Bankruptcy Lawyers Blog

Kodak may File for Bankruptcy

2012-01-04T15:37:00.000-08:00

With the advent of the New Year, many people are pursuing resolutions and starting fresh. Unfortunately, for many companies, 2012 ushers in a new rash of bankruptcy filings. Just this week, the Wall Street Journal reported that Eastman Kodak Co. may be preparing for Chapter 11 bankruptcy in the weeks ahead.

Kodak is in discussion with potential lenders, exploring the possibility of attaining about $1 billion in financing. If Kodak does file for bankruptcy, the company would attempt to sell its 1,100 patents in a court-supervised auction. Apparently the worth of these patents are around $3 billion.

Over the years, Kodak has had a difficult time adapting to an increasingly digital world. Digital photos and online photo-sharing posed certain challenges for Kodak, a more than 100-year-old company traditionally based on photography and its non-digital equipment. Over the years, significant numbers of staff have been let go worldwide.

Kodak has yet to comment on the possibility of a bankruptcy filing. In the meantime, the company's shares have closed under $1 for the last 30 days, according to the Wall Street Journal.

To learn more about bankruptcy, please contact an experienced bankruptcy attorney in your area.

Newspaper Publisher Lee Enterprises Files for Bankruptcy

2011-12-12T08:15:00.000-08:00

The newspaper publishing company Lee Enterprises Inc. has entered Chapter 11 bankruptcy. The company reached an agreement with creditors to settle its nearly $1 billion in debt. Lee Enterprises owns 48 newspapers, including the St. Louis Post-Dispatch.

The filing was expected. About two months ago, Lee had worked out an agreement with some of its creditors to refinance $769.5 million of its loans. According to Lee Enterprises, the publishing of its newspapers will be unaffected by the bankruptcy filing. The company has also said that its employees, advertisers and subscribers will not be adversely affected.

Lee filed a "prepackaged bankruptcy." In this type of bankruptcy, a company prepares a reorganization plan that is agreed to by creditors and shareholders prior to the actual filing. A prepackaged bankruptcy tends to simplify the process and save the company money. Companies including TWA and Resorts International have filed prepackaged bankruptcy in the past.

Lee Enterprises joins a multitude of newspaper companies who have filed for Chapter 11 bankruptcy in recent years. Print publications continue to face falling circulation and advertising revenue, perhaps because of the economic climate, as well as the movement of readers and advertisers to Internet-based media.

To learn more about bankruptcy, please contact an experienced bankruptcy attorney in your area.

Alabama Files Largest Bankruptcy in US History

2011-11-09T15:34:00.000-08:00

Earlier today, Jefferson County commissioners met to decide whether the county should continue to pursue a settlement with creditors or file for Chapter 9 municipal bankruptcy. They voted 4-1 to file a record-setting bankruptcy for the municipal debt load of $3.14 billion.

Alabama Governor Robert Bentley was disappointed by the decision and had hoped that city commissioners would continue to work towards a settlement with the county's creditors. The creditor who arranged the most bonds – and thus stands to lose the most – is JPMorgan Chase & Co. Prior to the meeting, Governor Bentley had promised to help the county find a solution that did not involve bankruptcy.

A settlement proposed in September included $1.1 billion in concessions and a sewer rate increase of 8.2 percent for the first three years (much of the county's debt is sewer debt). Although this settlement seemed promising, the county was unable to get creditors on board with it. Also, the 25-member county legislature was not in agreement for the bills that would need to be passed to initiate the settlement.

Jefferson County's bankruptcy exceeds the previous $1.6 billion Chapter 9 record set by Orange County, California in 1994.

To learn more about filing for bankruptcy, please contact an experienced bankruptcy lawyer in your area.

Jefferson County, AL Veering Away from Bankruptcy Settlement

2011-10-17T15:05:00.001-07:00

There is still a possibility that Jefferson County, Alabama will be filing the largest municipal bankruptcy in history.

In September, county commissioners and debt holders reached an agreement, but the terms of the agreement depend on the passage of various state laws, including sewer rate increases. Some legislators have expressed opposition to the settlement. A legislative session has yet to be scheduled and the city is again facing an ominous Chapter 9 bankruptcy.

The county has been struggling since 2008 due to a $3 billion sewer debt. Also, 44 percent of the county’s discretionary revenue stemmed from an occupational tax, which was found to be unconstitutional by the state Supreme Court. The county laid off hundreds of employees as a result of the finding.

If Jefferson County does file for bankruptcy, it will be a historical amount topping the record $1.6 billion of debt that led to Orange County, California’s Chapter 9 filing in 1994.

The fate of the laws that are part of Jefferson County’s settlement now lay in the hands of state legislators.

A growing number of municipalities are facing bankruptcy. To learn more, please contact an experienced bankruptcy lawyer in your area.

Harrisburg, PA Files for Chapter 9 Bankruptcy

2011-10-12T13:23:00.000-07:00

In a somewhat divisive move, the Harrisburg City Council voted 4-3 to file for Chapter 9 bankruptcy.

Harrisburg is the capital of Pennsylvania, and is currently attempting to file for Chapter 9 bankruptcy, the chapter specifically created for municipalities. Chapter 9 provides protection from creditors while the municipality reorganizes its debts.

Mayor Linda Thomson and the state are opposed to the bankruptcy filing, wishing instead to create and implement a fiscal rescue plan. The state is serious enough in its opposition to attempt to take control of Harrisburg. The state house has passed a bill that would allow the state to take control of Harrisburg and establish a fiscal rescue plan. Next week, the state senate will decide whether to pass the bill.

A primary reason that Harrisburg has become so indebted is the city’s trash incinerator facility, a project that cost almost $300 million. The incinerator has not brought in the revenue it was expected to.

Unfortunately, Harrisburg is one of many recent Chapter 9 bankruptcies. The city joins other municipalities including Central Falls, Rhode Island. Some economists and financial analysts are predicting that more will follow.

To learn more about bankruptcy, please contact an experienced bankruptcy attorney in your area.

Friendly’s Files for Chapter 11 Bankruptcy

2011-09-07T12:50:00.000-07:00

Friendly’s, the popular restaurant chain famous for ice cream, milk shakes, and hamburgers, filed for Chapter 11 bankruptcy protection earlier this week. The chain will close 63 stores, resulting in a loss of approximately 1,260 jobs.

The company explained that the slumping economy, increased food costs, and high rents made filing for bankruptcy a necessary step to ensure that the remaining restaurants can stay in business. Friendly Ice Cream Corp. has obtained $70 million in financing and will keep 424 restaurants open while they reorganize through bankruptcy protection. During this time, employee salaries and benefits will continue to be paid, and gift cards will be honored.

Friendly’s is not the first restaurant chain to seek bankruptcy protection during this current economic recession. Other notable restaurant companies who have filed for bankruptcy include:

Perkins & Marie Callender’s
Real Mex, which operates El Torito Restaurant and Chevys Fresh Mex
SSI Group Holding Corp., which operates Souper Salad and Grandy’s restaurant

As the economy continues to struggle, more and more people are choosing to eat out less. This trend does not bode well for other struggling restaurant franchises.

Central Falls, Rhode Island Files for Bankruptcy

2011-08-02T16:38:00.001-07:00

Yesterday, the city of Central Falls, Rhode Island filed for bankruptcy after it was unsuccessful in convincing retired police officers and firefighters to forego 50% of their pension. The city faces massive debt and without these concessions, bankruptcy became the only viable option to keep the town afloat.

Central Falls is a tiny town covering approximately one square mile with a population of 19,000. The city’s debt was expected to reach $5.6 million by next June if it failed to file for bankruptcy. Due to a dwindling population and the accompanying reduction in tax revenues, Central Falls has struggled to generate enough revenue to cover its expenses.

“In the end, we were left with no practical option,” said former State Supreme Court Judge Robert Flanders. “We needed cooperation and monetary agreements from all sides to make this work. That didn’t happen, and so that’s why we’re all here today.”

Last year, the city was forced to fire every teacher in the high school when the district failed to reach an agreement with the teacher’s union regarding compensation for increased hours at work. The teachers had been asked to spend more time with students in order to improve failing test scores. Due to the impasse, the school’s principal, three assistant principals, and 77 teachers were let go.

This situation is not unique to Central Falls. In March, Boise County in Idaho filed for Chapter 9 bankruptcy after a violation of federal law forced the county to pay $6.2 million to a housing developer.

Perkins Restaurants to Emerge from Bankruptcy in the Fall

2011-07-20T09:47:00.000-07:00

In June, Perkins and Marie Calendar’s Inc. filed for Chapter 11 Bankruptcy. The company, which owns or franchises 600 restaurants nationwide, closed about 65 restaurants prior to filing and is continuing to evaluate locations to weed out any poor performers.

The company blamed the suffering economy and increased costs of food like dairy and eggs as well as increased labor and benefit costs for its predicament. In its Chapter 11 petition, Perkins listed its total assets at $290 million while its total liabilities soared at $440.8 million.

Perkins has begun its restructuring and plans to exit bankruptcy in the fall in a significantly financially strengthened position. Its restructuring plan would place the company under the control of Wayzata Investment Partners LLC, a private-equity firm based in Wayzata, Minnesota that is the leader of unsecured note holders. Perkins would also emerge with $35 million to get back on its feet, replacing the company’s current $21 million debtor-in-possession credit line. While the plan has Wayzata’s support, creditors must cast their votes and a judge must approve it before it can proceed. Perkins hopes to win court approval in August.

Los Angeles Dodgers File for Bankruptcy

2011-06-27T13:06:00.000-07:00

The Los Angeles Dodgers have recently filed bankruptcy. This announcement came less than a week after Major League Baseball Commissioner Bud Selig prevented the Dodgers from pushing through a new TV deal with Fox Sports that would have provided the team with $3 billion. According to Dodgers owner Frank McCourt, that money was crucial to his ability to meet the team’s payroll for the rest of the season. Selig blocked the deal because he believed the money would have been used to attend to McCourt’s personal affairs rather than the team’s needs.

Since the team filed for Chapter 11 bankruptcy, they will be able to continue with normal operations during their financial reorganization. However, it is almost certain that McCourt will have to sell the team in the near future.

This bankruptcy filing has enabled the Dodgers to secure $150 million in debtor-in-possession financing which will be used to pay for the team’s operating expenses while they get back on their feet financially. Prior to filing bankruptcy, the team was unable to convince any lenders to loan them money. However, the debtor-in-possession status enables these lenders to receive a favorable position in the long line of creditors waiting to receive their money.

Many current and former Dodgers players are listed as creditors on the bankruptcy filing. Former all star outfielder Manny Ramirez, who is owed approximately $21 million, is listed as the team’s largest creditor. Due to collective bargaining agreements between the league and players’ union, most players should expect to be paid the full value of their contracts.

Teams filing for bankruptcy have been able to move on to achieve great things in a relatively short amount of time. Last year, the Texas Rangers were sold out of bankruptcy, and they went on to reach the World Series for the first time in the team’s history.

Washington Mutual Emerges from Bankruptcy with a Proposal for Shareholders

2011-05-23T13:42:00.001-07:00

On September 26, 2008, Washington Mutual filed for bankruptcy after being sold to JP Morgan Chase and Co. for $1.9 billion. Nearly three years after this event was deemed the biggest bank failure in U.S. history, Washington Mutual is finally on its way to recovery.

On Friday, May 20, Washington Mutual discussed a plan to give shareholders control of the company once it fully recovers from bankruptcy. In return, shareholders must agree to drop allegations that WaMu's hedge funds were using confidential information during trading.

This new proposal smoothes the feathers of disgruntled shareholders who were upset with a former proposal that paid off creditors but left little for them. In addition to giving shareholders control, the proposal sets aside $25 million that can be used for lawsuits on the shareholders' behalf.

Currently the proposal still needs many details worked out, and has a possibility of falling through. A hearing scheduled for June 29 will decide the proposal's fate. In the meantime, Washington Mutual looks forward to ridding itself of its bankruptcy status, and its shares have risen almost 90 percent in value.

If your company is facing bankruptcy or to learn more about bankruptcy, contact an experienced bankruptcy lawyer near you.

DISH Network Buys Blockbuster

2011-04-26T10:09:00.001-07:00

Earlier this month, satellite TV company DISH Network secured the winning bid in an auction to purchase former video rental giant, Blockbuster, for $320 million. After adjustments are made for available cash and inventory, DISH Network is expected to spend approximately $228 million to buy Blockbuster.

The deal is still pending approval of the bankruptcy
court. Once this hurdle is cleared, DISH Network plans to reorganize the bankrupt movie rental corporation. These plans include keeping approximately 1,700 stores open as well as leveraging Blockbuster's ability to help DISH Network deliver their existing video offerings.

Throughout the 90s and the early part of the past decade, Blockbuster enjoyed tremendous success and ranked as the nation's top video rental franchise. However, the company has fallen on tough times in recent years, largely due to its decreased market share at the hands of competitors such as Netflix and Redbox.

Blockbuster filed Chapter 11 bankruptcy in September 2010. At the time, the company still had 5,600 stores worldwide, including 3,300 stores in the United States. Blockbuster had $1.02 billion in assets and $1.47 billion in debt when they filed bankruptcy last fall. When DISH Network purchased the franchise earlier this month, the number of stores in the United States had dropped to 2,400, and approximately 700 more are expected to close their doors in the next month.

Bankrupt Borders Group Begs Landlords for Rent Relief

2011-03-15T11:18:00.001-07:00

Borders Group, operator of thousands of Waldenbooks and Borders bookstores nationwide, appears before a Manhattan federal bankruptcy judge today to request more time for renegotiating lease arrangements. Borders Group filed for Chapter 11 bankruptcy February 16^th of this year, hurt by stiff competition from Wal-Mart and Amazon.com.

Now, Borders Group must renegotiate more than 600 store leases, using plans to close 75 stores as leverage to seek concessions from landlords. A group of these landlords has filed an objection in US bankruptcy court to Borders’ request.

The landlords complain that Borders has not explained why it needs an extension, but are not generally opposed to negotiating with the bookseller as they have a substantial stake in the stores’ success. Under Chapter 11 bankruptcy law, debtors are granted 120 days to restructure these types of contracts, but 90-day extensions are common.

If Borders’ petition is approved, the company would have up to a September 14^th deadline to renegotiate its leases. Borders Group also plans to request additional 120-day extensions from individual landlords.

The New York Stock Exchange froze trading of Borders Group (BGP) shares after its February bankruptcy filing and announced plans Wednesday (3/9) to remove Borders Group stock from its listings on the 21^st of March.

To learn more about Chapter 11 bankruptcy or if your business is facing Chapter 11 bankruptcy, please contact us today to find a knowledgeable bankruptcy attorney near you.

Borders Group Files for Chapter 11 Bankruptcy, Closes 200 Stores

2011-02-16T23:17:00.000-08:00

Facing serious debt and solvency problems, Borders Group Inc. filed for Chapter 11 bankruptcy in US Bankruptcy Court today in New York. Borders will close at least 200 of its 642 Borders, Waldenbooks, and other bookstores and plans to close another 75 stores pending potential concessions from landlords.

Consistently failing to adapt to the growing online market for books, Borders Group’s market value has dropped more than $3 billion over the past decade. Borders didn’t even have an online bookstore until 2008, entering a market already dominated by Amazon.com for 10 years. Amazon’s Kindle e-book reader also beat Borders to the punch, debuting 3 years before Borders’ Kobo™ and grabbing huge market share.

Borders already announced last month that it would lay off 11% of its headquarters staff, plus 76 other workers. CEO Ron Marshall resigned after a one-year term and was replaced by interim CEO Michael Edwards. This came after Borders’ stock price fell more than 20% in December when the company was forced to delay payments to publishers.

We’ll keep following the Borders Group bankruptcy on this blog. Keep checking here for updates on the bankruptcy of the 2^nd largest book store chain in the US.

If your business is facing Chapter 11 bankruptcy or you are thinking about Chapter 7 bankruptcy or Chapter 13 bankruptcy to get out of debt, please contact us to fine an experienced bankruptcy lawyer in your state.

Know Your Bankruptcy Terms

2011-01-31T13:24:00.000-08:00

Filing for bankruptcy can be overwhelming and confusing. With the help of a bankruptcy lawyer, however, you will have a much better understanding of the legal process and how you can protect yourself. The following bankruptcy terms will help you understand the different parts of bankruptcy law.

List of Important Bankruptcy Terms to Know

Bankruptcy – The legal status of an organization or individual who is unable to repay debts owed to creditors.

Chapter – A chapter refers to the section of bankruptcy law that determines which type of bankruptcy you file. Each chapter or type of bankruptcy has different processes and requirements. Your bankruptcy attorney can help you figure out which chapter of bankruptcy applies best to your situation. The four main chapters of bankruptcy law are:

Creditor – An organization or an individual to whom money is owed.

Debtor – The organization or individual who is either voluntarily or involuntarily filing for bankruptcy.

Dischargeable Debt – Dischargeable debt can be wiped out during bankruptcy proceedings and will not be owed.

Liquidation – The legal process in bankruptcy law that takes the assets and property from the debtor filing for bankruptcy and redistributes it among the creditors to pay back the debt owed.

Non-Dischargeable Debt – Non-dischargeable debt cannot or may not be wiped out during bankruptcy proceedings and is still owed to creditors.

Petition – The paperwork that begins bankruptcy proceedings, filed by the debtor who needs to file bankruptcy or the creditors to whom money is owed.

For additional information about bankruptcy or to schedule a consultation about your bankruptcy, please contact us today to locate an experienced bankruptcy attorney in your area.

Dischargeable and Non-Dischargeable Debts in Bankruptcy

2010-12-30T13:23:00.000-08:00

When you file for bankruptcy, your debts fall into two different categories. These categories help determine what debts you will still owe your creditors and what debts will be wiped out. With the help of a bankruptcy lawyer, you can determine which debts fall into which category.

The two debt categories are dischargeable and non-dischargeable debts. Dischargeable debts are those that can be wiped out and will no longer be owed. Non-dischargeable debts are those that still must be paid after your bankruptcy proceedings.

Examples of dischargeable debts for Chapter 7 Bankruptcy are:

Balances on your credit card accounts
Business debts
Personal loans
Leases

Examples of non-dischargeable debts for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are:

Any debts you fail to list on your bankruptcy paperwork
Family support debts (e.g. alimony and child support)
Student loans
Traffic tickets or criminal restitution
Debts for the personal injury or wrongful death of another you caused by driving under the influence of drugs or alcohol
Federal, state, and local taxes

If you are faced with a bankruptcy and would like to schedule a consultation with a bankruptcy lawyer, please contact us today to find an experienced bankruptcy lawyer in your area.

Lehman Bankruptcy in Court: Barclays Pushes for Dismissal of SEC’s Claim

2010-11-30T14:08:00.000-08:00

UK bank Barclays Plc is pushing for a US bankruptcy judge to dismiss a claim by the US Securities and Exchange Commission in one of three bankruptcy lawsuits against Barclays related to the Chapter 11 bankruptcy of Lehman Brothers in 2008, which was by far the largest bankruptcy in history. The SEC is asking the court to rule that two transfers totaling over $1.2 Billion in assets and securities from Lehman’s brokerage to Barclays violate securities law.

Lehman Brothers Holdings, Inc is waiting for the judge to rule on its suit over what it calls an $11 Billion windfall reaped by Barclays from its 2008 purchase of Lehman. Barclays has pointed out the huge risk the firm took in purchasing Lehman, for which Barclays was the only bidder. At the time of the purchase, the SEC gave its support to the deal without reservations. Barclays says that the SEC is now backtracking on its earlier position in order to avoid “political criticism.”

Barclays maintains that it is still owed $3 Billion, including the transfers under review, but the SEC is trying to block payment of those funds in bankruptcy court. Bankruptcy attorneys involved in the case expect Judge James Peck to rule in January or February 2011.

Lehman Brothers Asks Bankruptcy Judge to Approve $30M in Bonuses

2010-10-28T16:50:00.001-07:00

Lehman Brothers Holdings Inc, which filed for Chapter 11 bankruptcy in September of 2008, has asked for a bankruptcy judge's approval to pay as much as $30 million in bonuses to employees in its derivatives department. Lehman's derivatives department is widely held responsible for the company's collapse, amassing billions of dollars' worth of risky derivatives like mortgage-backed securities.

Now, Lehman says, it needs to pay these bonuses to keep compensation competitive and retain highly skilled employees involved in unwinding the derivatives transactions that brought the company down two years ago. Lehman's request asks for authorization of a $15 million bonus pool for 2011 along with another $15 million that a judge has already authorized but has not been earned yet.

Under the incentive plan for 2010, Lehman was already authorized to pay $50 million in bonuses to its derivatives department.

The federal government declined to bail out Lehman Brothers in 2008 when the mortgage-related derivatives market collapsed, leading to the largest bankruptcy in United States history—twice as big as the next-largest, the bankruptcy of Washington Mutual, which was filed eleven days later. Lehman had approximately $646 billion in assets before filing for bankruptcy.

Blockbuster to File for Bankruptcy

2010-09-27T16:54:00.001-07:00

Blockbuster is currently preparing to file Chapter 11 bankruptcy. The movie rental chain may officially announce its plans to the general public as early as later in the week.

Earlier this year, Blockbuster executives announced a plan to close approximately 10% if its stores nationwide as an increasing number of customers have turned to online alternatives such as Netflix. Currently, the video retailer is shouldering about $900 million in debt.

According to their bankruptcy plan, Blockbuster will attempt to continue doing business while they work to pay off their debt. This reorganization will most likely result in the closing of many more retail outlets.

Blockbuster's bankruptcy has also created a significant problem for many landlords who have been forced to take back many leased premises as a result of the store closings. In the current real estate market, landlords may face considerable challenges re-renting many of these spaces.

One of Blockbuster's rivals, Movie Gallery Inc., declared bankruptcy earlier this year. While the company, which operates the Hollywood Video rental chain, initially intended to reorganize, they ultimately decided on liquidation instead. This decision was largely based on concerns over whether the in-store video rental business model is still viable given alternatives such as Netflix and Red Box.

Blockbuster remains committed to moving through bankruptcy with a goal of creating a better business model which will leave them in a stronger position once they have settled their debts.

Real Housewives of NJ Star’s Home Auctioned as Part of Bankruptcy Proceedings

2010-08-19T15:27:00.001-07:00

This weekend, Real Housewives of New Jersey star Teresa Guidice will have many of her possessions auctioned off as part of the terms of her bankruptcy filing. It is estimated that she and her husband Joe owe approximately $10.85 million to creditors.

The auction, which will be held on August 22, will sell off the contents of Guidice's new $1.7 million mansion located in Towaco, New Jersey. The home has been featured on the first two seasons of her hit reality show, The Real Housewives of New Jersey.

Items to be auctioned include:

Schaefer & Sons grand piano
Chandeliers
Faux marble chess set
Snow plow

Guidice and her husband filed Chapter 7 bankruptcy in October 2009 after several failed real estate ventures left them with their massive $10.85 million debt. Yet despite their tough financial times, the Guidices were shown on her reality show celebrating their tenth wedding anniversary with a brand new diamond for Teresa and a private helicopter tour for the couple.

Teresa has called her bankruptcy experience a fresh start for her family. Hopefully, this fresh start will include some more modest spending practices.

Filing Bankruptcy Can Help you Keep Your House

2010-07-21T09:37:00.001-07:00

If you have fallen behind on your mortgage payments and are in danger of going into foreclosure, you may want to consider filing bankruptcy. It may help you save your home.

Filing bankruptcy can halt foreclosure proceedings, prevent harassment by debt collectors, and give you an opportunity to catch up on missed payments while you reorganize your finances. However, it is not a solution for all homeowners in danger of foreclosure. If your primary problem is a lack of income, bankruptcy will not provide you with a way to correct that issue.

Bankruptcy is a good option for individuals who have fallen behind on payments but who have steady income and can therefore eventually begin making payments again after their finances are reorganized. However, if it is unlikely that you will have the means to resume your payments after moving through bankruptcy, then this strategy most likely will not help you keep your home in the long run.

The first step in the process is figuring out which type of bankruptcy to file for. You essentially have two options – Chapter 7 bankruptcy and Chapter 13 bankruptcy. Your specific financial situation will determine which is the best option for you.

While filing Chapter 7 bankruptcy initially halts foreclosure proceedings, it often eventually results in the liquidation of most of your assets. Therefore, it is likely that you will still lose your home down the road. However, Chapter 7 eliminates all of your unsecured debt so that you will only have to repay your secured debt, such as your mortgage. Since all of your other debts have been discharged, you may be able to afford resuming your mortgage payments if you have a steady income.

Most experts generally recommend filing Chapter 13 if you want to keep your home. By filing Chapter 13 bankruptcy, you will generally have three to five years to reorganize your finances. During this time period, the court agrees to an income-based budget and monthly payments that will be made to trustees, who will then pay off your debt. Your secured debt, such as a mortgage, will be paid off first. Any remaining money will be used to pay off unsecured debt, starting with back income taxes. Finally, expenses such as credit card debt and medical bills will be paid, generally at a vastly reduced rate (sometimes as little as five cents on the dollar).

If you are diligent at keeping up with your payments to the trustees, you can often emerge from bankruptcy in possession of your home.

Bankruptcy can offer you one additional piece of relief from a mortgage that is beyond your financial capacity to pay. While the courts cannot reduce mortgage debt to reflect a depreciated value of your home, they have the ability to relieve second mortgages, such as home equity loans, if the value of your home has fallen below the first mortgage balance. In this situation, the second mortgage would be considered unsecured debt, and it would be paid off at the same rate used with your other unsecured debt.

Of course, there are other downsides to filing bankruptcy. Your credit rating will generally plummet, and bankruptcy can remain on your credit report for as much as ten years. Therefore, it is important to weigh these issues with the advantage of keeping your home before determining whether bankruptcy is the right strategy for you.

Despite Massive Liability over Oil Spill, BP a Long Way from Bankruptcy

2010-06-24T09:07:00.001-07:00

Many bankruptcy experts share the opinion that BP is unlikely to be forced into bankruptcy over their liability for the oil spill currently ravaging the Gulf of Mexico – at least in the short term. For the moment, BP remains a financially strong and stable company, despite the plummeting value of their shares.

BP still has access to billions of dollars in credit, solid cash flow, and a healthy balance sheet. These factors should help the oil company weather the storm as the cost of cleaning up the oil spill and compensating victims for their damages escalates over the coming months.

However, BP still does not have a timetable for when they will be able to cap the well which is dumping massive quantities of oil into the Gulf of Mexico. If the spill continues into 2011 and costs for BP enter the $75-100 billion range, then Chapter 11 bankruptcy may become a possibility.

It is not uncommon for companies facing major liability over their negligent actions to file Chapter 11 bankruptcy. This provides the company protection from creditors, creates a course of action to value claims, and establishes a trust to cover these claims. Filing bankruptcy also provides the additional benefit of consolidating all legal claims in one court before one judge. This eliminates the risk of facing multiple jury trials in multiple jurisdictions across the country.

While this may seem to be an attractive option for a company facing the lofty price tag associated with cleaning up the largest oil spill in our nation's history, BP is too financially strong at the moment for a bankruptcy court to grant a Chapter 11 petition. Only time will tell if they are able to maintain their financial solvency as this crisis continues to worsen.

Chrysler Reports First Profit since Emerging from Bankruptcy

2010-05-25T12:00:00.001-07:00

Earlier this month, Chrysler reported that it posted its first quarterly operating profit since emerging from bankruptcy in June 2009. During the first quarter of 2010, the auto manufacturer posted an operating profit of $143 million. Company officials have indicated that Chrysler remains on target to break even on an operating basis for the 2010 year.

While this is certainly good news for Chrysler, the auto company still faces some degree of economic hardship. They posted a net loss of $197 million for the first quarter of 2010, increasing their total loss to almost $4 billion since emerging from Chapter 11 bankruptcy last year.

However, it is important to note that Chrysler's first quarter revenue increased 3% from the final quarter of 2009, and its market share increased from 8.1% to 9.1% in the United States. Chrysler executives are confident that sales will continue to increase as they release new products in the second quarter of 2010, including the 2011 Jeep Grand Cherokee.

As part of Chrysler's emergence from bankruptcy last June, the company was purchased by the Italian auto manufacturer Fiat. It will be interesting to see how Chrysler's fortunes fare as Fiat's long term plan for the company begins to take effect over the next few years.

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2010-04-26T12:28:00.001-07:00

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Ex-NBA Star Derrick Coleman Files Bankruptcy

2010-04-12T14:24:00.001-07:00

Derrick Coleman's NBA career was somewhat of a roller coaster ride. At its height, he was considered to be one of the most talented and promising power forwards in the league. However, after 15 meandering seasons which showcased more problems than all-star appearances, Coleman's legacy will be that of a great disappointment.

Apparently, his personal finances are currently in as much disarray as his up-and-down NBA career. Coleman has recently filed for bankruptcy and owes creditors approximately $4.7 million.

You might be wondering how someone who earned more than $87 million over his NBA career can be almost $5 million in debt and slogging through bankruptcy proceedings. It seems that Coleman spent a considerable amount of money on business and real estate ventures in an attempt to revitalize the struggling Detroit community. Unfortunately, Coleman didn't invest wisely.

However, there are several other reasons behind Coleman's tremendous debt:

Lavish spending on homes, cars, and fur coats
A $1.3 million lawsuit brought against him by Comerica Bank
A $1 million real estate loan from Thornburg Mortgage Home Loans
A $50,000 debt owed to Dave Bing, former NBA player and current mayor of Detroit

Currently, Coleman only has about $1 million in assets, which include a 1997 Bentley convertible, five fur coats, and $3,000 in jewelry. He is attempting to maintain possession of his two Beverly Hills homes (his mother lives in one of them), but filing bankruptcy will most likely make that an impossibility.

Hopefully, the current crop of NBA stars will learn from Derrick Coleman's predicament and invest their money a little more wisely.

Blockbuster Desperately Trying to Avoid Bankruptcy

2010-03-25T12:54:00.001-07:00

With massive debt totaling almost $1 billion, Blockbuster is in serious danger of filing Chapter 11 bankruptcy. The movie rental company has recently made several big moves in a last desperate effort to avoid this fate.

In an attempt to beat rival Netflix to the mobile movie market, Blockbuster announced this week that it will be offering on demand video in conjunction with T-Mobile's HTC HD2 smart phone. They expect to offer a similar service with the Android and Windows Mobile phones soon.

This week, Blockbuster also signed a new agreement with Warner Bros. movie studio guaranteeing that all of the studio's movies will be available for release by Blockbuster one month prior to their release through rival rental companies such as Netflix and Redbox.

While these moves should significantly improve the current state of the company, it is unlikely that they will be enough to keep Blockbuster out of bankruptcy. Once the largest and most profitable movie rental company in the country, Blockbuster has fallen on tough times in the past decade.

In 2004, the company acquired approximately $1 billion of debt due to their separation from Viacom. At the time, they were generating approximately $500 million in profits each year and expected to be able to reduce the debt quickly. However, the rise of Netflix accompanied by several questionable business decisions has kept Blockbuster in financial disarray.

For the better part of the last ten years, Blockbuster has been trying unsuccessfully to keep pace with Netflix in the mail-delivery movie market. This service has largely eroded the in-store video rental market, placing Blockbuster in a precarious financial situation. By the end of 2010, the company will only have approximately 3,000 video stores left in the United States, 1,500 fewer than they had at the start of 2009.

If these latest moves do not radically turnaround Blockbuster's fortunes in a relatively short period of time, bankruptcy seems all but unavoidable.

Chrysler: From Bankruptcy to Super Bowl Ads

2010-02-11T16:30:00.001-08:00

Less than a year after emerging from bankruptcy, Chrysler is surprisingly flexing some financial muscle. The auto manufacturer purchased a 60 second ad slot during the Super Bowl, the most expensive ad available for the biggest sporting event of the year.

It is uncertain precisely how much the ad cost Chrysler, who received a $7 billion bailout from the federal government last year. The 30 second slots, which are much more common during the Super Bowl, sold for about $3 million each.

The other two major U.S. auto manufacturers, Ford and General Motors, did not purchase Super Bowl ads this year. Like Chrysler, GM has recently gone through Chapter 11 bankruptcy and received more than $50 billion in government bailout funds. Both GM and Ford indicated that based on their limited resources this year, it didn't seem practical to spend so much money on a 30 or 60 second ad that would air once, when that money can go a lot farther in other marketing campaigns.

Most likely, Chrysler is trying to capitalize on an opportunity to tell a rather large viewing audience that they are back and ready to be a major player in the auto industry once again. However, it does seem surprising that the company has the money for such an expensive ad so soon after going through bankruptcy and accepting government bailout money. Perhaps this kind of spending is what got Chrysler into financial problems in the first place.

Tavern on the Green Closes Due to Bankruptcy

2010-01-13T10:07:00.001-08:00

Tavern on the Green, the iconic New York City restaurant overlooking Central Park, closed its doors for the last time on New Year's Eve. The restaurant has been a mainstay in the New York City culinary community for the past 75 years, drawing diners from across the globe.

As recently as three years ago, Tavern on the Green was plating more than 700,000 meals a year and generating annual revenues exceeding $38 million. However, the recession has dealt a crushing blow to the restaurant, sending it to bankruptcy court with more than $8 million in debt.

An auction will be held this week to sell off many of the ornate adornments which mark the restaurants décor, including chandeliers, stained glass, and a mural of Central Park. Proceeds will go towards paying off creditors.

Tavern on the Green has been owned by the LeRoy family since 1973, when Warner LeRoy took over the restaurant's lease. When he died in 2001, his wife and daughter took over the business.

A Manhattan federal judge is currently deciding whether the restaurant's name can be used by the next operator of the building. The Tavern on the Green name is valued at more than $19 million, a sum that will greatly help the LeRoys with their financial troubles if the judge rules they own the rights to the name.

Dean Poll, owner and operator of the Loeb Boathouse restaurant is expected to take over Tavern on the Green this spring, after renovating the building and modernizing the menu. The only question is whether he will be able to keep the classic name which has adorned the façade for almost a century.

TLC Vision Files Chapter 11 Bankruptcy

2009-12-22T09:35:00.001-08:00

TLC Vision Corp. and two of its subsidiaries, TLC Vision (USA) and TLC Management Services Inc., have filed for Chapter 11 bankruptcy. It is a pre-arranged reorganization, which means that their lenders have already agreed to the restructuring plan. This pre-arranged restructuring deal will most likely allow TLC Vision to move through bankruptcy much quicker.

The company, which specializes in eye care and refractive surgery, lists assets and debt between $100 million and $500 million. TLC has assured the general public that clinical patient care and obligations to employees will continue to be met during the bankruptcy process.

As part of the restructuring deal, TLC Vision has requested $15 million in debtor-in-possession financing, which will most likely be used to pay critical vendors and employee wages. Also, TLC Vision (USA) will become a private company, independent of the parent corporation. No other company affiliates or subsidiaries are involved in the bankruptcy filing.

TLC Vision Corp. is a Mississauga, Ontario company that operates 75 refractive vision centers throughout Canada and the United States. Their U.S. headquarters is based out of Chesterfield, Missouri.

Personal Bankruptcies on the Rise

2009-11-09T14:08:00.001-08:00

The American Bankruptcy Institute recently reported that the number of Americans filing personal bankruptcy increased 9% in October. In total, 135,914 people filed bankruptcy last month. Approximately one third of these were Chapter 13 Bankruptcy filings, which places you on a repayment plan that can last as long as five years.

It is expected that more than 1.4 million people will file for bankruptcy in 2009, an increase of more than 30% from last year. This would also be the highest annual total since 2005. Furthermore, there was a 7% increase in businesses filing bankruptcy. These statistics indicate that our economy is still struggling to recover from the recession.

Many Americans are struggling to pay off debt incurred by credit cards and home equity loans. The rising unemployment rate has forced many Americans into desperate financial situations they previously did not anticipate.

Some families have been able to avoid bankruptcy by drawing on money in savings accounts and retirement funds. However, many people who have been unable to find work are starting to exhaust these safety nets and are now forced into filing bankruptcy.

The last time bankruptcies were this high, it was the result of a change in bankruptcy laws rather than a reflection of a struggling economic climate. In October 2005, Congress changed the bankruptcy laws, making it more difficult for individuals to file Chapter 7 Bankruptcy, which enables them to clear their debts. In an attempt to avoid having to file under Chapter 13, many people rushed to file Chapter 7 in the months before the change in the law took effect.

Unfortunately, it does not seem that the current trend of rising bankruptcies will subside until the economy turns around.

Bankruptcy Judge Orders $12M Fund for Peanut Victims

2009-10-02T15:18:00.000-07:00

Yesterday, a U.S. bankruptcy judge ordered the insurance company for Peanut Corporation of America to earmark $12 million for a fund that will be used to reimburse victims who developed health problems after eating contaminated peanut products earlier this year.

To receive reimbursement, all victims must submit their claims to the claims administrator by October 31.

Peanut Corporation of America has faced a series of lawsuits involving a variety of peanut butter products tainted with salmonella. Investigations by health inspectors found that Peanut Corporation of America knowingly distributed tainted products to manufacturers for use in their retail products. Food products made with the tainted peanut butter included cookies, cakes, candies, crackers, and ice cream. These products were sold at grocery stores nationwide.

Hundreds of consumers suffered serious illnesses from the salmonella-contaminated peanut butter products, and at least nine people died from their consumption. After the injuries were made public, Peanut Corporation of America recalled hundreds of products containing the contaminated peanut butter.

Last February, Peanut Corporation of America declared bankruptcy after it became clear they were facing a multitude of lawsuits for their negligent actions.

Did Chrysler Stay in Bankruptcy Long Enough to Address Problems?

2009-09-14T13:05:00.000-07:00

Earlier this year, Chrysler filed for bankruptcy in order to reorganize and hopefully become a profitable company once again. At the time, the U.S. government pushed to move Chrysler through bankruptcy as quickly as possible in order to avoid a confrontation with the United Auto Workers union over pensions and other financial issues.

Unfortunately, Chrysler's rapid movement through Chapter 11 bankruptcy may have hurt them in the long run. Many bankruptcy experts have urged the company to take the necessary time to ensure that the company emerged in better condition than they entered. It appears that Chrysler did not remain in bankruptcy long enough to properly address all of the challenges facing them in the upcoming years.

Recently, Fiat purchased a controlling minority stake in Chrysler. The company plans to make several Fiat models available in the United States in order to boost the profits of the struggling Chrysler Corporation. Fiat also plans on phasing out several Chrysler, Dodge, and Jeep models that have not been profitable.

However, it is uncertain whether the help from Fiat will be able to resuscitate the floundering company. Their help may be too little, too late. Most likely, it will take at least two years for Chrysler to feel the impact of the changes brought by Fiat. Based on their current financial circumstances, it appears that Chrysler may not be able to wait that long.

Hertz, Macy’s, and Goodyear among Major Companies in Danger of Bankruptcy

2009-08-28T11:33:00.000-07:00

In our tumultuous economy, more and more large corporations are facing bankruptcy. The American auto industry has already seen two of the big three corporations, General Motors and Chrysler, file Chapter 11 bankruptcy. It appears that many other industries face the same economic hardships as the auto industry, and many companies that have long been regarded as extremely strong are treading dangerously close to bankruptcy.

Rental car giant Hertz is struggling to stay afloat amidst a sizeable debt incurred in the financing of their rental fleet. This debt is compounded by a falling rental demand among the general population. It remains to be seen whether Hertz will be able to right the ship in a hostile economic climate.

Macy's, long regarded as one of the most powerful department store chains in the country, is also facing the potential of filing bankruptcy. The company faces $2.4 billion of maturing debt over the next five years. They have tried to cut costs, but the reality is that vastly fewer people shop at department stores than ever before. Even if the economy rebounds soon, it is unlikely that Macy's will see their sales return to the level needed to maintain financial solvency.

Goodyear has recently lost a sizeable portion of the tire market share as demand for their tires has dropped. They are also financially strapped with massive debt and pension obligations. To make matters worse, The United Steelworkers union prevents Goodyear from exercising cost control measures by forcing factories to stay open.

Hopefully, these corporations will be able to pull through the tough economic times we are facing. For now, they are all playing a waiting game, and only time will tell if they can survive without filing bankruptcy.

GM Emerges From Bankruptcy

2009-07-29T10:33:00.001-07:00

On July 10, 2009, General Motors (GM) emerged after spending 42 days in bankruptcy. In order to help the company emerge from financial hardship, the U.S. government invested a landmark $50 billion into the auto-maker so that the company could restructure and eventually continue business.

Government bailout is not an option for everyone considering bankruptcy, which is why a bankruptcy lawyer is essential for people and smaller businesses with large amounts of debt. After the GM government bailout for their bankruptcy, the government now owns the majority of the company's common stock.

With the huge amount of money that has been poured into the auto company, GM will now look at what they can do to gain market share and restructure the company so they do not go into bankruptcy again. The chief executive of GM is saying that business at GM will never again continue like it has in the past.

Finally, the company says that it will attempt to repay taxpayers for the huge amount of money that saved thousands of jobs, but for this to happen, the value of GM stock would have to rise to an unprecedented level.

If you believe you are facing an insurmountable amount of debt and bankruptcy will be your best option, please contact an experienced bankruptcy attorney in your area to schedule an initial case evaluation. Your bankruptcy lawyer can help guide you through the filing process and help minimize the damage to your credit rating.

Number of Bankruptcies Filed In Georgia Skyrockets

2009-06-24T09:13:00.001-07:00

Bankruptcy trustees in South Georgia claim that the number of bankruptcies being filed is growing every week. Whether they are personal foreclosures or business bankruptcies, the number of buildings being auctioned off every week is growing.

While many say that the former employees of businesses that have filed for bankruptcy will start anew and make their own businesses, at the moment, the economic downturn is hurting many different people in the South.

One of the biggest areas of foreclosure and bankruptcy is in the building and construction market. There are many small construction businesses filing for bankruptcy because very few new homes and commercial buildings are being built at the moment. Carpet companies, electric companies, and plumbing companies are also feeling the hard times because there is much less work to go around than in previous years.

One of the reasons these companies are filing for Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11 bankruptcy is because they can't operate at a loss for very long. The construction business operates on a bid system; the people who offer to do the job at the lowest cost for the buyer usually get the job. Unfortunately, the lower and lower your offer gets, the less profit you make on the job itself. In the end, businesses are unable to make enough profit to continue running.

If you are a small business owner and you believe you will have to file for bankruptcy, one of the best things you can do is contact a bankruptcy lawyer to help you. An experienced bankruptcy attorney can help you pay off creditors and make sure you start on the road to financial recovery as quickly as possible.

Chrysler Dealers Follow Suit in Bankruptcy Claims

2009-05-28T13:59:00.001-07:00

Nearly 800 Chrysler auto dealers will be closing their doors as a result of the automaker's emergence from Chapter 11 bankruptcy. In just one month, about a quarter of all Chrysler auto dealers will be shut down.

The dealers the automaker is focusing on have failed to produce more than 100 new car sales over the course of the past year. While the company claims that many of these dealers are redundant, they have yet to say what affect this will have on local economies and what potential unemployed workers will do for jobs.

In addition to redundant dealers, Chrysler is going to look at dealers that have auto sales primarily in used cars rather than the newer, more expensive cars. According to Chrysler, 44% of the dealerships being closed also sell cars that are not Chrysler. These dealership closings are all apparently part of Chrysler's bankruptcy strategy called Project Genesis. With this new strategy, Chrysler is going to attempt to integrate their three strongest brands: Dodge, Chrysler, and Jeep.

Bankruptcy is not something that is only happening to large businesses. Small business bankruptcy claims and individual bankruptcy claims are becoming more and more common as well. Regardless of the situation, a bankruptcy attorney is essential if you are filing any type of bankruptcy claim.

GM May Attempt a “Surgical” Bankruptcy

2009-04-23T15:51:00.001-07:00

Unless there is a major change in the financial status of General Motors during the next few months, it is likely that the auto manufacturer will have to file bankruptcy by June 1. Over the past few weeks, there have been several discussions between GM officials and President Obama's automotive task force regarding this likelihood.

At the beginning of April, the task force gave GM 60 days to come up with a restructuring plan for the company. They are currently evaluating whether the auto manufacturer can once again become a viable company.

GM's strategy seems to be to prepare for a quick, "surgical" bankruptcy. This strategy will most likely be challenged by bondholders who would stand to lose a great deal of money as a result.

GM's plan would split the company in two: one part would include their strong assets, such as Chevrolet and their Chinese operations; the other part would include their underperforming assets and billions of dollars in debt that they currently owe.

While proceeds from the government's sale of equity in the better half of the company would help repay parties owed money by the weaker half, this sum would most likely not come close to settling all of GM's massive debts.

General Motors is hoping to make it through bankruptcy court in a few months instead of the typical year it takes many companies. However, it will be up to a judge to decide if the auto manufacturer can move forward with their accelerated bankruptcy plan.

What Does a GM Bankruptcy Mean for the Michigan Economy?

2009-03-18T14:01:00.001-07:00

The impending bankruptcy looming over auto manufacturer General Motors has many people concerned for the welfare of the local Michigan economy. Currently, the corporation has until the end of the month to prove that it is a viable company. If they can, they will most likely receive additional bailout funds from the federal government to help them stay afloat. If they are unable to do so, they will most likely have no choice but to file bankruptcy.

GM would have two choices if they file bankruptcy: they could file Chapter 7 (liquidation) bankruptcy or they could file Chapter 11 (reorganization) bankruptcy. Filing Chapter 7 would have disastrous consequences on the local Michigan economy and most likely on the national economy as well. It is less clear how Chapter 11 bankruptcy will affect the Michigan economy. Most likely, it stands to take a serious hit, but the extent of this hit hinges on several factors:

Under Chapter 11, GM could request that the courts alter the terms of their labor agreements with the auto union. GM would have to prove that the changes are strictly intended to enable them to survive bankruptcy as a viable company. However, union workers could stand to lose a great deal in terms of salary and health care benefits.
Retirees will most likely also be affected. GM's retirement fund is currently underfunded due to losses in the stock market. Under Chapter 11, there is a chance that GM retirees will see their benefits slashed due to lack of funding. Benefits such as health care, which are currently provided for retired salaried employees, may get cut entirely.
Suppliers will struggle under a GM bankruptcy as well. Suppliers are already feeling the cash crunch due to slumping car production, leading to fewer parts being ordered. However, under Chapter 11 bankruptcy, GM will be able to choose which contracts it wants to honor and which it does not. Many suppliers could lose contracts that they currently have with GM, forcing them into financial crisis.
White collar employees may face greater challenges than union workers. Their jobs can be eliminated and their wages can be cut more easily than those of union workers. Salaried white collar employees have already been hit hard by the economic downturn, as GM has already implemented massive layoffs to this sector of their work force.
Auto dealers may be affected as well, especially if auto production continues to decline.
GM car and truck owners may have to worry about whether or not their warranties will be honored. Companies have the ability to eliminate warranty service during Chapter 11 reorganization. However, it is unlikely that GM will do so. If their intention is to emerge from bankruptcy as a stronger company, they will need consumer confidence to accomplish this goal. Honoring customer warranties is crucial for maintaining consumer loyalty and confidence during tough times.
Local government will be hurt as well. Bankruptcy will most likely result in lost tax revenue for the local government, as well as rising unemployment, which will further put a strain on governmental resources.

Only time will tell how the current state of General Motors will impact the local Michigan economy. Unfortunately, Michiganders may be in for a long and bumpy ride.

Peanut Corporation of America Files Bankruptcy

2009-02-16T17:18:00.001-08:00

Peanut Corporation of America, the company responsible for the recent salmonella outbreak across the country, filed for Chapter 7 Bankruptcy last Friday.

The bankruptcy filing capped a horrendous week for the company. Earlier in the week, the company closed a plant in Texas after health inspectors discovered dead rodents, rodent excrement, and bird feathers in a ventilation shaft. A Congressional hearing also discovered that Peanut Corporation of America owner and president Stewart Parnell had knowledge of salmonella contamination, yet still ordered employees to ship these products to food manufacturers.

A lawyer for the company stated that bankruptcy was just about the only option left to the corporation. The salmonella outbreak has crippled its operation to the point where they could not conduct business at all without bankruptcy and reorganization.

By filing bankruptcy, the company will also be protected from the many product liability and wrongful death lawsuits it would have faced from the hundreds of Americans who have suffered serious illness or death from their contaminated peanut products. It seems somewhat unfair that Peanut Corporation of America will not be held accountable for criminally negligent actions committed on the part of their management. Perhaps bankruptcy laws should be revised to prevent this from happening in the future.

Should American Auto Manufacturers File Bankruptcy?

2009-01-22T14:52:00.001-08:00

This is a critical time for American auto manufacturers. Profits have been falling for quite awhile, and both GM and Chrysler may be headed toward bankruptcy without financial relief from the federal government. GM is closing approximately 20 plants across North America in anticipation of producing 250,000 fewer cars in the first quarter of 2009 than they did in the first quarter of 2008 (a reduction of about 30%). But is bankruptcy the best option for the auto manufacturers?

There are varying opinions on this matter. A recent survey conducted in early December polled 1,063 adults across the country. The findings indicated that only 26% of new car buyers would be willing to purchase a car produced by a company in bankruptcy.

The primary logic behind this hesitation on the part of consumers lies in the fear that if the bankrupt auto company eventually folds, people stuck with new cars from this manufacturer would be unable to receive the warranty service they deserve. This was certainly the situation with Daewoo, the last auto company that went bankrupt.

However, there are several prominent economists who argue that bankruptcy would in fact be the best option for several auto manufacturers. As part of the bankruptcy proceedings, these companies would undergo a reorganization that may leave them stronger in the long-run. Furthermore, the bankruptcy proceedings would most likely dissolve union contracts, leading to slightly lower wages for auto workers. Bankruptcy would also dissolve contracts regarding health payments and pension obligations. These factors have played a major role in the tenuous economic situation experienced by the big 3 auto manufacturers. By filing bankruptcy, these companies would also have the ability to restructure their debt, providing them with much lower interest rates. For these reasons, bankruptcy may give the big 3 their best chance at survival in these tough economic times.

Should I File Bankruptcy?

2009-01-02T14:47:00.001-08:00

Filing bankruptcy is a serious decision that should not be made lightly. It can be a gut-wrenching experience that will most certainly affect you for many years. It will take a long time to rebuild your credit after filing bankruptcy, and this will impact many areas of your life, including buying a home or a car and obtaining affordable insurance.

Before deciding that bankruptcy is the right option for you, it is important to explore all of your other options. While the bankruptcy laws are in place for a reason and can help you discharge insurmountable debts in the right situation, it is best to consider it a last resort. Ultimately, you must choose the best path to financial recovery available to you.

If you are a homeowner, you may be able to take out a low-interest home equity loan that will enable you to consolidate all of your other debts. Frequently, this interest rate will be lower than that of your other debts, and you may be able to pay off your debt slowly in this manner. This is only one option available to you. You should consult with a financial advisor to explore the many other options available to you before deciding to file bankruptcy.

If you decide that bankruptcy is the best decision for you, then you must decide whether to file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Chapter 7 is reserved for those people who truly need all of their debts completely discharged. Bankruptcy laws changed in 2005, making the requirements for filing Chapter 7 much stricter. For those who don't qualify for Chapter 7, there is the option of Chapter 13 Bankruptcy, where you must repay part of your debts according to a fixed payment plan.

The laws and regulations governing bankruptcy are very complex. It is important to hire an attorney specializing in bankruptcy law if you do choose this route. Please contact The Bankruptcy Directory today for a listing of lawyers in your area.

Bankruptcy Overview

2008-11-19T08:57:00.001-08:00

Bankruptcy laws are a series of federal statutes intended to get individuals and companies out from under debts that are so severe that they may otherwise never recover. By filing bankruptcy, you are essentially given a fresh start.

There are several different forms of bankruptcy. The two most common are Chapter 7 and Chapter 11.

Chapter 7 governs bankruptcy cases involving individuals. It provides for a complete liquidation of the person's assets and a complete forgiveness of debts. The assets are managed by a Trustee, who uses them to pay off all of the debts owed to creditors at a fraction of what is owed (generally less than 10 cents on the dollar).

Chapter 11 applies to companies. It is designed to reorganize the company, while keeping them in business, operating under the strict supervision of the Trustee. Under Chapter 11, creditors are legally prohibited from suing the bankrupt company, so that it has some breathing room to restructure its business and get back on its feet again. The expectation is that creditors will eventually be paid most, if not all, of what is owed to them, and that the debtor corporation will emerge from bankruptcy healthy and functional once again. This process essentially saves the company from a total liquidation and dissolution.

In today's financial crisis, many companies, most notably General Motors, are in danger of filing Chapter 11 in order to reorganize and get out from under their massive debt.

There are certain exemptions under bankruptcy laws which allow the debtor to keep certain exempt property without having to turn it over to the Trustee. Generally, this applies to the debtor's home. These exemptions are usually regulated by state law, even though bankruptcy laws are federal statutes.

The Bankruptcy Directory can help you find the right attorney to suit your individual needs. Please contact us today for a listing of lawyers in your area.

When to Hire a Bankruptcy Attorney

2008-10-13T07:43:00.001-07:00

If you are completely saddled with insurmountable debt, bankruptcy might be the only way you can regain control of your finances. Both individuals and companies have the ability to file for bankruptcy.

There are no laws requiring you to hire a lawyer if you file either Chapter 7 bankruptcy or Chapter 13 bankruptcy. However, going into such a proceeding without the council of an experienced attorney is highly unadvisable. Bankruptcy laws are very complex, and you will most likely need the assistance of a bankruptcy lawyer to navigate through them. Remember, you are dealing with your personal finances. This is not a matter to mess around with.

Recently, bankruptcy laws have changed. A 2005 bill has enabled creditors to more easily collect the debts owed to them even after you've filed for bankruptcy. As a result, it is more important than ever to consult an experienced bankruptcy attorney if you decide that this is the best option for you.

A good lawyer can help save you a great deal of time wading through the myriad of complex laws and regulations regarding bankruptcy. He can also help you determine which chapter of bankruptcy is appropriate for your circumstances.

The Bankruptcy Directory can help you find the right attorney to suit your individual needs. Please contact us today for a listing of lawyers in your area.

Questions About Bankruptcy

2008-08-18T13:18:00.001-07:00

What is the difference between Chapter 13 and Chapter 7 bankruptcy?

Chapter 7, sometimes referred to as straight bankruptcy, is a liquidation proceeding where the debtor turns over all non-exempt property to the bankruptcy trustee. The property is then converted to cash for distribution to the creditors. The debtor receives a "discharge" of all dischargeable debts usually within four months. Chapter 7 affects your credit rating for several years, but you are able to get a relatively quick fresh start.

Chapter 13 is also known as reorganization bankruptcy and is filed by people who want to pay off their debts over a period of three to five years. This is appealing mostly to individuals who have non-exempt property they want to keep. It’s also an option if you have predictable income and your income is sufficient to pay your reasonable expenses with some left over to pay off your debts.

Will the creditors ever stop calling me?

By law, all actions against a debtor must stop once bankruptcy documents are filed. Creditors cannot initiate any lawsuits, wage garnishments or telephone calls demanding payments.

If I’m married, will my spouse be affected?

Your wife or husband will not be affected by your bankruptcy if they are not responsible (did not sign an agreement or contract) for any of your debt. If they have a supplemental credit card they are probably responsible for that debt. However, in community property states, either spouse can contract for a debt without the other spouse's signature on anything, and still obligate the marital community. The community property states are as follows: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

What Debts are Not Discharged Under Chapters 7 and 13?

2008-01-03T08:16:00.000-08:00

The following is not a comprehensive list of the non-dischargeable debts under Chapter 7 and Chapter 13 Bankruptcy. Only an experienced bankruptcy attorney in your area can provide you with a comprehensive list.

Debts not listed on your bankruptcy papers
Alimony
Child support and other debts of this nature
Debts for personal injury or death caused by DUI or DWI
Student loans
Any fines or penalties for violating the law including traffic tickets
Federal, state and local taxes (most)
Any debts not discharged in a previous bankruptcy that was dismissed due to fraud

Sometimes, Bankruptcy is the Only Option

2007-11-27T10:59:00.000-08:00

When an individual or company is hopelessly buried in debt, bankruptcy may be the only option. Bankruptcy allows individuals and companies to free themselves from this mountain of debt and start over. Bankruptcy can put you back in control, rather than having your debt control you.

Legally, you are not required to have a bankruptcy lawyer if you will be filing either Chapter 7 bankruptcy or Chapter 13 bankruptcy. However, bankruptcy law is very complex. In many cases, it will be in your best interest to retain an experienced bankruptcy attorney.

In fact, in March of 2005, the U.S. Senate passed a bill that makes it easier for banks, realtors, credit card companies, and other creditors to recoup some money owed to them by entities filing for bankruptcy. So, if you are considering personal bankruptcy, choose a bankruptcy attorney from The Bankruptcy Directory.

A bankruptcy attorney will save you countless hours of worrying and frustration. The bankruptcy attorneys listed in The Bankruptcy Directory are experienced in bankruptcy law and will assist you in deciding which chapter of bankruptcy is right for you. Your bankruptcy lawyer will walk you through every step of the bankruptcy process.

What is Chapter 11 Bankruptcy?

2007-10-05T09:56:00.000-07:00

Chapter 11 bankruptcy is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers because it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11 although it does so under the supervision of the Bankruptcy court and its appointees.

Federal bankruptcy laws govern how companies go out of business or recover from crippling debt. A bankrupt company might use Chapter 11 of the Bankruptcy Code to reorganize its business and try to become more profitable again. Management continues to run the day-to-day business operations, but all significant business decisions must by approved by a bankruptcy court.

A company's securities may continue to trade even after the company has filed for bankruptcy under Chapter 11. In most cases, companies that file Chapter 11 are generally unable to meet the listing standards to continue to trade on Nasdaq or the New York Stock Exchange (NYSE). However, even when a company is delisted from one of those major stock exchanges, their shares may continue to trade on either the OTCBB or the Pink Sheets. There is no federal law that prohibits trading of securities of companies in bankruptcy.

Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution.

Sometimes, you may first learn about the company's bankruptcy in the news. If you hold stocks or bonds with a broker, your broker should forward information from the company to you. If you hold a stock or bond in your own name, you should receive information directly from the company. You may be asked to vote on the plan of reorganization although you may not get the full value of your investment back. Sometimes, stockholders get nothing back, and they don't get to vote on the reorganization plan. Even when stockholders do not vote, they should get a summary of the disclosure statement and a notice on how to file an objection to the plan.

What is Chapter 13 Bankruptcy?

2007-08-24T07:22:00.000-07:00

Sometimes called "reorganization bankruptcy," Chapter 13 bankruptcy is quite different from Chapter 7 bankruptcy. In Chapter 7, most of your debts are totally wiped out, and, in exchange, you must relinquish any property that isn't exempt from seizure by creditors. In Chapter 13, you don't have to relinquish property, but you must use your income to pay some or all of what you owe to your creditors over time (usually 3-5 years depending on debts and income).

Because Chapter 13 requires you to use your income to repay your debt, you and your bankruptcy lawyer will have to prove to the court that you can afford to meet your payment obligations. If your income is too low or irregular, the court might not allow you to file Chapter 13, and if your total debt is too high, you will not be allowed to file Chapter 13. Your bankruptcy lawyer will explain eligibility to you in more detail.

Typically, before you file Chapter 13 bankruptcy, you must receive credit counseling from an agency approved by the United States Trustee's Office. These agencies are allowed to charge a fee for their services, but they must provide counseling for free or at reduced rates if you cannot afford to pay. There is also a filing fee for Chapter 13, which your bankruptcy lawyer will explain to you at your consultation.

Can I File Chapter 7 Bankruptcy?

2007-07-18T06:55:00.000-07:00

Sometimes filing bankruptcy seems like the only viable solution to rid yourself of the mounting debt you've accrued during the last several years. There are several types of bankruptcy options, but only a certain one or two will be applicable to your financial situation. Chapter 7 bankruptcy is one of the more common types of bankruptcy filed.

Chapter 7 bankruptcy, often called liquidation bankruptcy, cancels your debts, but you may have to let the bankruptcy court sell (liquidate) some of your property for the benefit of your creditors. Chapter 7 refers to the chapter of the federal Bankruptcy Code that contains the bankruptcy law. The whole Chapter 7 process takes about four to six months, costs around $300 (some hire a lawyer and it costs more), and usually requires only one court appearance.

Due to the difficult and intricate nature of bankruptcy law, it is highly recommended that you hire a trained bankruptcy attorney to handle this very serious financial and legal undertaking.

You cannot file Chapter 7 if you already received a bankruptcy discharge in the last six to eight years, or if, based on your income, expenses and debt burden, you could complete a Chapter 13 repayment plan. A Chapter 13 bankruptcy is also called a wage earner's plan. It enables people with regular income to develop a plan to repay all or part of their debts. Under this plan, debtors propose a payment plan to make installments to creditors over three to five years.

To file for bankruptcy, you will fill out a petition and a number of other forms and file them with the bankruptcy court or in your area (if you hire an attorney, he/she will assist you with these forms and file them for you). The forms require some basic information including what property you own; income; debts; property you claim the law allows you to keep through the bankruptcy process (clothing, furniture, etc.); property you owned and money you spent in the last two years; and property you sold or gave away in the last two years.

We have all heard horror stories about how filing bankruptcy will ruin your financial life for at least seven years. Finding and hiring a trained bankruptcy lawyer in your area will certainly help minimize the stress of the whole bankruptcy process, and he/she can advise you on how to recuperate from such a drastic financial measure.

New Bankruptcy Law

2005-10-26T17:02:00.000-07:00

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, signed on April 20th, has been the cause of more than 11,000 last minute case filings in North Carolina alone. Thousands of people, all trying to avoid the enactment of this law on October 17th, The new law has changed former policies so that it is more difficult for Americans to escape financial obligations through Chapter 7; now people who have an income stream are more obligated to use Chapter 13 bankruptcy, which requires a long-term repayment plan.