U.S. Municipal Credit Bet Cut In Half

Posted on August 29, 2012 by Staff Writer

Reuters reported a story about Berkshire Hathaway Inc. cutting $8.25 billion in credit default swap protection it has sold on municipal debt. According to regulatory filings, this amounts for more than a half of the $16 billion in protection they have sold on bonds of states, cities, and towns.

Berkshire Chairman Warren Buffet, a billionaire investor, says three municipal bankruptcies in California in such a short time have been making traditionally objectionable Chapter 9 municipal bankruptcy filings more palatable. He says this is especially true for local governments in financial crises. Buffett is one of many investors who foresee a rise in U.S. municipal bankruptcies.

Berkshire sells protection against the default of states, towns, and cities using credit default swaps, which means they would be required to reimburse the counterparty of a contract for debt losses in case of a municipal bankruptcy. Berkshire’s filing stated that it has reached an agreement with a counterparty to terminate $8.25 billion of the CDS portfolio. The portfolio references over 500 state and municipal debt issuers.

Citigroup analysts said that the $8.25 billion is likely to be remains of contracts Berkshire held with the estate of the failed Lehman Brothers bank. Lehman had bought $8.25 billion in CDS protection on bonds of 14 states before failing.

You might not be filing for bankruptcy on behalf of a city or a municipality, but every bankruptcy should be handled with care. Do not struggle with your bankruptcy alone, but get experienced legal assistance to help you find the best way to proceed. Reach for a better outcome in your bankruptcy, and contact an experienced Arizona bankruptcy attorney today.

Chapter 7 vs. Chapter 13 Bankruptcies in Arizona Filings

Posted on August 26, 2012 by Staff Writer

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as “liquidation” (Chapter 7) or “reorganization” (Chapter 13). Under a Chapter 7 bankruptcy, you ask the bankruptcy court to wipe out (discharge) the debts you owe. Under a Chapter 13 bankruptcy, you file a plan with the bankruptcy court proposing how you will repay your creditors. You must repay some debts in full; others may be repaid only partially or not at all, depending on what you can afford.

When you file either kind of bankruptcy, a court order called an “automatic stay” goes into effect. The automatic stay prohibits most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.

Certain debts cannot be discharged in bankruptcy; you will continue to owe them just as if you had never filed for bankruptcy. These debts include back child support, alimony, and certain kinds of tax debts. Student loans will not be discharged unless you can show that repaying the debt would be an undue burden, which is a very tough standard to meet. And other types of debts might not be discharged if a creditor convinces the court that the debt should survive your bankruptcy.

If you are thinking of either Chapter 7 or Chapter 13 bankruptcy, there is no substitute for real legal advice from an experienced Arizona bankruptcy attorney. When filing for bankruptcy in Arizona, it is critical to seek guidance from an experienced and caring Arizona bankruptcy attorney who can guide you through the process and give personalized advice on your Arizona bankruptcy case.

Lawsuit Demands Caused San Bernardino Bankruptcy Filing

Posted on August 23, 2012 by Staff Writer

San Bernardino’s attorney says the city was pushed into early bankruptcy by a lawyer’s demand to pay settlements over police killings.

The city, which is facing a nearly $46 million budget gap, filed for Chapter 9 protection last Wednesday – two weeks earlier than planned.

City Attorney James Penman tells the San Bernardino Sun that the city wanted to avoid having assets seized after an attorney tried to collect $1.4 million. The money was promised to settle three lawsuits claiming police used excessive force.

Penman says the city wouldn’t have made its next payroll if a judge had forced it to pay now.

Attorney Dale Galipo says he’s disappointed and will keep trying to collect for his clients.

San Bernardino 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.

It is possible that some struggling cities in Arizona will not be far behind.

But if bankruptcy is the right option for you it is imperative to choose the right professional bankruptcy firm that can guide you through the complex nuances of bankruptcy filing. Schedule a free consultation with an experienced bankruptcy attorney in Glendale 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 Glendale, Arizona Bankruptcy Attorney Today!

Trend of Falling Bankruptcies in Arizona Continues for 18 Straight Months

Posted on August 20, 2012 by Staff Writer

An ongoing trend toward fewer bankruptcies remained firmly entrenched in July, with filings dropping 14 percent around the Phoenix metro area.

The 1,847 bankruptcies started in July were down from 2,153 in July 2011, reported the U.S. Bankruptcy Court in Phoenix. The latest figures marked the 18th consecutive month in which filings fell on a year-over-year basis.

For all of Arizona, filings also have dropped for 18 straight months, including a decline of 14 percent in July.

The improvement in the bankruptcy situation doesn’t mean consumers are flourishing, but it’s the latest of several encouraging signs. For example, the W.P. Carey School of Business at Arizona State University reported Thursday that median home prices around Maricopa and Pinal counties were up 29 percent in June over a year earlier.

Also, credit-researcher TransUnion reported that mortgage delinquencies in Arizona fell 21.1 percent over the past year, the second-best showing of any state in the nation. The average amount of mortgage debt in Arizona, $193,169, was down 3.1 percent from one year earlier, also the second-best improvement nationally. It may not always sound like the most appealing option, but bankruptcy can help your financial situation if you’re struggling. An experienced bankruptcy attorney in Arizona can help you determine the best choice for you.

“The economy has not grown at a robust rate, but it does continue to slowly improve, and we believe the improvement in mortgage delinquencies will follow a similar pattern,” said Tim Martin, a group vice president in TransUnion’s financial-services business unit. “With steadying home prices and mortgage interest rates remaining at extremely low levels, it appears that market conditions are set up to allow for further declines in the mortgage delinquency rate.”

Nationally, consumer bankruptcy filings fell 12 percent in July compared with a year earlier, according to the American Bankruptcy Institute and Epiq Systems.

“The July filings continue to reflect the effects of sustained low interest rates and weak consumer spending,” said the institute’s executive director, Samuel Gerdano. “We are still on pace for perhaps the lowest total new bankruptcies since before the financial crisis in 2008.”

Across the U.S., there were roughly 4.1 bankruptcy filings per 1,000 Americans over the first half of the year.

If bankruptcy is the right option for you it is imperative to choose the right Professional Bankruptcy Firm that can guide you through the complex nuances of bankruptcy filing. Schedule a free consultation with an experienced bankruptcy attorney in Prescott, Arizona 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 Prescott, AZ Bankruptcy Attorney Today!

Relief for Drought-Stricken Arizona Ranchers

Posted on August 17, 2012 by Staff Writer

Good news came for drought-stricken ranchers in August, just hours before Congress convened for summer vacation. According to US World News and Report, the House passed a disaster relief bill to provide $383 million in emergency payouts to “cattle and sheep ranchers who have lost livestock in the drought and assists them with monthly feed costs, which have skyrocketed as grazing lands are scorched by the nationwide heat wave.” These payments could reimburse ranchers up to 75 percent of their lost assets, and also cover some assistance to fruit and bee farmers as well.

Disaster relief provisions were included in the 2008 Farm Bill, which is still in effect, but these provisions expired last year. While the House passed the bill by a wide margin (223 to 196), some critics of the bill think that Congress should instead be focusing on creating an entirely new five-year Farm Bill, rather than quick fixes to the immediate problem.

For Arizona ranchers, this isn’t the first time this year that governmental agencies have stepped up to help water-strapped farms. According to the Arizona Daily Independent, the U.S. Department of Agriculture (USDA) granted the governor’s request for a Secretarial disaster designation in April for landowners in affected counties. According to the Independent, the disaster designation by the USDA found that the production losses were sufficient to warrant federal assistance. Farm operators have until December of this year to apply for these low-interest emergency loans. Our bankruptcy lawyers in Arizona are here to help those who have suffered financially due to the drought.

According to the Arizona Daily Star, this is the 10th year of the past 13 that Arizona has been a “federally declared disaster area due to a continuing drought.” Farmers and ranchers affected by the drought may qualify for bankruptcy protection under Chapter 12. If you or someone you know is considering bankruptcy, don’t go through it alone. Contact an experienced Arizona bankruptcy attorney today.

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New Allowances for Small Banks

Posted on August 14, 2012 by Staff Writer

After the Consumer Financial Protection Bureau (CFPB) proposed new regulations that require banks to disclose all fee requirements for customers, many small banks across the nation were worried that the regulations could run them into bankruptcy. Yet in mid-August, the agency “took a step toward giving smaller institutions relief in a key area: remittances,” according to American Banker.

The CFPB decided that institutions with fewer than 100 remittances “a year are freed from new fee-disclosure requirements.” The agency may have killed two birds with one stone with this ruling—a Texas banker launched a court challenge to the legitimacy of the agency after the new regulations were proposed, citing the remittance rule as a reason that the agency should be abolished.

In the original new regulations, the CFPB had excused banks with a 25-transfer limit, and raised this to 100 upon the controversy regarding remittances. CFPB Director Richard Cordray said in a press release that the agency “recognizes that in regulations, one size does not necessarily fit all. The final remittance rule will protect the overwhelming majority of consumers while making the process easier for community banks, credit unions, and other small providers that do not send many remittance transfers.” Our skilled bankruptcy lawyers in Phoenix can help you understand these new regulations and how they can work for you.

The CFPB initially proposed the new regulations as a mandate issued by the Dodd-Frank Act, meant to improve the financial solvency of cash-strapped Americans in the slow economic recovery. The new allowance by the CFPB is good news for the many smaller, community banks in Arizona, many of whom were hit hard by the economic downturn, according to a 2010 article in the Arizona Star.

If you or someone you know is facing financial insolvency despite efforts to curb personal bankruptcies across the nation, don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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Baseball Star’s Company Filing For Bankruptcy

Posted on August 11, 2012 by Staff Writer

The New York Times recently reported a story about former baseball star Curt Schilling‘s company filing for bankruptcy. Schilling ran a video game studio called 38 Studios in Rhode Island, but the company had to file for bankruptcy because of their debts. Rhode Island and federal officials have begun to investigate the operations of the company, which had extensive financial support from the state.

According to bankruptcy documents, Schilling’s company with three subsidiaries owe over $150 million to creditors, while their assets only account for €50 million. Schilling’s company said in a statement: “After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the company has been unable to find a solution to the current stalemate.”

The state of Rhode Island is the biggest creditor for 38 Studios, with $115.9 million. The company used to be Massachusetts-based, until in 2010, Rhode Island lured it in with a promise of $75 million in loan guarantees. The company missed a $1.1 million payment to the state and had laid off all its employees later in the same month. The Rhode Island Police have confirmed opening an inquiry into the company, and the F.B.I. and the United States attorney’s office are also investigating 38 Studios.

Many things might be different between sports stars and us regular people, but bankruptcy proceedings work the same for everyone. Only a qualified Arizona bankruptcy lawyer can provide legal advice for you during your bankruptcy proceedings. Star or not, do not go through your bankruptcy alone, but get the help of a qualified professional to ensure the best possible outcome for your case. Contact an experienced Arizona bankruptcy attorney today.

Can my Vehicle Loan be Reduced in Bankruptcy?

Posted on August 10, 2012 by Staff Writer

Bankruptcy provides many options relating to vehicle loans. But to back up a bit, please remember that you should have little to no problem retaining a vehicle in your bankruptcy, as this is a commonly asked question too; bankruptcy laws do not force debtors to surrender their vehicle(s). There may be situations where surrendering a vehicle will be a positive option, but it is never required.

If a debtor chooses to file a chapter 7 liquidation bankruptcy, then the debtor can choose to either reaffirm or redeem his or her vehicle loan. Bankruptcy laws are specific that a debtor’s vehicle loan must be either reaffirmed or redeemed in order for the debtor to be able to retain the vehicle after the bankruptcy. A reaffirmation is a written agreement, with the lender, thereby pledging to continue paying the note even though and after the bankruptcy is concluded. Vehicle lender’s may or may not agree to modify the terms of the loan through the reaffirmation process. Generally, lenders will not agree to change the terms if the vehicle is fairly new with relatively low mileage. However, if the car is older with high miles, then the lender will be receptive to lowering the principal and/or the interest rate through a reaffirmation agreement.

The second option a debtor has is to redeem the vehicle. The redemption process is a little bit more complicated than reaffirmations. By redeeming a vehicle, the debtor is able to purchase the vehicle for the actual value of the vehicle, rather than what is still owed on the vehicle loan. For example, if you own a vehicle with a $10,000 balance left on the loan, but the car is only worth $5,000, you would have the opportunity of buying it directly for $5,000. Now, most debtors do not have the ability of paying for the car outright, but there are several companies that will refinance the redemption amount (but please keep in mind that these companies generally charge a very high interest rate (up to 25%)). So you will need to make sure that the redemption, if financed, is worthwhile for you as compared to simply just reaffirming the vehicle loan.

The last option available to reducing a vehicle loan in a bankruptcy, involves what is commonly called a “cram down” in a ch. 13 filing. As opposed to a ch. 7, a ch. 13 involves making monthly payments to your creditors from 3 to 5 years. But one of the benefits of filing a ch. 13, is the ability to cram down certain secured debts to the actual value of the collateral (very similar to a redemption in a ch. 7.) However, the debtor must have owned/financed the vehicle for at least 910 days prior to the filing of the bankruptcy in order to be eligible to cram down the vehicle loan. The benefit of the cram down vs. the redemption is that the interest rate is significantly better through the cram down (generally around 5.25%, as opposed to the 25% in a redemption). Further, the debtor has the ability to refinance the vehicle directly through his or her chapter 13 bankruptcy plan, rather than refinancing it with another finance company.

Debt Settlement Companies

Posted on August 9, 2012 by Staff Writer

When people are strapped with unmanagable debt, some people choose to use a Debt Settlement Company (DSC).

BE VERY CAREFUL IF YOU CHOOSE TO USE A DSC. First of all they are not regulated and second, they are usually front loaded with administrative fees that do not go towards paying off the creditors. In addition, the creditors do not have to participate in the debt settlement program because there is no law that requires them to do so.

Another point of concern is the fact that the DSC requires people to give away their money to the DSC and “trust” that the money will go to pay the creditors. So, the money is given away in the hopes that the DSC will do what they said they would do, which is not always the case.

No matter how much due diligence one does in researching the integrity and honesty of the DSC it still remains that the whole matter is based on trusting that the DSC will do what they promised.

In addition, there is no guarantee that the outcome will be successful because, as previously mentioned, there is no regulation or oversight within this business.

Before giving away your hard earned money to a DSC, please take the time to consult with an attorney, preferably a bankruptcy attorney, to determine if it is in your best interest to use a DSC.

There are too many cases where people pay into the DSC for months, and sometimes years, and then the people find out later that hardly any of the creditors have been paid in an amount that would eliminate the debts that were to have been paid.

One last point. If a person is concerned about improving their credit rating and score because of past due debts, bankruptcy can actually improve the credit score more quickly than using a DSC. The bankruptcy can actually hasten the rebuilding of one’s credit due to the “clean slate” or “fresh start” that a bankruptcy provides. This surprises many people, but it is true.

Again, consult a Phoenix bankruptcy lawyer. And remember, the consult should be free-no charge for getting the information you need to make an informed decision.

Delinquent Medical Debt Leads to Increase in Bankruptcy Filings

Posted on August 8, 2012 by Staff Writer

Roughly 20 percent of those seeking financial counseling required for bankruptcy filing this year and last cited medical debt as the primary cause of their decision to seek bankruptcy protection, according to CredAbility, an Atlanta-based nonprofit credit counseling agency that serves clients nationally. The analysis included more than 47,000 clients for the first half of this year, and more than 100,000 from last year.

With unemployment persistently high, more people have lost health coverage along with their jobs. People who have lost their jobs, but are continuing their group coverage under the federal law known as COBRA, may find it difficult to make the higher premium payments and are slipping into default on premiums and medical bills at an increasing rate.

Health costs are escalating for employed people as well in the form of higher premiums and deductibles. More health plans are offering lower monthly premiums in exchange for higher deductibles, but that means people find themselves on the hook for more out-of-pocket costs if they get sick.

For healthcare providers trying to collect on delinquent debt, this means acting quickly to begin the collections process is imperative. With the good communication with the debtor, there are numerous alternatives to filing bankruptcy where the debtor can make arrangements to protect their creditworthiness, and the healthcare providers collect a higher percentage of return on delinquent debt and avoid losing the receivable to bankruptcy.

But if bankruptcy is the right option for you it is imperative to choose the right Professional Bankruptcy Firm that can guide you through the complex nuances of bankruptcy filing. Schedule a free consultation with an experienced bankruptcy lawyer 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!