also will be allowed to avoid future interest-rate increases and pay off any outstanding balance over time under the original rate terms. Currently, if a consumer gets hit with a penalty rate, for example, they aren't given the option to reject the rates.

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Medical debt leads to bankruptcy

Posted by Scarlett Lu

Many people do not save enough money for emergencies such as medical debt. When a person they find out they have cancer; they have to undergo many treatments which may cost them alot of money. Some patients may not have enough money for the treatments therefore they will not have efficient treatment for the disease they have.
"59.9% of families bankrupted by medical problems indicated that medical bills contributed to bankruptcy; 47.6% cited drug costs; 35.3% had curtailed employment due to illness - often (52.8%) to care for someone else.
Many families had problems with both medical bills and income loss." Both people who are insured and uninsured are filing for debt due to a hospital stay or after illness. Insurance does not cover that much of the medical bill. Our health care system is not efficient enough to provide us with all the treatments we need. In order to avoid being in a difficult situation where you can't pay your medical bills, people should start saving their money. You should create a personal health savings account and do not touch this money until you get sick, start saving early, join a pharmacy discount program, and exercise daily and eat right to avoid getting sick.


http://www.lasvegassun.com/news/2009/nov/29/injury-bankruptcy/

http://www.steveshorr.com/exceprts_on_medical_bankruptcy.htm

http://www.mynippon.com/lifestyle/avoid-medical-bankruptcy.htm

Understanding Bankruptcy

By Scarlett Lu
Some people face bankruptcy but they do not understand it. It’s important to understand bankruptcy rules and when people should be filing for bankruptcy. However bankruptcy should be the last resort a company files for. Bankruptcy is a big step; it is a big change in every family’s life. There are 2 types of bankruptcy people can file for Chapter 7 Bankruptcy and Chapter 13 bankruptcy. We must determine which bankruptcy is right for us.
Chapter 7 bankruptcy is when most of your unsecured debts are written off within 90 days of filing. The bankruptcy will stay on your credit report for 10 years. While debts will be forgiven, you’ll have to sell some of your property. In most cases you may lose your home or something expensive you owe such as jewelry. Chapter 13 Bankruptcy is a repayment plan. Bankruptcy will remain in your record for 7 years. You set up a three or five year schedule with your creditors. You get to keep your home
Chapter 13 bankruptcy makes sense when debtor have fallen behind some payments and can still catch up and make up for it. Chapter 7 bankruptcy makes sense when you have no assets to lose.
We should make sure we are filing for the best bankruptcy that describes our situation.

http://www.smartmoney.com/personal-finance/debt/understanding-the-bankruptcy-rules-15647/

http://www.bankruptcyhome.com/chapter7.htm#is-chapter7-best

http://www.filing-bankruptcy-form.com/chapter-13-faq.html

Understanding the Bankruptcy Rules

Posted by Scarlett Lu
ByAleksandra Todorova

BANKRUPTCY IS A BIG step — one that will follow you around for seven to 10 years, depending on the route you take. And the requirements have become much stricter thatn they were a few years ago, thanks to changes in bankruptcy law.

Here are answers to the 10 most frequently asked questions about bankruptcy.

1. The Basics
   
2. What is the difference between Chapter 7 and Chapter 13?
3. Is Chapter 7 bankruptcy right for me?
4. When does Chapter 13 make sense?
5. Can I choose the type of bankruptcy I file?

   The Process
   

6. Do I have to go through credit counseling before I file?
7. Under Chapter 7, are there any restrictions on the kind of debts that can be discharged?
8. Can I choose not to discharge certain debts in Chapter 7?

   The Aftermath
   

9. What happens to my credit after bankruptcy?
10. How do I rebuild my credit?
11. How soon can I consider larger loans, like a mortgage?

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http://www.smartmoney.com/personal-finance/debt/understanding-the-bankruptcy-rules-15647/

Central Columbia plan enforceable, safe despite General Growth bankruptcy, council told

Posted By Scarlett Lu
By Larry Carson

The plan to remake central Columbia is both enforceable and safe despite developer General Growth Properties' bankruptcy woes, the Howard County Council heard during its first work session on two proposed bills Monday evening.

Council members appeared reassured after the two-hour discussion, though Alan Klein, leader of a citizens group that has criticized the plan, remained skeptical.

"We can be confident we have in front of us the plan and zoning that is enforceable. We can start working on the details," council Chairwoman Mary Kay Sigaty said as the session ended. Amendments will be drafted to make sure, she said. "My goal is for it to be enforceable," she said after the meeting.

Other members also seemed satisfied.

"It allows me to go forward with more peace of mind, and look at details," said Ellicott City Democrat Courtney Watson. The discussion involved Deputy County Solicitor Paul Johnson; Jay Shulman, a private attorney hired as a consultant; William Erskine, a development lawyer who has studied recent court decisions on land use; Gabrielle Koeppel, a GGP official; and county planning director Marsha McLaughlin.

The council has plans for four more work sessions, starting Monday and continuing Dec. 2, Dec. 7 (after the regular 7:30 p.m. council legislative session) and Dec. 8, according to Sigaty, a west Columbia Democrat. All the meetings except Dec. 7 will begin at 4:30 p.m. at school board headquarters.

How to enforce aspects of the 30-year plan contained in a proposed General Plan amendment and how to make sure GGP's bankruptcy doesn't result in the loss of expensive amenities that are the heart of the huge plan were two major fears the council heard in three days of public hearings earlier in November. The second bill is a Zoning Regulation Amendment, which contains the legal basis for the zoning changes needed to allow the plan to happen.

The overall plan calls for up to 5,500 new residences, 4.3 million square feet of new commercial offices, 1.25 million square feet of retail space, hotels and a renovated Merriweather Post Pavilion. But also included are cultural buildings, large public plazas and walkways, a new transit stop and potentially a new interchange on U.S. 29.

But the lawyers said the two bills could be linked by language that would ensure that if the amenities aren't built, then the entire project would stop, even if GGP is forced to sell pieces of its holdings to other builders.

click to read more:

http://www.baltimoresun.com/news/maryland/howard/bal-ho.columbia29nov29,0,7934851.story

Penn Traffic to state: 3 Syracuse-area P&Cs will close, hundreds of jobs lost at Geddes warehouses

Posted By- Anshu Dixit
By Bob Niedt / The Post-Standard

Syracuse, NY -- At least three Syracuse area P&C Foods supermarkets will be closing soon, and workers at P&C owner The Penn Traffic Co.’s warehouses and distribution center in Geddes will be laid off, the company is telling the New York State Department of Labor.

P&C Foods stores in Shop City Plaza and at 620 Nottingham Road — the former Peter’s supermarket — will close by Feb. 15, as will the P&C Foods stores in Rome and Norwich, according to a required Worker Adjustment and Retraining Notification Penn Traffic filed with the state.

State law requires Penn to give 90 days’ notice of a shutdown of business.

The notice is a worst-case scenario for Penn Traffic, which filed for Chapter 11 bankruptcy protection Wednesday for the third time in 10 years. The company has stated in its bankruptcy filing that it wants to sell its assets, and if they are not sold, the stores and warehouses will be closed by Feb. 15. The outlook for some of the stores and the warehouses could change if a buyer is found for them, according to bankuptcy filings.

Penn Traffic operates 53 P&C Foods and Quality Markets in New York.

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Bankruptcies Hit Retirement Communities

Posted by Andrew Lipsitz

The recession is hitting elderly people where they live, literally. Financial problems have been mounting at a number of assisted-living and continuing-care communities, forcing some facilities into bankruptcies and inflicting new worries on residents and their families who thought their life plans were comfortably set. In recent weeks, Erickson Retirement Communities, which manages 19 continuing-care retirement communities in 11 states, declared bankruptcy. Sunrise Senior Living Inc. posted a quarterly loss of $82 million and announced plans to sell off 21 of its assisted-living communities. Nationally, smaller retirement communities are raising their prices, changing the way they operate, selling themselves off to bigger chains, or getting out of the business altogether. Many companies say they can't make a profit—or even succeed on a nonprofit basis—in an environment that combines the high cost of caring for elderly residents, restrictive Medicaid budgets, tight credit markets and fewer residents willing and able to pay top dollar for their care.

When a facility fails, it can have myriad effects on the residents. The good news is that no one gets kicked to the curb–at least not right away. "Nobody has ended up on the street, which is a primal fear when you're dealing with these places," says Jason Frank, an elder-law attorney in Baltimore. "But their fees can skyrocket, and they can become unaffordable. Then they can kick you out for nonpayment." In some cases, residents may find that the sizeable deposits they made to get their apartments in the first place have disappeared. (Continuing-care communities like Erickson's typically charge deposits of $150,000 or more, and assure residents that they can stay on the campus for the rest of their lives regardless of how their needs change, and that the deposits will be refundable to themselves or their heirs when they leave or die. But residents typically also have to pay monthly fees for care, and those fees can continue to increase. Assisted-living facilities like Sunrise generally require no deposits but charge a monthly pay-as-you-go-plan.) That's what happened to the 170 people who lived in Covenant at South Hills in Lebanon, Pa. Their deposits went up in smoke when their facility was sold in bankruptcy to Concordia Lutheran Ministries, which did not take on that liability. Several are now suing B'nai Brith Housing, the original operator of Covenant.

Erickson executives say that their bankruptcy filing will have no impact on residents. "We've refunded every single deposit in our 26-year history," says Tom Neubauer, the firm's executive vice president of sales. "People moving in are completely unaffected by all this." Erickson's corporate organization is complex, with each community (and that community's deposits) owned by a separate nonprofit entity that is not part of the bankruptcy filing.

But residents could face disruptions. Newer communities that haven't been completely built out yet may not have their assisted-living and nursing-home wings, so residents who need higher levels of care may end up being transferred to other facilities. Should various nonprofits not be able to resell units at the same price as the original buyers paid, those original buyers might not get their deposits back. And residents who run through their personal savings and their deposits paying for ever-higher levels of care will have to depend on an optional "benevolent fund" to cover their expenses.

Erickson has a solid reputation and good track record for keeping residents for the rest of their lives, but anyone shopping for retirement housing now should think thrice about the financial risks of their arrangements. "You've got to keep your eyes open," says Eric Carlson, director of the long-term-care project for the National Senior Citizens Law Center. "If you look at the agreements, sometimes what you're being promised is not that much. The provider may be reserving the right to force you to leave for various reasons." Often there's a generic "can't meet your needs" clause in the contract.

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Should you go bankrupt?

By: Zachary Pienkowski




NEW YORK (CNNMoney.com) -- U.S. consumer bankruptcy filings rose 37% nationwide in May from the same time a year ago. And more Americans are filing Chapter 13 -- the type of bankruptcy where you have to pay back some of your debt -- rather than Chapter 7 -- which your slate is wiped clean. The American Bankruptcy Institute expects almost one and a half million new bankruptcies by the end of the year.

1. Are you a candidate?

You're a good candidate for bankruptcy if you have high credit card debt, legal or medical debt that you don't think you'll ever be able to pay back. That's because if you can declare Chapter 7 bankruptcy, this debt is discharged.

Declaring Chapter 7 generally lets you get a fresh financial start -- but thanks to changes in the bankruptcy code, getting a Chapter 7 bankruptcy is harder. A lot of folks will only qualify to file a Chapter 13 bankruptcy in which you have to pay back some of what you owe to creditors.

If you have high student loan debt, alimony payments, unpaid back taxes or court-imposed fines you can't get out of paying those debts, says bankruptcy attorney Claire Ann Resop in Wisconsin.

2. Get the details

Declaring bankruptcy is not guaranteed to save your house, but it can delay foreclosure.

When you file for bankruptcy, foreclosure proceedings are stopped dead in their tracks and won't resume until your bankruptcy is completed. That could buy you enough time to become current with your mortgage payments.

If you've missed a few mortgage payments and you declare Chapter 13, you can spread out what you owe over time. There are certain exemptions that vary from state to state. You can hold onto your retirement savings, some home equity, your Social Security, college savings, your car and household goods up to limits.

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Borders on Verge of Bankruptcy

Posted by Chris O'Sullivan

Article by Jamie Dunkley

The high street retailer is thought to be holding discussions with groups including HMV as the threat of collapse draws nearer.

Borders was bought in July from Channel 4 chairman Luke Johnson's Risk Capital Partners, in a management buyout backed by Valco, a private equity firm.

However, the company has been hit by competition from supermarkets and the increasing strength of online retailers as the recession continues to hurt consumer spending. Borders has also suffered from the tightening in the credit insurance market, which has made it difficult to obtain stock from suppliers.

The company's management is now worried that it does not have enough cash to trade successfully through the busy Christmas period.

In 2008, the retailer's pre-tax losses jumped from £10.3m to £13.6m. In the accounts, published in August, its auditor Ernst & Young, raised doubts about its ability to continue as a going concern.

Last week, WH Smith ended talks about buying the bookseller. The company had been hoping to sell 36 of 45 outlets to WH Smith while its subsidiary, Books etc, held closing-down sales at the remaining stores.

It is thought that the other companies it has approached are more interested in buying packages of stores. This lack of appetite for a takeover of the whole company means it could be put into administration this week. It would then attempt to sell stores to interested parties.

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Try to save...atleast for your children

By Anshu Dixit

Many families have filed for bankruptcy. Everyone in the family suffers by filing bankruptcy due to the financial crisis. Adults understand the situation but what about the most emotional and sensitive person in the house, what about children. Children do not understand that, what can happen due to financial crisis, bankruptcy is one of them. During bankruptcy procedure a family can lose many things like their home, vehicles, and any other properties they might have. This is difficult for kids to go through because they are losing what is most precious to them. Because sometimes these things are not just thins but precious memories for them. It is not easy to make them understand that why their parents are doing that and why they cannot live the lifestyle they used to. It is a not easy to explain it to kids. Usually people can get rid of many debts but filing for bankruptcy, but they cannot avoid their children’s responsibilities if the parents are separated. The bankruptcy does not only effects children emotionally but financially and socially as well. Your child’s bank account would not be safe if that is under your name at the time of bankruptcy. The bankruptcy court can order you to not to contribute towards your child’s college expenses. If you think that bankruptcy is the only option, it is not true always. You can deal with this problem little bit more efficiently if you can some expert’s advices like bankruptcy expert lawyer. They can tell you what other options are available for you. But do not wait until last minute to see you legal advisor because sooner the better.

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CIT Group Says Bankruptcy Plan Wins Wide Support

Posted by Anshu Dixit

By REUTERS

Filed at 10:50 a.m. ET

NEW YORK (Reuters) - CIT Group Inc on Thursday said it has won overwhelming support from bondholders for its reorganization plan, as the big finance company tries to emerge from bankruptcy by the end of the year.

The New York-based company said it was won "substantially in excess" of the minimum support needed under U.S. bankruptcy law to restructure from all classes of bondholders eligible to vote on its "prepackaged" Chapter 11 plan.

CIT on November 1 filed one of the five largest bankruptcies in U.S. history, hoping to reduce debt by $10 billion.

Hundreds of thousands of small- and mid-sized businesses depend on CIT for financing, and company lawyers have said CIT has a "need for speed" in getting through bankruptcy on concern that many customers could defect if the process drags on.

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More Members of Middle Class file for Bankruptcy

Posted by: Scarlett Lu

Many middle class members have filed for bankruptcy. Among them are college educated and owners of homes. More than 100,000 middle class families have filed bankruptcy every month in 2007. The bankruptcy filings are warning risk that people can no longer count on their college education, good job, or home ownership in protecting them from a financial collapse. However, some highly educated have never been unemployed. There are many factors that cause bankruptcy these factors include poor saving habits, health problems, and excess spending.
Some people thought that having a home will save them from bankruptcy however, it does not. Many people had to file bankruptcy in order to pay for medical bills. Studies show that 2 million Americans annually.
Middle class families are encouraged to spend. So they spend more than they make. They are wrapped up in materialism. Some families had to downsize to save themselves from bankruptcy. Middle class people need to learn how to save more money by putting it in a bank, spending less, and etc. They should also learn how to budget their money correctly and save up for difficult times.

http://www.consumeraffairs.com/news04/2005/bankruptcy_study.html
http://www.usatoday.com/money/perfi/general/2009-11-19-bankruptcy19_CV_N.htm
http://www.mpbn.net/News/MaineNews/tabid/181/ctl/ViewItem/mid/3475/ItemId/9845/Default.aspx

http://www.consumeraffairs.com/news04/2005/bankruptcy_study.html

Middle-Class Americans on the Brink of Bankruptcy

By Andrew Lipsitz

With the onset of the economic breakdown in 2008, it appears that more and more middle-class Americans are filing for bankruptcy now more than ever before. There once was a time when a college education and home ownership meant that a family was financially secure of debt problems, however this ceases to be the case in these times.

A study conducted by Harvard Law School’s Elizabeth Warren suggests that these two main assets have become more risky since the financial stresses that have been plaguing the economy. Higher education may be a great investment for learning, but with such high student loan rates, and a declining job market, many middle-class Americans are finding it hard to repay the massive debt that they owe to these agencies. It has become an increasingly competitive market out there, forcing many to file for personal bankruptcy.

Homeownership, much like a college education, is proving to be less and less valuable to these middle-income families. Since the 80’s, many middle-class families relied on their houses, with fixed-rate mortgages and appreciating values, as an economic safety net should something go wrong. However, today’s home value market is plummeting and leaving many of these families with no cuss ion. Some are stuck with mortgage payments that they can’t even afford, but cannot sell their house for below the price they paid.

With nearly 1.1 million consumers filing for Chapter 7 bankruptcy in 2008, we can only hope the economy stabilizes. For middle-class Americans this means unemployment numbers will hopefully drop and the housing market will hopefully boom. For now, the best bet is to be as competitive as you can be.

Source #1

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Investor Protection under Corporate Bankruptcy

Posted by Matthew Maillet

When a public company files for bankruptcy, there are many mechanisms put in place by the government that protect the interest of the company’s investors. It is first important to understand the different levels of investor protection. Depending on the type of creditor, there are stipulations that decide whom has the right to make a claim on the remaining company assets.
Secured creditors are obviously the first interest of the company asset distribution. Typically, the secured creditors of a public company are banks. Regardless of the institution of the secured creditors, they are always paid first. Unsecured creditors on the other hand are the second claim on company assets. Unsecured creditors are typically banks, suppliers, and bondholders. The third level of claims comes from the company stockholders. The stockholders have ownership in the company and are only repaid if both the secured and unsecured creditors have been fully repaid. Thus, this is the riskiest level of company investment because there is no actual guarantee on your investment.
Companies that file for Chapter 11 bankruptcy are interested in restructuring the structure of the existing business. The overall goal in Chapter 11 is to find a restructuring plan that makes the company profitable in the future. Once a company files the bankruptcy plan, all major business decisions are decided upon by the bankruptcy court in place. However, marginal day-to-day decisions are still in the hands of the existing company management.
Chapter 7 bankruptcy on the other hand is when a company decides to completely end all operations, thus going out of business. In the event of a chapter 7 filing, an assigned trustee is put in place to sell all company assets and pay off company creditors.

Source 1

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CIT Group: Bankruptcy Plan has Wide Support

Posted by Matthew Maillet

CIT Group Inc on Thursday said it has won overwhelming support from bondholders for its reorganization plan, as the big finance company tries to emerge from bankruptcy by the end of the year.

The New York-based company said it was won "substantially in excess" of the minimum support needed under U.S. bankruptcy law to restructure from all classes of bondholders eligible to vote on its "prepackaged" Chapter 11 plan.

CIT on Nov. 1 filed one of the five largest bankruptcies in U.S. history, hoping to reduce debt by $10 billion.

Hundreds of thousands of small- and mid-sized businesses depend on CIT for financing, and company lawyers have said CIT has a "need for speed" in getting through bankruptcy on concern that many customers could defect if the process drags on.

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P&C Parent Company Files for Bankruptcy

Posted by Chris O'Sullivan

The parent company of many student's favorite local supermarket has filed for bankruptcy. Syracuse based Penn Traffic Co., parent company to P&C, recently filed for bankruptcy for the third time in ten years. This seems to be the last straw for Penn Traffic, as they will now sell all of there asset consisting primarily of 79 stores located in the region.

Stores will continue operations under court protection while a potential buyer is sought out. “We intend to continue to work closely with our vendor partners to provide the fresh products and good value that our customers have come to expect from our stores,” said Gregory J. Young, Penn Traffic’s president and chief executive officer. Company employees will continue to be paid wages as well as benefits.

This is a sad day for CNY business, as it appears the company be sold to a buyer outside of the region. Penn Traffic has filed chapter 11 and plans to sell all or most of its assets. Many believe a buyer agreement has already been finalized due to the fact that a Jan.10th sale date has already been announced.

Penn Traffic flourished in the 90's, acquiring other grocery chains and maxing out at over 200 total stores. This number has diminished significantly over the past decade amidst three bankruptcy filings. Business in the CNY region has most certainly been affected by supermarket powerhouse Wegman's, which often receives rave reviews from consumers in the area. Locals have noticed higher prices at P&C in recent months, and it appears their troubles have finally caight up with them.

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AIG gets a pass

By: Zachary Pienkowski

While we all have heard about the troubles that AIG has been facing over the last year, one thing that is nice talked about quite as much is what happened to those they insured? While it was all over the media how federal regulators worked around the clock in an attempt to bailout AIG, they did not properly work out agreements with their business partners to negotiate the value of their assets. The result was over $62 million of taxpayer and AIG money being distributed to 16 banks which were business partners with AIG. Generally when a toxic asset is being liquidated the value of the asset drops considerably and is usually acquired for pennies on the dollar. This wasn't the case with many of AIG's counter-parties. The exact opposite occurred, in fact, they paid 100 cents on the dollar for nearly all of the underlying assets. Complaints have been pouring in that the Fed gave up too easy and did not exercise their leverage to make AIG's business partners to fall in line like many of the other banks that were bailed out did. The Fed rushed to bail out AIG but then lost all of its leverage because they had nothing to threaten them with anymore. Prior to bailout AIG had the fear of going bankrupt, but after the bailout this was no longer the case. The Fed felt pressured to keep making the collateral payments to the other 16 banks that AIG could no longer fund because they did not want to have to force taxpayers to fully fund the 100 cent on the dollar default swap.

Sources:

http://money.cnn.com/2009/10/13/news/companies/aig_bonuses/index.htm?postversion=2009101318

http://money.cnn.com/2009/03/07/news/companies/aig.fortune/index.htm

http://www.forbes.com/2009/03/16/aig-counterparties-bailout-markets-equity-cds.html

Personal bankruptcies surge 9%

By Zachary Pienkowski

NEW YORK (CNNMoney.com) -- The number of Americans filing personal bankruptcies surged 9% in October and were on target for the highest annual total in four years, according to a report issued Wednesday.

The American Bankruptcy Institute, an industry research firm that relies on data from the National Bankruptcy Research Center, said 135,914 consumers filed for bankruptcy last month. Almost a third of the bankruptcies were filed under Chapter 13, in which consumers are put on a repayment plan of up to five years.

"The nearly 9% increase in consumer bankruptcy filings in October, together with a 7% jump reported in business cases, demonstrates the sustained stress on the U.S. economy," said ABI executive director Samuel Gerdano.

The group forecasts total bankruptcies to exceed 1.4 million in 2009, which would be the highest since 2005. It would also be an increase of at least 30% from last year.

"People are still carrying a lot of debt in terms of credit cards and home equity loans, and unemployment is still rising," said Maureen Thompson, legislative director for the National Association of Consumer Bankruptcy Attorneys in Washington. "All of those factors are hitting consumers at the exact same time."

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Bankruptcy Rise Slows With Thaw In Lending

Posted by Andrew Lipsitz

The bankruptcy boom is going bust -- for now.

The financial crisis created one of the worst periods in U.S. history for corporate bankruptcies, felling the likes of Circuit City Stores Inc., General Motors Corp. and CIT Group Inc., the giant lender to small businesses.

Now corporate failures have slowed, as companies once on the verge of default have found a new life. These companies are now refinancing their balance sheets with new debt, pushing out maturities on existing loans or using distressed-debt exchanges to avoid a bankruptcy filing.

Speculative-grade companies -- or those with "junk" credit ratings -- have issued about $123 billion in new bonds this year, compared with roughly $48 billion in all of last year, according to data provider Dealogic. That's on pace to challenge 2006's record issuance of more than $143 billion, Barclays Capital analysts said late last week.

Many analysts worry the refinancing wave is just "kicking the can" down the road, without fundamentally fixing companies' deeper problems. Among weaker companies, about $1.4 trillion in bonds and loans will still come due in the next five years, said Dominic DiNapoli of FTI Consulting, a business advisory firm.

At the height of the credit crisis in January, Moody's Investors Service predicted that as much as 16.4% of U.S. junk-rated companies would have defaulted in the past 12 months. Some analysts said the default rate might not peak until early 2010.

Now, Moody's expects that U.S. default rate to peak at 13.6% this month and fall to 4.4% a year from now. Just three large publicly traded companies filed for bankruptcy-court protection in September and six filed in October, down from 16 in March, according to data compiled by Lynn LoPucki, a University of California, Los Angeles, law professor. Mr. LoPucki tracks filings by public companies with assets greater than $261 million.

In normal times, high debt issuance signals economic vigor, as companies use the money to expand. But today, new debt "is nearly 100% refinancing," said Citigroup Inc.'s Richard Banziger at a gathering of the Turnaround Management Association. "From that perspective, it's less healthy."

Despite the lull in corporate failures, there have been signs in recent weeks that bankruptcies could tick upward again. There have been several high-profile filings, including Capmark Financial and CIT. Already, five big companies have filed in November.

It remains unclear "how long the window will stay open" for weaker companies to borrow, said Barclays Capital restructuring chief Mark Shapiro. "Six months ago, no one thought that many of these companies could access the high-yield market." For the time being, he said, it's helping a lot of companies avoid "bankruptcies that would have otherwise occurred in the next year."

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Study Finds Illness, Medical Bills Root Cause of Majority Of U.S. Bankruptcies

Posted By: Robert Katz

By: S. L. Baker

(NaturalNews) Unemployment is high and retirement accounts have virtually disappeared for many folks in the wake of the current recession. Housing prices have plummeted, too. So it comes as no surprise that data just released by the Administrative Office of the U.S. Courts shows the total number of U.S. bankruptcies filed during the first three months of 2009 increased 34.5 percent over the same period in 2008. But what is surprising is a new Harvard study published in the August 2009 issue of The American Journal of Medicine which reveals financial woes starting hitting Americans even before the officially recognized economic downturn -- and the main culprit was illness and medical bills.

The results of the first-ever national random-sample survey of bankruptcy filers, conducted by researchers at Cambridge Hospital and Harvard Medical School, Harvard Law School and Ohio University, show that in 2007, 60% of all bankruptcies in the United States were driven by sickness and related medical bills. Moreover, the share of bankruptcies attributable to medical woes over the past few years has been on the upswing.

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Bankruptcy Issue Slows

Posted by Chris O'Sullivan

Article by Mike Spector (Wall Street Journal)

The bankruptcy boom is going bust -- for now.

The financial crisis created one of the worst periods in U.S. history for corporate bankruptcies, felling the likes of Circuit City Stores Inc., General Motors Corp. and CIT Group Inc., the giant lender to small businesses.

Now corporate failures have slowed, as companies once on the verge of default have found a new life. These companies are now refinancing their balance sheets with new debt, pushing out maturities on existing loans or using distressed-debt exchanges to avoid a bankruptcy filing.

Speculative-grade companies -- or those with "junk" credit ratings -- have issued about $123 billion in new bonds this year, compared with roughly $48 billion in all of last year, according to data provider Dealogic. That's on pace to challenge 2006's record issuance of more than $143 billion, Barclays Capital analysts said late last week.

At the height of the credit crisis in January, Moody's Investors Service predicted that as much as 16.4% of U.S. junk-rated companies would have defaulted in the past 12 months. Some analysts said the default rate might not peak until early 2010.

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What Are the Positive Benefits of Bankruptcy?

By Lingxiao Li

While bankruptcy carries a nasty cultural stigma with it, it may be a very positive choice for a number of indebted individuals to help them lighten their financial burden. Let's take a look at what are the possible benefits that bankruptcy can bring. First of all, it allows for the "discharge" of most, if not all of your debts. This means that you are no longer legally obligated to pay the debts. Secondly, it prevents property from being repossessed, or it may require creditors to return property that was repossessed. It stops the collection process. This means that creditors must stop attempting to collect on the debts. It gives you the opportunity to dispute false claims from creditors who may be trying to collect more than what it owed to them. It halts the foreclosure process and gives you time to catch up on payments. This means you will not necessarily lose your house or mobile home. While bankruptcy will allow for the discharge of a number of debts, others remain non-dischargeable according to federal regulation. Non-dischargeable debts include family support, student loans, certain types of taxes, and criminal fines. Liens, mortgages, and other secured debts will also survive bankruptcy procedures seeing as how they are secured by either some sort of collateral or by the federal government. Additionally, it is important to remember that Chapter 7 bankruptcy does not relieve a co-signer from any responsibility that he or she might have. The creditor has the right to enforce the co-signer's obligation. Chapter 13, on the other hand, will protect a co-signer as long as the debtor complies with his or her bankruptcy plan.

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Gay publications close after bankruptcy

By Atlanta, Georgia
Post by Lingxiao Li


"It is with great regret that we must inform you that effective immediately, the operations of Window Media LLC and United Media LLC have closed down." It asked employees to return Wednesday, adding, "Please bring boxes and/or containers that will allow you to collect all your personal belongings at one time."
And with that, Douglas-Brown lost her job at Atlanta, Georgia-based Southern Voice --The South's main newspaper for lesbian, gay, bisexual and transgender communities --where she has worked for more than 12 years.
Southern Voice, which was in print for more than 20 years and had a 100,000 circulation, was one of several gay newspapers and magazines, including the Washington Blade and South Florida Blade, that were shut down Monday when their parent companies, Window Media and United Media, filed for Chapter 7 bankruptcy.
"Certainly we knew finances were tight, but none of us were expecting this today," said Douglas-Brown, who spent her day greeting staffers at the office so they wouldn't find the note alone.
Calls to corporate offices of the parent companies were not immediately returned Monday. Read more.

Simmons files for Chapter 11

Mattress maker files for bankruptcy as part of restructuring deal; decision expected within 60 days.
By Aaron Smith

Posted by: Scarlett Lu

NEW YORK (CNNMoney.com) -- Simmons Bedding Co., the second-largest mattress maker in the U.S., filed for bankruptcy on Monday.
Atlanta-based Simmons filed for Chapter 11 under a restructuring plan in Delaware Bankruptcy Court. If the bankruptcy filing is approved, then the process should take about 60 days, according to Michael Henson, spokesman for Simmons through an outside firm.
"All that's left is confirmation of the court," he said. "If the court approves the restructuring plan, the company should be able to close the transaction shortly hereafter."
NEW YORK (CNNMoney.com) -- Simmons Bedding Co., the second-largest mattress maker in the U.S., filed for bankruptcy on Monday.
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http://money.cnn.com/2009/11/16/news/companies/simmons_bankruptcy/

Recession triggers Bankruptcy Increase

Article By: Srividya Srinivasan

The years from 2006 to 2008, were the worst of times with bankruptcy declarations and, apparently, it still is. The United States Courts confirmed that 1,306,315 bankruptcy filings during the year ending June 30, 2009, represented a 35 percent increase compared to the 967,831 cases filed during the same period last year”1. All chapters of bankruptcy saw this filing increase during this time period. Because of the recession, bankruptcy filings have steadily increased.
Sometimes bankruptcy is the only way out. People declare bankruptcy or enter into a consumer proposal, which is the term to pay creditors a fraction of their debt. Experts say the deep recession could ripple through bankruptcy numbers for several years.

There are many misconceptions about bankruptcies. People think everything is cleared out in a bankruptcy. People don’t get away with a clean slate. “Bankruptcy is meant to be rehabilitative, not punitive. ‘For many, this is a break they never thought possible,’ said Henry Vine, a trustee with Vine and Williams in Hamilton” 2. Some people think bankruptcy is an excuse for people that don’t want to pay; it is really about hardship. Steve Borsellino, also a trustee with Vine and Williams, says that most people learn their lesson the first time, but about 10 percent find themselves bankrupt again. "That's much higher than we'd like to see ... but most people appreciate the second chance. They see it as an opportunity to start over," Borsellino said.

Consumer debt is bearing most, but not all, of the blame for the largest climb in bankruptcy filings Western New York has seen in at least seven years3. Business filings peaked in 1987 and have declined by about 37 percent since that time. According to the American Bankruptcy Institute in Alexandria, Virginia, nearly 95 percent of bankruptcy cases filed last year were consumer cases.

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Wilkes Bashford files for bankruptcy protection

Article By: Henry K. Lee, Chronicle Staff Writer
Posted By: Srividya Srinivasan


The Wilkes Bashford Co., the namesake business of the Sutter Street clothier that has been has been struggling since the economic meltdown, has filed for Chapter 11 bankruptcy protection, court records show.

The filing Monday came a little more than a month after the upscale company abruptly closed its satellite stores in Mill Valley and Carmel. In February, Wilkes Bashford laid off 18 of 97 employees because of slumping sales.

The company filed for Chapter 11 protection to ease the sale of its assets to Ed Mitchell West LLC, which is affiliated with a private luxury retailer on the East Coast. Under the proposed agreement, Mitchell would continue to operate Bashford's San Francisco and Palo Alto stores and pay $4.6 million in cash, pending better offers through a competitive bid process.

Bashford wants the sale to close by Nov. 30 to avoid affecting the holiday shopping season. A hearing on the matter is scheduled for today.

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