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Saudi Legal Paradox Deters Investors as Commercial Laws Remain Unenforced

Turki AlBallaa wants to bring more foreign investment to Saudi Arabia, the world’s largest oil supplier. The judicial system stands in his way.

Source: Yahoo! News Search Results for law bankruptcy | 5 Sep 2010 | 6:15 pm

Chile mine disaster exposes old family feuds

While a fire warms their campsite, the icy feeling between Cristina Nunez Macias and her mother-in-law is as palpable as the cold Atacama desert.

Source: Yahoo! News Search Results for law bankruptcy | 5 Sep 2010 | 5:10 pm

Sid Lowe: Spanish League's attempt to take credit for Spain's success is farcical

Success has many fathers, failure is an orphan. As the bandwagon passed this summer, it felt like the whole of Spanish soccer -- the whole of Spanish society, in fact -- sought to jump on board. When Spain paraded through a celebrating Madrid, people were queuing up to demand a paternity suit to prove that they had fathered the World Cup winners. And now, as La Liga takes its traditional and ...

Source: Yahoo! News Search Results for law bankruptcy | 5 Sep 2010 | 10:41 am

Reorganized VeraSun asks farmers to return payments

Area farmers who sold corn to the former VeraSun Energy Corporation have recently been receiving notices from law firms in New York demanding that they pay back any money received from VeraSun 90 days prior to the company filing Chapter 11 bankruptcy on Oct. 31, 2008. The money is to be returned to the bankruptcy-reorganized VeraSun.

Source: Yahoo! News Search Results for law bankruptcy | 5 Sep 2010 | 3:16 am

Law Review: Towns need to get tough with finances, bond lawyer says

Bill Rhodes, a municipal-bond lawyer at Ballard Spahr L.L.P. who has been laboring in the trenches of government finance for nearly two decades, says he has never seen things so dicey.

Source: Yahoo! News Search Results for law bankruptcy | 5 Sep 2010 | 3:01 am

Sunday Buzz: Meridian founder Darren Berg to get paid to unravel finances

Meridian Group founder Darren Berg will be paid $70,000 to help unravel what happened to more than $200 million he raised for nine Meridian Mortgage funds in bankruptcy.

Source: Yahoo! News Search Results for law bankruptcy | 5 Sep 2010 | 12:11 am

Car dealers fight for a second chance

When Chrysler and GM filed for bankruptcy in 2009 they planned to shutter thousands of dealerships across the country. Fewer than one third of the dealers who hoped to stay in business are in the running for a comeback.

Source: Yahoo! News Search Results for law bankruptcy | 4 Sep 2010 | 8:02 pm

Three Signs That It’s A Credit Repair Scam

Three Signs That It’s A Credit Repair Scam You’re up late at night listening to the radio, surfing the internet or watching TV when you’re bombarded with an over the top credit repair commercial promising to fix all of your credit problems if you would only hire their company. But before you pick up the phone to call the so-called credit repair “gurus” arm yourself credit repair scam list:

You know that the credit repair “service” is a scam when:

They want you to pay them instead of your creditors. Before the recently passed Credit Repair Organizations Act, credit repair companies could charge upfront fees for their “services.” But now it is illegal for a credit repair company to charge debtors upfront fees to help them “clean-up” their credit reports. But be warned, some credit repair companies are still trying to charge upfront fees.
The credit repair company guarantees that they can remove all negative marks on your credit report even if it is true. Any credit repair company that promises this is not to be trusted. Credit reporting agencies are not required to remove accurate information just because it is negative. However, they are required to remove negative information after 7 to 10 years. For example a delinquent credit card account may be removed from your credit report after 7 years while a Chapter 7 bankruptcy will be removed at 10 years.
The credit repair company suggests that you create a new identity and therefore a new credit history. This type of system manipulation is not only illegal but it is ineffective. The debtor will still owe any outstanding debts and they can and probably will still be sued by their creditors. Only bankruptcy has the power to give you an opportunity to build a new credit history by wiping out your obligation to pay old debts and protecting your future income from old creditors.

Please do not waste your time, money and energy with credit repair companies that offer much and deliver little. If you’re drowning in debt, take the time to meet with a bankruptcy attorney, so that he/she can help you determine whether bankruptcy is a good option for you.

Source: Reed's Bankruptcy Blog | 4 Sep 2010 | 7:19 pm

Celebrity Bankruptcy: Willie Nelson’s Lessons In Optimism

Celebrity Bankruptcy: Willie Nelson’s Lessons In Optimism In 1990 Willie Nelson was one of the most popular country singers of all time, but due to tax debts of over $16 million owed to the IRS he chose to file bankruptcy. But before filing bankruptcy, Willie Nelson suffered the indignity of IRS raids and asset seizures that left him in a serious financial pickle. The taxes owed were from tax returns filed in the 1970’s and 1980’s where the IRS disallowed several tax deductions designed to shelter most of the singer’s income. But if you think Willie Nelson allowed his tax debts or his very public bankruptcy filing to damper his spirits think again. When questioned about his bankruptcy and financial predicament, this is what Nelson had to say:

“I had a lot of things I owned, I needed to get rid of,” he said. “I had a lot of people around and needed to back off and stop supporting half the world so I could stop and look at my situation. It’s given me time to take inventory.”

And to those who lament his loss of money because of all the penalties and interest he must pay the IRS, Willie Nelson said:

“I’m not completely broke — I did a show in Hawaii and promoted it myself,” he said. “We didn’t make a lot of money, but I’ve got spending money ’till I can get out on the road again.”

Optimism and a good sense of humor helped him get through his financial troubles with the IRS; but it was smart thinking and the good advice of his bankruptcy attorney that helped him successfully exit bankruptcy in1993. Debtors facing financial troubles with powerful creditors such as the IRS would be wise to take Willie Nelson’s lead and remain optimistic; but also work with a professional bankruptcy attorney so that they too can get on the road to their fresh financial start.

Source: Reed's Bankruptcy Blog | 4 Sep 2010 | 5:05 pm

MC Hammer’s Bankruptcy And Learning To Say No

MC Hammer’s Bankruptcy And Learning To Say No MC Hammer’s meteoric rise to fame hit a pinnacle in 1990 when Forbes Magazine estimated the rapper’s worth at about $33 million. So, why is it that MC Hammer filed bankruptcy only six years later? For this celebrity, his road to bankruptcy began with his inability to say no to himself and to others. Before filing for bankruptcy, MC Hammer was known for his ostentatious lifestyle. He spent at estimated $12 to $20 million building a custom mansion on a 20-acre estate. But he didn’t limit his lavish spending on only himself; he had an huge entourage of 60 onstage performers and 100 backstage members which cost him millions of dollars. So what was the lesson that MC Hammer learned after filing bankruptcy?

“It’s time to close out old business and stop being the lottery for people who see MC Hammer as this big celebrity with a bottomless pit of dreams for people,” he told the Hollywood Reporter after declaring bankruptcy.

Most debtors filing bankruptcy are not supporting a large entourage of performers and groupies but MC Hammer’s road to bankruptcy can be a lesson for all debtors looking to successfully exit their bankruptcy and improve their financial health. It is absolutely essential for the financial health of every post-bankruptcy debtor to avoid becoming the financial life support of adult family members and friends. Many bankruptcy attorneys have witnessed firsthand post-bankruptcy debtors falling prey to family and friends who want to latch on to the new and improved debtor’s credit worthiness. Just say no to personal loans or co-signing loans for family and friends, your financial health after bankruptcy will depend on it.

Source: Reed's Bankruptcy Blog | 4 Sep 2010 | 4:05 pm

How Can I Protect My Retirement When Considering Bankruptcy?

How Can I Protect My Retirement When Considering Bankruptcy? Bankruptcy is not just about discharging debts and saving your salary from wage garnishment, it is about protecting your future. One of the ways that bankruptcy protects your future is by protecting qualified retirement account from creditor seizure. Below are a few ways that you can protect your retirement as you consider filing bankruptcy:

The first thing the debtor should do is avoid using their retirement account as collateral for a loan. We repeat, do not use your retirement account as collateral for a loan. If you use your retirement account as collateral for a loan, filing bankruptcy may have limited affect in protecting your retirement account. Speak with a bankruptcy attorney to find out what you can do if you have already made this mistake.
Do not withdraw money from your retirement account to pay for debts or living expenses. If you find yourself withdrawing money from your retirement account in times of financial duress then you really may need to speak with a bankruptcy attorney. Borrowing from the future is a huge mistake and bankruptcy will not be able to protect the retirement money you have already withdrawn. Bankruptcy has the power to protect money in your retirement account; but only if you have not withdrawn it.
Do not take out a loan against your retirement account to pay your debts. This is very tempting for debtors trying to avoid bankruptcy; but as we have said, if you are borrowing from the future to pay for today, it is a sign that you’re in deep trouble. At the very least talk to a bankruptcy attorney about how bankruptcy could help you protect your retirement before you take out a retirement account loan.

Source: Reed's Bankruptcy Blog | 3 Sep 2010 | 7:56 pm

Celebrity Bankruptcy: Burt Reynolds Delayed Bankruptcy Filing and Paid The Price

Celebrity Bankruptcy: Burt Reynolds Delayed Bankruptcy Filing and Paid The Price A mega-star of the 1970’s and 80’s Burt Reynolds was best known for appearing in hit movies such as “Smokey and the Bandit,” “Deliverance,” “The Longest Yard” and “Cannonball Run.” But all of his success and fame collided with a string of financial crises, bad investments and an expensive divorce from actress Loni Anderson which left him seeking Chapter 11 bankruptcy protection in 1996 with over $10 million in debt. But Burt Reynolds’ tango with bankruptcy didn’t begin in 1996, it began months or even years before he eventually decided to file Chapter 11 bankruptcy.

In 1994 Burt Reynolds revealed that he had $11 million in debt and that he had to make payments of $1 million a year just to remain current. But unfortunately for Reynolds, his earnings from acting had decreased from millions of dollars to just hundreds of thousands of dollars for appearing in a major film. Because of this, the actor became 9 months delinquent one of his California homes and failed to pay the taxes on another home for two years. When encouraged by others to file bankruptcy, Burt Reynolds refused, insisting that he was going to pay every last penny of his debts. Fortunately for Burt Reynolds, he did not persist in this type of thinking and eventually filed Chapter 11 bankruptcy emerging from bankruptcy in 1998 and going on to garner much success in his career, evening earning an Oscar nomination in 1997 after appearing in the hit film “Boogie Nights.” The bankruptcy filing allowed Reynolds to focus his energy back on his acting career instead of wasting it on battling with a horde of creditors. It is no coincidence that Reynolds’ career began to falter as he struggled financially and then improved after he reorganized his debts in bankruptcy. This is the power of bankruptcy. Bankruptcy allows the debtor to put their finances in order and get on with living their life.

Source: Reed's Bankruptcy Blog | 3 Sep 2010 | 6:55 pm

Blockbuster Bankruptcy Only A Few Weeks Away?

Blockbuster Bankruptcy Only A Few Weeks Away? Once again rumors are buzzing that Blockbuster, the struggling home video rental company, is preparing to file a Chapter 11 bankruptcy in mid-September.

Executives from Blockbuster and its senior debt holders last week held meetings with the six major movie studios to discuss their intention to enter a “pre-planned” bankruptcy in mid-September, said several people familiar with the situation who requested anonymity due to the sensitivity of ongoing talks.

Blockbuster is hoping to use its time in Chapter 11 to restructure a crippling debt load of nearly $1 billion and escape leases on 500 or more of it 3,425 stores in the U.S. Maintaining the support of Hollywood’s film studios during the process will be critical so that Blockbuster can continue to rely upon an uninterrupted supply of new DVDs.

A “pre-planned” or what’s more commonly known as a prepackaged bankruptcy would allow Blockbuster to get its major bondholders on board with the plan to repay their debts in Chapter 11 bankruptcy. A prepackaged bankruptcy could also allow the embattled company to exit Chapter 11 bankruptcy within five months if no major challenges are raised by junior bondholders who will likely lose the most in a Blockbuster bankruptcy filing. If Blockbuster is in fact planning their bankruptcy filing, it will be critical that they keep in place two essential elements, the willingness of major movie studios to continue working with the company despite the unavoidable losses they will suffer with store closings and the creditors’ willingness to accept significantly less than what they are owed so that they can possibly earn more in the future. But even after a Blockbuster Chapter 11 bankruptcy, if in fact they choose to do so, they will still need to have enough financing to successfully survive the process and to accomplish this, they need to convince investors that they are still a sound, viable and a potentially profitable company.

Source: Reed's Bankruptcy Blog | 3 Sep 2010 | 5:50 pm

Judge OKs Sale of Ohio-Based Newspaper Chain

Bankruptcy judge approves sale of most of Ohio-based newspaper chain's assets to lenders Ohio - Newspaper - United States - Law - Services

Source: Yahoo! News Search Results for law bankruptcy | 3 Sep 2010 | 1:14 pm

Paying Credit Cards While Neglecting Mortgage Payments Can Hurt Your Future

No Opportunity To Redeem Property After Foreclosure Credit card delinquencies have dropped slightly while foreclosures continue to rise; but one of the reasons cited for this shift is debtors’ neglect of mortgage payments in favor of keeping their credit cards current. Current high levels of unemployment and financial uncertainty have conspired to create an incentive for debtors to neglect their mortgages while making payments on their credit cards. Many debtors are afraid that they may lose their job soon and they want to have a source of easy to get to cash so they keep their credit cards in the black. Other debtors are already falling behind on mortgage payments, are unemployed or soon to be unemployed and figure that they will lose their home to foreclosure anyway so why bother trying to make payments. Many are betting on the fact that foreclosures in this country are so numerous that mortgage companies are backlogged for as much as a year which will give more homeowners time to live “rent free.” But there is a catch, even if mortgage companies don’t crack down on delinquent homeowners as fast as their credit card counterparts, they will eventually come after delinquent borrowers even after foreclosure. Because of the rapid loss of value in the housing market, many homes sold at foreclosure are sold for significantly less than the mortgage that the original homeowner owes. This means that the mortgage company will come after the debtor for the balance of that loan and will have the legal right to file lawsuits and use judgments to seize assets and garnish wages. Even if a debtor is without assets and jobless, the mortgage servicers are betting that eventually the debtor’s finances will improve and that they will be able to get repaid. Many debtors find that without the help of a bankruptcy discharge, once they regain employment and assets, old debts such as unpaid mortgages come back to haunt them. This is why debtors who find themselves neglecting their mortgage payments in order to pay credit cards, should really consider how bankruptcy can help them. Remember, bankruptcy will discharge unsecured debt and make it impossible for creditors to come after you once you’re financially on your feet again.

Source: Reed's Bankruptcy Blog | 2 Sep 2010 | 6:28 pm

HOA Fees Deliver Double Whammy For Homeowners Hit By Foreclosure

HOA Fees Deliver Double Whammy For Homeowners Hit By Foreclosure The foreclosure crisis has special significance for homeowners with properties governed by homeowner associations which often charge large monthly fees for the general maintenance of the common areas. Many homeowners who have lost their condos and planned community homes to foreclosure are finding that they are indebted to homeowner associations for thousands of dollars long after they have lost their home to foreclosure.

Homeowner associations are clamping down hard on delinquent residents and former residents who owe past-due HOA fees. Many of these homeowner associations are hiring debt collection companies, filing lawsuits and garnishing the wages and assets of homeowners’ who have lost their properties to foreclosure and have failed to pay HOA fees. It’s a double whammy for homeowners’ who have succumb to foreclosure because oftentimes they are on the hook for 12 months or more of HOA fees even if they weren’t living in the property at the time. Because homeowners remain liable for HOA fees until their home is sold or seized via foreclosure by the bank, many homeowners are being relentlessly pursued by homeowner associations. And even if they were only behind a month or two at the time they moved out of the property, they could end up paying much more because the bank delayed their foreclosure. Some even suspect that mortgage companies are hesitant to foreclose on condos/townhomes with HOA fees because they know it may take a long time to sell these property and they don’t want to spend out thousands in fees on a property that isn’t profitable. Fortunately for those debtors who file bankruptcy, HOA fees can be discharged in bankruptcy.

Source: Reed's Bankruptcy Blog | 2 Sep 2010 | 5:14 pm

Playlist Files Chapter 11 Bankruptcy

Playlist Files Chapter 11 Bankruptcy As the recession continues to sweep through the entertainment industry, another on-demand music company files bankruptcy. Playlist, a site which hosts on-demand music filed Chapter 11 bankruptcy with $24 million in debt from unpaid royalty payments to major record labels.

Playlist, a site which hosts on-demand music for users to share and generate playlists, is mired in debt. The company owes more than $24 million to major labels and $1.68 million to indies in royalty costs. Additionally, its bandwidth bill alone for providing free online streaming comes to $803,470–not exactly a sustainable financial picture.

After settling royalty lawsuits with Universal, WMG, RIAA and nine other labels throughout the year, Playlist was not able to pull itself out of its financial rut and hopes to restructure its debts in Chapter 11 bankruptcy. But it may have some trouble finding bankruptcy financing because the music industry has been unable to turn on-demand music streaming into a profitable business model. Investors specializing in bankruptcy exit financing may be hesitant to sink their money into any company using a business model that even the largest players such as iTunes are shying away from. One of the requirements of having a successful Chapter 11 bankruptcy is that the business must convince current creditors and investors as well as possible bankruptcy exit investors that their business is in fact viable. But if the business model a Chapter 11 bankruptcy company is using is considered flawed or not viable, it could be nearly impossible to convince creditors and investors to stick with them over the long haul. This is one of the challenges that Blockbuster is facing if in fact they choose to file bankruptcy and it will probably be a challenge for Playlist as they work through the bankruptcy process.

Source: Reed's Bankruptcy Blog | 2 Sep 2010 | 1:12 pm

Bankruptcy filings let up

The number of Hawaii residents filing for bankruptcy protection in August eased slightly from July, but cases remained above the 300 mark for the sixth month in a row.

Source: Yahoo! News Search Results for law bankruptcy | 2 Sep 2010 | 6:31 am

Pa. capital nearing bankruptcy

In a highly unusual move, the city of Harrisburg says it will not make a $3.3 million payment. Harrisburg Pennsylvania - Bankruptcy - United States - Law - Services

Source: Yahoo! News Search Results for law bankruptcy | 2 Sep 2010 | 5:04 am

The Third Fastest Man In America Files Bankruptcy

The Third Fastest Man In America Files Bankruptcy Legendary marathon runner Dick Beardsley and his wife Jill have filed for Chapter 13 bankruptcy, listing assets of $72,509 and liabilities of $176,734.

Beardsley and his wife, Jill, filed a petition for Chapter 13 bankruptcy petition on July 20, listing assets of $72,509 and liabilities of $176,734.

They owe the Internal Revenue Service $87,616 in taxes from 2006 to 2009, making the IRS the largest of the more than 50 creditors on their list filed with the U.S. Bankruptcy Court in Austin, where they live.

“We did it to consolidate some IRS debt, and that’s it. That’s the end of the story,” Jill Beardsley said by phone this week.

The IRS seized cash from the couple five days before they filed for bankruptcy, according to their statement of financial affairs filed with the court.

Beardsley is best known for finishing the 1982 Boston Marathon in 2:08:54, just two seconds behind winner Alberto Salazar in a famous race dubbed “The Duel in the Sun.” But his bankruptcy filing is another example of what can happen when debtors refuses to move quickly to protect their finance and delay a necessary bankruptcy filing. The IRS seized cash from this star athlete’s home only five days before he filed bankruptcy. It is almost certain beyond a reasonable doubt that Beardsley knew he had tax debts before his cash was seized. So why is it that he delayed filing bankruptcy? Beardsley like many other debtors probably believed that somehow his debt troubles would work themselves out or that maybe he would eventually catch up; but the truth is that it rarely happens that way. What does happen is that creditors, especially the IRS, become aggressive and seize assets that could have been protected if bankruptcy had been filed in a timely manner. Remember, bankruptcy can even stop the most powerful creditors such as the IRS from seizing your assets and give you a chance to put your financial house in order.

Source: Reed's Bankruptcy Blog | 1 Sep 2010 | 7:12 pm

Visteon Bankruptcy Plan Wins Approval

Visteon Bankruptcy Plan Wins Approval After settling a dispute with its retirees, Visteon Corp. won support for its reorganization plan from its major shareholders, lenders and the bankruptcy court, and raised more than $1.3 billion by selling stock to bondholders. Visteon retirees had been the one major challenge preventing Visteon from moving forward with its plan to cut $2 billion in debt and exit bankruptcy under the control of its bondholders. Under the new deal with retirees, Visteon will pay $12 million to unions representing more than 6,000 former Visteon employees. But the Visteon bankruptcy plan has not avoided controversy, a handful of shareholders oppose the bankruptcy plan saying that they should have been given a chance to participate in the stock sale. But with about 76 percent of Visteon’s shareholders voting to support the plan, the company has successfully won the court’s approval of the bankruptcy reorganization plan and should be exiting bankruptcy soon.

In most Chapter 11 bankruptcy plans, unsecured shareholders are left with either nothing or very little compensation after secured creditors are repaid. This is one of the pitfalls of Chapter 11 bankruptcy for unsecured creditors. Also, employees are often faced with drastic losses in benefits and salaries, especially retirees who are considered a huge financial liability for the company in Chapter 11 bankruptcy. On the upside, a company that enters Chapter 11 bankruptcy with an effective strategy can unload large amounts of debt while giving their company a fighting chance of survival even in the most hostile economic conditions experienced since the Great Depression.

Source: Reed's Bankruptcy Blog | 1 Sep 2010 | 5:01 pm

“American Pie” Film Producer Warren Zide Files Chapter 7 Bankruptcy

“American Pie” Film Producer Warren Zide Files Chapter 7 Bankruptcy Film producer Warren Zide best known for his hit movie “American Pie” has filed for Chapter 7 bankruptcy. Zide’s Chapter 7 bankruptcy petition did not list all of his specific debts; but it did list that he had $1 million to $10 million in liabilities and $518,630 in back taxes owed to the state of California. The fact that Zide filed Chapter 7 bankruptcy means that he does not make more than the median income in his state and that his debt and assets do not exceed the thresholds imposed by the bankruptcy code. The Zide bankruptcy is interesting in that while in many ways he is similar to other wage earners filing for Chapter 7 bankruptcy, he also owns assets such as copyrights, merchandise licensing deals and other intellectual property assets related to the movies he has produced that may be liquidated to pay creditors. However, Zide may still avail himself of the bankruptcy exemptions and may also have the opportunity to “buy back” some of his most valuable assets during bankruptcy with the help of an experienced bankruptcy attorney.

And while the details of Zide’s bankruptcy filing have not been disclosed yet, it is likely that this successful filmmaker overspent after his smash 1999 hit “American Pie” made millions and then found that his income had shrunk over the past 10 years. Unfortunately for celebrities such as Zide and even individuals who are not so famous, the unwillingness to make financial adjustments once income drops can lead them down the road of financial troubles. But with Chapter 7 bankruptcy, Zide will be able to discharge many of his debts, protect his most valuable assets and emerge from bankruptcy better positioned financially.

Source: Reed's Bankruptcy Blog | 1 Sep 2010 | 3:37 pm

Why Bankruptcy Has Become Baby Boomers’ Safe Haven In Troubled Times

Why Bankruptcy Has Become Baby Boomers’ Safe Haven In Troubled Times The American Bankruptcy Institute’s ABI Journal recently released a study that says that 42 percent of all debtors filing for bankruptcy were between the ages of 45 and 64 in 2007 and that older Americans file for bankruptcy at a faster rate than young adults. The increased rate of bankruptcy filings among older Americans is due to a combination of unemployment, medical debt, high credit card debt, devalued homes and the decimation of retirement funds. Not to mention the amount of discrimination many older Americans face in the employment market making it difficult for them to reenter the workforce after suffering devastating financial blows. Many older Americans are losing their jobs and losing their health insurance which can make them vulnerable to the financial fallout of medical emergencies. Medical debts pile up and they file bankruptcy. But before an older debtor files bankruptcy because of unemployment or medical debt, they often drain their home of equity or raid their retirement account in an attempt to repay debtors and avoid bankruptcy. What they don’t’ understand is that by doing this they are often digging themselves deeper into a debt hole that only bankruptcy can dig them out of. And like a line of tipped over dominos older debtors with equity lines of credit struggle to repay their debts and succumb to foreclosure, rely on credit cards and eventually face creditor lawsuits after months of avoidance and using one source of debt to pay another. It is at this point that older debtors finally file for bankruptcy. And it is at this point in their financial crisis that bankruptcy is the save haven they so badly need.

Source: Reed's Bankruptcy Blog | 31 Aug 2010 | 8:26 pm

How The Triple Threat Foreclosure Crisis Is Fueling The Rise Of Bankruptcy

How The Triple Threat Foreclosure Crisis Is Fueling The Rise Of Bankruptcy The truth is out, the housing industry is not recovering and the economy may be facing a double dip recession. Sales of previously occupied homes plunged to their lowest level in 15 years and that’s despite the presence of some of the lowest mortgage rates we’ve seen in decades. But what is driving this perfect storm of economic malaise? And why are the current conditions driving even more people into bankruptcy? Fear, unemployment and the mortgage industry’s resistance to change are three major factors driving the foreclosure crisis and the tsunami of bankruptcies hitting cities around the nation.

People are afraid, afraid of losing their jobs, losing their homes to foreclosure and not being able to sustain the payments on a new mortgage. This is why they aren’t buying the glut of houses on the market; but this is also why the mortgage industry has severely tightened their lending standards. The mortgage industry knows that unemployment, right now the leading cause of foreclosure and bankruptcy, is rampant and they are afraid of lending to the “wrong” people. But the irony of the mortgage industry’s stance during this foreclosure crisis is that they are primarily responsible for creating the quagmire that is currently crippling this economy. It is the mortgage industry that refuses to change, to modify toxic mortgages or to even untie the hands of the bankruptcy system so that bankruptcy judges can modify residential mortgages and save homeowners from foreclosure. But the other irony is that because the mortgage industry’s fear and resistance to change, even more homeowners are seeking the protection of bankruptcy. So many homes have lost significant value that many 2^nd and 3^rd mortgages are becoming unsecured debt and dischargeable in bankruptcy. In a twist of fate, this devaluation of personal real estate gives many homeowners the opportunity to save their home from foreclosure by using bankruptcy after all and many of them are jumping at the opportunity.

Source: Reed's Bankruptcy Blog | 31 Aug 2010 | 7:21 pm

Your Post Bankruptcy Life: Employment

Find a Job Many unemployed debtors are filing bankruptcy because they simply can’t pay their bills, are facing lawsuits and asset seizures. Generally speaking these unemployed debtors have had decent credit and paid their debts faithfully and on-time while employed; but because of unemployment or persistent underemployed they have become delinquent and need to file bankruptcy. Unfortunately, some uninformed or misinformed employers may misunderstand a job candidate’s bankruptcy filing and misinterpret their bankruptcy filing as a moral and character failing. This type of thinking, especially during this economy is a sign that many employers need a dose of reeducation regarding personal bankruptcy. But until we can reeducate these businesses on a mass scale, post-bankruptcy debtors need to be careful to present their bankruptcy in the proper light. Below are two important things every post-bankruptcy debtor must do if they are looking for employment:

Don’t hide your bankruptcy. If an employer says that he/she is going to run a credit check then you need to make them aware of your bankruptcy filing.
Understand that those employers who misjudge bankruptcy filers are not necessarily against bankruptcy; but they are usually against many of the misconceptions about why people file bankruptcy. For example, some misinformed employers believe that bankruptcy filers are irresponsible, have poor impulse control or refuse to take responsibility for their actions. While there are certainly bankruptcy debtors who fall into those categories, most bankruptcy debtors are individuals who have fallen upon hard times and need a helping hand. It is the post-bankruptcy debtor’s job to assure the employer that they belong to the category of responsible debtors who have fallen upon hard times and used bankruptcy to get a second chance.

Source: Reed's Bankruptcy Blog | 31 Aug 2010 | 6:18 pm

Lessons From Teresa Giudice’s Bankruptcy

Lessons From Teresa Giudice’s Bankruptcy If you’ve been watching the news and following the celebrity blogs then you’ve probably heard that Teresa Giudice is taking a lot of heat for spending $60,000 on home furnishings after filing bankruptcy. Her bankruptcy attorney is supposedly defending the purchases saying that the money spent was from income earned after the bankruptcy fling and therefore could be legitimately spent for necessities such as furnishing her home.

“That was the money she earned as an advance for her book Skinny Italian,” her attorney Jim Kridel tells PEOPLE. “Since she earned it after the filing, she was absolutely free to spend it.”

But many people were shocked and upset about Giudice’s splurge not so much because she may have broken bankruptcy laws, but because they felt that she was spending lavishly while in bankruptcy. This is the deal, Giudice lives a lifestyle that requires lavish spending and that lifestyle is probably one of the things that drove her into bankruptcy. How many of us live a lifestyle where we live beyond our means, drive up debts we can’t pay and eventually need to file bankruptcy? Bankruptcy is offering Teresa Giudice and her husband an opportunity to get a fresh financial start; but she cannot successfully take advantage of that opportunity if she is not willing to change her spending habits after bankruptcy. The Giudice family must make the effort to drastically pull back on their spending and abandon the idea of living a luxurious lifestyle if they cannot afford it. Giudice and many other less wealthy individuals are seduced by the idea of appearing to live in the lap of luxury even if it means they will squander the second chance that bankruptcy affords them. Don’t allow the ego boost that a faux luxurious lifestyle provides to ruin you second chance after bankruptcy.

Source: Reed's Bankruptcy Blog | 30 Aug 2010 | 8:15 pm

How To Property Disclose Income During Bankruptcy

When a debtor files bankruptcy, they must fill out what is called the Statement of Financial Affairs. On the Statement of Financial Affairs the debtor must disclose all the income they have earned from employment or the operation of a business. They must also disclose to the bankruptcy court all income received from any other sources. Here a few things you need to know about properly disclosing income on your bankruptcy’s Statement of Financial Affairs:

The bankruptcy debtor must disclose all income received for the year that they are filing bankruptcy and the previous two years. For example, if a debtor filed bankruptcy in October 2010, they would need to disclose all income for the years 2008 and 2009. This can usually be accomplished by providing tax returns, W-2s, paystubs or a profit and loss statement if the debtor is self-employed or owns a business.
If a debtor is filing Chapter 13 bankruptcy or Chapter 11 bankruptcy they need to also disclose their spouse’s income. The disclosure of a spouse’s income when filing Chapter 7 bankruptcy is not required on the Statement of Financial Affairs unless the spouse is also filing bankruptcy. However, since the spouse’s income is already listed on the Means Test, many bankruptcy attorneys also list it on the Statement of Financial Affairs when filing Chapter 7 bankruptcy despite the fact that it is not required.
When disclosing income on the Statement of Financial Affairs the debtor must include all income even income that is exempt in bankruptcy such as Social Security and child support payments. Also, if the debtor is being paid in cash or “under the table” this income should also be included in the bankruptcy filing’s Statement of Financial Affairs.

Source: Reed's Bankruptcy Blog | 30 Aug 2010 | 6:30 pm

How To Battle Non-Wage Garnishments

How To Battle Non-Wage Garnishments If a debtor has become delinquent on their debt payments for long enough, creditors will eventually file a lawsuit against them and may win a judgment. With a judgment in place the creditor can garnish wages and get the right to use non-wage garnishments which typically means they will seize bank accounts. If a creditor serves the debtor’s bank a non-wage garnishment affidavit, the bank is required by law to hand over the debtor’s money on deposit up to the amount owed to the creditor, even if that puts the debtor’s bank account at a zero balance. For example if a debtor owed $3,000 and had $1,500 in their bank account, the non-wage garnishment could wipe out the account handing over the $1500 to creditors. But there are things a debtor can do to protect their bank accounts from non-wage garnishments:

Be aware of any lawsuits filed against you by creditors. If you are significantly delinquent on any debt payments, there will be a lawsuit, it is just a matter of time. If you are facing a lawsuit, don’t ignore it. Show up to court and consider filing bankruptcy to stop the lawsuit. Bankruptcy will stop the lawsuit and prevent a non-wage garnishment before it happens.
Don’t deposit all of your money into your bank account. Yes, we know that is inconvenient; but depositing money into your bank account gives the creditor access to your funds. Consider paying your bills using money orders until you can sort out your financial affairs. Also, consider filing bankruptcy if you have large amounts of debt that you simply cannot pay.
If a creditor has already won a judgment against you, consider challenging the validity of that judgment. Were you served properly? Many creditors fail to properly serve debtors when they file a lawsuit leaving the debtor unaware of litigation. If a creditor failed to serve you, you may be able to have the judgment thrown out. Has the statute of limitations passed? In Texas, credit card companies have only four years to sue a debtor for non-payment. If the creditor files a lawsuit after the statute of limitations has expired, the debtor can have that judgment thrown out.

Source: Reed's Bankruptcy Blog | 30 Aug 2010 | 5:12 pm

Homeowner Are Still Suffering From ARMs But Bankruptcy May Help

Homeowner Are Still Suffering From ARMs But Bankruptcy May Help When the foreclosure crisis first began we heard a lot about the devastating effects of adjustable rate mortgages (ARMs) which were financially crippling millions of homeowners whose interest rates had reset. Unfortunately for many homeowners, ARMs are still pushing many into foreclosure causing a silent crisis on the thousands of communities across the nation. At the height of the housing boom and lending mania homeowners were given the option of choosing to structure their mortgages in a way that allowed them to make very low monthly payments for the first 3 to 5 years of their mortgage repayment period, but held the risk that the mortgage payment would balloon to sometimes double or even triple the original monthly payment. Many of those homeowners ended up in foreclosure because they were not prepared for the drastic increase in their mortgage payments. The good news for those debtors facing foreclosure due to an ARM reset is that if the value of their home fell below the balance of their second or third mortgage they may be able to discharge those debts in Chapter 13 bankruptcy while keeping their home and enjoying a lower payment. How is that possible? Well under the rules of bankruptcy, a debt is only considered a secured debt as long as the property it is secured by has enough value in it. For example, if you purchased a $250,000 home with three mortgages, a $150,000 first mortgage, a $50,000 second mortgage and a $50,000 third mortgage and your property’s value fell to $150,000 by the time you filed for bankruptcy, the second and third mortgage would not be considered secured debt. Technically the second and third mortgages mentioned in the example could be discharged in bankruptcy. To find out more about how you can save your underwater home in bankruptcy speak with a Dallas-Fort Worth bankruptcy attorney.

Source: Reed's Bankruptcy Blog | 29 Aug 2010 | 4:14 pm

New Efforts To Aid Unemployed Homeowners Avoid Foreclosure Misguided?

New Efforts To Aid Unemployed Homeowners Avoid Foreclosure Misguided? The newest foreclosure prevention scheme to come out of the White House is a $3 billion loan program that’s intended to help unemployed homeowners avoid foreclosure. But some homeowner and consumer advocate groups are crying foul saying that the only people guaranteed to benefit will be the banks. Right now, the government is targeting states hardest hit by the foreclosure crisis (Texas is not currently included on that list) for a program that would offer loans of up to $50,000 over the course of two years to unemployed homeowners facing foreclosure. This money would be given to the banks to issue loans to unemployed homeowners facing foreclosure but the banks would not be required to provide matching funds, modify the mortgages or any other concessions that would further aid the homeowners. However, the banks would benefit once the loans are repaid with interest. Furthermore, many housing advocates are saying that because the banks are not required to make any type of beneficial changes to the mortgages which are often underwater, many of the homeowners still won’t have any equity in their homes at the end of two years leaving them once again vulnerable to foreclosure.

Housing advocates have a very good point. At this point the way the unemployed homeowner loan program is designed banks don’t really have any skin in the game. They get to control who gets the loan and they get the benefits when the loan is paid back; but they are not required to modify mortgages which have balances significantly above the real value of the home. Also, it is the homeowner once again who is taking on all of the risk as they will need to repay the loans in two years regardless of the home’s value and whether or not they have found employment. Also, there is a great risk that many people will opt for these loans instead of filing bankruptcy even if their financial situation clearly indicates that a bankruptcy filing is necessary.

Source: Reed's Bankruptcy Blog | 29 Aug 2010 | 1:09 pm

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