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Thursday, December 11th, 2008

Michael Vick’s Creditors Challenge Bankruptcy Plan

Last summer, Total Bankruptcy reported on Michael Vick's bankruptcy petition from prison.

Vick was once the highest paid player in the NFL, but is now reportedly earning 12 cents an hour in federal prison, where he is serving time for his role in a dogfighting ring.

Vick's bankruptcy petition listed assets of approximately $16 million, but claimed outstanding debts in the amount of $20.4 million.

However, Vick's creditors--including the Atlanta Falcons--say that millions of dollars remain unaccounted for after a series of unexplained cash withdrawals and transfers over the past two years.

Creditors also expressed concern that Vick's repayment plan is premised on the assumption that he will be able to return to the NFL and again command a significant salary upon his release, an assertion they say requires some supporting documentation before they can assess whether or not the plan is realistic.

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Tuesday, December 9th, 2008

Durbin Makes Another Push for Bankruptcy Bill

Although Illinois Senator Dick Durbin's planned press conference on the Helping Families Avoid Foreclosure bill was a bit overshadowed by the arrest of Illinois governor Rod Blagojevich, Durbin's message remains the same:  allowing bankruptcy courts to rewrite home mortgage loans is a critical step toward ending the foreclosure crisis that's been mounting for more than two years and shows no signs of slowing down.

Durbin's bill, which failed to gain traction last year, would correct an absurdity in the current bankruptcy code that makes home loans one of the few items virtually untouchable by the bankruptcy court.

Not only can the bankruptcy court already rewrite other types of loans, such as auto loans, but even mortgage loans can be rewritten if those loans are attached to second homes, commercial property, or virtually anything other than the one asset most Americans most want to protect:  their homes.

The bill's sponsors believe that approximately 1/3 of the up to eight million homeowners facing foreclosure in the coming years could be helped directly by the bankruptcy courts, and speculate that the availability of relief in the bankruptcy courts might push mortgage lenders to work with borrowers to rewrite loans.

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