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Tuesday, November 17th, 2009

Florida Residents Join to Keep Island Resort Afloat in Bankruptcy

On Amelia Island, a coastal community off of Florida's Atlantic coast, a group of local investors have joined up to save a prominent resort from going under.

Amelia Island Plantation is a 30-year-old destination resort for vacationers and conference-goers. Recently, the resort fell on hard financial times, as many businesses have during the recession.

Wages for employees were cut, and other local businesses who depended on resort customers saw their business dwindle.

But rather than watch a local landmark and business stimulant disappear, a group of 22 local investors signed an agreement to keep Amelia Island Plantation financially viable. The investor group is called Red Maple Investors. Every member of the group is also a homeowner on the island.

Structured Bankruptcy Protection

The agreement states that the Plantation resort will seek Chapter 11 bankruptcy protection, and restructure its debts and liabilities. During this process, the resort will continue to operate normally.

Red Maple Investors will provide financial and strategic support to help Amelia Island Plantation through this Chapter 11 restructuring process.

The group's members are hardly amateur investors, however. John Griswold, for example, is the president of Harbor Hotels, and has accrued more than 30 years of experience operating high-class hotels.

"Our investors believe in the potential for the long-term success of Amelia Island Plantation," Red Maple Investors founding member Robert C. Smith told First Coast News. "All of us in RMI want to protect this little paradise we have come to love. And, we are willing to put up our own money to assure its success far into the future."

Community Finances Tied Together

As would be expected on an island of that size, the financial impact of the resort extends to other community businesses as well. The 700 employees and the 240,000 yearly visitors to the resort help many area businesses.

One such business, Dub Mullis’s fruit stand up the road from the resort, struggled along with Amelia Island Plantation.

"My customers are a lot of people from the resort. A lot of workers, people who live there and also visitors to the island," Mullis said.

A decline in corporate bookings at the resort were one of the main reasons for its struggles. The drop in large-scale events meant millions of dollars in lost revenue as companies tightened their belts.

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Posted in Bankruptcy and the Economy | 1 Comment »

Friday, November 13th, 2009

October Foreclosures Dip from September, Soar from ‘08

RealtyTrac, a company that follows foreclosure data for the United States, released October numbers on Thursday. It seems foreclosure rates have decreased slightly since last month, but are still significantly higher than they were a year ago.

Foreclosure by the Numbers

Here’s a look at the statistical breakdown of recent foreclosure activity in the country.

  • 332,292 property filings in October: This number includes three specific types of action: notices of bank repossession, auction and borrower default. That means one in every 385 American households is in some phase of the foreclosure process.
  • Percentage changed: The numbers translate to a three percent drop from September of this year, but a 19 percent increase from October of 2008, suggesting that the moderate improvement is only relative.
  • Estimate for the year: Based on information gathered thus far, RealtyTrac is reportedly predicting as many as 3.4 million foreclosures this year, a 48 percent jump from 2008’s total of 2.3 million.

These numbers may seem astoundingly high, and they are – remember that this recession started in the real estate industry, and continues to plague homeowners.

So why are foreclosures still inching up even when the economy is showing signs of recovery? Most likely, sources suggest, the unemployment rate is to blame. Even though consumer spending may be on the rise, millions of Americans are still without jobs – and without serious hope of getting jobs in the near future, which means missed house payments.

Foreclosure Prevention or Just Delays?

The Obama administration has taken some action to try to ease the pain in the housing market. The Home Affordable Mortgage Program, an initiative designed to encourage lenders to offer mortgage loan modifications with cash incentives, apparently helped as many as 20 percent of eligible borrowers last month, up from 16 percent in September.

But those numbers still represent far less than the majority of struggling homeowners – and some other laws may be offering less help than they seem to be.

Nevada, for example, allegedly has a law in place that mandates foreclosure mediation for at-risk borrowers. And, while sources indicate that the state saw a drop in foreclosures this month, it could very well see a jump later on, if and when mediations have been completed and proven unsuccessful.

Additional Resources

Home Affordable Modification Guidelines

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Posted in Mortgage Foreclosure | 4 Comments »

Monday, November 9th, 2009

Orlando Shooting Suspect Had Recently Filed Bankruptcy

The suspect in the shooting in Orlando last week that left one dead and six injured had a checkered financial past—including unemployment and a recent bankruptcy filing.

In 2007, suspect Jason Rodriguez was fired from engineering firm Reynolds, Smith & Hills, the location of the shooting, according to The New York Times. According to Rodriguez's public defender, he believed his former employers were blocking his attempts to receive unemployment benefits.

Rodriguez filed Chapter 7 bankruptcy in May, 2009, listing assets of $4,675, mostly from an unreliable 2002 Nissan XTerra, and debts at $89,873.31, including child support, back taxes and student loans.

At the time of his bankruptcy filing, Rodriguez was working at Subway as a "sandwich artist", but recently quit the position due to shortage of hours, according to CNN.

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Posted in Bankruptcy News and Events | 2 Comments »

Thursday, November 5th, 2009

Senate Passes Unemployment Extension Bill

Unemployed Americans will receive up to 20 additional weeks of unemployment benefits under a bill passed by the Senate this week, according to CNN.

The Senate voted 98-0 Wednesday to provide continued relief to the estimated 15 million Americans currently drawing unemployment benefits. The bill provides at least 14 additional weeks of benefits, and 20 weeks in those states where unemployment is 8.5% or greater.

The bill now moves to the House, which passed a similar bill in September providing up to 13 additional weeks of benefits. President Obama has shown support for extending unemployment benefits, and is expected to sign the bill.

In the Senate bill, benefits would be extended to those who exhaust their current benefits before December 31. Those whose benefits have already run out could reapply for additional benefits.

The additional unemployment would be funded by a supplemental unemployment tax on employers that would run through June 30, 2011.

7,000 Unemployed Lose Benefits each Day

CNN reports that 7,000 unemployed workers exhaust their benefits every day. And with just 3 million jobs for 15 million unemployed (a figure that doesn't include under-employed or those who've given up on looking), that rate isn't expected to slow soon—without help.

In September, the unemployment rate reached a 26-year high at 9.8%. October's unemployment rate, due out tomorrow, isn't expected to decline. Most experts expect unemployment to crest above 10% in 2010.

Unemployment and Bankruptcy

Unemployment is also closely tied with the bankruptcy filing rate. Personal bankruptcy filings reached a four-year high in October, with 135,914 consumer filings, according to the American Bankruptcy Institute. That total is the highest since the new bankruptcy law went into effect in October, 2005.

Update: The House passed the Senate's unemployment benefit extension bill Thursday afternoon with a vote of 403-12. President Obama is expected to sign the bill Friday.

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Posted in Bankruptcy and the Economy | 5 Comments »

Saturday, October 17th, 2009

More Seniors Struggling with Debt

A recent Newsweek article highlights the problem of older Americans struggling with debt. It seems that those aged 55 and older have become the group most likely to file for bankruptcy.

Retirement and Debt

The reasons for senior citizens' financial struggles may not be immediately obvious, but they are telling. Consider these factors that can sap a nest egg:

  • Credit card debt. This comes as no surprise – many Americans are strapped with serious credit card debt. This is part of the reason why the Credit CARD Act of 2009 was passed.
  • Large mortgages & home equity loans. Those who refinanced their mortgages during the real estate boom – whether to redecorate, fund children’s education, or pay down other debts – may find themselves faced with massive mortgage payments. In some cases, seniors may owe more on a house than it’s worth.
  • Cash-strapped kids. Like it or not, you may be contributing to your parents’ financial woes. In many cases, parents try to help their children financially even when they can’t afford to do so. Or they may be too embarrassed to refuse a child’s request for aid.
  • An end to income. Once you stop working, the paychecks stop flowing in. This isn’t problematic if you’ve got enough money socked away for your golden years, but since the stock market’s crash, many nest eggs aren’t quite as hefty as they once were. And paying down debt without regular paychecks can be difficult.
  • Predatory lending products. Unfortunately, nobody is immune to financial disasters like payday loans. People on fixed incomes (like many senior citizens) can find such loans especially damaging, since sky-high interest rates make them difficult to repay.

Getting Help for Yourself or a Loved One

The good news is that helpful agencies are available to provide credit counseling or debt management to those in need.

The bad news is that many con artists are also out there, ready to take money from whomever they can.

Check out various credit counseling services in your area (The Association of Independent Consumer Credit Counseling Agencies has a searchable database of accredited firms) and visit the Better Business Bureau’s website to check out any operation you discover.

If you think an older person in your life may need debt assistance but not have access to online resources, consider offering your skills to that person.

Additional Resources

The Plastic Safety Net (PDF)

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Posted in Bankruptcy and Predatory Lending | 2 Comments »

Friday, September 25th, 2009

Filing Bankruptcy & Foreclosure in America 2009

Check out this infographic on filing bankruptcy & foreclosure:

Bankruptcy and Foreclosure Rates for The U.S. in 2009

Bankruptcy and Foreclosure Rates for The U.S. in 2009

Check out filing bankruptcy and foreclosure statistics by state.
Startling statistics about filing bankruptcy and foreclosure in America this year:

  • A foreclosure action is taken every 10 seconds. There were 1,528,364 total foreclosure actions taken in the first half of 2009.
  • An individual files bankruptcy every 22 seconds There were 699,104 total personal bankruptcy filings in the first half of 2009.

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Posted in Bankruptcy and the Economy, Mortgage Foreclosure | 16 Comments »

Wednesday, September 23rd, 2009

10 Companies that Could Face Bankruptcy

Last week, Yahoo Finance had an interesting article about 10 big companies with troubled finances.

Citing a report by Audit Integrity, an independent corporate accounting researcher, these 10 publicly traded companies had the highest probability of declaring bankruptcy. Like many of their American customers, these companies may be seeing less income coming in and debts that just won't shrink. On the list:

  • Hertz: financing a fleet of new models while consumers cut travel and spending.
  • Sprint Nextel: phone customers are fleeing for rival carriers with more popular "smart phone" models.
  • Macy's: customers are shying away from higher-end department stores in favor of more affordable shopping.
  • CBS: TV advertising dollars aren't what they used to be, and CBS's difficulty may be a sign that other broadcasters could lose their footing as well.

Whether or not any of these companies end up filing bankruptcy remains to be seen. Signs of economic recovery could find investors sighing with relief.

Corporate Bankruptcy Chapters

Like consumers, businesses typically have two options when filing bankruptcy: Chapter 7 bankruptcy and Chapter 11 bankruptcy.

Chapter 7 corporate bankruptcy works like chapter 7 personal bankruptcy, in which assets are sold, or liquidated, to repay creditors.

Chapter 11 bankruptcy is similar to chapter 13 for consumers, in which corporation enter a structured plan to repay creditors over time.

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Posted in Bankruptcy and the Economy | No Comments »

Monday, September 7th, 2009

Study Shows Rampant Pay Violations for Minimum Wage Workers

In honor of Labor Day, Total Bankruptcy is looking at some interesting (and frightening) labor statistics.

A study released last week shows a troubling trend in minimum-wage employment: failure to comply with many laws governing workers’ rights.

The Wage Study

Funded by grants from the Joyce, Hanes, Russell Sage and Ford Foundations, the study examined 4,387 low-wage workers in Los Angeles, Chicago and New York, the nation’s three largest cities. Included in the research were workers often excluded from such studies, including those paid in cash and undocumented immigrants.

Survey subjects represent a group that, according to the study, makes up 15% of the workforce in the three cities involved.

The Findings: A Variety of Violations

The study exposed violations of a variety of workplace laws, including these:

  • Minimum wage violations: 26% of subjects were paid less than the federal minimum wage; 60% of those were shorted by more than one dollar per hour. With minimum wage at $7.25, one dollar is nearly 14 percent of an earner's income.
  • Overtime violations: More than 25% of respondents worked more than 40 hours in a week. Of these, 76% were not compensated according to overtime payment laws. On average, workers clocked 11 hours of overtime and were either underpaid or not compensated at all.
  • Off-the-clock violations: Almost a quarter of interviewees arrived early or stayed late for a shift; 70% of these received no compensation for those hours.
  • Meal break violations: 86% of respondents worked long enough to qualify for meal breaks, but more than two-thirds (69%) had no break, a shortened break, were interrupted during their break or worked during their break.
  • Pay stub and illegal deduction violations: Though documentation of earnings and deductions is required in all three states, 57 percent of those interviewed received no such documentation. Further, 41 percent noted that their employers had cut their pay for illegal deductions.
  • Tipped job violations: Respondents in tipped wage fields, where the minimum wage is lower, reported not receiving even the tipped-worker minimum wage. And 12% reported that bosses or supervisors stole a portion of their tips.
  • Retaliation violations: Twenty percent of those interviewed reported employer retaliation (in the form of suspension, firing, threatening or similar) when they attempted to form a union or lodge complaints. Another twenty percent noted that they opted not to speak up for fear of retaliation.

In addition to these, other violations were recorded. And, according to the study, the findings may be more accurate than traditional government-based studies because the respondents included 39% illegal immigrants, 31% legal immigrants and 30% natural-born Americans.

Bankruptcy and Wage

Statistics show that the average bankruptcy filer earns less than $30,000 a year, a group that certainly includes those working for minimum wage. Pay violations are not only illegal, but they make it difficult for workers to pay bills and debts, leading many to file bankruptcy.

Minimum wage earners who don't have health insurance, for example, may be forced to file Chapter 7 bankruptcy to discharge medical debt.

Additional Resources

Broken Laws, Unprotected Workers (PDF)

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Posted in Uncategorized | 3 Comments »

Friday, September 4th, 2009

High California Unemployment a sign of Economic Recovery?

Last week, the LA Times released an article pronouncing:

California unemployment hits post-World War II high. The rate jumped unexpectedly in July to 11.9% even as the national rate declined.

The purpose for this, it seems, is to inform the public of the rampant unemployment problem in the country’s largest state.

However, as in life, there is always a ‘yin’ to the ‘yang’.

High Unemployment Number, But is This the End of the Recession?

Explaining the positive side to this grossly negative numerical fright is Jerry Nickelsburg, a senior economist with the UCLA Anderson forecast:

Historically, unemployment rates continue to rise after the end of the recession. . .we're not creating enough jobs, we're losing jobs, and so that makes the unemployment rise. The importance of this is the reference to the ‘end of the recession’.

The Pain of Unemployment

If you ask the 35,800 California workers who lost their jobs last month (which is more than any other state) or the more than 760,000 residents who have lost their jobs in the last year--- the recession is far from over.

California has staggering average home prices, the nation’s highest cost-per-gallon of gas on average and is also notorious for their “sunshine taxes”. This only adds salt to the wounds of the unemployed.

California Losing Its Allure?

For so long California has been the Mecca for those searching for fame and fortune.
This began with the gold rush of 1849 and continued with the boom of the railroad, the rise of Hollywood fortunes and the blossoming of Silicon Valley.

The 16% unemployment rate won’t concave the mystique of California, but it’s worth noting that California is tied with Oregon for the fourth-highest unemployment rate in the nation, behind Michigan, Rhode Island and Nevada.

Some experts say the state is shedding jobs at a faster rate than the rest of the nation because of the prior dependence California had on their building/construction industry.

Whatever the reason, there are still large groups of unemployed workers in search of work.

We may see more Californians filing bankruptcy if this unemployment continues to rise.

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Posted in Bankruptcy and the Economy | No Comments »

Tuesday, September 1st, 2009

Michael Vick Filing Bankruptcy, Playing Ball & Moving Forward

If you can, please set aside the dog fighting, the jail time and the infuriating bad-boy behavior synonymous with his name—because Michael Vick’s got a new set of problems.

This fall, as the NFL reinstates him following a high profile, two-year hiatus during which Vick served time in federal prison, the former Atlanta Falcons quarterback finds himself $20 million in the hole.

On August 27, 2009, U.S. Bankruptcy Judge Frank J. Santoro approved Vick’s creditor repayment plan under one condition: that he retain a financial planner to ensure that he successfully emerges from his July 2008 Chapter 11 bankruptcy filing.

Vick has an estimated 100 creditors trying to collect from his past-due bills.

Vick 'Happy' With Filing Bankruptcy Decision

After the ruling, an elated Vick commented to reporters outside the courthouse in his home state of Virginia:

“I'm happy it's over. I can move on with my life. I think my lawyers did a great job. I commend the judge. I commend the creditors' committee, everybody. We finally got it all together. I'm just happy we can move forward.”

Following the court appearance, Vick and his fiancé were whisked away on a plane to Philadelphia for his debut in an Eagles’ preseason game.

Once the highest-paid player in the NFL, Vick now receives a $1.625 million salary for the 2009 season.
This amount may not even cover his legal fees, much less a solid portion of what he owes to creditors.

Michael Vick to Liquidate Assets

The three-time Pro Bowl pick will be forced to liquidate around $9 million in assets, including houses, luxury SUVs, boats and future NFL earnings.

He is allowed to keep only one of several homes, a luxury SUV and other possessions of minimal worth.

Michael Vick Back on the Field … Sort Of

NFL Commissioner Roger Goodell has permitted Vick to play in the final two preseason games of his new team, the Philadelphia Eagles, but not in the regular season.

In his announcement, much to the dismay of some, Goodell also contended that he would consider Vick for full reinstatement before Week 6 of the season.

Vick’s Debt to Be Resolved in Six Years?

Despite not having to pay creditors during his first year with the Eagles, Vick and his financial planner are hopeful that all of his debt will be paid off in six years.

The financial obligations of his Chapter 11 bankruptcy reorganization plan coupled with the 18 months he served in prison for operating a dog-fighting ring sustain Michael Vick’s reputation as an controversial figure in the sports world.

If nothing else, one thing in Michael Vick’s future is certain; for the undeniably talented athlete, winning games will not prove to be nearly as challenging as winning back an extremely contemptuous crowd.

Filing Bankruptcy Information

Are you tired of debt and curious as to how Vick may be resolving his old bills? Learn more about how filing bankruptcy works.

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Posted in Bankruptcy News and Events | 1 Comment »

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