Bankruptcy Filings Up in Phoenix

Posted on July 31, 2012 by Staff Writer

The month of June saw an increase of bankruptcy filings in the Phoenix metropolitan area, to the highest point in the past nine months. Individual, as well as business, filings have increased steadily in the past four months. The number of filings on the state level line up with the same trend, with May numbers rising steadily from April figures.

The bulk of the filings were for Chapter 7 bankruptcy, in which a business or personal assets (only those which are non-exempt) are liquidated to pay debts and creditors, with debt forgiveness after the proceeds are exhausted. The rest of the filings were primarily Chapter 13, calling for a reorganization of the debtor’s finances to structure repayments to creditors.

Situations that contribute to bankruptcy filings are unemployment and underemployment without cessation. Another issue that impacts figures is increases in foreclosures. Many homeowners file for bankruptcy after receiving notice of impending foreclosure on their homes. The number of foreclosures is directly tied to the number of new bankruptcy filings: as foreclosure numbers increase, bankruptcy filings also increase within one to two months afterwards.

The good news indicated by these numbers is that bankruptcy filings for the Phoenix metropolitan area have leveled off, with the past sixteen months coming in at lower rates than the same months in 2010 and 2011.

Becoming faced with job loss or an inability to secure employment that pays what your financial circumstances require is not an easy situation. For legal and emotional support through this difficult time, contact an empathetic Arizona attorney who specializes in bankruptcy. This expert can assist you in navigating through what can otherwise be a stressful, humiliating and almost impossible turn of events, and can assist with recuperating financially afterward the case is resolved.

Bankruptcy Not Only for the Average Joe

Posted on July 30, 2012 by Staff Writer

After the annual National Football League’s draft season, it is reported that an estimated 200 college athletes will secure contracts worth millions of dollars. Yet, in as little as five or ten years, these same athletes may become bankrupt.

This phenomenon is not limited to any specific group of athletes, but basketball and football players seem to file bankruptcy in the highest numbers. Sports Illustrated set forth estimated numbers (in 2009) of 78% of NFL players and 60% of NBA players were experiencing financial strain between two (NFL players) and five (NBA players) years of retiring. Exactly how does this happen?

Although there are several reasons for this occurrence, one of the contributing factors seems to be a result of unsound financial advice. The new millionaires become magnets for so called “advisors” who may not actually be experts in handing financial matters. Also, marriages and extramarital affairs contribute to huge income losses for athletes.

Athletes receive their pay early in their careers and there is a marked lack of the same cash flow after retirement or as the athlete ages. Unwise money management from the beginning can create bankruptcy in later times.

The average person who files bankruptcy may not have the same status of financial high points as these professional athletes, but they face financial mishaps in a similar manner. The Supreme Court set forth the definition that bankruptcy “gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” As such, bankruptcy is an available tool to help alleviate financial burdens and learn from past missteps to plan for a successful future. Contact a compassionate Arizona bankruptcy lawyer today to begin your new life.

Can Student Loans be Discharged in Bankruptcy Court

Posted on July 26, 2012 by Staff Writer

Student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.”

Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is the Brunner test, which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less.

If you can successfully prove undue hardship, your student loan will be completely forgiven. Filing for bankruptcy also automatically protects you from collection actions on all of your debts, at least until the bankruptcy case is resolved or until the creditor gets permission from the court to start collecting again.

Whether a student loan is discharged based on hardship is not automatically determined in the bankruptcy process. You must file a petition (called an adversary proceeding) to get a determination.

If you already filed for bankruptcy, but did not request a determination of undue hardship, you may reopen your bankruptcy case at any time in order to file this proceeding. You should be able to do this without payment of an additional filing fee. Chapter 10 of NCLC’s Student Loan Law manual includes extensive information about discharging student loans in bankruptcy.

Even if you cannot prove undue hardship, you still might want to consider repaying your student loans through a Chapter 13 bankruptcy plan.

Schedule a free consultation with an experienced Arizona bankruptcy attorney to see when you should file. Keep the assets you need to start over, don’t use them to pay creditors when you don’t have to. Contact a Phoenix Bankruptcy Attorney Today!

The Purpose of the Automatic Stay in Bankruptcy

Posted on July 25, 2012 by Staff Writer

Most people know that the filing of bankruptcy is an efficient way to remove one’s debts. But, most people do not know that debtors in bankruptcy are also afforded great protection from their creditors the instant the bankruptcy petition is filed. There are many reasons for filing a bankruptcy, some of which include: stopping the sale, foreclosure or repossession of one’s home, property or vehicle; stopping wage garnishments or bank levies; or, simply stopping creditor harassment. The automatic stay is what stops those events from occurring or continuing once the bankruptcy is filed.

Upon filing a bankruptcy, the automatic stay kicks in and it is designed to protect the debtor and the debtor’s assets from collection actions by his or her creditors. The debtor’s assets now become property of the bankruptcy estate and then can hopefully be exempted (protected) and retained by the debtor. Some property is unable to be exempted, and will need to be turned over to the bankruptcy trustee so that he may evenly distribute it amongst the debtor’s creditors. However, the debtor does not now need to worry about creditors actively attempting to collect those assets directly, and in the process, destroy the debtor’s attempt at a fresh start.

How Does the Recent Bankruptcy Reform Act Affect Me

Posted on July 25, 2012 by Staff Writer

In certain situations, the Bankruptcy Reform Act of 2005 will not affect individuals.

Certain changes were made that now require individuals to meet certain income requirements to file a Chapter 7 or Chapter 13 Bankruptcy.

The Chapter 7, or Liquidation Bankruptcy, process usually takes approximately 4-6 months from Filing The Petition to Discharge.

A Chapter 13, or Repayment Plan Bankruptcy, process usually takes approximately 3-5 years depending on debts and income.

In order to determine which Chapter a person qualifies for (and sometimes a person can actually qualify for both a Chapter 7 or a Chapter 13) certain required income tests are necessary.

Under the new Reform Act all candidates for Bankruptcy must complete 2 counseling or debt management courses. These courses are very helpful, simple and easy to do.

Another important component to the Reform Act of 2005 is that the U.S. Trustee’s Office has instituted a rigourous review of information contained in the Bankruptcy Petitions. Therefore, it is extremely important to use your best efforts to disclose all pertinent information so that the process goes smoothly.

Prior to deciding to file a Bankruptcy, one should consult with an attorney to make sure all the pitfalls and hazards of an improper filing can be avoided. It is much more difficult to ”fix’ a problem AFTER a petition is filed than BEFORE the petition is filed.

How Bankruptcy Can Help Foreclosure.

Posted on July 25, 2012 by Staff Writer

The filing of a bankruptcy petition with the Bankruptcy Court initiates the automatic stay, an injunction order given by the Court to halt creditor collection efforts against the filer. Secured creditors are temporarily prohibited from collection efforts unless they obtain permission from the Court to resume collection actions. Most unsecured creditors will be permanently prevented from resuming collection efforts by the stay and will subsequently be discharged in the bankruptcy. The protections provided by the automatic stay begin when the petition is filed with the Court. collection efforts unless they obtain permission from the Court to resume collection actions.

The automatic stay also stops foreclosure proceedings. F or the stay to be effective against foreclosure, the petition must be filed before the foreclosure sale takes place. Although filing bankruptcy can stop the foreclosure sale, this is usually only a temporary protection against losing the home.

Most people filing bankruptcy will file a Chapter 7 case, by far the most commonly filed chapter in bankruptcy. Chapter 7 Bankruptcy is a relatively quick procedural process. Once a petition is filed, a debtor (filer) may receive a Notice of Discharge within 4 or 5 months. The bankruptcy stay no longer provides protection against secured creditors once the case is closed. The debtor is once again subject to collection attempts by these creditors.

A home will be protected from foreclosure during the bankruptcy, but will once again be at risk when the case is closed. The debtor must pay the mortgage arrearages and remain current on post-petition house payments if she wants to keep her home. Filing bankruptcy can be very helpful in catching up on house payments because the debtor will no longer be liable for her unsecured debt. The money that would normally be spent paying credit cards, medical bills, and payday loans, or the money lost from a garnishment, can now be allocated to secured debts like the house and car payments.

Most homeowners in Arizona will be protected by the state’s anti-deficiency statutes from the liability on a first mortgage if their home is foreclosed. However, a homeowner will likely be liable to the lenders of any junior mortgages. A debtor may choose to surrender her house in bankruptcy and discharge the liabilities from all mortgage holders. By surrendering her home in the bankruptcy, the debtor is protected from all loan and arrearage responsibilities and obligations.

Clean Energy Going Bankrupt, Again

Posted on July 23, 2012 by Staff Writer

The New York Times reported a story of a solar panel manufacturer that received a $400 million loan guarantee from the federal government and is now announcing that it will file for bankruptcy. Operating from Loveland, Colorado, Abound Solar says that their reasons for filing bankruptcy are plummeting prices and intense competition from Chinese manufacturers in the same field.

Before Abound, which spent about $68 of the loan guarantee before its credit was cut off by the Energy Department, another solar panel maker, Solyndra, collapsed in 2011 after also receiving federal funding. Republicans, with their presidential candidate, have been saying this is evidence of the Obama administration wasting taxpayers’ money by supporting clean energy.

Abound Solar struggled for months, eventually closing its factory in Tipton, Indiana, to conserve resources for a more advanced product. The company produced panels that were supposed to be more cost-effective, because they used a different technology, but as silicon cells became much cheaper, the product lost its cost advantage. Abound said it will dismiss its 125 employees and file for bankruptcy, but if they would have had the means for large-scale manufacturing, it could have been profitable.

Analysts said that there is a global oversupply in manufacturing of solar panels, and this will make it harder to succeed in the field.

Even if you are not competing against the global markets on cost-effective solar panel manufacturing, you might find yourself in a situation where filing for bankruptcy needs to be considered. To ensure that you make the right decisions regarding bankruptcy, get qualified legal help on your side. Contact a Phoenix Bankruptcy Attorney Today!

San Bernardino Continues Rash of Municipal Bankruptcies in California

Posted on July 18, 2012 by Staff Writer

San Bernardino this week became the third California city to seek bankruptcy protection in the last month, and experts say it might not be the last.

“There are likely to be more in the future, but it’s hard to know, since a lot of struggling cities may manage to work things out,” said Michael Coleman, a fiscal policy adviser for the California League of Cities. “Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.”

Once rare, turning to bankruptcy has become a painful but enticing option for cities whose labor costs and municipal debt far outpace anemic tax revenue. The Bay Area city of Vallejo began the current trend in May 2008, filing for Chapter 9 bankruptcy protection because, city leaders said, salaries and benefits for its public safety workers were eating up too much of the general fund.

Last month, Stockton became the largest city in the state to seek bankruptcy protection after it was unable to come to agreement with its employee unions and creditors on a plan to close a $26-million gap in its general fund.

On July 2, the tiny resort town of Mammoth Lakes filed bankruptcy papers in part because it was saddled with a $43-million court judgment it couldn’t pay.

San Bernardino couldn’t close a $45.8-million budget shortfall and would be unable make its payroll this summer, city leaders said. Days before Tuesday’s City Council vote, the city of 211,00 people had just $150,000 in the bank. The city barely scraped together enough money to cover its June payroll.

Schedule a free consultation with an experienced bankruptcy attorney to see when you should file. Keep the assets you need to start over, don’t use them to pay creditors when you don’t have to. Contact a Phoenix Bankruptcy Attorney Today!

Desert Landscaping Company Files for Bankruptcy

Posted on July 16, 2012 by Staff Writer

A palm tree and desert citrus landscaping company filed for bankruptcy in mid-July, “blaming a slowdown in demand for landscaping from builders,” according to Bloomberg News. Cocopah Nurseries of Arizona is based in California, and had already once tried to restructure the company to no avail. Duane Young, the company vice president, reported in court papers filed in Yuma that “Cocopah and its bankrupt affiliates remain caught between, and impacted by the prepetition lenders’ intercreditor disputes to some degree.”

Cocopah is one of the many businesses indirectly affected by the housing market that have been forced into financial insolvency because of it. The U.S. Department of Commerce released a report in conjunction with the Census Bureau in June that new home sales have slowly but surely increased. Overall home sales in the U.S. increased nearly 20 percent from May 2011 to May 2012. This is good news for homebuilders, but it might be too soon for American homeowners to invest in expensive landscaping for these new homes. This puts companies, such as Cocopah Nurseries, on the chopping block.

According to IBISWorld reports, landscapers experienced a sharp decline in relation to the failing economy, but as job availability has increased, so has discretionary income for aesthetics like landscaping. While the Southeast of the country accounts for nearly 23 percent of the industry’s revenue, the additional challenges (and revenues) of landscaping in the Southwest keep the region a good place to business. According to the report, “in 2012, a marginal increase in the value of residential and non-residential construction is expected to boost [landscaping] industry revenue a meager 1.2 percent.”

If you or someone you know has been affected by the recession or your industry has experienced decline, it could be a difficult time for personal finances as well. Don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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California Proposes Legislation to Help Homeowners Avoid Foreclosure

Posted on July 14, 2012 by Staff Writer

According to Reuters, in early July California legislators “approved a swelling bill aimed at stopping abusive practices by mortgage lenders and helping homeowners avoid foreclosure.” One such practice is known as dual tracking, ”in which banks move ahead with foreclosures while still negotiating with homeowners over loan modifications. Reuters calls the legislation “among the most ambitious of its type in the nation.” The law also allows homeowners to sue banks for “robo-signing,” in which “foreclosure documents are signed en masse without review.”

In the housing and financial crisis of 2008–2010, California consistently rated high among states with the most number of foreclosures. Nevada usually leads with the most foreclosures, followed closely by Arizona, and then California. If the legislation works in California, it seems probable that Arizona lawmakers may look into creating their own form of the same legislation, since the states share similar foreclosure trends.

The law, however, is opposed by “banks, mortgage services, and some real estate market professionals,” according to Reuters, who say that “such legislation imposes unnecessary burdens on lenders and has the effect of delaying, rather than preventing, foreclosures.” If this proves to be the case, such a law could actually impede the recovery of the industry.

Foreclosures are consistently ranked among one of the top reasons for personal bankruptcy, and the two often go hand in hand. According to ClearBankruptcy.com, 1.5 percent of all personal bankruptcies in 2010 were caused by an attempt to avoid foreclosure, by any means necessary. This often meant file for financial re-organization, to hold on to the American dream of home ownership.

If you or someone you know is facing bankruptcy due to foreclosure, don’t go through it alone. Contact an experienced Arizona bankruptcy attorney today.

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