Thursday, February 26, 2009

How to Avoid Bankruptcy

By: Jeffrey Kam

If a company ran out of cash, could they file bankruptcy and start again? Bankruptcy is the last solution that a company will consider to be an outcome. Bankruptcy is considered an extreme move and taken as a final move after all alternate option is used. Even as an individual, bankruptcy will affect one's credit score history up to 10 years or receiving a higher interest rate when applying for new loans. Below are some tips that will help your avoid bankruptcy to happen.

  1. Increase your work period - By doing this your will be able to earn extra cash to pay off a portion of your current debt.
  2. Sell your assets - Selling your personal assets will enable you to gain some cash. Assets such as houses, cars, and inventory can be downgraded or easily replace.
  3. Re-evaluating your current financial debt - Debt cannot be written off unless paying it off, re-evaluate your current finance situation and pay off the debt bit by bit is better that filing bankruptcy.
  4. Change your financail habits - eliminate all unnecessary monthly expenses. Stop overspending.
  5. Search for alternative - talk with creditors to see if your can change the payment plan.
  6. Save all the time.


Wednesday, February 25, 2009

Bankruptcy in Firms

Bankruptcy is an extensive process on various levels. The cost of bankruptcy to a firm comes in two different ways; direct and indirect. Direct costs include any lawyer and accountant fees; things of that nature. Indirect costs come in the form of lost sales and profits, as well as a limitation on the firm’s credit, which greatly reduces its potential for growth.
Firms must realize that the threat of bankruptcy is relevant and is an important ingredient in its financial decisions, but there should be a cost-benefit analysis must be made for a firm to understand what the cost of bankruptcy to their company truly is. There is also the matter of the bankruptcy trustee’s ability to take over the company which could prove not to be in the companies best interest.

By: Matt Smith


Monday, February 23, 2009

The End of Printed Newspapers?

Posted by Amina Isakovic
Written by Nat Worden

Bankruptcies are piling up in the newspaper industry as debt-strapped publishers acknowledge that their businesses are deteriorating faster and for longer than they previously anticipated.

The bankruptcy process will allow newspaper companies to readjust their debts and try different business models as the media industry undergoes a secular transformation amid a global financial crisis. The process is likely to result in leaner newspapers and, possibly, fewer daily newspapers.

"Many of the underlying newspaper businesses at these companies have a future after a restructuring in bankruptcy, but we are going to see some big newspapers fold," said Lauren Rich Fine, a former newspaper analyst with Merrill Lynch who is now a professor at Kent State University and director of research with ContentNext Media Inc. "There are too many newspapers in some markets, and they can't all survive in this environment."

Click here to read more

This video, from the United States Courts, explains the basics of bankruptcy.

Posted by Matt Smith

Sunday, February 22, 2009

Mortgage plan opens bankruptcy option

Copied and pasted by: Jeffrey Kam

President Barack Obama’s $275 billion housing and mortgage plan would allow homeowners to rework their mortgages via bankruptcy proceedings.

Current federal laws restrict bankruptcy courts from reworking mortgages, while debts such as credit cards and consumer loans can be revised during proceedings.

Obama unveiled a large scale mortgage modifcation and home lending plan Wednesday in Mesa aimed at curbing foreclosures and helping the languishing housing market. It includes $75 billion for mortgage modifications and $200 billion in federal equity stakes in mortgage giants Fannie Mae and Freddie Mac.

Click to Read More

Monday, February 16, 2009

Bankruptcy advice

Is Going Back To School During a Recession

By Rudy Armstrong

As the Recession continues going back to school is supposed to be the way to go when you can not find a job. But is that really the truth to go back to school when times are rough. If you not sure what you want to do while these hard times, take a look at this article "MBA schools face up to crisis," which gives you a good idea of what is really going on at Graduate school.

Click here to read full article.

Save GM or let it file for Bankruptcy?

Posted by Amina Isakovic
Written by John Letzing

General Motors Corp. will offer the government the choice of giving it billions more in bailout money or seeing it file for bankruptcy when it presents a restructuring plan next week, according to a report published Saturday.

The online edition of The Wall Street Journal, citing unnamed sources, said the competing choices present a dilemma for the Obama administration, which may fear seeing the industrial icon carmaker (GM: 2.50-0.15-5.66%)fall into bankruptcy and cut more jobs if it's refused more aid.

The government has already committed $13.4 billion to GM as part of a federally-funded bailout. The automaker is expected to include its call for more funds in a restructuring plan it's required to submit to the Treasury Department by Tuesday, though the company isn't expected to include a dollar amount, according to the Wall Street Journal report.

Sunday, February 15, 2009

Bankruptcy: A Good Financial Decision?

Posted by Po-cheng Huang

Maybe. If it’s your last option to save your home.
If you are facing foreclosure and you have tried all your options to avoid impending disaster, it may be time to consider filing for chapter 13 bankruptcy to stop your foreclosure on your home loan.

The Truth About Bankruptcy

Copy and paste by Jeffrey Kam

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.

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.

Kathy called my radio show ready to file bankruptcy. Her debts were overwhelming, and her cheating husband had left with his girlfriend. The house was in his name, as was all the debt except $11,000. Kathy was 20 years old, and her brilliant uncle - a lawyer from California - told her to file bankruptcy. Kathy was beat up, beat down, and deserted without help, but she was not bankrupt. When her soon-to-be ex-husband ends up with all the debt in his name, he may be bankrupt, but Kathy won't be.

Click to Read More

Friday, February 13, 2009

Bankruptcy America

by Po-cheng Huang

Over the past one and a half year, we have witnessed the fall of the U.S. housing market which started from personal bankruptcy and led to the foreclosures of millions of houses. One of the brilliant idea that came from Countrywide Financial that somewhat started the mess was the change in the structure of home equity loan which traditionally were close-end credit, but as the financing company introduced the open-end type payment on home loan, things started to change. The open-end type home loan is pretty much like credit card payment, they want you to only make the monthly minimum payment so your debt in home loan will only keeps getting larger like a snowball rolling down the hill, and when you eventually unable to make payment on time, whether is because of other financing deal you have other than your housing loan, such as credit card or other unfortunate event occurred such as you lost your job, the creditor will simply recognize that as default and do anything to try to squeeze everything possible out of you and if that still doesn’t cover, they take away your house. Therefore to some extent, I see the change in home loan as American people are given a much bigger credit card since there are greater refinancing ability that came along with the house with raising value, and when the bubble burst, those who can’t continue to honor their contract, go into bankruptcy and have everything they thought they owned taken away from them.

Wednesday, February 11, 2009

Selling A home To Save Their Business from Bankruptcy

By Rudy Armstrong

With today's economy not doing well at all, people are doing all they must do to try and provide an income. As weeks and weeks go on their is still less hope that people have but not for this one lady named Vanessa Cooreman Smith. Mrs. Smith's dream while in college was to start her own boutique; which she did. With the economy not stable the Smith family had to sell their home to keep the business running. This is not going to be a easy transition, especially with a 3 year old baby. The Smith's are now going to have to look for a smaller house and could even face bankruptcy if their business does not do well. The Smiths's stated "As companies continue to lay off tens of thousands of employees each day, the Smiths aren't worried about getting a pink slip. But running their own businesses brings no less anxiety." While in a tough economic status small businesses are exposed to decrease in sales. Furthermore, owners face an increasing problem which is getting credit because of frozen lenders. According to the U.S. Bureau of Labor Statistics, "Sixty-six percent of businesses survive past the first two years." On the contrary, Cooreman Smith's shop, Flourish Boutique, sell an array of women's designer clothing, accessories and artwork, but her store is no exception to the rough economy. She says her store is still gaining market share in her town, but sale have still been very slow since October, and there have been times where there were no phone calls at all.

full link to article for source click here

Some Truths About Bankruptcy

By: Bovemsa Cheung

Filing for bankruptcy is a very serious issue. Once an individual files for bankruptcy their whole life will change and bankruptcy will cause lifelong damage. It is best to avoid bankruptcy if possible. Although filing for bankruptcy may seem as if you are lifting a debt burden off your shoulders there is a whole other side to it. Bankruptcy is listed in the top 5 life-altering negative events that people can go through.

There are various types of bankruptcy that people can file. The Chapter 7 bankruptcy is known as total bankruptcy. This form of bankruptcy can stay on your credit report for 10 years. Also, all debts are not wiped out in chapter 7 bankruptcy because certain types of debt cannot be erased. Chapter 13 bankruptcy is similar to a payment play and can stay on your credit report for 7 years.

When an individual files for bankruptcy, the public will not know unless this person is somewhat famous and the media finds out. The only people that do know if someone is filing for bankruptcy are creditors. Bankruptcy is a public legal process but so many people do file for bankruptcy that it is hard to keep track of everyone.

Some people should file for bankruptcy while other individuals can avoid it. Inexperienced people should contact an attorney or bankruptcy consultants.


Three Restaurants File a Petition to Push LGI Energy Solutions into Bankruptcy

By Velida Alemic

Three restaurants that bought its energy-management services from LGI Energy Solutions have filed a petition to force LGI Energy into a Chapter 7 bankruptcy. LGI Energy Solutions was established in 1996 and is based in Minnetonka, Minnesota. It provided remote energy-management services to restaurants by placing a control unit in the restaurant that sends energy information to LGI. Their customers would deposit money in escrow accounts and LGI Energy would pay their energy bills.

The three restaurants that filed the petition are Buffalo Wild Wings Inc. based in St.Louis Park , Wendy’s International Inc. based in Dublin, Ohio and Boddie Noell Enterprises which franchises Hardee’s restaurants. These three companies say that collectively, they are owed 6.4 million.

It was reported that M&I Bank which provided LGI’s line of credit had frozen the line of credit in December due to accounting irregularities. M&I Bank also seized some of LGI’s assets. LGI Energy is unable to account for between $20-$25 million in money that was collected from clients. LGI Energy now only has about 9 employees left compared to 60 they had last year. Many of the employees that left the company say that they are owed money by LGI.

After finding out all of the information about LGI Energy, these three restaurants had a right to file the petition. If LGI cannot account for $20 million and are not paying their own employees properly, there is clearly something wrong with this picture.


Sirius Files for Bankruptcy

By Brandon Zimerman

Sirius XM has filed for bankruptcy today, February 11. Shares of Sirius dropped 31% today admist the reports of the bankruptcy. Shares were down 3 cents to 8 cents, it traded at $4 just two years ago. Charlie Ergen, head of satellite provider Dish Network (DISH), had acquired most of a tranche of $300 million in Sirius XM debt that matures Tuesday, and that Sirius turned down Ergen's unsolicited bid to buy the company.

XM Satellite Radio and Sirius Satellite Radio were formed in the late 1990s. Though there was skepticism in some circles that people would pay for radio when it was available for free, as it had been for decades, the satellite services gained traction by convincing automobile manufacturers to make them optionally available in cars and trucks. Sirius and XM radio units were also available in retail stores.

The Chapter 11 filing is expected to be complete in a few days.


Tuesday, February 10, 2009

Lehman Brothers Bankruptcy Case

Posted by: Tsu-Han (Ina) Chang

Lehman Brothers filed for Chapter 11 bankruptcy protection in New York State on September 15, 2008. The case is considered to be the largest bankruptcy case seen in U.S. history since WorldCom Inc.’s bankruptcy in 2002. Prior to its bankruptcy, Lehman Brothers was an international financial services company that conducted business in investment banking, equity, trading, investment management, private equity and banking. It was the primary dealer in the U.S. Treasury Securities Market.

At the time of the filing, Lehman Brothers held close to $700 Billion in assets. However, in a press release made by the company to the public cited that the reason for the bankruptcy was due to the accumulating bank and bond debt totaling to $768 Billion, which was more than $100 Billion more than their total assets could cover at the time. Lehman Brothers was in talks at the time with both Bank of America and Barclay Plc prior to the filing hoping for a possible takeover of Lehman Brothers. Although, at the time the takeovers did not occur, Barclay has since acquired the majority of the business, with the rest of the company split among major financial institutions around the world; most famously Nomura Holdings, the leading Japanese brokerage firm. To this day analysts believe that the collapse at Lehman Brothers was the beginning to the financial crisis that plagues the U.S. today.


Types of Bankruptcy Fraud

Posted by Connie Yee
Committing bankruptcy fraud by any individual is a federal crime that can result in a fine up to $250,000 and/or up to 5 years in prison. As the number of bankruptcy filing increase, the number of bankruptcy fraud tends to increase. In 2003, there were 1.7 million cases of fraud committed in the United States.

There are three ways to commit bankruptcy fraud including: concealment of assets, multiple filings and petition mills.

Concealment of assets is the most common type and make up 70% of fraudulent bankruptcy cases. This occurs when the debtor purposely fails to list all his assets on the bankruptcy claim; in an attempt to avoid liquidation on those assets. This includes transferring their assets to their friends or family, or moving it into off-shore accounts.

Multiple filings occurs when a debtor file for bankruptcy in more than one state. The debtor tends to file an incomplete listing of their assets in each state.

Petition mills is a scheme that targets financially strapped tenants from getting evicted from their home. The scheme occurs when the tenants uses a “typing service” to get advice on how to avoid eviction. However, instead of filing to stop the eviction, the “typing service” files for bankruptcy in the tenant’s name. This scheme ruins the tenant’s credit, and drain their savings.

What is Bankruptcy Fraud?
Types of Bankruptcy Fraud
Bankruptcy Fraud

Monday, February 9, 2009

S&K Famous Brands men's chain files for bankruptcy

Posted by SooYeon(Pia),Shin

Menswear chain S&K Famous Brands Inc. filed for Chapter 11 bankruptcy protection on Monday, citing operational losses over the past year.

The Richmond, Va.-based chain, which sells value-priced clothing in about 136 stores in 23 states throughout the East Coast and Midwest, also attributed the move to difficulties plaguing many retailers, including tightening credit and slowed consumer spending.

S&K stores, mainly in strip malls, offer men's suits, sport coats, pants, shirts, ties and shoes for sale and tuxedoes for rent.

CEO Joseph A. Oliver III said in a news release that the company wants to cut its debt and build new capital as quickly as possible.

Click here to read more.

US Government May Force GM and Chrysler Into Bankruptcy

Posted by Connie Yee
Written by Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) -- General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

Click here to read more.

What Happens When Your Insurance Company Goes Bankrupt

Posted by Michael Collins

You're reading a newspaper, scanning through the headlines, when one story grabs your attention: Your insurance company is going bankrupt. Great. Now what does this mean for you?

Try not to lose too much sleep. Almost every state has a "guaranty association" or "guaranty fund" that handles insurance bankruptcies much like the FDIC handles bank failures. Guaranty funds pay your claims up to a certain limit if your insurer becomes insolvent. In most states, the maximum aggregate benefit for all claims is $300,000 for home, auto, and life insurance policies. That level of coverage will generally cover the average consumer's insurance claim. In most cases, you are not burdened with paperwork if your insurer has gone bust.

"The consumer doesn't have to do anything to be protected," says Peter Gallanis, president of the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). "They don't have to apply for protection. They will get it automatically."

Click Here to Read More

Crescent Oil Files for Bankruptcy

By Brandon Zimerman

Crescent Oil Company Inc., a fuel supplier for six Midwest states, has filed for bankruptcy, citing volatile fuel prices and expenses tied to opening new convenience stores.

The Independence-based firm filed for Chapter 11 protection from creditors in the U.S. Bankruptcy Court in Kansas City, Kan., on Saturday. A spokesman for the company did not immediately return a phone call seeking comment Monday.

In court documents, the company said it and its subsidiaries had a total of $85.3 million in assets and $88.8 million in liabilities at the time of its bankruptcy filing.

Click here to read more:

The Big BailOut, is it actaully going out?

By Rudy Armstrong
I found this article as I looked on the page of Today, February 9th in a press conference president Obama spoke upon the fact that the stimulus package needs to be dispersed. It is vital to the US economy that we take action on this package because if not then yes the country will fall in to "catastrophe" as President Obama said as well in his speech.

click here to read the full article

When is Bankruptcy the Best Option?

Posted By: Bovemsa Cheung

Bankruptcy and Fraud

Posted By: Sarah Reilly

Sarbanes-Oxley : Auditing
Bankruptcy and Fraud
February 9, 2009 08:00 AM

According to a new study published by the Deloitte Forensic Center, “Ten Things About Bankruptcy and Fraud,” companies filing for bankruptcy protection are three times more likely than non-bankrupt companies to face enforcement action by the Securities and Exchange Commission relating to alleged financial statement fraud. The study analyzed SEC Accounting and Auditing Enforcement Releases and bankruptcy filings.

The study also found that companies that were issued financial statement fraud–related Enforcement Releases by the SEC were more than twice as likely to file for bankruptcy protection as those not issued one. Of publicly traded companies with revenues greater than $100 million that were issued financial statement fraud–related SEC Enforcement Releases, 35 percent filed for bankruptcy compared to 14 percent of similar companies that were not issued the Releases.

Click here to read more

Sunday, February 8, 2009

GM in Talks to Take Back Part of Delphi

By Velida Alemic

General Motors Corp. is in talks to take back large portions of Delphi Corp., the parts supplier spun off by the auto maker a decade ago, people involved in the negotiations said. The move is part of a strategy to qualify for additional government loans.

GM also is expected to pursue the closure of more auto-assembly plants beyond the nine shutdowns it has already announced, people familiar with the matter said.

GM has seen sales fall further than expected since it submitted a plan to Congress in December that said it will shrink to as few as 65,000 employees from 96,000 and cut its plants to 38 from 47 in North America in 2012. The deepening woes are putting pressure on GM to absorb the crucial auto-parts plants, even as it pares its car-making operations.

GM executives have been in negotiations over the Delphi plants since December. Delphi and its lenders have asked for at least $2 billion, according to people briefed on the talks. But GM hopes to pay little or nothing because of previous agreements with Delphi -- and because of the plight the auto-parts maker finds itself in. At the heart of the talks: up to five Delphi plants that produce exclusive parts for GM, including steering systems, radios and air conditioners for models such as the Cadillac CTS and Chevrolet Silverado.

Click to read more

U,S, government hires two bankruptcy fims for auto advice

Posted by SooYeon(Pia), Shin

The Obama administration has hired two bankruptcy firms to advise General Motors Corp. and Chrysler LLC. By hiring two law firms, the Obama administration is to assist Treasury Department officials on restructuring the struggling automakers. However, the government did not reveal plans for naming a trustee or “czar” to manage the process. The two law firms with bankruptcy expertise are Cadwalader, Wickersham & Taft LLP in New York and Sonnenschein Nath & Rosenthal LLP in Chicago.

Cadwalader, Wickersham & Taft LLP, founded in 1792, concentrates on bankruptcy, restructuring, and other areas of corporate law as well. The firm provided guidance to Norwest Airlines in 2007, which Delta Air Line took over last year. And, Sonnerschein Nath & Rosenthal LLP is a 103-year old international law firm which specializes in bankruptcy and public policy.

The U.S. auto supplier may request “as much as $25.5 billion in government aid to prevent an industry collapse.” GM and Chrysler have received $17.4 billion and are required to prove their viability until Feb. 17. The government official said that there will be no decisions made on restructuring until the companies submit their restructuring report. However, “Both automakers have said bankruptcy would likely mean dissolution, since they would be hard-pressed to come up with necessary operating cash.”


Saturday, February 7, 2009

Delphi Value May Be Too Low to Pay Bankruptcy Lenders

Posted By: Tsu-Han (Ina) Chang
Written By: Christopher Scinta

Feb. 6 (Bloomberg) -- Delphi Corp., the biggest supplier to General Motors Corp., said its value has fallen so much that the company may not be able to cover debts accrued since filing for bankruptcy in 2005, including a $4.35 billion loan.

The “extremely low volume production environment in the global automotive industry” has cut the projected value of the reorganized company, Delphi said. To conserve cash, Delphi asked U.S. Bankruptcy Judge Robert Drain to let it end health care benefits for retirees who were salaried workers, saying the move would save about $70 million a year and eliminate as much as $1.1 billion of liabilities from its balance sheet.

Friday, February 6, 2009

Diamonds Losing Their Luster

Diamonds Losing Their Luster

By Rudy Armstrong

Fortunoff, a popular jewelry store centered in New York and New Jersey, filed for Chapter 11 bankruptcy Thursday. Even though they were trying to sell the company, brought on by a poor retail season, they suffered "a severe liquidity crisis" and were unable to secure a buyer.

Bankruptcy is not uncommon is the current economic recession. In addition to Fortunoff, retailers such as Circuit City and Gottschalk had to close their doors due to a fatal decrease in consumer spending.

Despite negotiations with potential buyers and meetings with financial advisers, Fortunoff decided that filing for bankruptcy, in order to go through the courts, was the best recourse. In the filing, Fortunoff claimed $100 to $500 million in liabilities and assets.

This unfortunate demise has become a typical outcome for many retailers. As noted by Jerry Mozian, a national segment leader at Tatum, the new year has ushered in several bankruptcies, "January is one of the typical months that retailers file, and then you put on top of that the backdrop of a very terrible economy."

Full link

Thursday, February 5, 2009

Sirius XM Radio Trying to Avoid Bankruptcy at all Costs

Posted by Madeleine Brooks

Sirius Satellite Radio Inc. and XM radio merged July 2008. Since the merger in late July, the stock dropped 40% and the price of the stock is less than a dollar. This downward plunge is resulting from debt payments that the company has accumulated over time. The merger was supposed to help build confidence in satellite radio and have subscribers pay monthly fees to hear the radio transmitted through special receivers. Sirius XM Radio Inc. CEO, Mel Karmazin, thought that sales would pick up during holiday season by giving its former subscribers a small selection to listen to for free of charge in hopes that they would consider being a full-time subscriber. Karmazin noticed that the retail market has been dead for quite some time due to the downturn in the U.S. economy and because of the confusion with the merger that took place in July.

Because of the low stock price, Karmazin is thinking about taking the company private. Sirius XM Radio Inc. is currently refinancing $300 million in convertible bonds that are due in February 17th, 2009 and substituting the bonds with bank debt. Charles Ergen who is head of EchoStar Corporation controls the satellite-television market, Dish Network and EchoStar. Charles Ergen has attained a part of the $300 million debt of Sirius XM Radio Inc. Sirius recently just converted part of the $300 million debt into equity making the debt outstanding only $175 million now. Charles Ergen is looking to use the debt he just obtained by taking control of Sirius either inside or outside of bankruptcy. Mel Karmazin wants to avoid bankruptcy at all costs but having $350 million in bank debt that is due May 2009 and another $400 million in bonds that reach maturity in December 2009, it seems that may be an option to consider here.


The High Cost Of Bankruptcy

Posted by Madeleine Brooks

It sure does cost a lot to go broke.

Fee watchers say Lehman Brothers’ massive bankruptcy could cost a staggering $1.4 billion by the time the case is completed, according to a story by Daily Bankruptcy Review’s David McLaughlin.

Lynn LoPucki, a law professor at the University of California, Los Angeles who has long studied bankruptcy fees, thinks total fees could hit $1.4 billion. Seton Hall University School of Law professor Stephen Lubben tells McLaughlin that he thinks fees could reach $800 million.

Lubben estimates that Weil, Gotshal & Manges, Lehman’s bankruptcy law firm, and Milbank, Tweed, Hadley & McCloy, which is representing Lehman’s unsecured creditors, will earn about $400 million. He expects most of the remaining $400 million to go to Alvarez & Marsal, the turnaround firm that’s winding down Lehman’s operations. Alvarez has already earned more than $30 million on the case.

Click here to read more

Wednesday, February 4, 2009

Why Bankruptcy??

By Velida Alemic

Knowing the negative effects that bankruptcy will have on your credit score, why do people still file for it? After researching through some sources I’ve come to the conclusion that people file bankruptcy because they feel there is no other option. There are many different reasons underlying the decision to file for bankruptcy.

One of the main reasons is to eliminate debt owed to creditors. Many people do not realize how much debt they are accumulating until it is too late. Credit cards are so easy to get and use that people don’t really think about the consequences of paying them back and interest that builds if they are not paid. In the end, people may end up paying triple the amount of the transaction.

Stop the foreclosure of your home or the repossession of your car are two more highly likely reasons why bankruptcy is filed. These two assets are important to every living person. In order to take good care of your family, shelter is very necessary. Also, unless you live in New York City, most likely you get in your car every day and drive to work. When the threat of losing your home or automobile rises, people panic and file bankruptcy.

Reduce medical bills and get help for student loans are also two reasons for bankruptcy. We all know how expensive medical bills and student loans are, it is just unbearable sometimes. Receiving medical help is vital to life, but sometimes people wish they were dead than have to pay all of the medical expenses incurred. Also, in order to get a good job, a good education is needed. But good education can be very expensive and sometimes impossible to pay for.

As you can see, some of the main reasons for filing bankruptcy are unavoidable. People don’t just wake up one day and say “hey maybe I’ll file bankruptcy today”, they do it because they feel that there is no other choice, their back is against the wall. With the economy the way it is right now, more and more people will file bankruptcy because they have no funds to pay for their expenses.

References :

Alternatives to Filing for Bankruptcy

By Michael Collins

When people get into financial trouble, choosing to file bankruptcy is often a way for them to escape their debt. However, there are other avenues that they can take to solve their problems.

Credit card debt is by far one of the most common forms of debt. People will often choose to simply make minimum payments, rather than pay in full every month. This leads to mounting debt, which is further increased by the high interest rates that are charged by the companies, up to over 30% in some cases. There are several ways to alleviate credit card debt without resorting to bankruptcy. Debt settlement is one common way. “In the strictest sense, debt settlement is an agreement between a debtor and a creditor to pay off any remaining debt at a reduced amount. Settlement occurs when a creditor is satisfied that a debtor no longer has the financial ability to repay the debt owed in full.”1 Debt settlement is often worked out by a separate company or group who set up payment plans. The debtor will begin putting money away into an account, from which the creditor(s) will withdraw in order to settle. Creditors will often settle debt if the debtor is considering bankruptcy, because if bankruptcy is filed, it is very likely that the creditor will not be paid at all. Bankruptcy will also severely hurt the credit rating of the debtor.

Mortgage debt is another common form. In order to avoid foreclosure or bankruptcy, debtors may choose to refinance, which is replacing a current mortgage with a new one. This is often done to take advantage of lower interest rates or in order to create a longer payment period with lower monthly payments. Another, more extreme way to avoid bankruptcy is for the debtor to liquidate some of their assets. Much like chapter 7 Bankruptcy, by selling off assets, the debtor can get the money they need to pay off their debt. However, unlike Chapter 7 Bankruptcy, this will not have an adverse effect on the credit rating of the debtor.

While bankruptcy is an option to get out from under debt, there are viable alternatives. These alternatives may be difficult for debtors in the short run, but end up being much better for them in the long run.



Retail Chains Going Bankrupt

Posted by Connie Yee

The current economic crisis is slowly reshaping America’s malls and shopping districts. Consumers are spending more on basic necessities (gas, food and rent) and purchasing less of other goods (furniture, clothing and electronics).

Since the end of 2007, many retail chains such as Levitz and Sharper Image have filed for bankruptcy protections. These major chains are unable to produce a profit as their debt continued to increase and sales decrease. Other retailers have tried to avoid filing for bankruptcy by closing stores or delaying expansion to preserve their cash flow. Over the next year, retailers such as Foot Lockers would close up to 140 stores around the country. The International Council of Shopping Centers estimated that there were 5,770 store closings in 2008, and this number is expected to increase in 2009.

The downturn in the economy is not only affecting retailers but also shopping centers. With less retailers willing to expand, the construction of new malls around the country is put on a halt. The bankruptcy of existing retail chains means more vacant restate on the market, and the need for new mall is on a decline. “In this environment, most retailers are wary of signing new leases—particularly for anything for 2010.”

Retailing Chains Caught in a Wave of Bankruptcies

Few new shopping centers while economy's dropping

Retail Chain Said to Face Bankruptcy

U.S. Personal Bankruptcies Climbed 34% in January

By Velida Alemic

Feb. 3 (Bloomberg) -- Personal bankruptcy filings in the U.S. rose 34 percent in January as the deepening economic crisis drove many to seek court protection from creditors.

Individual bankruptcy filings climbed to 88,773, up more than a third from a year earlier and 4.5 percent higher than the 84,926 filings in December, according to a report by the National Bankruptcy Research Center.

Click to read more

What is Bankruptcy??

By Brandon Zimerman
Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. People usually file for bankruptcy when they cannot earn enough money to pay bills or a mortgage on their house.
A common myth that most people have about filing for bankruptcy is that it could put you back finacially for many years. This is false. According to the research center at The Ohio State University, it takes an average person 10-20 years to regain the same financial status as they had previously to filing bankruptcy.
In fact, sometimes filing bankruptcy can be a good thing. For example, 90 percent of those who went bankrupt have a car less than a year after bankruptcy, compared to 89 percent of those who never filed. About 74 percent of bankruptcy filers have full time jobs after one to five years, compared to 73 percent of non-filers.

Filing for Bankruptcy

By: Bovemsa Cheung
Homeowners never want excessive debt or foreclosures. This is why sometimes bankruptcy is a good solution; however it is bad at the same time because it ruins your credit score. Another problem is that the bankruptcy laws passed in 2005 makes it even more difficult to file for bankruptcy.
When people no longer have the financial capacity to pay their lenders—they turn to bankruptcy. Declaring bankruptcy is the only legal way to lift financial burdens off your shoulders. However filing for bankruptcy is a complicated process. You have to explain to a bankruptcy trustee or judge how you got into this financial situation. The bankruptcy court also asks you to file an entire list of assets and outstanding debts with them. The assets are divided into exempt assets and non-exempt assets and outstanding debts are divided into secured debts and non-secured debts. After doing all the paperwork, the bankruptcy trustee makes sure that all secured debt are repaid within a specified period and the court issues a mandatory ‘stay’ which prevents creditors from property confiscation , foreclosure, or filing a lawsuit against you.
Under the bankruptcy law, there are two types of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 bankruptcies are generally chosen by people with lower income, fewer assets, and more debts. The Chapter 7 bankruptcy option is generally chosen by people who are interested in keeping their non-exempt property intact or people who want to buy time against foreclosures or property seizures. There is a test to see whether you are eligible for Chapter 7 or 13 bankruptcies.
Bankruptcy can stay on your credit report for as long as 10 years, depending on the chapter chosen. This affects getting a loan, mortgage, or a credit card. Consulting with a trustworthy bankruptcy attorney may be helpful in making this vital decision of filing for bankruptcy.

Tuesday, February 3, 2009

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

By: Tsu-Han (Ina) Chang

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was signed into law by President Bush on April 20, 2005. The purpose of the act was to make it more difficult for consumers to easily clear their debt by filing for Chapter 7 Bankruptcy.

In the past, before the passing of the BAPCPA, any debtor could file for bankruptcy under Chapter 7. However, with the passing of the BAPCPA, debtors were now subject to test that calculated the debtor’s income and comparing it to that of the average in the debtor’s state. If the debtor was found to have the majority of their debt be based on consumer debt, his/her case would be dismissed. If not, the “means test” would be administered to determine if the debtor should continue to file for Chapter 7 Bankruptcy or move to file for Chapter 13.

The BAPCPA provides several services for debtors filing for bankruptcy. Debtors are to receive mandatory credit counseling to help them better micromanage their finances. Debtors also receive financial education to assist debtors in making better decisions regarding filing for bankruptcy and paying off debt in the future.

BAPCPA provides significant amendments to the Bankruptcy Code since its establishment in 1987.