DrBoyceBankruptcy

How is MC Hammer and Walt Disney related?

2009-12-11T20:33:00.000-08:00

by Jameel Murray

Although many people believe that celebrities are rich and full of money, there are fair shares of celebrities who have filed for bankruptcy. Besides the recent news of Nicholas Cage and NBA star Antoine Walker, the public is oblivious to famous people who have filed for bankruptcy. One celebrity who should be the poster boy for bankruptcy is Mc Hammer. In 1996, Hammer owed $10 million to creditors and filed for bankruptcy. Since his bankruptcy claim, Hammer has become an entrepreneur in an attempt to reclaim success. Another bankruptcy that people never can recall was the bankruptcy of Walt Disney. In 1921, Disney began a company called laugh-o-gram, which would eventually cause him to file for bankruptcy. After his bankruptcy, Disney moved to Hollywood and became the most celebrated animator ever. Although bankruptcy can be a financial standstill in one’s life, it also teaches to be more careful with finances and can inspire one to pursue great ventures such as Walt Disney and MC Hammer.

http://www.angelfire.com/stars4/lists/bankruptcies.html

http://www.angelfire.com/stars4/lists/bankruptcies.html

http://www.americanchronicle.com/articles/view/16527

Bank Failures Reach 133

2009-12-11T19:58:00.000-08:00

Posted by Kenny Hernandez

NEW YORK (CNNMoney.com) -- Regulators closed regional banks in three U.S. states Friday, bringing the total number of failed banks this year to 133, the Federal Deposit Insurance Corp. said.

Customers of the failed banks are protected. The FDIC, which has insured bank deposits since the Great Depression, currently covers accounts up to $250,000.

In Florida, the Office of the Comptroller of the Currency (OCC) closed Republic Federal Bank, NA, and the FDIC was named receiver.

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House of Representatives Turn Down Bankruptcy Vote

2009-12-11T18:35:00.000-08:00

By Meredith Anderson,

The House of Representatives were quite busy on Friday as they passed the legislation to reform the nation's regulatory system by a vote of 223 to 202. The new legislation puts an end to taxpayer bailout by creating a single agency to oversee mortgages and outlaws predatory lending. With the overall proposed legislation was bankruptcy cramdown amendment proposed by Rep. John Conyers. This amendment was not favored by the House and rejected with a vote of 241 to 188. One of the main reason for the turn down was the fact that the House had past an almost identical bill back in March that was later turned down by the Senate. Another reason was the strong concerns of the mortgage banking community that stated that if passed the legislation would have further increased that cost of borrowers. There was not much released about the specifics for not including the cram down amendment in the overall package. If the past it would have helped with home foreclosures that are continuing to hurt our nation. Currently bankruptcy courts are allowed to reduce many forms of debt on boats, summer home, cars, boat, farm, but not the families primary residence. By rejecting this new clause the House state that bankruptcy courts are not allowed to reconstruct mortgages.

Sources:

http://www.dsnews.com/articles/house-passes-reform-legislation-but-scraps-bankruptcy-cramdowns-2009-12-11
http://business.theatlantic.com/2009/12/the_consumer_financial_protection_agency_lives_cramdowns_fail.php http://www.reuters.com/article/idUSTRE5BA3CN20091211

Types of Bankruptcy

2009-12-11T14:47:00.001-08:00

By Shawn Chandok

When filing for bankruptcy, there are usually 2 types of bankruptcies that are common, Chapter 7 and Chapter 11. Chapter 7 bankruptcy is considered one of the worst because it is complete liquidation of assets. The court first follows a procedure where they assign a trustee to evaluate all your assets and wealth. Once that is done, he/she converts all convertible assets to cash in order to pay off debtors and creditors. However what makes chapter 7 unique is that “In most chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge just a few months after the petition is filed.”
Chapter 11 bankruptcy is also known as reorganization. Under chapter 11 bankruptcy, the debtor usually has a certain amount of days to convince his debt holders why he should be given more time to pay off his debts. If the court approves this decision, the debtor is given a grace period of a certain amount of time where he will not be charged any expenses, however he must begin to pay off his previous debt to show future prosperity.

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Playboy Facing Bankruptcy?

2009-12-11T13:36:00.000-08:00

By Shawn Chandok

We have all heard of the famous entrepreneur Huff Heffner and how he is considered probably one of the world’s luckiest men alive. However, even with his glamour filled life, the economic recession of 2008 has impacted him tremendously.
Currently the CEO of Playboy is Jerome Kern, who replaced Hugh Heffner’s daughter Christine Hefner. Last year Playboy reported a $13.7 million dollar loss during their first quarter. It was stated that this loss is 3x the loss they took during the same time in 2008 which was $4.2 million. Ever since the financial crisis, Playboy has taken several initiatives to reduce costs and avoid bankruptcy. “In October 2008, Playboy laid off over a quarter of its workforce, axed its DVD business and its New York office and consequently merged its print and online operations to reduce costs significantly.” Billionaire and bachelor Hugh Heffner said he is considering selling the famous company and ending his dynasty under graphic magazines. One of the major reasons for the continuing downfall of Playboy includes the failure of its outsourced ecommerce operations. In addition to the lack of magazine sales, revenue was down more than 20% last year totaling $78.5 million. This is a perfect example of how outsourcing may not be suitable for all companies.

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CIT Shares Rise as Company Emerges From Bankruptcy

2009-12-10T18:13:00.000-08:00

Posted by- Anshu Dixit

By- NEW YORK (Reuters)

CIT Group Inc's new shares rose as much as 6 percent from opening levels in their debut on the New York Stock Exchange on Thursday as the lender to small businesses emerged from one of the largest bankruptcies in U.S. history.

CIT, one of the biggest financial sector victims of the credit crisis, is also the only major firm in the sector to emerge from bankruptcy.

Others, such as Lehman Brothers, Washington Mutual and IndyMac have been unable to continue on their own.

But the comeback may not be easy.

"In the space they are working, it is a tough time trying to secure customers for a company that has gone bankrupt," said Robert Lutts, president and chief investment officer at Cabot Money Management.

"Today, executives making decisions in the financial area are making very low-risk decisions," Lutts said. "That means don't work with the problem childs of the world, and I think that is going to mean a tough sledding for CIT."

Hundreds of thousands of small and mid-sized businesses depend on CIT for financing, and company lawyers had said the company needed to get through bankruptcy quickly to avoid customer defections.

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The Origins of the U.S. Debt Disaster

2009-12-10T11:18:00.000-08:00

By Andrew Lipsitz

By now it should be obvious that information is the basis for all decision making in finance. The statisticians at JP Morgan were most likely well aware of this concept, and used a model to predict corporate defaults by using previous correlations in such risks. However, this was still just a guessing game in theory, because at any time correlation can change and corporations could begin to default at significant levels just because other corporations using JP Morgan are loosing confidence.

The information for supporting hundreds of billions of dollars in assets on the balance sheets just was not sufficient enough to carry out these “super-senior” risk derivatives. Also, since the derivatives received the highest ratings from Moody’s and other major rating companies, AIG agreed to take on the risk of these deals. Since AIG was insuring these credit derivatives, and making a large percentage of their income off of them, it was only natural that the two went down together as corporations began to default.

I believe that the whole catastrophe could have been avoided if the derivatives made up less of the balance sheet or if they would have been used as off-balance sheet items.

The second issue here is one of specialization versus generalization. JP Morgan wanted to compete in the mortgage loan market because competitors were getting an edge on them. For JP Morgan to enter into this unfamiliar market was a disaster from the start. Since they had no data on mortgage defaults and regulators made it difficult for them to acquire this information, it was hard for them to estimate the correlated risks. Although doing credit derivative deals with mortgage debt seemed inevitable if they wanted to properly compete, JP Morgan was not specialized in mortgage debt and did not have the required data to keep up.

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EU Classes Greek Debt Situation as 'Very Serious'

2009-12-10T10:56:00.000-08:00

Posted by Andrew Lipsitz

BRUSSELS — The financial crisis engulfing Greece is "very serious," requires "support" from fellow EU member states and will be discussed by leaders at a summit dinner in Brussels later Thursday, the bloc's Swedish presidency said.

"It is not formally on the agenda, but I guess prime ministers will relate to the matter informally, because the situation in Greece is very serious," said Swedish European Affairs Minister Cecilia Malmstroem.

"We are of course concerned... It's a difficult situation that needs time, political courage (and) some reform.

"We are in a family, we try to support each other," she underlined.

Greek Prime Minister George Papandreou on Thursday called an all-party crisis meeting aiming to reassure panicked markets that Athens is ready to "clean up" its economy.

Greek debt stands at 300 billion euros, the highest in the country's history, the finance ministry in Athens announced Thursday.

Greece's sovereign debt was downgraded this week by the international ratings agency Fitch, prompting fears around Europe of dangerous spillover effects for the 16 countries that use its euro currency, and the European Union at large.

"They know what they need to do, but they are in difficulty and it will take time," Malmstroem added.

However, Finnish foreign minister Matti Vanhanen said the EU wanted reassurance that no "surprises" lurk behind Greece's latest statements.

"There are big deficits in all countries," he said. "The most important issue is that we have real information, and not surprises."

In Bonn, meanwhile German Chancellor Angela Merkel said that the European Union shared a "common responsibility" for Greece.

"What happens in a member country influences all the others, particularly when you have a common currency," Merkel said after a meeting of the centre-right European People's Party (EPP) in the western German city of Bonn.

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CIT Group seeks judge's OK on bankruptcy exit plan

2009-12-08T09:17:00.000-08:00

Posted by Chris O'Sullivan

NEW YORK (Reuters) - U.S. small business lender CIT Group Inc headed to court on Tuesday to ask a New York bankruptcy judge for approval of its prepackaged reorganization plan.

The company, which filed for bankruptcy just weeks ago on November 1, is asking Judge Allan Gropper to approve the plan, which would pave the way for the company to exit bankruptcy protection.

"We think our plan has, in fact, satisfied the conditions for approval," Gregg Galardi, an attorney at Skadden Arps Slate Meagher & Flom representing CIT, said at the beginning of a court hearing on Tuesday.

CIT, which filed one of the five largest bankruptcies in U.S. history after a debt exchange offer failed, is hoping to reduce its debt by $10 billion under the reorganization plan.

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Bigtime Buyouts On The Rise...Good Or Bad For The Economy?

2009-12-07T17:34:00.000-08:00

By: Zachary Pienkowski

During the 1980's many leveraged buyout firms jumped on the opportunity to scoop up troubled companies, restructure them, and then sell them back to the public for often an enormous profit. This trend has been carried on by private equity funds that have been formed for this very purpose. While these large buyouts have been somewhat on the downswing over the last 12 months, they are back on the rise and have recorded the second highest volume since July of 2008. The question that is raised is whether or not these large buyouts are a good thing for the economy? Large investors have made it so the stock market is no longer the place to go to make money. Private equity is longer simply a part of the financial market, it has quickly become a centerpiece which does not appear to be going anywhere. One possible threat is that an increasing number of large firms will be taken over by these pools of investors that run the company privately and have no one to answer to. The sole purpose for them is to make a return on their own investment, with little interest of others. Investors make the argument that the U.S. economy is better off when companies are operating well, but it is also difficult how much good it is actually doing for the economy, but not so hard to see how much money it makes for the investors. A result of this may be that returns on these investments may start to come down a little as these deals become harder and harder to find.

Sources:

http://blogs.wsj.com/privateequity/2009/11/30/big-buyouts-are-back-sort-of/
http://www.csmonitor.com/2006/1113/p01s01-usec.html
http://www.behindthebuyouts.org/hertz-so-good/

Fed’s Dudley Is Feisty on Bank Pay, Bubbles and AIG

2009-12-07T17:16:00.000-08:00

Posted by: Zachary Pienkowski

In a feisty and expansive speech, New York Fed President Bill Dudley says he finds it “galling” and “unfair” that employees at bailed out banks are raking in big pay packages, but he says regulators need to be careful about cracking down on it.

Here it is in his words:

“This issue of compensation is obviously a hugely potent one, as there is a fundamental unfairness in what has happened over the past few years. The actions taken by the Federal Reserve and others to stabilize the financial system had the effect of rescuing many of the same financial institutions that contributed to this crisis. Many of those financial institutions are now prospering, and many of their employees will be highly compensated. This situation is unfair on its face. But it is even more galling in an environment in which the unemployment rate is 10 percent and many people are struggling to make ends meet.

“Despite the fundamental unfairness of the situation, I don’t think it is feasible or practical for the Federal Reserve, or any other supervisory entity, to attempt to determine the level of compensation at individual firms on an ongoing basis. A better approach is for supervisors to ensure that a firm’s compensation regime is consistent with an institution’s safety and soundness and with broader financial stability. That can and should have important implications for the level of individual compensation. For example, a trader should not be paid solely on the basis of this year’s accounting profits if those profits are based on the valuation of illiquid assets held on the bank’s books that could easily go down considerably in value before they are liquidated.”

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Everything you must know about Bankruptcy

2009-12-06T23:04:00.000-08:00

By: Scarlett Lu

When you are unable to pay an organization or people you have taken credit from, you can file for insolvency which is known as bankruptcy. The main purpose people file for bankruptcy is to give a fair chance to the debtor who is honest to start a life afresh by alleviating most of his debts or to pay his creditors in new installments. They want people to have a chance in redeeming themselves. Liquidation and reorganization is the two common types of bankruptcy. When the debtors have filed in a bankruptcy case or have declared it publicly, the creditors can under no law pursue legal actions against them. When you file for bankruptcy you may lose almost everything including home, bank accounts, and even insurance.

When you file for bankruptcy it may be an emotional process but you should not rely on substances for comfort. You should make long term goals to make sure you do not become bankrupt again. Tell your family and friends do not keep it a secret; people around you will give you emotional support. Get Exercise to cope with stress. Don’t be ashamed to ask for professional help. Remember it’s a difficult time in your life; you will overcome it.

http://www.foreclosurelistings.com/bankruptcy.php
http://www.understandingbankruptcy.org/
http://www.consumer.org.nz/reports/bankruptcy

Free bankruptcy clinic made permanent

2009-12-06T21:37:00.000-08:00

By Kara McGuire

Posted by Scarlett Lu

No one wants to be sitting across from Mary Hoben on a Thursday morning, but they are awfully glad she's there.

Hoben is one of 16 attorneys who donate their time and expertise to low-income Minnesotans at a free bankruptcy advice clinic. The new clinic, held at the U.S. Courthouses in Minneapolis or St. Paul, was set up on a trial basis this spring to assist people tackling the painful and mind-boggling task of filing for bankruptcy without an attorney's help. The walk-in clinic was made permanent this fall because demand is strong. In the worst recession since the Great Depression, is that surprising?

Bankruptcy filings in the state have surpassed levels last seen in 2004, the year before the law was overhauled in an attempt to reduce bankruptcy numbers. Filings are up 30.6 percent over last year, with 19,380 personal bankruptcies filed in Minnesota through November. Close to 1.3 million people have filed nationwide, an increase of 32.1 percent from 2008, according to the National Bankruptcy Research Center.

Easy Ways to Avoid Bankruptcy

2009-12-05T19:40:00.000-08:00

By Laura Reginelli

In today’s retail oriented world, spending money on luxury items or just overspending in general can be tempting. Not knowing the proper ways to create and maintain a household budget can run your savings down into debt territory. To avoid bankruptcy, there are some proper precautions that you should take in order to insure your household’s safety.

If you see yourself slipping into debt there are a few steps that you can take in order to avoid hitting rock bottom and filing for bankruptcy. For example if you owe several different businesses, you can invest in getting a debt consolidation plan. This allows you to have all your debt consolidated into one and from there you only have to make one payment per month. This eliminates much of the hassle that is related to receiving overwhelming amounts of bills.

Another good method to avoiding bankruptcy is to limit your credit card use. If you have had serious problems with credit card debt in the past a good step is to cut all your credit cards up in order to restrain yourself from overuse.

Before deciding to file for bankruptcy it is recommended that one looks into credit counseling to determine all available options. This will allow you to create a plan to best manage your debt.

It is important to avoid bankruptcy at all costs because it can affect your credit for long after the bills are gone.

Sources: http://www.debtconsolidationcare.com/avoid-bankruptcy.html

http://www.ehow.com/how_2067981_avoid-filing-bankruptcy.html?ref=fuel&utm_source=yahoo&utm_medium=ssp&utm_campaign=yssp_art

http://www.themoneyalert.com/avoidingbankruptcy.html

Ways to Avoid Filing for Bankruptcy

2009-12-05T13:48:00.000-08:00

Posted by: Janielle Viggiano

There are many ways to avoid bankruptcy. Here are some of the most important ways:

Find out if bankruptcy is worth it
Set up a strict budget
Try negotiating with creditors
Raise money
Opt for a lifestyle that will help you financially
Debt settlement
Debt consolidation program
Debt management
Payday loan consolidation
Do it yourself plan

(Strong, 2009), (Debt consolidation care, 2009)

Some other alternative options would be to sell your assets. After you declare bankruptcy they usually take almost everything of value you own so it’s better to sell the things you no longer use to avoid filing for bankruptcy. Another way is to work more, pick up more hours at work to earn more money. Or even get another job. You should also brush up on your laws when it comes to filing for bankruptcy because they differ by geographic location. Lastly, communicate your options. According to debt steps, “Make it clear that if you cannot find a way of paying your debts, you will be forced to file for bankruptcy. This is one of the best things to do when you’re considering bankruptcy. Most creditors would rather have you pay back a fraction of what you owe than not be able to get money from you as a bankrupt.

Sources: http://www.thedigeratilife.com/blog/index.php/2009/04/20/how-to-avoid-bankruptcy-go-bankrupt-steps-solvency/

http://www.debtsteps.com/how-to-avoid-bankruptcy.html

http://www.debtconsolidationcare.com/avoid-bankruptcy.html

Personal Bankruptcy Surges in US

2009-12-04T11:22:00.000-08:00

Posted by: Christina Dove

Since the recession and financial crisis have been going on, people have been faced with tightened budgets, reduced salaries and have had to cut back spending a lot. Some people have been more affected than others and have had to file for foreclosures and file for personal bankruptcy. Although this trend has been going on for sometime now, bankruptcy has become more common as of late. 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. This number also includes many businesses who have been forced to file for bankruptcy in these tough economic times. 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. The explanation for this sudden increase is that people may have been able to survive the tough times when they first hit but now are beginning to run out of funds and forced to file for bankruptcy as their only viable option.

By filing for bankruptcy, people are able to relieve all of their current debt obligations to creditors. Although this seems like a great idea to start over new, the bankruptcy can stay on your credit report for 7 years and can make it very challenging to get approved for credit or a loan. One source estimates that the reform caused about 800,000 additional mortgage defaults and 250,000 additional foreclosures to occur in each of the past several years. Hopefully people will be able to get their feet back on the ground before having to resort to the last option of filing for bankruptcy.

Sources:

http://money.cnn.com/2009/11/04/news/economy/October_consumer_bankruptcy/index.htm
http://www.bankruptcyaction.com/

http://www.voxeu.org/index.php?q=node/4313

The Intersection of Divorce and Bankruptcy

2009-12-03T17:51:00.000-08:00

Posted By- Anshu Dixit

By -Article provided by The Law Offices of Vincent W. Davis & Associates

In the current economy, couples who are considering a divorce need to be as concerned about how their debts will be divided as they are about their assets. In a divorce in a community property state like California, any debts of the marital estate will be divided equitably. This includes debts that are only in one spouse's name, but were incurred during the time of the marriage. Thus, spouses may be liable not only for debt held jointly in both of their names, like a mortgage, but for debt held only in one spouse's name, like a car loan.

Bankruptcy May Be The Best Choice

For divorcing couples with heavy debt loads, bankruptcy may be the best answer to relieving at least some financial stresses. Bankruptcy can be filed before, during or after a divorce. Spouses may file the bankruptcy jointly or separately.

Generally, it may be in the spouses' best interests to file a joint bankruptcy on their marital debts before filing for a divorce. This way, they may be able to eliminate some debts that otherwise would be subject to division during the property settlement portion of the divorce. For example, if the couple has a lot of consumer debt like credit cards, they may be able to discharge that debt in a Chapter 7 filing. Conversely, if the couple is facing foreclosure on their family home, they may be able to restructure their mortgage and other debts with a Chapter 13 filing. Using a joint bankruptcy to decrease the debt load can make the divorce process less contentious.

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Bankruptcy and Divorce???

2009-12-03T17:45:00.000-08:00

By- Anshu Dixit

Marriage is something people call as, marital contract, in which, their two lives become one. Although this is true in matters of love or in the movies, and it is somewhat true in personal finance as well. Divorce is something, which leads to many other problems such as attorney expenses, children’s responsibility, sharing of property and many more. In addition to all these, there is one thing that can be an impact of divorce “personal bankruptcy”. When every these kind of problems arises, a question raised by people often include issues about who is liable for which debts, what creditors reasonably expect to collect and what happens when bankruptcy is filled before and divorce.
There are many suggestions by specialist what to do in what case, such as what if a couple is planning to file a bankruptcy after divorce, than they need to consider things such as who is going to b more liable, how would the property matter will resolve and many more. In addition, laws are different if anyone is filing for bankruptcy before marriage or as an individual. Due to the recent economic crisis, most of the people are filing for personal bankruptcy but joint because then they can deal with the problem together instead of individually. There are some clues, which can tell you if you are leading towards “bankruptcy”, such as tightness of cash in house budget, shortness of cash, and many other cash related problems. There is consoling available to guide people through the whole process of personal bankruptcy, before or after filing the bankruptcy.

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Personal and Business Bankruptcy Highest Since 2005

2009-12-03T10:59:00.000-08:00

http://www.modernracer.com/news/wp-content/uploads/2009/05/gm-cartoon.jpg

By: Zachary Pienkowski

U.S. consumers and businesses filed 388,485 bankruptcies in the third quarter, a 33 percent increase from a year earlier, pushing this year’s total to the highest level since 2005. (Bloomberg) While bankruptcy comes with a negative connotation, many of these bankruptcies are in an effort to restructure many of these struggling companies. However, with the unemployment rate soaring over 10%, and businesses continuing to cut back, many are turning to bankruptcy. It is not hard to connect the dots of the increase in bankruptcies with the struggling economy. Despite being a bad habit which has led to many of the financial problems people are facing, the tightening of credit has made it much harder to pay bills. People used to be less concerned with paying a bill because they were able to put it on their credit cards with huge limits and then just pay the minimum balance and never get out of debt. Now they are not able to get these credit cards and are forced to pay bills with only the money they have in their bank account. With many companies laying people off and the unemployment rate continuing to rise, many people are left with little in that account. Many creditors want to help customers stay afloat and not go under because it is actually more costly for them. Creditors get nothing from their customers when they file for bankruptcy, so many want to work with someone who is struggling and cut down the amount of the debt so both parties can win.

Sources:

http://www.reuters.com/article/bankruptcyNews/idUSN0936993120090609
http://www.bloomberg.com/apps/news?pid=20601068&sid=at_99ovdBIUE
http://feeds.bignewsnetwork.com/?sid=570033

Filing for Bankruptcy: What Goes Wrong?

2009-12-03T10:27:00.000-08:00

By Robert Katz

There are many reasons for why people file for bankruptcy and they are probably not what you would expect. A couple of the main reasons people end up having to file for bankruptcy is because of the high costs of medical bills out of their control, have to pay the high costs lawyers and pay out a divorce settlement, and one of the most common reasons is lossing your job. One of the main reasons for the economic crash as of recent was because people were spending way more than they had expecting money to continuously flowing in with out fully thinking about the future and what could happen. When managing your personal finances it is always the best to budget for the worst in the best of times, for no matter how good things may be they can change at the drop of a hat.
People that get into these rough financial spots may not actually be completely broke because filing for bankruptcy has some benefits when you have lots of debt. When you file for bankruptcy you are admitting to being in trouble and are in effect asking for help. People file for bankruptcy because it can stop your house from being foreclosed, your property from being, repossessed, it can reduce or even eliminate the high costs of medical bills, and generally decreases the legal obligation to pay back most of your debts. These are some of the major benefits of filing for bankruptcy if you are truly in serious financial crisis. Some more minor benefits can be stopping harassing collection calls, restore utilities if they were shut off, and stop wage garnishment. Regardless of all of these benefits, if you just manage your money and budget properly, most likely, you'll never have to be in a position that filing for bankruptcy is necessary.

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How Did This Happen?

2009-12-03T10:13:00.000-08:00

Dear Readers, Picture This:

Posted By: Robert Katz

Your spouse is out of job, the monthly income is halved and your family is left without health insurance. Just as you are managing somehow by slashing all unnecessary expenses your child is hospitalized for a tonsillectomy. Past-due bills are piling up, the number of calls from nasty creditors, and the letters threatening to foreclose on your mortgage, are on the rise too. You contact non-profit debt counseling services who manage to keep their promise of permanently lowering interest rates on some of your outstanding bills. But six months on, and having paid the sign-up charge and monthly fee of the agency, your debt only increases. The counseling services seems to have profited more.

Claim for help is hollow, and the promise to rescue, a scam. The combination of high household debt levels and major corporate layoffs in the past few years has led to a sudden increase in many organizations that depend on people falling for these claims.

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Supreme Court Weighs Bankruptcy Code Provisions

2009-12-03T10:05:00.000-08:00

Posted by Chris O'Sullivan

Article by Rachel Feintzeig (WSJ)

Bankruptcy got its moment in the Supreme Court spotlight yesterday when the justices heard oral arguments in two bankruptcy-related cases: one centered on the issue of discharging student loans in Chapter 13 and one challenging changes to the Bankruptcy Code.

The latter case could potentially have the biggest impact on bankruptcy attorneys, who are currently barred from encouraging clients who are considering filing for bankruptcy protection to take on more debt. That provision was added to the Bankruptcy Code during the 2005 revisions, along with a requirement that attorneys identify themselves as “debt-relief agencies.”

Minnesota law firm Milavetz, Gallop & Milavetz P.A. is challenging both provisions, arguing that they violate the first amendment. The firm’s attorney, G. Eric Brunstad of Dechert LLP, faced off against the U.S. Department of Justice yesterday on Capitol Hill.

The provision “basically proscribes or tells the lawyer you can’t give perfectly legitimate advice, and that’s wrong,” Brunstad said in an interview following the arguments. “The government has no compelling reason to prohibit that kind of advice.”

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The Real Deal on Bankruptcy

2009-12-03T08:35:00.000-08:00

By: Zachary Pienkowski

Living in a society that has learned to lived completely swamped in debt, it is important to understand what really is involved in a bankruptcy proceeding. In many cases, people think that your house is off limits to the creditors. This is true in some situations, but bankruptcy law vary by region and it is critical to fully understand the laws in your area before you file. In some cases, the amount of equity you have in your home is protected, but in others that equity is not protected and you run the risk of losing your residence. Probably the most common myth about bankruptcy is that once you file all of your debts are gone you are get off free. That may be true with some debts like credit cards, but student loans, alimony, and support are not going away. Making the decision to file for bankruptcy should be carefully thought out because it will not leave you without any debts. In addition to not having control of any of those debts anymore, you unfortunately do not hold the rights to your assets anymore either. Another myth is that even though you declared bankruptcy that you will never be able to get a credit card or establish credit again. This is not entirely true, however, it is not something that will change over night. Most people typically are unsuccessful in repairing their credit within the first few years. Bankruptcy may also last longer than you think. Generally you are discharged after a period of time and can begin to rebuild your life. There are some people that can step in the way of that and keep you bankrupt for longer than you expected. This is rare however unless the bankruptcy was due to a case of fraud, in which the punishment in significantly more severe.

Sources:

http://ca.finance.yahoo.com/personal-finance/article/bankratecanada/1344/five-bankruptcy-myths

http://kclau.com/wealth-management/bankruptcy/

http://www.lawhandbook.sa.gov.au/ch03s03s01.php

A look at 'White House Crasher's' Bankruptcy

2009-12-02T18:45:00.000-08:00

Posted by Andrew Lipsitz

Tareq and Michaele Salahi have catapulted themselves into the public spotlight with their "uninvited" appearance at a White House state dinner on Nov. 24. It was President Obama's first official state dinner and the gate crashers sadly showed how easy it is (or was that night) to walk in off the street and stand within steps of two world leaders (Obama and India Prime Minister Manmohan Singh).

In an interview with NBC's "Today Show" host Matt Lauer Tuesday morning, the Salahis insisted they weren't party crashers and said the truth will come out in the Secret Service investigation.

The couple also denied reports in some media that they were trying to sell the story of their escapades to media outlets. (Reports said they wanted upwards of $100,000.) Lauer attempted to put speculation to rest by asking the couple on air if they were paid to do the NBC interview. They said they weren't.

But from the state of their financial affairs revealed in public records, they may really need the money.

Bankruptcy papers show mounds of debtIn Chapter 7 bankruptcy documents filed earlier this year in the Eastern District of Virginia, Tareq Salahi's vineyard company, Oasis Enterprises Inc., claims $335,000 in assets but $965,000 in liabilities, including at least $81,000 in credit card debts. According to CNN.com, the couple faces numerous civil suits in the Virginia-D.C. area as well.

Maybe they were trying to get close to Obama to hit him up for a loan. But more likely they are a new breed of thrill seekers -- reality TV wannabes hoping to wrestle the spotlight for themselves. (They were trying out for "The Real Housewives of D.C.") Does the balloon boy stunt sound familiar here? Just like the Colorado family who falsely claimed their six-year-old son was launched into a homemade balloon, the Salahis have perhaps gotten more spotlight than they bargained for, with some members of Congress calling for an investigation of the White House security breach.

The bankruptcy filings paint a picture of a couple living the good life, funded in part by credit cards when their vineyard company started to, well, dry up. Business income of $1.7 million in 2007 dwindled to only $35,000 in 2008, according to bankruptcy records. Fancy boats and cars (including an Aston Martin) have been repossessed to pay creditors.

One creditor, Wells Fargo Bank, filed a court claim seeking $19,577.85 in credit card debt from Tareq Salahi. According to the bank's claim, Tareq Salahi, the vineyard president, had a $25,000 credit line on a business credit card with a 9.25 percent interest rate. As of May 18, 2009, when the claim was filed, Salahi's last payment on the account was $500 received July 22, 2008, making the account 330 days delinquent.

Wells Fargo lists a 475 FICO score for the account, which would put Salahi in the less-than-stellar bad credit risk category on FICO's scale of 350 to 850.

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'Office' plotlines reflect recession anxieties

2009-12-01T20:07:00.000-08:00

By: Zachary Pienkowski

(CNN) -- Dunder Mifflin, the fictional paper company at the center of NBC's prime-time comedy "The Office," is facing bankruptcy. Staffers in the Scranton branch are anxious about their fate.

"The Office" is among a great many prime-time shows that have integrated recession-era themes into their plotlines this fall in an effort to reflect the changing American economic climate. Art imitating life on television can offer a sense of solidarity for the viewing public and a new type of coping mechanism for dealing with recession-related stress.

"Shows that deal with the recession help people to validate the full range of emotions they are feeling right now," explained Stephan J. Quentzel, psychiatrist, family physician and director of Beth Israel Hospital's Louis Armstrong Center for Music and Medicine in New York.

"It doesn't trivialize the experience. It shows people they don't have to put on a good face and think positively. It helps them realize that they are angry, and that's OK, and that is why watching these shows is so therapeutic."

Without an entire show based specifically on the recession, financial uncertainty and economic realities have infiltrated the secondary plotlines of shows like CBS's "The Good Wife," where impending law firm layoffs on a recent episode led characters to throw furniture as they cleaned out their desks.

The anger that is apparent on the show is exactly what Quentzel means by fans being able to relate to a full range of emotions through viewing them on the small screen.

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U.S. 4th Largest Cable Operater comes out of Bankruptcy

2009-12-01T09:29:00.000-08:00

Posted by Chris O'Sullivan

Article by Kelsey Volkmann (WSJ)

Charter Communications Inc., one of the largest cable-television and Internet services providers in Massachusetts, has emerged from Chapter 11 bankruptcy with $8 billion less debt.

Judge James Peck in U.S. Bankruptcy Court in the Southern District of New York approved the pre-arranged financial restructuring Nov. 17, which was filed March 27 and considered one of the nation’s largest and most complex bankruptcy filings.

Through the plan, Charter, the fourth-largest U.S. cable operator, will shave off $8 billion from the $21 billion debt it took on through acquisitions and service upgrades to compete with larger rivals. The company, which has 5.3 million customers and reported a loss every year since going public in 1999, said it expects to generate positive free cash flow through the reduction of more than $830 million in annual interest expense.

Charter’s plan generates $1.6 billion in proceeds from an equity rights offering; reinstates $11.4 billion of its senior bank debt at below-market rates; and gives Microsoft co-founder Paul Allen the largest voting interest at 35 percent.

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The Truth About Bankruptcy

2009-11-30T21:20:00.000-08:00

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

2009-11-30T21:11:00.000-08:00

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

2009-11-29T21:26:00.000-08:00

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

2009-11-29T20:56:00.000-08:00

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

2009-11-29T20:53:00.000-08:00

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.

click to read about it:
http://www.smartmoney.com/personal-finance/debt/understanding-the-bankruptcy-rules-15647/

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

2009-11-29T20:43:00.000-08:00

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

2009-11-25T08:31:00.000-08:00

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

2009-11-24T10:29:00.000-08:00

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?

2009-11-24T08:37:00.000-08:00

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

2009-11-23T14:32:00.000-08:00

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

2009-11-19T19:03:00.000-08:00

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

2009-11-19T17:09:00.000-08:00

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

2009-11-19T13:52:00.000-08:00

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

2009-11-19T11:37:00.000-08:00

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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Source #3

Investor Protection under Corporate Bankruptcy

2009-11-19T10:02:00.000-08:00

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

2009-11-19T09:43:00.000-08:00

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

2009-11-18T21:07:00.000-08:00

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.

Sources:
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AIG gets a pass

2009-11-18T09:29:00.000-08:00

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%

2009-11-17T11:16:00.000-08:00

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

2009-11-17T07:37:00.000-08:00

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

2009-11-17T03:49:00.000-08:00

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

2009-11-16T22:13:00.000-08:00

Posted by Chris O'Sullivan

Article by Mike Spector (Wall Street Journal)

The bankruptcy boom is going bust -- for now.

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What Are the Positive Benefits of Bankruptcy?

2009-11-16T20:12:00.000-08:00

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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http://ezinearticles.com/?When-Bankruptcy-is-a-Legitimate-Option&id=3270821
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Gay publications close after bankruptcy

2009-11-16T20:01:00.000-08:00

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

2009-11-16T10:54:00.000-08:00

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

2009-11-10T13:51:00.000-08:00

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

2009-11-10T12:29:00.000-08:00

No Slide TitleNo Slide Title

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.

Click to read more.

Advanta files for bankruptcy protection

2009-11-08T21:11:00.000-08:00

Posted By Rico K Setyo
By Megan Davies

Advanta Corp (ADVNA.O), a small business credit card lender, on Sunday said it filed for bankruptcy protection after the economic crisis over the last two years devastated its small business customers.

Advanta Bank Corp, a wholly owned subsidiary of Advanta Corp which issues credit cards for small businesses, is not included in the Chapter 11 filing, the company said. The filing will not have any impact on outstanding credit card balances, Advanta said.

The Spring House, Pennsylvania-based company Advanta, which earlier this year shut 1 million accounts, said it is currently collecting its $2.7 billion portfolio of managed receivables from 360,000 customers, but the cards are not open to new charges.

It cautioned that Advanta Bank's capital is below regulatory capital requirements and over time Advanta Bank Corp may be turned over to an FDIC receivership.

It said the parent corporation has decided not to fund the capital deficiency in order to preserve value for the senior retail note holders and other Advanta Corp. stakeholders.

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Personal Bankruptcy on the Rise

2009-11-08T20:56:00.000-08:00

By Rico K. Setyo

Since 2007, the financial crisis has taken a toll on both individuals and businesses. For the past two years, many businesses and corporations have fallen and filed for bankruptcy. However, corporations in the financial and commercial industry are not the only victims of bankruptcy, many consumers have fallen to bankruptcy filings.

The amount of American consumers filing personal bankruptcies has reached 9% which is considered the highest in four years. In addition the amount of total bankruptcies exceeded 1.4 million. Many people are still holding a lot of debt like credit cards and home equity loans. Since unemployment continues to rise, these people who have a lot of liabilities are not able to pay their creditors which ultimately lead to bankruptcy. However, many people have found alternatives to pay their debts by tapping into their retirement funds and savings.

The government is trying to help these people by passing an unemployment extension bill which was recently passed by the senate. This bill will help Americans by giving them an additional 20 weeks of unemployment benefits. Since unemployment is closely connected with bankruptcy, passing this bill will hopefully help some people with their financial struggles.

Another way to reduce the amount of people filing for personal bankruptcy is taking alternatives to relieve debt. Some of these alternatives are debt settlement, debt consolidation & debt consolidation loans, and consumer credit counseling.

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Effectiveness of Government Bailouts

2009-11-08T19:35:00.000-08:00

Written By: Lisa Matthys

It was hardly a surprise that CIT filed for Chapter 11 bankruptcy protection on November 1st as it has been expected for months. However, mainstream media is calling the collapse “one of the largest in U.S. corporate history”, fifth after Lehman Brothers, Washington Mutual, WorldCom, and General Motors.

The 101-year-old CIT received a $2.3 billion bailout from the federal government last December. The bankruptcy of CIT marks the first failure of a government-bailed-out firm. Last year during the peak of the financial crisis, government bailouts were expected to help those banking companies near the verge of filing for bankruptcy. Out of those companies given government money, companies like Goldman Sachs Group Inc. and JPMorgan Chase & Co. have already repaid their debt and restrictions have been lifted. But companies such as Citigroup Inc. and Bank of America Corp will continue to have restrictions, on bonuses for example, until they pay back the government.

But when will enough be enough? The Obama Administration is currently contemplating whether to provide a third rescue to GMAC, which provides financing for dealers, primarily General Motors and Chrysler. GMAC is seeking as much as $5.6 billion in taxpayer money, on top of the $12.5 billion it received previously. Many say that GMAC’s failure would be devastating not only to General Motors and Chrysler, but also to consumers who often use GMAC to finance loans to buy new vehicles.

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As Bankruptcies Surge, Fewer Emerge

2009-11-08T19:23:00.000-08:00

Posted by Adam Lindheim
By John Tozzi

As the effects of the recession continue, the high number of business bankruptcies—7,514 in May, up 40% from the prior year—shows few signs of abating. That's because the factors pushing companies into bankruptcy, including depressed sales and tighter credit, may linger even when the economy starts growing again, especially if the recovery is less than robust.

More than 100,000 companies—about one in every 270 American businesses—have landed in bankruptcy court since the downturn began 18 months ago, according to data compiled by Oklahoma City-based Jupiter eSources, which tracks bankruptcy filings through its AACER database. The rate of commercial bankruptcies has more than doubled in two years, and economists expect the level to remain high for a year or longer once the recession ends. In addition, creditors are less willing to work with business owners to find ways for an insolvent firm to recover.

That's because in a sluggish recovery, banks with already fragile balance sheets are unlikely to be sympathetic to debtors' turnaround plans. Often creditors recover more of their debts faster by closing bankrupt businesses and selling off the assets. "Today lenders—meaning banks—have much less patience for a traditional Chapter 11 reorganization, no matter what size the case," says attorney Kenneth Rosen, head of the bankruptcy group at Lowenstein Sandler in Roseland, N.J.

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Bankruptcy Buyout Basics

2009-11-08T18:58:00.001-08:00

By Adam Lindheim

With more and more businesses filling for bankruptcy, bankruptcy buyouts are becoming more common, but can be problematic compared to traditional acquisitions. Most modern bankruptcy buyouts are considered 363 deals. 363 refers to a section of the bankruptcy codes, and are designed to maximize value of each of the businesses assets. These deals are not intended to follow the same procedures as chapter 7 or chapter 13, as well speeds up the processes.

If a businesses entrepreneur is aware of a business potentially filling for bankruptcy, they can work out a deal to make the buyout easier before the company files for bankruptcy. The company or individual purchasing the company can build in protections in order to insure the success of buyout. Once the seller files for bankruptcy, they can ask the judge to approve the deal and then authorize the auction of the company. The seller must still give the auction to the highest bidder, but the 363 deal insures a quick and speedy deal is done. Despite these facts Moody's Investors Service did a study that followed the largest private equity deals of the decades buyouts. They found that these deals fared much worse than in past decades. It is important to carefully study the companies that are filing for bankruptcy before an acquisition deal is finished.

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Hollywood Financial Woes: Willie Aames Rebounds, Nicholas Cage Sues

2009-11-08T18:39:00.000-08:00

Posted By: Lisa Matthys

Written By: Alice Gomstyn and Sheila Marikar

Celebrity financial problems are making headlines again this week, with Nicolas Cage pursuing a lawsuit, and Willie Aames trying to make a comeback.

A documentary chronicling Aames' efforts to rebuild his life will premiere Thursday on VH1. The documentary is called "Broke and Famous: Willie Aames," and it will show the star of "Eight Is Enough" and "Charles in Charge," who has struggled with a home foreclosure and bankruptcy, working with a financial guru and life coach. He is trying "to reshape his financial future," VH1 said in a statement.

Evidently, Aames has already succeeded -- he told the show "Entertainment Tonight" that he, himself, now plans to become a financial advisor.

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GM and Opel

2009-11-08T15:51:00.000-08:00

Written by Minjune Kim

DETROIT — The head of European operations for General Motors quit on Friday after the automaker backed out of a deal to sell its Opel brand, a decision that has angered German workers and government officials.
The executive, Carl-Peter Forster, was expected to run Opel after a majority stake was transferred to the Canadian auto parts supplier Magna International and the Russian bank Sberbank.
Mr. Forster had been outspoken in his support of the sale and this week criticized G.M.’s handling of the deal, the result of talks that started in the spring as the company spiraled toward its June 1 bankruptcy filing. The aborted deal also included G.M.’s British brand, Vauxhall.
Robert A. Lutz, G.M.’s marketing chief and a member of Opel’s supervisory board, will become Opel’s interim chairman while G.M. searches for a new chief executive, a person with direct knowledge of those plans said. Mr. Lutz, 77, who delayed previous plans to retire this year, will retain his current duties.

GM now intends to keep Opel and its sister brand Vauxhall, but needs to update its restructuring plan in order to win financing for the move from Germany, the U.K., Poland and Spain. GM said Tuesday it needs €3 billion ($4.45 billion) in government financing, but in recent days has indicated it may have other ways to help fund a restructuring, including using its own liquidity.
Mr. Forster, an opponent of the board's decision to keep Opel, will be replaced for now by GM marketing chief Robert A. Lutz, who will be head of the Opel supervisory board but not GM Europe CEO.

In Germany, tensions are running high over GM’s decision not to go through with a deal that would have given Magna and Russian bank Sberbank majority control of Opel, a deal favored by European labor unions and German politicians.
Thousands of Opel employees walked off the job on Thursday to protest the decision.
“Our trust (in GM) is now zero, and that is the heart of the problem,” the Associated Press quoted Klaus Franz, the head of Opel’s employee council, telling thousands of workers in Ruesselsheim.

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Lear to Exit Bankruptcy Court

2009-11-08T15:30:00.000-08:00

Written by JOHN D. STOLL

Posted by Minjune Kim

Lear Corp. plans to emerge from bankruptcy protection Monday with a message from Chief Executive Bob Rossiter: "We are a tighter, leaner company that will never make some of the mistakes we made in the past."
The Southfield, Mich., company, which produces seats and electronics for automobiles, expects to emerge from bankruptcy court on Monday, just four months after it filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Despite concerns voiced earlier in the year suggesting there would be no bankruptcy financing available for auto suppliers, Mr. Rossiter managed to line up creditors and lenders willing to fund a $500 million debtor-in-possession facility and exchange billions in debt for new equity.
Lear and many of the other key players in the U.S. supply industry avoided the dire prospects predicted for the auto-supply chain earlier this year. At least 50 auto suppliers have filed for bankruptcy protection in 2009, but many of them have managed to quickly regain footing and avoid liquidation even though the U.S. auto-supply chain is operating at about 46% of its actual production capacity, according to the Original Equipment Suppliers Association.
"There has been significant progress in recent months to recognize and protect the [suppliers] that will continue to provide the foundation beneath any [auto maker] looking forward to surviving this crisis," CSM world-wide supply-chain analyst John Eaton said in a recent research report. Billions in aid from the U.S. Treasury Department, and an unexpected, albeit limited, source of DIP financing has helped salvage many of the larger parts makers.
On Monday, Lear is expected to post a $100 million operating profit and $100 million in positive free cash flow for the third quarter, as well as announce that its new business backlog for the next three years has swelled to $1.4 billion, or 25% higher than it was in January, according to a spokesman.
For Mr. Rossiter, who has been at Lear's helm since 2003, the challenge has never been about proving that his company has a strong core. His challenge has been posting sustained earnings growth while relying heavily on U.S. auto makers that often oblige suppliers to take price reductions, shoulder material cost increases, and incur mountains of debt in order to win supply contracts.
It was a pile of debt, much of which was related to a business it hasn't owned since mid-decade, that landed Lear in bankruptcy court.
The auto supplier divested its interiors business—which relied on the extremely low-margin production of injection-molded plastic parts—to billionaire investor Wilbur Ross.
As a part of that deal, Lear agreed to keep about $2 billion of that business's debt. "We were carrying this $2 billion in debt that we had no sales on," Mr. Rossiter said in an interview Friday.
By last November, after the meltdown of the credit markets and a nosedive in U.S. auto sales, Mr. Rossiter said it was clear that the company would have to do something about its debt load.
Rather than wait for government funding or request significant bailouts from its customers, Mr. Rossiter tried his luck with bankruptcy and creditors, making it clear that "we are more realistic about our approach...we want a fair return for what we give."
Lear expects its stock to resume trading on the New York Stock Exchange upon the company's emergence from bankruptcy court. Mr. Rossiter said the equity, which is mostly owned by the creditors who backed the Chapter 11 filing, is expected to be valued at $1.9 billion, a level not seen since mid-2008. "We think we fixed the business and we're going to come out with investment-grade metrics," Mr. Rossiter said.
Under Mr. Rossiter, Lear increasingly has moved operations to lower-cost markets and won business in markets outside the U.S., including Asia and Europe. Its most recent achievement was scoring the seating business for the Fiat 500 compact car that Fiat SpA plans to make in Mexico and sell in the U.S.
But despite deep retooling, Lear has made one annual profit in the past four fiscal years. Standard & Poor's Ratings Services, in a news release issued late Friday about its expectations for Lear's credit ratings, estimated that 37% of Lear's 2008 sales are based on deliveries to General Motors Co. and Ford Motor Co. A quarter of its seat sales are to GM. S&P expects to assign a "B" credit rating to Lear's corporate credit and view it with a "stable outlook."
Analysts expect Lear's court-protected debt restructuring, which will lower interest payments, to help drive profits. Lear also reworked supply and labor contracts in bankruptcy court in order to cut costs and fortify pricing. "Based on the capital structure under the plan of reorganization, the new company will have reduced its debt by more than 75% from pre-bankruptcy levels," S&P credit analyst Lawrence Orlowski wrote in the release.
"We assume Lear's global sales for 2010 will grow 12%," Mr. Orlowski added. Still, the supplier is likely to face major challenges. "We believe the new Lear's business risk profile after emergence will be weak, largely because of volatile auto production levels, high fixed costs, fierce competition, and severe pricing pressures that characterize the global auto supplier industry," Mr. Orlowski said.

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Namvar Debts At New Heights

2009-11-08T11:23:00.000-08:00

INVESTMENT: Businessman personally owes $321 million.

Posted by Stefanie Marty

Written by DANIEL MILLER

Los Angeles Business Journal Staff

Bankrupt businessman Ezri Namvar personally owes at least $321 million to creditors, making his bankruptcy one of the largest in Los Angeles County in recent decades.

That amount, combined with $545 million already known to be owed by his bankrupt real estate investment company, Namco Capital Group Inc., swells the total amount of money owed in Namvar’s financial collapse to at least $866 million.

The information on what Namvar owes comes from a list of the businessman’s personal debts that was prepared by his bankruptcy counsel but has not been filed in court. The list can be found on the Namvar bankruptcy trustee’s Web site.

Bankruptcy experts and local attorneys said they know of no larger personal bankruptcy in Los Angeles County in recent decades, although no one knew of any records that would verify that. However, local corporate bankruptcies, such as Fremont General Corp. and IndyMac Bancorp Inc., were far larger.

“This is as big a local real estate bankruptcy case as I recall,” said J. Scott Bovitz, a bankruptcy law expert with three decades of experience who is also representing a Namco creditor. “I think at the end of the day we are going to discover the amounts are higher – I think it could be a billion-dollar case.”

Namvar is the subject of a federal investigation and has been accused by several creditors of running a Ponzi scheme after his real estate business collapsed.

Namvar raised money in an unusual way. He personally collected it from hundreds of members of his own West L.A. Persian Jewish community, some of whom are now said to be destitute after handing him their life savings. He invested most of it in commercial real estate, including such local trophy assets as the Los Angeles Marriott Downtown hotel; the Wilshire Bundy Plaza office building in West Los Angeles; and the Park Fifth development site downtown, where he and his partners planned to build the tallest condo tower west of Chicago.

His empire, valued at $2.4 billion in mid-2008, collapsed in the real estate downturn in the second half of last year. He and his company were forced into bankruptcy by a group of creditors in December.

Filing Personal Bankruptcy or Opt for a Debt Relief Program?

2009-11-08T11:19:00.000-08:00

Written by Stefanie Marty

Bankruptcy filings are at near historical highs. Consumers feel that they are benefiting through filing personal bankruptcy. But totaldebtrelief.net advises to avoid personal bankruptcy due to different reasons. By filing bankruptcy it doesn’t mean that personal property cannot be seized anymore. Further bankruptcy has a long-term effect on the filers by destroying their credit records. It is almost impossible for filers to get any form of credit during a long period of time, it will be more difficult for them to get a job and it also leads more likely to higher deposits paid by them for utilities.

But certainly there are cases when filing bankruptcy makes sense. When to file for bankruptcy is different for everyone. John Turner, an attorney specializing in bankruptcies, says that in general people might need to start thinking about filing when they pay everyday expenses with their credit card.

Instead of filing personal bankruptcy totaldebtrelief.net advises individuals to consider alternatives like debt relief programs. One such alternative is a debt settlement which helps eliminating credit card debt. But also in such a process every step has to be evaluated carefully. As Susan Grant, director of consumer protection at the Consumer Federation of America, said: “There's no guarantee that a debt-settlement company is going to be able to in fact settle your debts for pennies on the dollar, if at all.” To make sure a debt settlement is the right thing to do in your situation, visit a consumer-credit counseling agency, talk to attorney, and try working out a settlement yourself. Working out a settlement helps you to find out what you can afford to pay and come to an agreement with your creditors.

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One of the oldest symphony houses declares bankruptcy

2009-11-07T10:41:00.000-08:00

Written by Michael Rivezzo

The Honolulu Symphony, one of the oldest symphony houses still left, has decided to file for Chapter 11 bankruptcy protection. Last week the symphony stated that it did't have the money to supplement their payroll. The house decided it will cancel the rest of their shows for this year, they do not want to spend money they don't have said Majken Mechling, the executive director of the symphony society. They stated that ticket sales were the same as usual but donations, which covers 70 percent of costs, were down exponentially.

The symphony had trouble signs over the past years of the upcoming bankruptcy. Last year they held checks for sometimes up to three months. Musicians, conductors and staff tried to help carry the load by accepting a 15-20 percent payroll cut for this year. They just did not have the money to support a 64-piece orchestra. They go into bankruptcy with a 1 million dollars in debt. They have plan to re-organize themselves and possibly cut the orchestra's size to be easier to sustain a future growth.

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Personal bankruptcies surge 9%

2009-11-07T10:36:00.000-08:00

By Hibah Yousuf

Posted by Michael Rivezzo

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.

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Small Business Bankruptcy Filings Up 44% from Last Year

2009-11-03T17:48:00.000-08:00

Written by: Lisa Matthys

An analysis performed by Equifax Inc. shows that bankruptcies among small businesses have increased by 44% from the third quarter of 2008 to the third quarter of 2009. In September 2009, there were 9361 bankruptcy filings throughout the U.S., up from 7386 one year ago. California remains the state with the most commercial bankruptcy filings during September 2009. Other states with high small business bankruptcies include Colorado, Texas, Oregon, and Georgia. Based on the data, the East Coast (areas such as Charlotte and New York – White Plains) are experiencing an earlier recovery from the recession than the West Coast.

Because of such high bankruptcy statistics over the last year and the recent declaration of bankruptcy of major Small Business Administration-backed loans, CIT, small businesses are struggling to find loans because banks are raising lending requirements and reducing the amount of credit they are willing to extend to reduce their exposure to risk. However, all hope is not lost. There are still sources for financing but borrowers must be prepared to disclose their current financial standing, along with the past two years of financial performance. With the current economy, small business bankruptcies are expected to continue to rise, leading to higher unemployment within the United States.

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October Personal Bankruptcies Highest Since 2005 Law Changes

2009-11-03T16:31:00.000-08:00

Posted by: Lisa Matthys

Written by: Bill Rochelle and Michael Bathon

Nov. 3 (Bloomberg) -- More Americans filed bankruptcy in October than in any month since changes to U.S. bankruptcy laws in 2005 as unemployment and falling home prices prevented consumers from paying their debts.

The number of individuals filing bankruptcy rose 25 percent to about 131,200 from a year earlier, according to data compiled from court records by Oklahoma City-based Jupiter ESources LLC. The 1.2 million bankruptcies filed through October have already surpassed last year’s total of 1.1 million.

Businesses also continued to struggle to pay creditors; corporate bankruptcies climbed about 30 percent from October 2008, according to Jupiter. Chapter 11 bankruptcies, where a company attempts to reorganize rather than liquidate, rose the most in four months to 1,327 in October, according to Jupiter.

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Business Bankruptcy Filings Increased 7% in October

2009-11-03T15:19:00.000-08:00

By Eric Morath
Posted By: Srividya Srinivasan

Business bankruptcy filings jumped in October, reversing two consecutive months of declining commercial filings and indicating that bankruptcies could continue to rise as the economy struggles to stabilize.

Last month, 7,771 businesses filed for bankruptcy protection, compared to 7,271 that sought shelter from creditors in September, according to data from Automated Access to Court Electronic Records, a private firm that tracks bankruptcy filings.

After two months of decline, the 7% rise in commercial filings shows that businesses are still struggling to access financing and are facing weak demand for their products.

"The margin for success is so thin that any financial hiccup" could cause a business to file for bankruptcy, said Jack Williams, a bankruptcy professor at the Georgia State University College of Law.

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The Truth about Bankruptcy

2009-11-03T14:59:00.000-08:00

Posted by: Srividya Srinivasan

Filing bankruptcy represents starting over to some people. Why not start with a clean slate? Because it destroys your financial life let alone your personal life. Bankruptcy should not be a word that is taken lightly. The benefits of bankruptcy are your debt-to-income ratio is reduced, no more harassing calls from creditors, and you can start building up credit immediately after filing. However, the so-called benefits come at a great cost. Filing total bankruptcy affects your credit report and is kept on record for 10 years. Even after this time frame, a bankruptcy past can follow you for the rest of your life. When applying for a loan, it is common to question about past bankruptcy filings. If saying no because it is beyond 10 years, it is still considered fraud.

Most bankruptcy cases can be avoided, and if it is possible, it should be. With help from financial counselors and extensive amputation of excess stuff, eliminates the painful process of bankruptcy. With the help of creditors, debit collectors, and family and friends, as well as selling assets, the option of filing for bankruptcy might no longer have to be an option. As said in an article DaveRamsey.com about the experience of bankruptcy, foreclosure, and lawsuits, “Been there, done that, got the t-shirt, and it is not worth it”.

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CIT bankruptcy hits Asian markets

2009-11-02T17:46:00.000-08:00

Written by Minjune Kim

Stock markets sagged across much of the Asia-Pacific region on Monday, unnerved by news over the weekend that the US lender CIT Group had filed for bankruptcy, and following a dismal showing on Wall Street on Friday. Upbeat economic news from China, South Korea and Australia did little to lift the mood in most of the region as investors focused instead on the fact that the US recovery remains feeble — a fact that was hammered home by weak US consumer spending data Friday.

Asian markets tumbled Monday as a heavy loss on Wall Street at the end of last week was compounded by the bankruptcy of US bank CIT at the weekend, hitting confidence for a global economic recovery. Tokyo lost 2.31 percent, Sydney 2.21 percent and Seoul 1.37 percent as dealers went into sell-off mode. Hong Kong lost 0.61 percent, after having been almost three percent lower at one point. Benchmarks in New Zealand, Taiwan and Singapore also fell, though the region recovered some early losses on strength in mainland China. The Shanghai Composite index was the only major market in positive territory, up 2.7 percent on stronger manufacturing figures and higher bank earnings. The broader Standard & Poor's 500 index fell 29.92, or 2.8 percent, to 1,036.19, and the Nasdaq composite index dropped 52.44, or 2.5 percent, to 2,045.11.U.S. markets were headed for a higher open. Dow futures rose 26 points, or 0.3 percent, to 9,690, while S&P futures climbed 3.3, or 0.3 percent, to 1,036. Oil prices were higher after a big fall, with benchmark crude for December delivery up 22 cents to $77.22 a barrel. The contract dropped $2.87 to settle at $77.00 on Friday.

US consumer spending data released on Friday, which showed a 0.5 per cent drop in September, revealed that American shoppers, concerned about their job prospects, remain reluctant to open their wallets — bad news for Asia’s export-dependent economies.
Combined with the CIT Group insolvency that served as a reminder that the US economy and financial system remain under considerable pressure, analysts said.

‘‘CIT filing for Chapter 11 bankruptcy protection is the culmination of difficulties for the lender that investors would have been well aware of. Still, it will at least refocus attention on underlying economic challenges and underpin risk unwinding trades,’’ Patrick Bennett, a strategist at Société Générale in Hong Kong, said in a note.

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CIT Australia Bondholders Agree to Waive Rights, Letter Shows

2009-11-02T16:15:00.000-08:00

Written by Sarah McDonald

Posted by Minjune Kim

Nov. 3 (Bloomberg) -- Bondholders of CIT Group Inc.’s Australian unit agreed to allow the lender to keep operating as normal after the U.S. parent filed for bankruptcy, according to a company letter to clients seen by Bloomberg News.

CIT Australia negotiated “certain concessions” for investors in its medium-term notes in return for them “forbearing from exercising rights associated with the bankruptcy,” it said in a letter dated yesterday and signed by Managing Director Keith Rodwell.

The letter didn’t give details on the concessions and Rodwell declined to comment when contacted at his office.

CIT, based in New York, listed $71 billion in assets and $64.9 billion in liabilities in a Chapter 11 petition to the U.S. Bankruptcy Court in Manhattan on Nov. 1. The lender, which funds about 1 million businesses such as Dunkin’ Brands Inc. and Eddie Bauer Holdings Inc., said it plans to exit court protection quickly because of support from bondholders, who voted for a “prepackaged” plan.

CIT Group (Australia) Ltd. sold A$300 million ($271 million) of fixed- and floating-rate notes in 2006, according to data compiled by Bloomberg. The bonds were guaranteed by CIT Group, National Australia Bank Ltd. analysts said in a research note yesterday.

The guarantor’s bankruptcy is likely to trigger an event of default, which gives bondholders the right to demand early repayment. The bonds mature in March 2011, Bloomberg data show.

None of CIT’s operating subsidiaries is included in the U.S. bankruptcy filing, according to a group statement.

“CIT Australia is well capitalized, profitable and cash- flow positive,” and the parent group’s bankruptcy filing will have “limited effect” on its daily business, the letter said.

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CIT Group Files Chapter 11; Biggest Loss For TARP Plan

2009-11-02T10:44:00.000-08:00

By: Albert Tirado

Despite receiving $2.3 billion in federal bailout funds, small-business lender CIT Group Inc. filed for Chapter 11 bankruptcy Sunday afternoon.

CIT is the first firm to fail after receiving government bailout money. The bankruptcy is the largest loss so far for the Trouble Asset Relief Program and ranks among the top five largest bankruptcies in U.S. history.

The 101-year-old company's prepackaged bankruptcy plan is expected to allow the company to leave court protection by the end of the year under the control of its debt holders. While shareholders could receive new notes worth 70 percent of their existing shares, the Treasury Department probably will not see any of its bailout funds repaid

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The 10 towns with the highest rates of personal bankruptcy

2009-11-01T11:41:00.000-08:00

Written by David Budworth
Posted by Stefanie Marty

Bankruptcy and recessions go together like fat cats and bankers - but a report out this week reveals that in some parts of the country this is more true than others.

People in coastal towns are particularly prone to declare themselves bust, according to research from Wilkins Kennedy, the accountant

Overall, the average rate of personal insolvencies in coastal towns was almost one third higher last year than the national average at 20.6 per 10,000 adults, compared with 15.7 across the country and 9.1 in London.

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Increase in Personal Bankruptcy

2009-11-01T11:36:00.000-08:00

Written by Stefanie Marty

Personal bankruptcy filings in the United States have risen dramatically in 2009. Here are some numbers: In September alone 130,000 families filed for bankruptcy and so far this year more than one million people have done so. This is a huge increase from 2008 when the total number of bankruptcy filings was 1.1 million. And compared to the first nine month in 2008, there has been a 40% increase in the same timeframe of 2009.

A report of Equifax showed that together with this rise of bankruptcy filings, mortgage delinquencies raised as well, while credit card debt and lines of credit are being reduced. Dann Adams, president of Equifax’s U.S. Consumer Information, explains this result with the current economy in transition. He said that many consumers are still struggling with the high unemployment and the restricted credits, but have improved their cash management.

Other reasons for the high increase in personal bankruptcy filings are the high debt-level people carry, the medical problems people face and the way the real estate market has developed. The debt US citizens hold relative to their income is too big for that they would be able to pay the debt back in case of a job loss. Today, the debt to income ratio of Americans is bigger than 130%. Further many people face high medical costs which make them take on high levels of debt. A statistic says that between 30% and 50% of bankruptcy cases involve medical debt. Lastly, the assets people held – especially the real estate- have lost their value over the last year, what makes people owe even more.

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SemGroup gets the approval.

2009-11-01T10:47:00.000-08:00

By Rico Setyo

SemGroup is a energy marketing company that collapsed last year due to the Chief Executive Thomas Kivisto poor decisions of selling unauthorized crude oil options. Upon the collapse, the company filed a Chapter 11 Restructuring to help strengthen the company and prevent it from disappearing from the market. However, according to the court’s records they had estimated obligations of about $9.47 billion to their creditors. In order to reorganize the liabilities and equity side of the balance sheet, they needed to formulate a plan that has to be approved by the courts.

During the Chapter 11 restructuring process, the business continues to operate while the courts oversee its operations. The restructuring ensures that all of the companies secured and administrative creditors are paid back first before any of its shareholders. However, in the actual process there issues that arise with their creditors which jeopardized their chances of court approvals. “The settlements [of the dispute] with the three oil-trading companies are critical, [as stated by] Margot Schonholtz, an attorney for the lenders’ agent, Bank of America Corp.” She also mentioned that without the release of the $122 million, the reorganization plan fails.

Fortunately, SemGroup received court approval on October 26 in a 10 hour hearing for a settlement regarding $122 million that is critical to ending its contentious 15-month bankruptcy. Chapter 11 bankruptcy has been a quite popular option during these rough economic times. Despite the slow recovery many companies are being forced to file for chapter 11 in hopes of saving their organization.

Sources

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html
http://www.bloomberg.com/apps/news?pid=20601103&sid=arn5X5M6Y2wE
http://www.reuters.com/article/bankruptcyNews/idUSN2516732420091026

CIT Nears Bankruptcy Filing

2009-11-01T10:08:00.000-08:00

Post By Rico K Setyo

By Mike Spector and Kate Haywood

CIT Group Inc. plans to file for bankruptcy as soon as Sunday afternoon, said people familiar with the matter, in a high-stakes restructuring intended to keep the doors open at one of the U.S.'s largest small-business lenders.

CIT's board was meeting about the likely filing early Sunday afternoon, these people said, and the company expected to seek Chapter 11 protection in New York in a matter of hours. The lender expected to have considerable support from creditors for its "prepackaged" reorganization, which could allow CIT to have its plan approved quickly and emerge from bankruptcy by the end of the year, other people familiar with the matter said.

The filing comes after a previous debt-exchange offer made to CIT's bondholders failed. But CIT garnered broad support for a prepackaged bankruptcy, people familiar with the matter said.

The $2.3 billion in taxpayer money spent to save CIT is likely to be wiped out, as the lender prepares for the filing.

In a move smoothing its restructuring, the company said Friday that it had persuaded billionaire investor Carl Icahn to support its prepackaged bankruptcy plan. Mr. Icahn, who wanted to push CIT into liquidation, failed to persuade other bondholders to derail CIT's restructuring plan.

With $71 billion in assets, CIT would have the fifth-largest bankruptcy filing in U.S. history, trailing only those of Lehman Brothers Holdings Inc., Washington Mutual Inc., Worldcom Inc. and General Motors Corp. CIT's Utah bank, which has about $10 billion in assets, wouldn't be part of the bankruptcy filing.

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Delphi's bankruptcy a issue with retirees pensions

2009-10-31T11:17:00.000-07:00

Written by Michael Rivezzo

Retirees from Delphi testified in front of a Senate committee this week about abrupt cuts that were made to their pensions following Delphi filing for Chapter 11 bankruptcy in October 2005. Majority of the 20,000 retirees from Delphi stand to lose 30 to 70 percent of their pension. Senators were outraged because GM retirees managed to work out agreements to retain 100% of their pensions during GM's government-led bankruptcy; and GM is the parent company of Delphi.

"It's a wonderful thing that we live in a country where we can petition our government for redress of grievances" said Bruce Gump, a engineer who worked with Delphi for 33 years. The reduction in pensions will most likely put many workers just below federal poverty levels. Gump is pleading with the committee to show fair treatment to all auto workers, with obvious preferential treatment shown to GM workers.

They plan on meeting with the House of Representatives committee in the next few weeks. Hopefully, this situation can be resolved with retirees having a better idea of what they expect to receive in the future.

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Bereaved mother fights for changed bankruptcy laws

2009-10-31T10:51:00.000-07:00

BY LARRY MARGASAK

Posted by Michael Rivezzo

A Rhode Island woman urged senators Tuesday to ease bankruptcy rules for people devastated by medical debt, as she described the pain of losing a child and going broke from his health care bills.

The experience of Kerry Burns, of Coventry, R.I., raised a crucial question of bankruptcy law: should people going broke due to high medical bills get a break over those bankrupted by divorce or high credit card bills?

Sen. Sheldon Whitehouse, D-R.I., chaired the Senate Judiciary subcommittee hearing on his bill to create an exception for people whose medical bills are their main cause of financial distress.

Sen. Jeff Sessions, R-Ala., disagreed with a major provision of the bill: Elimination of an income-related test for medical debtors only. The test currently is required to determine if someone is qualified for a Chapter 7 bankruptcy, which allows the debtor to get a fresh start by wiping out all debts.

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Debt Settlement Company Forced to Pay for Defrauding NYS Customers

2009-10-26T15:31:00.000-07:00

Posted By: Lisa Matthys

Written By: David Mittleman

During a time when most people are desperate to pay off those high-interest rate credit card balances, it can be tempting to call up a debt settlement company. They often promise a quick fix: by paying them a fee, they agree to negotiate much lower settlement amounts with your creditors. Indeed, for many people debt settlement seems like the answer to fix all of their financial woes and a way to avoid bankruptcy. However, a recent lawsuit against a debt settlement company in New York state might make you think twice before “signing on the dotted line”, so to speak.

In a ruling on Thursday, the Arizona-based Nationwide Asset Services was ordered to pay $200,000 for defrauding 1,981 customers in New York State. Furthermore, the company was also barred from conducting further business in New York, unless they provide a $500,000 performance bond to protect their customers.

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Replacing Bankruptcy Not Best for "Too-Big-To-Fail" Banks

2009-10-26T15:25:00.000-07:00

Posted By: Lisa Matthys

Written By: Stephen Labaton

WASHINGTON — Congress and the Obama administration are about to take up one of the most fundamental issues stemming from the near collapse of the financial system last year — how to deal with institutions that are so big that the government has no choice but to rescue them when they get in trouble.

A senior administration official said on Sunday that after extensive consultations with Treasury Department officials, Representative Barney Frank, the chairman of the House Financial Services Committee, would introduce legislation as early as this week. The measure would make it easier for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution.

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Personal Bankruptcy Filings Soar

2009-10-26T14:48:00.000-07:00

Written By: Lisa Matthys

Consumer bankruptcies exceeded one million for the first nine months of this year for an all time high since the system was overhauled in 2005. Using data from the National Bankruptcy Research Center, the American Bankruptcy Institute determined that as of Sept 30. personal bankruptcies totaled 1,046,449, whereas in 2008 there were 773,810 within the same time period. September's filings increased 41% from last year.

The 2005 reform was intended to make it more difficult for Americans to simply relieve their debts by filing for bankruptcy. Many attribute bankruptcies to health care and job loss. Some believe personal bankruptcies are caused by over-consumption in which households underestimate their personal disposable income and end up spending more than what they budget for. The new law imposed by Congress forces more people to file under Chapter 13, in which consumers are put on a repayment plan of up to five years. Any debts not addressed by the repayment plan do not have to be paid. Still, even with the new law, about 71% of consumers who filed for bankruptcy within the first nine months of this year filed for Chapter 7. With a tough economy, the American Bankruptcy Institute expects that personal bankruptcies will exceed 1.4 million by the end of the year.

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Commercial Real Estate Industry are Seeing Bankruptcy as the Only Option

2009-10-25T20:39:00.000-07:00

By Rico Setyo

The commercial real estate industry has already been forecasted to collapse. The Federal Deposit Insurance Corporation closed Corus Bank which can be seen as the beginning of “the next shock to the banking system” which would be commercial real estate. The lack of new debt will hurt many people especially inside the industry. There are three signs to look for to see how badly and when will the collapse of the industry happen: Special Servicers, Big Projects, and Regional Banks.

Capmark Financial Group is one of the largest commercial real estate lenders and they have recently filed for bankruptcy protection due to bad debts. The company has been looking at Chapter 11 Bankruptcy since September and they have finally filed. Chapter 11 bankruptcy is the restructuring of the organization and the debt it owes. Mohsin Meghji, the company's chief restructuring officer said that "the Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders".

Many other players in the commercial real estate industry were forced to make the same the decision as Capmark. The mall giant company, General Growth Properties and hotel chain, Extended Stay Inc. filed for bankruptcy in the past year, and even more commercial real estate ventures could fail because of the inability to refinance debts and reduced customer traffic as consumers continue to pull back.

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Annie Leibovitz is heading towards bankruptcy.

2009-10-25T20:10:00.000-07:00

By Johanna Neuman
Posted By Rico K Setyo

The photo was released by the White House today, the official portrait of the current occupants of 1600 Pennsylvania Ave. -- President Obama, 8-year-old Sasha, First Lady Michelle Obama and 11-year-old Malia. The photo was taken Sept. 1, and the subjects were all smiles.

The back story is anything but. Leibovitz is best known for her celebrity photos -- like the famous one she did of John Lennon and Yoko Ono the day the former Beatle was gunned down, or the one she did of a pregnant Demi Moore, posing nude.

But lately the photographer to the stars has been embroiled in a financial mess that could lead to bankruptcy and the loss of her photographic catalog. As Gawker.com put it, the Obama photo was taken one week before Leibovitz's deadline to repay a $24-million loan to "high-end artsharks Art Capital Group."

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Bankruptcy Options - 7, 11, and 13

2009-10-25T20:04:00.000-07:00

By Joseph Devine
Posted By Rico K Setyo

Bankruptcy: the word alone may send chills up your spine. But so should the words "debt", "foreclosure", and "repossession". While bankruptcy may seem undesirable, intimidating, or downright embarrassing, in some instances bankruptcy can be a useful tool and may save you from a life mired in debt. Bankruptcy under chapters 7, 11, and 13 are available to both individuals and businesses, each with its own advantages and disadvantages.

Chapter 7

Chapter 7 is a liquidation bankruptcy. This means that, as an individual or business, when you file for Chapter 7 you agree to have some of your property liquidated to pay off your debts. Businesses that file for Chapter 7 will be dissolved and the assets liquidated to creditors. For individuals, some assets may be exempt, such as your home, tools of your trade, and retirement accounts.

The laws for exempt assets vary from state to state. All nonexempt items, however, are at risk of being liquidated under Chapter 7. While you may lose a significant amount of property, your debts will be immediately resolved and you can quickly begin to restructure your finances without the burden of debt.

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Perkins Twp. woman fights unethical debt collection

2009-10-25T13:38:00.000-07:00

Posted by Stefanie Marty

By MELISSA TOPEY | Wednesday, October 21, 2009 1:00 AM EDT

PERKINS TWP.

A local woman who dared to question has given a black eye to one of the nation's largest debt collection agencies.

Andrea Schwarzentraub, 32, was distraught when she opened up a certified letter to find she was being sued by Midland Funding and Midland Credit Management for an alleged credit card debt of $4,516 from 2000.

Not recognizing any of the people she supposedly owed, she questioned the lawsuit. She attempted to get answers from the collection agency with the help of Sandusky law firm Murray & Murray.

"Most people wouldn't have questioned it," Schwarzentraub said.

U.S. District Court Judge David Katz ruled that Midland Funding used an illegal affidavit to sue Schwarzentraub and others when the company attempted to collect debts. The affidavit, signed by a Midland employee, stated the employee had personal knowledge of the debt.

A year and a half later, the debt still hasn't been proven. Katz did not rule on whether the debt belongs to Schwarzentraub, a matter that could go to trial.

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Debt Collection

2009-10-25T13:19:00.000-07:00

Posted By Adam Lindheim
By Arthur Epstein

During these gloomy times for the U.S. economy, many businesses are suffering. But some are uniquely positioned to do well when times are tough for most others, namely debt collection agencies and related companies.

The U.S. now has more than 6,000 debt collection companies, according to Kaulkin Ginsberg, a Maryland-based market research firm. Most of them are small, privately held entities. However a few debt collection agencies are publicly traded, including Portfolio Recovery Associates (PRAA) and IDT (IDT).

Although the debt collection business may get a bad rap when depicted in the movies or on television shows, it is actually a heavily regulated industry. While debt collectors may be tempted to use any tactics that will pry owed money from debtors' hands, they must comply with the federal Fair Debt Collection Practices Act, which prohibits deceptive, unfair, and abusive practices by third-party collectors; requires debtors to be treated fairly; and forbids certain methods of debt collection, including threats, abusive language, or harassment, such as repeatedly calling.

According to the Federal Reserve, the consumer credit industry increased from $133.7 billion of consumer debt obligations in 1970 to $2.5 trillion of consumer debt obligations in November, 2007, a compound annual growth rate of 8.2%. The Kaulkin Ginsberg report states the amount of outstanding revolving and non-revolving consumer credit increased at a compound annual growth rate of 6.4% from $1.3 trillion in June, 1997, to $2.5 trillion in June, 2007.

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Bankruptcies: The Next Wave

2009-10-25T13:16:00.000-07:00

Posted by Adam Lindhem
By Ben Steverman

Recent earnings reports show companies are slashing costs, paying off debt, and stockpiling cash. Meanwhile, economists see signs the economy is slowly improving.

Unfortunately, none of that could prevent a wave of bankruptcies by firms walloped by the recession and credit crisis.

That's the prediction of experts on bankruptcy, who say too many firms are loaded up with too much debt to survive the next year without defaulting on their debt obligations and filing for bankruptcy protection.

Standard & Poor's, for example, predicts the default rate for speculative-grade (i.e., junk-rated) companies to hit an all-time high of 14.3%—but not until the first quarter of 2010. The default rate was 9.25% last month, and just 0.79% back in November 2007. (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP).)

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Corporate Bankruptcy

2009-10-25T12:25:00.000-07:00

By Adam Lindheim

With the crashing of the American economy more and more corporate companies are filing for bankruptcy. In the first 5 months of this year 100 public companies filed for bankruptcy, the highest number since 2002. A company or individual files for bankruptcy when they pay their bills to their creditors in a timely fashion. Their debts outweigh their assets, and in these cases they turn to bankruptcy courts for protection. The courts will either liquidate their company or reorganize their business.

Bankruptcy is a legal procedure that is used by the U.S. bankruptcy code when a debtor is not able to make payments to its creditors. Bankruptcy is used as a safety net as it gives companies protection from their creditors which can no longer demand to be paid once bankruptcy is declared. The majority of corporate bankruptcies filed are either under chapter or chapter 11 of the bankruptcy code.

A chapter 7 filing typically leads to a liquidation of its business. This implies that the company has no intention of continuing to operate and is planning to sell off all of its assets. Proceeds from the sale are distributed to creditors in the order of their priority. A chapter 11 filing usually involves company reorganizing its business through the bankruptcy process with the hope that it will survive. When a company files chapter 11 it shields them from a creditors demands for payments and from lawsuits while it restructures it finances. Contract terms between the debtor and creditor can also be rewritten under the bankruptcy codes, something that is not as easily done without a bankruptcy filing. During a chapter 11 proceedings, the debtors reorganization plan must be accepted by a majority of its creditors.

General Motors the nations largest automaker had 172.81 million dollars in debt and 82.29 billion dollars in assets, according to their recent bankruptcy filling. They are currently trying to restructure their company so they can eventually prosper once again. They hired the consulting firm AP Services LLC who charged GM 23 million dollars for 90 days of consulting work. Bankruptcy laws have allowed GM to protect itself from its creditors and try to bring back their company.

As the number of corporate companies in the U.S. that are filing for bankruptcy continues to rise and reach record numbers, investors need to be aware of where and how they invest their money. Companies need to be more ethical with their operations, and conscious of how their operations are going in order to avoid bankruptcy.

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After Lehman Bankruptcy

2009-10-25T11:13:00.000-07:00

Written by Minjune Kim

Simmons & Simmons has advised hedge fund RAB Market Cycles Fund on the latest dispute in the Lehman Brothers bankruptcy saga. Simmons acted for RAB in relation to the status of post-administration cash derived from securities received by the failed bank after it went into administration. As a result of the ruling handed down on 21st October. City hedge funds could now see the money returned to the beneficiaries rather than falling into the general estate. RAB successfully argued that the post-administration cash held by Lehman as custodian was held on trust, and therefore under Financial Services Authority regulations should not fall into Lehman's general estate. The ruling will be seen as important by so-called prime brokerage clients, which currently have cash worth $3.3bn (£2bn) tied up in the administration.

Hundreds of hedge funds that were customers of Lehman Brothers and had their assets frozen when the bank collapsed can keep the cash generated by their portfolios in the 13 months since the investment bank was declared bankrupt. A High Court judge said yesterday that about $3.3 billion (£2 billion) in dividend, interest and other payments accrued since Lehmans entered bankruptcy on September 15 last year should go directly to the funds, rather than into a general pot for all Lehmans creditors. The decision is a setback for Lehmans’ non-hedge fund creditors, which had hoped to benefit from the constantly expanding pot of cash generated by frozen hedge fund holdings. PricewaterhouseCoopers (PwC), the bank’s European administrator, had kept confidential the names of and amounts owed to Lehmans’ European creditors, for fear that financial institutions could suffer if it became known that they had large Lehmans-related losses.

ehman Brothers Holdings Inc, the bankrupt investment bank, paid its lawyers and financial advisers $402.9m between September 2008, when it failed, and now, according to a filing with the US Securities and Exchange Commission.In total, 23 law firms, financial advisers, investment banks and consulting firms were paid in fees and expense reimbursements over the last 12 months. Restructuring firm Alvarez & Marsal LLC, which provided Lehman with its current chief executive officer, Bryan Marsal, was paid $169.2m in fees. The firm said it had about 175 full-time employees working on the bankruptcy.Weil Gotshal & Manges LLP of New York, the investment bank’s lead bankruptcy-law firm, was paid $98.5m, Lehman said in the filing.

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Auctions, bankruptcy sales scheduled

2009-10-25T11:06:00.000-07:00

Written by Ed Waters Jr.

Posted by Minjune Kim

Two trustees sales and a bankruptcy sale are scheduled within the next several weeks.
A parcel at Hamilton and Pennsylvania avenues will be auctioned at 10 a.m. Wednesday at the Frederick County Courthouse, 100 W. Patrick St.
The land had been owned by the city, according to Harry T. deMoll, a substitute trustee, but was sold to Richard Romsberg. The land had been used at one time to park trucks and other equipment for the city's Public Works Department.
The Musket Ridge Golf Course on Brethren Church Road, Myersville , will be auctioned off at 11 a.m. Nov. 17 at the courthouse in Frederick .
The golf course includes a main clubhouse, banquet facility, maintenance building, driving range and putting green. The course was constructed in 2001.
A bankruptcy sale will be held at 9 a.m. Nov. 16 for Hubert R. Brown Construction Inc. on site at 11214 Angleberger Road, Thurmont .
The auction includes heavy construction equipment and trucks, shop equipment, tools, office furniture and other equipment.

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Bankruptcy court allows Erickson Retirement Communities to pay staff

2009-10-25T10:58:00.000-07:00

Written by Julekha Dash

Posted by Minjune Kim

A U.S. bankruptcy court in Texas has allowed Erickson Retirement Communities LLC to continue paying its employees and offer them health benefits as it works though a reorganization plan.
One of the nation’s largest builders of senior housing, Erickson filed for Chapter 11 bankruptcy protection Oct. 19. The Catonsville firm also said it will sell the company to Redwood Capital Investments LLC, controlled by Baltimore businessman Jim Davis, who is chairman of Hanover-based staffing agency Allegis Group Inc.
The court’s Oct. 20 ruling affects 794 employees who work for Erickson’s corporate division. Of those, 723 are full-time salaried employees, 65 get paid hourly and six are temporary workers. Though Erickson employs 12,000 throughout the country, but the remaining workers get paid by their individual properties and are not impacted by the ruling. Erickson oversees 19 housing campuses in 10 states.
In court documents, Erickson said it owes approximately $2.3 million in unpaid salary and other compensation to its employees on its next pay date. It also owes $6,000 in reimbursable expenses related to business travel, mileage and parking. The company pays $772,00 per moth, on average, on medical and vision insurance and another $167,000 a month on dental insurance.
After a company files for bankruptcy, all spending needs to be approved by the court.
Erickson filed bankruptcy after unsuccessfully trying to restructure its debt with its lenders. The company had been facing mounting financial pressures that forced it to stop work on all of its new developments. The stoppage affected seven developments in Kansas, Texas, Michigan, Illinois and Massachusetts.
Chairman John Erickson told his 23,000 residents across 10 states in a letter earlier this month that the company has to separate its real estate business from its property management business so its residents are protected from its financial troubles. Part of the bankruptcy process will include breaking off these two divisions.

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The good and bad of chapter 13 bankruptcy

2009-10-24T20:27:00.000-07:00

by Michael Rivezzo

Filing Chapter 13 bankruptcy can actually be beneficial to you if you have failed redundantly to pay off debt . Chapter 13 can help people that still make a income and who want to avoid a foreclosure, while still being able to pay off some of their debts. This is why Chapter 13 is also called the reorganization bankruptcy.

Some of the positives of Chapter 13: you can still be able to keep real estate and some personal property. You can pay back some or all of your debt with a payment plan. This usually take 3-5 years to completely pay back the creditor. Creditors also stop calling and any legal action brought against you is nullified.

There are still some bad parts of Chapter 13. Your credit score will drop 200-250 points. The bankruptcy will stay on your report for 7 years. There is also fees that need to be paid regularly.Most people will not even qualify for Chapter 13 because there strict criteria for eligibility. You must have a regular source of income, while your gross income should be greater then the State median for your family size.

http://www.brainerddispatch.com/stories/101709/new_20091017032.shtml

http://blogs.wsj.com/economics/2009/10/23/qa-what-the-middle-class-recession-means-for-bankruptcies/

http://toledoblade.com/apps/pbcs.dll/article?AID=/20091002/BUSINESS07/910020354/-1/BUSINESS05

Identity Theft on the Rise

2009-10-24T19:14:00.000-07:00

By Lorilyn Prestidge

Posted By Michael Rivezzo

Identity theft is the fastest growing crime in America.

And in light of increasing numbers, this week has been named, "National Protect Your Identity Week" by the National Foundation for Credit Counseling.It's a crime with more than ten million victims, including Catherine Estergren, who had checks stolen out of her mailbox."The bank called me after I didn't have any money in my account and I was way overdrawn," said Victim of Identity theft Catherine Estergren.

The thieves used Estergren's checks in five states and withdrew more than seven thousand dollars."I got all kinds of collection letters from all over these states," said Estergren.Estergren's story is a classic case of identity theft."It takes years and again tens of thousand of dollars to correct what has happened in maybe just a week or two or a month," said Austin Police Department Lt. John Mueller.

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States institute new rules that limit debt collectors

2009-10-24T19:01:00.000-07:00

by Emery P. Dalesio

Posted By Michael Rivezzo

With many Americans in dire financial straits, states are cracking down to make sure aggressive debt collectors target only people who legitimately owe them money.

National consumer credit laws already prohibit collection agencies from harassing, deceptive or unfair practices like telling neighbors or family about what is owed, or calling before 8 a.m. or late at night. Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court. Other states may follow suit.

Lawmakers are increasingly focusing on outfits that buy bad debt from credit card companies and other lenders for pennies on the dollar and profit when they collect more than they paidDebtors – some agree they owe money, others say they’ve already paid or are disputing their bills – have reported being bombarded with calls and subjected to foul language and threats of arrest or deportation.

A North Carolina law that took effect this month requires debt buyers filing collection lawsuits to produce documents proving they’re the ones owed the money. Trying to collect on a debt that a company should reasonably know is invalid could lead to lawsuits and civil penalties of up to $4,000 per violation.

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Personal Bankruptcies

2009-10-22T18:24:00.000-07:00

Written by Jane Birnbaum
Posted by Stefanie Marty

Bankruptcy is a procedure allowing debtors, both households and businesses, to eliminate some bills and repay others over time.

While bankruptcy is generally seen today as a protective measure for debtors, its ancient roots are punitive, a remedy on behalf of creditors. Early United States bankruptcy laws did not provide for a discharge of debts by debtors, only a liquidation of their assets. The roots of modern American bankruptcy are found in Congress’ Bankruptcy Act of 1898.

The Department of Justice’s United States Trustee Program oversees administration of bankruptcy law. There are five chapters of United States bankruptcy law, which apply to different situations:

Chapter 7: Used by consumers and businesses, it eliminates many debts such as credit card and medical bills not secured by collateral, in exchange for the liquidation of assets not protected by federal or state exemption laws.

Chapter 13: A debt reorganization plan chiefly used by individuals who want to keep possession of assets such as homes and cars by becoming current on delinquent loans and repaying unsecured debts according to their means.

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Personal Bankruptcy on its highest Level since 2005

2009-10-22T18:20:00.000-07:00

Written by Stefanie Marty

In the first nine months of this year 1,046,449 individuals filed for personal bankruptcy. This represents a 35% increase from the previous year, when 773,810 filed for personal bankruptcy during the same time period. At the same time consumer bankruptcy is on its highest point since 2005 when the system was overhauled. In 2005 and before the implementation of the new system the amount of personal bankruptcies in the first nine months of the year was 1.35 millions.

The new implemented law makes it harder and more expensive to file bankruptcy. Academics and lawyers believe that by the new law many borrowers have the wrong impression that they could no longer file. This unavailability of bankruptcy makes the current economic crisis even worse.

Typical reasons for bankruptcy are job loss, medical bills, and divorce. During the tough economic crisis there are more factors present that make the number of bankruptcy filings go up. Some of them are the rising unemployment, lower payments, fewer people with health insurance, and the mortgage and foreclosure crisis, but the most important one is probably the credit tightening. Due to the fewer lending by banks, it has gotten though and in some cases even impossible for consumers to get credits.

Robert M. Lawless, a professor at the University of Illinois College of Law, said: “With the consumer credit tightening and the economy in a nosedive, this pop could just be the beginning of a long-term rise in the bankruptcy filing rate to levels that are even higher than we had before the 2005 bankruptcy law.”

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Bounce back fast after bankruptcy

2009-10-21T18:59:00.000-07:00

Posted by Lily Mei

By Liz Pulliam Weston
Almost anyone can get credit soon after a bankruptcy. It's just a matter of knowing how.

It's true that bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your creditworthiness. But the effects don't have to be lasting.

Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms.

Nothing is forever
Ken from Chicago filed Chapter 7 liquidation after unemployment and overspending caused him to rack up more than $20,000 in credit card and other unsecured debt. Four years later, his credit scores ranged from 655 to 719, decent numbers that are just below the cutoff to get most lenders' very best rates.

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Your Credit Report After Bankruptcy

2009-10-21T18:40:00.000-07:00

By: Lily Mei

Bankruptcy is generally considered as a last resort for managing your debt because the credit results are long-lasting and hard to repair. A bankruptcy stays on your credit report for 10 years, making it extremely difficult to get credit, buy a home, get life insurance, and sometimes even get a job. However, under the federal law, it is a required legal procedure for people who want to get a fresh start from their debts.
It is a long-standing battle once you file for bankruptcy because even you file a bankruptcy and voluntarily dismiss it before the discharge, the credit reporting agency must report the dismissal as well as the bankruptcy filing. Therefore, your credit is still affected by the dismissal. That doesn’t mean you won’t receive new credit after bankruptcy, credit is still available but it may be more expensive than before with lower available limits. Rebuilding credit worthiness after bankruptcy is difficult and takes time. It is a matter of using the credit cautiously and paying it on time to slowly improve your credit score.

Sources:
http://www.creditreporting.com/bankruptcy-credit-report.html
http://www.doney.net/faq_credit.htm
http://www.cardratings.com/bankruptcyconsumercreditrights.html

At Ethics Debate, Goldman Exec Defends Bonuses

2009-10-21T18:35:00.000-07:00

Posted by: Lily Mei

One Goldman Sachs executive thinks the bank’s rich bonuses are a good thing, and he’s not afraid to say it.

Bumper payouts to bankers should be seen as part of a longer-term investment in London’s economy, the vice chairman of Goldman Sachs International, Brian Griffiths, told a debate on ethics at St. Paul’s Cathedral in London on Tuesday.
Defending lavish bonuses expected at the U.S. investment bank, Mr. Griffiths said he was not “ashamed” of his bank’s compensation package, which has inflamed the bonuses debate, Reuters reported.

The British public should “tolerate the inequality as a way to achieve greater prosperity for all” Mr. Griffiths, a former adviser to Margaret Thatcher when in power, said at the public meeting examining what role morality should play in the marketplace.

Goldman last week reignited the fight over excessive compensation after setting aside $5.4 billion for pay in the third quarter alone. It is on course to pay out $20 billion this year, infuriating critics in part because it comes so soon after repaying $10 billion in taxpayer bailout funds.

Mr. Griffiths said that if bonuses were capped the industry’s highest fliers would leave London’s financial services sector for other countries.

“I believe that we should be thinking about the medium term common good, not the short term common good… we should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people,” he said.

He also said Goldman rewarded only those who showed a commitment to company values and not simply to whoever brings in the most profit.

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Hate it when free credit reports aren't free? Tell the feds

2009-10-21T15:35:00.000-07:00

By Diane C. Lade
Sun Sentinel (MCT)

FORT LAUDERDALE, Fla. - Federal trade regulators are changing the rules regarding how "free credit reports" are marketed, as required under the Credit CARD Act of 2009. And they want to hear from you.

The Federal Trade Commission is collecting comments on their proposed changes through Nov. 30. To submit electronically, go to http://public.commentworks.com/ftc/FreeCreditReportNPRM/. Or write: FTC, Office of Secretary, Room H-135 (Annex T), 600 Pennsylvania Avenue NW, Washington, D.C. 20580.

Among the agency's suggestions: Private companies that use "free credit report" in their name would be required to first send customers to a page explaining they are not AnnualCreditReport.com, the federally mandated centralized source.

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Posted By: Amy Nightingale