February 4, 2012

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NY Mets Taking First Step Toward Bankruptcy?

January 12, 2012 By

In a statement released last week, the New York Mets (i.e. the city’s non-Yankees baseball team) announced that it was enlisting the help of a financial firm known as a “turnaround specialist and bankruptcy consultant,” as the New York Times puts it.

In 2010, the company helped oversee the bankruptcy filing of the Texas Rangers. But while the Mets are reportedly facing some pretty serious debt burdens (including $400 million owed to several banks and $25 million owed to Major League Baseball), the team has not given any other public or official indication that it is considering a bankruptcy filing. Still, the consultation with the bankruptcy-focused firm suggests that the team is certainly considering court protection.

So what can individuals learn from the Mets’ maneuvers? Primarily that the bankruptcy process should begin long before an individual actually files his or her bankruptcy petition with the court. For most individuals, the bankruptcy process really begins during the information-gathering period.

Talk with the Right People Before Choosing Bankruptcy

Like the Mets, those considering personal bankruptcy can and should consult with knowledgeable sources before deciding whether or not to file a petition with the bankruptcy court. Individuals have a few choices about whom to speak to:

  • A credit counselor: Many credit counseling organizations provide free or low-cost financial evaluations for consumers in need of guidance about whether or not to file for bankruptcy. Credit counselors run by community groups often charge little or nothing for leading consumers through a non-bankruptcy debt elimination process. And if you do decide to seek bankruptcy protection, the court requires a pre-filing credit counseling session anyway.
  • A bankruptcy lawyer: Most bankruptcy lawyers offer free initial consultations during which they can help clients determine whether filing for bankruptcy makes sense financially. After that consultation, the client can move forward with bankruptcy or a bankruptcy alternative confident that his or her decision will work in his or her own best interest.
  • An accountant: Those who work with an accountant or tax preparer regularly may find consulting with this person useful as part of the bankruptcy-consideration process. Small business owners may be best served by an accountant’s opinion.

The Importance of A Well-Informed Bankruptcy Decision

Filing for bankruptcy is a major financial step in anyone’s life, and should not be undertaken lightly. Further, waiting until the last possible minute to file for bankruptcy can have detrimental effects on an individual’s or family’s finances.

By starting the bankruptcy process well ahead of actually filing a bankruptcy petition, individuals set themselves up for a less stressful (and potentially more successful) bankruptcy process. For many Americans struggling with debt burdens, consulting a financial or bankruptcy professional is the first step in making a decision about bankruptcy.

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Myths of Filing for Bankruptcy

January 6, 2012 By Leave a Comment

By Sandra Oswalt -

As a common form of debt relief, bankruptcy is a legal process that allows a debtor to liquidate their debt or consolidate and repay their debt. The two most common forms of bankruptcy include Chapter 7 and Chapter 13 bankruptcy. Chapter 7, known as the “debt liquidation” bankruptcy, allows a debtor to liquidize a majority of their debt in a short period of time. Chapter 13, on the other hand, gives a debtor an opportunity to pay back their debt in affordable monthly payments over a period of three to five years.

While bankruptcy is such a beneficial and resourceful tool, it still has a negative stigma due to the many myths that surrounding this area of the law. Fortunately, a bankruptcy attorney with experience in this area of the law will be able to help you, as a consumer, establish the difference between fact and fiction when it comes to bankruptcy law. The following are several myths uncovered by a bankruptcy attorney.

Myth #1: Only fiscally irresponsible people file for bankruptcy.

This is far from the truth; many people who file for bankruptcy are simply in the working class, middle class, lower class, upper class and every class in between who are unable to keep up with their monthly payments. A person can reach debt in many different situations, including divorce, sudden illness, death of a spouse, car accident, or even due to unpaid student loans. Even the most financially responsible individuals may be thrust into debt and forced to file bankruptcy at some point in their life.

Myth #2: A debtor will lose everything that they own by filing for bankruptcy.

While this may appear to be true and is a valid concern for many people struggling with debt, a debtor may not necessarily have to give up their possessions to file for bankruptcy. In fact, some forms of bankruptcy can actually protect your possessions. With Chapter 13 bankruptcy, a person can save their home from foreclosure.

Myth #3: A person who files for bankruptcy will never rebuild their credit.

This myth is the least bit true. In fact, many people who file for bankruptcy are often given second chances by banks and other lenders. Sometimes, after a person faces the troubles of bankruptcy, they become even more financially aware and conservative with their spending; therefore proving that they can rebuild their credit and manage their payments. If you wish to rebuild credit after filing for bankruptcy, you may be able to open a credit card with a limited balance as long as you are sure to pay off the credit card on time.

Myth #4: Everyone will know that you filed for bankruptcy.

While it is true that bankruptcy records are public, you will most likely not be found out by anyone unless you tell them personally. The truth of the matter is that so many people file for bankruptcy that the public records are flooded with names; a person would have to search for days and be looking specifically for your name.

If you are considering bankruptcy, but believe that the negative stigma associated with filing is stopping you, do not wait to call a bankruptcy lawyer. You will be immediately informed as to your rights and the options you have, including Chapter 7 and Chapter 13 bankruptcy.

At the Oswalt Law Group, PLLC, the Phoenix bankruptcy attorneys have years of experience in the area of bankruptcy, foreclosure defense and tax law. Recognized as an accredited business by the Better Business Bureau, the legal team can provide you with the resources and information you need to file for bankruptcy in Phoenix, Arizona. If you have been struggling with an overwhelming amount of debt and are seeking a method of debt relief, call a Phoenix bankruptcy lawyer from the Oswalt Law Group, PLLC today for a free evaluation of your case.

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Bankruptcy Courts Turn to Online Chats to Guide Users

January 4, 2012 By

A new trend in the Southwest suggests that the country’s bankruptcy courts are finally taking advantage of technology that many other industries have already adopted: online chat forums. Sources note that bankruptcy courts in Arizona, New Mexico and Nevada have all started dabbling in online contact for court users.

As many other companies have discovered, offering online chat forums provides consumers with a convenient way to get information about the nuts and bolts of bankruptcy law.

Help for Real Estate and Bankruptcy Lawyers

One interesting element of the new trend, according to sources, is that some of the first to take advantage of the online chat forums have been real estate lawyers who have expanded their practices to represent clients interested in filing for bankruptcy.

Likely a result of the implosion of the housing bubble (which hit especially hard in the Southwest), many real estate lawyers have apparently seen bankruptcy proceedings become a much larger part of their clients’ daily needs. This can be attributed to the fact that Chapter 13 bankruptcy can be used as a means of halting or delaying mortgage foreclosure.

But because most real estate lawyers lack the training and experience in bankruptcy laws and bankruptcy court proceedings, they have more questions about navigating the bankruptcy court system than traditional bankruptcy lawyers do, it seems.

Enter the online chat forums.

Online Forums Available to Bankruptcy Filers, Too

In addition to providing pointers to lawyers representing bankruptcy filers, the bankruptcy courts with online chat forums also offer valuable services to individual bankruptcy filers interested in learning more about the process or nitty-gritty details of filing a bankruptcy case.

Those interested in filing for personal bankruptcy can use the online chat system to:

  • Ask for direction about where to find necessary forms or schedules for filing a bankruptcy case;
  • Clarify parts of the Bankruptcy Code that they cannot decipher for themselves;
  • Learn about deadlines, procedures, and requirements of the bankruptcy court; and
  • Get general information about how bankruptcy works and what they can do to prepare for bankruptcy or recover from a bankruptcy filing.

The Internet as a Bankruptcy Tool

Since the Internet went mainstream, potential bankruptcy filers have used it to research the bankruptcy process and potential effects of filing for bankruptcy on their financial lives. The introduction of a venue where filers can get their questions answered directly marks a natural progression toward more and more consumer-oriented online offerings.

At present, the online chat forums are only available for filers in a few states; however, if their success continues to grow, other areas of the country may introduce similar tools for filers and potential filers.

Filed Under: Medical Bankruptcy, News Tagged With: , , , , , , , , , , ,

Future Income and Bankruptcy Fraud

December 15, 2011 By

Every so often, there’s a local news story about someone who has been convicted of bankruptcy fraud. This week, the case belongs to one George Raynor, of Baileyville, Maine. While the case itself isn’t exceptional in any way, it highlights an important precaution for potential bankruptcy filers to note in order to avoid a fraud conviction.

What Is Bankruptcy Fraud?

Bankruptcy fraud is exactly what it sounds like: a bankruptcy filer’s provision of false information to the court that alters the outcome of his or her bankruptcy case. In some cases, bankruptcy fraud can be unintentional, but its penalties are steep: those convicted of bankruptcy fraud might face up to five years in jail and up to $250,000 in fines.

Common examples of bankruptcy fraud include an attempt to shield property from the court; a filer might attempt to transfer property from his or her name to the name of a friend or family member or might simply fail to report ownership of a piece of property or sum of money.

But bankruptcy fraud can also occur when a filer fails to mention income he or she is expected to receive in the future. Raynor’s case falls into this category.

Reporting Future Income in Bankruptcy

According to the Bangor Daily News, Raynor and his wife filed a bankruptcy petition in 2006 but, in their list of assets, did not mention:

  • A savings account in a bank;
  • A deferred compensation retirement account valued at roughly $150,000;
  • A lump sum payment from his retirement account in the amount of $97,000; and
  • A payment from his former employer of $12,000 as compensation for unused sick and vacation days.

Now convicted of the charges, Raynor could see as much as five years behind bars and fines of up to a quarter of a million dollars. To date, Raynor’s sentencing has apparently not been scheduled. Often, the amount of the fine assessed on a bankruptcy fraud conviction roughly equals the amount of money or value of property that the filer attempted to withhold from the court.

Avoiding Bankruptcy Fraud in Your Filing

One of the easiest ways to avoid bankruptcy fraud is to work with a bankruptcy lawyer. Working with someone who is familiar with state bankruptcy laws and the procedures of the bankruptcy court can go a long way toward avoiding mishaps that could delay or derail a case.

Lawyers can also advise filers about which of their assets they must list, whether gifts or property transfers will be considered legal by the court, and what outcomes they can expect from their bankruptcy case.

In cases where a filer may have future income due to him or her, a lawyer can help determine how to calculate the value of that income and how to report it on bankruptcy filing paperwork.

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USPS Keeps Batting Back Bankruptcy

November 29, 2011 By

The U.S. Postal Service announced recently that, in an effort to avoid filing for bankruptcy, it will raise prices on its most popular services (priority and express mail), as well as on standard first class stamps (up to 45 cents each starting January 22, 2012).

The USPS debt problems highlight some important differences between bankruptcy filings for individuals and businesses. Here’s a look at what you can learn from the USPS and why you may be in a better position if you’re interested in avoiding a bankruptcy filing of your own.

Shedding Expensive Baggage

When individuals see their debt spiraling out of control, they can usually take at least some meaningful action to reduce the total amount they owe – or at least to stop the ever-increasing financial burden they carry.

But because of the oversight Congress provides to the USPS, the nation’s postal system isn’t quite as free to slough off its highest costs. For example:

  • Underperforming post offices: To save money, the USPS has proposed shutting down post offices that don’t earn sufficient profit to merit staying open. In other words, the USPS wants to operate like an ordinary business or individual, eliminating its branches that cost money to operate but don’t bring in enough in return. However, Congress must approve any such shut-downs, and it has not yet ruled on USPS closures.
  • Six-day delivery: Like extra cable channels or a too-expensive car lease for individuals, six-day delivery has been cited as one of the major expenses dragging down USPS finances. While officials from the Postal Service hope to cut home delivery to five days per week, they have not yet received the okay from Congress, and so are unable to take this cost-saving step.
  • Expensive healthcare and pensions: When municipalities file for bankruptcy, one of the main debt-cutting measures available to them is the re-negotiation of contracts with workers. In many cases, municipalities are able to save serious money by cutting benefits they pay out in pensions, healthcare, and other benefits. But the USPS has not yet been able to make such negotiations with its workers, again because of inaction in Congress.

Not Enough to Prevent Bankruptcy?

The Postal Service’s rate increases, set to take place in late January, could increase its income substantially, but many analysts predict that price hikes alone will not allow the USPS to avoid bankruptcy.

Without action from Congress allowing it to make meaningful cuts in its current services, the USPS has claimed that it could need bankruptcy protection as early as next September. If the USPS is allowed to reorganize (either in bankruptcy or without its help), the business has a decent chance of succeeding: its competitors FedEx and UPS have reportedly both achieved modest growth even during the economic downturn.

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American Airlines & The Long-Term Financial Benefits of Bankruptcy

October 14, 2011 By

The current financial situation of American Airlines serves as a lesson on how filing for bankruptcy can lead to long-term financial strength – and, perhaps more importantly for the airline, how avoiding bankruptcy can sometimes cause long-term financial struggles.

Of course, every individual situation is unique and the American Airlines model can’t be applied across the board. But for people teetering at the edge of their finances wondering whether personal bankruptcy could have any benefits down the road, the story of American Airlines is worth considering.

Avoiding Bankruptcy

In the months and years immediately after the terrorist attacks of September 11, 2001, Americans flew less and many airlines struggled to remain profitable. In the ensuing years, many of them (including Delta, Northwest, US Airways and others) filed for Chapter 11 bankruptcy protection, which allowed them to reorganize their finances and debts.

American Airlines did not choose bankruptcy; instead, the airline opted to negotiate benefits and salaries with its employees and managed to continue operating. At the time – and, according to some reports, even today – the airline’s CEO was proud of his company’s ability to stay out of bankruptcy court. But some analysts are questioning whether the decision made sense financially.

Today, American Airlines operates at a loss. In fact, sources note that the airline:

  • Has more than $12.1 billion in outstanding debts;
  • Is saddled with a pension liability (for which it has no funding) of about $7.9 billion;
  • Earned $11.6 billion last year but had a net loss of $716 million;
  • Is expected to report a $132 million loss for 2011’s third quarter; and
  • Recently took on a high-interest (8.75 percent) loan for about $726 million.

These numbers are particularly gloomy when compared with those of the nation’s other leading airlines, most of which are currently operating at a profit, according to sources. In fact, comparisons between American Airlines and its competitors show stark differences.

In addition to having the least fuel-efficient fleet of planes in the country (which sources estimate cost it as much as $400 million in extra fuel expenses per year), American pays its staff more per flight hour than other airlines. One analyst estimates that if American could cut its per-flight-hour operating costs to those of US Airways, the airline would save $2.2 billion per year.

So how have other airlines managed to do so well in a struggling industry? Most of them filed for bankruptcy – and reemerged as stronger, more profitable companies.

Emerging Stronger from Personal Bankruptcy

For corporations, Chapter 11 bankruptcy provides the rare opportunity to renegotiate contracts with venders, employees and unions. Most companies also sell of unused assets and devise a court-approved way to be able to make a profit while treating all of their creditors fairly.

Like airlines, individuals can use the power of the bankruptcy court to introduce positive financial change into their lives. Bankruptcy may offer several unique protections and opportunities not offered by common debt elimination alternatives, including:

  • Full discharge of certain debts, meaning that the court legally excuses filers from paying them;
  • A temporary halt to collection actions, which can give filers breathing room to take control of their finances; and
  • Financial management and credit counseling resources so filers can learn to establish and maintain financial habits that will improve their overall finances.
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Statistics Show Decrease in Small Business Bankruptcies

August 31, 2011 By

The latest numbers from Equifax, a credit rating organization based in Atlanta, Georgia, show that small business bankruptcy filings decreased in the first quarter of 2011 compared to the same period in 2010. Down 15 percent from last year, the first-quarter small business filings were still higher than those in the first quarter of 2008, before the recession hit.

For the purposes of its statistics, Equifax considers a small business any corporation with 100 employees or fewer. Here’s a look at what these numbers might mean for the larger economy.

Small-Business Bankruptcy & Economic Recovery

Small business bankruptcy filings might affect the economy in a number of ways:

  • Jobs: When small businesses file for Chapter 7 bankruptcy, they liquidate and cease to exist. That means that any employees of that business become unemployed and enter the job market. A Chapter 11 bankruptcy means reorganization for a small business, but some employees could still be made redundant, especially in smaller operations where salaries are among the largest expenses business owners have. While it might not seem like a small business could have a big impact on the unemployment rate, consider this: about 38 million Americans work for companies with fewer than 100 employees.
  • Local economies: In many parts of the country, small businesses give a town its individual “flavor.” Liquidation bankruptcy by these businesses might hurt a local economy by removing a draw for tourists or out-of-towners; however, a successful reorganization could mean more-booming business in the future.
  • Real estate: In an admittedly less direct way, small-business bankruptcies could affect a place’s real estate market. Empty storefronts drive down real estate prices. This can be good if other businesses fill in right away, but could be bad if multiple businesses close down in the same area. Similarly, if an area’s businesses are failing and its residents are losing work, they may move to greener pastures, leaving their houses empty and potentially driving down residential real estate prices, as well. If few businesses exist to attract potential buyers, the problem could persist.

The Cycle of Small-Business Bankruptcy

One of the most difficult parts of a slow economy is its potential to lead to unhealthy economic cycles: when people are worried about jobs and money, they tend to save more and spend less (and, in fact, numbers have shown that the U.S. savings rate is much higher now than it was pre-recession).

When people aren’t spending money, though, the economy has a hard time getting started (as much as two-thirds of the U.S. GDP is made up of consumer spending). Small businesses, which have shallower reserves of cash, may not be able to attract the customers they need to stay afloat.

When local businesses fail, more people lose jobs and fight to save money, knowing they’ll need it if they cannot find work right away.

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Bankruptcy Attorneys and How To Choose One

July 29, 2011 By Leave a Comment

By Dean Shainin -

When one is faced with such a serious financial problem that he or she is considering the option to file for bankruptcy, the smartest and safest thing to do would be to let the professionals guide him through the rough waters. And that is where the role of bankruptcy attorneys comes in.

Bankruptcy is a specialized section of the law. It is a legal process involving issues ranging from simple to the complex. With the changes to the bankruptcy law, it may be more difficult to file for one. If you are considering bankruptcy, it would be wise to hire a bankruptcy attorney who can guide you through the process.

Bankruptcy has spun out of control and has hit a record high. A new bankruptcy law has been passed called “Bankruptcy Abuse and Consumer Protection Act.” Americans are concerned with their high debt and are having to deal with this new law.

When you hire a bankruptcy attorney, you are not just hiring someone to prepare and file your papers. More importantly, a bankruptcy attorney provides you with advice on legal issues and makes sure your rights are protected.

A bankruptcy attorney will:

* Educate you on bankruptcy laws, your rights and responsibilities including your options and the consequences of bankruptcy.

* Assess your financial situation and help you decide the best option to take.

* Walk you through every step of bankruptcy filing and all the new regulations.

* Represent you in court.

* Deal with your creditors.

Here are some important things to consider when interviewing a prospective bankruptcy attorney:

o Fees – Ask if the bankruptcy attorney will charge you a fixed fee and be certain as to what services are covered in that fee. Find out if there are any additional fees that you have to pay. The average fee of a bankruptcy attorney is around $800 to $1000.00.

The cost is just one of the things to consider but should never be the deciding factor in choosing a bankruptcy attorney.

o Expertise – Look for someone who is experienced in bankruptcy cases and is who is up to date and familiar with all bankruptcy procedures. Find out how long the bankruptcy attorney has been in practice and how many cases similar to yours has he handled.

o Service – Will the bankruptcy attorney assist you in every step of the process? Will he go with you at court meetings? Will you be working with him mostly or with a legal assistant?

o Communication – In choosing a bankruptcy attorney, go with someone you can speak to with ease. Communication is very critical so you have to be comfortable in asking your bankruptcy attorney questions. Study how he responds to you and if he makes an effort to make sure you understand everything.

Bankruptcy laws differ in each state so be sure to find a qualified bankruptcy attorney in your area. Once you have made your selection, be sure that all agreements are in writing. Read all documents carefully. Be honest with your lawyer and do not withhold any information that is relevant to your case. Be involved. It is your case and your life. Your bankruptcy attorney is there to assist you but you should play the central role.

Above all, one who is considering hiring a bankruptcy attorney should not be hasty in his or her decision. He must consider if the lawyer makes him comfortable and is considerate about his problem.

Dean Shainin offers online Bankruptcy and debt advice. For more information, articles, news, tools and valuable resources on bankruptcy and debt solutions, visit this site: Bankruptcy Attorneys

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Why Hire a Bankruptcy Attorney

July 21, 2011 By Leave a Comment

By Tony Mandarichand Reda Abouleish -

“Bankruptcy” is a word that automatically conjures up highly charged emotions. It normally means that if you are about to file bankruptcy then you are down to your last resort. It is not easy. It is not fun. It is a stressful process to go through. Your finances are in shambles and the old saying, “playing with my money is like playing with my emotions,” rings true in the majority of bankruptcy cases than other situations encountered.

Today, you cannot turn on the television without hearing about someone else losing his/her home due to financial problems. People feel trapped in an economical downslide. The economy is having a domino effect causing havoc upon households nationwide. Bills are piling, creditors are hounding, cars are being repossessed. It is a financial mess. And when you have no other means to pay past due bills, bankruptcy emerges as the best clear option. However, what do you do first? You start with hiring a reputable, knowledgeable, experienced bankruptcy attorney.

Bankruptcy is a stressful process. The emotional weight of knowing you are submerged in debt with no other way out than filing bankruptcy takes its toll upon oneself. So why would you chance getting qualified while under such a tense state of mind. What if you are filling out the paperwork yourself, with no attorney to assist in guidance, and the burden of your financial situation causes you to miss something on your bankruptcy application. What if your application is rejected and you have no clue how to proceed forth? You need to take these scenarios in consideration. Especially since, once you file for bankruptcy there is no going back.

If you file for Chapter 7 Bankruptcy, then you cannot go back and change it to Chapter 13 Bankruptcy at later date. Once you declare a specific type of bankruptcy then you are stuck with it. Therefore, what would happen if you were unaware of the differences? Perhaps one form of bankruptcy is better suited towards your situation. A bankruptcy attorney will find the correct filing and the most beneficial option for you.

Furthermore, what if your days are consumed with family, kids, a significant other, pets, and emotional issues from your financial situation leaving zero time left to manage your bankruptcy filing? How would you conduct follow-up phone calls, paperwork, and reading documents if time is of the essence, and you have none left? You are limited by how much time is in one day. Thus, surround yourself with a support system that knows bankruptcy laws easing your daily worries. Concentrate solely on emotionally working through the process and allow someone else, preferably a bankruptcy attorney, to worry about the rest.

Communication is essential in handling a successful bankruptcy case. There is communication exchanged between the courts, creditors, banks and the individual(s) filing the case. Someone needs to be accessible to these parties or else something could go wrong during the filing process. It is better to leave the communication tasks to an attorney who knows how to react and answer the questions quickly, intelligently and without hesitation.

Find an Arizona bankruptcy attorney or a Scottsdale bankruptcy attorney today.

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Pros and Cons of Filing Bankruptcy<

July 20, 2011 By Leave a Comment

By Josh Riverside -

Before filing for bankruptcy, you must be aware of its advantages, disadvantages, and the consequences it may have in the future. It is a big decision to make and it can have a lasting impact on the financial aspect of your life. It is best to seek the help of a financial adviser or lawyer so that you can be sure that you have understood everything about it. Here are some of the pros and cons of filing for bankruptcy.

Advantages

Of course, the biggest advantage (and the main reason) for filing for bankruptcy is that you will be discharged from all your eligible debts. As a result, the burden of obligation will be lifted off your shoulders. This will then allow you a fresh start and a chance to manage your finances better. Collection efforts by your creditors will stop once you file for bankruptcy, and a provision will be set by the court to prevent them from claiming your assets. You also can not be fired from you job on the sole basis that you have filed for bankruptcy.

Disadvantages

Filing for bankruptcy may be a good idea for a chance at a fresh start but it is not without disadvantages. For one, it will reflect on your credit report for ten years or more which will make it hard for you to get credit. This will also mean it may be impossible for you to get financing. Once you are discharged from your debts, you will not be able to obtain a discharge for another six years. Any new debts you incur after filing for bankruptcy will be exempt from discharge. If you have a co-signer when you incurred a debt, the co-signer will be made liable for the entire debt (except for a Chapter 13 bankruptcy).

Filing Bankruptcy provides detailed information on Filing Bankruptcy, Filing Bankruptcy Online, Filing Chapter 11 Bankruptcy, Filing Chapter 13 Bankruptcy and more. Filing Bankruptcy is affiliated with Will Estate Planning.

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